Fund L.P.

Fund Investment Objectives

The Fund is a US oriented long/short equity hedge fund. The goal is to outperform the S&P 500 in bull markets and to outperform cash in years when the S&P 500 declines, while at the same time exposing the Fund to considerably less than market risk. On a net basis this has been achieved virtually every year since inception. The expectation is that this should be achieved on a 3 year rolling basis. The strategy involves investing in the equity of companies with business models that are changing in some way that the market has yet to recognize, looking for deeply discounted intrinsic value on the long side and structural or cyclical deterioration on the short side. We look 12 to 18 months out where we find a rich research yield. Market noise is kept to a minimum looking for stocks that are mispriced or undervalued. The Fund is not seeking to capture short-term arbitrage or relative value mispricings - all trades are directional. Only 50% turnover on the long side gives US taxable investors the benefit of a relatively tax efficient vehicle. Component security selection strategies include: 1) intrinsic value longs, 2) asymmetric opportunities, 3) deteriorating business model shorts, and 4) portfolio overlay. We manage risk with the overlay to protect capital from market downturns.