PASSPORT CAPITAL, LLC 1 ORDERS OF MAGNITUDE

PASSPORT CAPITAL, LLC1

ORDERS OF MAGNITUDE

John WoodberryPassport CapitalNovember 2007


OUTLINEOUTLINE

Passport Capital overview

Living in a universe of huge liquidity and low returns

Investment world structurally lagging real world

Find the bottlenecks and you will find the returns “Unconventional” ideas and trades that could go up

by “an order of magnitude” or 10x


PPASSPORT ASSPORT CCAPITAL APITAL OOVERVIEWVERVIEW

San Francisco-based alternatives investment management firm founded in 2000

7 year history of successful operation and growth

$3.7 billion in assets under management across 5 strategies

Consistent, successful long/short strategy of global concentration implemented since August 2000

Investment team of 27 professionals, 11 of which have 10+ years experience

Clients include HNW investors, pension funds, corporations and endowments

Robust institutional infrastructure with capacity to manage $5 billion in assets

Registered with the SEC

Specialists in Global Long/Short Concentration Passport Strategies

Global – value fund focused on global sector themes

India & China – uncorrelated domestic secular growth stories

Basic Materials – only viable hedges against inflation and weak USD

Energy – supply and infrastructure are massively inadequate

Internet – great franchises in global markets with unique business models

Mortgage-Backed CDS – too narrow spreads and enormous fundamental risks for sub-prime consumer loans

Asset Managers -

Compounding investment returns on great free cash flow businesses


DEFINITIONS*DEFINITIONS*

Order of Magnitude:

“An estimate of size or magnitude expressed as a power of ten”

Liquidity:

“The quality of being readily convertible into cash”

Hedge Fund:

“An investment company that uses high-risk techniques, such as borrowing money and selling short, in an effort to make extraordinary capital gains”…or just steady gains post-2000

* American Heritage dictionary


HOW TO GET 10X RETURNHOW TO GET 10X RETURN

High liquidity environment chasing low returns provides two choices for 10x return by hedge fund operator:

Typical hedge fund formula: High liquidity + 10x leverage = Hope for 2x return with 5x AUM increase (the steady low volatility return profile grows investor confidence 10x)

Passport formula: Lower liquidity + time = 10x price change through compounding (to hell with the low volume dictum – the real world is a compelling investment)

Typical Hedge Fund Models make the world price differently than it really is


WHERE LIQUIDITY ISWHERE LIQUIDITY IS Money invested in US, EU in equities last year1

Foreign inflows into US stock markets - $150 B, inflows into EU stock markets - $280 B, Japan - $47 B

Where are Hedge funds invested?2

Total of over 11,000 Hedge funds, with 65% located in US and 31% in Europe Single manager hedge funds manage $2.5 Trillion as of 9/30/07

- US based funds manage about $1.6 Trillion, Europe about $750 Billion- $1.2 T invested globally,$700 B invested in US and $375 B in Europe, $140 B

invested in Asia- $247 B net asset flows in first quarter 2007

S&P weighting by sector3

Financials – 19%, IT – 17%, Healthcare – 12%, Industrials – 11%, Energy - 12%, Consumer Staples – 10% Consumer discretionary – 9%, Telecom - 4%, Utilities – 3%, Materials – 3%

Money in Subprime Mortgages4

$628 B in 2006

1- US Treasury, Euro Central Bank, Goldman Sachs2 – HFN Hedge Fund Industry Asset Flow/Performance Report, 3/31/073 - Bloomberg, as of Oct 31, 20074 - Deutsche Bank


Passport Composition vs. S&P 500 & MSCIPassport Composition vs. S&P 500 & MSCI Passport

Capital MSCI Global Fund S&P 500 World

Long Exposure Exposure ExposureIndustry Groups 31-Oct-07 31-Oct-07 31-Oct-07Consumer in Aggregate 9.0% 18.6% 18.7%Energy 15.0% 11.8% 10.2%Financials 12.0% 19.2% 23.7%Healthcare 3.0% 11.7% 8.3%Industrials 0.0% 11.4% 11.4%Internet/Technology 5.0% 17.0% 11.3%Basic Materials 19.0% 3.3% 7.1%Telecommunication Services 0.0% 3.6% 4.9%Utilities 0.0% 3.4% 4.3%India 17.0% 0.0% 0.0%Total Long Exposure 80.0% 100.0% 100.0%

PassportCapital

Global FundShort Exposure

31-Oct-07Notional CDS Exposure -89.5%Other Notional Short Exposure -15.0%Total Notional Short Exposure -104.5%


HEDGE FUND RETURNS DIMINISHHEDGE FUND RETURNS DIMINISH

1990-1999 2000-Sept 07 YTD-Oct 07

HFRI Fund Weighted Composite Index 18.3% 8.6% 12.3%

HFRI Equity Hedge Index 23.7% 8.2% 13.5%

Source: HFRI


HISTORICAL 10X+ RETURNSHISTORICAL 10X+ RETURNS

Low Price High PriceMultiple

Gold – 1971 – 1980 $35.00 $850.00 24.3xHigh inflation 1/31/70 1/21/80

Dow – 1982 – 2000 $776.92 $11,722.98 15.1xInflation defeated 8/12/82 1/14/00

Hang Seng – 1984 – 1997 $746 $16,673 22.3xJapan outsourced 7/13/84 8/7/97

CSCO – 1990 – 2000 $0.07 $80.06 1144xPower of network/internet 10/11/90 3/27/00

BBB- Sub Prime Spread – ’03-’06 800 bps <200 bps 32.5xToo much liquidity chasing yield 2003 late 2006

Source: Bloomberg


WELCOME TO THE REAL WORLDWELCOME TO THE REAL WORLD

Where to Invest Now for 10x returns

India

China

Basic Materials

Energy

Internet

Short Credit/Sub-prime Consumer Loans

Asset Managers


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INDIAINDIA

Source: Bloomberg

NIFTY Index Performance HistoryJanuary 2000 –October 2007


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Shanghai Composite Index Performance HistoryJanuary 2000 – September 2007

Source: Bloomberg


BASIC MATERIALSBASIC MATERIALS

CRB RIND Index Performance HistoryJanuary 2000 – October 2007

Source: Bloomberg

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SUBPRIME MELTDOWNSUBPRIME MELTDOWN

Source: www.markit.com

ABX BBB- has lost >65% of its notional value


Asset ManagersAsset Managers

Asset Manager Index vs. S&P 500: 473% vs. 5%

Note: US Long Only Equal Weighted Asset Manager Index (BEN, AB, BLK, TROW, LM, AMG, EV, FII, WDR, & GBL) Source: Bloomberg

US Long Only, Equal-Weighted Asset Manager Performance History

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MISMATCHMISMATCH

Why is money not invested where the returns are?

No liquidity No research No experience No imagination Too much volatility Predominantly US and Europe based managers in a

predominantly ex-G6 world


81% of the 1,783 basic materials companies have 1 or less analysts covering the

security 92% of sub $500mm market cap basic materials companies have 1 or less analysts

providing coverage, while 83% have no analyst coverage 34% of the 996 energy companies have 1 or less analysts covering the security 84% of sub $500mm market cap energy companies have 1 or less analysts providing

coverage, while 69% have no analyst coverage

INFORMATION ARBITRAGEINFORMATION ARBITRAGE

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Analyst Coverage of Energy Companies

No Analys t Coverage (%) <2 Analys ts (%)

Source: Factset

Data as of 6/17/05

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Source: Factset


Basic Materials small caps provided greater average returns over time

Basic Materials small caps had a wider distribution of returns

The opportunity for stock picking alpha is more readily available among Basic Materials small caps due to the wider distribution of returns

Source: FactSet Data as of September 2007Note: 1. Aggregate return includes the compounded reinvestment of dividends 2. Common equities only 3. Results not adjusted for

survivorship bias

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Basic Materials - 3 Year Historical Aggregate ReturnDistrib. of Returns

Hist Mrkt Cap Range Avg Beg Market Cap Avg Return No. of Std Devs5 - 100M 34.9 259% 3.1100 - 250M 161.4 239% 2.0250 - 500M 348.9 179% 1.5500M - 1B 700.1 194% 1.41 - 2B 1,375.3 148% 1.42 - 5B 3,067.6 129% 1.15 - 10B 7,150.2 123% 1.110B+ 18,045.8 131% 0.8





SECTOR RETURNS BY MARKET CAP – BASIC

MATERIALS

SECTOR RETURNS BY MARKET CAP – BASIC

MATERIALS


WHERE PEOPLE AREWHERE PEOPLE ARE

Where are people now?

World Population Distribution

China20%

India17%

Rest of Asia Pacific19%

Africa14%

European Union8%

North America7%

CIS4%

Central, South America

7%

Middle East4%

Source: CIA Factbook, 2006


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Brazil ChinaIndia RussiaFrance GermanyItaly JapanUK US

Source: IMF; 2005E

WHERE WORKING POPULATION ISWHERE WORKING POPULATION IS

Labor force, millions


DEMOGRAPHIC SHIFT IN USDEMOGRAPHIC SHIFT IN US


CHINA’S DEMOGRAPHIC SHIFTCHINA’S DEMOGRAPHIC SHIFT


INDIA’S DEMOGRAPHICS INDIA’S DEMOGRAPHICS


Middle East DemographicsMiddle East Demographics

Shift in Mid-East demographics similar to that of India Projection for population to continue rapid growth Demographic shift to proportionally more people of working age Result: decades long trend of growth in wealth as well as

consumption of goods just beginning

Middle East Demographic Data as of 2000

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Estimated Middle East Demographic Data 2011

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Source: Business Monitor InternationalNote: Countries included in Middle East, UAE, Bahrain, Egypt, Iraq, Iran, Jordan, Oman, Qatar, Syria, Turkey, Yemen


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JapanGermany

UK

FranceChina

ItalySpain

CanadaKorea

India

MexicoAustralia

RussiaBrazil

Sweden

SwitzerlandTurkey

TaiwanIndonesia

South AfricaThailand

Hong Kong

MalaysiaIsrael

Singapore

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ChinaJapan

IndiaGermany

FranceUK

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BrazilRussia

CanadaMexico

SpainKorea

IndonesiaAustralia

TaiwanTurkey

ThailandSouth Africa

Malaysia

SwedenSwitzerland

Hong KongIsrael

Singapore

GDP (US$ Bil) GDP PPP (US$)

Source: IMF; 2005E

$12,390$11,785

MEASURES OF GDP


BOTTLENECKBOTTLENECK

Definition:

A hindrance to progress or production

Strategy: Invest in bottlenecks Find great demands Find lack of supply Find securities that would benefit in this situation and are

leaders in the market


GREAT DEMAND #1GREAT DEMAND #1

Consumers in India and China – “The Real Inevitables”

Want western lifestyles and are becoming domestic spenders

Why now?- Media & Internet- Wages have risen from explosion in outsourcing

Bottleneck- restriction on foreign investment in key domestic sectors- few organized local companies to handle this increasing demand

What to invest in- Financial services- Media, Internet- Retail- Property

Think Buffett in US ’56 - present.. What did he invest in?


GREAT DEMAND #2GREAT DEMAND #2Commodities – “How Capital Markets Failed”

Underinvestment for 10+ years Declining real returns from 1981 to 2001 in disinflationary world ’97 Asia crisis produced long-term demand despair and capital cut-off Sector was career killers for investment managers who lost industry understanding

Why now? Hedge against inflation Margin expansion China & India need them

Bottleneck Previous underinvestment not meeting compounding current demand Stocks are illiquid Stocks generally listed in non-US markets

What to invest in Small cap names Large cap names with margin expansion Any current commodity shortage

Think inelasticity, margin expansion & long-term supply/demand imbalances


GREAT DEMAND #3GREAT DEMAND #3Unwinding of excess liquidity

Reversal coming for post-emerging market crisis Asian nation game plan that propped up US consumption & currency which Wall Street thrived on

Why now? World now over owns US $, US treasuries, US agencies Average US consumer depends on asset prices, saves nothing Sub-prime mortgage breakdown iceberg of poor capital allocation

Bottleneck Who else is there left to buy when flows reverse Fed likely to resort to monetization causing further US$ weakness Deepest liquidity markets will require price dislocation to clear

What to invest in Own CDS protection sold by CDOs on sub-prime mezzanine debt Short ABX Index NOT 10x leveraged “low vol” managers

Think manufactured housing bonds – 1998-2000 & ’97 EM crisis occurring at once


Great Demand #4Great Demand #4Efficient Reinvestment of Wealth Created Primarily over last 25 years creates inherent

industry stability.

The top 500 asset managers in the world manage USD $63.7T (12/31/06). Hedge funds only manage approximately USD $2.5T (est. 9/07 E&Y).

Passport Capital currently covers 58 publicly traded asset managers. During the next five years, we expect the publicly traded universe to continue to expand and we expect many publicly traded asset management companies to at least triple their share prices and in some cases increase much more.

The asset managers are miss priced as an asset class (superior performing hedge funds in particular) because the market does not properly value the extraordinary leverage of the asset manager business model, the likely continued compounding of positive investment returns from superior managers. Moreover, the aggregate savings in the emerging markets are extremely large, fast growing, underappreciated, and not yet allocated in a meaningful way to the asset management industry.

Asset managers are great businesses that generate a lot of free cash. Earnings growth can be exponential as they are generated from both positive inflows and investment performance on a relatively fixed share count with limited capital expenditures.

Over the next few years, portfolio managers will probably overweight the asset manager group because there is so much less credit risk relative to other financials and arguably superior returns on investment capital at a reasonable multiple.

Sovereign Wealth Funds will become an even more significant participant in the global financial markets and become strategic purchasers of resources, professional organizations and financial infrastructure (i.e., exchanges, asset managers, investment banks, etc).

Investment managers that consistently outperform the market will be viewed as a scarce commodity by a broader group of well funded organizations.


Recent Sovereign Wealth Fund Investments in Financial ServicesRecent Sovereign Wealth Fund Investments in Financial Services

InvestmentAnnouncement Sovereign Consideration Percent

Date Wealth Fund Name of the Target (USD Billions) Purchased

1 March 2006 Temasek (Singapore) Standard Chartered $4.0 12.0%2 October 2006 Abu Dhabi Inv. Authority Ares Management 0.4 15.0% - 20.0%3 October 2006 Istithmar Standard Chartered 0.4 2.7%4 May 2007 DIFC Deutsche Bank 1.9 2.2%5 June 2007 China Blackstone 3.0 10.0%6 July 2007 China Barclays 2.4 3.0%7 July 2007 Temasek (Singapore) Barclays 2.4 3.0%8 July 2007 Abu Dhabi Inv. Authority/Calpers Apollo 1.2 18.0%9 September 2007 Qatar London Stock Exchange 1.9 20.0%

10 September 2007 Dubai London Stock Exchange 2.7 28.0%11 September 2007 UAE HSBC 6.0 3.0%12 September 2007 Mubadala Development Co.(Abu Dhabi) Carlyle Group 1.3 7.5%13 November 2007 DIC Sahir Och-Ziff 1.2 9.9%

$28.8


IMPORTANT DISCLOSURES AND RISK

CONSIDERATIONS


CONSIDERATIONS THESE MATERIALS ARE PROVIDED FOR GENERAL INFORMATION PURPOSES ONLY BY PASSPORT CAPITAL, LLC (“PASSPORT”) IN CONNECTION WITH A CONFIDENTIAL PRIVATE PRESENTATION DESCRIBING PASSPORT’S GLOBAL INVESTMENT STRATEGY. THESE MATERIALS ARE NOT INTENDED TO BE RISK DISCLOSURE DOCUMENTS, AND ARE SUBJECT IN THEIR ENTIRETY TO DEFINITIVE DISCLOSURE AND OTHER DOCUMENTS (COLLECTIVELY, THE “DOCUMENTS”) RESPECTING THE FUND.

THESE MATERIALS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY OR SELL ANY SECURITIES, AND ARE QUALIFIED IN THEIR ENTIRETY BY THE INFORMATION CONTAINED IN THE FINAL DOCUMENTS. PROSPECTIVE INVESTORS ARE ADVISED TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM PASSPORT CONCERNING THE FUND AND TO OBTAIN ANY ADDITIONAL INFORMATION THEY CONSIDER NECESSARY FOR THEIR DECISION TO INVEST WITH PASSPORT THROUGH THE FUND.

WHILE INFORMATION USED IN THESE MATERIALS MAY HAVE BEEN OBTAINED FROM VARIOUS PUBLISHED AND UNPUBLISHED SOURCES CONSIDERED TO BE RELIABLE, NEITHER PASSPORT NOR ANY OF ITS AFFILIATES GUARANTEES ITS ACCURACY OR COMPLETENESS AND ACCEPTS NO LIABILITY FOR ANY DIRECT OR CONSEQUENTIAL LOSSES ARISING FROM ITS USE. THIS INFORMATION IS CONFIDENTIAL AND INTENDED SOLELY FOR THE USE OF PASSPORT AND ITS AFFILIATES AND THE CLIENT OR PROSPECTIVE CLIENT TO WHOM IT IS PRESENTED. IT IS NOT TO BE REPRODUCED OR DISTRIBUTED TO ANY OTHER PERSONS EXCEPT TO THE RECIPIENT’S PROFESSIONAL ADVISORS.

IN MAKING THEIR DECISION TO INVEST IN THE FUND, PROSPECTIVE INVESTORS SHOULD RELY SOLELY UPON THEIR OWN INDEPENDENT INVESTIGATION, INCLUDING A REVIEW OF THE DOCUMENTS. NEITHER PASSPORT NOR ANY OF ITS AFFILIATES, EMPLOYEES, OR AGENTS ARE AUTHORIZED TO MAKE ANY REPRESENTATIONS OR WARRANTIES INCONSISTENT WITH OR IN ADDITION TO THOSE CONTAINED IN THE DOCUMENTS. STATEMENTS MADE HERE WITH RESPECT TO THE FUND ARE NOT NECESSARILY COMPLETE, AND ALL INFORMATION CONTAINED IN THIS PRESENTATION IS SUBJECT TO UPDATING, CHANGE, COMPLETION, REVISION, AMENDMENT AND FINAL VERIFICATION.

THE INVESTMENT OPPORTUNITIES DESCRIBED HEREIN HAVE GENERALLY NOT BEEN REGISTERED FOR SALE TO THE PUBLIC IN ANY JURISDICTION AND WILL NOT BE MADE AVAILABLE FOR INVESTMENT EXCEPT UNDER CIRCUMSTANCES THAT WILL RESULT IN COMPLIANCE WITH ANY APPLICABLE LAWS AND REGULATIONS. THE INVESTMENT OPPORTUNITIES DESCRIBED HEREIN ARE NOT GUARANTEED BY PASSPORT OR ITS AFFILIATES.

THE FUND MAY NOT ACHIEVE THE DESIRED RESULTS DUE TO IMPLEMENTATION LAG, OTHER TIMING FACTORS, PORTFOLIO MANAGEMENT DECISION-MAKING, ECONOMIC OR MARKET CONDITIONS OR OTHER UNANTICIPATED FACTORS. THE VIEWS AND OPINIONS EXPRESSED IN THESE PRESENTATION MATERIALS ARE SUBJECT TO CHANGE WITHOUT NOTICE, MAY NOT COME TO PASS AND DO NOT REPRESENT A RECOMMENDATION OR OFFER OF ANY PARTICULAR SECURITY, STRATEGY, OR INVESTMENT.

THE PERFORMANCE FIGURES DISCLOSED ON PAGE 5 CONSIST OF THE ACTUAL HISTORICAL NET PERFORMANCE OF A SERIES OF SELECTED SINGLE LIMITED PARTNERS IN PASSPORT I, LP (SHARE CLASS A), WHICH FIGURES LINK SUCH LIMITED PARTNERS’ RESPECTIVE ACTUAL NET PERFORMANCE INFORMATION DURING A NUMBER OF SUB-PERIODS COMPRISING THE OVERALL PERFORMANCE PERIOD PRESENTED (WITH EACH SUB-PERIOD COMMENCING ON THE EXPIRATION OF THE PRIOR SUB-PERIOD AND ENDING ON A REDEMPTION OR OTHER CAPITAL ACTIVITY IN THE LIMITED PARTNER’S ACCOUNT). THE PRINCIPAL CRITERIA FOR SELECTING THE LIMITED PARTNERS’ INFORMATION INCLUDED IN THE PRESENTATION ARE THAT THEY EACH REPRESENT A STANDARD INVESTOR (AS DEFINED IN THE PPM) DURING THE APPLICABLE SUB-PERIOD AND ARE ELIGIBLE FOR NEW ISSUE PARTICIPATION. THE NET PERFORMANCE FIGURES ARE AFTER THE DEDUCTION OF ALL COSTS, INCLUDING, FOR PERIODS BEFORE JANUARY 1, 2003, PRO RATA MANAGEMENT FEES OF 1.0% ANNUALLY AND INCENTIVE ALLOCATIONS OF 15% (REPRESENTING SUCH FEES AND ALLOCATIONS IN EFFECT DURING SUCH PERIODS), AND, FOR PERIODS ON OR AFTER JANUARY 1, 2003, PRO RATA MANAGEMENT FEES OF 1.5% ANNUALLY AND INCENTIVE ALLOCATIONS OF 20%, IN EACH CASE, IN AMOUNTS AS SUCH FEES OR ALLOCATIONS, IF ANY, WOULD HAVE BEEN PAID OR MADE TO THE GENERAL PARTNER IF THE END OF THE APPLICABLE SUB-PERIOD WAS TREATED AS THE END OF THE CALENDAR YEAR AND ASSUMING THE APPLICABLE PERFORMANCE PERIOD COMMENCED AT THE BEGINNING OF THE APPLICABLE SUB-PERIOD. THE PERFORMANCE OF INDIVIDUAL INVESTORS IN THE FUND MAY VARY DEPENDING UPON A NUMBER OF FACTORS, INCLUDING THE TIMING OF CAPITAL CONTRIBUTIONS OR WITHDRAWALS, NEW ISSUE ELIGIBILITY, OFFSHORE OR ONSHORE FEEDER FUND CHOICE AND OTHER FACTORS AND COULD RESULT IN LOWER INVESTMENT PERFORMANCE THAN THAT OF ANY OF THE ACCOUNTS PRESENTED HEREIN. PERFORMANCE DATA HAS NOT BEEN AUDITED AND MAY INCLUDE ESTIMATES. PAST PERFORMANCE IS NO ASSURANCE OF FUTURE RESULTS. THE GENERAL PARTNER MAY CHOOSE TO VARY THE PARTNERSHIP’S ACTIVITIES AND MAY NOT NECESSARILY CONTINUE INVESTING IN THE MANNER THAT GENERATED THE RESULTS PRESENTED ABOVE.

THE S&P INDEX IS AN UNMANAGED CAPITALIZATION-WEIGHTED INDEX OF 500 STOCKS. THIS INDEX IS DESIGNED TO MEASURE PERFORMANCE OF THE BROAD DOMESTIC (US) ECONOMY THROUGH CHANGES IN THE AGGREGATE MARKET VALUE OF 500 STOCKS REPRESENTING ALL MAJOR INDUSTRIES. THE S&P INDEX WAS DEVELOPED WITH A BASE LEVEL OF 10 FOR THE 1941-43 BASE PERIOD. ALL PERFORMANCE DATA REGARDING THE INDEX ARE HISTORICAL AND ARE NOT INDICATIVE OF FUTURE RESULTS, AND THERE CAN BE NO ASSURANCE THAT THESE OR COMPARABLE RESULTS WILL ACTUALLY BE ACHIEVED BY THE FUND OR THAT THE FUND’S INVESTMENT OBJECTIVE WILL BE ACHIEVED.


THE MSCI WORLD INDEX IS A FREE-FLOAT WEIGHTED EQUITY INDEX THAT IS DESIGNED TO MEASURE EQUITY MARKET PERFORMANCE IN THE GLOBAL DEVELOPED AND EMERGING MARKETS. IT WAS DEVELOPED WITH A BASE VALUE OF 100 AS OF DECEMBER 31, 1987. ALL PERFORMANCE DATA REGARDING THE INDEX ARE HISTORICAL AND ARE NOT INDICATIVE OF FUTURE RESULTS, AND THERE CAN BE NO ASSURANCE THAT THESE OR COMPARABLE RESULTS WILL ACTUALLY BE ACHIEVED BY THE FUND OR THAT THE FUND’S INVESTMENT OBJECTIVE WILL BE ACHIEVED.

THE CSFB/TREMONT HEDGE FUND INDEX IS AN ASSET-WEIGHTED HEDGE FUND INDEX DERIVED FROM THE TASS DATABASE OF MORE THAN 3000 HEDGE FUNDS. THIS INDEX CONSISTS OF FUNDS WITH A MINIMUM OF US $10 MILLION UNDER MANAGEMENT AND A CURRENT AUDITED FINANCIAL STATEMENT. FUNDS ARE SEPARATED INTO PRIMARY SUBCATEGORIES BASED ON INVESTMENT STYLE. THE CSFB/TREMONT HEDGE FUND INDEX IN ALL CASES REPRESENTS AT LEAST 85% OF THE ASSETS UNDER MANAGEMENT IN THE UNIVERSE. IT IS REBALANCED MONTHLY, AND FUNDS ARE RESELECTED ON A QUARTERLY BASIS. INDEX NAVS ARE UPDATED ON THE 15TH OF EACH MONTH. ALL PERFORMANCE DATA REGARDING THIS INDEX ARE HISTORICAL AND ARE NOT INDICATIVE OF FUTURE RESULTS, AND THERE CAN BE NO ASSURANCE THAT THESE OR COMPARABLE RESULTS WILL ACTUALLY BE ACHIEVED BY THE FUND OR THAT THE FUND’S INVESTMENT OBJECTIVE WILL BE ACHIEVED.

THE HFRI MONTHLY INDICES (“HFRI”) ARE EQUALLY WEIGHTED PERFORMANCE INDEXES, UTILIZED BY NUMEROUS HEDGE FUND MANAGERS AS A BENCHMARK FOR THEIR OWN HEDGE FUNDS (SEE WWW.HFR.COM FOR MORE INFORMATION).

THE COMPARISON OF THE FUND’S PERFORMANCE TO A SINGLE MARKET INDEX, INCLUDING THE COMPARISONS ON PAGES 5, IS IMPERFECT BECAUSE THE FUND'S PORTFOLIO MAY CONTAIN OPTIONS AND OTHER DERIVATIVE SECURITIES, MAY INCLUDE MARGIN TRADING AND OTHER LEVERAGE , MAY EXPERIENCE GREATER VOLATILITY AND IS NOT AS DIVERSIFIED AS THE S&P INDEX OR OTHER INDICES. DUE TO THE DIFFERENCES BETWEEN THE FUND’S PORTFOLIO AND ITS INVESTMENT STRATEGY, POTENTIAL INVESTORS SHOULD UNDERSTAND THAT NO SUCH INDICES ARE DIRECTLY COMPARABLE TO THE RESULTS OF THE FUND.

THE INVESTMENT ENVIRONMENT AND MARKET CONDITIONS MAY BE MARKEDLY DIFFERENT IN THE FUTURE AND INVESTMENT RESULTS WILL FLUCTUATE. THE RETURNS OF THE FUNDS COULD BE MATERIALLY DIFFERENT FROM THE RETURNS OF THE ABOVE COMPOSITE.

ANY SPECIFIC PORTFOLIO SECURITIES IDENTIFIED AND DESCRIBED IN THESE MATERIALS DO NOT REPRESENT ALL OF THE SECURITIES PURCHASED OR SOLD BY THE FUND, AND THERE SHOULD BE NO ASSUMPTION THAT INVESTMENTS IN SUCH SECURITIES IDENTIFIED AND DISCUSSED IN THESE MATERIALS WERE OR WILL BE PROFITABLE.

RISK CONSIDERATIONS NO ASSURANCE CAN BE GIVEN THAT THE FUND’S INVESTMENT OBJECTIVE WILL BE ACHIEVED. AN INVESTMENT IN THE FUND IS SUBJECT TO

SIGNIFICANT RISKS AND IS SUITABLE ONLY FOR INVESTORS OF SUBSTANTIAL FINANCIAL MEANS THAT HAVE NO NEED FOR IMMEDIATE LIQUIDITY IN THIS INVESTMENT.

THE FUND USES SOPHISTICATED INVESTMENT TECHNIQUES, AND MAY NOT BE SUITABLE FOR ALL INVESTORS. THE DOCUMENTS WILL DESCRIBE IN MORE DETAIL RISKS OF INVESTING IN THE FUND, AND PROSPECTIVE ADVISORY CLIENTS MUST READ THE DOCUMENTS CAREFULLY BEFORE INVESTING WITH PASSPORT THROUGH THE FUND.

ANY PERSON CONSIDERING MAKING AN INVESTMENT MUST BE ABLE TO BEAR THE RISKS INVOLVED AND MUST BE ABLE MEET CERTAIN SUITABILITY REQUIREMENTS. SOME OR ALL ALTERNATIVE INVESTMENT PROGRAMS MAY NOT BE SUITABLE FOR CERTAIN INVESTORS. AMONG SUCH RISKS ARE THE FOLLOWING:

AN INVESTMENT IS SPECULATIVE AND INVOLVES A SUBSTANTIAL DEGREE OF RISK. AN INVESTMENT MAYBE LEVERAGED. PAST PERFORMANCE RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE, AND PERFORMANCE MAY BE VOLATILE. AN INVESTOR COULD LOSE ALL OR A SUBSTANTIAL AMOUNT OF HIS OR HER INVESTMENT. THERE IS NO SECONDARY MARKET FOR THE INVESTORS' INTERESTS IN THE FUND AND NONE IS EXPECTED TO DEVELOP. THERE ARE RESTRICTIONS ON TRANSFERRING INTERESTS IN THE FUND. FEES AND EXPENSES MAY OFFSET TRADING PROFITS. A PORTION OF THE TRADING MAY TAKE PLACE ON FOREIGN MARKETS. AN INVESTMENT IS SUBJECT TO CONFLICTS OF INTEREST.


CONSIDERATIONS


CONSIDERATIONS

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