Adding Value While Managing Risk

Adding Value While Managing RiskAdding Value While Managing Risk

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Profile of Fairlane Asset Management

• Manages traditional & non-traditional bond mandates

• Experienced investment professionals

• Services high net worth and institutional investors, including foundations & trusts

• 80% of our investors have been with us for more than fifteen years

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Fairlane’s History

• Fairlane Asset Management was founded in 2003

• Merged with Strathy Investments Ltd. in 2005 creating over 33 years of experience

• Registration with the Ontario Securities Commission: Portfolio Manager (PM)

Investment Fund Manager (IFM) Commodity Trading Manager (CTM)

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Fairlane A Plus Bond Hedged Fund

Fairlane Asset Management Service Providers:

• Caledon Trust - Trustee • Commonwealth - Fund Administration• Gowlings - Legal • National Bank Prime Brokerage• SB Partners - Accountants

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Fairlane’s Business

• Our focus is providing superior absolute returns

• We concentrate in “Special Situation Investing” using the following investment strategies:• Fixed Income Long / Short Investing (Fairlane Credit

Arbitrage) with leverage

• Fixed Income Long Investing (Fairlane A Plus Bond) traditional

• Fixed Income Long Investing with Hedge (Fairlane A Plus Bond Hedged) non-traditional

• Equity and Fixed Income Investing (Fairlane Balanced)

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Fairlane’s Product Profile

Fairlane Credit Arbitrage Strategy Canadian Fixed Income Strategies

Fairlane A Plus Bond Hedged Fund Canadian Short Credit Bonds and Gov’t Bonds

Fairlane A Plus Bond StrategyCanadian Fixed Income Strategies

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Fairlane Balanced StrategyMid Cap Equity with Fixed Income

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Fairlane A Plus Bond Hedged Fund

Philosophy and Objective:

• The Fund actively invests in undervalued investment grade corporate bonds with an average credit rating of “A” (as per S&P, Moody’s)

• The bonds in the Fund will have an average duration of less than 5 years• The Fund can use Government bonds as a hedge to mitigate interest rate

risk and also can be used opportunistically when market conditions warrant• The Fund invests in securities that are highly liquid

Suitability :• The Fund is suitable for fixed income investors seeking a lower risk strategy

to invest in an actively managed portfolio of bonds • This Fund should be a part of your overall asset mix.

Fairlane A Plus Bond Hedged Fund

Investment Style:

Long Credit – what we do or look for• Rich/Cheap• Top Down • Liquidity• Credit Rating • Underlying stock performance

Government of Canada’s• Match duration • Add alpha value • Trade around edges when opportunity exists

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Fund Facts : GlobeFund Five Star Rating Inception: July 1, 2011Management Fee: 100 basis points

Performance Fee is 15% of our return over a High Water Mark

Expenses: 30 basis points (capped)Category: Fixed IncomeRisk Profile: Low….X……………………HighMin Investment: $100,000 for Pooled FundsDistribution Frequency: Systematically re-invested, T5 at end of

yearAsset Mix/Credit Mix: “A” credit on averageLiquidity: Monthly redemptions & purchasesTax Efficiency: Fund is very tax efficient as approx 70%

of fund return is Capital gain

Fairlane A Plus Bond Hedged Fund

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Fairlane Asset Management Current Investment Strategy :• Fund is positioned to take advantage of current spreads between

attractive Corporate Bonds and Government Bonds• Fund is also positioned well to take advantage of expensive

Government Bonds • Active Management provides increased returns by trading hedge • Manager believes that current economic conditions forecast higher

bond yields• Hedge will protect capital in a “bear” bond environment• Fund will invest in a portfolio of Corporate securities and High Yield

producing a high internal positive cash flow which will add to net return• Fund would suit investors that seek above average fixed income return

Fairlane A Plus Bond Hedged Fund

1 Month

3 Month 6 Month 1 Year 5 Year 10 YearSince

Inception

Fund 0.60% -0.24% 5.40% 8.51% 8.51%

Benchmark* 0.12% 0.60% 0.69% 2.52% 2.52%

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Fairlane A Plus Bond Hedged Fund

Compounded Rate of Return Chart

*Globe Canadian Short Term Fixed Income Peer Index

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Fairlane A Plus Bond Hedged Fund

July 2011 to June 2012

Monthly Returns

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Fairlane A Plus Bond Hedged Fund vs Globe Cdn Short Term Fixed Income Peer Index

5 Yr. RBC Corp Bond ETF vs. 5 Yr. Gov’t of Can Benchmark

Fairlane A Plus Bond Hedged Fund

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Fairlane A Plus Bond Hedged Fund

• Canadian 10-year bond yield too low• Probability rates going higher at some point • Fund is protected against higher rates

Fairlane A Plus Bond Hedged Fund

Current Economic Scenarios and Outcomes

Economic Expansion• EPS growing , stocks higher, credit tightens • Canada’s decrease in price , down in price as BOC tightens eventually

Economic Contraction • Flock to Canada’s for safety• Credit trades flat or down• Manager would reduce shorts outright or partially

Economic Lull• Pick up positive spread between Corps and Canadas • Pick up trading gains

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Robert Bradeen30 St. Clair Ave West, Suite 1105

Toronto, Ontario M4V 3A1t (416) 975-1900 f (416) 975-1933

www.fairlane-am.com | [email protected]

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