Adding Value While Managing RiskAdding Value While Managing Risk

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Profile of Fairlane

• Manages traditional & non-traditional bond mandates

• Experienced investment professionals

• Targets high net worth and institutional investors

• 80% of our investors have been with us for more than fifteen years

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Fairlane’s History

• Fairlane Asset Management was founded in 2003

• Merged with Strathy Investments Ltd. in 2005 creating over 25 years of experience

• Registration with the Ontario Securities Commission:

Portfolio Manager (PM)

Investment Fund Manager (IFM)

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Fairlane’s Business

• Our focus is providing superior absolute returns

• We concentrate in “Special Situation Investing” using the following investment strategies:• Long / Short Investing (Credit Arbitrage Fund)• Long Investing (A Plus Bond Fund)

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Investment Approach

• Thorough and detailed company research and analysis

• Exploit inefficiencies across security classes

• Focus on “out of favour” and “under-researched” securities

• Invest in a small number of investments

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Investment Philosophy/Principles

Protect clients’ wealth

Above average returns

Absolute return orientation

Value

Contrarian

Discipline

A flexible approach allows us to capitalizeon opportunities through all stages of the economic cycle.

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How we Structure our Portfolio

• Invest in a focused and thoroughly researched portfolio of investments, primarily A+ rated securities or better

• Portfolio typically consists of 15-20 credits due to the limited number of exceptional opportunities available

• Strategy is to maximize returns over the long-term, not provide a stable 1% per month

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Financial Instruments Utilized

• Instruments used include:• Bank debt• Senior debt• Subordinated debt• Other liquid investment grade debt

• We are not forced to remain in sectors that no longer offer value

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Risk Management

• Our goal is not to avoid risk, but to understand the risks we are taking and ensure that the portfolio is well compensated for them

• Our key lines of defense:• Research • “Scenario analysis” and “stress testing” of portfolio

allows us to assess overall risk

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Fairlane Product Profile

Credit Arbitrage FundCanadian Fixed Income Strategies

Risk

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Fairlane A Plus Bond Fund Canadian Midterm Credit Bonds

Fairlane Growth FundSmall to Mid Cap Equity

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OBJECTIVE:

The philosophy of the Fund is to actively invest in under-valued investment grade corporate bonds with an average credit rating of “A” in order to achieve maximum reliable returns. The portfolio will have an average duration of no more than 5 years.

INVESTMENTS:

The investments are sovereign debt issued in Europe, US, Australian, New Zealand and Government of Canada. Currency is priced in US and Canadian dollar. Currency exposures are managed with hedges using options and futures.

Fairlane A Plus Bond Fund

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Fairlane A Plus Bond Fund vs Globe Canadian Fixed Income Peer Index

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Fairlane A Plus Bond – Monthly Returns

0%

4%

January 2001 to April 2011

Best Month: 4.23% April 2009Worst Month: (1.16%) December 31, 2009

*Returns measured quarterly from Jan 2001 to Dec 2004 and monthly from Jan 2005 to Sept 2010

61 up 75.3% 20 down 24.7%

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OBJECTIVE:

The philosophy of the Fund is to opportunistically invest in credit where attractive risk adjusted returns can be captured. We seek the best values within the corporate bond market, understand them within a variety of market environments, take positions when we believe they are attractive and exit these positions when we feel they become less appealing. The objective is to invest when spreads are compelling, not to invest for the sake of deploying cash. The intention is disciplined security selection, rather than interest rate prediction. Anomalies in specific securities or sectors are identified through a rigorous evaluation process that utilizes fundamental analysis, credit analysis, historic time series, swaps and relative value. Government bonds are sold against securities to hedge market risk.

INVESTMENTS:

The portfolio will be a combination of investment grade credit, governments and provincials.

Fairlane Credit Arbitrage Fund

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Fairlane Credit Arbitrage vs S&P 500

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Fairlane Credit Arbitrage Fund: Leverage and Shorting

• Leverage

• Used to improve return profile of conservative investments• Currently using 2.8 times market value• Can be adjusted to suit client profile

• Shorting

• Short Canadian Government Bonds on a risk adjusted basis• Risk is monitored daily and adjusted weekly

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Fee Information

• Management fees annually cover:• office overhead• administrative staff• due diligence travel expenses

• Performance fees (with high water mark) cover:• bonus pool for administrative staff• compensation for partners

• Minimum account size:• 10 million Canadian dollars

*A Plus Bond base fee 50 bps Credit Arbitrage base fee is 1%, performance fee is 15%

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Why Invest with Fairlane?

• Experienced

• Solid track record

• Focused on making money in absolute, not relative terms

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The Ideal Fairlane Investor(Know your client)

• Investment Size

• investment does not represent more than 20% of net worth• investment does not tax the liquid financial resources of the

client• accounts are segregated, therefore they are scaleable as well

as transparent

• Investment Horizon

• minimum one year hold period, but prefer longer horizon• willing to take bad years with the good

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Philip Strathy Fixed Income and Small Cap Equities

Vicki Hunter Fixed Income

John Strathy Fixed Income Advisor

Geoff McCrea Equity Arbitrage

Rob Bradeen Equity Advisor

Fairlane Team

ContactContact

30 St. Clair Ave West, Suite 1105 Toronto, Ontario M4V 3A1

t (416) 975-1920 f (416) 975-1933www.fairlane-am.com | vcraig@strathy.com