Yakira Partners, L.P. was formed in 1997 to invest in market neutral, event-driven arbitrage opportunities. The Fund invests principally in securities subject to an event where Management believes the market price does not adequately reflect the effect that such event will have on the securities valuation. The Fund invests primarily in risk arbitrage, closed-end fund restructurings, takeovers, exchange offers, liquidations and other special situations including value plays. The Fund also engages in balance sheet arbitrage, pair trading within the same industry group, short selling and other investments in securities. Management often employs strategies involving derivative securities, such as options and convertible securities, in order to establish more favorable risk reward relationships. It also uses hedging devices frequently. The Fund may utilize leverage when Management believes it is appropriate; however, it has rarely done so in the past. Since its inception, the Fund's objective has been to generate capital growth while limiting the downside risk of any individual position.