Donald Smith Long/Short

Equities Fund, L.P.

Fund Investment Objectives

The investment objective of the Partnership is to generate attractive long-term returns. The Partnership intends to invest, long or short, primarily in equities. Other potential securities utilized could include preferreds, warrants, options, futures, currencies, ETFs, closed end funds, etc. On the long equity side, the Partnership intends to invest on a global basis in deeply discounted value stocks that often sell well under their tangible book values. Specifically, the Partnership will replicate all long equity holdings with at least a 0.1% weighting held by Donald Smith & Co., Inc. ("Donald Smith & Co."), an affiliate of the Investment Manager. This long portfolio shall be automatically rebalanced on the first business day of each month, using the closing price for the securities on such date, so that the Partnership's portfolio matches, pro rata, the long equity holdings with at least a 0.1% weighting held by Donald Smith & Co. on such date. Donald Smith & Co. is a registered investment advisor (RIA) with a successful track record of over 30 years. Donald Smith & Co. has utilized the low price-to-tangible book strategy throughout its history. Donald Smith & Co. looks for companies in the bottom decile of the price-to-tangible book universe that have a positive earnings outlook over the next 2-4 years. Studies have shown, and the superior record at Donald Smith& Co. confirms them, that this universe of stocks substantially outperforms over extended cycles. A study was conducted in cooperation with Compustat from 1951 - 2001. It showed that stocks in the lowest price-to tangible book value decile delivered the highest returns over the long term. The lowest decile delivered 16.5% return versus 12.2% for the S&P 500. Other outside academic studies have confirmed the efficacy of the low price-to-tangible book value approach to investing. Research is generally performed on the companies that comprise the lowest price-to tangible book value decile. The research includes an in-depth analysis of asset quality, liabilities (on and off balance sheet) and the potential for the assets to generate substantial earnings potential. The research is performed by an experienced analyst staff and portfolio managers (see "Management of the Partnership" for team biographies) and it will include reading both company documents and analyst research, and contacts with management. Stocks purchased will often sell at attractive valuations based on price-to-tangible book value, market cap/revenues and price/2-4 year earnings potential. On the short side, the Investment Manager expects to generally focus on those companies that sell at large premiums to book value and high multiples of revenues and earnings.