Capital Master Fund

Fund Investment Objectives

The primary investment focus of the Chicago Capital Management,LP is merger arbitrage; the Fund only invests in publicly announced merger transactions. The Fund primarily invests in publicly traded equities (stock and convertible bonds). The Fund also invests in options that make up less than 1% of the portfolio. Occasionally, the Firm will invest in fixed income instruments of a company being acquired. After a merger is announced our analysts quickly analyze the merger and assign a probability to the likelihood that the transaction will be completed under the announced terms. If we do take an initial position, we continue our research to strengthen our original convictions further and carefully monitor each position as the merger progresses. After each significant milestone is reached, we assess the remaining risks and reward and either add to or reduce our position. However, more often than not, as the risks of the transaction being completed are reduced by events such as positive earnings announcements, regulatory approval and the announcement of progress toward the completion of the merger, we tend to add to our position with the intention of holding it until the merger is consummated. Unlike other portfolio managers in our field, Chicago Capital Management's fund is unique due to its' low volatility, consistent positive returns, and its' flat hierarchy. We pride ourselves in being independent and nimble. Economic environments in which Chicago Capital Management performs best historically are in periods of economic recovery when there is economic retraction and financing has gone away. Analysts at Chicago Capital Management look at the balance sheets of each company, any lawsuits that the companies might be involved in, the probability that the companies will be able to obtain the financing necessary to complete the deal, the likelihood that the companies will be able to obtain a favorable anti-trust ruling and any other regulatory ruling issues that might affect the completion of the merger. After that initial work is done, a determination is made whether or not to take an initial position.