Drake Capital Advisors LLC

Fees and Compensation
Drake Capital receives, for its investment management services, an Administrative Allocation. The
Administrative Allocation is based on the value of the assets under management attributable to
each limited partner in one of the Funds in accordance with the following schedule:

            Investment Class           Administrative Allocation as a Percentage of Assets

                 Series A                                0.95% per annum

                 Series B                                0.85% per annum

The Administrative Allocation is allocated at the end of the quarter, based on the net assets of the
investor as of the first business day of the quarter. The Administrative Allocation attributable to
any limited partner in a Fund who is invested for less than a full quarter or who changes the
amount of his investment is adjusted based on the number of days that the limited partner is
invested and the varying amount of his investment. If a new account is established during a
quarter or a client makes an addition to his account during a quarter, the Administrative
Allocation will be prorated for the number of days remaining in the quarter.

In addition to the Administrative Allocation, Drake Capital receives annual performance
compensation, called the Incentive Allocation. The Incentive Allocation is equal to 5% of the
investor’s profits, if any, after deducting the Administrative Allocation, and is subject to a 5%
non-cumulative hurdle rate for the calendar year, prorated for a partial-year investment.

In its sole discretion, Drake Capital may waive or reduce the Administrative Allocation or the
Incentive Allocation, or both, for limited partners who are employees or affiliates of Drake
Capital, the relatives of these persons and some strategic investors. The compensation payable
to Drake Capital by the Funds is not otherwise negotiable.

The fees payable by a client with respect to an Account are similar to the fees payable by Fund
investors but may vary based on the size of the Account. Account clients often request special
account structures or have atypical objectives.

By investing in portfolio funds indirectly through the Funds or an Account, a limited partner or a
client bears asset-based and performance-based allocations at both the Fund or Account level and
at the portfolio fund level. In addition, a limited partner in a Fund bears a proportionate share
of the fees and expenses of the Fund (including operating costs) and, indirectly, similar
expenses of the portfolio funds. An Account client also indirectly bears expenses of the portfolio
funds.

                Performance-Based Fees and Side-by-Side Management
As more fully described in the section “Fees and Compensation,” in its capacity as general
partner of the Funds, Drake Capital is entitled to receive an Incentive Allocation equal to 5% of
the investor’s profits, if any, after deducting the Administrative Allocation once a non- cumulative
annual hurdle rate of return is achieved. The Incentive Allocation is a performance-based fee.
Account clients typically pay similar performance-based compensation, but different Account clients
may pay different aggregate fees as a result of Account size and other considerations.

Types of Clients
As noted above, Drake Capital furnishes investment management services to the Funds and the
Accounts. Investors in the Funds include individuals, trusts, estates, charitable organizations,
pension and profit-sharing plans, corporations and other business entities, and pooled
investment vehicles.

Drake Capital generally requires a minimum investment of $50 million to open a separately
managed Account. The initial and additional subscription minimums for the Funds are disclosed in
the offering memoranda for the Funds.

              Methods of Analysis, Investment Strategies and Risk of Loss
Methods of Analysis and Investment Strategy

Drake Capital develops and implements alternative investment programs for sophisticated clients.
Drake Capital has the sole discretion to select investment managers for the Master Funds and
Accounts, to determine which investment strategies are suitable for the Master Funds and
Accounts, and to allocate and reallocate the assets of the Master Funds and Accounts.

The investment objective of the Master Funds is to achieve attractive risk-adjusted capital growth
by investing in a portfolio of funds (private and registered) and/or managed accounts (such
managed accounts together with the funds, the “Portfolio Funds”), managed by Investment
Managers, that invest, both long and short, in equities, options, warrants, futures, commodities,
fixed income securities, currency forward contracts and other financial instruments, often use
leverage and charge a fixed fee and/or a performance-based fee. Such Portfolio Funds may also
have a long bias and may not engage in short selling. Each Master Fund seeks to achieve results
that are less volatile than the results of a single fund with the same or similar investment
objective. There is no assurance that the investment objective of a Master Fund will be met.
Drake Capital may invest the cash balances of the Funds and the Accounts in any instruments that
it deems appropriate, including hedging and portfolio overlay investments. Any income earned
from these investments is reinvested by the Funds and the Accounts in accordance with their
respective investment programs.

Drake Capital primarily focuses on researching and analyzing the Investment Managers rather

than individual securities. The analytical process used by Drake Capital includes both
quantitative and qualitative elements. Drake Capital analyzes and evaluates the strategy,
philosophy and decision-making process of each Investment Manager, its proprietary research
and portfolio management processes, the quality of its investment professionals, and its
organizational structure. Drake Capital invests in Investment Managers that execute a broad
range of strategies, including equity investing, credit and fixed income investing, and event
driven, distressed and macroeconomic strategies. The Investment Managers typically have broad
investment parameters, and each Investment Manager may employ several strategies within its
portfolio.

The following risks are among those associated with the investment strategy of Drake Capital
and the common investment strategies used by the Investment Managers.

Dependence on Portfolio Managers. Drake Capital invests client assets through Investment
Managers that are not affiliated with Drake Capital. The success of the Funds and the Accounts
depends on the ability of Drake Capital and these Investment Managers to develop and
implement investment strategies that achieve client investment objectives. For Drake Capital, this
task may be accomplished primarily by its selection and management of a group of Investment
Managers that meet objectives established by Drake Capital. The decisions made by Drake Capital
or the Investment Managers, or both, may cause clients to incur losses and to miss profit
opportunities. Overall client performance is dependent on not only the investment performance
of individual Investment Managers, but also the ability of Drake Capital to select and allocate
client assets among the Investment Managers effectively on an ongoing basis. There can be no
assurance that the allocations made by Drake Capital will prove successful, or as successful as
other allocations that might have been made, or superior to a static approach in which Investment
Managers are not changed.

Equity Investing. Investment Managers use a broad range of equity investment styles, including
growth, core and value, as well as portfolios designed to be neutral as to investment style.
Some Investment Managers focus on specific ranges on the capitalization scale, including micro-
cap, small-cap, mid-cap, large-cap and mega-cap. Other Investment Managers focus on
investment opportunities in more than one capitalization category or across all capitalization
levels. In addition, some Investment Managers emphasize a global or multi-national investment
approach or concentrate on particular geographic regions or specific countries.

Fixed Income Investing. Several Investment Managers invest in a broad range of fixed income
securities that may or may not be credit sensitive. Investment Managers may invest their portfolio
funds in investment grade, high yield or distressed securities, as well as combinations of these types
of securities, and structured securities instruments of United States and foreign issuers.

Short Selling. The Investment Managers typically engage in short-selling strategies. In a short sale
transaction, an investor sells a security that he o r sh e does not own in anticipation that the
market price of the security will decline. The Investment Managers may make short sales for
profit, as a form of hedging to offset potential declines in long positions in similar securities, or
to maintain flexibility.

Financial Leverage. The investment programs of the Investment Managers may use a significant
amount of leverage. Financial leverage involves the borrowing of funds from brokerage firms,
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