Phoenix Hedge

Fund L.P.

Fund Investment Objectives

Structured basket of hedge funds dynamically leveraged. Includes fifty major hedge funds in all styles and all markets, held under the Societe Generale Lyxor Platform, geographically diversified but mostly in the developed countries and the selected managers are almost exclusively from the Morgan Stanley Investable Index(MSCI). In good months the returns reached the 5-7% monthly level with commensurate but brief downside from time to time (9 months since Oct 2006 and the stop of rate increases the fund was up some 60+% (tax-deferred). This is one of a kind product that first takes most risk out by diversifying in multiple ways and then reintroduces leverage to go after a return that normally should be 3-4 times the S+P500 during upside with positive returns yet also make nice solid returns in flat markets and up to a point in mild down market. The issue of concern is mostly liquidity forcing good positions out in major established hedge funds. Correlation to the stock market of about 25% variable. Expected much higher returns than the standard fund of funds with perhaps returns in normal times in the 30-50% range. Risk is primarily a rare liquidity crunch where good positions are liquidated on lack of availability of borrowing like August 2006. SINCE November 2009 A BASKET OF FUNDS (hedge funds/mutual funds) IS HELD till renewal of the Societe Generale original product described above. Fund was distributed to two LPs of similar strategies and holdings following October 2009 but different level of risk and this record represents the two parts recombined for continuity (weighted average).Fees not included in record since not charged due to small size. When charged are included. No incentive fees till size growth.