INVESTMENT ALLOCATION

The objective of the Fund is to combine the best ideas of Emerald's three distinct sub-strategies (Hybrid, Concentrated Equity and Global Cycle) and construct a well-diversified portfolio which generates consistent, positive returns regardless of market conditions.

Our asset allocation weighting toward each of the Fund's three sub-strategies will adjust according to changing market conditions and opportunities that we identify. We employ a flexible investment mandate and utilize an adaptive approach to best position the Fund for preservation and growth of capital in all market environments. There may be times when the allocation among the three sub-strategies remains fairly balanced and others when one sub-strategy is over/under weighted relative to the others. This is largely dependent on market conditions and our forward-looking assessment of the investment landscape.

The following represents a general example of how the Fund may be positioned in different market conditions and investment environments. We refer to them as "zones" to indicate our view of the investment climate and the best risk/reward opportunities within these given conditions:

In difficult economic times or in a cyclical bear market environment, we would expect to allocate a heavier weighting to the Hybrid strategy. This is the type of investment climate where the use of short positions and hedging techniques serve an even greater purpose and allow for greater flexibility to preserve and grow capital. This also holds true in times of high market volatility.

In periods where some of the market uncertainty has cleared and economic conditions begin to show fundamental signs of recovery in the U.S. (i.e. - a greater outlook for stocks), we would expect to allocate more heavily to the long-biased, Concentrated Equity strategy.

In a period of anticipated strong and sustained global economic growth, where opportunities may abound in many sectors, we may increase the Fund's weighting to the Global Cycle strategy. This particular strategy pursues investment themes that, in our opinion, will appreciate over a long period of time, and while the Fund's holdings may be adjusted over time, they typically represent core holdings over the long term.