A. INVESTMENT OBJECTIVE

The Partnership's investment objectives are to maximize risk adjusted return on capital and focus on downside protection while maintaining a reduced correlation of returns to the broader equity market. The Partnership aims to achieve these objectives by purchasing securities that the Partnership believes will take advantage of anticipated price movements in a company's stock, sector specific securities or market indices. In order to take advantage of these anticipated price movements, the Partnership will be long and short equities, index tracking stock (ETF), equity options and index options.

B. INVESTMENT PHILOSOPHY

The Partnership has developed a five-step investment philosophy, which it uses to select appropriate investments for the portfolio. At any given time, the Partnership will analyze approximately 100-200 companies using this approach.

1) Determine Company's Future Business Prospects: The Partnership conducts "bottom-up" analysis in order to determine a company's market position and strength and seeks out investments in public companies where the medium to longer-term outlook is misperceived or misunderstood by the marketplace. The following are some of the criteria the Partnership uses to determine the company's market position and strength:

• Market position: "world class" companies with globally diverse portfolios
• Significant growth prospects
• Management strength and vision
• Corporate "story" and potential catalysts
• Financial strength including cash flow, profit margin, earnings and other standard financial conditions
• Brand strength
  

The Partnership will also conduct sector analysis and will tend to invest opportunistically in sectors that demonstrate longer-term positive trends. While the investment decision will be primarily based on company analysis, sector analysis will be used to validate assumptions.

2) Determine Underlying Equity's Potential Price Movements: The Partnership will focus on understanding the underlying fundamentals of a business and the industry in which it participates. The Partnership uses input from fundamental analysis, and to some extent technical analysis, to assist in determining the potential price movement of a company's stock over the following 1 to 24 months. Generally the Partnership is looking to invest in securities of companies whose anticipated stock price movement falls into one of the following three categories:

• Solid floor with limited risk of a further downside move
• Strong move upward
• Strong downward move
  

3) Determine Appropriate Products and Positions: The Partnership uses input from the first two steps of the investment philosophy as it decides which financial products to utilize and investment positions to establish.

(a) Products: The Partnership uses various investment products in order to build positions that attempt to achieve the Partnership's investment objectives, including:

• Stock
• Derivatives, including stock and index options and index tracking stock
• Cash and cash equivalents (i.e., short-term fixed income products)
  

(b) Positions: Using the above products, the Partnership intends to establish positions that will meet the Partnership's investment objectives. The Partnership has identified certain types of positions as Primary Positions. The Partnership anticipates that Primary Positions may make up a significant percentage of the portfolio. The Partnership has also identified certain types of positions as Secondary Positions. These Secondary Positions may also make up a percentage of the portfolio. Following is a list of Primary and Secondary Positions:

• Primary: covered calls - spreads - long and short index tracking stock
• Secondary: long stock - long calls - long puts - short stock - short puts
  

(c) Analysis: The Partnership analyzes the positions to balance risk and reward and set targeted market exposure:

• Determine appropriate risk and reward by analyzing positions' compound annual growth rate, total return, breakeven and time horizon
• Every position is established at a targeted market and dollar exposure in order to reflect the level of conviction of the Partnership
  

4) Set Entry Point and Exit Strategy for Investment: Before entering into any position, the Partnership will set entry and exit points. These entry and exit points will be based on the anticipated stock price movement and/or the desired investment duration. The use of price-based entry and exit points will generally entail the use of limit orders. The Partnership intends to invest primarily in positions that are 1 to 24 months in duration, though in many cases it will enter into positions that are intended to be shorter or longer in duration. The Partnership will not be obligated to abide by the initial entry and exit points.

After a position is established the Partnership will:

(a) Continually monitor the company and position to best ensure both are behaving as expected; and

(b) Employ a sell discipline that is triggered if the fundamentals change or the position's market exposure or dollar exposure moves beyond a set level

5) Portfolio Market Exposure: The Partnership will target a market exposure range for the portfolio according to three criteria:

• Historical market valuation
• Primary trend of the market
• Secondary trend of the market
  

The Partnership will take on an aggressive market exposure when it determines that valuations, the primary trend of the market and the secondary trend of the market are positive. In turn, the Partnership will maintain a defensive exposure when it determines market valuation, the primary trend of the market and the secondary trend of the market are negative. In the cases where the criteria are mixed the Partnership will keep more of a moderate market exposure.