Letter: Soros and Quantum Fund

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WE WISH to clarify a few essential points regarding Quantum Fund, following your articles of 6 March, 13 March, and 10 April on George Soros, Soros Fund Management and the Quantum Group of Funds:

1 It has been, and remains, our policy to encourage George Soros and his key associates to invest their own money in Quantum Fund. The interests of shareholders of the fund and George Soros and his key associates are similar; to maximise the value of the fund.

Since inception in 1969, the fund has returned an average of about 35 per cent per annum to its investors after fees. We are not aware of any other fund with similar returns. As key contributors to the fund's results, George Soros and SFM personnel do not pay annual fixed or performance fees (to themselves) on their fund investments, but they do bear the cost of any investment advisory fees paid to others. Otherwise, their financial risks and rewards as owners of the fund remain identical to other shareholders. This has been an important factor in the continued success of the fund. Although George Soros and SFM personnel, unlike outside shareholders, do not pay any premium when they purchase fund shares, they do not receive any premium if they sell shares.

2 The profits on dealing in fund shares and the related premiums accrue to all investors equally. We are not aware of any other mutual fund, unit trust or investment company which passes back to the unit-holders dealing profits in this manner.

George Soros and key SFM personnel are responsible, because of the fund's exceptional investment performance, for the market-created premium on shares in the fund and, in our view, are therefore entitled to also share in that benefit in proportion to their investment in the fund.

3 Performance fees received by SFM and income received by SFM personnel in respect of their investments in the fund are not distributed as dividends, but continue to remain invested in the fund. This is the reason their value has grown. Again, this is obviously in the interest of all shareholders.

4 Similar observations apply to the 10 April article regarding our UK real estate fund: Mr Soros participates pro rata with his shareholders' investment in the fund, including the investment in the British Land shares (as fully disclosed in the Information Memorandum for the fund). We strongly believe that the admittedly complicated structure of the fund is fair to all parties and the successful performance since 1969 proves that the structure works for the benefit of all shareholders.

We will not respond further to your biased reporting.

Richard Katz

Executive Committee of the Board of Supervisory Directors of Quantum Fund

Netherlands Antilles

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