Ground Rules

Things we absolutely sure CAN do:

• We can help you chalk out a plan on how much you should be investing with us relative to your net worth, considering your risk tolerance, asset-liability circumstances, and age. You can then choose a strategy that helps you to achieve your personal goals

• We can help you with the paperwork and preparation of other materials when you are participating with us as a partner or a client without incurring any extra cost on your end. We are going to take care of almost all heavy liftings in the process of becoming our client

• You can inject new capital into your account only once in a quarter (until the 5th of any given month). Other than these specific periods, we only accept new capital if we see any opportunity. In that case, you would receive a call from us

• We can only invest with a minimum investment period of between 3 to 5 years (although the legal lock-up period is only for one year). We invest in simple, understandable, and predictable companies that are in our circle of competence at a reasonable price

• There is a lock-up period of a year from the capital contribution date (unless it is mentioned otherwise in your contract). Once the lock-up period is over, we can facilitate redemption up to any amount from your account once a year with a 15 days advance request via email at ir@ar.capital. The deadline for submitting withdrawal requests is 15th December in any given year

• We would make sure that you have the appropriate information to decide whether you want to stay invested with us or not by sending you the capital account statement so you can make an informed and right decision about your wealth before December. You would also get to know the 'estimated fees payable’ to us at the end of the year (if any) through that

• We will be writing to you bi-annually and sharing our views regarding our partnership. These letters are primarily going to be reflecting our thoughts on business and economic circumstances in general

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Things we absolutely sure CAN NOT do:

• We cannot forecast the market and the economy. Therefore anyone believing that to be an essential component of the result achieved through investment operation should not be in the partnership

• We are not willing to share and disclose our investment position/s at any given time (unless required by the law). It is not to maintain some kind of secrecy but to protect and take advantage of the mispriced and generally short-lived opportunities provided to us by the markets

• We cannot share our research and investment thesis on a specific company at any point in time unless required by the law. We also choose to abstain from talking, writing, discussing any investment idea we are assessing at present, invested in the past, and considering in the future in a public or private setting to protect our decision making from consistency and commitment biases

• In no sense is any rate of return guaranteed to partners, but we can guarantee you our full efforts, energy, intelligence, and a significant portion of our own and our family’s wealth in the fund. So whichever direction the net worth of your contribution to the fund would go - our net worth would have the same directional and proportional impact

• A successful investment operation requires ample time to read and think, so we are not willing to spend our time discussing what we have been up to (i.e., investment performance-wise) during the year other than the fund’s annual general meeting event. Almost all other matters can be solved via emails or direct calls with our relationship manager dedicated to you

• We cannot produce a positive short-term investment performance, so please do not expect one while getting into the partnership. While we would prefer a five-year test, three years is the absolute minimum for measuring the performance. The only exception to this statement would be three years covering a speculative explosion in a bull market

• Our clients need to know that this will be a long-only portfolio. We are neither willing to take leverage in the portfolio nor interested in investing in derivatives. Our firm would not participate in shorting stocks either. Even if it means giving up a percentage point or two in performance - we are not willing to own businesses that are primarily focused on intoxicants, gambling parlors such as - casinos, sports betting houses, marijuana, tobaccos, liquors, etc. as they contradict our core value system in a major way.
  

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Please know that anything not mentioned above falls into a grey zone for us. We are not entirely sure whether it would be possible and feasible to do anything that falls into our grey zone.

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Other important things to consider before joining the partnership:

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ZERO MANAGEMENT FEES: We charge you nothing unless you make money.

MINIMUM INVESTMENT OF $50,000: For a limited time, we are not requiring this minimum threshold as you will be betting on our character participating in the early stage of the partnership.

HIGH WATER MARK: If the value of your investment in the fund declines, we do not get an incentive fee until your losses are fully recouped.

HURDLE RATE: There is a non-cumulative 4% hurdle rate p.a. (i.e. we make no money until we secure a 4% return on your capital a year).

1/3 PERFORMANCE FEE BEYOND 4% HURDLE: This is how we are compensated for managing your money. We only make money when you make money.

CATCH UP: There are no catch-up fees.

ONE YEAR LOCK-UP: The earliest you can redeem your investment in the fund is one year after you make the investment.

QUARTERLY ADDITIONS AND YEARLY REDEMPTIONS: After the first year, you can make additions once every three months and redeem at the end of each year. We plan to be your partner for many years and hope you think of our relationship the same way.

MEASUREMENT OF INVESTMENT PERFORMANCE: A plus or minus for the year would not indicate whether we did a good or a poor job with your capital. Instead, it should be measured against the general experience in securities as measured by the leading investment companies that own asset classes that are analogous to us and operate in the same markets as we do. We would consider it a good year if our record is better than this yardstick, whether we are plus or minus. If we do poorer, we deserve the tomatoes.

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Schedule 1.0: Illustration to explain Performance Fee computation over a multi-year investment period. Click Here