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Opportunity Partners L.P.

Fund Investment Objectives

The Partnership seeks to produce absolute, long-term returns on its capital that are superior to the historical return of the HFR Equity Hedge index. It attempts to generate these returns by using a tax-efficient, long-term long/short investment strategy that emphasizes capital preservation. The Partnership employs a discipline of reward-risk analysis to identify public companies that are selling below or above their intrinsic value. It invests primarily in common stocks but also utilizes other components of corporate capital structures such as preferred stocks and corporate bonds. As part of this strategy, the Partnership sells securities short, uses leverage, ETFs, index funds and index instruments, and may use options and futures to hedge or enhance its equity exposure. However, the Partnership is not limited to any particular instruments or investment strategies. The Partnership generally identifies and acquires interests in publicly traded companies that meet three fundamental requirements. One, the company must have a business model that is understandable, defensible and can generate strong free cash flow. Companies meeting these standards usually have structural advantages as compared to their competition and, if well managed, can deliver consistently high profitability. Two, the company must be well governed by a motivated management team whose interests are closely linked to those of the shareholders. The General Partner considers such things as officer and other insider holdings, compensation structures and management stability. Three, the company must be selling below its intrinsic value. Discrepancies between intrinsic and market value occur when there is poorly articulated information or research about a company; a problem arises that is temporary in nature; a valuable segment of a company is obscured by a less attractive business; or a new management team, product or service emerges that can increase a company's cash flow generation. Conversely, the Partnership focuses its short positions on publicly traded companies that do not meet the above criteria and appear to be trading above their intrinsic value. The Partnership seeks to be opportunistic in its pursuit of companies that demonstrate the above characteristics. The Partnership's due diligence process often involves company and industry research that includes competitor, customer and supplier checks, meetings with management, background checks, and an accounting analysis of historical and pro forma financial statements. The Partnership, as a matter of policy, takes only passive, minority interests in companies and does not attempt to control or influence management. The Partnership relies on incumbent management to realize the value that the General Partner perceives in its portfolio companies. The General Partner typically constructs a portfolio that is net long in its market exposure and without significant leverage. The General Partner's approach does not limit the range of specific industries that may be included in its universe of prospective investments. The Partnership invests and trades without material limitation on the strategies it implements, the investments it makes, the type of securities it acquires or the market capitalization size of its portfolio companies. Its holdings typically are concentrated among a limited group of issuers, but prospective investors must not rely on the Partnership's portfolio being either concentrated or diversified. Consistent with this approach, the General Partner's policy is to have a detailed understanding of each investment in its portfolio. Generally, the Partnership will invest in a limited number of companies. Typically there are no more than 20-40 long positions and an additional 0-15 short positions, without regard to industry diversification. At times, the Partnership's portfolio may be more concentrated in fewer positions, all of which may be in the same or related market sectors. The Partnership has a preference toward investing in small and mid-capitalization stocks, however, the Partnership will take advantage of market conditions that present opportunities in high-quality, large capitalization stocks. Due to inadequacies in the research coverage of smaller companies, the General Partner believes that there is an opportunity for the General Partner to add value in this area. Also, the Partnership may invest in private placements of publicly traded securities (PIPE transactions). In summary, the Partnership provides investors with an alternative investment that may provide superior returns and, in the case of the TOP Partnership, has a demonstrated historical track record of low market correlation, lower than market volatility and excess returns (as compared to the S&P 500 index). The Partnership seeks to realize the intrinsic or fair value of long investments made in high-quality businesses. In addition, it uses short selling and options strategies to both generate excess returns and to hedge its gross market exposure. Disclosure: The inception date of the fund for performance calculations is January 1, 2000, the date that the fund manager fully implemented a new strategy to include a portfolio in excess of 20 positions in companies of any size market capitalization and a greater emphasis on short selling. From September 1997 through December 31, 1999, the fund strategy included a 10-stock, primarily long-focused hedge fund investing in a portfolio consisting of all micro and small capitalization companies. Performance under the old strategy is not correlated to the current strategy and constitutes a separate performance composite as recommended by the independent verifier. The performance of Talon Small Cap L.P. prior to January 1, 2000 is not presented as part of the historical fund performance of Talon Opportunity Partners L.P.