This information is subject to the current offering memorandum of a Stark Fund and is not intended as an offer to sellor a solicitation to buy interests in any Stark Fund. Potential investors should refer to the current offeringmemorandum of the Fund for important information related to the Fund's and the Investment Manager's / GeneralPartner's organization and investment strategy, as well as material risks of investing in the Fund. Potential investorsshould also review the Form ADV Part II of the Investment Manager or General Partner.

The purchase of interests in aStark Fund is suitable only for sophisticated investors for whom an investment in the Fund does not constitute acomplete investment program and who fully understand and are willing to assume the risks involved in the Fund’sinvestment program.

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3600 SOUTH LAKE DRIVE

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ST. FRANCIS, WI 53235-3716TEL. 414.294.7000

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FAX. 414.294.7700

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WWW.STARKINVESTMENTS.COM

January 27, 2009Dear Investor,If necessity is the mother of invention, then distress must be the grandmother of necessity. For it is distress that begets the necessity for action which, in turn, begets aninvention to address that necessity.As we all know far too well, Grandmama Distress went nuts over the past year, leavingopportunity in her wake. Issues regarding liquidity, financing, and redemptions forcedmany good organizations to suspend fund redemptions and consider strategic options.In the Tundra sections of the past few monthly commentaries we have alluded to suchsituations with increasing specificity. That is because for the past several months wehave been in selective communication with a number of managers with the goal of determining if some action could be taken, some invention if you will, that could bemutually beneficial to both their and our investors. In particular, discussions with onefund took on increased seriousness over time.As a result of those discussions, analysis and due diligence by both sides, we are pleasedto announce that we have reached an agreement with Deephaven Capital Management.Although there are certain closing conditions that must be satisfied, we currently expectthat the transaction will close at the end of February.Pursuant to this agreement, the investors of the Deephaven flagship funds, the DeephavenGlobal Multi-Strategy Funds (the “Deephaven Fund”), will be given the option to become investors in Stark Funds by contributing their proportionate share of the positionsin the Deephaven Fund portfolio. Some of these positions, where appropriate, will gointo the Stark Master Fund portfolio. The remaining positions, based primarily on their liquidity characteristics, will be put into a side pocket to which the current investors of Shepherd and Stark Investments LP (“SILP”) will not have exposure.

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In a sense, we have “purchased” for Shepherd and SILP a part of the Deephaven Fund portfolio by taking on investors from the Deephaven Fund. The Stark organization willmanage the orderly wind-up of those investments that will be placed into side pocketsand the resulting cash will be transferred to Stark Master Fund as new capital on behalf of the former Deephaven Fund investors. In addition, Stark has offered to assist with themanagement of the wind-down of the remainder of Deephaven’s funds.For those of you unfamiliar with Deephaven, its background is strikingly similar to our own in several respects. Like Stark, Deephaven is a global multi-strategy, multi-assetalternative investment manager. Founded 14 years ago, Deephaven has similar midwestern roots, headquartered in Minneapolis, Minnesota, and has managed billionsfor qualified institutional and individual investors. Also like Stark, Deephaven evolvedfrom its inception as a single strategy manager in convertible arbitrage, via the gradualaddition of further strategies and geographic exposures, to a diversified multi-strategyapproach. Indeed, it was the substantial degree of overlap, historically, culturally andstrategically, that made this transaction relatively easy to analyze by both parties.Like all good agreements, we believe that this one is beneficial for both sides. The primary benefit of the deal for our investors is that it allows Shepherd and SILP toacquire a portfolio concentrated in areas that are a current focus of investmentopportunity for the Funds. Moreover, this acquisition is being made without having todeplete the Funds’ existing store of excess liquidity.Another benefit is the augmentation of the Funds’ NAV during a period of widespreaddecline across other funds due to redemptions and performance issues. This is theclearest possible signal to our financing and counterparty relationships that Stark will beone of the survivors of the industry consolidation, and we believe will thereby further significantly strengthen those critical relationships that have been a key source of our success to date.Finally, the deal should provide Stark with an opportunity to open the door to additionalopportunities in similar situations to acquire attractive portfolios and, potentially,investment talent.For the Deephaven Fund investors, the deal provides them with the opportunity for continued management of their assets in the context of a stronger entity. In addition, thesimilarities between Stark and Deephaven permit them to replicate in many respects thetype of investment profile they had originally sought through Deephaven.