Alternative Liquidity Fund : August 20, 2021 - Circular

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action you should take, you are recommended to seek your own independent financial advice from your stockbroker, bank manager, solicitor, accountant or other appropriately qualified independent financial adviser, authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom, or from another appropriately authorised independent financial adviser if you are outside the United Kingdom.

If you have sold or otherwise transferred all of your Shares, you should pass this document (but not any accompanying personalised Form of Proxy) as soon as possible to the purchaser or transferee or to the person through whom the sale or transfer was effected for onward transmission to the purchaser or transferee.

ALTERNATIVE LIQUIDITY FUND LIMITED

(incorporated in the Island of Guernsey under the Companies (Guernsey) Law, 2008, as amended, as a non-cellular company limited by shares with registered number 60552 and registered as a registered closed-ended collective investment scheme with the GFSC)

Recommended proposals relating to the issue of a new segregated class

of Ordinary Shares, the appointment of Waverton Investment Management Limited as investment manager of the new Ordinary Portfolio and the adoption of a new investment objective and policy of the Ordinary Portfolio

and

Notice of Extraordinary General Meeting

The Company is a registered closed-ended collective investment scheme registered pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended (the "POI Law") and the Registered Collective Investment Scheme Rules 2018 (the "Rules") issued by the Guernsey Financial Services Commission ("GFSC"). Notification of the proposals outlined in this document has been given to the GFSC pursuant to Part 6 of the Rules. The GFSC has not reviewed this document and takes no responsibility for the correctness of any statements made or opinions expressed with regard to the Company.

Your attention is drawn to the "Letter from the Chairman" set out in Part 1 of this document which contains a recommendation from the Board that Shareholders vote in favour of the Resolutions to be proposed at the Extraordinary General Meeting referred to below.

Notice of the Extraordinary General Meeting to be held at 9.00 a.m. on 6 September 2021 at Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 1GR is set out at the end of this document. The accompanying Form of Proxy for use at the Extraordinary General Meeting should be completed and returned as soon as possible and, to be valid, must arrive with Link Group at PXS 1, Link Group, Central Square, 29 Wellington Street, Leeds LS1 4DL no later than 9.00 a.m. on 2 September 2021.

The definitions used in this document are set out on pages 14 to 16 of this document.

Page 1

Contents
	Page
- LETTER FROM THE CHAIRMAN.........................................................................	3
- PROPOSED NEW INVESTMENT OBJECTIVE AND POLICY OF THE ORDINARY
PORTFOLIO ................................................................................................	11
- INFORMATION ON WAVERTON AND THE PROPOSED INVESTMENT STRATEGY
RELATING TO THE ORDINARY PORTFOLIO ......................................................	12
DEFINITIONS............................................................................................................	14
NOTICE OF EXTRAORDINARY GENERAL MEETING ..........................................................	17

Page 2

- LETTER FROM THE CHAIRMAN

ALTERNATIVE LIQUIDITY FUND LIMITED

(incorporated in the Island of Guernsey under the Companies (Guernsey) Law, 2008, as amended, as a non-cellular company limited by shares with registered number 60552 and registered as a registered closed-ended collective investment scheme with the GFSC)

Directors:	Registered Office:
Quentin Spicer (Chairman)	Sarnia House
Dr Richard Berman	Le Truchot
Anthony Pickford	St Peter Port
	Guernsey GY1 1GR
	20 August 2021
Dear Shareholder

Recommended proposals relating to the issue of a new segregated class of Ordinary Shares, the appointment of Waverton Investment Management Limited as investment manager of the new Ordinary Portfolio and the adoption of a new investment objective and policy of the Ordinary Portfolio

1 Introduction

The Company was launched in September 2015 and invests in a diversified portfolio of illiquid interests in funds and other instruments and securities with the objective to manage, monitor and realise these investments over time. The Company currently has a single class of ordinary shares in issue, which is admitted to trading on the Specialist Fund Segment.

Since 25 February 2019, when the Company's current investment policy was adopted, the Company has pursued a realisation strategy in relation to the Existing Portfolio. The Company is currently a self-managed AIF and, since 1 January 2021, Hindsight Solutions Limited ("Hindsight"), a company owned and operated by Tim Gardner, has been appointed as the investment adviser to the Company in respect of the Existing Portfolio. Tim has provided oversight and support in relation to the management of the Company since its launch in 2015. In the Board's view, the Existing Portfolio retains significant value but such value will take several years to realise. The Board has been considering options for the future of the Company to enable it to continue such realisation process at a lower cost base.

The Board has also been reviewing potential growth strategies and the scope for the Company to offer new share classes. The Company published a placing programme prospectus in October 2019 with a view to issuing an additional share class to make investments in line with the Company's current investment policy. For a variety of factors, including the onset of COVID-19, no new capital was raised under that placing programme.

As well as focusing on realising the Existing Portfolio and maximising returns for Existing Shareholders, the Board believes that it is in the best interests of Shareholders to raise additional capital through the launch of a new segregated share class. Subject to Shareholder approval at the EGM, the Company is proposing to issue a new class of ordinary shares (which will be called the "Ordinary Shares") pursuant to an Initial Issue and subsequent Placing Programme. The new Ordinary Shares will also be admitted to trading on the Specialist Fund Segment.

Page 3

The Board has agreed terms in relation to the management of the portfolio of assets attributable to the new Ordinary Shares with Waverton Investment Management Limited ("Waverton" or the "Investment Manager"). Further details on Waverton and the proposed strategy for the management of the assets attributable to the new share class are set out below and in Part 3 of this document.

With effect from Admission, the Company's existing class of ordinary shares will be redesignated the "Realisation Shares" to reflect the Board's policy to return cash from the proceeds of the investments and the Company's existing assets currently held within the Existing Portfolio will be attributable to the "Realisation Portfolio". Any new ordinary shares to be issued pursuant to the Initial Issue and the Placing Programme will be designated as "Ordinary Shares" and the assets attributable to that new segregated share class will be the "Ordinary Portfolio".

Conditional on the passing of the Resolutions and Admission, Waverton will be appointed as investment manager to the Company with responsibility for the management of the Ordinary Portfolio. Hindsight will remain as investment adviser to the Company in respect of the Realisation Portfolio.

In conjunction with the proposed introduction of the new segregated class of Ordinary Shares and the appointment of Waverton as investment manager of the Ordinary Portfolio, the Board is also proposing that:

1. the Company adopt a new and separate investment objective and policy of the Ordinary Portfolio, in order to reflect the differing investment strategies to be applied to the management of each of the Realisation Portfolio and the Ordinary Portfolio. The Company's existing investment objective and policy will continue to apply as the investment objective and policy of the Realisation Portfolio and will not be changed;
2. certain amendments be made to the Company's articles of incorporation; and
3. the Company's name be changed to "The Endowment Fund Limited".

The proposed new investment objective and policy of the Ordinary Portfolio is summarised in paragraph 4 below and set out in full in Part 2 of this document. A summary of the changes proposed to the Company's articles of incorporation is set out in paragraph 6 below.

The purpose of this document is to explain the Proposals which, in order to become effective, require, inter alia, the Resolutions to be passed at the Extraordinary General Meeting. The notice convening the Extraordinary General Meeting is set out at the end of this document. In addition to providing you with further details of the Proposals, this document also explains the reasons why the Board believes that the Proposals are in the best interests of Shareholders as a whole.

2 Further details of the Proposals

The Proposals are conditional on Shareholder approval. The Board is recommending that, at the EGM, Shareholders vote in favour of resolutions to:

• adopt a new investment objective and policy for the Ordinary Portfolio;

Page 4

• amend the Articles in order to, inter alia, extend the continuation vote from being held at the annual general meeting of the Company in 2023 to 2026 and then every two years thereafter;
• approve the disapplication of the pre-emption rights contained in the Articles so that the Board will have authority to allot and issue (or sell from treasury) up to 250 million new Ordinary Shares pursuant to the Initial Issue and Placing Programme for cash on a non-pre-emptive basis;
• approve the buy back of up to 14.99 per cent. of the Ordinary Shares in issue on Admission; and
• change the Company's name to "The Endowment Fund Limited".

If Shareholders approve the Proposals, the Company intends to publish a prospectus and introduce the Initial Issue and 12 month Placing Programme for up to 250 million new Ordinary Shares, the net proceeds of which will be used to invest in a diversified portfolio of investments attributable to the Ordinary Shares in line with the new investment objective and policy of the Ordinary Portfolio.

If the Resolutions are passed, and conditional on Admission, Waverton will be appointed as the Company's investment manager in respect of the Ordinary Portfolio pursuant to an investment management agreement to be entered into between the Company and Waverton. Waverton is an independent, owner-managed investment management firm based in London with assets under management of approximately £7.6 billion as of 30 June 2021. Further information relating to Waverton, the key members of the investment team and the investment strategy proposed in relation to the management of the Ordinary Portfolio is set out in Part 3 of this document.

The Company and Waverton have entered into heads of terms in connection with the appointment of Waverton as investment manager in respect of the Ordinary Portfolio. Waverton will be entitled to receive a management fee of 0.75 per cent. per annum of market capitalisation and its appointment may be terminated on 12 months' notice, such notice to expire on or at any time after the fifth anniversary of Admission.

The existing investment advisory agreement in place in respect of the Realisation Portfolio will not be affected. If the Proposals become effective, the Realisation Portfolio's strategy will be to realise the underlying assets in the Realisation Portfolio as quickly as possible while also seeking to preserve value. It is unlikely that any new investments will be acquired by the Realisation Portfolio and, as a result of this portfolio going into wind down, it is expected that it will become more concentrated over time as assets are sold.

The Board will consider, over the next 12 to 24 months, options for the orderly termination of the Realisation Portfolio and will consult with Shareholders prior to determining the best route, which may include a portfolio sale of remaining assets in the Realisation Portfolio (and subsequent return of capital) or introducing a right of conversion of the Realisation Shares into another share class.

In the event that the Resolutions are not passed, the Proposals will not become effective, the Company will not publish a prospectus and no new Ordinary Shares will be issued, nor will the appointment of Waverton as investment manager of the Ordinary Portfolio become effective.

Page 5