Viceroy Fund

L.P.

Fund Investment Objectives

Options - The sale of put and call options on stock indexes is the dominant portion of the program. The index of choice is the S&P 100 (OEX). Selling is concentrated in the nearest expiring series. Both puts and calls are sold in amounts and strike prices that tend to make the portfolio approximately market neutral. All option contracts sold are out-of-the-money (away from their strike prices). Other stock indexes may be used to satisfy the objectives of the Partnership. For example, over the past few years index mutual funds that trade like stocks have become very popular and trade with significant liquidity on various exchanges primarily the American Stock Exchange. These funds are called Exchange Traded Funds (ETFs). The representative funds the Partnership would consider for option selling are: SPDRS: Standard & Poor's 500 Index Deposit Receipts (symbol SPY); DIAMONDS: Dow Jones Industrial Average tracking unit (DIA); and QUBES; NASDAQ 1000 tracking units (QQQQ). Stocks - The Program identifies equities it values as worthwhile for purchase or sale. A proprietary algorithm provides the basis for entering either the long or short side of an equity position. The signaling takes into account various factors, such as, price level, price momentum, volatility, and volume. The Partnership's portfolio will always be simultaneously long and short although not necessarily in equal amounts. In order to ensure sufficient liquidity, the universe of stocks analyzed are in most cases, part of the S&P 500. An integral part of the stock selection is the availability of the appropriate options for sale or purchase. Again, shorter term options are considered first and will be out-of-the-money. Depending on the strategy options may be sold in a ratio, that is, more puts than calls or the reverse depending the underlying stock position.