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UBS Activist Partners_Client

UBS Activist Partners_Client

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abc UBS Activist Partners, L.L.C.

Private and Confidential

Table of Contents
Risk Considerations The UBS Client Experience Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Activist Investing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Investment Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Activist Investing: A Hybrid Approach . . . . . . . . . . . . . . . . . .10 The Current Environment for Activist Investing . . . . . . . . . . .11 Activist Investing in Action . . . . . . . . . . . . . . . . . . . . . . . . . .12 Investment Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Portfolio Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Fund Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Potential Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Potential Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Investment Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 About UBS and UBS Alternative Investments US . . . . . . . . . .21 Due Diligence Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Private and Confidential

Risk Considerations
Interests of UBS Activist Partners, L.L.C. (the “Fund”) are sold only to qualified investors, and only by means of a Private Placement Memorandum that includes information about the risks, performance and expenses of the Fund. Clients are urged to read the Memorandum carefully before subscribing. This presentation is for clients only and should not be reproduced or otherwise distributed, in whole or in part. This is not an offer to sell any interests of the Fund, and is not a solicitation of an offer to purchase them. The Fund is not a mutual fund and it is not subject to the same regulatory requirements as mutual funds. The Fund’s performance may be volatile, and investors may lose all or a substantial amount of their investment in the Fund. The Fund may engage in leveraging and other speculative investment practices that may increase the risk of investment loss. Portfolio assets of the Fund typically will be illiquid. The Fund may not be required to provide periodic pricing or valuation information to investors. It generally involves complex tax strategies and there may be delays in distributing tax information to investors. The Fund may charge high fees that would reduce profits. Interests of the Fund are illiquid and subject to restriction and change. There is no secondary market for the interests of the Fund, and none is expected to develop. Interests of the Fund are not deposits or obligations of, or guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other governmental agency. The Fund is a fund-of-funds, meaning that it will primarily invest in hedge funds managed by persons not affiliated with UBS (or in accounts managed by persons not affiliated with UBS). The overall performance of the Fund is dependent not only on the investment performance of the manager of the Fund, but also on the performance of the underlying managers. An investor bears two levels of fees, one charged by the Fund and another by the funds or accounts in which the Fund invests. The Fund is available only to individuals with at least $10 million in net worth exclusive of residence and at least $5 million dollars in investable assets. It is also available to partnerships and other entities with at least $25 million in investable assets.

Private and Confidential

The UBS Client Experience
In delivering the UBS Client Experience, our Financial Advisors take the time to understand your needs and goals and proactively provide appropriate solutions. We keep you informed on a periodic basis, as appropriate, to respond to ever-changing markets and your evolving needs.

It is important that you understand the ways in which we conduct business and the applicable laws and regulations that govern us. As a firm providing wealth management services to clients in the United States, we are registered with the U.S. Securities and Exchange Commission (SEC) as an investment advisor and a broker-dealer, offering both investment advisory and brokerage services. Though there are similarities among these services, the investment advisory programs and brokerage accounts we offer are separate and distinct, differ in material ways and are governed by different laws and separate contracts. It is important that you carefully read the agreements and disclosures that we provide to you about the products or services we offer. While we strive to ensure the nature of our services is clear in the materials we publish, if at any time you seek clarification of your accounts or services, please speak with your Financial Advisor or call 201-352-9999. For more information, please visit our website at www.ubs.com/workingwithus.

Private and Confidential

Executive Summary
UBS Activist Partners, L.L.C. (the “Fund”) is a concentrated hedge fund-of-funds that seeks capital appreciation over the long term. Highlights include: • Value Investment: Investment with value-oriented Managers, who will be primarily investing in the public securities of companies trading below their intrinsic value • “Private Equity” Approach to Public Equity: Investment with Managers who seek to act as a catalyst to influence corporate management in an effort to unlock value for investors. These Managers can take large stakes in a company to maximize their influence • Concentrated Investment: The Fund will invest with 10 – 12 core Managers who invest in a limited number of their highest conviction investment ideas • Long-Biased Portfolio: The Fund will be long-biased with limited exposure to short selling strategies • Exclusive Access: UBS Activist Partners, L.L.C. is available exclusively to select clients of UBS Financial Services Inc.

Private and Confidential

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Executive Summary (cont’d)
Potential benefits for investors • Equity Returns, Enhanced by Activist Investing Approach – a value-oriented strategy where the Managers actively seek to “close the discount” between an investment’s market price and its intrinsic value to potentially add value for investors • “Event” Orientation of Strategy May Lessen Market Correlation – the specific actions taken by the Managers may result in returns that exhibit a reduced correlation to financial markets • A Blend of Styles – the Managers, who each employ their own style of “activism,” can invest in both equity and debt securities, across geographies and market capitalizations • Potential for Gains to be Treated as Long-Term Capital Gains • Access to Experienced Investment Managers – Investment Managers with demonstrated track records* – lower minimum investment than if investors approached Managers directly

* Past performance is not indicative of future results.

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Executive Summary (cont’d)
The Fund will be managed by UBS Alternative Investments US, a leader in hedge funds-of-funds management for more than a decade. • UBS Alternative Investments US has a demonstrated track record in managing hedge funds-of-funds since 1995: – currently manages 11 funds-of-funds, including domestic and offshore vehicles – portfolio strategies include long/short equities, sector-focused, credit-oriented, special situations and multi-strategy – approximately $2.6 billion in assets under management (AUM) • Within its funds-of-funds strategies, UBS Alternative Investments US has allocated its assets to a number of shareholder activists who have been meaningful contributors to the performance of its funds. It is this experience that has led to the creation of UBS Activist Partners, L.L.C.*

* Past performance is not indicative of future results.

Private and Confidential

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Activist Investing
Activist Investing is an attempt by a shareholder of a publicly traded corporation to exercise his or her rights to increase shareholder value. These investors employ a number of value creation strategies, including: • Equity Investments – acquiring a large equity stake in a company to influence corporate management • Distressed Debt Investments – buying the debt of a distressed or bankrupt company to maximize its value through committee representation or establishing control positions during a reorganization • Special Situations – engaging in extraordinary activities to promote value realization, for example, debt-for-equity swaps, acquisitions or divestitures

Private and Confidential

4

Investment Process
The investment process typically consists of several discrete steps. The amount of time that each step requires will vary, and in the aggregate, the investment process for certain Activist Investors can take up to three years or more to unlock the full value of an investment.

Sourcing Analysis and Due Diligence “Active” Enhancement Value Realization

Time

Note: There can be no assurance that the illustrated investment process will be successful or profitable. Investment involves risks, including the risk of losing principal.

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Sourcing
Sourcing Analysis and Due Diligence “Active” Enhancement Value Realization

Time The investment process begins with a value-oriented review of candidates. These companies can have good cash flow or asset-rich characteristics, but valuations may be depressed because of low investor expectations and/or a history of investor disappointment. This can be the result of: • Weak corporate management and/or Boards • Flawed investment strategy • Poor corporate governance • Misallocation of capital or corporate resources Because of low investor expectations, these companies can trade at a discount to what the Manager believes to be their true intrinsic value.

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Analysis and Due Diligence
Sourcing Analysis and Due Diligence “Active” Enhancement Value Realization

Time Managers next, will analyze and conduct thorough due diligence to fully understand the source of the discount to intrinsic value and to identify potential actions which can enhance investor value. This step usually includes: • Conducting intensive bottom-up research • Analyzing all aspects of the capital structure • Performing liquidation analysis • Gauging the receptivity of management to change • Analyzing the shareholder base • Pinpointing financial and/or operational deficiencies Following this analysis, the Managers will decide whether there is an opportunity to eliminate or narrow the discount to intrinsic value. Private and Confidential

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Active Enhancement
Sourcing Analysis and Due Diligence “Active” Enhancement Value Realization

Time If there is sufficient value and the probability of a favorable outcome, Managers will carefully craft a strategy and then begin to accumulate a meaningful share of securities in an attempt to influence management. Activist actions can be pursued in a friendly or hostile manner. Techniques can range from discussions with management to publicly advocating for change. Strategies can focus on the following: • Strategic – reshaping business plans, making divestitures or acquisitions • Financial – changing dividend policies, share repurchase programs, capital structure • Operational – seeking cost reduction programs or maximizing operational efficiencies • Governance – changing corporate management, directorship and/or realignment of governance policies and incentive structures

Private and Confidential

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Value Realization
Sourcing Analysis and Due Diligence “Active” Enhancement Value Realization

Time Rather than passively buying or selling securities and waiting for change, Activist Investors seek to take specific actions designed to realize the true value of a business. When the market price begins to approach the perceived intrinsic value, Managers have a variety of exit strategies at their disposal: • Open market sale of securities • Private sale of securities • Registered offering • Mergers and buyouts Value is created when the actions taken by the Managers are able to narrow the gap between the market price of a security and its intrinsic value

Private and Confidential

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Activist Investing: A Hybrid Approach
An activist-oriented investment can be viewed as a hybrid—a “private equity” approach to public equity. It combines elements of both hedge fund and private equity structures to help increase investment flexibility and potential opportunities.

Characteristics Securities Ownership Acquisition Cost Influence/Control

Typical Hedge Fund Public Minimal Market price Limited

UBS Activist Partners Public; private possible Significant minority stake Market price Significant influence, occasional control

Typical Private Equity Fund Private Majority ownership Auction “premium” Significant influence, primarily through control Concentrated 3 – 10 years

Portfolio Concentration Investment Time Horizon Liquidity/Lock Up

Diversified Varies

Concentrated Up to 3 years

Typically semiannual after initial 1-year lock Public market sale

Semiannual after initial 3-year lock

None; 5 – 10 years

Exit

Public market, or sale to strategic/financial buyer

IPO or sale to strategic/financial buyer

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The Current Environment for Activist Investing
Changes around the world are creating an environment which is seen as more favorable to shareholder activism.
North America New laws, such as SarbanesOxley, foster greater corporate accountability. Japan Unwinding of cross-ownership, new proxy voting guidelines and advent of proxy voting agencies.

Europe Major financial and operational restructurings underway.

Asia Increasing acceptance of corporate governance initiatives.

In addition, investors such as hedge funds are increasingly able to accumulate sufficient equity positions to engage corporate management in a two-way dialogue.

Private and Confidential

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Activist Investing in Action
Dissident Success Rate1
80%

70%

Recent studies show that Activist Investors have been increasingly successful in their campaigns. In situations where a Manager declared his/her intention of becoming active, findings show: • Hedge fund activists had a 100% success rate in replacing the CEO, a 74% success rate in achieving seats on a firm’s Board of Directors and a 56% success rate in preventing a merger—all objectives stated in their initial 13-D filings.3 • Targeted firms earned on average 10.3% of abnormal stock returns (i.e., returns not explainable by movements in the market) during the period surrounding the initial 13-D filing, and dividends per share approximately doubled in the year following the initial stake.3

60%

50%

40%

30%

20% 2001 2002 2003 2004 2005 20062

3

Source: The Wall Street Journal, FactSet
1

April Klein, Associate Professor of Accounting, NYU Stern School of Business, October 2006; Study period: 1/11/2003-12/31/2005

Number of outright victories, partial victories or settlements by the dissident as a percentage of all proxy fights where an outcome has been reached. 2006 figures are through October 2, 2006

2

In practice, certain institutional investors such as the California Public Employees Retirement System (CalPERS) have successfully advocated for better corporate governance in hopes of generating excess returns. Their success has led others to objectively evaluate shareholder concerns, rather than simply siding with corporate management.

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Investment Objective
The Investment Objective of UBS Activist Partners, L.L.C. is to seek capital appreciation over the long term. In so doing, the Fund seeks to deploy its assets among a select group of Investment Managers who pursue shareholder activism strategies as part of their overall investment program. “These are managers who actively seek to bolster the returns of their investments by working with company managements to improve shareholder value directly. These managers, who are some of our favorites in terms of their resources and insight deployed in this pursuit, are another prime example of having conviction in one’s capabilities. UTIMCO appreciates manager efforts to make something happen, rather than waiting for it to happen.“* University of Texas Investment Management Company (UTIMCO), a $20 billion corporation that oversees the investments for The University of Texas and Texas A&M Systems.

*Source: UTIMCO 2005 Annual Report

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Portfolio Construction
The Fund’s portfolio is designed to balance the risks of Manager concentration while preserving the alpha generation of skilled Managers. Typical characteristics include: • Investments with 10 – 12 core Managers • Public equity investments and, to a lesser extent, debt investments • Long-biased portfolio, with minimal short exposure • Global orientation – developed markets (primarily North America, Europe and Japan) – limited emerging markets exposure • A – – – blend of investment styles large/small companies operational/financial strategies friendly or hostile situations

Past performance is not indicative of future results.

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Fund Managers
The following table represents those Managers with whom the Fund intends to invest its capital. There can be no guarantees that all or any of the Managers will receive capital from the Fund. (For more details on each fund, see Appendix.)

Geographic Exposure Activist Fund Cevian Capital II Principal Lock-Up Period 3 years North America Western Europe Nordic Japan Asia Ex-Japan Emerging Markets

Securities Equities Debt

Christer Gardell

• • • • • •

• • • •

Chap-Cap Robert Activist Partners Chapman Harbinger Capital Partners Special Situations Fund Icahn Partners Philip Falcone

2 years

2 years

Carl Icahn

3 years

• •

• •

• •

• •

Pardus European Karim Special Samii Opportunities Fund

1 year

Private and Confidential

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Fund Managers (cont’d)
Geographic Exposure Activist Fund Pershing Square Steel Partners II Steel Partners Japan Strategic Fund Taiyo Pacific Partners The Children’s Investment Fund Trian Partners Principal Lock-Up Period 2 years North America Western Europe Nordic Japan Asia Ex-Japan Emerging Markets Securities Equities Debt

Bill Ackman Warren Lichtenstein

• • • • • • • •

• • • •

3 years

Warren 3 years Lichtenstein & Thomas Niedermeyer Brian Heywood Christopher Hohn 3 years

• • • • • • •

• •

3 years

Nelson Peltz

3 years

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Potential Benefits
Potential benefits of investing in UBS Activist Partners include: • Exposure to Activist Investing – capital appreciation over the long term from investment in equities, enhanced by Managers who employ an activist investing approach – investment with Managers who invest in a limited number of their highest conviction investment ideas – a value-oriented strategy that seeks to buy assets trading below their intrinsic value – Manager-created “catalysts” which seek to close the discount between market price and intrinsic value for investors, but may also help to reduce the Fund's correlation with financial markets • Experienced Investment Managers With Demonstrated Track Records* – a range of investment styles (e.g., equity/debt investment, market capitalizations) • Potential for Gains to be Treated as Long-Term Capital Gains

* Past performance is not indicative of future results.

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Potential Benefits (cont’d)
A fund-of-funds approach offers numerous potential benefits:

• Professionally Researched Managers – Manager selection and due diligence by a dedicated and experienced team – ongoing due diligence to evaluate Managers and to make changes when appropriate • Manager Access – access to Managers whose funds are possibly closed to new and non-institutional investors or which require a high investment minimum – key relationships that can be difficult to replicate • Multi-Manager Approach – mitigates some risks inherent in single-manager fund investing, while preserving the alpha generation of skilled Managers

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Potential Risks
All investments carry specific risks. For this Fund, considerations include:

• Concentration – the Fund will allocate to a limited number of Managers, each holding a limited number of investments. Duplicate investments by more than one Manager will further increase exposure to a single investment • Limited Liquidity – redemptions initially restricted for three years – liquidity available semiannually thereafter1 – some of the Investment Funds subject to side pockets2 • Long-Biased Portfolio – limited hedging; portfolio subject to traditional market risks • Success Dependent Upon Manager’s Ability to Successfully Execute Strategy • Other Risks – as outlined in the Risk Considerations section of this presentation and the Private Placement Memorandum

1

After a 3-year lock-up period, each June and December, with 100 days prior written notice. For each June withdrawal date, if interests redeemed exceed 15% of the Fund’s Net Asset Value, such requests will be pro-rated. The term “side pocket” refers to a portion of a fund’s less liquid investments that are segregated from the remainder of the fund.

2

Private and Confidential

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Investment Terms

UBS Activist Partners, L.L.C. Qualified Investors • An individual or beneficiary of IRA/participant-directed plan with a $10 million net worth (or jointly with spouse), exclusive of residence.1 • A corporation, partnership or limited liability company with investable assets of at least $25 million. (Certain entities may be subject to additional requirements.) • Investment may not exceed 5% of the client’s net worth on the Client Account Inquiry (CAI). • Investors subject to ERISA and other tax-exempt or tax-deferred investors may incur unrelated business taxable income (“UBTI”) as a result of investment. Not suitable for Charitable Remainder Trusts. Minimum Investment Additional Contributions Subscriptions Liquidity • $500,000 • $100,000 • Monthly • After a 3-year lock-up period, each June and December, with 100 days prior written notice. For each June withdrawal date, if interests redeemed exceed 15% of the Fund’s Net Asset Value, such requests will be pro-rated. • 1.50% • 0 – 2%

Annual Management Fee Placement Fee

1

UBS has imposed a higher-than-required net worth criteria. This is subject to change at the discretion of UBS Financial Services Inc. Individuals must also have investable assets of a least $5 million.

Private and Confidential

20

About UBS and UBS Alternative Investments US
UBS AG UBS is the world’s largest wealth manager and a recognized leader in alternative investments, managing and distributing more than $70 billion in this category. Our global team has relationships with many of the world’s leading hedge fund, managed futures, private equity and real estate firms. We bring this elite talent to institutional and high net worth clients who seek attractive risk-adjusted returns. UBS Alternative Investments US Headquartered in New York City, Alternative Investments US of UBS Financial Services Inc. is an experienced manager in hedge funds and alternative investment strategies. It oversees approximately $11 billion in assets across hedge funds, hedge funds-of-funds, managed futures, private equity and real estate. Alternative Investments US has a demonstrated track record in managing hedge funds-of-funds since 1995. It currently manages 11 funds-of-funds, including domestic and offshore vehicles. Strategies include long/short equity, sector-focused, credit-oriented, special situations and multi-strategy. Currently, Alternative Investments US has approximately $2.6 billion in hedge funds-of-funds assets under management.

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Due Diligence Process
Every Manager to whom UBS Alternative Investments US has allocated capital undergoes a rigorous due diligence process in which qualitative data is analyzed and conviction established. Quantitative data points are also reviewed.

• As part of initial due diligence, a combination of direct and indirect research techniques are utilized.* Of course, the process continues unabated after capital has actually been placed with a Manager. Due diligence and monitoring are on-going over the life of the investment. • The following pages outline our initial and ongoing due diligence processes.

* Not all of these factors are considered with respect to all Managers. Other factors may also be considered.

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Initial Due Diligence Process

“Direct” Research • On-site visits • Interviews with key personnel • Review of offering materials • Audited financial statements • Tax filings “Indirect” Research • Background checks • Reference checks, including: – prime brokers – attorneys – accountants • Regulatory history • Public filings • Current/past investors • Industry network • Performance analysis and attribution • Portfolio analysis • Assessment of operational capabilities

* Not all of these factors are considered with respect to all Managers. Other factors may also be considered.

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Ongoing Due Diligence Process

Ongoing Due Diligence and Monitoring • Monitor portfolio risk/return • Regular performance reviews and Manager calls • Quarterly written updates • Semiannual Manager meetings • Hire/fire Managers • Reallocate capital

*Not all of these factors are considered with respect to all Managers. Other factors may also be considered.

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Appendix
The following information was presented to us by the funds and their Managers with whom the Fund intends to invest. You should note the following about this information: • There is no guarantee that the Fund will invest in all of these different funds and Managers. • The Fund’s investments will not be equally weighted, i.e., it intends to invest more money with one or more of the funds and Managers, and less money with others. • The Fund intends to invest over time, i.e., it will not invest in all of the funds and Managers at the same time. Some investments may begin in January, some in April, and some later than that. • The Fund may withdraw from the various underlying funds and Managers at different times. • All performance and internal rate of return information contained in this Appendix A has been approved by the funds and their Portfolio Managers. They are net of management fees, incentive allocations and expenses. However, they do not reflect any fees that the Fund would charge. 2006 performance is estimated and unaudited. Please note that we have not independently reviewed the performance information in this Appendix.

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Cevian Capital II
AUM: $1 billion Investment Minimum: $2.5 million Geographic Focus: Nordic Total Return: 22.7% (July – Oct 2006)* 70% IRR for predecessor fund (Oct 2003 – June 2006) This reflects the net performance of a predecessor fund managed by the principals of Cevian which pursued a strategy that was substantially similar to that of Cevian Capital II. Past performance is no guarantee of future results. Investment Overview: Substantial minority ownership positions are taken in a limited number of undervalued companies, where value can be created through operational, hands on activism. Cevian is actively and deeply involved in portfolio companies, typically through board participation. The investment strategy is to build a highly concentrated, long only portfolio of 8 – 12 positions, held typically over a mediumterm investment horizon of 11/2 – 3 years. Portfolio Managers: Christer Gardell is founder and Managing Partner of Cevian Capital. Prior to forming Cevian, Gardell served as the CEO of Custos, an investment company listed on the Stockholm Stock Exchange (1996 – 2001). Before Custos, Gardell was a Partner with Nordic Capital, a leading Nordic private equity firm. From 1984 – 1995, Mr. Gardell worked for McKinsey & Co, ultimately as a Partner. He holds an M.Sc. in Economics and Business Administration from the Stockholm School of Economics and the London Business School. Lars Forberg is founder and Managing Partner of Cevian Capital. Prior to forming Cevian, Forberg served as the CIO of Custos, an investment company listed on the Stockholm Stock Exchange (1997 – 2001). Prior to joining Custos, Forberg was a Partner of Nordic Capital, a leading Nordic private equity firm. He holds an M.Sc. in Economics and Business Administration from the Stockholm School of Economics and the University of Michigan. Office Location(s): Stockholm

*Partial year performance; past performance is not indicative of future results. Performance for the S&P 500 Index over this same period was 9.1%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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Chap-Cap Activist Partners
AUM: $300 million Investment Minimum: $5 million Geographic Focus: North America Total Return: 1.5% (April – Oct 2006)* The portfolio manager previously managed another investment partnership whose performance is not shown here. While this fund pursued a broader investment mandate, activist style investments were included as part of its investment program. Investment Overview: The Fund focuses on small-cap activism, employing social, legal and financial leverage upon target public companies in an effort to narrow the activist arbitrage spread between unaffected/public and induced/restructured-private market value. The investment strategy is to build a highly concentrated, long only portfolio of 5 – 10 positions. Portfolio Manager: Robert Chapman is the founder and Portfolio Manager of Chap-Cap Activist Partners. Chapman ran Chap-Cap Partners, L.P. from 1996 – 2003. Prior experience includes time at Scudder, Stevens & Clark, Inc., where he co-managed a portfolio concentrating on distressed equities and turnarounds, and NatWest Securities, where he founded its Arbitrage and Strategic Hedging Department. Chapman also worked at Junction Advisors and Goldman Sachs & Co. He graduated Phi Beta Kappa from the University of California, Berkeley with a B.S. in Business Administration. Office Location(s): Los Angeles

*Partial year performance; past performance is not indicative of future results. Performance for the S&P 500 Index over this same period was 7.5%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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Harbinger Capital Partners Special Situations Fund
AUM: $4.2 billion Investment Minimum: $5 million Geographic Focus: North America Total Return: 6.4% (Aug – Oct 2006)* The portfolio manager previously managed another investment partnership whose performance is not shown here. While this fund pursued a broader investment mandate, activist style investments were included as part of its investment program. Investment Overview: The Fund seeks to achieve superior absolute returns by investing long-only in a limited number of medium- to long-term investments involving distressed/high-yield debt, special situation equities and private loans/notes. The Fund will focus on holding 10 – 15 longer term, control oriented and frequently less liquid, distressed investments. Portfolio Manager: Philip Falcone is a senior managing director at Harbinger Capital Partners (2001 – present). He has also managed Harbinger Capital Partners (HCP) since June 2001. Before joining Harbinger, Falcone was head of high-yield trading at Barclays Capital (1998 – 2000) and at Gleacher Natwest, Inc. (1997 – 1998). From 1995 – 1997, he was Senior High Yield Trader at First Union Capital Markets. From 1990 – 1995, Falcone was President and COO of AAB Mfg. Corp. after acting as Senior High-Yield Trader at Kidder, Peabody, & Co., Inc from 1985 – 1990. He earned a B.A. in Economics from Harvard University in 1984. Office Location(s): New York

*Partial year performance; past performance is not indicative of future results. Performance for the S&P 500 Index over this same period was 8.4%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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Icahn Partners
AUM: $3.5 billion Investment Minimum: $25 million Geographic Focus: Global Annualized Return: 19.0% (Nov 2004 – Oct 2006)* Office Location(s): New York Investment Overview: Rather than “search for alpha,” Icahn Management seeks to create alpha by investing in businesses it perceives to be undervalued, mismanaged or misunderstood, and seeks to act as a catalyst for change. The strategy is focused on approximately 3 – 5 activist positions that may represent 50% – 75% of the portfolio. Portfolio Manager: Carl Icahn is founder, Chairman and CEO of Icahn Management, LP. Before starting Icahn Management in 2004, Icahn had been investing his own capital in an activist-oriented strategy. Icahn graduated from Princeton University in 1957 with a B.A. in Philosophy.

*Past performance is not indicative of future results. Performance shown is net of fees and expenses. Performance for the S&P 500 Index over this same period was 12.5%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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Pardus European Special Opportunities Fund
AUM: Not disclosed Investment Minimum: $1 million Geographic Focus: North America, Western Europe Annualized Return: 30.4% (April 2005 – Oct 2006)* Investment Overview: Pardus is an event-driven hedge fund focused on deep value investments. The Managers seek to unlock value through total restructuring solutions of stressed/distressed opportunities and special situations, primarily in Western Europe and opportunistically in other regions where the principals have expertise. Portfolio Managers: Karim Samii is President, CIO and founder of Pardus Capital. Before starting Pardus, Samii spent three years as a restructuring and distressed debt specialist for WR Huff Asset Management Co. From 1999 – 2001, Samii served as Managing Director of an emerging market high-yield research team at Credit Suisse First Boston. From 1996 – 1999, he was an Executive Director at UBS Warburg, leading a team of global high-yield research analysts. Joseph Thornton co-founded Pardus with Samii. Thornton began his career in 1988 as an attorney at Rogers & Wells (now Clifford Chance) in the firm’s corporate and securities department. In 1993, Thornton helped launch WR Huff’s alternative funds, which invested opportunistically in distressed securities, mezzanine debt and special situations. Thornton has experience on numerous creditors committees, serving as Chairman of Adelphia Communications. Most recently, he is serving as Chairman of the Official Equity Committee at Delphi Corporation. He earned his J.D., M.B.A., and B.A. in Economics and Political Science from the University of North Carolina, Chapel Hill. Thornton is a CFA charter holder. Office Location(s): New York, Frankfurt Before joining UBS Warburg, Samii was a Vice President in the investment banking division of Bankers Trust (1993 – 1996). He earned an M.B.A. from New York University with Beta Gamma Sigma honors and a B.A. in Economics from Columbia University. Samii also studied European Union formation at the London School of Economics.

*Past performance is not indicative of future results. Performance shown is net of fees and expenses. Performance for the S&P 500 Index over this same period was 12.3%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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Pershing Square
AUM: $2.0 billion Investment Minimum: $5 million Geographic Focus: North America Annualized Return: 35.6% (Jan 2004 – Oct 2006)* Investment Overview: Concentrated (typically 8 – 12 positions), research-intensive investments in businesses with gross discrepancies between trading price and intrinsic value. The Fund will play an activist role in select situations if return on opportunity cost and invested time is expected to be very high. Portfolio Manager: Bill Ackman is the founder and Portfolio Manager of Pershing Square. Prior to founding Pershing Square, Ackman co-ran Gotham Partners, a public and private equity investment partnership (1993 – 2004). He earned an M.B.A. from Harvard Business School and graduated magna cum laude from Harvard College. Office Location(s): New York

*Past performance is not indicative of future results. Performance shown is net of fees and expenses. Performance for the S&P 500 Index over this same period was 9.8%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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Steel Partners II
AUM: $2.3 billion Investment Minimum: $10 million Geographic Focus: Global Annualized Return: 18.6% (Oct 1993 – Oct 2006)* Investment Overview: The Fund invests in under-followed, undervalued securities, including debt (senior and subordinated) and equities of public and private companies. The Investment Manager attempts to work with management to implement long-term strategies to unlock and build value. Bottom-up portfolio construction process focuses on 20 – 30 core positions, with 5 – 10 making up 50% of the portfolio. Average holding period is approximately 3 – 5 years. The portfolio is long biased, with net exposure usually greater than 80%. Portfolio Manager: Warren Lichtenstein is co-founder and sole managing member of Steel Partners. He began his career as an analyst with Para Partners, L.P., which invests in risk arbitrage and related situations. In 1988, he joined Ballantrae Partners, L.P. as an acquisition/arbitrage analyst. He earned a B.A. in Economics in 1987 from the University of Pennsylvania. Office Location(s): New York, Los Angeles, London, Seoul, Tokyo, Beijing, Hong Kong

*Past performance is not indicative of future results. Performance shown is net of fees and expenses. Performance for the S&P 500 Index over this same period was 10.8%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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Steel Partners Japan Strategic Fund
AUM: $3.2 billion Investment Minimum: $10 million Geographic Focus: Japan Annualized Return: 18.7% (April 2002 – Oct 2006)* Investment Overview: Actively invests in Japanese companies to act as a catalyst for change by aggressively pursuing actions to unlock value in undervalued stocks. Bottom-up portfolio construction process focusing on 30 – 40 core positions, with 5 – 10 making up 50% of the portfolio. Average holding period is approximately three years or longer. Portfolio is long biased with net exposure usually greater than 80%. Portfolio Managers: Warren Lichtenstein is co-founder and sole managing member of Steel Partners. He began his career as an analyst with Para Partners, L.P., which invests in risk arbitrage and related situations. In 1988, he joined Ballantrae Partners, L.P. as an acquisition/arbitrage analyst. He earned a B.A. in Economics in 1987 from the University of Pennsylvania. Thomas Niedermeyer is co-founder and is presently a managing member of the General Partner of Steel Partners Japan. He is also co-founder and Managing Partner of Liberty Square Asset Management. Before founding Liberty Square, he co-founded Teton partners—a foreign equity focused hedge fund. Niedermeyer’s credentials also include: research salesman at Nomura International, Inc. (1982 – 1984); Japanese equity specialist at Hoare Govett, Inc. (1984 – 1986); Vice President at Salomon Brothers (1986 – 1989); and Principal with Morgan Stanley and Co. He earned a B.A. from the University of Washington. Yusuke Nishi is Director of Steel Partners Japan, K.K., a consultant to Steel Partners Japan. Most recently, he was a Director for the Tokyo M&A Advisory Group for ING Baring Securities in Japan. He began his career in 1988 at Nikko Securities Co., Ltd., a Japanese Securities firm, where he was involved in Capital Markets and M&A advisory. From 1999 – 2000, Nishi served as Assistant Director in Tokyo M&A for Jardine Fleming Securities. He received a B.A. from AoyamaGakuin University and an M.B.A. from Manchester Business School. Office Location(s): New York, Boston, Tokyo

*Past performance is not indicative of future results. Performance shown is net of fees and expenses. Performance for the S&P 500 Index over this same period was 6.0%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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Taiyo Pacific Partners
AUM: $1.2 billion Investment Minimum: $10 million Geographic Focus: Japan Annualized Return: 22.8% (July 2003 – Oct 2006)* The performance above is for Taiyo Pacific Partners which is currently closed to investors. Taiyo intends to open a new fund that pursues an investment program substantially similar to that of Taiyo Pacific Partners, but will focus on mid-capitalization companies. Investment Overview: A mid-cap, Japanese activist fund focused on engaging and supporting management in the areas of capital allocation, globalization, strategy/positioning, M&A and ROIC. The investment strategy is to build a highly concentrated, long- only portfolio of 8 – 15 positions, held typically over a medium-term investment horizon of 11/2 – 3 years. Michael King, prior to starting the Taiyo Funds, worked as a fund manager for Wanger Asset Management, running $600 million in Japanese securities. He lived in Japan for over five years and earned an M.B.A. from the University of Chicago. Brian Heywood has extensive experience working in management consulting at JD Power. He has lived in Japan for 13 years and graduated from Harvard University in 1991 with an honors degree in East Asian studies. John Hammond has extensive consulting and management experience as the COO for JD Power and CEO for Intellichoice. Over the course of his career, he has acted as a consultant to hundreds of multinational corporations and boards of directors. He earned a Ph.D. in Econometrics and Economic Policy from George Washington University. Portfolio Managers: Michael King, Brian Heywood and John Hammond cofounded Taiyo Pacific Partners in 2001 and run the Taiyo Fund in association with Wilbur Ross. The Investment Committee makes all decisions and is comprised of Messrs. Heywood, King, Hammond and Ross.

Office Location(s): Monterey, New York, Tokyo
*Past performance is not indicative of future results. Performance shown is net of fees and expenses. Performance for the S&P 500 Index over this same period was 13.0%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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The Children’s Investment Fund
AUM: Not disclosed Investment Minimum: $15 million Geographic Focus: Global Annualized Return: 42.3% (Jan 2004 – Oct 2006)* Investment Overview: TCI is a global, value-opportunistic, long-biased investment fund that looks to use three scenarios for investing in companies: (a) companies that are undervalued or under-researched; (b) those waiting for a catalyst to be released; and (c) those where it is believed activism can add value. The fund looks for investment opportunities with a long-term time horizon to release value. A typical portfolio consists of 50 positions where the top 10 account for 75% – 80% of NAV and where net exposure is usually 110% – 115% net long. Portfolio Manager: Christopher Hohn is the founder and Portfolio Manager of TCI. Prior to founding TCI, Hohn led Perry Capital’s European event-driven investment strategy from 1997 – 2003, managing $1 billion – $2 billion of capital and generating high returns with low levels of drawdown. While at Perry, Hohn established the London office in 1998, which employed 20 people. Prior to Perry, Hohn worked at Apax Partners on special situation LBOs in Europe, and at Coopers & Lybrand as a manager in the corporate finance division. He earned his M.B.A. with high distinction from Harvard Business School and a B.Sc. in Accounting and Business Economics (1st class honors) from Southampton University in England. Office Location(s): London, Hong Kong

*Past performance is not indicative of future results. Performance shown is net of fees and expenses. Performance for the S&P 500 Index over this same period was 9.8%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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Trian Partners
AUM: Not disclosed Investment Minimum: $25 million Geographic Focus: North America Total Return: 16.5% (Nov 05 – Oct 06)* Investment Overview: Operational activists seeking to create significant capital appreciation by adding value to companies through active, hands-on influence and involvement. The investment strategy is to build a highly concentrated, long only portfolio of 4 – 6 positions, held typically over a mediumterm investment horizon of 1 – 3 years. Portfolio Managers: Nelson Peltz is the CEO and a founding partner of Trian Fund Management. Peltz is also a Director and the Chairman and CEO of Triarc, a publicly held company controlled by Peltz and his longtime business partner, Peter May, since April 1993. Throughout his extensive career, Peltz has served as CEO, Chairman, and Board member of numerous public companies. He attended The Wharton School of the University of Pennsylvania. Peter May is President and a founding partner of Trian Partners. May is also a director, President and COO of Triarc since April 1993. Throughout his extensive career, May has been President, COO, and Board member of numerous public companies. He graduated from the University of Chicago with an A.B., and received his MBA from the University of Chicago School of Business and is a CPA. Ed Garden is Portfolio Manager and a founding partner of Trian Partners. He is also a Director and Vice Chair of Triarc since August 2003. Garden also serves as a director for Deerfield Capital Management, LLC. Before Joining Trian, he was a Managing Director at CSFB, where he served as a senior investment banker in the Financial Sponsors Group. He graduated from Harvard College with a B.A. in Economics. Office Location(s): New York

*Partial year performance; past performance is not indicative of future results Performance for the S&P 500 Index over this same period was 16.4%. The S&P 500 Index should not be considered to be a benchmark for this Fund or for this Manager. The S&P 500 Index is an unmanaged index and is considered to be generally representative of the U.S. large-cap stock market as a whole. The performance data for the S&P 500 Index assumes the reinvestment of all dividends, but does not deduct any fees or expenses.

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