The Importance of a Boutique Administrator to an Emerging Manager (Start-up Fund)

1. The Importance of a Boutique Administrator to an Emerging Manager (Start-up Fund) Over the past seven years, regulations and compliance requirements have significantly increased the cost of providing fund administration services. In most instances, these costs are passed on to the client. In addition, most Emerging Managers are now launching their fund with initial AUM ranging between US $1 million and US $15 million. Unless these funds are in a position to pay increased fees to the larger fund administration firms, they are either fired, or have to delay their proposed launch date, unless they can engage a firm that can provide the coverage of services needed. Furthermore, if these services have to be obtained from various service providers, the cost can still be significant when taken as a whole. These are some of the reasons why the importance of an established Boutique Administrator, like AFA is invaluable to an Emerging Manager. The value proposition of a Boutique Administrator to its clients is the ability to structure a service model that is reliable, so that what is promised, is delivered, and provides a real solution over the long term. This was the basis upon which Advanced Fund Administration (AFA) was established, and continues to play a leading role with Emerging Managers. A Boutique Administrator that adds value should be SOC 1 compliant and provide a comprehensive and cost effective solution to all types of fund structures and investment strategies. Accordingly, the technology used should be a fully integrated, multi-currency platform providing Straight-Through-Processing and complete transparency with a secure web-based portal that delivers robust reporting to investment managers and investors. The suite of services offered should include, but not limited to the following: Fund Accounting Investor Services Cash Management 1

2. Year-end Services (financial statements preparation) Shadow Accounting FACTA Registration and other regulatory reporting Outsourced Compliance Services Registered Office In order to enhance the startup phase of a new fund, it is important to have in place an established relationship in the following areas: Legal Advisory, and possibly, An Emerging Manager Platform At AFA, the following are either a subsidiary or a department of the firm: 1)AFA Legal Resources Ltd in the Cayman Islands and BVI offers legal and fiduciary services including fund document preparation and incorporation of offshore entities; directorship services; corporate secretary services; virtual office services; private client & trusts services; and liquidation services; 2)AFA Advisory Services provides assistance with the development and design of websites, pitch books, and tear sheets, as well as providing ongoing website hosting and monthly maintenance of client marketing collateral. In addition, the AFA Emerging Manager Platform (US Onshore & Cayman Offshore) offers early stage fund managers a cost effective turnkey solution that provides the necessary infrastructure to support a new fund launch while minimizing fund start-up costs. Fund managers receive a high quality service from top tier SOC I compliant service providers at significantly reduced rates. Services include legal, prime brokerage, fund administration, advisory, audit & tax, and compliance. 2

3. With the challenges Emerging Mangers are faced with, the importance of working with a well-established Boutique Administrator is underscored by the value it offers when it is needed most - during the startup phase of a fund. Peter M.O. Young President and COO of AFA pyoung@afaservices.com +1 (345) 747-4232 Joseph A. Levato Head of North America Operations and CFO Advanced Fund Administration, LLC jlevato@afaservices.com +1 (908) 273-4545 Wilton G. McDonald II Attorney at Law and Director of AFA Legal wmcdonald@afaservices.com +1 (305) 851-2549/ +48.608.274.583 3