The Sprott Small Cap Hedge Fund's investment objective is to provide unit holders with long-term capital growth. The Fund invests primarily in Canadian equity securities, with a significant bias toward small to medium capitalization stocks where the pricing of securities is less efficient. The Manager uses a variety of tools in order to assess a security before it enters the portfolio. The tools include quantitative and qualitative factors. The Manager uses a database of over 700 small and medium size securities to screen for those with strong earnings growth, high returns on equity, reasonable valuations and strong balance sheets. The Manager meets with over 500 management teams a year in order to qualitatively assess their investment merit. Preference is given to those companies that fit the Manager's growth at a reasonable price criteria. The above-mentioned factors form the basis of the Manager's decision making process to select those stocks which should be purchased and those which should be shorted. The actual inception of this fund is January 31, 2007.