SC TO-I

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE TO

(Rule 13e-4)

TENDER OFFER STATEMENT PURSUANT TO SECTION 13(e)(1)

OF THE SECURITIES EXCHANGE ACT OF 1934

The Endowment Institutional Fund, L.P.

(Name of Issuer)

The Endowment Institutional Fund, L.P.

(Name of Person(s) Filing Statement)

Limited Partnership Interests

(Title of Class of Securities)

N/A

(CUSIP Number of class of securities)

John A. Blaisdell c/o Endowment Advisers, L.P. 4265 San Felipe, 8th Floor Houston, Texas 77027 (713) 993-4675 With a copy to: George J. Zornada K&L Gates LLP State Street Financial Center One Lincoln St. Boston, MA 02111-2950 (617) 261-3231

(Name, Address and Telephone No. of Person Authorized to Receive Notices and Communications on Behalf of the Person(s) Filing Statement

(February 20, 2014)

Calculation of Filing Fee

Transaction Valuation	Amount of Filing Fee
$28,131,798(a)	$3,623.38(b)

(a) Calculated as the aggregate maximum purchase price for limited partnership interests.

(b) Calculated at $128.80 per million of the Transaction Valuation.

¨ Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form of Schedule and the date of its filing.

Amount Previously Paid:	Filing Parties:
Form or Registration No.:	Date Filed:

¨ Check the box if the filing relates solely to preliminary communications made before commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

¨ third-party tender offer subject to Rule 14d-1.

x issuer tender offer subject to Rule 13e-4.

¨ going-private transaction subject to Rule 13e-3.

¨ amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer:  ¨

Item 1. Summary Term Sheet.

As disclosed in the Private Placement Memorandum of The Endowment Institutional Fund, L.P. (the “Fund” or the “Institutional Fund”) dated as of January 1, 2014 (attached hereto as an exhibit; the “PPM”), the Fund from time to time may offer to buy your limited partnership interest (an “Interest”) or a portion thereof, at its estimated net asset value (which is calculated as the estimated value of the Fund’s assets minus its liabilities). This offer (the “Offer”), which begins on February 20, 2014, will remain open until midnight, New York City Time, on March 19, 2014 (such time and date, as it may be extended, the “Expiration Date”). The estimated net asset value will be calculated for this purpose on March 31, 2014 (or, solely in the event that it is necessary to extend such date in order to satisfy certain conditions of the Offer as set forth herein, June 30, 2014), subject to the terms and conditions of the Offer described herein (such date being referred to herein as the “Valuation Date”). Capitalized terms used herein, but not otherwise defined, shall have the meanings ascribed to them in the PPM. The Offer is being made simultaneously with a cash tender offer (the “PMF Funds Offer”) by the PMF Funds (as defined below) in which Partners (as defined below) tendering Interests pursuant to the Offer, and therefore becoming holders of Shares of the PMF Fund, will have the opportunity to participate. The Offer is not contingent upon the completion of the PMF Funds Offer.

Following this summary is a formal notice of the Fund’s offer to purchase all or a portion of your Interest, which Offer will remain open until the Expiration Date, unless extended. No Partner need participate. If you choose to participate, you may withdraw your tendered Interest until the Expiration Date and, if Interests have not yet been accepted by the Fund, after the expiration of 40 business days from the commencement of the Offer.

Unlike the Fund’s prior offers to repurchase Interests, Partners who choose to tender their Interests will receive shares of a newly-formed fund (the “PMF Fund”) that will be managed to liquidate over time, distributing its capital to investors. The opportunity presented by the Offer, to obtain shares of a liquidating fund in an amount equal to the full value of a Partner’s Interest, is unlikely to be repeated in the future. Future repurchase offers, if any, will likely be for cash in substantially smaller amounts than previous repurchase amounts and likely will not provide for a choice similar to that presented by the Offer. The Fund does not anticipate considering any future repurchase offers until the fourth quarter of 2014 at the earliest.

The repurchase price for Interests tendered and accepted will not be paid in cash, but in-kind with tendering limited partners of the Fund (“Partners”) receiving 100% of their repurchase proceeds in shares of limited partnership interest (“Shares”) in PMF Fund, L.P. PMF Fund is a newly-formed, closed-end, non-diversified, registered investment company that invests substantially all of its assets in The Endowment PMF Master Fund, L.P. (the “PMF Master Fund” and, together with the PMF Fund, the “PMF Funds”), which also is a newly-formed, closed-end, non-diversified, registered investment company. Shares are only available to Partners that tender their Interests pursuant to the Offer. The PMF Funds have been created to provide Partners a choice of converting their Interests in the Fund, which is a continuously-offered fund with an actively managed portfolio, into Shares, which is a fund that will prioritize Partner liquidity over active management. Instead of reinvesting proceeds generated by redemptions of and distributions received from underlying Investment Funds, the PMF Funds will generally distribute such proceeds to their respective investors (as described in the PMF Fund’s Private Placement Memorandum (the “PMF PPM”)), until such time as the PMF Master Fund portfolio has been entirely liquidated.

The PMF Master Fund’s portfolio will represent an approximately pro-rata division of the portfolio of The Endowment Master Fund, L.P. (the “Master Fund”) as of the Valuation Date, such that Partners

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tendering their Interests will receive Shares that represent an ownership interest in approximately the same underlying portfolio of investments represented by the tendered Interests immediately prior to the Valuation Date. As of the Valuation Date, Shares of the PMF Fund will have the same value as the Interests that were tendered but thereafter such value will differ as the PMF Fund and the Fund are managed differently, with the PMF Fund being managed for purposes of an orderly liquidation. Settlement of the Offer and payment of the Shares are not expected to occur until after the Valuation Date, as described in more detail herein.

As described above, the PMF Master Fund’s portfolio will represent an approximately pro-rata division of the Master Fund’s portfolio. An approximately pro-rata division of the Master Fund’s portfolio is dependent upon the Master Fund’s ability to obtain sufficient consents from the investment managers (each, an “Investment Manager”) of the underlying Investment Fund interests to transfer otherwise non-transferable Investment Fund interests that represent a proportional cross-section of the Master Fund’s portfolio as of the Valuation Date. To the extent that sufficient Investment Manager consents are received to effect an approximately pro-rata division of the Master Fund’s portfolio but one or more Investment Managers do not consent to the division of the Master Fund’s interest in the respective Investment Fund(s) managed by such Investment Managers as of the Valuation Date, the Master Fund will be unable to transfer to the PMF Master Fund a pro-rata portion of its interest in such Investment Funds. Instead, the Master Fund will be required to pay to the PMF Master Fund an amount of cash equal to the net asset value as of the Valuation Date of the relevant portion of the Master Fund’s interest proposed but unable to be transferred. Accordingly, there may be differences in the allocations and/or holdings of the portfolios of the Master Fund and the PMF Master Fund as of the Valuation Date if consents are not received from all Investment Funds. Furthermore, there can be no assurance that the net asset value of such a non-transferring Investment Fund paid in cash would ultimately represent the full value of a continuing interest in such Investment Fund.

There can be no assurance that the Master Fund will be able to effect an approximately pro-rata division of the Master Fund portfolio by the Valuation Date. If as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Partners are cautioned that the Valuation Date is expected to occur after the date on which Interests are accepted for purchase in the Offer, and that following such date of acceptance they will not have the right to withdraw their tendered Interests prior to the Valuation Date.

Partners may tender part or all of their Interests. Partners who do not tender all of their Interests will remain invested in the Fund to the extent of the Interests they retain. The Fund will continue to be offered to existing and prospective Partners, unlike the PMF Fund, which will not be available to new investors following the conclusion of the Offer. The Fund will continue to pursue its investment objective utilizing an active management strategy, unlike the PMF Fund which will prioritize liquidity and distributions over active management until it is fully liquidated.

The information contained herein regarding the PMF Fund and the Fund is only a summary. Prior to deciding whether to tender Interests pursuant to the Offer or to remain invested in the Fund, Partners should carefully review the PPM and the PMF PPM, which include detailed information regarding the investment objective, risks, fees and expenses of the Fund and the PMF Fund, respectively. The PPM and the PMF PPM are attached hereto as exhibits. Also attached hereto as an exhibit is a chart comparing certain terms/aspects of the Fund and the PMF Fund.

If you do not wish to tender any part of your Interest, you may ignore the Offer.

If a Partner would like to tender part or all of his or her Interest, such Partner generally should mail a Letter of Transmittal (the enclosed Tender Offer Form will suffice), which is attached to this document as Exhibit 99.3, to Endowment Advisers, L.P. (the “Investment Adviser”) at P.O. Box 182663, Columbus, Ohio 43218-2663, Attention: The Endowment Fund, or fax it to the Investment Adviser at (866) 624-0077, Attention: The Endowment Fund. Either method of delivery must result in the receipt of the properly executed form before the Expiration Date. If faxed, the original Tender Offer Form should be mailed promptly thereafter to the Investment Adviser. Partners whose broker of record is Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill”) or U.S. Trust Company, Bank of America Private Wealth Management (“U.S. Trust”) should mail or fax the Letter of Transmittal to their Financial Advisor or Portfolio Manager, instead of to their customized Investment Adviser, by the Expiration Date.

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The value of your Interest will likely change between the most recent time net asset value was calculated and communicated to you and the Valuation Date. If you would like to obtain the estimated net asset value of your Interest, which the Fund’s administrator calculates monthly based on the information the Fund receives from the managers of the Investment Funds, you may contact the Support Desk of the Investment Adviser at (800) 725-9456, Monday through Friday, except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m., New York City Time.

Please note that just as you have the opportunity to have your Interest repurchased in the Offer and the right to withdraw your tendered Interest until such time as it is accepted for purchase, the Fund has the right, subject to applicable law and the conditions described herein, to cancel, amend or postpone the Offer at any time prior to the earlier to occur of the Expiration Date (as such may be extended) or when the tendered Interest has been accepted by the Fund. Also realize that for any Interests tendered, you remain a Partner in the Fund through the Valuation Date, which is the date on which the estimated net asset value of your Interest will be calculated and the effective date as of which you will be issued Shares. However, the actual issuance of Shares is not expected to occur until after the Valuation Date. Following the acceptance of the Interests tendered in the Offer, you will not have the right to withdraw the Interest which you tendered.

Item 2. Issuer Information.

(a) The name of the issuer is The Endowment Institutional Fund, L.P. The Fund is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a closed-end, non-diversified, management investment company and is organized as a Delaware limited partnership. The principal executive office of the Fund is located at 4265 San Felipe, 8th Floor, Houston, Texas 77027 and the telephone number is (713) 993-4675.

(b) The title of the securities that are the subject of the offer to purchase (the “Offer to Purchase” and the tender offer made thereby, the “Offer”) is limited partnership interests or portions thereof in the Fund. (As used herein, the term “Interest” or “Interests,” as the context requires, shall refer to the limited partnership interests in the Fund and portions thereof that constitute the class of security that is the subject of the Offer or the limited partnership interests in the Fund or portions thereof that are tendered by Partners to the Fund pursuant to the Offer.) As of the close of business on December 31, 2013, the outstanding Interests had an approximate aggregate net asset value of $28,131,798. Subject to the conditions set forth in the Offer to Purchase, the Fund will purchase up to 100% of the Fund’s outstanding Interests as of the Valuation Date.

The Fund is one of several “feeder” funds that invests substantially all of its capital into the Master Fund, which then invests its capital in Investment Funds. Concurrent with this tender offer, the Board of the Master Fund has approved a tender offer for up to 100% of its outstanding interests.

(c) Interests are not traded in any market, and any transfer thereof is strictly limited by the terms of the Fund’s Agreement of Limited Partnership dated as of December 8, 2009 (the “LP Agreement”).

Item 3. Identity and Background of Filing Person.

(a) The name of the filing person is The Endowment Institutional Fund, L.P. The Fund’s principal executive office is located at 4265 San Felipe, 8th Floor, Houston, Texas 77027 and the telephone number is (713) 993-4675. The investment adviser of the Fund is Endowment Advisers, L.P. The principal executive office of the Investment Adviser is located at 4265 San Felipe, 8th Floor, Houston, Texas 77027 and the telephone number is (713) 993-4675. The Investment Adviser’s investment committee (the “Investment Committee”) members are Messrs. Lee G. Partridge, Jeremy L. Radcliffe, William K. Enszer, William B. Hunt and William R. Guinn (herein defined as the “Managers”). Their address is c/o Endowment Advisers, L.P. at 4265 San Felipe, 8th Floor, Houston, Texas 77027.

Item 4. Terms of This Tender Offer.

(a) (1) (i) Subject to the conditions set forth in the Offer to Purchase, the Fund will purchase up to all of the Fund’s outstanding Interests that are properly tendered by and not withdrawn before the Expiration Date. The Fund is offering to purchase up to the full net asset value of the Fund’s Interests in an effort to provide Partners with the

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choice of continuing with their investment in the Fund or acquiring Shares having the same initial net asset value as their Interests in the Fund but which represent an interest in a separate investment vehicle with a focus on passive management until liquidation rather than active management. Instead of reinvesting proceeds received from Investment Funds (i.e., withdrawal or liquidation proceeds), the PMF Fund will generally distribute such proceeds to its Shareholders until the PMF Fund is fully liquidated. Partners that do not tender all of their Interests will remain in the Fund with limited liquidity generally only available through future repurchase offers, to the extent such offers are approved by the Board, as set forth in the PPM.

(ii) The purchase price of Interests tendered to the Fund will be their estimated net asset value as of the close of business on the Valuation Date.

The purchase price for Interests tendered to the Fund will not be paid in cash. The purchase price for Interests will be paid in-kind in the form of Shares. The value of the Shares received by tendering Partners will be equal to the estimated net asset value of the Interests tendered as of the Valuation Date.

The repurchase of Interests is subject to regulatory requirements imposed by the Securities and Exchange Commission (“SEC”). The Fund’s repurchase procedures are intended to comply with such requirements. However, in the event that the Board determines that modification of the repurchase procedures described above is required or appropriate, the Board will adopt revised repurchase procedures as necessary to ensure the Fund’s compliance with applicable regulations or as the Board in its sole discretion deems appropriate. The Offer is also subject to certain number of conditions as set forth in Item 7(b).

Each Partner whose Interest (or portion thereof) has been accepted for repurchase will continue to be a Partner of the Fund effective until the Valuation Date (and thereafter if such Partner’s Interest is repurchased in part) and may exercise its voting rights with respect to the repurchased Interest (or portion thereof) until the Valuation Date.

The Master Fund has incurred and paid, and may incur and pay in the future, expenses in connection with conducting the Offer, including expenses in connection with the formation and capitalization of the PMF Funds, and the Fund will therefore bear an indirect pro-rata share of such expenses. The Offer is not conditioned on the completion of the PMF Funds Offer; however, in the event that the PMF Funds Offer is not completed, the Master Fund will bear a pro-rata portion of certain expenses relating to the PMF Funds Offer, including certain expenses that may be payable in the event that the transaction contemplated by the Purchase and Sale Agreement with the Third Party Feeder (as defined herein) is not completed. The Fund does not intend to impose any charges (except for direct costs and expenses borne by the Fund generally) on the repurchase of Interests. Partners that tender Interests will become Shareholders of the PMF Fund and, as a result, will become subject to the fees and expenses of the PMF Fund, as set forth in the PMF PPM.

A Partner who tenders some but not all of such Partner’s Interest for repurchase will be required to maintain a minimum capital account balance of $100,000 in the Fund. Such minimum capital account balance requirement may be waived by the Fund, in its sole discretion. The Fund reserves the right to reduce the amount to be repurchased from a Partner so that the required capital account balance is maintained.

In the event that the Investment Adviser or any of its affiliates holds an Interest (or a portion of an Interest) in its capacity as a Partner, such Interest (or portion of an Interest) may be tendered for repurchase in connection with the Offer or any subsequent repurchase offer made by the Fund, without notice to the other Partners.

A copy of: (i) the Cover Letters to Offer to Purchase and Letter of Transmittal; (ii) the Offers to Purchase; (iii) Form of Letter of Transmittal; (iv) the PPM; (v) the PMF PPM; and (vi) a chart comparing certain terms/aspects of the Fund and PMF Fund are attached hereto as exhibits.

(iii) The initial scheduled Expiration Date is midnight, New York City Time, March 19, 2014.

(iv) Not applicable.

(v) To the extent that the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will delay the Valuation Date to June 30, 2014,

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in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date will not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw your tendered Interests), and would increase the potential that the value of tendered Interest may change between the time you elect to tender and the Valuation Date. Following the acceptance of Interests tendered in the Offer, Partners will not have the right to withdraw such tendered Interests.

The Fund reserves the right, at any time and from time to time, subject to applicable law, to extend the period of time during which the Offer is pending by notifying Partners of such extension. If the Fund elects to extend the period during which the Offer is open, the Valuation Date (which is the date on which the estimated net asset value of tendered Interests will be determined) may, in the discretion of the Board, be delayed to June 30, 2014. During any extension of the Offer, all Interests previously tendered and not withdrawn will remain subject to the Offer.

The Fund may amend the Offer or postpone the acceptance of tenders made pursuant to the Offer (and, by extension, the Valuation Date) in order to allow the approximately pro-rata division of the Master Fund’s portfolio to be made (such condition, the “Portfolio Division Condition.”) However, there can be no assurance that the Fund will exercise its right to extend or amend the Offer or to postpone acceptance of tenders pursuant to the Offer. If the Fund determines to amend the Offer or to postpone the acceptance of Interests tendered, it will, to the extent required, extend the period of time during which the Offer is open as provided above and will promptly notify Partners.

Please refer also to the conditions to the Offer set forth in Item 7(b).

(vi) You may withdraw your tendered Interest until the Expiration Date and, if Interests have not yet been accepted by the Fund, after the expiration of 40 business days from the commencement of the Offer.

(vii) Partners wishing to tender Interests pursuant to the Offer generally should send or deliver a completed and executed Letter of Transmittal (the enclosed Tender Offer Form will suffice) to the Investment Adviser, to the attention of The Endowment Fund, at P.O. Box 182663, Columbus, Ohio 43218-2663, or fax a completed and executed Letter of Transmittal (the enclosed Tender Offer Form will suffice) to the Investment Adviser, also to the attention of The Endowment Fund, at (866) 624-0077. Partners whose broker of record is Merrill or U.S. Trust should send or deliver, or fax, the completed and executed Letter of Transmittal to their Financial Advisor or Portfolio Manager instead of to the Investment Adviser. The completed and executed Letter of Transmittal must be received, either by mail or by fax, prior to the Expiration Date. The Fund recommends that all documents be submitted by certified mail, return receipt requested, or by facsimile transmission. A Partner choosing to fax a Letter of Transmittal must also send or deliver the original completed and executed Letter of Transmittal promptly thereafter to the Investment Adviser or to such Partner’s Financial Advisor or Portfolio Manager.

Any Partner tendering an Interest pursuant to the Offer may withdraw its tendered Interest until the Expiration Date and, if Interests have not yet been accepted by the Fund, after the expiration of 40 business days from the commencement of the Offer. To be effective, any notice of withdrawal must be timely received by the Investment Adviser by mail or fax, or in the case of clients of Merrill or U.S. Trust, by their Financial Advisor or Portfolio Manager. A form to use to give notice of withdrawal is available by calling, in the case of clients of Merrill or U.S. Trust, their Financial Advisor or Portfolio Manager or, for all other Partners, the Investment Adviser at (800) 725-9456. Interests properly withdrawn shall not thereafter be deemed to be tendered for purposes of the Offer. However, withdrawn Interests may be re-tendered prior to the Expiration Date by following the procedures described above.

(viii) For purposes of the Offer, the Fund will be deemed to have accepted Interests that are tendered when the Fund gives written notice to the tendering Partner of the Fund’s election to purchase such Interest. The purchase price of an Interest tendered by any Partner will be the estimated net asset value thereof as of the close of business on the Valuation Date, although settlement of the Offer and payment of the purchase price are not expected to occur until after the Valuation Date, as described herein. The estimated net asset value will be determined after all allocations to capital accounts of the Partners required to be made by the LP Agreement have been made.

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In light of the necessity for Investment Fund transfers to be duly authorized and effected in order to satisfy the Portfolio Division Condition, settlement of the Offer and payment may only be made following the execution of the required transfer agreements, which may not occur until after the date on which Interests are accepted for purchase in the Offer. Due to, among other things, the large number of Investment Funds held and the varying degrees of cooperation needed from the Investment Managers, the date as of which transfer agreements will be executed is uncertain. To the extent that the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will be required to delay the Valuation Date to June 30, 2014, in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date would not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw your tendered Interest), and would increase the potential that the value of tendered Interests may change between the time you elect to tender and the Valuation Date. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

(ix) Not applicable.

(x) The Board has previously communicated to Partners certain strategy changes to the Fund which became effective on January 1, 2014. The Fund replaced the previous asset allocation ranges and liquidity requirements of the investment portfolio with a limitation that the Fund’s portfolio will not contain more than 75% in long-term illiquid private assets, as defined in the PPM (determined at the time of investment). The PPM includes a more detailed description of the Fund’s strategy and should be reviewed carefully in determining whether to tender Interests or to remain invested in the Fund.

The purchase of Interests pursuant to the Offer will have the effect of increasing the proportionate interest in the Fund of Partners who do not tender Interests. Partners who retain their Interests may be subject to increased risks that could result from the reduction in the Fund’s aggregate assets resulting from payment for the Interests tendered as well as potentially increased illiquidity of the Master Fund’s portfolio. Additionally, a reduction in the aggregate assets of the Fund may result in higher costs for remaining Partners to the extent that certain expenses borne by the Fund are relatively fixed and may not decrease if assets decline. These effects may be reduced or eliminated to the extent that additional subscriptions for Interests are made by new and existing Partners from time to time (of which there can be no assurance).

Partners that tender Interests will become investors in the PMF Fund. The PMF Fund will be one of multiple feeder funds that invest in the PMF Master Fund. The PMF Funds and such other feeder funds have entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with HarbourVest-Origami Structured Solutions L.P., a third-party feeder fund managed by certain large institutional investors (the “Third Party Feeder”), pursuant to which the Third Party Feeder has agreed to purchase from the PMF Fund (and from the other feeder funds that invest in the PMF Master Fund) interests in the PMF Master Fund in an amount equal to the amount represented by Shares tendered to the PMF Fund and such feeder funds pursuant to the PMF Funds Offer. The completion of the transactions contemplated by the Purchase and Sale Agreement is subject to certain conditions. In the event that such transactions are consummated, the Third Party Feeder may be deemed to be a control person of the PMF Master Fund and will in any case have the ability effectively to veto certain actions requiring a vote or unilaterally determine the outcome of a PMF Master Fund vote, including changes to certain governance standards and any vote required under the 1940 Act, which could adversely affect the interests of the PMF Master Fund and the Partners. Thus, investors in the Third Party Feeder may be able to exercise greater influence than investors in the other feeder funds that invest in the PMF Master Fund, including the PMF Fund, potentially to the detriment of the PMF Fund and its investors.

Additionally, in consideration of the Third Party Feeder’s agreement to purchase PMF Master Fund interests and assuming that the conditions to such purchase are met, following the Offer the PMF Master Fund Board has agreed to appoint as directors two individuals to be submitted by the Third Party Feeder prior to the closing of the Third Party Feeder investment. The Third Party Feeder anticipates appointing as directors an individual to be identified, who is expected to be affiliated with HarbourVest Partners L.P., and Jeffrey Young, a principal of Origami Capital Partners, LLC. Mr. Young was born in 1967 and is responsible for all aspects of Origami’s operations, collaborating on firm leadership, investing, and working with clients. His primary experience is in completing complex transactions and building businesses. Mr. Young graduated from the University of California, Berkeley (A.B., 1989) and the Santa Clara University School of Law (J.D., 1993). He is admitted to the

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bar in California and Nevada. The two new PMF Master Fund directors would be “interested” directors, and would have the ability effectively to veto certain actions requiring a unanimous vote of the PMF Master Fund board but would not constitute a majority and would not themselves be able to determine the outcome of any PMF Master Fund board vote, other than matters that require a unanimous vote. Such PMF Master Fund directors will not become directors of the PMF Fund. Partners are not tendering Interests or Shares to the Third Party Feeder and have no claim or rights with respect to the Third Party Feeder.

The investors in the Third Party Feeder have entered into a voting agreement with the Investment Adviser (the “Voting Agreement”) pursuant to which the investors in the Third Party Feeder agree that they will not vote to terminate the PMF Master Fund’s investment management agreement (the “Investment Management Agreement”) with the Investment Adviser unless (i) a majority of the PMF Master Fund’s independent directors has voted to so terminate the Investment Management Agreement, (ii) it has been finally determined by a court or an arbitrator that the Investment Adviser (or any officer, director, member, partner, principal or employee thereof) has engaged in willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the Investment Adviser’s office or has materially breached its obligations under the PMF Master Fund’s limited partnership agreement or (iii) such vote is in the same proportion as the other investors in the PMF Master Fund’s feeder funds (for example, if 40% of the investors in the other PMF Master Fund’s feeder funds vote to terminate the Investment Management Agreement, the investors in the Third Party Feeder may cause the Third Party Feeder to vote 40% of its interest to terminate the Investment Management Agreement). In addition, the investors in the Third Party Feeder have agreed that they will vote in favor of any nominee to serve as an independent director on the PMF Master Fund board of directors who has been nominated by a majority of the PMF Master Fund’s independent directors unless (i) they have received written advice of reputable outside counsel that voting for such nominee would be a breach of such investors’ fiduciary duties (such investors have pre-approved two existing directors of the Fund as suitable independent directors for the PMF Master Fund) or (ii) such vote is in the same proportion as the other investors in the PMF Master Fund’s feeder funds (for example, if 40% of the investors in the other PMF Master Fund’s feeder funds vote against a nominee of the independent directors of the PMF Master Fund, the investors in the Third Party Feeder may cause the Third Party Feeder to vote 40% of its interest against such nominee). The investors in the Third Party Feeder have also agreed that they will not cause the Third Party Feeder to call a meeting of the holders of the PMF Master Fund’s voting interests for the purpose of terminating the Investment Management Agreement, or to solicit proxies (including, without limitation, hiring a proxy solicitor) or the written consent of the holders of the PMF Master Fund’s voting interests in connection with a vote of such holders to terminate the Investment Management Agreement.

(xi) Not applicable.

(xii) A Partner who tenders all or a portion of its Interest to the Fund for repurchase receiving payment in kind in the form of Shares generally will not recognize any income or capital gain or loss with respect to the transaction. A Partner’s tax basis in the Shares it receives in the repurchase transaction generally will be the same as its aggregate tax basis in the tendered Interest.

(2) Not applicable.

(b) At the present time, certain Managers, members of the Board and officers of the Fund or of a Fund affiliate have indicated their intentions to have their Interests acquired in this tender offer (or to have their interests of other feeder funds of the Master Fund acquired in parallel tender offers being made simultaneously with this tender offer by such other feeder funds of the Master Fund).

Item 5. Past Contracts, Transactions, Negotiations and Agreements With Respect to the Issuer’s Securities.

The PPM (attached hereto as an exhibit) and the LP Agreement (which was provided to each Partner in advance of subscribing for an Interest) provide that the Board has the discretion to determine whether the Fund will purchase Interests from Partners from time to time pursuant to written tenders. Other than the repurchase offers that the Fund has conducted over the last two years, the Fund is not aware of any contract, arrangement, understanding or relationship relating, directly or indirectly, to this tender offer (whether or not legally enforceable) between: (i) the Fund and the Investment Adviser or the Board, or any person controlling the Fund or controlling the Investment Adviser or the Board; and (ii) any person, with respect to Interests.

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As stated above, the Fund will pay the purchase price for tendered Interests in-kind with Shares. In conjunction with the Offer, the Master Fund will transfer to the PMF Master Fund an approximately pro-rata portion of the Master Fund’s investment portfolio in an amount corresponding to the amount of Interests tendered pursuant to the Offer (and amounts tendered pursuant to similar offers conducted by other feeder funds). An approximately pro-rata division of the Master Fund’s portfolio is dependent upon the Master Fund’s ability to obtain sufficient consents from Investment Managers to transfer otherwise non-transferable Investment Fund interests that represent a proportional cross-section of the Master Fund’s portfolio as of the Valuation Date. To the extent that sufficient Investment Manager consents are received to effect an approximately pro-rata division of the Master Fund’s portfolio but one or more Investment Managers do not consent to the division of the Master Fund’s interest in the respective Investment Fund(s) managed by such Investment Manager as of the Valuation Date, the Master Fund will be unable to transfer to the PMF Master Fund a pro-rata portion of its interest in such Investment Fund. Instead, the Master Fund will be required to pay to the PMF Master Fund an amount of cash equal to the net asset value as of the Valuation Date of the relevant portion of the Master Fund’s interest proposed but unable to be transferred. Accordingly, there may be differences in the allocations and/or holdings of the portfolios of the Master Fund and the PMF Master Fund as of the Valuation Date if consents are not received from all Investment Funds. Furthermore, there can be no assurance that the net asset value of such a non-transferring fund paid in cash would ultimately represent the full value of a continuing interest in such Investment Fund. As of the Valuation Date, Shares of the PMF Fund will have the same initial value as the Interests that were tendered but thereafter will differ as the PMF Fund and the Fund will be managed differently, with the PMF Fund being managed for purposes of an orderly liquidation.

Item 6. Purposes of This Tender Offer and Plans or Proposals of the Issuer or Affiliate.

(a) The purpose of the Offer is to provide Partners with the choice of continuing with their investment in the Fund or to acquire Shares having the same initial value as their Interests but which represent an interest in the PMF Fund which will focus on passive management until liquidation rather than active management. Rather than utilizing, as the Fund does, an active management strategy of investing and reinvesting proceeds, the PMF Fund will prioritize liquidity and generally distribute proceeds to Shareholders until the PMF Fund’s portfolio has been fully liquidated.

(b) Interests that are tendered to the Fund in connection with the Offer to Purchase, if accepted for repurchase, will be repurchased and cancelled by the Fund, resulting in a potential increase in the expenses of the Fund as a percentage of the value of the Interests held by the remaining Partners (at least until there are no further issuances of Interests).

(c) None of the Fund, the Investment Adviser or any of the Managers or Directors of the Fund (or members of the Board of Directors) have any plans or proposals that relate to or would result in: (1) the acquisition by any of the above of additional Interests (other than the Fund’s intention to accept subscriptions for Interests from time to time in the discretion of the Fund), or the disposition of Interests (except for the Fund’s periodic discretionary solicitations of tender offers); (2) other than as described herein or in the cover letters filed in connection with the Offer with regard to the choice to receive Shares, an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Fund; (3) other than as described herein or in the cover letters filed in connection with the Offer with regard to the choice to receive Shares, any material change in the present distribution policy, indebtedness or capitalization of the Fund; (4) any change in the identity of the Investment Adviser, any of the Managers or any of the Directors, or in the management of the Fund including, but not limited to, any plans or proposals to change the number or the term of the Directors, to fill any existing vacancy for a Director or to change any material term of the investment advisory arrangements with the Investment Adviser; (5) other than as described herein or in the cover letters filed in connection with the Offer with regard to the choice to receive Shares, a sale or transfer of a material amount of assets of the Fund; (6) other than as described herein or in the cover letters filed in connection with the Offer, any other material change in the Fund’s structure or business, including any plans or proposals to make any changes in its fundamental investment policies, as amended, for which a vote would be required by Section 13 of the 1940 Act; or (7) any changes in the LP Agreement or other actions that might impede the acquisition of control of the Fund by any person. Because the Interests are not traded in any market, Items (6), (7) and (8) of Item 1006(c) of Regulation M-A are not applicable to the Fund.

To obtain consents, the Master Fund and the PMF Master Fund may be required to agree to indemnify Investment Funds and Investment Managers in connection with the division of the Master Fund’s portfolio or any

ix

related transfers of Investment Fund interests to the PMF Master Fund, which could expose the Master Fund and PMF Master Fund, and thus the Fund and the PMF Fund, to additional liabilities. The Master Fund may also bear the expenses imposed on transfers by Investment Funds, including fees and expenses of counsel to the Investment Funds, as well as accounting fees and expenses that the Investment Funds may incur in the future in connection with the Investment Fund’s compliance with any U.S. federal tax requirements or elections as a result of the transfers.

Item 7. Source and Amount of Funds or Other Consideration.

(a) Concurrent with the Offer, the Board of the Master Fund has approved a tender offer for up to 100% of its outstanding interests. The repurchase proceeds paid by the Master Fund will be PMF Fund Shares, which the Fund will in turn distribute to tendering Partners.

(b) An approximately pro-rata division of the Master Fund’s portfolio, and thus settlement of the Offer and payment of the purchase price, is dependent upon the Master Fund’s ability to make an approximately pro-rata division of the Master Fund’s portfolio. There can be no assurance that the Master Fund will be able to effect an approximately pro-rata division of the Master Fund portfolio by the Valuation Date. If as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Partners are cautioned that the Valuation Date is expected to occur after the date on which Interests are accepted for purchase in the Offer, and that following such date of acceptance they will not have the right to withdraw their tendered Interests prior to the Valuation Date. In addition, to the extent that subsequent to the Fund accepting Interests, the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will be required to delay the Valuation Date to June 30, 2014, in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date would not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw your tendered Interest), and would increase the potential that the value of tendered Interests may change between the time you elect to tender and the Valuation Date. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

(d) The Fund is not required, and does not expect, to borrow funds, directly or indirectly, for the purpose of the Offer.

Item 8. Interest in Securities of the Issuer.

(a) Based on December 31, 2013 estimated values, Mr. John A. Blaisdell, Manager, Director and Co-Principal Executive Officer of the Fund, beneficially owns $1,254,065 of Interests in the Fund, and an aggregate of $1,503,159 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. Andrew B. Linbeck, Manager, Director and Co-Principal Executive Officer of the Fund, beneficially owns $2,065,961 of Interests in the Fund, and an aggregate of $2,336,811 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. John E. Price, Principal Financial Officer of the Fund, beneficially owns $121,947 of Interests in the Fund, and an aggregate of $121,947 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. A. Haag Sherman, Director of the Fund, beneficially owns $1,978,061 of Interests in the Fund, and an aggregate of $2,066,434 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. Lee G. Partridge, Manager and Chief Investment Officer of the Investment Adviser, does not have any beneficial ownership in the Fund.

Based on December 31, 2013 estimated values, Mr. Jeremy L. Radcliffe, Secretary of the Fund, beneficially owns $516,490 of Interests in the Fund, and owns an aggregate of $516,490 of the interests in the fund complex.

x

Based on December 31, 2013 estimated values, Mr. Scott E. Schwinger, Independent Director of the Fund, does not have any beneficial ownership in the Fund, but beneficially owns $223,345 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. William K. Enszer, portfolio manager of the Fund, does not have any beneficial ownership in the Fund.

None of the other directors of the Fund have any beneficial ownership in the Fund or the fund complex.

(b) Other than transactions conducted pursuant to the continuous offering of Interests and the December 31, 2013 tender offer for the repurchase of Interests, there have not been any transactions involving Interests in the last 60 days.

Item 9. Persons/Assets Retained, Employed, Compensation or Used.

No persons have been employed, retained or are to be compensated by the Fund to make solicitations or recommendations in connection with the Offer to Purchase.

Item 10. Financial Statements.

The audited financial statements of the Fund for the fiscal year ended December 31, 2012, and the schedule of investments dated December 31, 2012, both filed with the SEC on EDGAR on Form N-CSR on March 11, 2013, are hereby incorporated by reference. The semi-annual, unaudited financial statements for the six month period ended June 30, 2013, filed with the SEC on EDGAR on Form N-CSRS on September 6, 2013, are hereby incorporated by reference.

Item 11. Additional Information.

(a)	(1)	None.
	(2)	None.
	(3)	Not Applicable.
	(4)	None.
	(5)	None.
(b)	None.

Item 12. Exhibits.

99.1	Cover Letter to Offers to Purchase and Letter of Transmittal.
99.2	Offers to Purchase.
99.3	Forms of Letter of Transmittal.
99.4	Private Placement Memorandum dated as of January 1, 2014 of The Endowment Institutional Fund, L.P.
99.5	Private Placement Memorandum dated as of February 20, 2014 of PMF Fund, L.P.
99.6	Chart Comparing Certain Terms of The Endowment Institutional Fund, L.P. and PMF Fund, L.P.

xi

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: February 20, 2014
THE ENDOWMENT INSTITUTIONAL FUND, L.P.
	By:     /s/ John A. Blaisdell
	Name: John A. Blaisdell
	Title: Co-Principal Executive Officer

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EXHIBIT INDEX

Exhibit
99.1	Cover Letter to Offers to Purchase and Letter of Transmittal.
99.2	Offers to Purchase.
99.3	Forms of Letter of Transmittal.
99.4	Private Placement Memorandum dated as of January 1, 2014 of The Endowment Institutional Fund, L.P.
99.5	Private Placement Memorandum dated as of February 20, 2014 of PMF Fund, L.P.
99.6	Chart Comparing Certain Terms of The Endowment Institutional Fund, L.P. and PMF Fund, L.P.

xiii

EX-99.1

Letter to Investors to Accompany Investor Choice Tender Notice

Dear Investors,

Last quarter, we shared with you our intention to develop a plan to allow you to choose among several options involving your investment in The Endowment Fund. Over the last several months, we have worked with intermediaries, liquidity providers, and regulatory authorities to deliver on that plan. We are happy to announce that this letter accompanies a tender offer form that will allow you to choose the option that is right for you and your investment portfolio.

In accordance with the plan we have developed, you have a choice among three options. You may also select a mix of these options, allocating portions of your investment across the different strategies.

Option 1: Remain invested in The Endowment Fund, an actively managed core alternatives vehicle with a focus on difficult-to-access and niche alternative strategies with low correlation to equities. This is the default option – if you do not make an election, you will stay invested in the actively managed fund.

Option 2: Enter into a liquidating fund (referred to as the Passively Managed Fund, or PMF) that will distribute cash as the underlying assets of the current portfolio are liquidated. We expect that process to take up to ten years. If you choose this option, you would tender your interest in The Endowment Fund in exchange for shares in the PMF. We refer to this process as the TEF tender offer. Investors who wish to participate in Option 2 must qualify as an Accredited Investor as defined in the tender offer materials.

Option 3: Sell your PMF investment for cash at a discount to NAV. The PMF Fund will offer to repurchase your shares at a discount reflecting an agreement by the PMF Fund to sell its investment to a third-party buyer that was selected through a formal competitive bidding process. An institutional broker, Park Hill Group, LLC, was engaged to run an auction, in which thirteen prospective buyers worked alone or together to produce seven unique bids. Under Option 3, you would first participate in the TEF tender process described in Option 2 above, and then choose to participate in PMF’s repurchase offer. PMF will repurchase your shares based on selling its investment at a corresponding discount to the winning bidder, HarbourVest – Origami Structured Solutions L.P., at the tender offer price outlined below and in the enclosed tender offer solicitation. We currently expect investors who elect Option 3 to receive cash payment of the net proceeds of the sale in mid-May, 2014, subject to possible extension for completion of the sale as described below. We refer to this process as the PMF early liquidity offer.

Please be aware that events outside of the Fund’s control may impact the timing of these tender offers. The underlying general partners (the managers of the portfolio funds in which The Endowment Fund invests) must approve the split of those investments between The Endowment Fund and the Passively Managed Fund. It is possible that a sufficient amount of the underlying general partners may decline or defer until June 30, 2014, which would delay the transaction until that date. Additionally, there is a minimum take up condition in the PMF early liquidity offer which stipulates that in the event participation

1

in Option 3 is less than 20%, the transaction may not occur. In that case, investors who select Option 3 will remain invested in the Passively Managed Fund. Please review the tender offer materials carefully, as they contain important disclosures in this regard.

Please pay particular attention to the response deadlines contained in the accompanying tender offer materials. If you do not make an election, the default will be remaining in The Endowment Fund under Option 1.

Comparison of Tender Options

	Option 1: The Endowment Fund (Continuing Option)	Option 2: Passively Managed Fund (Long Term Wind-Down)	Option 3: Early Liquidity Offer (Cash at Closing)
Investment Strategy	Core Alternatives	Core Alternatives w/ Private Equity Focus	None
Investment Approach	Actively Managed	Liquidating Only	None
New Investments	Yes	None	None
Active Asset Allocation	Yes	None	None
Opportunistic Investments	Yes	None	None
Tenders	Limited Tender Process1	None	None
Distributions	None	Quarterly as Available	Single, Up-Front
Management Fee	1.00%	0.70% for the first six quarters, 0.40% thereafter	None
Servicing Fee	1.00%	0.50% for the first six quarters, 0.40% thereafter	None
Discounted NAV	N/A	N/A	87%2

Option 1: The Endowment Fund (Actively Managed)

We are excited about the opportunities ahead for the actively managed Endowment Fund. We have confidence that a core alternatives strategy focused on niche private investment funds and difficult-to-access hedge fund strategies with low correlation to equities can serve an important diversifying role in the typical investor’s public equity-oriented portfolio. We believe that the private portion of the Fund holds a mature and varied portfolio of investments, diversified by industry, region, vintage and investment stage that could not be built or bought elsewhere. The Endowment Fund is currently positioned as follows:

	Asset Classes	Current Allocation (as of 12/31/2013)			Allocation Range
Private Investments	Equity		63	%	Typically 50-80%
	Energy
	Real Estate
Hedge Funds	Macro/Trading		37	%	Typically 20-50%
	Relative Value
	Event Driven

¹  Liquidity will be provided via periodic tender offer process as approved quarterly by the Board. The first tender offer is expected to take place no earlier than 4Q2014. Future tender offers may be as frequent as quarterly or as infrequent as annually.

²  Investors who elect Option 3 may expect to receive 87% of their NAV as calculated on 9/30/2013, subject to certain adjustments as described in the tender offer materials. These adjustments are currently estimated to have a -2.3% to -3.7% impact on the price received, but may differ based on factors described in the tender offer materials.

2

Beyond the current positions, we are excited about the future of the strategy as well. The actively managed Endowment Fund will continue to seek new investment opportunities across the core alternatives spectrum. In practice, we expect the Fund to be tilted toward a mid-market approach to private markets, where we believe smaller investors are challenged to build sufficiently diversified portfolios. The Fund is also positioned to access seeding opportunities and early-stage investments that allow Endowment Fund investors to capture more economics and reduce overall fees. Additionally, the Adviser has made steady progress on identifying managers in the hedge fund space who can potentially deliver returns in a lower, more fee-efficient manner.

As part of our commitment to and enthusiasm about the portfolio, we are also pleased to inform you that the Adviser has redeemed the interest formerly held by Morgan Creek Capital Management. The Adviser is now wholly-owned by Salient, and the Salient team (as associated persons of the Adviser) has sole management of the portfolio.

The investment team is experienced and benefits from a variety of backgrounds. Chief Investment Officer, Lee Partridge, served in an executive role for the Teacher Retirement System of Texas, one of the largest public pension plans in the country. Chief Risk Officer, Ben Hunt, was formerly an equity long/short portfolio manager. Portfolio Manager, Bill Enszer, has run multi-manager portfolios for Salient for several years, and did so previously at Redstone Asset Management, as well. Deputy Chief Investment Officer, Rusty Guinn, was the Director of Texas Teachers’ $12 billion Strategic Partnerships program, a multi-asset portfolio spanning a similar range of public and private investments. Director of Investments, Todd Centurino, was the Portfolio Manager for Texas Teachers’ multi-billion dollar equity market neutral and long/short equity portfolios. These professionals are supported by a team of ten investment and due diligence professionals in the management of The Endowment Fund and the other more than $2 billion in alternative investments overseen by Salient and its affiliates.

In summary, we believe that the actively managed Endowment Fund, focused on difficult-to-access and niche alternative strategies with low correlation to equities, led by a team of experienced investment professionals, continues to serve as a viable core alternative allocation in investors’ portfolios.

You should read carefully the updated Private Placement Memorandum of The Endowment Fund included in your tender offer materials prior to making a decision as to whether to remain invested in The Endowment Fund. If you take no action, you will remain invested in The Endowment Fund by default. Your investment will not be discounted in any way.

Option 2: The Passively Managed Fund (Long Term Wind-Down)

Investors who elect the Passively Managed Fund will receive an approximately pro rata portion of the portfolio they own through their investment in The Endowment Fund as of the closing date. Unlike Option 1, however, the Passively Managed Fund will include no new investments and will emphasize providing investor liquidity over time. Investors in the PMF should expect the following:

• As soon as practicable after the acceptance of interests for purchase in the tender offer, the Adviser will seek to redeem all underlying funds for which it is possible to do so. For underlying funds with lock-up periods, redemptions will be submitted as soon as it is possible. We expect that this will accelerate liquidity of a significant portion of the hedge fund portfolio in 2014.

3

• Any distributions of capital or redemptions from underlying managers will be distributed to investors on a quarterly basis, subject to the Fund holding up to 5% in cash to back future capital commitments, a minimum quarterly distribution of $10 million, and payment of fees and expenses associated with the Fund. We expect that complete liquidation of the PMF will take up to 10 years.

• The Fund must continue to honor commitments of capital to private markets funds; other than funding these investments and cash management, no new investments will be made.

Option 3: Early Liquidity Offer (Cash at Closing)

As noted above, we developed an option for shareholders to fully and quickly liquidate their investment as part of a tender offer. Investors who choose to participate in Option 3 would be able to fully liquidate their TEF holdings in the coming months.

The process would include (1) participating in the TEF tender offer that exchanges TEF interests for PMF interests, and (2) participating in the PMF early liquidity offer, in which PMF will purchase those PMF shares for cash. Please see the enclosed tender solicitation materials for a complete description of that offer and the related process.

• As noted in the enclosure, the cash price to be paid in the PMF early liquidity offer will be calculated on the basis of TEF’s September 30, 2013 net asset value. The reason for the September 30 NAV “as of” date is that the competitive bidding process required significant lead time for due diligence, bidding, regulatory matters, and contract negotiation.

• This purchase price will be subject to adjustments based on cash flows out of The Endowment Fund between September 30, 2013 and the closing date of the transaction and certain expenses of the transaction. Please carefully review the tender offer materials to understand each of these adjustments and our estimates of their potential impact on proceeds.

• Third party purchasers are in a position to purchase interests in the Passively Managed Fund equivalent to as many interests as investors wish to sell to PMF in the PMF early liquidity offer. If you wish to tender your entire interest (or a portion thereof) at the PMF early liquidity, you may do so.

• The cash proceeds from this option are expected to be paid out in mid-May, 2014, subject to possible extension for completion of the sale.

As you consider each of these options, we urge you to thoroughly review the tender offer materials, including supplemental disclosures of portfolio positions, to make your decision among these options. Consider in particular certain potential tax implications. Selling your interest at a discount in accordance with Option 3 does not necessarily mean that it will be treated as a capital loss, since your account may still have accrued unrealized gains over the full investment period. For those who elect Option 3, you should expect a tax estimate in April, subject to possible extension for completion of the sale, and final K-1s in 2015.

Investors are advised to read the Fund’s tender offer statement when it is available because it contains important information. Investors are further advised that they can obtain the tender offer statement and other filed documents free of charge at the Securities and Exchange Commission’s web site (www.sec.gov). In addition, the Fund will send investors copies of the tender offer statement and related documentation free of charge.

4

EX-99.2

EX-99.2

Exhibit 99.2

Offer to Purchase

THE ENDOWMENT INSTITUTIONAL FUND, L.P.

P.O. Box 182663

Columbus, Ohio 43218-2663

Offer to Purchase All Outstanding

Limited Partnership Interests at Net Asset Value

Dated February 20, 2014

The Offer Will Expire at

Midnight, New York City Time, on March 19, 2014,

Unless the Offer is Extended

To the Partners of The Endowment Institutional Fund, L.P.:

The Endowment Institutional Fund, L.P., a closed-end, non-diversified, management investment company organized as a Delaware limited partnership (the “Fund”), is offering to purchase on the terms and conditions set forth in this offer to purchase (the “Offer to Purchase”) and the related Letter of Transmittal (which together with the Offer to Purchase constitutes the “Offer”) all outstanding limited partnership interests in the Fund or portions thereof pursuant to tenders by Partners at a price equal to their estimated net asset value as of March 31, 2014 (or, solely in the event that it is necessary to extend such date in order to satisfy certain conditions of the Offer as set forth in the Offer to Purchase, June 30, 2014) (the “Valuation Date”). The Offer is currently scheduled to expire at midnight, New York City Time, on March 19, 2014, but the Fund may extend this date (such time and date, as it may be extended, the “Expiration Date”). (As used in the Offer, the term “Interest,” or “Interests,” as the context requires, shall refer to limited partnership interests in the Fund and those interests and portions thereof that have been tendered for repurchase.) The Offer is being made to all Partners and is not conditioned on any minimum amount of Interests being tendered, but is subject to certain conditions described herein. Interests are not traded on any established trading market and are subject to strict restrictions on transferability pursuant to the Fund’s Agreement of Limited Partnership dated as of December 8, 2009 (the “LP Agreement”). Capitalized terms used in this tender offer filing but not otherwise defined shall have the meanings ascribed to them in the Fund’s Private Placement Memorandum dated as of January 1, 2014 (the “PPM”), which is included herewith. The Offer is being made simultaneously with a cash tender offer by the PMF Fund (as defined below) in which Partners tendering Interests pursuant to the Offer, and therefore becoming holders of Shares of the PMF Fund, will have the opportunity to participate (the “PMF Funds Offer”). The Offer is not contingent upon the completion of the PMF Funds Offer.

The Fund is one of several “feeder” funds into The Endowment Master Fund, L.P. (the “Master Fund”), which then invests its capital in Investment Funds. The Board of the Master Fund has approved a tender offer for all of the outstanding capital of its Partners, including the Fund. The Board of the Fund has approved a tender offer for all of the Fund’s outstanding Interests. The Offer is conditioned on the Master Fund’s ability to obtain the approval of the Investment Managers to divide and transfer the Master Fund’s interest in Investment Funds to effect an approximately pro-rata division of its portfolio. If as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Partners are cautioned that the Valuation Date is expected to occur after the date on which Interests are accepted for purchase in the Offer, and that following such date of acceptance they will not have the right to withdraw their tendered Interests prior to the Valuation Date.

Unlike the Fund’s prior offers to repurchase Interests, Partners who choose to tender their Interests will receive shares of a newly-formed fund (the “PMF Fund”) that will be managed to liquidate over time, distributing its capital to investors. The opportunity presented by the Offer, to obtain shares of a liquidating fund in an amount equal to the full value of a Partner’s Interest, is unlikely to be repeated in the future. Future repurchase offers, if any, will likely be for cash in substantially smaller amounts than previous repurchase amounts and likely will not provide for a choice similar to that presented by the Offer. The Fund does not anticipate considering any future repurchase offers until the fourth quarter of 2014 at the earliest.

xiv

Partners who desire to retain their investment in the Fund may ignore the Offer.

The repurchase price for Interests tendered and accepted will not be paid in cash, but in-kind with tendering Partners receiving 100% of their repurchase proceeds in shares of interest (the “Shares”) in PMF Fund, L.P. The PMF Fund is a newly-formed, closed-end, non-diversified registered investment company that invests substantially all of its assets in The Endowment PMF Master Fund, L.P. (the “PMF Master Fund” and, together with the PMF Fund, the “PMF Funds”), which also is a newly-formed, closed-end, non-diversified, registered investment company. Shares of the PMF Fund are only available to Partners that tender their Interests pursuant to the Offer. The PMF Funds have been created to provide Partners a choice of converting their Interests in the Fund, which is a continuously-offered fund with an actively managed portfolio, into Shares of the PMF Fund, which is a fund that prioritizes Partner liquidity over active management. Instead of reinvesting proceeds generated by redemptions of and distributions received from underlying Investment Funds, the PMF Funds will generally distribute such proceeds to the Shareholders (as described in the PMF Fund’s Private Placement Memorandum (the “PMF PPM”)), until such time as the PMF Master Fund portfolio has been entirely liquidated.

The PMF Master Fund’s portfolio will represent an approximately pro-rata division of the portfolio of The Endowment Master Fund, L.P. (the “Master Fund”) based on a valuation as of the Valuation Date, such that Partners tendering their Interests will receive Shares that represent an ownership interest in approximately the same underlying portfolio of investments represented by the tendered Interests immediately prior to the Valuation Date. As of the Valuation Date, Shares of the PMF Fund will have the same value as the Interests that were tendered but thereafter will differ as the PMF Fund and the Fund are managed differently, with the PMF Fund being managed for purposes of an orderly liquidation. Settlement of the Offer and payment of the Shares to tendering Partners are not expected to occur until after the Valuation Date, as described in more detail herein.

Partners may tender part or all of their Interests. Partners who do not tender all of their Interests will remain invested in the Fund. The Fund will continue to be offered to existing and prospective Partners, unlike the PMF Fund, which will not be available to new investors following the conclusion of the Offer. The Fund will continue to pursue its investment objective utilizing an active management strategy, unlike the PMF Fund which will prioritize liquidity and distributions over active management until it is fully liquidated.

Prior to deciding whether to tender Interests pursuant to the Offer (and thereby become an investor in the PMF Fund) or to remain invested in the Fund, Partners should carefully review the PPM and the PMF PPM, which include detailed information regarding the investment objective, risks, fees and expenses of the Fund and PMF Fund, respectively. Partners should note that transfers of the PMF Fund shares are restricted and will not be permitted except as approved by the board of directors of the PMF Fund, as set forth in more detail in the PMF PPM. The board of directors of the PMF Fund will not in most circumstances permit transfers of the Shares for value. The PPM and the PMF PPM are enclosed. Also included herewith is a chart comparing certain terms/aspects of the Fund and the PMF Fund.

Partners should realize that the value of the Interests tendered in the Offer will likely change between the most recent time net asset value was calculated and communicated to them and the Valuation Date (which will be either March 31, 2014 or June 30, 2014), when the value of the Interests tendered to the Fund will be determined for purposes of the Offer, and such change could be material. The Fund determines the estimated net asset value monthly based on the information it receives from the managers of the Investment Funds in which it invests. Any tendering Partners that wish to obtain the estimated net asset value of their Interests on this basis should contact the Support Desk of Endowment Advisers, L.P. at (800) 725-9456 Monday through Friday, except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m. (New York City Time).

Partners desiring to tender all or any portion of their Interest in accordance with the terms of the Offer should complete and sign the appropriate forms in accordance with the procedures in the Offer to Purchase.

xv

IMPORTANT

NONE OF THE FUND, THE INVESTMENT ADVISER OR ANY OF THE MANAGERS OR DIRECTORS OF THE FUND MAKE ANY RECOMMENDATION TO ANY PARTNER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING INTERESTS. PARTNERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER INTERESTS, AND, IF SO, THE PORTION OF THEIR INTERESTS TO TENDER.

BECAUSE EACH PARTNER’S INVESTMENT DECISION IS A PERSONAL ONE, BASED ON ITS FINANCIAL CIRCUMSTANCES, NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE FUND AS TO WHETHER PARTNERS SHOULD TENDER INTERESTS PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE FUND.

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR ON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

Questions and requests for assistance and requests for additional copies of the Offer to Purchase may be directed to the Investment Adviser.

Endowment Advisers, L.P.

P.O. Box 182663

Columbus, Ohio 43218-2663

Phone: (800) 725-9456

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THE ENDOWMENT INSTITUTIONAL FUND, L.P.

OFFER TO PURCHASE

TABLE OF CONTENTS

Section	Page
Summary Term Sheet		1
1. Background and Purpose of the Offer		3
2. Offer to Purchase		5
3. Amount of Tender		7
4. Procedure for Tenders		7
5. Withdrawal Rights		7
6. Purchases and Payment		8
7. Certain Conditions of the Offer		9
8. Certain Information About the Fund		10
9. Certain Federal Income Tax Consequences		11
10. Miscellaneous		11
Financial Statements (incorporated by reference)		11

SUMMARY TERM SHEET

• As disclosed in the Fund’s private placement memorandum dated as of January 1, 2014, as it may be amended and supplemented from time to time (the “PPM”), the Investment Adviser intends to recommend to the Board and the Board is expected to approve offers to buy your limited partnership interests at their estimated net asset value (that is, the estimated value of the Fund’s assets minus its liabilities, multiplied by the proportionate interest in the Fund you desire to sell) via a tender offer process. The current offer will remain open until midnight, New York City Time, on March 19, 2014 (the “Expiration Date”) with the estimated net asset value calculated for the purpose of the Offer as of March 31, 2014 (or, solely in the event that it is necessary to extend such date in order to satisfy certain conditions of the Offer as set forth herein, June 30, 2014) as described herein (the “Valuation Date”). Capitalized terms used in this tender offer filing but not otherwise defined have the meanings ascribed to them in the PPM. The Offer is being made simultaneously with a cash tender offer by the PMF Fund (as defined below) in which Partners tendering Interests pursuant to the Offer, and therefore becoming holders of Shares of the PMF Fund, will have the opportunity to participate (the “PMF Funds Offer”). The Offer is not contingent upon the completion of the PMF Funds Offer.

• Unlike the Fund’s prior offers to repurchase Interests, with respect to which the Fund paid repurchase proceeds in cash, proceeds for Interests tendered and accepted pursuant to the Offer will not be paid in cash. Proceeds for tendered Interests will be paid in-kind with tendering Partners receiving 100% of their repurchase proceeds in shares of limited partnership interest (the “Shares”) in PMF Fund, L.P. (the “PMF Fund”), a newly-formed, closed-end, non-diversified, registered investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”) that invests substantially all of its assets in The Endowment PMF Master Fund, L.P. (the “PMF Master Fund” and together with the PMF Fund, the “PMF Funds”), which also is a newly-formed, closed-end, non-diversified, registered investment company.

• The option presented by the Offer — specifically, the choice of obtaining shares of a liquidating fund in an amount equal to the full value of a Partner’s Interest in the Fund — is unlikely to be repeated in the future. Additionally, as disclosed previously to Partners, the Fund’s strategy has changed such that a larger percentage of its portfolio may consist of long-term illiquid securities, as described in further detail in the PPM, which is attached hereto. Future repurchase offers, if any, will likely be for cash in substantially smaller amounts than previous repurchase amounts and likely will not provide for a choice similar to that presented by the Offer. The Fund does not anticipate considering any repurchase offers until the fourth quarter of 2014 at the earliest.

• Shares of the PMF Fund are only available to Partners that tender their Interests pursuant to the Offer. The PMF Funds have been created to provide Partners with the choice of effectively converting their Interests in the Fund, which is a continuously-offered fund with an actively managed portfolio, into Shares of the PMF Fund, which is a fund that prioritizes returning Partners’ liquidity over active management. Instead of reinvesting proceeds generated by redemptions of and distributions received from underlying investments, the PMF Funds will generally distribute such proceeds to their respective investors (as described in the PMF Fund’s Private Placement Memorandum (the “PMF PPM”), which is included herewith), until such time as the PMF Master Fund portfolio has been entirely liquidated.

• The PMF Master Fund’s portfolio will represent an approximately pro-rata division of the portfolio of The Endowment Master Fund, L.P. (the “Master Fund”) as of the Valuation Date, such that Partners tendering their Interests will receive PMF Fund Shares that represent an ownership interest in approximately the same underlying portfolio of Investments as represented by the tendered Interests immediately prior to the Valuation

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Date. Thus, as of the Valuation Date, Shares of the PMF Fund will have the same value as the Interests that were tendered but such net asset value thereafter will diverge as the PMF Fund and the Fund will be managed differently, with the PMF Fund returning capital until liquidation, and also having different fees and expenses from the Fund.

• As described above, the PMF Master Fund’s portfolio will represent an approximately pro-rata division of the Master Fund’s portfolio. An approximately pro-rata division of the Master Fund’s portfolio is dependent upon the Master Fund’s ability to obtain sufficient consents from the investment managers (each, an “Investment Manager”) of the underlying Investment Fund interests to transfer otherwise non-transferable Investment Fund interests that represent a proportional cross-section of the Master Fund’s portfolio as of the Valuation Date. To the extent that sufficient Investment Manager consents are received to effect an approximately pro-rata division of the Master Fund’s portfolio but one or more Investment Managers do not consent to the division of the Master Fund’s interest in the respective Investment Fund(s) managed by such Investment Manager as of the Valuation Date, the Master Fund will be unable to transfer to the PMF Master Fund a pro-rata portion of its interest in such Investment Fund. Instead, the Master Fund will be required to pay to the PMF Master Fund an amount of cash equal to the net asset value as of the Valuation Date of the relevant portion of the Master Fund’s interest proposed but unable to be transferred. Accordingly, there may be differences in the allocations and/or holdings of the portfolios of the Master Fund and the PMF Master Fund as of the Valuation Date if consents are not received from all Investment Funds. Furthermore, there can be no assurance that the net asset value of such a non-transferring fund paid in cash would ultimately represent the full value of a continuing interest in such Investment Fund. As of the Valuation Date, Shares of the PMF Fund will have the same initial value as the Interests that were tendered but thereafter will differ as the PMF Fund and the Fund will be managed differently, with the PMF Fund being managed for purposes of an orderly liquidation.

• There can be no assurance that the Master Fund will be able to effect an approximately pro-rata division of the Master Fund portfolio by the Valuation Date. If as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Partners are cautioned that the Valuation Date is expected to occur after the date on which Interests are accepted for purchase in the Offer, and that following such date of acceptance they will not have the right to withdraw their tendered Interests prior to the Valuation Date.

• In light of the necessity for Investment Fund transfers to be duly authorized and effected to divide the Master Fund’s portfolio as of the Valuation Date, settlement of the Offer and payment may only be made following the execution of the required transfer agreements, which may not occur until after the date on which Interests are accepted for purchase in the Offer. Due to, among other things, the large number of Investment Funds held and the varying degrees of cooperation needed from the Investment Managers, the date as of which transfer agreements will be executed is uncertain. To the extent that the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will be required to delay the Valuation Date to June 30, 2014, in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date would not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw your tendered Interest), and would increase the potential that the value of tendered Interests may change between the time you elect to tender and the Valuation Date. As discussed above, if as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

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• Partners may tender part or all of their Interests. Partners who do not tender all of their Interests will remain invested in the Fund to the extent of the Interests not tendered. The Fund will continue to be offered to existing and prospective investors, unlike the PMF Fund, which will not be available to new investors following the conclusion of the Offer. The Fund will continue to pursue its investment objective utilizing an active management strategy, unlike the PMF Fund which will prioritize liquidity and distributions over active management until it is fully liquidated.

• Following this summary is a formal notice of the Offer to Purchase Interests. The Offer will remain open until the Expiration Date, unless extended. You may withdraw your tendered Interest until the Expiration Date and, if Interests have not yet been accepted by the Fund, after the expiration of 40 business days from the commencement of the Offer. If you would like to tender part or all of your Interests, you should read and complete a Letter of Transmittal (the enclosed Tender Offer Form will suffice), enclosed with the Offer to Purchase, and contact your financial advisor for specific return instructions. Allow for additional processing time by your financial intermediary if necessary as the form must ultimately be submitted to Endowment Advisers, L.P. (the “Investment Adviser”), at P.O. Box 182663, Columbus, Ohio 43218-2663, Attention: The Endowment Fund or faxed to Endowment Advisers, L.P. at (866) 624-0077, Attention: The Endowment Fund. If you choose to fax the Letter of Transmittal (the enclosed Tender Offer Form will suffice), you should mail the original Letter of Transmittal (the enclosed Tender Offer Form will suffice) promptly after you fax it. Properly completed mailed Letters of Transmittal (the enclosed Tender Offer Form will suffice) or faxed Letters of Transmittal (the enclosed Tender Offer Form will suffice) must be received prior to the Expiration Date. The value of your Interests will likely change between the most recent time the net asset value was calculated and communicated to you and the Valuation Date, when the value of your Interest will be determined for purposes of calculating your purchase price.

• If you would like to obtain the estimated net asset value of your Interest, which the Fund’s administrator calculates monthly based on the information the Fund receives from the managers of the Investment Funds, you may contact the Support Desk of the Investment Adviser at (800) 725-9456, Monday through Friday, except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m. (New York City Time). Please note that although you have the opportunity to have your Interest repurchased, we reserve the right, subject to applicable law, to cancel, amend or postpone the Offer prior to the earlier to occur of the Expiration Date (as such may be extended) or when the tendered Interests have been accepted by the Fund or under other circumstances as described herein.

• Before deciding to tender your Interest and become an investor in the PMF Fund or, alternatively, to retain your investment in the Fund, please review carefully the PPM and the PMF PPM, which include detailed information regarding the investment objective, risks, fees and expenses of the Fund and PMF Fund, respectively. Each PPM is enclosed herewith. Also included herewith is a chart comparing certain terms/aspects of the Fund and the PMF Fund.

• If you do not wish to tender your Interest, you may ignore the Offer.

1. Background and Purpose of the Offer. The purpose of the Offer is to provide Partners with the choice of continuing with their investment in the Fund or acquiring Shares having the same initial value as their Interest in the Fund. The Shares that tendering Partners will receive as repurchase proceeds will represent an interest in a separate investment vehicle with a focus on passive management until liquidation rather than active management. Instead of reinvesting proceeds received from Investment Funds (i.e., withdrawal or liquidation proceeds), the PMF Fund will generally distribute such proceeds to its shareholders until the PMF Fund is fully liquidated and thus, the PMF Fund will have a finite term. In contrast, the Fund, consistent with its active management style, generally reinvests proceeds received from underlying Investment Funds. Partners that wish to dispose of and/or liquidate their Interests should consider tendering their Interests to the Fund pursuant to the Offer. Partners that wish to remain in the Fund may ignore the Offer.

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As previously communicated to Partners, the Board approved strategy changes for the Fund, which became effective on January 1, 2014. The Fund replaced the previous asset allocation ranges and liquidity requirements of the investment portfolio with a limitation that the Fund’s portfolio will not contain more than 75% in longer term illiquid private assets, as defined in the PPM (determined at the time of investment). The change in strategy permits a larger percentage of longer term illiquid assets to be held in the Fund’s portfolio. As a result, amounts offered in future cash repurchase offers, if any, will likely be smaller than those amounts that have been offered for repurchase historically due to the potentially increased illiquidity of the Fund’s investment portfolio. The Fund does not anticipate considering any future repurchase offers until the fourth quarter of 2014 at the earliest.

Tendering Partners will become investors in the PMF Fund, which is only available to Partners that tender their Interests pursuant to the Offer. Following the conclusion of the Offer, the PMF Fund will not be available to new Partners. The PMF Fund has a different investment objective and is subject to different risks, fees and expenses. Transfers of the Shares are strictly limited and are not permitted except as approved by the Board, as set forth in more detail in the PMF Fund PPM. The PMF Fund is one of multiple feeder funds that invest substantially all of their assets in the PMF Master Fund. The PMF Funds have entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with HarbourVest - Origami Structured Solutions L.P., a third-party feeder fund managed by certain large institutional investors (the “Third Party Feeder”), pursuant to which Third Party Feeder has agreed to purchase from the PMF Fund (and from the other feeder funds that invest in the PMF Master Fund) interests in the PMF Master Fund in an amount equal to the amount represented by Shares tendered to the PMF Fund (and the other feeder funds that invest in the PMF Master Fund) pursuant to the PMF Funds Offer. The completion of the transactions contemplated by the Purchase and Sale Agreement is subject to certain conditions. In the event that such transactions are consummated, the Third Party Feeder may be deemed to be a control person of the PMF Master Fund and will in any case have the ability effectively to veto certain actions requiring a vote or unilaterally determine the outcome of a PMF Master Fund vote, including changes to certain governance standards and any vote required under the 1940 Act. Additionally, the Third Party Feeder has had an opportunity to review the Master Fund’s portfolio holdings and may have access to information not generally available to Partners. Thus, investors in the Third Party Feeder may be able to exercise greater influence than investors in the other feeder funds that invest in the PMF Master Fund, including the PMF Fund, potentially to the detriment of the PMF Fund and its investors.

Additionally, the PMF Master Fund has agreed to appoint as directors two individuals to be submitted by the Third Party Feeder prior to the closing of the Third Party Feeder investment. The Third Party Feeder anticipates appointing as directors an individual to be identified, who is expected to be affiliated with HarbourVest Partners L.P., and Jeffrey Young, a principal of Origami Capital Partners, LLC. Mr. Young was born in 1967 and is responsible for all aspects of Origami’s operations, collaborating on firm leadership, investing, and working with clients. His experience is in completing complex transactions and building businesses. Mr. Young graduated from the University of California, Berkeley (A.B., 1989) and the Santa Clara University School of Law (J.D., 1993). He is admitted to the bar in California and Nevada. The two new PMF Master Fund directors would be “interested” directors, and would have the ability effectively to veto certain actions requiring a unanimous vote of the PMF Master Fund board but would not constitute a majority and would not themselves be able to determine the outcome of any PMF Master Fund board vote, other than matters that require a unanimous vote. Such PMF Master Fund directors will not become directors of the PMF Fund. Partners are not tendering Interests or Shares to the Third Party Feeder and have no claim or rights with respect to the Third Party Feeder. Please carefully review the PPM and the PMF PPM for detailed information on the risks, fees and expenses of each. Also included herewith is a chart comparing certain terms/aspects of the Fund and the PMF Fund.

The investors in the Third Party Feeder have entered into a voting agreement with the Investment Adviser (the “Voting Agreement”) pursuant to which the investors in the Third Party Feeder agree that they will not vote to terminate the PMF Master Fund’s investment management agreement (the “Investment Management Agreement”) with the Investment Adviser unless (i) a majority of the PMF Master Fund’s independent directors has voted to so terminate the Investment Management Agreement, (ii) it has been finally determined by a court or an arbitrator that the Investment Adviser (or any officer, director, member, partner, principal or employee thereof) has engaged in willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the

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Investment Adviser’s office or has materially breached its obligations under the PMF Master Fund’s limited partnership agreement or (iii) such vote is in the same proportion as the other investors in the PMF Master Fund’s feeder funds (for example, if 40% of the investors in the other PMF Master Fund’s feeder funds vote to terminate the Investment Management Agreement, the investors in the Third Party Feeder may cause the Third Party Feeder to vote 40% of its interest to terminate the Investment Management Agreement). In addition, the investors in the Third Party Feeder have agreed that they will vote in favor of any nominee to serve as an independent director on the PMF Master Fund board of directors who has been nominated by a majority of the PMF Master Fund’s independent directors unless (i) they have received written advice of reputable outside counsel that voting for such nominee would be a breach of such investors’ fiduciary duties (such investors have pre-approved two existing directors of the Fund as suitable independent directors for the PMF Master Fund) or (ii) such vote is in the same proportion as the other investors in the PMF Master Fund’s feeder funds (for example, if 40% of the investors in the other PMF Master Fund’s feeder funds vote against a nominee of the independent directors of the PMF Master Fund, the investors in the Third Party Feeder may cause the Third Party Feeder to vote 40% of its interest against such nominee). The investors in the Third Party Feeder have also agreed that they will not cause the Third Party Feeder to call a meeting of the holders of the PMF Master Fund’s voting interests for the purpose of terminating the Investment Management Agreement, or to solicit proxies (including, without limitation, hiring a proxy solicitor) or the written consent of the holders of the PMF Master Fund’s voting interests in connection with a vote of such holders to terminate the Investment Management Agreement.

The purchase of Interests pursuant to the Offer will have the effect of increasing the proportionate interest in the Fund of Partners who do not tender Interests. Partners who retain their Interests may be subject to increased risks that could result from the reduction in the Fund’s aggregate assets resulting from payment for the Interests tendered as well as potentially increased illiquidity of the Master Fund’s portfolio. Additionally, a reduction in the aggregate assets of the Fund may result in Partners who do not tender Interests bearing higher costs to the extent that certain expenses borne by the Fund are relatively fixed and may not decrease if assets decline. These effects may be reduced or eliminated to the extent that additional subscriptions for Interests are made by new and existing Partners from time to time (of which there can be no assurance).

Interests that are tendered to the Fund in connection with the Offer to Purchase, if accepted for repurchase, will be repurchased and cancelled, resulting in an increase in the expenses of remaining Partners (assuming no further issuances of Interests).

2. Offer to Purchase. The Fund will purchase, upon the terms and subject to the conditions of the Offer, up to all of the Fund’s outstanding Interests that are properly tendered by and not withdrawn before the Expiration Date. The purchase price of Interests tendered to the Fund will be their estimated net asset value as of the close of business on the Valuation Date.

Unlike prior repurchase offers conducted by the Fund, the purchase price for Interests tendered to the Fund will not be paid in cash. The purchase price will be paid in-kind in the form of Shares. The Fund is offering to purchase up to the full net asset value of the Fund’s Interests in an effort to provide Partners with the choice of continuing with their investment in the Fund or acquiring Shares having the same initial value as their Interests but which represent an interest in a separate investment vehicle with a focus on passive management until liquidation rather than active management. Instead of reinvesting proceeds received from Investment Funds (i.e., withdrawal or liquidation proceeds), the PMF Fund will generally distribute such proceeds to its Shareholders until the PMF Fund is fully liquidated. Partners that do not tender all of their Interests will remain in the Fund with limited liquidity generally only available through future repurchase offers, to the extent such offers are approved by the Board, as set forth in the PPM.

The PMF Fund is a newly-formed, closed-end, non-diversified, registered investment company that invests substantially all of its assets in the PMF Master Fund, which also is a newly-formed, closed-end, non-diversified, registered investment company. Shares are only available to Partners that tender their Interests pursuant to the Offer. The PMF Master Fund’s portfolio will represent an approximately pro-rata division of the Master Fund’s portfolio as of the Valuation Date, such that Partners tendering their Interests will receive PMF Fund Shares that represent an ownership interest in approximately the same underlying portfolio of investments represented by the tendered Interests immediately prior to the Valuation Date. As of the Valuation Date, Shares will have the same value as the Interests that were tendered but thereafter will differ as the PMF Fund and the Fund are managed differently, with the PMF Fund being managed for purposes of an orderly liquidation. Settlement of the Offer and payment of the Shares are not expected to occur until after the Valuation Date, as described in more detail herein.

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As described above, the PMF Master Fund’s portfolio will represent an approximately pro-rata division of the Master Fund’s portfolio. An approximately pro-rata division of the Master Fund’s portfolio is dependent upon the Master Fund’s ability to obtain sufficient consents from the investment managers (each, an “Investment Manager”) of the underlying Investment Fund interests to transfer otherwise non-transferable Investment Fund interests that represent a proportional cross-section of the Master Fund’s portfolio as of the Valuation Date. To the extent that sufficient Investment Manager consents are received to effect an approximately pro-rata division of the Master Fund’s portfolio but one or more Investment Managers do not consent to the division of the Master Fund’s interest in the respective Investment Fund(s) managed by such Investment Managers as of the Valuation Date, the Master Fund will be unable to transfer to the PMF Master Fund a pro-rata portion of its interest in such Investment Funds. Instead, the Master Fund will be required to pay to the PMF Master Fund an amount of cash equal to the net asset value as of the Valuation Date of the relevant portion of the Master Fund’s interest proposed but unable to be transferred. Accordingly, there may be differences in the allocations and/or holdings of the portfolios of the Master Fund and the PMF Master Fund as of the Valuation Date if consents are not received from all Investment Funds. Furthermore, there can be no assurance that the net asset value of such a non-transferring Investment Fund paid in cash would ultimately represent the full value of a continuing interest in such Investment Fund.

There can be no assurance that the Master Fund will be able to effect an approximately pro-rata division of the Master Fund portfolio by the Valuation Date. If as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Partners are cautioned that the Valuation Date is expected to occur after the date on which Interests are accepted for purchase in the Offer, and that following such date of acceptance they will not have the right to withdraw their tendered Interests prior to the Valuation Date.

In light of the necessity for Investment Fund transfers to be duly authorized and effected to divide the Master Fund’s portfolio as of the Valuation Date, settlement of the Offer and payment may only be made following the execution of the required transfer agreements, which may not occur until after the date on which Interests are accepted for purchase in the Offer. Due to, among other things, the large number of Investment Funds held and the varying degrees of cooperation needed from the Investment Managers, the date as of which transfer agreements will be executed is uncertain. To the extent that the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will be required to delay the Valuation Date to June 30, 2014, in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date would not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw your tendered Interest), and would increase the potential that the value of tendered Interests may change between the time you elect to tender and the Valuation Date. As discussed above, if as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

In addition to the differences described above between the Fund and the PMF Fund, there are also differences in risks, fees and expenses.

Accordingly, before deciding to tender your Interest and become an investor in the PMF Fund or, alternatively, to retain your investment in the Fund, Partners should carefully review the PPM and the PMF PPM, which include detailed information regarding the investment objective, risks, fees and expenses of the Fund and PMF Fund, respectively. Each PPM is enclosed herewith, as well as a chart comparing certain terms/aspects of the Fund and the PMF Fund.

The Fund is one of several “feeder” funds that invests all of its capital into the Master Fund, which then invests its capital in Investment Funds. The Board of the Master Fund has approved a concurrent repurchase offer to be conducted by the Master Fund in an amount up to all outstanding interests of the Master Fund. The Board of the Fund has approved the Offer.

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If the Fund elects to extend the tender period, the Valuation Date (the date as of which estimated net asset value of Interests will be determined) may, upon the terms and conditions described herein, be delayed to June 30, 2014. The Fund reserves the right to extend, amend or cancel the Offer as described herein. The purchase price of an Interest tendered will be its estimated net asset value as of the close of business on the Valuation Date.

As of the close of business on December 31, 201, the outstanding Interests had an approximate aggregate net asset value of $28,131,798 (based on the estimated net asset value of such Interests). The Fund’s administrator determines its estimated net asset value monthly based on information it receives from the managers of the Investment Funds in which it invests. Partners may obtain this information by contacting the Support Desk of Endowment Advisers, L.P. at (800) 725-9456, Monday through Friday, except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m. (New York City Time). Of course, the value of the Interests tendered by the Partners likely will change between the most recent time net asset value was calculated and communicated to you and the Valuation Date.

In the event that the Investment Adviser or any of its affiliates holds an Interest in the Fund, such Interest may be tendered for repurchase in connection with the Offer, without notice to Partners.

3. Amount of Tender. Partners may tender their entire Interest or a portion of their Interest. The Offer is being made to all Partners and is not conditioned on any minimum amount of Interests being tendered. The Fund is offering to purchase up to the full net asset value of all of the Fund’s outstanding Interests as of the Valuation Date. All Interests tendered will be accepted for repurchase by the Fund unless the Fund elects to cancel or amend the Offer.

At the present time, certain Managers, members of the Board and officers of the Fund or of a Fund affiliate have indicated their intentions to have their Interests acquired in this tender offer (or to have their interests in other feeder funds of the Master Fund acquired in parallel tender offers being made simultaneously with this tender offer by such other feeder funds of the Master Fund).

4. Procedure for Tenders. Partners wishing to tender Interests pursuant to the Offer should read and complete and execute the Letter of Transmittal (the enclosed Tender Offer Form will suffice) and contact their financial advisor as the financial intermediary may have specific instructions that need to be followed. Please allow for additional processing time by your financial intermediary if necessary as the form must ultimately be received by the Investment Adviser, either by mail to the attention of The Endowment Fund, at P.O. Box 182663, Columbus, Ohio 43218-2663, or by fax also to the attention of The Endowment Fund, at (866) 624-0077, prior to the Expiration Date. The Fund recommends that all documents be submitted by certified mail, return receipt requested, or by facsimile transmission. A Partner choosing to fax a Letter of Transmittal should also send the original completed and executed Letter of Transmittal (the enclosed Tender Offer Form will suffice) promptly thereafter to the Investment Adviser or to their Financial Advisor or Portfolio Manager.

Partners wishing to confirm receipt of a Letter of Transmittal may contact the Investment Adviser at (800) 725-9456. The method of delivery of any documents is at the election and complete risk of the Partner tendering an Interest, including, but not limited to, the failure of the Investment Adviser to receive any Letter of Transmittal or other document submitted by facsimile transmission. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of tenders will be determined by the Fund, in its sole discretion, and such determination shall be final and binding. The Fund reserves the absolute right to reject any or all tenders determined by it not to be in appropriate form or the acceptance of or payment for which would, in the opinion of counsel for the Fund, be unlawful. The Fund also reserves the absolute right to waive any of the conditions of the Offer or any defect in any tender with respect to any particular Interest or any particular Partner, and the Fund’s interpretation of the terms and conditions of the Offer will be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Fund shall determine. Tenders will not be deemed to have been made until the defects or irregularities have been cured or waived. None of the Fund, the Investment Adviser nor any of the Managers or Directors of the Fund shall be obligated to give notice of any defects or irregularities in tenders, nor shall any of them incur any liability for failure to give such notice.

5. Withdrawal Rights. Any Partner tendering an Interest pursuant to the Offer may withdraw its tendered Interest until the Expiration Date and, if Interests have not yet been accepted by the Fund, after the expiration of 40

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business days from the commencement of the Offer. To be effective, any notice of withdrawal must be timely received by the Investment Adviser by mail or fax. A form to use to give notice of withdrawal is available by calling the Support Desk of the Investment Adviser at (800) 725-9456. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Fund, in its sole discretion, and such determination shall be final and binding. Interests properly withdrawn shall not thereafter be deemed to be tendered for purposes of the Offer. However, withdrawn Interests may be re-tendered prior to the Expiration Date by following the procedures for tenders described above. Partners are cautioned that the Valuation Date is expected to occur after the date on which Interests are accepted for purchase in the Offer, and that following such date of acceptance they will not have the right to withdraw their tendered Interests prior to the Valuation Date.

6. Purchases and Payment. For purposes of the Offer, the Fund will be deemed to have accepted an Interest that is tendered when the Fund gives written notice to the tendering Partner of the Fund’s election to purchase such Interest. The purchase price of an Interest tendered by any Partner will be the estimated net asset value thereof as of the close of business on the Valuation Date, although settlement of the Offer and payment of the purchase price are not expected to occur until after the Valuation Date, as described herein. The estimated net asset value will be determined after all allocations to capital accounts of the Partners required to be made by the LP Agreement have been made.

In light of the necessity for Investment Fund transfers to be duly authorized and effected to divide the Master Fund’s portfolio as of the Valuation Date, settlement of the Offer and payment may only be made following the execution of the required transfer agreements, which may not occur until after the date on which Interests are accepted for purchase in the Offer. Due to, among other things, the large number of Investment Funds held and the varying degrees of cooperation needed from the Investment Managers, the date as of which transfer agreements will be executed is uncertain. To the extent that the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will be required to delay the Valuation Date to June 30, 2014, in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date would not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw tendered interests), and would increase the potential that the value of tendered Interests may change between the time you elect to tender and the Valuation Date. As discussed above, if as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

There can be no assurance that all Investment Managers will consent to a division of the Master Fund’s interest in their respective Investment Funds. To the extent that sufficient Investment Manager consents are received to effect an approximately pro-rata division of the Master Fund’s portfolio but one or more Investment Managers do not consent to the division of the Master Fund’s interest in the respective Investment Fund(s) managed by such Investment Manager as of the Valuation Date, the Master Fund will be unable to transfer to the PMF Master Fund a pro-rata portion of its interest in such Investment Fund. Instead, the Master Fund will be required to pay to the PMF Master Fund an amount of cash equal to the net asset value as of the Valuation Date of the relevant portion of the Master Fund’s interest proposed but unable to be transferred. Accordingly, there may be differences in the allocations and/or holdings of the portfolios of the Master Fund and the PMF Master Fund as of the Valuation Date if consents are not received from all Investment Funds. Furthermore, there can be no assurance that the net asset value of such a non-transferring fund paid in cash would ultimately represent the full value of a continuing interest in such Investment Fund. As of the Valuation Date, Shares will have the same initial value as the Interests that were tendered but thereafter will differ as the PMF Fund and the Fund will be managed differently, with the PMF Fund being managed for purposes of an orderly liquidation.

The purchase price for Interests tendered to the Fund will not be paid in cash. The purchase price for tendered Interests will be paid in-kind in the form of Shares that the Fund will receive from the Master Fund in connection with the Master Fund’s concurrent repurchase offer. The value of the Shares received by tendering Partners will be equal to the estimated net asset value of the tendered Interests as of the Valuation Date.

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The repurchase of Interests is subject to regulatory requirements imposed by the Securities and Exchange Commission (“SEC”). The Fund’s repurchase procedures are intended to comply with such requirements. However, in the event that the Board determines that modification of the repurchase procedures is required or appropriate, the Board will adopt revised repurchase procedures as necessary to ensure the Fund’s compliance with applicable regulations or as the Board in its sole discretion deems appropriate. Conditions of the Offer are set forth in section 7 below.

Each Partner whose Interest (or portion thereof) has been accepted for repurchase will continue to be a Partner of the Fund effective until the Valuation Date (and thereafter if its Interest is repurchased in part) and may exercise its voting rights with respect to the repurchased Interest (or portion thereof) until the Valuation Date.

The Master Fund has incurred and paid, and may incur and pay in the future, expenses in connection with conducting the Offer, including expenses in connection with the formation and capitalization of the PMF Funds, and the Fund will therefore bear an indirect pro-rata share of such expenses. The Offer is not conditioned on the completion of the PMF Funds Offer; however, in the event that the PMF Funds Offer is not completed, the Master Fund will bear a pro-rata portion of certain expenses relating to the PMF Funds Offer, including certain expenses that may be payable in the event that the transaction contemplated by the Purchase and Sale Agreement with the Third Party Feeder is not completed. The Fund does not intend to impose any charges (except for direct costs and expenses borne by the Fund generally) on the repurchase of Interests. Partners that tender Interests will become Shareholders of the PMF Fund and, as a result, will become subject to the fees and expenses of the PMF Fund, as set forth in the PMF PPM.

A Partner who tenders some but not all of the Partner’s Interest for repurchase will be required to maintain a minimum capital account balance of $100,000. Such minimum capital account balance requirement may be waived by the Fund, in its sole discretion. The Fund reserves the right to reduce the amount to be repurchased from a Partner so that the required capital account balance is maintained.

7. Certain Conditions of the Offer. An approximately pro-rata division of the Master Fund’s portfolio, and thus settlement of the Offer, is dependent upon the Master Fund’s ability to obtain the consents of Investment Managers to such division. There can be no assurance that the Master Fund will be able to effect an approximately pro-rata division of the Master Fund portfolio by the Valuation Date. If as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. The Fund expects to accept Interests tendered for repurchase prior to being able to determine whether the Master Fund will be able to effect such division. Following such date of acceptance Partners will not have the right to withdraw their tendered Interests prior to the Valuation Date.

To the extent that the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will be required to delay the Valuation Date to June 30, 2014, in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date will not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw your tendered Interest), and would increase the potential that the value of tendered Interests may change between the time you elect to tender and the Valuation Date. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

The Fund reserves the right, at any time and from time to time, subject to applicable law, to extend the period of time during which the Offer is pending by notifying Partners of such extension. If the Fund elects to extend the period during which the Offer is open, the Valuation Date (which is the date on which the estimated net asset value of tendered Interests will be determined) may, in the discretion of the Board, be delayed to June 30, 2014. During any extension of the Offer, all Interests previously tendered and not withdrawn will remain subject to the Offer. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

The Fund may amend the Offer or postpone the acceptance of tenders made pursuant to the Offer (and, by extension, the Valuation Date) in order to allow the approximately pro-rata division of the Master Fund’s portfolio to be made (such condition, the “Portfolio Division Condition.”) However, there can be no assurance that the Fund

9

will exercise its right to extend or amend the Offer or to postpone acceptance of tenders pursuant to the Offer. If the Fund determines to amend the Offer or to postpone the acceptance of Interests tendered, it will, to the extent required, extend the period of time during which the Offer is open as provided above and will promptly notify Partners.

8. Certain Information About the Fund. The Fund is registered under the 1940 Act as a closed-end, non-diversified, management investment company and is organized as a Delaware limited partnership. The principal executive office of the Fund is located at 4265 San Felipe, 8th Floor, Houston, Texas 77027 and the telephone number is (713) 993-4675. Interests are not traded on any established trading market and are subject to strict restrictions on transferability pursuant to the LP Agreement. The Investment Adviser’s investment committee (the “Investment Committee”) members are Messrs. Lee G. Partridge, Jeremy L. Radcliffe, William K. Enszer, William B. Hunt and William R. Guinn (the “Managers”). Their address is c/o Endowment Advisers, L.P. at 4265 San Felipe, 8th Floor, Houston, Texas 77027 and the telephone number is (713) 993-4675.

Based on December 31, 2013 estimated values, Mr. John A. Blaisdell, Manager, Director and Co-Principal Executive Officer of the Fund, beneficially owns $1,254,065 of Interests in the Fund, and an aggregate of $1,503,159 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. Andrew B. Linbeck, Manager, Director and Co-Principal Executive Officer of the Fund, beneficially owns $2,065,961 of Interests in the Fund, and an aggregate of $2,336,811 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. John E. Price, Principal Financial Officer of the Fund, beneficially owns $121,947 of Interests in the Fund, and an aggregate of $121,947 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. A. Haag Sherman, Director of the Fund, beneficially owns $1,978,061 of Interests in the Fund, and an aggregate of $2,066,434 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. Lee G. Partridge, Manager and Chief Investment Officer of the Investment Adviser, does not have any beneficial ownership in the Fund.

Based on December 31, 2013 estimated values, Mr. Jeremy L. Radcliffe, Secretary of the Fund, beneficially owns $516,490 of Interests in the Fund, and owns an aggregate of $516,490 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. Scott E. Schwinger, Independent Director of the Fund, does not have any beneficial ownership in the Fund, but beneficially owns $223,345 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. William K. Enszer, portfolio manager of the Fund, does not have any beneficial ownership in the Fund.

None of the other directors of the Fund have any beneficial ownership in the Fund or the fund complex.

The Fund does not have any plans or proposals that relate to or would result in: (1) the acquisition by any of the above of additional Interests (other than the Fund’s intention to accept subscriptions for Interests from time to time in the discretion of the Fund), or the disposition of Interests (except for the Fund’s periodic discretionary solicitations of tender offers); (2) other than as described herein or in the cover letters filed in connection with the Offer with regard to the choice to receive Shares, an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Fund; (3) other than as described herein or in the cover letters filed in connection with the Offer with regard to the choice to receive Shares, any material change in the present distribution policy or indebtedness or capitalization of the Fund; (4) any change in the identity of the Investment Adviser or the Managers or Directors of the Fund, or in the management of the Fund including, but not limited to, any plans or proposals to change the number or the term of the Directors of the Fund, to fill any existing vacancy for a Director or to change any material term of the investment advisory arrangements with the Investment Adviser; (5) other than as described herein or in the cover letters filed in connection with the Offer with regard to the choice to receive Shares, a sale or

10

transfer of a material amount of assets of the Fund; (6) other than as described herein or in the cover letters filed in connection with the Offer, any other material change in the Fund’s structure or business, including any plans or proposals to make any changes in its fundamental investment policies, as amended, for which a vote would be required by Section 13 of the 1940 Act; or (7) any changes in the LP Agreement or other actions that might impede the acquisition of control of the Fund by any person. Because Interests are not traded in any market, Items (6), (7) and (8) of Item 1006(c) of Regulation M-A are not applicable to the Fund.

To obtain consents, the Master Fund and the PMF Master Fund may be required to agree to indemnify Investment Funds and Investment Managers in connection with the division of the Master Fund’s portfolio or any related transfers of Investment Fund interests to the PMF Master Fund, which could expose the Master Fund and PMF Master Fund, and thus the Fund and the PMF Fund, to additional liabilities. The Master Fund may also bear the expenses imposed on transfers by Investment Funds, including fees and expenses of counsel to the Investment Funds, as well as accounting fees and expenses that the Investment Funds may incur in the future in connection with the Investment Fund’s compliance with any U.S. federal tax requirements or elections as a result of the transfers.

9. Certain Federal Income Tax Consequences. The following discussion is a general summary of the federal income tax consequences of the purchase of Interests by the Fund from Partners pursuant to the Offer. Partners should consult their own tax advisors for a complete description of the tax consequences to them of a purchase of their Interests by the Fund pursuant to the Offer.

A Partner who tenders all or a portion of its Interest to the Fund for repurchase receiving payment in kind in the form of Shares generally will not recognize any income or capital gain or loss with respect to the transaction. A Partner’s tax basis in the PMF Fund Shares it receives in the repurchase transaction generally will be the same as its aggregate tax basis in the Interest being repurchased.

10. Miscellaneous. The Offer is not being made to, nor will tenders be accepted from, Partners in any jurisdiction in which the Offer or its acceptance would not comply with the securities or Blue Sky laws of such jurisdiction. The Fund is not aware of any jurisdiction in which the Offer or tenders pursuant thereto would not be in compliance with the laws of such jurisdiction. However, the Fund reserves the right to exclude Partners from the Offer in any jurisdiction in which it is asserted that the Offer cannot lawfully be made. The Fund believes such exclusion is permissible under applicable laws and regulations, provided the Fund makes a good faith effort to comply with any state law deemed applicable to the Offer.

The Fund has filed an Issuer Tender Offer Statement on Schedule TO with the SEC, which includes certain information relating to the Offer summarized herein. A free copy of such statement may be obtained from the Fund by contacting the Investment Adviser at (800) 725-9456 or from the SEC’s internet web site, http://www.sec.gov. For a fee, a copy may be obtained from the Public Reference Room of the SEC at 100 F Street, N.E., Washington, DC 20549. For more information about its operation. call (202) 551-8090.

Financial Statements

The audited financial statements of the Fund for the fiscal year ended December 31, 2012, and the schedule of investments dated December 31, 2012, both filed with the SEC on EDGAR on Form N-CSR on March 11, 2013, are hereby incorporated by reference. The semi-annual, unaudited financial statements for the six month period ended June 30, 2013, filed with the SEC on EDGAR on Form N-CSRS on September 6, 2013, are hereby incorporated by reference.

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Offer to Purchase

Clients of Merrill Lynch Financial Advisors or U.S. Trust Portfolio Managers

THE ENDOWMENT INSTITUTIONAL FUND, L.P.

P.O. Box 182663

Columbus, Ohio 43218-2663

Offer to Purchase All Outstanding

Limited Partnership Interests at Net Asset Value

Dated February 20, 2014

The Offer Will Expire at

Midnight, New York City Time, on March 19, 2014,

Unless the Offer is Extended

To the Partners of The Endowment Institutional Fund, L.P.:

The Endowment Institutional Fund, L.P., a closed-end, non-diversified, management investment company organized as a Delaware limited partnership (the “Fund”), is offering to purchase on the terms and conditions set forth in this offer to purchase (the “Offer to Purchase”) and the related Letter of Transmittal (which together with the Offer to Purchase constitutes the “Offer”) all outstanding limited partnership interests in the Fund or portions thereof pursuant to tenders by Partners at a price equal to their estimated net asset value as of March 31, 2014 (or, solely in the event that it is necessary to extend such date in order to satisfy certain conditions of the Offer as set forth in the Offer to Purchase, June 30, 2014) (the “Valuation Date”). The Offer is currently scheduled to expire at midnight, New York City Time, on March 19, 2014, but the Fund may extend this date (such time and date, as it may be extended, the “Expiration Date”). (As used in the Offer, the term “Interest,” or “Interests,” as the context requires, shall refer to limited partnership interests in the Fund and those interests and portions thereof that have been tendered for repurchase.) The Offer is being made to all Partners and is not conditioned on any minimum amount of Interests being tendered, but is subject to certain conditions described herein. Interests are not traded on any established trading market and are subject to strict restrictions on transferability pursuant to the Fund’s Agreement of Limited Partnership dated as of December 8, 2009 (the “LP Agreement”). Capitalized terms used in this tender offer filing but not otherwise defined shall have the meanings ascribed to them in the Fund’s Private Placement Memorandum dated as of January 1, 2014 (the “PPM”), which is included herewith. The Offer is being made simultaneously with a cash tender offer by the PMF Fund (as defined below) in which Partners tendering Interests pursuant to the Offer, and therefore becoming holders of Shares of the PMF Fund, will have the opportunity to participate (the “PMF Funds Offer”). The Offer is not contingent upon the completion of the PMF Funds Offer.

The Fund is one of several “feeder” funds into The Endowment Master Fund, L.P. (the “Master Fund”), which then invests its capital in Investment Funds. The Board of the Master Fund has approved a tender offer for all of the outstanding capital of its Partners, including the Fund. The Board of the Fund has approved a tender offer for all of the Fund’s outstanding Interests. The Offer is conditioned on the Master Fund’s ability to obtain the approval of the Investment Managers to divide and transfer the Master Fund’s interest in Investment Funds to effect an approximately pro-rata division of its portfolio. If as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Partners are cautioned that the Valuation Date is expected to occur after the date on which Interests are accepted for purchase in the Offer, and that following such date of acceptance they will not have the right to withdraw their tendered Interests prior to the Valuation Date.

Unlike the Fund’s prior offers to repurchase Interests, Partners who choose to tender their Interests will receive shares of a newly-formed fund (the “PMF Fund”) that will be managed to liquidate over time, distributing its capital to investors. The opportunity presented by the Offer, to obtain shares of a liquidating fund in an amount equal to the full value of a Partner’s Interest, is unlikely to be repeated in the future. Future repurchase offers, if any, will likely be for cash in substantially smaller amounts than previous repurchase amounts and likely will not provide for a choice similar to that presented by the Offer. The Fund does not anticipate considering any future repurchase offers until the fourth quarter of 2014 at the earliest.

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Partners who desire to retain their investment in the Fund may ignore the Offer.

The repurchase price for Interests tendered and accepted will not be paid in cash, but in-kind with tendering Partners receiving 100% of their repurchase proceeds in shares of interest (the “Shares”) in PMF Fund, L.P. The PMF Fund is a newly-formed, closed-end, non-diversified registered investment company that invests substantially all of its assets in The Endowment PMF Master Fund, L.P. (the “PMF Master Fund” and, together with the PMF Fund, the “PMF Funds”), which also is a newly-formed, closed-end, non-diversified, registered investment company. Shares of the PMF Fund are only available to Partners that tender their Interests pursuant to the Offer. The PMF Funds have been created to provide Partners a choice of converting their Interests in the Fund, which is a continuously-offered fund with an actively managed portfolio, into Shares of the PMF Fund, which is a fund that prioritizes Partner liquidity over active management. Instead of reinvesting proceeds generated by redemptions of and distributions received from underlying Investment Funds, the PMF Funds will generally distribute such proceeds to the Shareholders (as described in the PMF Fund’s Private Placement Memorandum (the “PMF PPM”)), until such time as the PMF Master Fund portfolio has been entirely liquidated.

The PMF Master Fund’s portfolio will represent an approximately pro-rata division of the portfolio of The Endowment Master Fund, L.P. (the “Master Fund”) based on a valuation as of the Valuation Date, such that Partners tendering their Interests will receive Shares that represent an ownership interest in approximately the same underlying portfolio of investments represented by the tendered Interests immediately prior to the Valuation Date. As of the Valuation Date, Shares of the PMF Fund will have the same value as the Interests that were tendered but thereafter will differ as the PMF Fund and the Fund are managed differently, with the PMF Fund being managed for purposes of an orderly liquidation. Settlement of the Offer and payment of the Shares to tendering Partners are not expected to occur until after the Valuation Date, as described in more detail herein.

Partners may tender part or all of their Interests. Partners who do not tender all of their Interests will remain invested in the Fund. The Fund will continue to be offered to existing and prospective Partners, unlike the PMF Fund, which will not be available to new investors following the conclusion of the Offer. The Fund will continue to pursue its investment objective utilizing an active management strategy, unlike the PMF Fund which will prioritize liquidity and distributions over active management until it is fully liquidated.

Prior to deciding whether to tender Interests pursuant to the Offer (and thereby become an investor in the PMF Fund) or to remain invested in the Fund, Partners should carefully review the PPM and the PMF PPM, which include detailed information regarding the investment objective, risks, fees and expenses of the Fund and PMF Fund, respectively. Partners should note that transfers of the PMF Fund shares are restricted and will not be permitted except as approved by the board of directors of the PMF Fund, as set forth in more detail in the PMF PPM. The board of directors of the PMF Fund will not in most circumstances permit transfers of the Shares for value. The PPM and the PMF PPM are enclosed. Also included herewith is a chart comparing certain terms/aspects of the Fund and the PMF Fund.

Partners should realize that the value of the Interests tendered in the Offer will likely change between the most recent time net asset value was calculated and communicated to them and the Valuation Date (which will be either March 31, 2014 or June 30, 2014), when the value of the Interests tendered to the Fund will be determined for purposes of the Offer, and such change could be material. The Fund determines the estimated net asset value monthly based on the information it receives from the managers of the Investment Funds in which it invests. Any tendering Partners that wish to obtain the estimated net asset value of their Interests on this basis should contact the Support Desk of Endowment Advisers, L.P. at (800) 725-9456 Monday through Friday, except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m. (New York City Time).

Partners desiring to tender all or any portion of their Interest in accordance with the terms of the Offer should complete and sign the appropriate forms in accordance with the procedures in the Offer to Purchase.

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IMPORTANT

NONE OF THE FUND, THE INVESTMENT ADVISER OR ANY OF THE MANAGERS OR DIRECTORS OF THE FUND MAKE ANY RECOMMENDATION TO ANY PARTNER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING INTERESTS. PARTNERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER INTERESTS, AND, IF SO, THE PORTION OF THEIR INTERESTS TO TENDER.

BECAUSE EACH PARTNER’S INVESTMENT DECISION IS A PERSONAL ONE, BASED ON ITS FINANCIAL CIRCUMSTANCES, NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE FUND AS TO WHETHER PARTNERS SHOULD TENDER INTERESTS PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE FUND.

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR ON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

Questions and requests for assistance and requests for additional copies of the Offer to Purchase may be directed to your Financial Advisor or Portfolio Manager.

Endowment Advisers, L.P.

P.O. Box 182663

Columbus, Ohio 43218-2663

Phone: (800) 725-9456

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THE ENDOWMENT INSTITUTIONAL FUND, L.P.

OFFER TO PURCHASE

TABLE OF CONTENTS

Section	Page
Summary Term Sheet		1
1. Background and Purpose of the Offer		3
2. Offer to Purchase		5
3. Amount of Tender		7
4. Procedure for Tenders		7
5. Withdrawal Rights		7
6. Purchases and Payment		8
7. Certain Conditions of the Offer		9
8. Certain Information About the Fund		9
9. Certain Federal Income Tax Consequences		11
10. Miscellaneous		11
Financial Statements (incorporated by reference)		11

SUMMARY TERM SHEET

• As disclosed in the Fund’s private placement memorandum dated as of January 1, 2014, as it may be amended and supplemented from time to time (the “PPM”), the Investment Adviser intends to recommend to the Board and the Board is expected to approve offers to buy your limited partnership interests at their estimated net asset value (that is, the estimated value of the Fund’s assets minus its liabilities, multiplied by the proportionate interest in the Fund you desire to sell) via a tender offer process. The current offer will remain open until midnight, New York City Time, on March 19, 2014 (the “Expiration Date”) with the estimated net asset value calculated for the purpose of the Offer as of March 31, 2014 (or, solely in the event that it is necessary to extend such date in order to satisfy certain conditions of the Offer as set forth herein, June 30, 2014) as described herein (the “Valuation Date”). Capitalized terms used in this tender offer filing but not otherwise defined have the meanings ascribed to them in the PPM. The Offer is being made simultaneously with a cash tender offer by the PMF Fund (as defined below) in which Partners tendering Interests pursuant to the Offer, and therefore becoming holders of Shares of the PMF Fund, will have the opportunity to participate (the “PMF Funds Offer”). The Offer is not contingent upon the completion of the PMF Funds Offer.

• Unlike the Fund’s prior offers to repurchase Interests, with respect to which the Fund paid repurchase proceeds in cash, proceeds for Interests tendered and accepted pursuant to the Offer will not be paid in cash. Proceeds for tendered Interests will be paid in-kind with tendering Partners receiving 100% of their repurchase proceeds in shares of limited partnership interest (the “Shares”) in PMF Fund, L.P. (the “PMF Fund”), a newly-formed, closed-end, non-diversified, registered investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”) that invests substantially all of its assets in The Endowment PMF Master Fund, L.P. (the “PMF Master Fund” and together with the PMF Fund, the “PMF Funds”), which also is a newly-formed, closed-end, non-diversified, registered investment company.

• The option presented by the Offer — specifically, the choice of obtaining shares of a liquidating fund in an amount equal to the full value of a Partner’s Interest in the Fund — is unlikely to be repeated in the future. Additionally, as disclosed previously to Partners, the Fund’s strategy has changed such that a larger percentage of its portfolio may consist of long-term illiquid securities, as described in further detail in the PPM, which is attached hereto. Future repurchase offers, if any, will likely be for cash in substantially smaller amounts than previous repurchase amounts and likely will not provide for a choice similar to that presented by the Offer. The Fund does not anticipate considering any repurchase offers until the fourth quarter of 2014 at the earliest.

• Shares of the PMF Fund are only available to Partners that tender their Interests pursuant to the Offer. The PMF Funds have been created to provide Partners with the choice of effectively converting their Interests in the Fund, which is a continuously-offered fund with an actively managed portfolio, into Shares of the PMF Fund, which is a fund that prioritizes returning Partners’ liquidity over active management. Instead of reinvesting proceeds generated by redemptions of and distributions received from underlying investments, the PMF Funds will generally distribute such proceeds to their respective investors (as described in the PMF Fund’s Private Placement Memorandum (the “PMF PPM”), which is included herewith), until such time as the PMF Master Fund portfolio has been entirely liquidated.

• The PMF Master Fund’s portfolio will represent an approximately pro-rata division of the portfolio of The Endowment Master Fund, L.P. (the “Master Fund”) as of the Valuation Date, such that Partners tendering their Interests will receive PMF Fund Shares that represent an ownership interest in approximately the same underlying portfolio of Investments as represented by the tendered Interests immediately prior to the Valuation Date. Thus, as of the Valuation Date, Shares of the PMF Fund will have the same value as

1

the Interests that were tendered but such net asset value thereafter will diverge as the PMF Fund and the Fund will be managed differently, with the PMF Fund returning capital until liquidation, and also having different fees and expenses from the Fund.

• As described above, the PMF Master Fund’s portfolio will represent an approximately pro-rata division of the Master Fund’s portfolio. An approximately pro-rata division of the Master Fund’s portfolio is dependent upon the Master Fund’s ability to obtain sufficient consents from the investment managers (each, an “Investment Manager”) of the underlying Investment Fund interests to transfer otherwise non-transferable Investment Fund interests that represent a proportional cross-section of the Master Fund’s portfolio as of the Valuation Date. To the extent that sufficient Investment Manager consents are received to effect an approximately pro-rata division of the Master Fund’s portfolio but one or more Investment Managers do not consent to the division of the Master Fund’s interest in the respective Investment Fund(s) managed by such Investment Manager as of the Valuation Date, the Master Fund will be unable to transfer to the PMF Master Fund a pro-rata portion of its interest in such Investment Fund. Instead, the Master Fund will be required to pay to the PMF Master Fund an amount of cash equal to the net asset value as of the Valuation Date of the relevant portion of the Master Fund’s interest proposed but unable to be transferred. Accordingly, there may be differences in the allocations and/or holdings of the portfolios of the Master Fund and the PMF Master Fund as of the Valuation Date if consents are not received from all Investment Funds. Furthermore, there can be no assurance that the net asset value of such a non-transferring fund paid in cash would ultimately represent the full value of a continuing interest in such Investment Fund. As of the Valuation Date, Shares of the PMF Fund will have the same initial value as the Interests that were tendered but thereafter will differ as the PMF Fund and the Fund will be managed differently, with the PMF Fund being managed for purposes of an orderly liquidation.

• There can be no assurance that the Master Fund will be able to effect an approximately pro-rata division of the Master Fund portfolio by the Valuation Date. If as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Partners are cautioned that the Valuation Date is expected to occur after the date on which Interests are accepted for purchase in the Offer, and that following such date of acceptance they will not have the right to withdraw their tendered Interests prior to the Valuation Date.

• In light of the necessity for Investment Fund transfers to be duly authorized and effected to divide the Master Fund’s portfolio as of the Valuation Date, settlement of the Offer and payment may only be made following the execution of the required transfer agreements, which may not occur until after the date on which Interests are accepted for purchase in the Offer. Due to, among other things, the large number of Investment Funds held and the varying degrees of cooperation needed from the Investment Managers, the date as of which transfer agreements will be executed is uncertain. To the extent that the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will be required to delay the Valuation Date to June 30, 2014, in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date would not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw your tendered Interest), and would increase the potential that the value of tendered Interests may change between the time you elect to tender and the Valuation Date. As discussed above, if as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

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• Partners may tender part or all of their Interests. Partners who do not tender all of their Interests will remain invested in the Fund to the extent of the Interests not tendered. The Fund will continue to be offered to existing and prospective investors, unlike the PMF Fund, which will not be available to new investors following the conclusion of the Offer. The Fund will continue to pursue its investment objective utilizing an active management strategy, unlike the PMF Fund which will prioritize liquidity and distributions over active management until it is fully liquidated.

• Following this summary is a formal notice of the Offer to Purchase Interests. The Offer will remain open until the Expiration Date, unless extended. You may withdraw your tendered Interest until the Expiration Date and, if Interests have not yet been accepted by the Fund, after the expiration of 40 business days from the commencement of the Offer. If you would like to tender part or all of your Interests, you should contact your Financial Advisor or Portfolio Manager who will provide you with a customized Tender Offer Form for you to sign and return. The Letter of Transmittal accompanying this Offer to Purchase includes a sample Tender Offer Form for your reference only. The Tender Offer Form generated for your account will need to be signed and returned to your Financial Advisor or Portfolio Manager. Upon receiving the signed Tender Offer Form, your Financial Advisor or Portfolio Manager will need to submit the order with the properly completed Tender Offer Form prior to the Expiration Date. The value of your Interests will likely change between the most recent time the net asset value was calculated and communicated to you and the Valuation Date, when the value of your Interest will be determined for purposes of calculating your purchase price.

• If you would like to obtain the estimated net asset value of your Interest, which the Fund’s administrator calculates monthly based on the information the Fund receives from the managers of the Investment Funds, you may contact the Support Desk of the Investment Adviser at (800) 725-9456, Monday through Friday, except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m. (New York City Time). Please note that although you have the opportunity to have your Interest repurchased, we reserve the right, subject to applicable law, to cancel, amend or postpone the Offer prior to the earlier to occur of the Expiration Date (as such may be extended) or when the tendered Interests have been accepted by the Fund or under other circumstances as described herein.

• Before deciding to tender your Interest and become an investor in the PMF Fund or, alternatively, to retain your investment in the Fund, please review carefully the PPM and the PMF PPM, which include detailed information regarding the investment objective, risks, fees and expenses of the Fund and PMF Fund, respectively. Each PPM is enclosed herewith. Also included herewith is a chart comparing certain terms/aspects of the Fund and the PMF Fund.

• If you do not wish to tender your Interest, you may ignore the Offer.

1. Background and Purpose of the Offer. The purpose of the Offer is to provide Partners with the choice of continuing with their investment in the Fund or acquiring Shares having the same initial value as their Interest in the Fund. The Shares that tendering Partners will receive as repurchase proceeds will represent an interest in a separate investment vehicle with a focus on passive management until liquidation rather than active management. Instead of reinvesting proceeds received from Investment Funds (i.e., withdrawal or liquidation proceeds), the PMF Fund will generally distribute such proceeds to its shareholders until the PMF Fund is fully liquidated and thus, the PMF Fund will have a finite term. In contrast, the Fund, consistent with its active management style, generally reinvests proceeds received from underlying Investment Funds. Partners that wish to dispose of and/or liquidate their Interests should consider tendering their Interests to the Fund pursuant to the Offer. Partners that wish to remain in the Fund may ignore the Offer.

As previously communicated to Partners, the Board approved strategy changes for the Fund, which became effective on January 1, 2014. The Fund replaced the previous asset allocation ranges and liquidity requirements of the investment portfolio with a limitation that the Fund’s portfolio will not contain more than 75% in longer term

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illiquid private assets, as defined in the PPM (determined at the time of investment). The change in strategy permits a larger percentage of longer term illiquid assets to be held in the Fund’s portfolio. As a result, amounts offered in future cash repurchase offers, if any, will likely be smaller than those amounts that have been offered for repurchase historically due to the potentially increased illiquidity of the Fund’s investment portfolio. The Fund does not anticipate considering any future repurchase offers until the fourth quarter of 2014 at the earliest.

Tendering Partners will become investors in the PMF Fund, which is only available to Partners that tender their Interests pursuant to the Offer. Following the conclusion of the Offer, the PMF Fund will not be available to new Partners. The PMF Fund has a different investment objective and is subject to different risks, fees and expenses. Transfers of the Shares are strictly limited and are not permitted except as approved by the Board, as set forth in more detail in the PMF Fund PPM. The PMF Fund is one of multiple feeder funds that invest substantially all of their assets in the PMF Master Fund. The PMF Funds have entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with HarbourVest—Origami Structured Solutions L.P., a third-party feeder fund managed by certain large institutional investors (the “Third Party Feeder”), pursuant to which Third Party Feeder has agreed to purchase from the PMF Fund (and from the other feeder funds that invest in the PMF Master Fund) interests in the PMF Master Fund in an amount equal to the amount represented by Shares tendered to the PMF Fund (and the other feeder funds that invest in the PMF Master Fund) pursuant to the PMF Funds Offer. The completion of the transactions contemplated by the Purchase and Sale Agreement is subject to certain conditions. In the event that such transactions are consummated, the Third Party Feeder may be deemed to be a control person of the PMF Master Fund and will in any case have the ability effectively to veto certain actions requiring a vote or unilaterally determine the outcome of a PMF Master Fund vote, including changes to certain governance standards and any vote required under the 1940 Act. Additionally, the Third Party Feeder has had an opportunity to review the Master Fund’s portfolio holdings and may have access to information not generally available to Partners. Thus, investors in the Third Party Feeder may be able to exercise greater influence than investors in the other feeder funds that invest in the PMF Master Fund, including the PMF Fund, potentially to the detriment of the PMF Fund and its investors.

Additionally, the PMF Master Fund has agreed to appoint as directors two individuals to be submitted by the Third Party Feeder prior to the closing of the Third Party Feeder investment. The Third Party Feeder anticipates appointing as directors an individual to be identified, who is expected to be affiliated with HarbourVest Partners L.P., and Jeffrey Young, a principal of Origami Capital Partners, LLC. Mr. Young was born in 1967 and is responsible for all aspects of Origami’s operations, collaborating on firm leadership, investing, and working with clients. His experience is in completing complex transactions and building businesses. Mr. Young graduated from the University of California, Berkeley (A.B., 1989) and the Santa Clara University School of Law (J.D., 1993). He is admitted to the bar in California and Nevada. The two new PMF Master Fund directors would be “interested” directors, and would have the ability effectively to veto certain actions requiring a unanimous vote of the PMF Master Fund board but would not constitute a majority and would not themselves be able to determine the outcome of any PMF Master Fund board vote, other than matters that require a unanimous vote. Such PMF Master Fund directors will not become directors of the PMF Fund. Partners are not tendering Interests or Shares to the Third Party Feeder and have no claim or rights with respect to the Third Party Feeder. Please carefully review the PPM and the PMF PPM for detailed information on the risks, fees and expenses of each. Also included herewith is a chart comparing certain terms/aspects of the Fund and the PMF Fund.

The investors in the Third Party Feeder have entered into a voting agreement with the Investment Adviser (the “Voting Agreement”) pursuant to which the investors in the Third Party Feeder agree that they will not vote to terminate the PMF Master Fund’s investment management agreement (the “Investment Management Agreement”) with the Investment Adviser unless (i) a majority of the PMF Master Fund’s independent directors has voted to so terminate the Investment Management Agreement, (ii) it has been finally determined by a court or an arbitrator that the Investment Adviser (or any officer, director, member, partner, principal or employee thereof) has engaged in willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the Investment Adviser’s office or has materially breached its obligations under the PMF Master Fund’s limited partnership agreement or (iii) such vote is in the same proportion as the other investors in the PMF Master Fund’s feeder funds (for example, if 40% of the investors in the other PMF Master Fund’s feeder funds vote to terminate the Investment Management Agreement, the investors in the Third Party Feeder may cause the Third Party Feeder to vote 40% of its interest to terminate the Investment Management Agreement). In addition, the investors in the Third Party Feeder have agreed that they will vote in favor of any nominee to serve as an independent director on the PMF

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Master Fund board of directors who has been nominated by a majority of the PMF Master Fund’s independent directors unless (i) they have received written advice of reputable outside counsel that voting for such nominee would be a breach of such investors’ fiduciary duties (such investors have pre-approved two existing directors of the Fund as suitable independent directors for the PMF Master Fund) or (ii) such vote is in the same proportion as the other investors in the PMF Master Fund’s feeder funds (for example, if 40% of the investors in the other PMF Master Fund’s feeder funds vote against a nominee of the independent directors of the PMF Master Fund, the investors in the Third Party Feeder may cause the Third Party Feeder to vote 40% of its interest against such nominee). The investors in the Third Party Feeder have also agreed that they will not cause the Third Party Feeder to call a meeting of the holders of the PMF Master Fund’s voting interests for the purpose of terminating the Investment Management Agreement, or to solicit proxies (including, without limitation, hiring a proxy solicitor) or the written consent of the holders of the PMF Master Fund’s voting interests in connection with a vote of such holders to terminate the Investment Management Agreement.

The purchase of Interests pursuant to the Offer will have the effect of increasing the proportionate interest in the Fund of Partners who do not tender Interests. Partners who retain their Interests may be subject to increased risks that could result from the reduction in the Fund’s aggregate assets resulting from payment for the Interests tendered as well as potentially increased illiquidity of the Master Fund’s portfolio. Additionally, a reduction in the aggregate assets of the Fund may result in Partners who do not tender Interests bearing higher costs to the extent that certain expenses borne by the Fund are relatively fixed and may not decrease if assets decline. These effects may be reduced or eliminated to the extent that additional subscriptions for Interests are made by new and existing Partners from time to time (of which there can be no assurance).

Interests that are tendered to the Fund in connection with the Offer to Purchase, if accepted for repurchase, will be repurchased and cancelled, resulting in an increase in the expenses of remaining Partners (assuming no further issuances of Interests).

2. Offer to Purchase. The Fund will purchase, upon the terms and subject to the conditions of the Offer, up to all of the Fund’s outstanding Interests that are properly tendered by and not withdrawn before the Expiration Date. The purchase price of Interests tendered to the Fund will be their estimated net asset value as of the close of business on the Valuation Date.

Unlike prior repurchase offers conducted by the Fund, the purchase price for Interests tendered to the Fund will not be paid in cash. The purchase price will be paid in-kind in the form of Shares. The Fund is offering to purchase up to the full net asset value of the Fund’s Interests in an effort to provide Partners with the choice of continuing with their investment in the Fund or acquiring Shares having the same initial value as their Interests but which represent an interest in a separate investment vehicle with a focus on passive management until liquidation rather than active management. Instead of reinvesting proceeds received from Investment Funds (i.e., withdrawal or liquidation proceeds), the PMF Fund will generally distribute such proceeds to its Shareholders until the PMF Fund is fully liquidated. Partners that do not tender all of their Interests will remain in the Fund with limited liquidity generally only available through future repurchase offers, to the extent such offers are approved by the Board, as set forth in the PPM.

The PMF Fund is a newly-formed, closed-end, non-diversified, registered investment company that invests substantially all of its assets in the PMF Master Fund, which also is a newly-formed, closed-end, non-diversified, registered investment company. Shares are only available to Partners that tender their Interests pursuant to the Offer. The PMF Master Fund’s portfolio will represent an approximately pro-rata division of the Master Fund’s portfolio as of the Valuation Date, such that Partners tendering their Interests will receive PMF Fund Shares that represent an ownership interest in approximately the same underlying portfolio of investments represented by the tendered Interests immediately prior to the Valuation Date. As of the Valuation Date, Shares will have the same value as the Interests that were tendered but thereafter will differ as the PMF Fund and the Fund are managed differently, with the PMF Fund being managed for purposes of an orderly liquidation. Settlement of the Offer and payment of the Shares are not expected to occur until after the Valuation Date, as described in more detail herein.

As described above, the PMF Master Fund’s portfolio will represent an approximately pro-rata division of the Master Fund’s portfolio. An approximately pro-rata division of the Master Fund’s portfolio is dependent upon the Master Fund’s ability to obtain sufficient consents from the investment managers (each, an “Investment Manager”) of the underlying Investment Fund interests to transfer otherwise non-transferable Investment Fund interests that

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represent a proportional cross-section of the Master Fund’s portfolio as of the Valuation Date. To the extent that sufficient Investment Manager consents are received to effect an approximately pro-rata division of the Master Fund’s portfolio but one or more Investment Managers do not consent to the division of the Master Fund’s interest in the respective Investment Fund(s) managed by such Investment Managers as of the Valuation Date, the Master Fund will be unable to transfer to the PMF Master Fund a pro-rata portion of its interest in such Investment Funds. Instead, the Master Fund will be required to pay to the PMF Master Fund an amount of cash equal to the net asset value as of the Valuation Date of the relevant portion of the Master Fund’s interest proposed but unable to be transferred. Accordingly, there may be differences in the allocations and/or holdings of the portfolios of the Master Fund and the PMF Master Fund as of the Valuation Date if consents are not received from all Investment Funds. Furthermore, there can be no assurance that the net asset value of such a non-transferring Investment Fund paid in cash would ultimately represent the full value of a continuing interest in such Investment Fund.

There can be no assurance that the Master Fund will be able to effect an approximately pro-rata division of the Master Fund portfolio by the Valuation Date. If as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Partners are cautioned that the Valuation Date is expected to occur after the date on which Interests are accepted for purchase in the Offer, and that following such date of acceptance they will not have the right to withdraw their tendered Interests prior to the Valuation Date.

In light of the necessity for Investment Fund transfers to be duly authorized and effected to divide the Master Fund’s portfolio as of the Valuation Date, settlement of the Offer and payment may only be made following the execution of the required transfer agreements, which may not occur until after the date on which Interests are accepted for purchase in the Offer. Due to, among other things, the large number of Investment Funds held and the varying degrees of cooperation needed from the Investment Managers, the date as of which transfer agreements will be executed is uncertain. To the extent that the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will be required to delay the Valuation Date to June 30, 2014, in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date would not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw your tendered Interest), and would increase the potential that the value of tendered Interests may change between the time you elect to tender and the Valuation Date. As discussed above, if as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

In addition to the differences described above between the Fund and the PMF Fund, there are also differences in risks, fees and expenses.

Accordingly, before deciding to tender your Interest and become an investor in the PMF Fund or, alternatively, to retain your investment in the Fund, Partners should carefully review the PPM and the PMF PPM, which include detailed information regarding the investment objective, risks, fees and expenses of the Fund and PMF Fund, respectively. Each PPM is enclosed herewith, as well as a chart comparing certain terms/aspects of the Fund and the PMF Fund.

The Fund is one of several “feeder” funds that invests all of its capital into the Master Fund, which then invests its capital in Investment Funds. The Board of the Master Fund has approved a concurrent repurchase offer to be conducted by the Master Fund in an amount up to all outstanding interests of the Master Fund. The Board of the Fund has approved the Offer.

If the Fund elects to extend the tender period, the Valuation Date (the date as of which estimated net asset value of Interests will be determined) may, upon the terms and conditions described herein, be delayed to June 30, 2014. The Fund reserves the right to extend, amend or cancel the Offer as described herein. The purchase price of an Interest tendered will be its estimated net asset value as of the close of business on the Valuation Date.

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As of the close of business on December 31, 201, the outstanding Interests had an approximate aggregate net asset value of $28,131,798 (based on the estimated net asset value of such Interests). The Fund’s administrator determines its estimated net asset value monthly based on information it receives from the managers of the Investment Funds in which it invests. Partners may obtain this information by contacting the Support Desk of Endowment Advisers, L.P. at (800) 725-9456, Monday through Friday, except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m. (New York City Time). Of course, the value of the Interests tendered by the Partners likely will change between the most recent time net asset value was calculated and communicated to you and the Valuation Date.

In the event that the Investment Adviser or any of its affiliates holds an Interest in the Fund, such Interest may be tendered for repurchase in connection with the Offer, without notice to Partners.

3. Amount of Tender. Partners may tender their entire Interest or a portion of their Interest. The Offer is being made to all Partners and is not conditioned on any minimum amount of Interests being tendered. The Fund is offering to purchase up to the full net asset value of all of the Fund’s outstanding Interests as of the Valuation Date. All Interests tendered will be accepted for repurchase by the Fund unless the Fund elects to cancel or amend the Offer.

At the present time, certain Managers, members of the Board and officers of the Fund or of a Fund affiliate have indicated their intentions to have their Interests acquired in this tender offer (or to have their interests in other feeder funds of the Master Fund acquired in parallel tender offers being made simultaneously with this tender offer by such other feeder funds of the Master Fund).

4. Procedure for Tenders. Partners wishing to tender Interests pursuant to the Offer should contact their Financial Advisor or Portfolio Manager who will provide a customized Tender Offer Form to be signed and returned. The completed and executed Tender Offer Form must be submitted by the Financial Advisor or Portfolio Manager prior to the Expiration Date. The Fund recommends that all documents be submitted by certified mail, return receipt requested, or by facsimile transmission. A Partner choosing to fax a Letter of Transmittal should also send the original completed and executed Letter of Transmittal (the Tender Offer Form will suffice) promptly thereafter.

Partners wishing to confirm receipt of a Letter of Transmittal may contact their Financial Advisor or Portfolio Manager. The method of delivery of any documents is at the election and complete risk of the Partner tendering an Interest, including, but not limited to, the failure of the Placement Agent to receive any Letter of Transmittal or other document submitted by facsimile transmission. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of tenders will be determined by the Fund, in its sole discretion, and such determination shall be final and binding. The Fund reserves the absolute right to reject any or all tenders determined by it not to be in appropriate form or the acceptance of or payment for which would, in the opinion of counsel for the Fund, be unlawful. The Fund also reserves the absolute right to waive any of the conditions of the Offer or any defect in any tender with respect to any particular Interest or any particular Partner, and the Fund’s interpretation of the terms and conditions of the Offer will be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Fund shall determine. Tenders will not be deemed to have been made until the defects or irregularities have been cured or waived. None of the Fund, the Investment Adviser, Placement Agent nor any of the Managers or Directors of the Fund shall be obligated to give notice of any defects or irregularities in tenders, nor shall any of them incur any liability for failure to give such notice.

5. Withdrawal Rights. Any Partner tendering an Interest pursuant to the Offer may withdraw its tendered Interest until the Expiration Date and, if Interests have not yet been accepted by the Fund, after the expiration of 40 business days from the commencement of the Offer. To be effective, any notice of withdrawal must be timely received by the Placement Agent. A form to use to give notice of withdrawal is available by calling the Support Desk of the Investment Adviser at (800) 725-9456. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Fund, in its sole discretion, and such determination shall be final and binding. Interests properly withdrawn shall not thereafter be deemed to be tendered for purposes of the Offer. However, withdrawn Interests may be re-tendered prior to the Expiration Date by following the procedures for tenders described above. Partners are cautioned that the Valuation Date is expected to occur after the date on which Interests are accepted for purchase in the Offer, and that following such date of acceptance they will not have the right to withdraw their tendered Interests prior to the Valuation Date.

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6. Purchases and Payment. For purposes of the Offer, the Fund will be deemed to have accepted an Interest that is tendered when the Fund gives written notice to the tendering Partner of the Fund’s election to purchase such Interest. The purchase price of an Interest tendered by any Partner will be the estimated net asset value thereof as of the close of business on the Valuation Date, although settlement of the Offer and payment of the purchase price are not expected to occur until after the Valuation Date, as described herein. The estimated net asset value will be determined after all allocations to capital accounts of the Partners required to be made by the LP Agreement have been made.

In light of the necessity for Investment Fund transfers to be duly authorized and effected to divide the Master Fund’s portfolio as of the Valuation Date, settlement of the Offer and payment may only be made following the execution of the required transfer agreements, which may not occur until after the date on which Interests are accepted for purchase in the Offer. Due to, among other things, the large number of Investment Funds held and the varying degrees of cooperation needed from the Investment Managers, the date as of which transfer agreements will be executed is uncertain. To the extent that the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will be required to delay the Valuation Date to June 30, 2014, in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date would not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw tendered interests), and would increase the potential that the value of tendered Interests may change between the time you elect to tender and the Valuation Date. As discussed above, if as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

There can be no assurance that all Investment Managers will consent to a division of the Master Fund’s interest in their respective Investment Funds. To the extent that sufficient Investment Manager consents are received to effect an approximately pro-rata division of the Master Fund’s portfolio but one or more Investment Managers do not consent to the division of the Master Fund’s interest in the respective Investment Fund(s) managed by such Investment Manager as of the Valuation Date, the Master Fund will be unable to transfer to the PMF Master Fund a pro-rata portion of its interest in such Investment Fund. Instead, the Master Fund will be required to pay to the PMF Master Fund an amount of cash equal to the net asset value as of the Valuation Date of the relevant portion of the Master Fund’s interest proposed but unable to be transferred. Accordingly, there may be differences in the allocations and/or holdings of the portfolios of the Master Fund and the PMF Master Fund as of the Valuation Date if consents are not received from all Investment Funds. Furthermore, there can be no assurance that the net asset value of such a non-transferring fund paid in cash would ultimately represent the full value of a continuing interest in such Investment Fund. As of the Valuation Date, Shares will have the same initial value as the Interests that were tendered but thereafter will differ as the PMF Fund and the Fund will be managed differently, with the PMF Fund being managed for purposes of an orderly liquidation.

The purchase price for Interests tendered to the Fund will not be paid in cash. The purchase price for tendered Interests will be paid in-kind in the form of Shares that the Fund will receive from the Master Fund in connection with the Master Fund’s concurrent repurchase offer. The value of the Shares received by tendering Partners will be equal to the estimated net asset value of the tendered Interests as of the Valuation Date.

The repurchase of Interests is subject to regulatory requirements imposed by the Securities and Exchange Commission (“SEC”). The Fund’s repurchase procedures are intended to comply with such requirements. However, in the event that the Board determines that modification of the repurchase procedures is required or appropriate, the Board will adopt revised repurchase procedures as necessary to ensure the Fund’s compliance with applicable regulations or as the Board in its sole discretion deems appropriate. Conditions of the Offer are set forth in section 7 below.

Each Partner whose Interest (or portion thereof) has been accepted for repurchase will continue to be a Partner of the Fund effective until the Valuation Date (and thereafter if its Interest is repurchased in part) and may exercise its voting rights with respect to the repurchased Interest (or portion thereof) until the Valuation Date.

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The Master Fund has incurred and paid, and may incur and pay in the future, expenses in connection with conducting the Offer, including expenses in connection with the formation and capitalization of the PMF Funds, and the Fund will therefore bear an indirect pro-rata share of such expenses. The Offer is not conditioned on the completion of the PMF Funds Offer; however, in the event that the PMF Funds Offer is not completed, the Master Fund will bear a pro-rata portion of certain expenses relating to the PMF Funds Offer, including certain expenses that may be payable in the event that the transaction contemplated by the Purchase and Sale Agreement with the Third Party Feeder is not completed. The Fund does not intend to impose any charges (except for direct costs and expenses borne by the Fund generally) on the repurchase of Interests. Partners that tender Interests will become Shareholders of the PMF Fund and, as a result, will become subject to the fees and expenses of the PMF Fund, as set forth in the PMF PPM.

A Partner who tenders some but not all of the Partner’s Interest for repurchase will be required to maintain a minimum capital account balance of $100,000. Such minimum capital account balance requirement may be waived by the Fund, in its sole discretion. The Fund reserves the right to reduce the amount to be repurchased from a Partner so that the required capital account balance is maintained.

7. Certain Conditions of the Offer. An approximately pro-rata division of the Master Fund’s portfolio, and thus settlement of the Offer, is dependent upon the Master Fund’s ability to obtain the consents of Investment Managers to such division. There can be no assurance that the Master Fund will be able to effect an approximately pro-rata division of the Master Fund portfolio by the Valuation Date. If as of the Valuation Date the Master Fund is unable to make an approximately pro-rata division of its portfolio, including as a result of the failure to obtain Investment Manager consents, the Fund will be unable to settle the Offer, in which case Partners will remain invested in the Fund. The Fund expects to accept Interests tendered for repurchase prior to being able to determine whether the Master Fund will be able to effect such division. Following such date of acceptance Partners will not have the right to withdraw their tendered Interests prior to the Valuation Date.

To the extent that the Master Fund is delayed in entering into sufficient transfer agreements to transfer an approximately pro-rata portion of its portfolio, the Fund will be required to delay the Valuation Date to June 30, 2014, in which case the settlement of the Offer and payment of the Shares to tendering Partners will also be delayed. Such a change in the Valuation Date will not necessarily be accompanied by an extension of the Offer (so that you might not be able to withdraw your tendered Interest), and would increase the potential that the value of tendered Interests may change between the time you elect to tender and the Valuation Date. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

The Fund reserves the right, at any time and from time to time, subject to applicable law, to extend the period of time during which the Offer is pending by notifying Partners of such extension. If the Fund elects to extend the period during which the Offer is open, the Valuation Date (which is the date on which the estimated net asset value of tendered Interests will be determined) may, in the discretion of the Board, be delayed to June 30, 2014. During any extension of the Offer, all Interests previously tendered and not withdrawn will remain subject to the Offer. Following the acceptance of Interests tendered in the Offer, you will not have the right to withdraw such tendered Interests.

The Fund may amend the Offer or postpone the acceptance of tenders made pursuant to the Offer (and, by extension, the Valuation Date) in order to allow the approximately pro-rata division of the Master Fund’s portfolio to be made (such condition, the “Portfolio Division Condition.”) However, there can be no assurance that the Fund will exercise its right to extend or amend the Offer or to postpone acceptance of tenders pursuant to the Offer. If the Fund determines to amend the Offer or to postpone the acceptance of Interests tendered, it will, to the extent required, extend the period of time during which the Offer is open as provided above and will promptly notify Partners.

8. Certain Information About the Fund. The Fund is registered under the 1940 Act as a closed-end, non-diversified, management investment company and is organized as a Delaware limited partnership. The principal executive office of the Fund is located at 4265 San Felipe, 8th Floor, Houston, Texas 77027 and the telephone number is (713) 993-4675. Interests are not traded on any established trading market and are subject to strict restrictions on transferability pursuant to the LP Agreement. The Investment Adviser’s investment committee (the “Investment Committee”) members are Messrs. Lee G. Partridge, Jeremy L. Radcliffe, William K. Enszer, William B. Hunt and William R. Guinn (the “Managers”). Their address is c/o Endowment Advisers, L.P. at 4265 San Felipe, 8th Floor, Houston, Texas 77027 and the telephone number is (713) 993-4675.

9

Based on December 31, 2013 estimated values, Mr. John A. Blaisdell, Manager, Director and Co-Principal Executive Officer of the Fund, beneficially owns $1,254,065 of Interests in the Fund, and an aggregate of $1,503,159 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. Andrew B. Linbeck, Manager, Director and Co-Principal Executive Officer of the Fund, beneficially owns $2,065,961 of Interests in the Fund, and an aggregate of $2,336,811 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. John E. Price, Principal Financial Officer of the Fund, beneficially owns $121,947 of Interests in the Fund, and an aggregate of $121,947 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. A. Haag Sherman, Director of the Fund, beneficially owns $1,978,061 of Interests in the Fund, and an aggregate of $2,066,434 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. Lee G. Partridge, Manager and Chief Investment Officer of the Investment Adviser, does not have any beneficial ownership in the Fund.

Based on December 31, 2013 estimated values, Mr. Jeremy L. Radcliffe, Secretary of the Fund, beneficially owns $516,490 of Interests in the Fund, and owns an aggregate of $516,490 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. Scott E. Schwinger, Independent Director of the Fund, does not have any beneficial ownership in the Fund, but beneficially owns $223,345 of the interests in the fund complex.

Based on December 31, 2013 estimated values, Mr. William K. Enszer, portfolio manager of the Fund, does not have any beneficial ownership in the Fund.

None of the other directors of the Fund have any beneficial ownership in the Fund or the fund complex.

The Fund does not have any plans or proposals that relate to or would result in: (1) the acquisition by any of the above of additional Interests (other than the Fund’s intention to accept subscriptions for Interests from time to time in the discretion of the Fund), or the disposition of Interests (except for the Fund’s periodic discretionary solicitations of tender offers); (2) other than as described herein or in the cover letters filed in connection with the Offer with regard to the choice to receive Shares, an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Fund; (3) other than as described herein or in the cover letters filed in connection with the Offer with regard to the choice to receive Shares, any material change in the present distribution policy or indebtedness or capitalization of the Fund; (4) any change in the identity of the Investment Adviser or the Managers or Directors of the Fund, or in the management of the Fund including, but not limited to, any plans or proposals to change the number or the term of the Directors of the Fund, to fill any existing vacancy for a Director or to change any material term of the investment advisory arrangements with the Investment Adviser; (5) other than as described herein or in the cover letters filed in connection with the Offer with regard to the choice to receive Shares, a sale or transfer of a material amount of assets of the Fund; (6) other than as described herein or in the cover letters filed in connection with the Offer, any other material change in the Fund’s structure or business, including any plans or proposals to make any changes in its fundamental investment policies, as amended, for which a vote would be required by Section 13 of the 1940 Act; or (7) any changes in the LP Agreement or other actions that might impede the acquisition of control of the Fund by any person. Because Interests are not traded in any market, Items (6), (7) and (8) of Item 1006(c) of Regulation M-A are not applicable to the Fund.

To obtain consents, the Master Fund and the PMF Master Fund may be required to agree to indemnify Investment Funds and Investment Managers in connection with the division of the Master Fund’s portfolio or any related transfers of Investment Fund interests to the PMF Master Fund, which could expose the Master Fund and PMF Master Fund, and thus the Fund and the PMF Fund, to additional liabilities. The Master Fund may also bear

10

the expenses imposed on transfers by Investment Funds, including fees and expenses of counsel to the Investment Funds, as well as accounting fees and expenses that the Investment Funds may incur in the future in connection with the Investment Fund’s compliance with any U.S. federal tax requirements or elections as a result of the transfers.

9. Certain Federal Income Tax Consequences. The following discussion is a general summary of the federal income tax consequences of the purchase of Interests by the Fund from Partners pursuant to the Offer. Partners should consult their own tax advisors for a complete description of the tax consequences to them of a purchase of their Interests by the Fund pursuant to the Offer.

A Partner who tenders all or a portion of its Interest to the Fund for repurchase receiving payment in kind in the form of Shares generally will not recognize any income or capital gain or loss with respect to the transaction. A Partner’s tax basis in the PMF Fund Shares it receives in the repurchase transaction generally will be the same as its aggregate tax basis in the Interest being repurchased.

10. Miscellaneous. The Offer is not being made to, nor will tenders be accepted from, Partners in any jurisdiction in which the Offer or its acceptance would not comply with the securities or Blue Sky laws of such jurisdiction. The Fund is not aware of any jurisdiction in which the Offer or tenders pursuant thereto would not be in compliance with the laws of such jurisdiction. However, the Fund reserves the right to exclude Partners from the Offer in any jurisdiction in which it is asserted that the Offer cannot lawfully be made. The Fund believes such exclusion is permissible under applicable laws and regulations, provided the Fund makes a good faith effort to comply with any state law deemed applicable to the Offer.

The Fund has filed an Issuer Tender Offer Statement on Schedule TO with the SEC, which includes certain information relating to the Offer summarized herein. A free copy of such statement may be obtained from the Fund by contacting the Investment Adviser at (800) 725-9456 or from the SEC’s internet web site, http://www.sec.gov. For a fee, a copy may be obtained from the Public Reference Room of the SEC at 100 F Street, N.E., Washington, DC 20549. For more information about its operation. call (202) 551-8090.

Financial Statements

The audited financial statements of the Fund for the fiscal year ended December 31, 2012, and the schedule of investments dated December 31, 2012, both filed with the SEC on EDGAR on Form N-CSR on March 11, 2013, are hereby incorporated by reference. The semi-annual, unaudited financial statements for the six month period ended June 30, 2013, filed with the SEC on EDGAR on Form N-CSRS on September 6, 2013, are hereby incorporated by reference.

11

EX-99.3

Exhibit 99.3

LETTER OF TRANSMITTAL

REGARDING

LIMITED PARTNERSHIP INTERESTS IN THE ENDOWMENT INSTITUTIONAL FUND, L.P. AND

SHARES OF LIMITED PARTNERSHIP INTEREST IN THE PMF FUND, L.P. (AS APPLICABLE)

TENDERED PURSUANT TO THE RESPECTIVE OFFERS TO PURCHASE

DATED FEBRUARY 20, 2014 OF SUCH FUNDS

EACH OFFER WILL EXPIRE ON MARCH 19, 2014

AND THIS LETTER OF TRANSMITTAL MUST BE RECEIVED BY

ENDOWMENT ADVISERS, L.P., EITHER BY MAIL OR BY FAX, BY MIDNIGHT,

NEW YORK CITY TIME, ON MARCH 19, 2014, (THE “EXPIRATION DATE”) UNLESS THE OFFERS ARE EXTENDED.

IF YOU WISH TO PARTICIPATE IN EITHER OR BOTH OFFERS TO PURCHASE, COMPLETE THE TENDER OFFER FORM (THE “TENDER OFFER FORM”) AND SUBSCRIPTION AGREEMENT SIGNATURE PAGES AND CONTACT YOUR FINANCIAL INTERMEDIARY FOR SPECIFIC INSTRUCTIONS

Ladies and Gentlemen:

The undersigned hereby tenders to The Endowment Institutional Fund, L.P., a closed-end, non-diversified, management investment company organized under the laws of the State of Delaware (the “Endowment Fund”), the limited partnership interest (or portion thereof) in the Endowment Fund held by the undersigned and specified on the Tender Offer Form (the “Interest”), on the terms and conditions set forth in the Endowment Fund’s offer to purchase, dated February 20, 2014 (the “Endowment Fund Offer to Purchase”), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the “Endowment Offer”).

The undersigned hereby tenders to PMF Fund, L.P., a closed-end, non-diversified management investment company organized under the laws of the State of Delaware (the “PMF Fund” and together with the Endowment Fund, the “Funds”), the shares of limited partnership interest (or portion thereof) in the PMF Fund held by the undersigned and specified on the Tender Offer Form (the “Shares”), on the terms and conditions set forth in the PMF Fund’s offer to purchase, dated February 20, 2014 (the “PMF Fund Offer to Purchase” and, together with the Endowment Fund Offer to Purchase, the “Offers to Purchase”), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the “PMF Offer”, and together with the Endowment Offer, the “Offers”).

THE OFFERS ARE SUBJECT TO ALL THE TERMS AND CONDITIONS SET FORTH IN THE APPLICABLE OFFER TO PURCHASE, INCLUDING, BUT NOT LIMITED TO, THE ABSOLUTE RIGHT OF A FUND TO REJECT ANY AND ALL TENDERS DETERMINED BY IT, IN ITS SOLE DISCRETION, NOT TO BE IN THE APPROPRIATE FORM.

As specified in the Tender Offer Form, the undersigned hereby sells to the applicable Fund the Interest and Shares tendered hereby pursuant to the Offers.

The undersigned hereby warrants that the undersigned has full authority to sell, as applicable, the Interest and the Shares tendered hereby (as set forth in the Tender Offer Form) and that the applicable Fund will acquire good title thereto, free and clear of all liens, charges, encumbrances, conditional sales agreements or other obligations relating to the sale thereof, and not subject to any adverse claim, when and to the extent the same are purchased by such Fund. Upon request, the undersigned will execute and deliver any additional documents necessary to complete the sale in accordance with the terms of the Offers. The undersigned recognizes that under certain circumstances set forth in the applicable Offer to Purchase, a Fund may not purchase any of the Interest and/or Shares tendered.

Payment of the purchase price for the Interest tendered by the undersigned shall be made entirely in-kind in the form of Shares, as described in Section 6 of the Endowment Fund Offer to Purchase.

Payment of the purchase price for the Shares tendered by the undersigned shall be wired, as described in Section 6 of the PMF Fund Offer to Purchase, to an account designated by the undersigned or sent to the undersigned at its mailing address as listed in the Endowment Fund’s records, unless the undersigned advises the

Endowment Fund in writing of a change in the undersigned’s mailing address. The undersigned recognizes that the purchase price of the Shares tendered will be determined as set forth in Section 6 of the PMF Fund Offer to Purchase, and that the purchase price for the Shares tendered will be less than the net asset value of such Shares, may be less than the amount the undersigned might otherwise receive by holding the Shares through liquidation of the PMF Fund, and the undersigned may consequently be foregoing material value (on both a present value and an absolute dollar basis) that the undersigned would otherwise receive over time if the undersigned held the Shares through liquidation of the PMF Fund.

All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and the obligations of the undersigned hereunder shall be binding on the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in Section 5 of the applicable Offer to Purchase, this tender is irrevocable.

TENDER OFFER FORM & SUBSCRIPTION AGREEMENT SIGNATURE PAGES

(“TENDER OFFER FORM”)

Date this Tender Offer Form is submitted:             , 2014

TENDER OFFER EXPIRATION DATE: 12 Midnight New York City Time, March 19, 2014

THIS TENDER OFFER FORM IS PART OF (1) THE OFFERS TO PURCHASE OF THE ENDOWMENT INSTITUTIONAL FUND, L.P. (THE “ENDOWMENT FUND”) AND THE PMF FUND, L.P. (THE “PMF FUND”) AND (2) THE PMF FUND SUBSCRIPTION AGREEMENT INCLUDED IN THE PMF FUND’S PRIVATE PLACEMENT MEMORANDUM DATED FEBRUARY 20, 2014 AND MUST BE READ IN CONJUNCTION WITH SUCH OFFERS TO PURCHASE AND PMF FUND SUBSCRIPTION AGREEMENT. ALL SUBSCRIPTIONS FOR SHARES IN THE PMF FUND ARE MADE IN THE FORM OF TENDERS OF LIMITED PARTNERSHIP INTERESTS IN THE ENDOWMENT FUND. CASH PROCEEDS WILL BE PAID SOLELY FOR TENDERED SHARES OF THE PMF FUND.

ALL PARTS OF THIS TENDER OFFER FORM MUST BE COMPLETED IN ORDER

FOR THIS FORM TO BE PROCESSED

PLEASE INFORM THE FINANCIAL INTERMEDIARY WHO SERVICES YOUR INVESTMENT IN THE ENDOWMENT FUND THAT YOU WISH TO SUBMIT A TENDER, AS SUCH FINANCIAL INTERMEDIARY MAY HAVE SPECIFIC INSTRUCTIONS THAT NEED TO BE FOLLOWED. ALLOW FOR ADDITIONAL PROCESSING TIME BY YOUR FINANCIAL INTERMEDIARY IF NECESSARY AS THIS TENDER OFFER FORM MUST ULTIMATELY BE RECEIVED BY THE APPLICABLE FUND(S) PRIOR TO THE TENDER OFFER EXPIRATION DATE, MIDNIGHT, NEW YORK CITY TIME, ON MARCH 19, 2014. IF YOUR FINANCIAL INTERMEDIARY INSTRUCTS YOU TO SEND THIS TENDER OFFER FORM DIRECTLY TO THE APPLICABLE FUND, PLEASE FAX OR MAIL TO:

Regular Mail	Overnight Mail	Fax
THE ENDOWMENT FUND	THE ENDOWMENT FUND	(866) 624-0077
PO BOX 182663	Attn: Salient Operations	FOR ADDITIONAL INFORMATION:
Columbus, OH 43218-2663	3435 Stelzer Road, Suite 1000	Phone: (800) 725-9456
	Columbus, OH 43219

PART 1 – NAME (AS IT APPEARS ON YOUR ENDOWMENT FUND STATEMENT) AND CONTACT INFORMATION

Endowment Fund Feeder Name:

Endowment Fund Account #:

Account Name/Registration:

Address:

City, State, Zip:

Telephone Number:

Email Address:

Financial Intermediary Firm Name:

Financial Intermediary Account #:

Financial Advisor Name:

Financial Advisor Telephone #:

¨ Please check here if you are an employee, officer or director of Salient Partners, L.P. or of one of their respective affiliated entities. (Pre-clearance Form from compliance must be turned in with this Tender Offer Form.)

PART 2 – REQUESTED TENDER PARTICIPATION: Please complete ONLY ONE of the 3 options below. Capitalized terms used in this Part 2 shall have the meanings given to them in the attached Letter of Transmittal:

¨ OPTION 1: FULL ELECTION FOR THE PMF FUND – LONG TERM WIND-DOWN OPTION: The undersigned wishes to participate in the Endowment Offer and elects to tender ALL of the undersigned’s Interest. The purchase price for such Interest will be paid entirely in-kind in the form of Shares. The undersigned elects to retain the Shares and not to participate in the PMF Offer (Early Liquidity Option).

¨ OPTION 2: FULL ELECTION FOR THE PMF FUND – EARLY LIQUIDITY OPTION: The undersigned wishes to participate in the Endowment Offer and the PMF Offer, and elects to tender ALL of the undersigned’s Interest and ALL of the undersigned’s Shares. The purchase price for the Shares will be paid in cash at a discount to net asset value and at a price that may be less than the amount the undersigned might otherwise receive by electing the Long Term Wind-Down Option, and the undersigned may consequently be foregoing material value (on both a present value and an absolute dollar basis) that the undersigned would otherwise receive over time if the undersigned elected the Long Term Wind-Down Option, as described in the PMF Fund Offer to Purchase. The undersigned is aware that in the event the PMF Offer (Early Liquidity Option) is cancelled, the proceeds for the undersigned’s Interest will be paid entirely in-kind in the form of Shares, and the undersigned will receive no cash proceeds.

¨ OPTION 3: COMBINATION OF LONG TERM WIND-DOWN AND EARLY LIQUIDITY OPTIONS: The undersigned wishes to participate in the Endowment Offer and the PMF Offer and elects to tender the following amount of the undersigned’s Interest (MUST SELECT EITHER FULL OR PARTIAL AND COMPLETE THE TABLE BELOW):

¨ Full Election for the Endowment Offer

¨ Partial Election for the Endowment Fund Offer (must provide dollar amount tendered)    $

The undersigned requests to allocate the proceeds from the tendered Interest requested in Option 3 in the following manner:

PASSIVELY MANAGED FUND – LONG TERM WIND-DOWN OPTION – PERCENTAGE OF PROCEEDS FOR THE TENDERED INTEREST TO BE PAID AND RETAINED IN-KIND IN THE FORM OF SHARES.		%
PASSIVELY MANAGED FUND – EARLY LIQUIDITY OPTION – PERCENTAGE OF PROCEEDS FOR THE TENDERED INTEREST TO BE TENDERED FOR CASH AT A DISCOUNT TO NET ASSET VALUE AS DESCRIBED IN THE PMF FUND OFFER TO PURCHASE. THE UNDERSIGNED IS AWARE THAT IN THE EVENT THE PMF OFFER (EARLY LIQUIDITY OPTION) IS CANCELLED, THE PROCEEDS FOR ALL OF THE UNDERSIGNED’S TENDERED INTEREST WILL BE PAID ENTIRELY IN-KIND IN THE FORM OF SHARES, AND THE UNDERSIGNED WILL RECEIVE NO CASH PROCEEDS.		%
	100.00	%

PART 3 – INVESTOR CERTIFICATIONS

A. For individual investors and grantors of certain grantor trusts, please check one (or more) of the following describing your eligibility to invest in PMF Fund, L.P. (as referred to in this Part 3, the “Fund”):

In order to determine your qualification as an “accredited investor” for purposes of Regulation D under the U.S. Securities Act of 1933, as amended (the “1933 Act”), please check one (or more) of the following boxes describing your eligibility to invest in the Fund. You are:

¨ (a) A natural person whose net worth¹ (or joint net worth with a spouse) at the time of purchase exceeds $1,000,000, excluding the value of the primary residence of such natural person;

¹  As used herein, “net worth” means the excess of total assets at fair market value over total liabilities. For the purposes of determining “net worth”, the principal residence owned by an individual shall be excluded from both total assets and total liabilities, except that liabilities attached to such residence should be included in total liabilities to the extent that such liabilities exceed the fair market value of the residence.

¨ (b) A natural person who had an individual income in excess of $200,000 for each of the last two years (or joint income with a spouse in excess of $300,000 in each of those years) and who reasonably expects to reach the same income level in the current year.

B. For entities, please check one (or more) of the following describing your eligibility to invest in the Fund:

In order to determine your qualification as an “accredited investor” for purposes of Regulation D, please check one (or more) of the following boxes describing your eligibility to invest in the Fund. You are:

¨ (a) A trust (i) with total assets in excess of $5,000,000, (ii) that was not formed for the specific purpose of investing in the Fund, and (iii) of which the person responsible for directing the investment of assets in the Fund has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment;

¨ (b) An entity with total assets in excess of $5,000,000 that was not formed for the specific purpose of investing in the Fund and that is (please check one)

a corporation;	a Massachusetts or similar business trust; or
a partnership;	an organization described in Section 501(c)(3) of the
a limited liability company;	Internal Revenue Code of 1986, as amended (the “Code”);

¨ (c) An entity licensed, or subject to supervision, by U.S. federal or state examining authorities as a “bank,” (as defined in Section 3(a)(2) of the 1933 Act, a “savings and loan association,” (or other institution as described in Section 3(a)(5)(A) of the 1933 Act), or an account for which a bank or savings and loan association is subscribing in a fiduciary capacity;

¨ (d) An entity registered with the U.S. Securities and Exchange Commission as a broker or dealer under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), an “insurance company” (as defined in Section 2(13) of the 1933 Act) or an investment company registered under the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”); or an entity that has elected to be treated or qualifies as a “business development company” (within the meaning of Section 2(a)(48) of the Investment Company Act);

¨ (e) A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;

¨ (f) An employee benefit plan which (A) has total assets in excess of $5,000,000 or (B) is a self-directed plan, with investment decisions made solely by persons that are “accredited investors” (as defined in Regulation D under the 1933 Act) or (C) investment decisions are made by a plan fiduciary (as defined in Section 3(21) of ERISA), which is either a bank, savings and loan association, insurance company, or registered investment adviser or (D) is not a participant-directed plan but is a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, with total assets in excess of $5,000,000;

¨ (g) A private business development company as defined in Section 202(a)(22) of the U.S. Investment Advisers Act of 1940, as amended (the “Advisers Act”); or

¨ (h) An entity which all of the unit owners and participants (i.e., all partners (including limited partners) of a partnership, shareholders of a corporation, or beneficiaries of an estate) are Accredited Investors. THIS OPTION IS NOT APPLICABLE FOR NON-GRANTOR TRUSTS.

PART 4 – PAYMENT OPTIONS

If you invest in the Endowment Fund through a financial intermediary, that financial intermediary may require alternate delivery instructions notwithstanding your request herein. Please contact your financial intermediary before submitting this Tender Offer Form. Please select delivery option 1, 2 or 3 below. Wiring instructions are not required for option 1 or 2. Please complete wiring instructions only if option 3 is selected.

1.	¨	Wire to Custodian Account on Record (MANDATORY FOR IRA HOLDERS)
2.	¨	Wire to Financial Intermediary Account on Record (COMMON FOR NON-IRA HOLDERS)
3.	¨	Wire to Financial Intermediary Account listed (MUST COMPLETE WIRING INSTRUCTIONS BELOW, OBTAIN MEDALLION SIGNATURE GUARANTEE, AND SUBMIT ORIGINAL DOCUMENT VIA MAIL FOR PROCESSING.)
		Bank Name:
		ABA Routing Number:
		(Please note: The routing number on personal checks is typically NOT the appropriate wire ABA number. Please contact your bank to verify ABA number needed for a wire transfer)
		For Credit to:
		Name(s) on Bank Account
		Bank Account Number:
		For Further Credit to:
		Name(s) on Investor Account
		Account # at Financial Intermediary:

PART 5 - SIGNATURE(S)

¨ PLEASE CHECK THE BOX TO ACKNOWLEDGE THE FOLLOWING: BY SIGNING THIS TENDER OFFER FORM AND CHECKING THE BOX ABOVE, THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS READ AND UNDERSTOOD THE PMF FUND SUBSCRIPTION AGREEMENT AND HEREBY MAKES ALL OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THE PMF FUND SUBSCRIPTION AGREEMENT.

The undersigned acknowledges that the request set forth in this Tender Offer Form is subject to all the terms and conditions set forth in the applicable Offer to Purchase as well as the applicable Private Placement Memorandum and that all capitalized terms used herein and not otherwise defined herein or in the Transmittal Letter have the meaning as defined in the applicable Fund’s Private Placement Memorandum. This Tender Offer Form is irrevocable except as set forth in the applicable Offer to Purchase. The undersigned represents that the undersigned is the beneficial owner of the Interest and/or Shares to which this Tender Offer Form relates, and that the person(s) signing this Tender Offer Form is an authorized representative of the beneficial owner of such Interest and Shares.

In the case of joint accounts, each joint holder must sign this Tender Offer Form. Tender Offer Forms submitted on behalf of a foundation, partnership or any other entity should be accompanied by evidence of the authority of the person(s) signing.

Signature	Print Name of Authorized Signatory (and Title if applicable)    Date
Signature	Print Name of Authorized Signatory (and Title if applicable)    Date

For Fidelity/NFS investors and for investors who elect to receive proceeds by wire transfer other than to Account on Record only, Medallion Signature Guarantee must be provided here (ORIGINAL DOCUMENT MUST BE SUBMITTED BY MAIL):

Medallion Signature Guarantee

Tender Offer Form & Subscription Agreement

Signature Pages – US Investors

Document #:	Client account #:	Production / CAI #:
Client name:

Instructions for a Tender of Limited Partnership Interests in the Endowment Fund and a Subsequent Subscription of Limited Partnership Interests in the PMF Fund at Bank Of America

After the Endowment Fund has delivered the offering materials for the PMF Fund to the client, the Financial Advisor, Portfolio Manager or registered representative (each, an “Investment Professional”) needs to:

Step 1	REVIEW client information
	Review all pages of this document for accuracy and completeness.
Step 2	DISCUSS with your client
	Ensure your client understands, verifies and completes all sections of this document.
Step 3	SIGN and DATE
	Your client must sign and date the document.
Step 4	SCAN and SUBMIT
	Scan the completed and signed document to your desktop and submit it through the Dashboard on the Alternative Investments Processing Center.

This document forms part of the Endowment Fund and PMF Fund Tender Offers (respectively, “Endowment Offer” and “PMF Offer”) and part of the PMF Fund Subscription Agreement and must be read in conjunction with the Endowment and PMF Offers and PMF Fund Subscription Agreement. All subscriptions in the PMF Fund are derived from tendered limited partnership interests in the Endowment Fund. Cash proceeds will be paid solely for tendered Shares of the PMF Fund. All capitalized terms not defined herein shall have the meanings assigned to them in the Endowment Offer and PMF Offer, as the context requires.

Investment Professional Attestation

The undersigned Investment Professional hereby certifies that the Client is known to and is a client of the Investment Professional, and has had substantive discussions with the Client regarding the Client’s investment objectives. The Investment Professional confirms that he/she has a reasonable basis for believing (i) that all of the representations made by the Client in the Signature Pages are true and correct, (ii) based on information obtained from the Client concerning the Client’s investment objectives, other investments, financial situation and needs, and any other information known to the Investment Professional, that a tender from the Fund(s) and subsequent investment in the PMF Shares is suitable for the Client, and (iii) that the Client’s contact information on record with the selling agent and as noted on these Signature Pages is true and correct.

The Investment Professional confirmed that the Client is aware of the financial terms and risks applicable to an investment in each Fund and the specific class(es) and series of units or shares (or other form of interest) issued by each Fund in which the Client is seeking to invest.

Name:	Phone #:
Signature:	Date:

TEF_PMF_v1.0

Document #:	Client account #:	Production / CAI #:
Client name:

Client(s) Account Details

Client’s name:
Account to be debited:	SSN/TIN #:
Account classification:
Registration address:
Is the above address a P.O. Box? If so, please provide a physical mailing address:

BAC Additional Compensation / Managed Accounts

The Client acknowledges that affiliates or subsidiaries of Bank of America Corporation (together “BAC”) may receive additional compensation from the Fund, the manager or an affiliate thereof in connection with the Client’s investment in the Fund. The Client agrees to the receipt by BAC of this additional compensation, and acknowledges the conflicts of interests associated with the receipt of such additional compensation. If the Client is subscribing for interests in the Fund through an eligible managed account program, the Client confirms that he, she or it is a client of an eligible managed account program.

þ I acknowledge and agree.

Client Eligibility

By checking the box below, the Client hereby certifies that:

Accredited Investor

The Client has read the definition of an “Accredited Investor” set forth in each Fund’s Subscription Agreement and certifies that the Client satisfies one or more of the requirements set forth therein. If the Client is an entity (other than a trust) and (i) is an “Accredited Investor” because each beneficial owner of the Client is an “Accredited Investor,” the Client represents and warrants that it has confirmed that each beneficial owner of the Client is an “Accredited Investor” in its own right, (ii) was not formed for the specific purpose of investing in the Fund, and (iii) the Fund, based on this representation, has a reasonable basis to accept the Client as an “Accredited Investor.”

þ Accredited Investor

Document #:	Client account #:	Production / CAI #:
Client name:

TEF_PMF_v1.0 2 of 4

Document #:	Client account #:	Production / CAI #:
Client name:

Order Details – Tender Participation & Amount

These Signature Pages relate to your subscription to the PMF Fund. By executing these Signature Pages, you acknowledge and agree that you have received and reviewed the PMF Fund’s and Subscription Agreement, of which these Signature Pages form an integral part, included within the PMF Fund’s Private Placement Memorandum. The risks associated with an investment in the PMF Fund are described in the PMF Fund’s Private Placement Memorandum (including all parts, supplements, appendices and exhibits thereto, an “Offering Memorandum”).

By signing these Signature Pages, the undersigned hereby tenders to the Fund and the PMF Fund (as applicable), Interests and Shares held by the undersigned in the Fund and the PMF Fund in the amounts indicated below, on the terms and conditions set forth in the respective Offers to Purchase of the Fund and the PMF Fund, receipt of each of which is hereby acknowledged, and in this letter of transmittal (which together constitute the “Offer”). The undersigned hereby warrants the undersigned has full authority to sell, as applicable, Interests and Shares or a portion thereof tendered hereby and that the Fund and PMF Fund, respectively, will acquire good title thereto, free and clear of all liens, charges, encumbrances, conditional sales agreements or other obligations relating to the sale thereof, and not subject to any adverse claim, when and to the extent the same are purchased by it. Except as stated in the applicable Offer to Purchase, this tender is irrevocable and is binding on the heirs, personal representatives, successors and assigns of the undersigned.

Passively Managed Fund – Long Term Wind-Down Option

If participation in the “Passively Managed Fund – Long Term Wind-Down Option” is indicated below, then the Client wishes to participate in the Endowment Offer and elects to tender the undersigned’s Interest. The purchase price for such Interest will be paid entirely in-kind in the form of Shares. The undersigned elects to retain the Shares and not to participate in the PMF Offer (Early Liquidity Option).

Passively Managed Fund – Early Liquidity Option

If participation in the “Passively Managed Fund – Early Liquidity Option” is indicated below, then the Client wishes to participate in the Endowment Offer and the PMF Offer, and elects to tender the undersigned’s Interest and the undersigned’s Shares. The purchase price for the Shares will be paid in cash at a discount to net asset value and at a price that may be less than the amount the undersigned might otherwise receive by electing the Long Term Wind-Down Option. By participating in the PMF Offer (Early Liquidity Option), the undersigned may be foregoing material value (on both a present value and an absolute dollar basis) that the undersigned would otherwise receive over time if the undersigned did not tender Shares, as described in the PMF Fund Offer to Purchase. The undersigned is aware that in the event the PMF Offer (Early Liquidity Option) is cancelled, the proceeds for the undersigned’s Interest will be paid entirely in-kind in the form of Shares, and the undersigned will receive no cash proceeds.

Tender Fund:	The Endowment Registered Fund, LP
Effective Date	Description	Exchange Out Units	Fund Description
03/31/2014	Exchange Out	100.000	Tender Fund
Purchase Option /Fund:	Passively Managed Fund – Long Term Wind-Down Option
Description		Exchange In Percentage	Fund Description
Exchange In		50.0%	Purchase Fund
Tender Fund:	The Endowment Registered Fund, LP
Effective Date	Description	Exchange Out Units	Fund Description
03/31/2014	Exchange Out	100.000	Tender Fund
Purchase Option / Fund:	Passively Managed Fund – Early Liquidity Option
Description		Exchange In Percentage	Fund Description
Exchange In		50.0%	Purchase Fund

Document #:	Client account #:	Production / CAI #:
Client name:

TEF_PMF_v1.0 3 of 4

Document #:	Client account #:	Production / CAI #:
Client name:

Signature

By executing and submitting these Signature Pages, the Client represents that (a) if an individual, the Client is at least 21 years old and legally competent; (b) if an Entity; (i) the Client has been duly formed, is validly existing and is in good standing under the laws of the jurisdiction of its formation with full power and authority to enter into the transactions contemplated by the Endowment Offer and PMF Offer, including the acquisition of Shares; (ii) based upon a review of the Client’s constitutional documents and/or based on consultation with counsel or Investment Professionals, the Client is authorized to invest in the PMF Fund; and (iii) the Signatory has been authorized by the Client to execute and deliver these Signature Pages submitted by the Client; (c) the Client has received and read the Endowment Offer, PMF Offer and the PMF Fund’s Private Placement Memorandum; (d) the Client has received, read and understood, and agrees to each and every term of the Subscription Agreement of the PMF Fund; (e) these Signature Pages have been or will be duly and validly authorized, executed and delivered by the Client; (f) the Client makes and affirms all of the certifications, representations, warranties, agreements, acknowledgements and undertakings set forth in the PMF Fund’s Subscription Agreement; (g) the Client’s execution of these Signature Pages will constitute for all purposes the Client’s execution of the Subscription Agreement of the PMF Fund; and (h) these Signature Pages (including the Subscription Agreement) submitted by or on behalf of the Client, pursuant to a power of attorney, constitute or will constitute the valid, binding and enforceable agreement of the Client.

Suitability And Nature Of Investment

The Client understands that an investment in the PMF Fund(s) is speculative, illiquid (not listed or traded and subject to substantial restrictions on transferability, resale, redemptions, or other liquidity terms) and long-term, and does not constitute a complete investment program. The Client confirms that the Client has (either alone or with the Client’s Investment Professionals, if any, sufficient knowledge and expertise to be able to evaluate the merits and risks of investing in the PMF Fund. The Client has considered the speculative and illiquid nature of an investment in the PMF Fund within the context of the Client’s total portfolio, understands an investment in the PMF Fund is only suitable, if at all, for a limited portion of the risk segment of the Client’s overall portfolio, and is willing and financially able to bear the various risks of such an investment, including the risk of total loss.

Important Notice: The USA PATRIOT Act

In order to fight the funding of terrorist activity and money laundering, the selling agent, like other financial institutions, is required by law to obtain, verify, and record information that identifies each person who opens an account, including legal persons such as corporations and partnerships. When an account is opened, the selling agent asks for information to identify the person opening the account and in some cases the persons controlling the account. The selling agent may also ask for identifying corporate documentation. Such information, like all customer information, is confidential as required by law. The Client hereby specifically confirms and acknowledges its certifications, representations, warranties and covenants contained in each Fund’s Subscription Agreement, if any.

Internal Revenue Code Certification

The Client hereby represents, warrants and certifies as follows (a) under penalties of perjury, by signature below, the Client certifies that the Social Security/Taxpayer ID Number set forth in these Signature Pages is the true, correct and complete Social Security/Taxpayer ID Number of the Client, and the Client is a “United States person” (as defined in Section 7701(a)(30) of the Code) including a U.S. resident alien, (b) under penalties of perjury, by signature below, the Client certifies that the Client is not subject to backup withholding because (i) the Client is exempt from backup withholding, (ii) the Client has not been notified by the Internal Revenue Service that the Client is subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the Internal Revenue Service has notified the Client that the Client is no longer subject to backup withholding, (c) under penalties of perjury, by signature below, if an exemption from FATCA reporting code was requested on this document then the Client certifies that the FATCA code(s) entered on this document, if any, indicating that the Client is exempt from FATCA reporting is correct, and (d) the Client agrees to notify their Investment Professional within 30 days of any change in the information set forth above.

The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding.

Signature 1:	Required
Signature:			Date:
Signer’s Name:		Title:
(please print)
Signature 2:
Signature:			Date:
Signer’s Name:		Title:
(please print)

Document #:	Client account #:	Production / CAI #:
Client name:

TEF_PMF_v1.0 4 of 4

EX-99.4

THE ENDOWMENT INSTITUTIONAL FUND, L.P.

PRIVATE PLACEMENT MEMORANDUM

LIMITED PARTNERSHIP INTERESTS

January 1, 2014

This private placement memorandum describes The Endowment Institutional Fund, L.P. (the “Fund”). The Fund is a limited partnership registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as a non-diversified, closed-end management investment company.

The Fund invests substantially all of its investable assets into The Endowment Master Fund, L.P., a Delaware limited partnership (the “Master Fund”), which allocates the proceeds among a number of investment managers (“Investment Managers”), generally through investments in a wide range of investment vehicles (“Investment Funds”) managed by the Investment Managers.

The Fund’s investment objective is to preserve capital and to generate consistent long-term appreciation and returns across a market cycle (which is estimated to be five to seven years). To achieve its objective, the Fund provides its limited partners (the “Partners”), through the Master Fund, with access to a broad range of investment strategies and asset categories (collectively, “asset classes”), Investment Managers and overall asset allocation services typically available on a collective basis to larger institutions. The Fund cannot guarantee that its investment objective will be achieved or that its portfolio design and risk monitoring strategies will be successful. SEE “GENERAL RISKS,” “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE” AND “INVESTMENT RELATED RISKS.”

Investments in the Fund may be made only by “Eligible Investors” as defined herein. See “ELIGIBLE INVESTORS.” Eligible Investors who purchase Interests in the offering, and other persons who acquire Interests and are admitted to the Fund, will become Partners in the Fund. Each of the Fund and the Master Fund is governed by its Board of Directors (each individually a “Director” and collectively the “Board”). Endowment Advisers, L.P., a Delaware limited partnership, serves as the Fund’s and the Master Fund’s investment adviser (the “Adviser”).

This private placement memorandum (“Memorandum”) applies to the private placement of Interests of the Fund. This Memorandum provides information that you should know about the Fund before investing. You are advised to read this Memorandum carefully and to retain it for future reference. The information in this Memorandum may be changed. If you purchase an Interest in the Fund, you will become bound by the terms and conditions of the agreement of limited partnership of the Fund (“LP Agreement”), which shall be in substantially the form attached as Appendix C to this Memorandum.

Interests are generally available for purchase as of the first business day of each calendar month, except that Interests may be made available for purchase more or less frequently as determined by the Fund’s Board in its sole discretion. As used in this Memorandum, “business day” means each day on which the New York Stock Exchange is open for trading, or as otherwise determined from time to time by the Fund. No person who is admitted as a Partner has the right to require the Fund to redeem such Partner’s Interest. The Interests are not listed on any securities exchange and it is not anticipated that a secondary market for the Interests will develop. The Interests are subject to substantial restrictions on transferability and resale and may not be transferred or resold except as permitted under the LP Agreement. Although the Fund may offer to repurchase Interests from time to time, Interests are not

redeemable at a Partner’s option nor are they exchangeable for Interests or shares of any other fund. As a result, an investor may not be able to sell or otherwise liquidate his or her Interest. The Interests are appropriate only for those investors who do not require a liquid investment and who are aware of the risks involved in investing in the Fund. To the extent that an investor requires that a portion of its investment portfolio provide liquidity, such portion should not be invested in the Fund.

The Interests are not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state. The Fund issues Interests only in private placement transactions in accordance with Regulation D or other applicable exemptions under the Securities Act. This Memorandum is not an offer to sell, or a solicitation of an offer to buy, any security to or from the public within the meaning of the Securities Act. This Memorandum is not an offer to sell the Interests and is not soliciting an offer to buy the Interests in any state or jurisdiction where such offer or sale is not permitted. This Memorandum is intended for use only by the person to whom it has been issued. Reproduction of this Memorandum is prohibited.

Neither the Securities and Exchange Commission (“SEC”) nor any state securities commission has determined whether this Memorandum is truthful or complete, nor have they made, nor will they make, any determination as to whether anyone should buy these securities. Any representation to the contrary is a criminal offense.

You should not construe the contents of this Memorandum as legal, tax or financial advice. You should consult with your own professional advisors as to the legal, tax, financial or other matters relevant to the suitability of an investment in the Fund.

You should rely only on the information contained in this Memorandum. The Fund has not authorized anyone to provide you with different information. You should not assume that the information provided by this Memorandum is accurate as of any date other than the date on the front of this Memorandum.

The date of this Memorandum is January 1, 2014.

TABLE OF CONTENTS

SUMMARY	i
SUMMARY OF FUND EXPENSES	1
INVESTMENT OBJECTIVE	3
INVESTMENT STRATEGIES	5
OVERVIEW OF INVESTMENT PROCESS	11
DUE DILIGENCE AND MANAGER SELECTION	12
BORROWING BY THE FUND AND THE MASTER FUND	13
ADDITIONAL METHODS OF INVESTING IN INVESTMENT FUNDS	13
ADDITIONAL INVESTMENT POLICIES	14
GENERAL RISKS	16
SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE	24
INVESTMENT RELATED RISKS	29
MANAGEMENT OF THE FUND	46
INVESTMENT MANAGEMENT FEE	68
PLACEMENT AGENTS	69
ADMINISTRATION	70
CUSTODIAN	71
FUND EXPENSES	72
PORTFOLIO TRANSACTIONS	73
VOTING	74
CONFLICTS OF INTEREST	75
CONFLICTS OF INTEREST RELATING TO THE INVESTMENT MANAGERS	78
CODES OF ETHICS	79
LIQUIDITY REQUIREMENTS	79
OUTSTANDING SECURITIES	81
PERFORMANCE INFORMATION	81
REPURCHASES OF INTERESTS	82
TRANSFERS OF INTERESTS	88
CALCULATION OF NET ASSET VALUE; VALUATION	89
CAPITAL ACCOUNTS AND ALLOCATIONS	91
CERTAIN TAX CONSIDERATIONS	92
ERISA CONSIDERATIONS	106
ELIGIBLE INVESTORS	108

PURCHASING INTERESTS	109
PROXY VOTING POLICIES AND PROCEDURES	110
ADDITIONAL INFORMATION AND SUMMARY OF THE LP AGREEMENT	111
REPORTS TO PARTNERS	113
FISCAL YEAR	114
ACCOUNTANTS AND LEGAL COUNSEL	114
INQUIRIES	114
FINANCIAL STATEMENTS	114
Appendix A – Form of Subscription Agreement	A-1
Appendix B – Performance History of the Fund	B-1
Appendix C – Form of Amended and Restated Agreement of Limited Partnership	C-1

SUMMARY

This is only a summary and does not contain all of the information that you should consider before investing in the Fund. Before investing in the Fund, you should carefully read the more detailed information appearing elsewhere in this Memorandum and the LP Agreement.

THE MASTER FUND

The Fund is a Delaware limited partnership and invests substantially all of its investable assets directly in the Master Fund. The Master Fund was organized in March 2003 as a Cayman Islands limited partnership and, without having commenced investment operations, re-domesticated as a Delaware limited partnership in March 2003. After this re-domestication, the Master Fund operated as an unregistered investment vehicle until March 10, 2004, at which time it registered as a closed-end investment company under the Investment Company Act. The Master Fund currently has other investors that are feeder funds managed by the Adviser (as defined below) or one or more affiliates of the Adviser, and it may have additional investors in the future. The Master Fund has the same investment objective as the Fund. The Master Fund allocates its assets among a number of Investment Managers. The Fund and the Master Fund are each managed by Endowment Advisers, L.P. (the “Adviser”), a Delaware limited partnership registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The address of the Fund, the Master Fund and Adviser is 4265 San Felipe, Suite 800, Houston, Texas 77027 and the telephone number at such address is: 1-800-725-9456.

For convenience, references to the Fund may include the Master Fund as the context requires. Also, the Master Fund’s investments other than Direct Investments may be referred to as investments with Investment Managers or Investment Funds.

MANAGEMENT

The Endowment Fund GP, L.P., a Delaware limited partnership, serves as the general partner of the Fund and the Master Fund (in each case, the “General Partner”) and may in the future serve as general partner of other registered investment companies and/or unregistered investment funds. The General Partner is an affiliate of the Adviser. The General Partner retains all rights, duties and powers to manage the affairs of the Fund that may not be delegated under Delaware law, and that are not otherwise delegated by the General Partner to the Board or contractually assumed by the Adviser. The General Partner is responsible for, among other things, acting as Tax Matters Partner (as defined below in “CERTAIN TAX CONSIDERATIONS”).

The General Partner, to the fullest extent permitted by applicable law, has irrevocably delegated to the Board its rights and powers to monitor and oversee the business affairs of the Fund, including the complete and exclusive authority to oversee and establish policies regarding the management, conduct and operation of the Fund’s business. Accordingly, the Board has the overall responsibility for the management and supervision of the business operations of the Fund. To the extent permitted by applicable law, the Board may delegate any of its rights, powers and authority to, among others, the officers of the Fund, the Adviser or any committee of the Board. The Board exercises the same powers, authority and responsibilities on behalf of the Fund as are customarily exercised by the directors of an investment company organized as a corporation and registered under the Investment Company Act. The Directors, in their capacities as such, are not general partners of, or investment advisers to, the Fund.

Under the supervision of the Board and pursuant to an investment management agreement (the “Investment Management Agreement”), Endowment Advisers, L.P., an investment adviser registered

i

under the Advisers Act, serves as the Fund’s Adviser. The Adviser also serves as investment adviser to the Master Fund pursuant to an investment management agreement.

The Adviser is owned by Salient Partners, L.P. (“Salient” or the “Principal.”) Messrs. Lee G. Partridge, Jeremy L. Radcliffe, William K. Enszer, William B. Hunt and William R. Guinn are the members of the Adviser’s Investment Committee (the “Investment Committee”). Mr. William K. Enszer is the portfolio manager for the Fund. See “MANAGEMENT OF THE FUND—The Adviser.”

THE FUND

The Fund is a Delaware limited partnership, formed in 2009, that is registered under the Investment Company Act as a non-diversified, closed-end management investment company. The Fund invests substantially all of its investable assets in the Master Fund, which is also registered under the Investment Company Act.

INVESTMENT OBJECTIVE

The Fund’s investment objective is to preserve capital and to generate consistent long-term appreciation and returns across a market cycle (which is estimated to be five to seven years). To achieve its objective, the Fund provides the Partners with access to asset classes, Investment Managers and overall asset allocation services typically available on a collective basis to larger institutions. The Fund generally pursues its investment objectives by allocating assets to the Investment Funds, with a focus on private partnerships, limited liability companies and other investment vehicles, managed by a group of Investment Managers identified by the Adviser to have investments that are allocated broadly across markets, asset classes, strategies and risk profiles.

The term “private partnerships,” as used throughout this Memorandum, refers to limited partnerships, limited liability companies or other funds and investment vehicles that are private and issue interests to investors that meet certain suitability standards. In general, these interests are not freely tradable and/or have substantial transfer restrictions and no active trading market, but may have certain rights as to redemption.

The Investment Committee has developed a pool of potential Investment Funds to consider for investment. The Investment Committee identifies Investment Funds based on quantitative, qualitative or other due diligence criteria. Once a pool of potential Investment Funds has been identified, the Investment Committee determines an allocation for the Fund’s assets across the pool, in such proportions of the Fund’s assets as the Adviser may from time to time determine. This due diligence effort is then revisited from time to time for the life of the Fund. See “OVERVIEW OF INVESTMENT PROCESS,” “INVESTMENT STRATEGIES” and “DUE DILIGENCE AND MANAGER SELECTION.”

The Master Fund will generally make direct investments (i) for hedging purposes in limited circumstances to provide exposure to certain asset chasses or strategies where the adviser believes that it is beneficial to attempt to limit investment risks, reduce volatility and/or hedge against swings in the value of equity or other markets; (ii) to hedge existing exposure to an asset class or strategy, or under other similar circumstances; and (iii) in certain circumstances to gain access to an asset class or strategy in a cost-effective manner (in each case, “Direct Investments”). For certain Direct Investments other than through investment in Investment Funds, the Master Fund may use derivatives (including futures, forwards and swaps) and/or instruments such as total returns swaps (for example, in cases where banks have created rules-based indices that replicate certain investment strategies, or certain Investment Fund returns or strategies). The Adviser may utilize such investments, rather than investing through Investment

ii

Funds, to hedge existing exposure or in certain circumstances access new exposure to an asset class or strategy. The Master Fund also may to a limited extent use investment in exchange-traded funds (“ETFs”) in place of certain Investment Funds or as complements to certain strategies.

Additional information regarding the strategies utilized by the Investment Managers is set forth under “INVESTMENT STRATEGIES.” There can be no assurance that the Fund’s investment objective will be achieved or that its portfolio design and risk monitoring strategies will be successful.

PORTFOLIO CONSTRUCTION; LIMITATIONS ON LIQUIDITY

Certain asset classes and/or Investment Funds that have the potential of providing investors with attractive risk-adjusted returns over time have limitations on liquidity (e.g., private equity, private energy, private real estate and certain other Investment Funds with limitations on the ability of an investor to withdraw capital, such as long lock-up periods). Accordingly, the Investment Funds in which the Master Fund invests may have limitations on withdrawals, such as quarterly withdrawals with notice provisions or even more limited withdrawal rights or none at all (such as in the case of self-liquidating funds, where the investor typically only receives liquidity as the fund liquidates underlying investments).

The Fund’s portfolio is not subject to any minimum liquidity requirement imposed by regulation. The Fund’s policy with respect to the liquidity of the Master Fund’s investment portfolio is such that, as of any calendar quarter-end, the Master Fund ordinarily will not have more than 75% of its capital invested in Investment Funds that either (i) do not provide liquidity and are self-liquidating (such as private equity funds), or (ii) allow for periodic withdrawals on an annual or lesser frequency. The Master Fund includes in this category Investment Funds that only make distributions as the underlying portfolio’s assets or investments are liquidated (i.e., the investor in such Investment Funds does not have the right to request withdrawals on any specified periodic basis), which may include, without limitation, private equity funds, real estate funds, or natural resources or energy funds that only make distributions when an investment is monetized or generates cash flow through distributions, dividends, etc. The Master Fund will calculate the percentage of its assets invested in this category using the lesser of: (a) the amount of called and invested capital or (b) the fair value of the interests in such Investment Funds on the financial statements of the Master Fund. The Master Fund also includes in this category Investment Funds that allow for periodic withdrawals at the time of investment but have lengthy redemption periods or extended lock-up periods remaining. Sidepockets and/or special purpose vehicles (and any similar interests or investments, including certain types of distributions in-kind) remaining upon redemption from an Investment Fund (collectively, “Residual Interests”) and having anticipated lengthy and/or unknown periods of existence shall also each be included.

The remaining portion of the Master Fund’s investment portfolio may be invested in liquid assets and Investment Funds that have withdrawal rights more frequent than annually, for example, quarterly, and not more than a one-year lock-up remaining. Investment Funds with investor-level gates, fund-level gates, redemption fees and/or penalties, sidepockets and/or special purpose vehicles housing less liquid investments may be included in this category. Ordinarily, standard and customary audit hold-backs which remain after redeeming from an Investment Fund will be classified within this category. Any other holdings which remain (e.g., “sidepockets” and/or other Residual Interests) may be included within the 75% category discussed above.

In measuring these liquidity categories, the Master Fund will make its calculation on a gross asset basis divided by the sum of the total Master Fund assets in the respective categories. If at the end of any calendar quarter the Master Fund’s portfolio is invested outside of the above categories, the Master Fund

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will endeavor to bring its portfolio into conformance, taking into consideration the best interests of all investors. During such time the Master Fund will not commit any additional capital to more illiquid investments that would be included within the 75% category. During any such time, however, the Master Fund may fund existing capital commitments to Investment Funds.

Investment in each particular tranche of an Investment Fund, depending upon such Investment Fund’s structure, may be treated separately for purposes of the above categories. In general, Investment Funds may be initially categorized as less liquid and, through the passage of time or changed circumstances, may be characterized as more liquid and thus outside the 75% category. Likewise, an Investment Fund may have been initially categorized as more liquid and, through the passage of time or changed circumstances, may be characterized as less liquid and thus within the 75% category. The Board in the future may approve changes to the above liquidity categories without the vote of the Partners, subject to ninety (90) days’ prior written notice to Partners of such change.

THE ADVISER USES THE LIQUIDITY CHARACTERIZATIONS TO STRUCTURE THE MASTER FUND’S PORTFOLIO IN A MANNER THAT THE ADVISER REASONABLY BELIEVES WILL ENABLE IT (AND CONSEQUENTLY THE FUND) TO MAKE LIMITED PERIODIC REPURCHASE OFFERS FOR INTERESTS. HOWEVER, SUCH DEFINITIONS SHOULD NOT BE CONSTRUED BY PARTNERS OR PROSPECTIVE INVESTORS TO MEAN THAT THE FUND PROVIDES INVESTORS WITH LIQUIDITY. THE INTERESTS WILL NOT BE LISTED ON ANY SECURITIES EXCHANGE AND IT IS NOT ANTICIPATED THAT A SECONDARY MARKET FOR THE INTERESTS WILL DEVELOP. THE INTERESTS ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE FUND’S LIMITED PARTNERSHIP AGREEMENT. ALTHOUGH THE FUND MAY OFFER TO REPURCHASE INTERESTS FROM TIME TO TIME, INTERESTS WILL NOT BE REDEEMABLE AT A PARTNER’S OPTION NOR WILL THEY BE EXCHANGEABLE FOR INTERESTS OR SHARES OF ANY OTHER FUND. AS A RESULT, AN INVESTOR MAY NOT BE ABLE TO SELL OR OTHERWISE LIQUIDATE HIS OR HER INTEREST. THE INTERESTS ARE APPROPRIATE ONLY FOR THOSE INVESTORS WHO DO NOT REQUIRE A LIQUID INVESTMENT AND WHO ARE AWARE OF THE RISKS INVOLVED IN INVESTING IN THE FUND. TO THE EXTENT THAT AN INVESTOR REQUIRES THAT A PORTION OF ITS INVESTMENT PORTFOLIO PROVIDE LIQUIDITY, SUCH PORTION SHOULD NOT BE INVESTED IN THE FUND. SEE “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE – INVESTMENT FUNDS’ SECURITIES ARE GENERALLY ILLIQUID.”

A PARTNER OR POTENTIAL INVESTOR MAY REQUEST THE FUND’S MOST RECENT PORTFOLIO LIQUIDITY SCHEDULE BY CONTACTING THE FUND’S SALES DESK AT 1-800-725-9456. THE FUND PROVIDES PARTNERS WITH SUCH REPORTING PERIODICALLY, WHICH INCLUDES INFORMATION ON CURRENT HOLDINGS OF LONG-TERM ILLIQUID ASSETS, SUCH AS PRIVATE EQUITY FUNDS, REAL ESTATE FUNDS AND NATURAL RESOURCES OR ENERGY FUNDS, AND MAY INCLUDE METRICS RELATED TO SUCH HOLDINGS WITHIN THE PORTFOLIO. TO REQUEST THE MOST RECENT SUCH REPORT WITHIN THE LIQUIDITY SCHEDULE, PLEASE CONTACT THE FUND’S SALES DESK AT 1-800-725-9456.

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RISK FACTORS

An investment in the Fund involves certain risks and special considerations. Listed below are summaries of several of such risks and considerations.

— Investment Funds may be illiquid. The Master Fund may invest in an amount up to 75% of the Master Fund’s gross assets as of any calendar quarter end in long-term illiquid assets. If a significant number of Partners sought to have their Interests repurchased at the same time, the illiquidity that results from the Master Fund’s investment in such long-term investments, which ordinarily cannot be liquidated without significant discount, if at all, may prevent the Master Fund from repurchasing more than a specified amount of Interests. Due to the high level of investment in long-term illiquid assets and its impact on the Fund’s ability to meet repurchase requests, the Fund charges a 2% early repurchase fee (“Early Repurchase Fee”) with respect to any repurchase of an Interest (or portion thereof) from a Partner at any time prior to the business day immediately preceding the one-year anniversary of the Partner’s purchase of the Interest (or portion thereof).

— The Master Fund may make withdrawals from most Investment Funds only at certain specified times, which may affect the ability of a Partner to have Interests repurchased from the Fund. As stated above, it is intended that up to 75% of the Master Fund’s gross assets (as of the end of each calendar quarter) may be allocated to long-term illiquid assets. To the extent that the Fund ever was to repurchase significant amounts of Interests, the illiquidity of the remaining portfolio would increase, a factor that the Board would consider when determining the amount of Interests to repurchase. The Board, subject to notice to Partners, may approve future changes to the definitions of liquidity without a vote of Partners. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Investment Funds’ Securities Are Generally Illiquid.”

— Interests are not listed for trading on any national securities exchange, are subject to substantial restrictions on transfer, and have limited liquidity. Although the Adviser may recommend to the Board that the Fund offers to repurchase Interests on a quarterly basis, the Board retains the discretion to approve such requests and, therefore, there is no requirement that the Fund repurchase Interests. Accordingly, there can be no assurance that a Partner who requests the repurchase of its Interest (or a portion thereof) will have such Interest repurchased. It is not anticipated that the Board will consider a repurchase of Interests until the fourth quarter of 2014 at the earliest. Any future repurchase offers will likely offer to purchase a substantially smaller percentage of the Fund’s NAV than that which the Fund has offered to purchase historically. See “Repurchases of Interests” below and “GENERAL RISKS—Interests Not Listed; Repurchases of Interests.”

— The performance of the Fund depends upon the ability of the Adviser to select investments and Investment Managers and Investment Funds in which the Master Fund invests, and on the success of the Investment Managers in managing the assets of the Investment Funds. See “GENERAL RISKS—Dependence on the Adviser and the Investment Managers.”

— Pursuant to Board approval, to the extent the Master Fund purchases non-voting interests of, or contractually foregoes the right to vote its interests in, an Investment Fund, it will

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not be able to vote on matters that require the approval of the investors of the Investment Fund, including matters that could adversely affect the Master Fund’s investment in such Investment Fund. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Inability to Vote.”

— The Adviser has broad discretion to make allocations to Investment Funds executing different strategies, and other than limitations on illiquid investments, is not constrained with respect to the allocation to individual strategies or asset classes. There is no assurance that its decisions in this regard will be successful, or that the Master Fund will have the ability to change these allocations when the Adviser determines it is advisable to do so. This could have a material adverse effect on the ability of the Adviser to implement the Master Fund’s and the Fund’s investment objective.

— Certain Investment Funds as well as the Master Fund itself may use investment strategies and techniques that involve greater risks than the strategies typically used by open-end registered investment companies (i.e., mutual funds). Although Investment Funds invest in equity and debt securities, certain of them along with the Master Fund itself also may invest in and trade equity-related instruments, debt-related instruments, currencies, financial futures, swap agreements, and other types of instruments. In addition, the Investment Funds may sell securities short and use a wide range of other investment techniques, including leverage and derivative instruments used for both hedging and non-hedging purposes. The use of such instruments and techniques may be an integral part of an Investment Fund’s investment strategy, and may increase the risk to which the Fund’s portfolio is subject. The Master Fund will generally use such investments for hedging purposes only. See “INVESTMENT RELATED RISKS.”

— The Adviser, on behalf of the Master Fund, and Investment Managers on behalf of Investment Funds, may consider it appropriate, subject to applicable regulations, to utilize forward and futures contracts, options, swaps, other derivative instruments, short sales, margin and other forms of leverage in their investment programs. Such investment techniques can substantially increase the adverse impact of investment risks to which the Fund’s investment portfolio may be subject. The Master Fund’s use of any such instruments will generally be for hedging purposes. See “INVESTMENT RELATED RISKS—Leverage” and “Risks Associated with Derivative Instruments.”

— Certain of the Investment Funds may invest in private securities for which there is no readily available market and that are generally illiquid. In addition, certain of these investments carry a high degree of risk.

— The Investment Funds may invest a substantial portion of their assets in securities of non-U.S. issuers and the governments of non-U.S. countries. These investments involve special risks not usually associated with investing in securities of U.S. companies or the U.S. government, including, but not limited to, political and economic considerations, such as greater risks of expropriation and nationalization, confiscatory taxation, the potential difficulty of repatriating funds, general social, political and economic instability and adverse diplomatic developments. See “INVESTMENT RELATED RISKS—Non-U.S. Investments” and “Investment in Emerging Markets.”

— Certain of the Investment Funds in which the Master Fund invests may have limited or no operating histories.

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— Legal, tax and regulatory changes may occur which may materially adversely affect the Fund. See “GENERAL RISKS—Legal, Tax and Regulatory Risks” and “CERTAIN TAX CONSIDERATIONS.” Additionally, there are certain tax risks associated with an investment in the Fund, including without limitation with respect to tax positions taken by and tax estimates made by the Fund and the Investment Funds held by the Master Fund, as well as the potential for legislative or regulatory change that could impact the Fund. There can be no assurance that positions taken or estimates made by the Fund or the Investment Funds will be accepted by tax authorities. See “CERTAIN TAX CONSIDERATIONS.”

— The Master Fund directly, as well as certain Investment Funds, may purchase and sell futures contracts and options on futures contracts. The Adviser has claimed an exemption from the definition of the term “commodity pool operator” with respect to the Fund pursuant to Rule 4.5 under the Commodity Exchange Act, as amended (the “CEA”), and therefore, is not subject to registration or regulation as a commodity pool operator under the CEA. It should be noted, however, that in 2012 the CFTC revised certain rules that significantly affect the exemptions available to the Fund and the Adviser. The scope and application of these rules is still uncertain with respect to, among other things, fund of funds such as the Fund. As of the date of this Memorandum, there is no certainty that the Fund, the Adviser or other parties will be able to rely on Rule 4.5 in the future. Additional CFTC regulation (or a choice to no longer use strategies that trigger additional regulation) may cause the Fund to change its investment strategies or to incur additional expenses.

— The Fund may accept additional subscriptions for Interests, and any such subscriptions will dilute the indirect interest of existing Partners in the Fund’s investment portfolio, which could have an adverse impact on the existing Partners’ Interests. See “GENERAL RISKS—Special Considerations Applicable to Purchases of Interests.”

— Investment Managers charge the Master Fund asset-based fees, and most are also entitled to receive performance-based fees or allocations. Such fees and performance-based compensation are in addition to the fees charged to the Master Fund and the Fund by the Adviser. Moreover, an investor in the Fund bears a proportionate share of the expenses of the Master Fund, the Fund, and, indirectly, similar expenses of the Investment Funds. Investors could avoid the additional level of fees and expenses at the Master Fund and Fund level by investing directly with the Investment Funds, although access to many Investment Funds may be limited or unavailable. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Multiple Levels of Fees and Expenses.”

— Performance-based allocations may create incentives for Investment Managers to make risky investments, and may be payable by the Master Fund to an Investment Manager based on an Investment Fund’s positive returns even if the Master Fund’s overall returns are negative. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Multiple Levels of Fees and Expenses.”

— Investment Funds generally are not registered as investment companies under the Investment Company Act and, therefore, the Master Fund as an investor in Investment Funds does not have the benefit of the protections afforded by the Investment Company Act. Investment Managers may not be registered as investment advisers under the

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Advisers Act, in which case the Master Fund as an investor in Investment Funds managed by such Investment Managers will not have the benefit of certain of the protections afforded by the Advisers Act. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Investment Funds Generally Not Registered.”

— The valuation of the Master Fund’s investments in Investment Funds is ordinarily calculated by Citi Fund Services, Inc., the Fund’s independent administrator (the “Independent Administrator”) in consultation with the Adviser. The Board has formed a valuation committee (the “Board Valuation Committee”) that is responsible for overseeing the Master Fund’s valuation policies, making recommendations to the Board on valuation-related matters, and overseeing implementation by the Adviser’s Valuation Committee (as defined below) of the Master Fund’s valuation policies that the Board of the Master Fund has approved for purposes of determining the value of securities held by the Master Fund, including the fair value of the Master Fund’s investments in Investment Funds. The Board has also authorized the establishment of a valuation committee of the Adviser (the “Adviser’s Valuation Committee”). The Adviser’s Valuation Committee’s function, subject to the oversight of the Board Valuation Committee and the Board, is generally to review the Investment Funds’ valuation methodologies, valuation determinations, and any information provided to the Adviser’s Valuation Committee by the Adviser or the Independent Administrator. The Master Fund’s investments are ordinarily based upon valuations provided to it by the Investment Managers of such Investment Funds or, in many cases, the administrators of those Investment Funds. Certain securities in which the Investment Funds invest may not have a readily ascertainable market price and are fair valued by the Investment Managers and/or their administrators. An Investment Manager may face a conflict of interest in valuing such securities since their values affect the Investment Manager’s compensation. The Adviser’s Valuation Committee reviews the valuation procedures used by each Investment Manager and monitors the returns provided by the Investment Funds, including performing ongoing due diligence. However, none of the Adviser’s Valuation Committee, the Adviser, the Independent Administrator, the Board or the Board Valuation Committee is able to confirm or review the accuracy of valuations provided by Investment Managers or their administrators. Inaccurate valuations provided by Investment Funds could materially adversely affect the value of Interests, which determine the value at which new Partners are admitted and the amounts Partners receive upon any repurchases of Interests by the Fund. Illiquid investments may be harder to value, potentially increasing risks regarding valuation. “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Valuation of Investments in Investment Funds,” and “CALCULATION OF NET ASSET VALUE; VALUATION.”

— Since certain Investment Funds that the Adviser has selected may provide infrequent opportunities to purchase their securities, the Master Fund may hold significant amounts of cash, short-term debt securities or money market securities pending investment in such Investment Funds, which could materially adversely affect the Fund’s investment returns. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Limitations on Ability to Invest in Investment Funds.”

— The Master Fund may agree to indemnify certain of the Investment Funds and the Investment Managers and their respective officers, directors, and affiliates from any

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liability, damage, cost, or expense arising out of, among other things, acts or omissions relating to the offer or sale of Interests. In addition, the Master Fund may be required to agree to indemnify Investment Funds and Investment Managers in connection with a division of the Master Fund’s portfolio or any related transfer of Investment Fund interests. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Indemnification of Investment Funds and Investment Managers.”

— The Master Fund may borrow money (currently limited, as a fundamental policy, to 25% of net asset value (“NAV”), after taking into consideration the investment of the proceeds from the loan) to meet capital calls in Investment Funds, to pay operating expenses, to repurchase Interests and for certain other purposes. The Fund also may borrow to the extent permitted by its fundamental policy on borrowing. In addition, certain Investment Funds may utilize leverage in their investment programs. The utilization of leverage could increase the volatility of the Master Fund’s investments. In addition, certain of the Investment Funds may buy and sell securities on margin and otherwise utilize leverage, further increasing the volatility of the Master Fund’s investments. Use of leverage by the Master Fund or the Investment Funds can substantially increase the adverse impact of risks to which an investment in the Fund may be subject.

In view of the risks noted above, an investment in the Fund is suitable only for investors who can bear the risks associated with limited liquidity of the Interests and should be viewed as a long-term investment.

No guarantee or representation is made that the investment program of the Fund or any Investment Fund will be successful, that the various Investment Funds selected will produce positive returns or that the Fund will achieve its investment objective.

A more detailed discussion of the risks associated with an investment in the Fund can be found under “GENERAL RISKS,” “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE,” and “INVESTMENT RELATED RISKS.”

BORROWING BY THE FUND AND THE MASTER FUND

The Master Fund and, although not anticipated, the Fund and the Offshore Fund, may borrow money to purchase portfolio securities and for portfolio management purposes. The Master Fund also may borrow money to pay operating expenses, including, without limitation, investment management fees, to fund repurchases of Interests or to meet capital calls of Investment Funds, including but not limited to investments in private equity, real estate, natural resources and energy; provided, however, that, as a fundamental policy, the Master Fund may not borrow more than 25% of its NAV (determined as of the time of investment and after taking into account such borrowings and the use of proceeds therefrom). The Master Fund from time to time may have a line of credit under which the Master Fund may borrow money for the purposes described above. To any extent that the Master Fund may utilize such line of credit, there can be no assurance that such line of credit will continue to be available in the future. The loss of any such master line of credit could create adverse consequences.

PLACEMENT AGENTS

The Fund may engage one or more placement agents (each, a “Placement Agent”) to solicit investments in the Fund. Salient Capital, L.P., a registered broker-dealer and an affiliate of Salient (which

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is an affiliate of the Adviser), has been engaged by the Fund to serve as a Placement Agent. Investments in the Fund are not subject to any placement fee. See “PURCHASING INTERESTS.” A Placement Agent may engage one or more sub-placement agents (each, a “Sub-Placement Agent”). The Adviser or its affiliates may pay a fee out of their own resources to Placement Agents and Sub-Placement Agents.

Sub-Placement Agents may charge an investor a fee for their services in conjunction with an investment in the Fund and/or maintenance of investor accounts. Such a fee will be in addition to any fees charged or paid by the Fund and will reduce the amount of an investor’s investment in the Fund. The payment of any such fees, and their impact on a particular investor’s investment returns, would not be reflected in the returns of the Fund. Investors should direct any questions regarding such fees to the relevant Sub-Placement Agent. In addition, the Adviser or its affiliates also may pay a fee out of their own resources to financial intermediaries whose clients invest in the Fund. See “PLACEMENT AGENTS.”

The Placement Agent to the Fund and other feeder funds that invest in the Master Fund has arrangements with Sub-Placement Agents and other financial intermediaries. As of June 30, 2013, the two largest nonaffiliated Sub-Placement Agents serviced approximately 80.98% of the assets of all feeder funds that invest in the Master Fund. To the extent that substantial numbers of investors have a relationship with a particular Sub-Placement Agent, such Sub-Placement Agent may have the ability to influence investor behavior, which could positively or negatively affect the Fund. See “GENERAL RISKS – Significant Placement Agents” and “PLACEMENT AGENTS.”

FUND ADMINISTRATION

The Adviser also acts as servicing agent to the Fund (“Administrative Servicing Agent”), whereby it provides or procures certain investor servicing and administrative assistance. Investor servicing entails the provision of personal, continuing services to investors in the Fund. The Administrative Servicing Agent may, in turn, retain certain parties to act as sub-administrative servicing agents to assist with investor servicing and administrative assistance. The Fund compensates the Administrative Servicing Agent for providing or procuring these services and, when the Administrative Servicing Agent employs sub-administrative servicing agents, the Administrative Servicing Agent compensates such sub-administrative servicing agents out of its own resources.

Citi Fund Services, Inc. serves as the Independent Administrator of the Fund and the Master Fund. The Master Fund compensates the Independent Administrator for providing administrative services. See “ADMINISTRATION.”

FEES AND EXPENSES

The Fund bears its own operating expenses (including, without limitation, its organizational expenses), and a pro rata portion of the operating expenses of the Master Fund. A more detailed discussion of the Fund’s expenses can be found under “FUND EXPENSES.”

Investment Management Fee.

The Master Fund pays the Adviser a monthly investment management fee equal to 1.00% (on an annualized basis) of its average month-end net assets, accrued monthly and payable monthly in arrears (the “Investment Management Fee”). So long as the Fund invests all of its investable assets in the Master Fund, the Fund does not directly pay the Adviser an investment management fee. See “INVESTMENT MANAGEMENT FEE.”

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Administrative Servicing Fee and Administration Fee

In consideration for investor services and administrative assistance, the Fund pays Endowment Advisers, L.P., as Administrative Servicing Agent, a quarterly servicing fee (“Administrative Servicing Fee”) based on the average month-end net assets of the Fund over the course of the applicable quarter. The Administrative Servicing Fee equals 0.35% (on an annualized basis) of the Fund’s month-end net assets, payable quarterly in arrears. The Administrative Servicing Agent may engage one or more sub-administrative servicing agents (each, a “Sub-Administrative Servicing Agent”) to provide some or all of the services. Compensation to any Sub-Administrative Servicing Agent is paid by the Administrative Servicing Agent. The Adviser or its affiliates also may pay a fee out of their own resources to Sub-Administrative Servicing Agents.

Although the Administrative Servicing Fee is paid for the provision of ongoing investor services and is intended primarily for such services, to any extent that the Administrative Servicing Fee could be considered to support the distribution of the Fund, Partners would be paying for distribution of Fund interests out of the Fund’s assets. To any extent that the Administrative Servicing Fee could be considered to support distribution of the Fund, the Adviser would not have to pay such expenses from its other resources, which is an incentive to maintain the Administrative Servicing Fee and considered a conflict of interest. See “CONFLICTS OF INTEREST.”

In consideration for administrative services, the Master Fund pays the Independent Administrator a monthly administration fee (the “Administration Fee”) based on the month-end net assets of the Master Fund. The Administration Fee equals, on an annualized basis, 0.06% of the Master Fund’s month-end net assets for the first $2 billion of net assets, 0.05% of the Master Fund’s month-end net assets for that portion of the Master Fund’s net assets that exceeds $2 billion and is equal to or less than $5 billion, 0.02% of the Master Fund’s month-end net assets for that portion of the Master Fund’s net assets that exceeds $5 billion and is equal to or less than $15 billion, and 0.0125% of the Master Fund’s month-end net assets for that portion of the Master Fund’s net assets that exceeds $15 billion. As of June 30, 2013, the Master Fund’s net assets were approximately $2.6 billion. In addition, the Independent Administrator charges fees for legal, transfer agency, compliance, and certain other services. See “ADMINISTRATION.”

Organizational Expenses and Offering Costs.

The Fund’s organizational expenses (“Organizational Expenses”), which are separate from and in addition to those fees previously discussed and which include among other expenses, the cost of preparing this Memorandum and the Fund’s LP Agreement, were initially borne by the Adviser or an affiliate and were for audited financial statement purposes expensed upon commencement of operations in accordance with U.S. generally accepted accounting principles (“GAAP”). For capital account allocation purposes such expenses will be amortized over sixty months or less from the date the expenses were incurred. Any offering costs will be amortized over a period of twelve months or less upon commencement of operations. The Fund’s direct Organizational Expenses were $48,461.

ALLOCATION OF PROFIT AND LOSS

The net profits or net losses of the Fund (including, without limitation, net realized gain or loss and the net change in unrealized appreciation or depreciation of investments) are credited to or debited against the capital accounts of the Partners at the end of each accounting period (as defined in “CAPITAL ACCOUNTS AND ALLOCATIONS”) in accordance with their respective “investment percentages” as

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of the start of such period. Each Partner’s investment percentage is determined by dividing, as of the start of an accounting period, the Partner’s capital account balance by the sum of the balances of the capital accounts of all Partners of the Fund, as adjusted for any capital contributions, transfers and repurchases of Interests as of the beginning of such accounting period. See “CAPITAL ACCOUNTS AND ALLOCATIONS.”

DISTRIBUTIONS

The Board has the right to cause distributions to be made in cash or in-kind to the Partners in its sole discretion. Whether or not distributions are made, each Partner will be required each year to pay applicable federal, state and local income taxes on its allocable share of the Fund’s taxable income.

CONFLICTS OF INTEREST

The investment activities of the Adviser, the Investment Managers, and their respective affiliates (including the Principal), and their directors, trustees, managers, members, partners, officers, and employees (collectively, the “Related Parties”), for their own accounts and other accounts they manage, may give rise to conflicts of interest that potentially could disadvantage the Fund and its Partners. The Adviser and other Related Parties provide other investment management services to other funds and discretionary managed accounts that follow an investment program certain aspects of which are similar to certain aspects of the Fund’s investment program or that replicate certain asset classes within the Fund’s investment program. The Adviser and other Related Parties, are involved with a broad spectrum of financial services and asset management activities, and may, for example, engage in the ordinary course of business in activities in which their interests or the interests of their clients may conflict with those of the Fund or the Partners. The trading activities of the Adviser’s affiliates are carried out without references to positions held directly or indirectly by the Fund. In addition and more significantly, the Related Parties may be involved with other investment programs, investment partnerships or separate accounts that use Investment Managers or Investment Funds that are either already a part of the Master Fund’s portfolio or that may be appropriate for investment by the Master Fund. In some cases, these Investment Funds may be capacity constrained. The Related Parties are under no obligations to provide the Master Fund with capacity with respect to these Investment Funds and, accordingly, the Master Fund may not have exposure or may have reduced exposure with respect to these Investment Funds that may be used in other portfolios managed by Related Parties. The Master Fund’s and the Fund’s operations may give rise to other conflicts of interest that could disadvantage the Fund and the Partners. See “CONFLICTS OF INTEREST” AND “CONFLICTS OF INTEREST RELATING TO THE INVESTMENT MANAGERS.” In addition, the Adviser may recommend an investment by the Master Fund in an Investment Fund managed or co-managed by a Related Party. Such an investment would only be made subject to required exemptive relief from the SEC and, among other things, will be made only if approved by a majority of the Directors who are not “interested persons,” as defined in Section 2(a)(19) of the Investment Company Act (“Independent Directors”), who will review the conflicts of interest that may arise from such investment. Finally, the Adviser may in certain instances manage a portion of the Master Fund’s assets directly. However, no additional fees are charged by the Adviser for such management. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE – Affiliate Funds.”

Although Administrative Servicing Fees are paid for the provision of ongoing investor services and are intended primarily for such services, to any extent that the Administrative Servicing Fees could be considered to support the distribution of the Fund, investors would be paying for distribution of Fund interests out of the Fund’s assets. To any extent that the Administrative Servicing Fees could be

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considered to support distribution of the Fund, the Adviser would not have to pay such expenses from its other resources, which is an incentive to maintain Administrative Servicing Fees and considered a conflict of interest in this respect. An investment adviser would benefit from the payment by an investment company of distribution expenses, including compensation to intermediaries, to the extent that an investment adviser does not itself need to make such payments.

ELIGIBLE INVESTORS

Each prospective investor is required to complete the correct subscription agreement signature pages (“Subscription Agreement Signature Pages”) to the Fund’s subscription agreement, and satisfy the investor eligibility standards set forth therein in order to be permitted to invest in the Fund. The Subscription Agreement Signature Pages and the Fund’s subscription agreement are referred to collectively as the “Subscription Agreement,” a form of which is set forth in Appendix A to this Memorandum.

Existing Partners subscribing for additional Interests will be required to verify their status as Eligible Investors at the time of the additional subscription. The qualifications required to invest in the Fund will appear in the Subscription Agreement. See “ELIGIBLE INVESTORS.”

An investment in the Fund involves risks and it is possible that an investor may lose some of its investment. In addition, an investment in the Fund is not liquid and investors should provide for adequate liquidity outside of their investment in the Fund to meet their foreseeable liquidity needs. Before making an investment decision, an investor and/or its adviser should (i) consider the suitability of this investment with respect to its investment objectives and personal situation and (ii) consider factors such as its personal net worth, income, age, risk tolerance, and liquidity needs. See “RISK FACTORS.” Short-term investors and investors who cannot bear the loss of some of their investment and/or the risks associated with a lack of liquidity should not invest in the Fund.

The Fund is only open to Eligible Investors as set forth below. See “ELIGIBLE INVESTORS.”

Only those Eligible Investors (as defined below) that (i) compensate their financial intermediaries directly for their services (for example, investors participating in a “wrap fee” or similar account with their intermediary), or (ii) in the case of certain institutional investors, invest directly through their financial intermediary or are internally managed (for example, an endowment or similar large institutional investor advised internally or by a separately-retained consultant or other intermediary), may invest in the Fund. In addition, employees of the Adviser or its affiliates who otherwise are Eligible Investors (as defined below) may invest in the Fund. The Subscription Agreement requires that an investor certify that it is an “accredited investor” for purposes of Regulation D under the Securities Act. In addition, Interests are being offered only to investors that are U.S. persons for U.S. federal income tax purposes. Investors who meet the qualifications set forth in the Subscription Agreement are referred to in this Memorandum as “Eligible Investors.” Existing Partners who request to purchase additional Interests are required to qualify as Eligible Investors and to complete additional Subscription Agreement Signature Pages prior to the additional purchase. Only certain categories of Eligible Investors may be able to invest in a particular Fund. See “ELIGIBLE INVESTORS.”

PURCHASING INTERESTS

The minimum initial investment in the Fund by any investor is $100,000, and the minimum additional investment in the Fund by any investor is $25,000. However, the Fund, in its sole discretion,

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may accept investments below these minimums. Interests are generally available for purchase as of the first business day of each calendar month, except that Interests may be made available for purchase more or less frequently as determined by the Board in its sole discretion. A prospective investor must submit a completed Subscription Agreement and transfer funds on or prior to the acceptance date set by the Fund and communicated to prospective investors. The Fund reserves the right to reject in whole or in part, in its sole discretion, any request to purchase an Interest in the Fund at any time. The Fund also reserves the right to suspend or terminate the availability for purchase of Interests at any time. Additional information regarding the subscription process is set forth under “PURCHASING INTERESTS.”

Investments in the Fund are not subject to any placement fee. The Adviser or its affiliates may pay a fee out of their own resources to Placement Agents, Sub-Placement Agents and Sub-Administrative Servicing Agents. See “PLACEMENT AGENTS” and “ADMINISTRATION – Administrative Servicing Agent.”

Sub-Placement Agents may charge an investor a fee for their services in conjunction with an investment in the Fund and/or maintenance of investor accounts. Such a fee will be in addition to any fees charged or paid by the Fund and will reduce the amount of an investor’s initial or subsequent investment in the Fund. The payment of any such fees, and their impact on a particular investor’s investment returns, would not be reflected in the returns of the Fund. Investors should direct any questions regarding such fees to the relevant Sub-Placement Agent.

REPURCHASES OF INTERESTS

No Partner has the right to require the Fund to redeem its Interest (or any portion thereof) in the Fund. The Fund from time to time may offer to repurchase Interests pursuant to written tenders by the Partners. These repurchases may be made at such times and on such terms as may be determined by the Board from time to time in its sole discretion. The Fund may elect to repurchase less than the full amount that a Partner requests to be repurchased. If a repurchase offer is oversubscribed and not amended to increase the offer, the Fund will repurchase only a pro rata portion of the amount tendered by each Partner.

It is not anticipated that the Board will consider a repurchase of Interests until the fourth quarter of 2014 at the earliest. Any future repurchase offers will likely offer to purchase a substantially smaller percentage of the Fund’s NAV than that which the Fund has offered to purchase historically.

In determining whether the Fund should offer to repurchase Interests from Partners pursuant to repurchase requests, the Board may consider, among other things, the recommendation of the Adviser as well as a variety of other operational, business, legal and economic factors.

The Board may under certain circumstances elect to postpone, suspend or terminate an offer to repurchase Interests. In the event the Fund ever winds down investment operations and terminates, the Fund would be unable to offer to repurchase all Interests immediately and Partners would receive the value of their Interests over time as the Master Fund liquidated its assets, which could require a significant period to realize certain illiquid assets.

A Partner who tenders some but not all of its Interest for repurchase in a repurchase offer will be required to maintain a minimum capital account balance of $100,000 in the Fund. Such minimum capital account balance requirement may be waived by the Adviser, in its sole discretion. The Fund reserves the

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right to reduce the amount to be repurchased from a Partner so that the required capital account balance is maintained.

A 2% Early Repurchase Fee will be charged by the Fund (and inure to the benefit of the remaining Partners) with respect to any repurchase of an Interest (or portion thereof) from a Partner at any time prior to the business day immediately preceding the one-year anniversary of the Partner’s purchase of the Interest (or portion thereof). Certain repurchases may qualify for a waiver of the Early Repurchase Fee. See “REPURCHASES OF INTERESTS.”

TRANSFER RESTRICTIONS

A Partner may assign, transfer, sell, encumber, pledge or otherwise dispose of (each, a “transfer”) its Interest (or a portion thereof) only (1) by operation of law pursuant to the death, divorce, insolvency, bankruptcy, or adjudicated incompetence of the Partner; or (2) under other limited circumstances, with the consent of the Board (which may be withheld in its sole discretion and is expected to be granted, if at all, only under extenuating circumstances). Unless counsel to the Fund confirms that the transfer will not cause the Fund to be treated as a “publicly traded partnership” taxable as a corporation, the Board generally will not consider consenting to a transfer of an Interest (or a portion thereof) unless the transfer is: (1) one in which the tax basis of the Interest in the hands of the transferee is determined, in whole or in part, by reference to its tax basis in the hands of the transferring Partner (e.g., certain transfers to affiliates, gifts and contributions to family entities); (2) to members of the transferring Partner’s immediate family (siblings, spouse, parents or children); or (3) a distribution from a qualified retirement plan or an individual retirement account. In connection with any request to transfer an Interest (or a portion thereof), the Fund may require the Partner requesting the transfer to obtain, at the Partner’s expense, an opinion of counsel selected by the Fund as to such matters as the Fund may reasonably request.

Each transferring Partner and transferee may be charged reasonable expenses, including attorneys’ and accountants’ fees, incurred by the Fund in connection with the transfer. See “TRANSFERS OF INTERESTS.”

TAXES

The Fund believes that it is treated as a partnership for U.S. federal income tax purposes, and, as a result, each Partner is required to include in income its allocable share of the Fund’s taxable income each year, regardless of whether the Fund makes a distribution to such Partner in such year. In addition, for a variety of reasons, a Partner’s allocation of taxable income of the Fund in any year may be more or less than the amount of net profits or net losses allocated to the Partner’s capital account for that year.

For a discussion of certain tax risks and considerations relating to an investment in the Fund, see “CERTAIN TAX CONSIDERATIONS.”

Investors should consult their own tax advisers with respect to the specific federal, state, local, U.S. and non-U.S. tax consequences of the purchase and ownership of an Interest in the Fund and/or the filing requirements, if any, associated with the purchase and ownership of an Interest in the Fund.

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ERISA PLANS AND OTHER TAX-EXEMPT ENTITIES

Prospective investors subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and other tax-exempt entities, including employee benefit plans, individual retirement accounts and Keogh Plans, may purchase Interests in the Fund. The Fund’s assets should not be considered to be “plan assets” for purposes of ERISA’s fiduciary responsibility and prohibited transaction rules or similar provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code” or the “Code”).

The Fund

Because many of the Investment Funds incur debt in connection with the purchase of securities, futures and other investments, the Fund may generate income that is taxable to tax-exempt Partners as unrelated business taxable income (“UBTI”). In addition, a tax-exempt Partner will likely recognize UBTI if it incurs indebtedness to finance its investment in the Fund, and it is possible that certain investments by the Fund could result in UBTI, even if such investments are not debt financed. Due to these considerations, an investment in the Fund is not appropriate for certain types of tax-exempt entities, including charitable remainder trusts. See “CERTAIN TAX CONSIDERATIONS.”

An investment in the Fund by tax-exempt entities may not be appropriate. Trustees or administrators of such entities are urged to review carefully the matters discussed in this Memorandum and to consult with their tax advisers prior to making an investment in the Fund. See “ERISA CONSIDERATIONS.”

TERM

The Fund’s term is perpetual unless the Fund is otherwise terminated under the terms of the LP Agreement.

REPORTS TO PARTNERS

The Fund intends to send the Partners annual tax information necessary for completion of U.S. federal, state and local tax returns. The Fund intends to furnish to Partners such information as soon as practicable after receipt of the necessary information from the Investment Funds. However, such annual tax information is provided by the Fund after April 15 of each year and, accordingly, Partners will need to file for extensions for the completion of their tax returns.

The Fund anticipates sending Partners an unaudited semi-annual and an audited annual report within 60 days after the close of the period for which the report is being made. Partners also may be sent additional reports regarding the Fund’s operations each quarter, at the discretion of the Adviser. See “REPORTS TO PARTNERS.”

In the event that the Investment Company Act or the SEC in the future requires more frequent reporting, the Fund will comply with such additional reporting requirements.

FISCAL YEAR

For accounting purposes, the Fund’s fiscal year is the period ending on December 31. The Fund’s taxable year is the period ending December 31.

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SUMMARY OF FUND EXPENSES

The Fund

The following table illustrates the approximate expenses and fees that Partners in the Fund are expected to bear directly or indirectly. The information below and specifically the Acquired Fund Fees and Expenses (as described below in footnote 4) are a required disclosure for investment companies that are registered under the Investment Company Act. Since the Master Fund and the Fund are registered under such act, they are required to include these disclosures in their Memorandum. Unregistered funds that may resemble the Master Fund in that they invest in underlying funds also incur expenses from the underlying funds in which they invest. However, unlike the Master Fund, these unregistered funds of funds are not required to disclose Acquired Fund Fees and Expense information to investors because they are not registered under the Investment Company Act.

PARTNER TRANSACTION EXPENSES
Maximum Placement Fee (as a percentage of purchase amount) (1)	None
Maximum Early Repurchase Fee (as a percentage of repurchased amount) (2)	2.00	%
ANNUAL EXPENSES (as a percentage of average net assets)
Management Fees	1.00	%
Other Expenses (3)	0.87	%
TOTAL ANNUAL FUND OPERATING EXPENSES	1.87	%
Acquired Fund Fees and Expenses (4)	5.87	%
TOTAL ANNUAL EXPENSES (5)	7.74	%

(1) The Fund may engage one or more Placement Agents to assist it in placing Interests in the Fund. A Placement Agent may engage one or more Sub-Placement Agents. The Adviser or its affiliates may pay a fee out of their own resources to Placement Agents and Sub-Placement Agents. Sub-Placement Agents may charge an investor a fee for their services in conjunction with an investment in the Fund and/or maintenance of investor accounts. Such a fee is in addition to any fees charged or paid by the Fund and is not a Fund expense, and thus not reflected above. Investors should direct any questions regarding such fees to the relevant Sub-Placement Agent.

(2) A 2.00% Early Repurchase Fee payable to the Fund is charged with respect to the repurchase of a Partner’s Interest (or portion thereof) at any time prior to the business day immediately preceding the one-year anniversary of a Partner’s purchase of such Interest (or portion thereof). Certain repurchases may qualify for a waiver of the Early Repurchase Fee. See “REPURCHASES OF INTERESTS.” Any Early Repurchase Fees are paid to the Fund and thus will inure to the benefit of the remaining investors in the Fund.

(3) Other Expenses include the Administrative Servicing Fee of 0.35% on an annualized basis out of the Fund’s assets, the Fund’s direct operating expenses of approximately 0.33% (including professional fees, transfer agency fees, offering costs and other operating expenses) and the Fund’s pro rata share of the operating expenses borne directly at the Master Fund level of approximately 0.18% (these expenses include administration fees, custodial fees, professional fees, interest expense and other operating expenses). Other costs may be allocated between the Master Fund and the Fund, as appropriate. As a contractual matter, so long as the Fund invests all of its investable assets in the Master Fund, the Fund does not directly pay the Adviser an investment management fee, however, as reflected in the preceding line item in the Fee Table, the Fund’s Partners bear an indirect share of the Master Fund’s annualized investment management fee of 1.00%, through the Fund’s investment in the Master Fund. If the Fund

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invested directly, it would pay the Adviser the investment management fee of 1.00%. As discussed above, the Fund pays an Administrative Servicing Fee of 0.35% on an annualized basis out of the Fund’s assets. Any compensation to a Sub-Administrative Servicing Agent is paid by the Administrative Servicing Agent. The Adviser or its affiliates also may pay a fee out of their own resources to Sub-Administrative Servicing Agents.

(4) The Acquired Fund Fees and Expenses include the Fund’s share of operating expenses and performance-based incentive fees of the underlying Investment Funds in which the Master Fund invests. The costs incurred at the underlying Investment Fund level include management fees, administration fees, professional fees, incentive fees and other operating expenses. In addition the underlying Investment Funds also incur trading expenses, which may include interest and dividend expenses, which are the byproduct of leveraging or hedging activities employed by the Investment Managers in order to seek to enhance or preserve the Investment Funds’ returns. Of the approximately 5.87% representing costs incurred at the underlying Investment Fund level, such costs consists of approximately 1.64% in management fees, approximately 3.07% in other expenses (trading, etc.) and approximately 1.16% in incentive fee allocations.

The Acquired Fund Fees and Expenses were calculated in good faith by the Adviser. There are several components that go into the calculation and for some Investment Funds, complete, updated information was not available. Generally the calculation is based on responses received from the underlying Investment Funds, the most recent shareholder reports, the most recent investor communication (which in some cases may be the Investment Funds offering documents) or other materials/communications from/with the underlying Investment Funds. The fees and expenses disclosed above are based on historic earnings of the Investment Funds, which may (and which should be expected to) change substantially over time and, therefore, significantly affect Acquired Fund Fees and Expenses. In addition, the Investment Funds held by the Master Fund will change, which further impacts the calculation of the Acquired Fund Fees and Expenses. Generally, fees payable to Investment Managers of the Investment Funds will range from 0.5% to 3% (annualized) of the average NAV of the Master Fund’s investment in such Investment Funds. In addition, certain Investment Managers charge an incentive allocation or fee generally ranging from 10% to 30% of an Investment Fund’s net profits, although it is possible that such ranges may be exceeded for certain Investment Managers. The expenses charged by the underlying Investment Funds are not paid to the Fund or the Adviser and represent the costs incurred to invest in the underlying Investment Funds.

(5) The “Total Annual Expenses” of the Fund disclosed above differs from the ratio of expenses to average net assets (Fund expense ratio) included in the Financial Highlights section of the financial statements in the Fund’s June 30, 2013 shareholders’ report. The financial statements in the Fund’s shareholders report depict the Fund’s direct expenses and the Fund’s pro rata allocation of those expenses incurred directly at the Fund level, but do not include in expenses the portion of Acquired Fund Fees and Expenses that represent costs incurred at the underlying Investment Fund level, as required to be disclosed in the above table.

The purpose of the table above is to assist prospective investors in understanding the various fees and expenses Partners bear directly or indirectly. For a more complete description of the various fees and expenses of the Fund, see “INVESTMENT MANAGEMENT FEE,” “ADMINISTRATION,” “FUND EXPENSES,” “REPURCHASES OF INTERESTS,” and “PURCHASING INTERESTS.”

The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. The assumed 5% annual return, which is required by the SEC, is not a prediction of, and does not represent, the projected or actual performance of the Fund.

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Example

You would pay the following fees and expenses on a $1,000 investment, assuming a 5% annual return:

1 YEAR		3 YEARS		5 YEARS		10 YEARS
	$ 76	$	223	$	361	$	676

The example is based on the fees and expenses incurred by the Fund, including the Acquired Fund Fees and Expenses, as set out in the table above and should not be considered a representation of future expenses. Actual expenses may be greater or less than those shown. The rate of return of the Fund may be greater or less than the hypothetical 5% return used in the example. A greater rate of return than that used in the example would increase the dollar amount of the investment advisory fee paid by the Fund.

INVESTMENT OBJECTIVE

The Fund’s investment objective is to preserve capital and to generate consistent long-term appreciation and returns across a market cycle (which is estimated to be five to seven years). The Fund attempts to achieve this objective through:

1. Allocation among a broad range of strategies and Investment Managers;

2. Access to quality Investment Managers; and

3. Capital allocation decisions.

In particular, it is intended that the Fund provides the Partners (through their investments in the Fund) with access to strategies, Investment Funds and overall asset allocation services that, on a collective basis, are typically available to larger institutions, such as major university endowments, in order to seek consistent returns and relatively low volatility.

The Fund invests substantially all of its investable assets in the securities of the Master Fund, through which the Fund pursues its investment objective. Although substantially all of the Fund’s investments are made through the Master Fund, this Memorandum generally refers to the Fund’s investments as if they were made directly by the Fund, in order to make the Fund’s and Master Fund’s investment programs easier to understand. Accordingly, references in this Memorandum to the Fund’s investment activities actually describe the Master Fund’s investment activities, unless the context requires otherwise.

The Fund’s investment objective is non-fundamental and may be changed by the Board without the approval of the Partners. Except as otherwise stated in this Memorandum or the LP Agreement, the investment policies, strategies and restrictions of the Fund are not fundamental and may be changed by the Board without the approval of the Partners. The Master Fund’s principal investment policies and strategies are discussed below.

Allocation.  The Master Fund pursues its investment objective by allocating its assets to build a broad portfolio consisting primarily of private partnerships, other investment vehicles and/or managed Investment Funds that are managed by Investment Managers identified by the Investment Committee, and when it would be less costly and more efficient to the Fund, strategies implemented directly by the Adviser that are similar to those that would be operated by Investment Managers. The Master Fund

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invests in a number of Investment Funds (the Adviser anticipates that, the larger the assets under management, the greater the number of Investment Funds in which the Master Fund invests). Investment Managers may invest in a wide range of instruments and markets, including, but not limited to, U.S. and non-U.S. equities and equity-related instruments, currencies, commodities, real estate, financial futures, fixed income, debt-related instruments and other derivative products.

Though in most instances the Master Fund invests in Investment Funds that are limited partnerships, limited liability companies or other entities managed by Investment Managers, on occasion, the Master Fund can invest in separate accounts in its name that are managed by Investment Managers (“Separate Accounts”). The Master Fund holds no investments in Separate Accounts as of the date hereof. Before an investment can be made in a Separate Account, the Master Fund will need to obtain either approval of its limited partners or exemptive relief from the SEC to the extent required. Though the Adviser does not contemplate that Separate Accounts will comprise a significant portion of the Fund’s investment program going forward, there can be no assurance that this will be the case. In the event that the Adviser deems that Separate Accounts are necessary to carry out the investment program of the Fund and either limited partner approval and/or exemptive relief from the SEC is delayed or unavailable, there may be a material adverse effect on the ability of the Adviser to carry out the investment program of the Fund and, correspondingly, the investment returns of the Fund may suffer.

In addition to benefiting from the Investment Managers’ individual investment strategies, the Master Fund, as a whole, expects to achieve the benefits of making a broad allocation of its assets among a carefully selected group of Investment Managers across numerous markets. The Investment Committee expects that by investing through multiple Investment Managers and across strategies, the Master Fund may reduce the volatility inherent in a more concentrated portfolio that is invested in fewer Investment Managers and/or strategies.

For certain Direct Investments other than through investment in Investment Funds, the Master Fund may use derivatives (including futures, forwards and swaps), and/or instruments such as total returns swaps (for example, in cases where banks have created rules-based indices that replicate certain investment strategies, or certain Investment Fund returns or strategies). The Adviser may utilize such investments, rather than investing through Investment Funds, to hedge existing exposure or in certain circumstances to access exposure to a strategy that can be accessed more efficiently or with less cost on a direct basis. The Master Fund also may to a limited extent use investment in ETFs in place of certain Investment Funds or as complements to certain strategies.

Access.  Many Investment Funds are sometimes organized as limited partnerships that are not required to register under the Investment Company Act because they do not publicly offer their securities and are restricted as to either the number of investors permitted to invest in such Investment Funds or as to the qualifications of persons eligible to invest (determined with respect to the value of investment assets held by the managers of such investor) in such Investment Funds. Many of these Investment Funds will have greater investment flexibility than traditional investment funds (such as mutual funds and most other registered investment companies) as to the types of securities owned, the nature of performance-based compensation paid to Investment Managers, the types of trading strategies employed, and in many cases, the amount of leverage they may use.

An investment in the Fund enables investors to invest, through the Fund’s indirect investment in the Master Fund, with Investment Managers whose services generally are not available to the investing public, whose investment funds may be closed from time to time to new investors or who otherwise may

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place stringent restrictions on the number and type of persons whose money they will manage. An investment in the Fund also enables investors to invest with a cross-section of investment strategies without incurring the high minimum investment requirements that Investment Managers typically would impose on investors.

Capital Allocation Decisions.  The Master Fund expects its assets to be allocated broadly among asset classes and strategies. In making such asset allocation decisions, the Adviser considers national and international economic and geopolitical conditions, the risks incident to the strategy and the return opportunities for such strategy (among other considerations) and gauge these factors versus the relative opportunities with other strategies and the need for a broad portfolio to reduce risk (as measured by volatility).

INVEST MENT STRATEGIES

The Fund seeks to achieve its investment objective by investing substantially all of its assets in the securities of numerous Investment Funds with the objective of adding additional Investment Managers as the Fund’s assets grow and the need to diversify among additional Investment Managers increases. The Fund may also invest directly in securities and other derivative instruments for hedging purposes, or to access exposure to a strategy than can be accessed more efficiently or with less cost on a direct basis. The strategies operated by these Investment Funds fall within 2 principal areas: Private Investments and Hedge Fund strategies. Hedge Fund strategies employed include (i) Global Macro and Trading Strategies, (ii) Relative Value Strategies and (iii) Event-Driven Strategies. Private Investments strategies employed include (i) Private Equity, (ii) Real Estate and (iii) Energy.

Hedge Fund Strategies

Global Macro and Trading.  Global Macro and Trading strategies will consist of Investment Funds that have the flexibility to invest in all global markets and across all security types, including but not limited to equities, fixed income, commodities, currencies, futures, and ETFs. To achieve an appropriate range of investments, the Fund may employ several Global Macro and Trading and funds. Global Macro and Trading strategies may also be implemented directly by the Adviser. Investment Funds in this asset class are primarily private funds (e.g. “hedge funds”) which have broad latitude with respect to their investment activities.

The principal types of Investment Funds that comprise this portfolio include global macro funds and Commodity Trading Advisors (“CTAs”). Investment Managers utilizing global macro strategies seek to generate income and/or capital appreciation through a portfolio of investments focused on macro-economic opportunities across numerous markets and instruments. These strategies may include positions in the cash, currencies, futures and forward markets. These managers employ such approaches as long/short strategies, warrant and option arbitrage, hedging strategies, inter- and intra-market equity spread trading, futures, options and currency trading, and emerging markets (debt and equity) and other special situation investing. Trading positions are generally held both long and/or short in both U.S. and non-U.S. markets. Global macro strategies are generally categorized as either discretionary or systematic in nature and may assume aggressive investment postures with respect to position concentrations, use of leverage, portfolio turnover, and the various investment instruments used. CTAs generally use a programmatic approach to investing in various futures markets. The Adviser may also allocate to Direct Investments executing one or more of these strategies in certain cases where it believes it can do so in a more efficient or less costly manner than investing through Investment Funds.

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Relative Value.  The following strategies comprise the “Relative Value” strategy group, which is defined herein as having a relatively low or negative correlation to the most financial markets. Managers accessing this strategy often identify themselves as “Absolute Return” managers. The Fund invests in Investment Funds that are categorized into five general styles, each with several underlying strategies. The Adviser may also allocate to Direct Investments executing one or more of these strategies in certain cases where it believes it can do so in a more efficient or less costly manner than investing through Investment Funds.

Equity Market Neutral or Statistical Arbitrage.  Funds that employ Equity Market Neutral or Statistical Arbitrage Strategies purchase certain equity securities and simultaneously sell short other equity securities in an attempt to isolate risk to the relative value of one security or basket of securities as compared to another security or basket of securities and eliminate general market risk. Generally, managers of Investment Funds who use fundamental analysis to establish the relative values of the securities in their portfolios are categorized as Equity Market Neutral, while those who use quantitative models to establish the relative values are categorized as Statistical Arbitrage.

Capital Structure, Convertible or Volatility Arbitrage.  Capital Structure Arbitrage is utilized by Portfolio Managers to exploit perceived pricing inefficiencies within a company’s capital structure. A Portfolio Manager employing Capital Structure Arbitrage analyzes the various securities issued by a company, including common and preferred equity, convertible securities, various forms of senior and junior (typically unsecured) debt, and then establishes a long position in a security that is more attractive on a relative basis to another security in which a short position is established. In a successful trade, the long security appreciates in price relative to the shorted security and the Portfolio Manager then closes the trade at a profit. This strategy is market neutral because it can be profitable even if both securities decline in value (as long as the shorted security declines more than the purchased security). Companies that are distressed are often targets in this strategy because of the potential for significantly different recover values for different types of securities in the event of a bankruptcy, but healthy companies with complex balance sheets are also fertile ground for Capital Structure Arbitrage trades.

Convertible Arbitrage is really a sub-strategy within Capital Structure Arbitrage which involves the purchase of a convertible debt or preferred equity instrument (an instrument that is effectively a bond or has a fixed obligation of repayment with an embedded equity option, non-detachable warrants or an equity-linked or equity-indexed note) concurrent with the short sale of, or a short over-the-counter (“OTC”) derivative position in, the common stock of the issuer of such debt instrument. Investment returns are driven by a combination of an attractive coupon or dividend yield, interest on the short position and the level of the underlying stock’s volatility (which directly affects the option value of the security’s conversion feature). The Fund may invest in one or more Investment Funds with exposure in the convertible arbitrage strategy to provide greater diversification across markets (U.S. and non-U.S. issues), sectors, credit ratings, and market capitalizations. This strategy is cyclical because the opportunity set is dependent on sufficient issuance of convertible securities.

Volatility Arbitrage entails the use of derivative investments and can be used on both a stand-alone basis and as a hedging strategy in conjunction with other investment strategies. As a stand-alone strategy, exchange traded domestic or global index options and/or options on futures contracts are used to exploit anomalies in the pricing of volatilities in related assets. There are several well-defined related securities and/or asset classes that Volatility Arbitrage Portfolio Managers typically follow to determine when they are out of their historical trading ranges. By continually monitoring these relationships, the Portfolio Manager can identify when the securities or asset classes trade out of their normal trading range

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and can put a trade on when there has not been a fundamental, or exogenous, change in the relationship. As an adjunct strategy, these same derivative instruments can be used to manage risk and enhance returns on investments made utilizing other strategies. Use of derivatives often relies on extensive quantitative modeling, volatility estimation and proprietary in-house trading models.

Fixed Income or Credit Arbitrage.  Fixed Income Arbitrage is designed to identify and exploit anomalous (typically based on historical trading ranges) spreads in the prices of functionally equivalent or substitutable securities. Such disparities, or spreads, are often created by imbalances in supply and demand of different types of issues (for example, Agencies relative to U.S. Treasuries). An example of a fixed income arbitrage position consists of a long position in the higher yield, and therefore lower priced, security and a short position in the lower yield, higher priced security. For example, Agencies of a similar duration of U.S. Treasuries have over time established a relatively well-defined trading range and carry a higher interest rate or yield. When Agencies trade at a discount to this range (e.g., when there is discussion about whether Agencies should continue to receive a U.S. government guarantee), Agencies will trade at a higher than normal discount to U.S. Treasuries (reflected by a higher current yield in Agencies). Accordingly, the Portfolio Manager will buy the Agencies and then short the U.S. Treasuries. When the spread narrows or becomes more in line with historical norms, the Portfolio Manager generates a profit by closing its position. In general, these fixed income investments are structured with the expectation that they will be non-directional and independent of the absolute levels of interest rates. As this interest rate exposure is hedged out, these strategies generally exhibit little to no correlation to the broader equity and bond markets. There can be no assurance that any such hedging techniques will be successful or that the hedging employed by the Portfolio Manager will not have the negative effect of lowering overall returns, or creating losses, in the portfolio or with respect to the applicable position.

Fixed Income Arbitrage also may include buying fixed income or yield bearing instruments with a higher coupon or yield and shorting a shorter duration instrument with a lower coupon. The Investment Fund makes a spread on the difference between the higher yielding long position and the lower yielding short position. Investment banks may allow a Portfolio Manager to use significant leverage in these positions (particularly if the instruments are investment grade corporate securities or government securities). The principal risk in this strategy is rising interest rates, which often result in a greater decline in the value of the long position than in the short position. In such a case, the Portfolio Manager will either have to provide additional collateral to the investment bank lender or close the position at a loss. Depending on the level of leverage and the duration of the long position, the resulting loss of capital could be significant.

Event-Driven.  Event-Driven strategies are designed to profit from changes in the prices of securities of companies facing a major corporate event. These securities may include different types of equity (common or preferred) and many types of debt. The goal of an Event-Driven strategy is to identify securities, which may include common or preferred stock as well as many types of debt, with a favorable risk-reward ratio based on the probability that a particular event will occur. Such events include mergers and acquisitions as well as restructurings, spin-offs and significant litigation (e.g., tobacco or patent litigation). Event-Driven Strategies employed by Investment Funds may be generalized as Event-Driven, or in certain cases categorized more specifically as follows:

Merger or Risk Arbitrage.  The Merger Arbitrage strategy involves taking short and long investment positions, respectively, in the stock of acquiring and target companies upon the announcement of an acquisition offer. Acquisitions are typically paid for in stock, cash or a combination thereof. Thus, when an acquisition is announced, the acquiring company (“Acquirer”) will establish a price per share of

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the company being acquired (“Target”) in cash (per share cash price), stock (a share ratio is established) or a combination thereof. Typically, the Target traded for less than the price being paid (in either cash or stock) prior to the announcement. When the announcement is made, the Target’s stock price will typically increase but still trade at a discount to the price being offering by the Acquirer. This discount – and the size of the discount – is principally a function of three factors: (a) the risk that the acquisition will close, (b) the time frame for closing (i.e., the time value of money) and (c) the amount of liquidity or capital being deployed by merger arbitrageurs and other investors. Accordingly, if a merger arbitrageur or investor believes that the risk of the acquisition not closing is not significant relative to the returns that can be generated by the “spread” between the current stock price of the Target and the price being offered by the Acquirer, the merger arbitrageur or investor will generally buy shares of the Target and short shares of the Acquirer in a stock for stock transaction. When the deal closes, the risk premium vanishes and the Investment Fund’s profit is the spread. This strategy is somewhat cyclical, since it requires a supply of corporate mergers and acquisitions to deploy capital.

Distressed or Special Situations.  Distressed investments include investments in securities issued by companies that are experiencing difficult business conditions, including bankruptcy. In many cases, securities issued by such companies over-correct and trade at levels below their value in a liquidation or acquisition scenario. Special Situations investments are similar to distressed investments in that they are typically made in securities that the buyer perceives to be undervalued for one reason or another; however, these companies are not in, and do not appear to be on the brink of, bankruptcy. An example of a Special Situations trade is the purchase of a security issued by a company that the Portfolio Manager believes is a likely acquisition target.

Other. Event-Driven Style Sub-Strategies that do not fit in the two categories defined above are included in the Other Event-Driven category. An example of such a strategy is private investing in public equities or “PIPE” investments, when a company issues securities to private investors instead of raising capital through an initial or secondary public offering.

Private Investments

Private Equity.  Private Equity investing seeks to generate capital appreciation through investments in private companies in need of capital. The Private Equity strategy seeks to profit from, among other things, the inefficiencies inherent in these markets through valuation and due diligence analysis of available business opportunities. Over time, the Fund attempts to invest in a group of Investment Funds that vary widely: sector, size, stage (venture, mezzanine, etc.), duration, liquidity, and the extent to which the Investment Managers take an active role in managing and operating the business. The Fund’s private equity portfolio is also intended to be diversified with respect to vintage, or the initial closing dates, of its Investment Funds. Certain Investment Managers and Investment Funds focus on opportunities in the secondary market, buying interests in existing private equity funds, often at a discount.

The Fund may also as a by-product of primary investments in Private Equity Investment Funds make allocations to certain co-investment opportunities. These opportunities are typically positions in the Investment Funds which, in the Investment Manager’s discretion, were too large to be accommodated without excessive concentration in the Investment Fund, but which may be offered to the Fund on a lower or no fee basis.

In addition to private equity Investment Funds, this asset class includes certain other Investment Funds which do not invest exclusively in private investments but whose liquidity terms are similar to those offered by private equity funds.

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Distressed Debt.  Within Private Equity, the Fund may also invest in distressed debt strategies. These strategies entail investing in the debt of companies experiencing significant financial or operational difficulties that often lead to bankruptcies, exchange offers, workouts, financial reorganizations, and other special credit event-related situations. These companies are generally experiencing even greater difficulties than companies in the “high yield” category. These securities generally trade at significant discounts to par value, because of these difficulties and because certain classes of investors are precluded, based on their investment mandates, from holding low-credit instruments.

Private Equity managers focusing on distressed debt may seek to identify distressed securities in general or focus on one particular segment of the market (such as the senior secured debt sector, subordinated notes, trade claims or distressed real estate obligations) depending on their expertise and prior experience. Additionally, these Investment Funds may be diversified across passive investments in the secondary market, participations in merger and acquisition activity, or active participation in a re-capitalization or restructuring plan. It is important to note that some or all of these factors may not be included in the construction of this portion of the portfolio. Investment Managers may actively attempt to modify or improve a restructuring plan with the intent of improving the value of such securities upon consummation of a restructuring. Additionally, they may take an active role and seek representation in management on a board of directors or a creditors’ committee. In order to achieve these objectives, Investment Managers may purchase, sell, exchange, or otherwise deal in and with restricted or marketable securities including, without limitation, any type of debt security, preferred or common stock, warrants, options, and hybrid instruments.

A significant portion of a distressed debt portfolio may be invested in restricted securities that may not be registered and for which a market may not be readily available, and therefore a significant portion of the portfolio may not be freely traded. Investments may involve both U.S. and non-U.S. entities and may utilize leverage. In addition, a distressed debt Investment Manager may use certain hedging tools, such as “shorting” securities in other portions of the capital structure (e.g., being “long” the distressed debt position and “short” the issuer’s common stock) in order to mitigate the risk associated with an investment in an otherwise “troubled” company. There can be no assurance that any such hedging techniques will be successful or that the hedging employed by the Investment Manager will not have the negative effect of lowering overall returns, or creating losses, in the portfolio or with respect to the applicable position.

Structured Credit Securities.  Structured credit investing involves the purchase of investment entities that pool large baskets of underlying securities to rearrange risks and returns. Entities in this investment strategy include but are not limited to collateralized debt obligations (“CDOs”), collateralized loan obligations (“CLOs”), collateralized mortgage obligations (“CMOs”), structured investment vehicles (“SIVs”), and derivatives based on indices that mimic the returns of these instruments. The Fund does not typically invest directly in structured credit entities, but rather invest through managers that will be long or short credit exposure. Managers also may buy these entities at a discount with an intent to restructuring the underlying collateral. Managers may hedge credit exposure in this strategy using derivatives on an index of credit performance.

Real Estate.  The Real Estate strategy consists generally of investing in Investment Funds that are: (a) registered investment companies or managers that invest in real estate investment trusts (commonly known as “REITs”) and (b) private partnerships that make direct investments in (i) existing or newly constructed income-producing properties, including office, industrial, retail, and multi-family residential properties, (ii) raw land, which may be held for development or for the purpose of appreciation

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or (iii) conventional mortgage loans, participating mortgage loans, loans, issued by REITs or other real estate companies or government sponsored entities, common or preferred stock of companies whose operations involve real estate (i.e., that primarily own or manage real estate), and CMOs. The investment may be in the U.S. or in other countries. Some of the investments may be in “emerging markets” (such as India) that may offer significant opportunities for capital appreciation and income, but also carry significant risks.

Investment Managers whose Investment Funds are private partnerships that invest in real estate typically offer the opportunity to generate attractive returns, but without the liquidity offered by REITs. These Investment Managers invest in established properties with existing rent and expense schedules or in newly constructed properties that the Investment Manager judges to offer an attractive risk/return profile. Investment Managers may invest in raw land, which may be acquired for appreciation or development purposes. These Investment Managers often do not provide their investors with the right to redeem their investment in the Investment Fund, thus the investors only gain liquidity in their investment through the distribution of rental income and the ultimate liquidation or sale of real estate assets held by the Investment Fund.

The Fund may also as a by-product of primary investments in Real Estate Investment Funds make allocations to certain co-investment opportunities. These opportunities are typically positions in the Investment Funds which, in the Investment Manager’s discretion, were too large to be accommodated without excessive concentration in the Investment Fund, but which may be offered to the Fund on a lower or no fee basis.

Energy.  Energy includes Investment Funds which invest in either publicly-traded securities issued by companies involved in the energy sector, make private investments in energy-related assets or companies, trade futures in energy commodity markets, or engage in some combination of the foregoing. The Investment Funds include private funds engaged in long/short equities trading, CTAs trading contracts on energy-related commodities, mutual funds or ETFs, and private partnerships with illiquid, private investments in their portfolios.

Investment Funds in this strategy group have exposure to a wide variety of sub-sectors, including but not limited to oil and gas exploration, oil service, energy technology, power generation and transmission, pipelines and storage, and alternative or clean energy. In limited cases, the Adviser may allocate to Investment Funds that make investments in natural resources or associated infrastructure outside of Energy, for example metals and mining or agricultural investments.

The Fund may also as a by-product of primary investments in Energy Investment Funds make allocations to certain co-investment opportunities. These opportunities are typically positions in the Investment Funds which, in the Investment Manager’s discretion, were too large to be accommodated without excessive concentration in the Investment Fund, but which may be offered to the Fund on a lower or no fee basis.

Direct Investments and Derivatives

The Adviser may also engage in certain direct trading activities for hedging purposes in limited circumstances where the Adviser believes it beneficial to create exposure to certain assets, or in connection with the liquidation of securities that have been distributed in-kind to the Master Fund, as well as in certain circumstances to gain access to a strategy in a cost-effective manner. These Direct Investment strategies will typically seek to generate a similar return profile to a strategy that would otherwise be accessed by allocating to an Investment Fund.

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In making any Direct Investments within the Master Fund, the Adviser may utilize securities and other cash instruments as well as derivatives (including swaps and futures). Specifically, the derivatives used may include but are not limited to long and short futures contracts on a variety of underlying exposures; credit default swaps on a variety of credit indexes to either gain or hedge exposure to these indexes; total return swaps with banks in order to gain access to a particular (typically rules-based) strategy; or total return swaps with banks in order to gain exposure to a specific index or Investment Fund.

When used for hedging purposes, there can be no assurance that any such hedging techniques will be successful or that the hedging employed by the Adviser will not have the negative effect of lowering overall returns, or creating losses, in the portfolio with respect to the applicable position.

When used to generate a similar return profile to a strategy that would otherwise be accessed by allocating to an Investment Fund, there can be no assurance that any such Direct Investments will be successful or that the strategies employed by the Adviser will not have the negative effect of lowering overall returns, or creating losses, in the portfolio with respect to the applicable position.

Most derivatives have embedded or implicit leverage, and their use, even when designed to hedge an existing exposure, may have the result of increasing the risk level of the Fund.

OVERVIEW OF INVESTMENT PROCESS

Manager Criteria; Portfolio Construction

The Fund will strive to maintain a broad allocation of its assets, both with regard to allocation of assets among Investment Managers and also allocation of assets among various strategies. In general, studies indicate that a broadly allocated portfolio enables an investor to generate more consistent returns than one that is more concentrated. Accordingly, a broad allocation of assets is generally noted as a means to reduce investment risk as measured by volatility. Correspondingly, while a broad allocation of assets lowers volatility and helps to mitigate the risk of investment losses, an unconcentrated portfolio is subject to limitations on its ability to generate relatively high investment returns than a more concentrated portfolio can sometimes generate. Accordingly, an unconcentrated portfolio may be appropriate for investors that want less volatility in their portfolio and are willing to accept relatively lower, but generally more consistent, returns than a portfolio concentrated in a very few strategies or Investment Managers.

In general, the Fund intends to allocate its assets in two ways: (a) allocation among Investment Managers and (b) allocation among strategies. In addition, within these divisions, one can further diversify by geography, among other things. The Fund may allocate assets to more than one Investment Fund sponsored by the same Investment Manager, such as in the event that an Investment Manager sponsors Investment Funds in various strategies.

Manager Diversification.  The Adviser defines “manager risk” as the risk that an Investment Manager does not generate the returns commensurate with the mean of the Investment Manager’s peer group (e.g., same investment style) because of (a) poor fundamental analysis and/or security selection, (b) market timing, (c) management turnover within the Investment Manager or (d) other factors or circumstances that affected that Investment Manager’s performance specifically that were not caused by market conditions within the Investment Manager’s strategy generally. Manager risk can be reduced by, among other things, due diligence conducted on the Investment Managers and diversifying across multiple Investment Managers within the same or similar strategy.

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The Adviser, on behalf of the Fund, generally attempts to allocate assets among multiple Investment Managers to achieve an appropriately broad allocation among strategies and also among Investment Managers. The Fund will limit the percent of assets held of any one Investment Fund, at the time of investment, to an amount that is in accordance with any regulatory restrictions applicable to the Fund.

DUE DILIGENCE AND MANAGER SELECTION

General.  It is the responsibility of the Adviser to research and identify Investment Managers, to satisfy itself as to the suitability of the terms and conditions of the Investment Funds and to allocate or reallocate the Fund’s assets among Investment Managers and asset classes. In the event that the Fund has one or more sub-advisers, it is also the responsibility of the Adviser to negotiate the investment sub-advisory agreements, subject to shareholder approval requirements or SEC exemptive relief from such requirements. There can be no assurance that the Fund will seek, or that the SEC will grant, such exemptive relief. The Adviser allocates the Fund’s assets among Investment Managers using the diverse knowledge and experiences of the Investment Committee members to assess the capabilities of the Investment Managers and to determine an appropriate mix of investment strategies, asset classes, sectors and styles given the prevailing economic and investment environment. The Investment Managers with which the Fund invests may pursue various investment strategies and are subject to special risks. See “GENERAL RISKS” and “INVESTMENT RELATED RISKS.”

Process of Portfolio Construction.  The Adviser generally intends to employ a multi-step process in structuring and monitoring the Fund’s portfolio. The Adviser generally employs the following steps, although the steps may not be conducted in the following order:

First, the Adviser attempts to develop a pool of one or more potential Investment Funds or Direct Investments to consider for investment in a particular strategy.

Second, the Investment Committee identifies one or more potential Investment Funds or Direct Investments based on quantitative, qualitative, or other due diligence criteria.

Third, once a pool of one or more potential Investment Funds or Direct Investments has been identified and approved for investment by the Investment Committee, the Investment Committee then determines an allocation for the Fund’s assets across the pool.

Finally, the Adviser intends to monitor the overall level of assets managed, the estimated capacity of each Investment Fund, any management or firm ownership changes and the adherence to the pre-defined strategy and risk/return targets set forth when the investment was made.

On a periodic basis, existing and prospective Investment Managers or Direct Investments are reviewed by the Adviser. The review, and potential inclusion of new Investment Managers, will be predicated on the Adviser’s assessment of the current economic climate, capacity issues with respect to existing Investment Funds, performance issues with respect to existing Investment Funds or Direct Investments, due diligence and/or other criteria on which Investment Funds and Investment Managers are assessed.

The Adviser may invest a substantial portion of the Fund’s assets with Investment Managers who may have limited track records and Investment Funds or Direct Investments with limited or no operating histories.

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BORROWING BY THE FUND AND THE MASTER FUND

The Master Fund and, although not anticipated, the Fund, may borrow money to purchase portfolio securities and for portfolio management purposes. The Master Fund also may borrow money to pay operating expenses, including, without limitation, investment management fees, to fund repurchases of Interests or to meet capital calls of Investment Funds, including but not limited to investments in private equity, real estate, natural resources and energy; provided, however, that, as a fundamental policy, the Master Fund may not borrow more than 25% of its NAV (determined as of the time of investment and after taking into account such borrowings and the use of proceeds therefrom). The Master Fund from time to time may have a line of credit under which the Master Fund may borrow money for the purposes described above. To any extent that the Master Fund may utilize such line of credit, there can be no assurance that such line of credit will continue to be available in the future. The loss of any such master line of credit could create adverse consequences. The use of borrowings for investment purposes involves a high degree of risk.

Under the Investment Company Act, each of the Fund and the Master Fund are not permitted to borrow for any purposes if, immediately after such borrowing, such Fund would have an asset coverage ratio (as defined in the Investment Company Act) of less than 300% with respect to indebtedness or less than 200% with respect to preferred stock. The Investment Company Act also provides that each of the Fund and the Master Fund may not declare distributions, or purchase its Interests (including through repurchase offers) if, immediately after doing so, it will have an asset coverage ratio of less than 300% or 200%, as applicable. Under the Investment Company Act, certain short-term borrowings (such as for the purpose of meeting repurchases, for bridge financing of investments in Investment Funds or for cash management purposes) if (i) repaid within 60 days, (ii) not extended or renewed, and (iii) which are not in excess of 5% of the total assets of the Fund are not considered the use of investment leverage. Borrowing requirements generally do not apply to Investment Funds that are not registered under the Investment Company Act.

To the extent permitted by the Fund’s and the Master Fund’s fundamental policy on borrowing (described below) and the Investment Company Act, the Board may modify the Fund’s borrowing policies, and the board of directors of the Master Fund may modify the Master Fund’s borrowing policies, including the purposes of borrowings, and the length of time that the Fund may hold portfolio securities purchased with borrowed money. The rights of any lenders to the Fund or the Master Fund to receive payments of interest or repayments of principal may be senior to those of the Partners, and the terms of any borrowings may contain provisions that limit certain investments or activities of the Fund or the Master Fund.

ADDITIONAL METHODS OF INVESTING IN INVESTMENT FUNDS

The Master Fund typically invests directly in an Investment Fund by purchasing an interest in such Investment Fund. There may be situations, however, where an Investment Fund is not open or available for direct investment by the Master Fund. On occasions where the Adviser determines that an indirect investment is the most effective or efficient means of gaining exposure to an Investment Fund, the Master Fund may invest in an Investment Fund indirectly by purchasing a structured note or entering into a swap or other contract paying a return approximately equal to the total return of an Investment Fund. In each case, a counterparty would agree to pay to the Master Fund a return determined by the return of the Investment Fund, in return for consideration paid by the Master Fund equivalent to the cost of purchasing an ownership interest in the Investment Fund. Indirect investment through a swap or similar

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contract in an Investment Fund carries with it the credit risk associated with the counterparty. Direct Investments generally are subject to transaction and other fees, which reduce the value of the Master Fund’s investment. There can be no assurance that the Master Fund’s indirect investment in an Investment Fund will have the same or similar results as a direct investment in the Investment Fund, and the Master Fund’s value, and therefore the Fund’s value, may decrease as a result of such indirect investment. When the Master Fund makes an indirect investment in an Investment Fund by investing in a structured note, swap, or other contract intended to pay a return equal to the total return of such Investment Fund, such investment by the Master Fund may be subject to additional regulations.

ADDITIONAL INVESTMENT POLICIES

Applicability of Investment Company Act Limitations

For purposes of determining compliance with the Fund’s investment restrictions and certain investment limitations under the Investment Company Act, including for example, the Fund’s leverage limitations, the Fund does not “look through” Investment Funds in which the Fund invests, except for (i) Investment Funds managed or distributed by the Fund’s investment manager or placement agent, respectively, or their affiliates, and (ii) any subsidiary vehicles established to pursue the Fund’s investment program. Investment Funds are not subject to the Fund’s investment restrictions and, unless registered under the Investment Company Act, are generally not subject to any investment limitations under the Investment Company Act or the Internal Revenue Code. If in the future the Fund obtains exemptive relief to permit the Fund or the Adviser to enter into advisory arrangements with sub-advisers without first obtaining the approval of the Partners, the Fund generally will “look through” to the underlying investments of accounts or vehicles that it establishes to facilitate the management of the Fund’s assets by such sub-advisers.

Futures Transactions

The Fund’s or the Investment Funds’ use of derivatives that are subject to regulation by the CFTC and National Futures Association (“NFA”) could cause the Fund to be deemed a commodity pool or the Adviser a commodity pool operator (“CPO”), which would require the Fund and the Adviser to comply with certain rules which could result in additional costs to the Fund. However, as a general matter, the Fund intends to conduct its operations in compliance with CFTC Rule 4.5 in order to avoid regulation by the CFTC as a commodity pool. Pursuant to regulations and/or published positions of the SEC, the Fund also may be required to segregate cash or liquid securities in connection with futures transactions. The Master Fund directly, as well as certain Investment Funds, may purchase and sell futures contracts and options on futures contracts. The Adviser has claimed an exemption from the definition of the term “commodity pool operator” with respect to the Fund pursuant to Rule 4.5 under the CEA, and therefore, is not subject to registration or regulation as a commodity pool operator under the CEA. It should be noted, however, that in 2012 the CFTC revised certain rules that significantly affect the exemptions available to the Fund and the Adviser. The scope and application of these rules is still uncertain with respect to, among other things, fund of funds such as the Fund. As of the date of this Memorandum, there is no certainty that the Fund, the Adviser or other parties will be able to rely on Rule 4.5 in the future. Additional CFTC regulation (or a choice to no longer use strategies that trigger additional regulation) may cause the Fund to change its investment strategies or to incur additional expenses.

Fundamental Policies

The Fund’s fundamental policies listed below may not be changed without an affirmative vote of a majority of the Fund’s voting securities, which means the lesser of: (i) 67% of the Interests (by value)

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present at a meeting at which holders of more than 50% of the Interests (by value) are present in person or by proxy; or (ii) more than 50% of the Interests (by value). The Master Fund has adopted the same fundamental policies as the Fund; such policies cannot be changed without the approval of a majority (as such majority vote is defined in the preceding sentence) of the outstanding voting securities of the Master Fund. No other policy, including the Fund’s or the Master Fund’s investment objective, is a fundamental policy of the Fund or the Master Fund, respectively. Within the limits of the Fund’s and Master Fund’s fundamental policies, each of the Fund’s and the Master Fund’s management has reserved freedom of action. To the extent permitted by the Investment Company Act, the rules and regulations thereunder, or interpretations, orders, or other guidance provided by the SEC or its staff, each of the Fund and the Master Fund may:

1) Borrow money or issue any senior security, to the extent permitted under the Investment Company Act, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time; provided that in no event shall the Master Fund be entitled to borrow money in an amount greater than 25% of its NAV (as calculated immediately after any borrowing of money taking into account the use of proceeds therefrom).

2) Not invest 25% or more of the value of its total assets in the securities of issuers in any single industry or group of industries, except that securities issued by the U.S. Government, its agencies or instrumentalities and repurchase agreements collateralized by securities issued by the U.S. Government, its agencies or instrumentalities may be purchased without limitation, and each of the Fund and the Master Fund may invest substantially all of its investable assets in one or more registered investment companies. For purposes of this investment restriction, the Investment Funds are not considered part of any industry or group of industries. Each of the Fund and the Master Fund may invest in Investment Funds that may concentrate their assets in one or more industries. The Fund may not invest 25% or more of the value of its total assets in Investment Funds that focus on investing in any single industry or group of related industries.

3) Not act as an underwriter of securities of other issuers, except to the extent that in connection with the disposition of portfolio securities, it may be deemed to be an underwriter under the federal securities laws.

4) Not purchase or sell real estate except insofar as such transaction is made through a vehicle whereby the risk of loss is not greater than the investment therein, although it may purchase and sell securities secured by real estate or interests therein, or securities issued by companies which invest in real estate, or interests therein.

5) Make loans only as permitted under the Investment Company Act, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time.

6) Not make a direct purchase or sale of physical commodities and commodity contracts, except (a) insofar as such transaction is made through a vehicle whereby the risk of loss is not greater than the investment therein, and (b) it may (i) enter into futures contracts and options thereon in accordance with applicable law; and (ii) purchase or sell physical commodities if acquired as a result of ownership of securities or other instruments. The Fund will not consider stock index, currency and other financial futures contracts, swaps, or hybrid instruments to be commodities for purposes of this investment policy.

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As an additional fundamental policy, the Fund may pursue its investment program through one or more subsidiary vehicles. The establishment of such vehicles and the Fund’s utilization thereof is wholly within the discretion of the Board.

With respect to these policies and other policies and investment restrictions described in this Memorandum (except the Fund’s and the Master Fund’s fundamental policies on borrowings and the issuance of senior securities), if a percentage restriction is adhered to at the time of an investment or transaction, a later change in percentage resulting from a change in the values of investments or the value of the Fund’s or the Master Fund’s total assets, unless otherwise stated, will not constitute a violation of such policy or restriction. With respect to the Fund’s and the Master Fund’s fundamental policies on borrowings and the issuance of senior securities, any use of futures contracts, forward contracts, swaps and certain other investments will have the economic effect of using financial leverage. Such investments, however, do not constitute borrowing by the Master Fund, and will not constitute the issuance of any senior security by the Master Fund if appropriate steps are taken to segregate liquid assets or otherwise cover its obligations with respect to any such investments in accordance with interpretations and positions of the SEC and its staff. The Fund’s and the Master Fund’s investment policies and restrictions do not apply to the activities and transactions of Investment Funds in which assets of the Master Fund are invested, but will apply to investments, if any, made by the Fund and the Master Fund directly (or any account consisting solely of the Fund’s or the Master Fund’s assets). The Investment Funds may have different or contrary investment policies.

GENERAL RISKS

Although the Master Fund’s investment program is designed to generate consistent returns over a long time or investment horizon while attempting to minimize risk, the Master Fund’s investment program does entail certain risks to which the Fund is subject through its investment in the Master Fund. There can be no assurance that the investment objective of the Fund or the Master Fund or those of the Investments Funds in which the Fund invests will be achieved or that their investment programs will be successful. Because the Fund invests substantially all of its investable assets in the Master Fund, the risks associated with an investment in the Fund are substantially the same as the risks associated with an investment in the Master Fund. Certain risks associated with an investment in the Fund are set forth below.

Master/Feeder Structure

The Master Fund may accept investments from other investors (including other feeder funds), in addition to the Fund. The Master Fund currently has other investors that are feeder funds managed by the Adviser or its affiliates, and it may have additional investors in the future. Because each feeder fund can set its own transaction minimums, feeder-specific expenses, and other conditions, one feeder fund could offer access to the Master Fund on more attractive terms, or could experience better performance, than another feeder fund. Smaller feeder funds may be harmed by the actions of larger feeder funds. For example, a larger feeder fund will have more voting power than the Fund over the operations of the Master Fund. If the Fund conducts repurchase offers, and if other feeder funds tender for a significant portion of their shares in a repurchase offer, the assets of the Master Fund will decrease. This could cause the Fund’s expense ratio to increase to the extent contributions to the Master Fund do not offset the cash outflows.

Risk Allocations

The Adviser has broad discretion to make allocations to Investment Funds executing different strategies and other than limitations on illiquid investments is not constrained with respect to the

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allocation to individual strategies or asset classes. There is no assurance that its decisions in this regard will be successful. In addition, the Master Fund may be limited in its ability to make changes to allocations due to the subscription and redemption provisions of the Investment Funds, including notice periods and limited subscription and redemption dates, the ability of the Investment Funds to suspend and postpone redemptions, and lockups on redemptions imposed by certain Investment Funds. In addition, any such allocations will be made by the Adviser based on information previously provided by the Investment Funds. If such information is inaccurate or incomplete, it is possible that the Master Fund’s allocation to the asset classes from a risk/reward perspective may not reflect the Adviser’s intended allocations. This could have a material adverse effect on the ability of the Adviser to implement the investment objective of the Fund and the Master Fund.

Dependence on the Adviser and the Investment Managers

The Adviser invests assets of the Master Fund primarily through the Investment Managers, and the Adviser has the sole authority and responsibility for the selection of the Investment Managers. The success of the Master Fund depends upon the ability of the Adviser to develop and implement investment strategies that achieve the investment objective of the Fund and the Master Fund. In addition, the Adviser may be dependent on key personnel, including Lee G. Partridge. To the extent that any such key personnel were to depart, the Adviser’s ability to successfully develop and implement investment strategies may be negatively impacted.

The Master Fund also is dependent upon the ability of the Investment Managers to develop and implement strategies that achieve their investment objectives. Partners have no right or power to participate in the management or control of the Fund, the Master Fund or the Investment Funds, and will not have an opportunity to evaluate the specific investments made by the Investment Funds or the Investment Managers, or the terms of any such investments.

Closed-End Fund; Limited Liquidity

The Fund is a non-diversified, closed-end management investment company designed primarily for long-term investors, and is not intended to be a trading vehicle. You should not invest in the Fund if you need a liquid investment. The Fund invests substantially all its assets in illiquid investments. Closed-end funds differ from open-end management investment companies (commonly known as mutual funds) in that investors in a closed-end fund do not have the right to redeem their shares on a daily basis at a price based on NAV. In order to be able to meet daily redemption requests, mutual funds are subject to more stringent liquidity requirements than closed-end funds. In particular, a mutual fund generally may not invest more than 15% of its net assets in illiquid securities, while a closed-end fund, such as the Fund, may invest all or substantially all of its assets in illiquid investments (as is the Fund’s investment practice). The Adviser believes that unique investment opportunities exist in the market for Investment Funds, which generally are illiquid.

An investment in the Fund provides limited liquidity since the Interests are not freely transferable and Partners may not cause the Fund to redeem their Interests. As described below, the Fund may offer to repurchase Interests from the Partners. Distributions of proceeds upon the repurchase of a Partner’s Interests may be subject to restrictions imposed upon withdrawals under the terms of the Investment Funds or, in the event that the Fund and/or the Adviser has engaged one or more sub-advisers, restrictions imposed by investment advisory agreements pursuant to which the Fund’s assets are invested. An investment in the Fund is suitable only for certain sophisticated investors that do not need liquidity.

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If the Fund conducts repurchase offers, and if a significant number of Partners sought to have their Interests repurchased at the same time, the illiquidity that results from the Master Fund’s significant investment in long-term investments, which ordinarily cannot be liquidated without significant discount, if at all, may prevent the Master Fund from repurchasing more than a specified amount of Interests.

Payment for repurchased Interests of the Fund may require the Master Fund to liquidate its investments in Investment Funds earlier than the Adviser would otherwise liquidate these holdings, potentially resulting in losses, and may increase the Master Fund’s portfolio turnover. In addition, to the extent that the Fund ever were to repurchase significant amounts of Interests, the illiquidity of the remaining portfolio would increase, a factor that the Board would consider when determining the amount of Interests to repurchase. The Adviser intends to take measures (subject to such policies as may be established by the Investment Committee) to attempt to avoid or minimize potential losses and turnover resulting from the repurchase of Interests. In the event the Fund ever winds down investment operations and terminates, the Fund would be unable to offer to repurchase all Interests immediately and Partners would receive the value of their Interests over time as the Master Fund liquidated its assets, which could require a significant period to realize certain illiquid assets.

Interests Not Listed; Repurchases of Interests

The Fund does not intend to list its Interests for trading on any national securities exchange. There is no secondary trading market for the Interests, and none is expected to develop. The Interests are, therefore, not readily marketable. Because the Fund is a closed-end investment company, its Interests are not redeemable at the option of Partners and they are not exchangeable for interests of any other fund. Although the Board may, in its sole discretion, cause the Fund to offer to repurchase outstanding Interests at their NAV, the Interests are considerably less liquid than shares of funds that trade on a stock exchange, or shares of open-end registered investment companies.

If the Fund conducts repurchase offers, there will be a substantial period of time between the date as of which Partners must accept the Fund’s offer to repurchase their Interests and the date they can expect to receive payment for their Interests from the Fund. Partners whose Interests are accepted for repurchase bear the risk that the Fund’s NAV may fluctuate significantly between the time that they accept the Fund’s offer to repurchase their Interests and the date as of which such Interests are valued for purposes of such repurchase. Partners will have to decide whether to accept the Fund’s offer to repurchase their Interests without the benefit of having current information regarding the value of Interests on a date proximate to the date on which Interests are valued by the Fund for purposes of effecting such repurchases. See “REPURCHASES OF INTERESTS.”

Further, repurchases of Interests, if any, may be suspended, postponed or terminated by the Board under certain circumstances. See “REPURCHASES OF INTERESTS—Periodic Repurchases.” An investment in the Fund is suitable only for investors who can bear the risks associated with the limited liquidity of the Interests and the underlying investments of the Fund. Also, because the Interests are not listed on any securities exchange, the Fund is not required, and does not intend, to hold annual meetings of its Partners.

It is not anticipated that the Board will consider a repurchase of Interests until the fourth quarter of 2014 at the earliest. Any future repurchase offers will likely offer to purchase a substantially smaller percentage of the Fund’s NAV than that which the Fund has offered to purchase historically.

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Non-Diversified Status

The Fund is a “non-diversified” investment company. Thus, there are no percentage limitations imposed by the Investment Company Act on the percentage of the Fund’s assets that may be invested in the securities of any one issuer. Although the Adviser follows a general policy of seeking to diversify the Fund’s capital among multiple Investment Funds, the Adviser may depart from such policy from time to time and one or more Investment Funds may be allocated a relatively large percentage of the Fund’s assets. The Fund will limit the percent of assets held of any one Investment Fund, at the time of investment, to an amount that is in accordance with any regulatory restrictions applicable to the Fund. As a consequence of a large investment in a particular Investment Fund, losses suffered by such an Investment Fund could result in a higher reduction in the Fund’s capital than if such capital had been more proportionately allocated among a larger number of Investment Funds.

Limited Operating History of Certain Investment Funds and/or Investment Strategies

Certain of the Investment Funds in which the Master Fund invests may have limited or no operating histories, and certain investment strategies, such as quantitative and/or model-based strategies, pursued by Investment Funds may have limited histories. The results of other investment funds or accounts managed by the Adviser, which have or have had an investment objective similar to or different from that of the Fund is not indicative of the results that the Fund may achieve.

Ability to Borrow

Although the Master Fund does not ordinarily utilize borrowings for leverage purposes, to the extent the Master Fund became unable to borrow, or lost a line of credit, such inability to borrow could adversely impact the Master Fund’s operations to the extent the Master Fund needed to access borrowed funds. Investment Funds may utilize leverage in their investment programs. The utilization of leverage will increase the volatility of the Master Fund’s investments. The use of leverage by the Master Fund or the Investment Funds can substantially increase the adverse impact of risks to which an investment in the Fund may be subject. The level of interest rates generally, and the rates at which the Master Fund and the Investment Funds can borrow in particular, can affect the operating results of the Fund. In addition, although not direct borrowing, any use of futures contracts, forward contracts, swaps and certain other Instruments has the economic effect of financial leverage based on inherent, or implicit, leverage in such instruments. See “Investment Related Risks—Leverage” for discussion of leverage risks related to such investments.

Governmental, Legal, Tax and Regulatory Risks

The global financial markets continue to be subject to pervasive and fundamental disruptions that have led to extensive and unprecedented governmental intervention. Such intervention has in certain cases been implemented on an “emergency” basis with little or no notice, with the consequence that some market participants’ ability to continue to implement certain strategies or manage the risk of their outstanding positions has been suddenly and/or substantially eliminated or otherwise negatively implicated. Given the complexities of the global financial markets and the limited time frame within which governments have been able to take action, these interventions have sometimes been unclear in scope and application, resulting in confusion and uncertainty, which in itself has been materially detrimental to the efficient functioning of such markets as well as previously successful investment strategies.

Legal, tax and regulatory changes could occur that may materially adversely affect the Fund. For example, the regulatory and tax environment for Investment Funds and for derivative instruments in which

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Investment Managers may participate is changing rapidly, and changes in the regulation or taxation of derivative instruments may materially adversely affect the value of derivative instruments held by the Investment Funds or the Fund and the ability of the Investment Managers or the Adviser to pursue their trading strategies. Similarly, the regulatory environment for leveraged investors and for hedge funds generally is changing rapidly, and changes in the direct or indirect regulation of leveraged investors or hedge funds, including tax regulation applicable thereto, may materially adversely affect the ability of the Fund to pursue investment objectives or strategies. In particular, Congress has enacted sweeping legislation regarding the operations of banks, private fund managers and other financial institutions. Congress also has held hearings regarding taxation policy as it relates to leveraged investors, tax-exempt investors and hedge funds, and the SEC has recently engaged in a general investigation of hedge funds which has resulted in increased regulatory oversight and other legislation and regulation relating to hedge fund managers, hedge funds and funds of hedge funds. Due to events in the markets over the past several years, and recent legislation, additional regulatory change may be more likely than not and should be expected to occur.

It is impossible to predict with certainty what additional interim or permanent governmental restrictions may be imposed on the markets and/or the effect of such restrictions on the Adviser’s ability to fulfill the Fund’s investment objective. Legislation or regulation, which could be substantial and is unpredictable, could pose additional risks and result in material adverse consequences to the Investment Funds or the Fund and/or limit potential investment strategies that would have otherwise been used by the Investment Managers or the Fund in order to seek to obtain higher returns. The Adviser believes that there is a high likelihood of significantly increased regulation of the global financial markets, and that such increased regulation could be materially detrimental to the performance of the Fund. Certain tax risks associated with an investment in the Fund are discussed in “CERTAIN TAX CONSIDERATIONS.”

Uncertain Impact of Legislation and Follow-On Regulation

Congress has enacted sweeping financial legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), regarding the operation of banks, private fund managers and other financial institutions, which includes provisions regarding the regulation of derivatives. Many provisions of the Dodd-Frank Act will be implemented through regulatory rulemakings and similar processes over a period of time. The impact of the Dodd-Frank Act, and of follow-on regulation, on trading strategies and operations is impossible to predict, and may be adverse. Practices and areas of operation subject to significant change based on the impact, direct or indirect, of the Dodd-Frank Act and follow-on regulation, may change in manners that are unforeseeable, with uncertain effects. By way of example and not limitation, direct and indirect changes from the Dodd-Frank Act and follow-on regulation may occur to a significant degree with regard to, among other areas, bank ownership of and involvement with private funds, registration of investment advisers, and the trading and use of many derivative instruments. In addition, Congress may address tax policy, which also could have uncertain direct and indirect impact on trading and operations, as well as, potentially, operations and structure of the Fund and/or Investment Funds, and the SEC has engaged in a general investigation of private funds, which has resulted in increased regulatory oversight and other legislation and regulation relating to private fund managers, private funds and funds of hedge funds.

Further, the Dodd-Frank Act created the Financial Stability Oversight Council (“FSOC”), an interagency body charged with identifying and monitoring systemic risks to financial markets. The FSOC has the authority to require that nonbank financial companies that are “predominantly engaged in financial activities,” such as the Fund, the Adviser, Investment Funds and Investment Managers, whose failure it determines would pose systemic risk, be placed under the supervision of the Board of Governors

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of the Federal Reserve System (“Federal Reserve”). The FSOC has the authority to recommend that the Federal Reserve adopt more stringent prudential standards and reporting and disclosure requirements for nonbank financial companies supervised by the Federal Reserve. Such disclosure requirements may include the disclosure of the identity of investors in private funds such as the Investment Funds. The FSOC also has the authority to make recommendations to the Federal Reserve on various other matters that may affect the Fund and/or Investment Funds, including requiring financial firms to submit resolution plans, mandating credit exposure reports, establishing concentration limits, and limiting short-term debt. The FSOC may also recommend that other federal financial regulators impose more stringent regulation upon, or ban altogether, financial activities of any financial firm that poses what it determines are significant risks to the financial system. In the event that the FSOC designates the Fund or an Investment Fund as a systemic risk to be placed under the Federal Reserve’s supervision, the Fund or Investment Fund could face stricter prudential standards, including risk-based capital requirements, leverage limits, liquidity requirements, concentration requirements, and overall risk management requirements, among other restrictions. Such requirements could hinder the Fund’s and/or an Investment Fund’s ability to meet its investment objective and may place the Fund at a disadvantage with respect to its competitors.

Investment Funds may also face additional reporting and recordkeeping requirements under the Dodd-Frank Act. Under the Dodd-Frank Act, advisers to private funds are required to maintain records regarding private funds that include a description of: amount of assets under management and use of leverage, including off-balance-sheet leverage; counterparty credit risk exposure; trading and investment positions; valuation policies and practices; types of assets held; side arrangements or side letters whereby certain investors obtain more favorable rights than other investors; trading practices, and such other information as the SEC determines is necessary and appropriate in the public interest and for the protection of investors or for the assessment of systemic risk. Over time, private Investment Funds’ adherence to the new recordkeeping and reporting requirements may indirectly increase Fund expenses.

Uncertain Commodities Regulation

Certain actions by the CFTC relating both to registered investment company (including amendment of CFTC Rule 4.5 and accompanying “harmony” rules for investment companies) as well as Investment Fund investment in, and exposure to investment in, commodities and related derivatives may have uncertain but negative impacts on investment companies and Investment Funds, including increased operating costs and substantive restrictions. It is not possible to determine the ultimate impact at the current time.

Diverse Investors may Result in Conflicts of Interest between Taxable Investors and Tax-Exempt Investors

Investors in the Fund and other investment vehicles that invest in the Master Fund, taken collectively, include taxable and tax-exempt U.S. investors and non-U.S. investors. As a result, conflicts of interest may arise in connection with decisions made by the Adviser that may be more beneficial for one type of investor than for another type of investor. The Adviser may make any such determinations in its sole discretion, including whether and to what extent to take into account the tax considerations applicable to one or more investors in making decisions for the Master Fund. To the extent any such tax considerations are taken into account, the Fund may incur additional costs or expenses, potentially including additional tax or other risks that otherwise would not have occurred, and may structure or dispose of investments in a manner that is less beneficial for other investors, than might otherwise have

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been the case. Certain tax risks associated with an investment in the Fund are discussed in “CERTAIN TAX CONSIDERATIONS.”

Significant Sub-Placement Agents; Substantial Repurchases; Change in Control of the Fund

The Placement Agent to the Fund and other feeder funds that invest in the Master Fund has entered into arrangements with Sub-Placement Agents and other financial intermediaries. As of June 30, 2013, the two largest nonaffiliated Sub-Placement Agents serviced approximately 80.98% of the assets of all feeder funds that invest in the Master Fund. To the extent that substantial numbers of investors have a relationship with a particular Sub-Placement Agent, such Sub-Placement Agent may have the ability to influence investor behavior, which may affect the Fund. In addition, the global financial markets are currently undergoing pervasive and fundamental disruptions, which has led to departures of brokers and financial advisors employed at Sub-Placement Agents and other financial intermediaries. Such departing brokers or financial advisors may transition their clients to firms that do not have arrangements in place to permit continued servicing of such clients’ Interests in the Fund. To the extent that such Sub-Placement Agents or other financial intermediaries exercise collective influence over such investors’ decisions to request repurchase of Interests, the Master Fund and the Fund may make larger repurchase offers than would otherwise be the case. Substantial acceptance of the Fund’s offers to repurchase Interests could require the Master Fund to liquidate certain of its investments more rapidly than otherwise desirable in order to raise cash to fund the repurchases and achieve a market position appropriately reflecting a smaller asset base. This could have a material adverse effect on the performance of the Fund and the value of the Interests.

Similarly, if such Sub-Placement Agents or other financial intermediaries exercise collective influence over such investors’ voting of such Interests, they could, subject to compliance with SEC rules and state law, change the composition of the Board, which in turn could lead to a change in the Adviser to the Fund. If effected, such changes could have a material adverse effect on the performance of the Fund and the value of the Interests.

Special Considerations Applicable to Purchases of Interests

The Fund may accept subscriptions for Interests as determined by the Board, in its sole discretion. Additional purchases may dilute the indirect interests of existing Partners in the Fund’s investment portfolio prior to such purchases, which could have an adverse impact on the existing Partners’ Interests in the Fund if future Fund investments underperform the prior investments. In addition, it is expected that Investment Managers may structure performance-based compensation so that compensation is paid only if gains exceed prior losses. Appreciation in the net assets managed by an Investment Manager at any given time is shared pro rata by all of the Partners at such time, not just those who were Partners at the time prior losses were incurred. The value attributable to the fact that no performance-based compensation will be paid to an Investment Manager until its gains exceed its prior losses is not taken into account in determining the NAV of the Fund. Such value to existing Partners will be diluted by new sales of Interests, because the new Interests will participate in any positive performance by the Investment Manager until its gains exceed its prior losses without the Investment Manager being paid any performance-based compensation.

In addition, Interests represent interests in an operating fund which may have significant open positions. Since these Interests will share in open positions that may have been held by the Fund for

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some period of time prior to the issuance of the additional Interests, the application of the relevant Investment Manager’s trading approach to such positions may have a qualitatively different effect on the performance of the additional Interests than it does on the performance of previously issued Interests. For example, a number of trading approaches may become more aggressive in terms of willingness to tolerate losses in a position and increase the size of a position after an open trade has generated a substantial profit because subsequent losses (up to a certain level) are perceived as being only a partial give-back of prior profits, not an actual loss. As subsequent purchasers of Interests will not have received the benefit of any profits on open positions prior to the date on which they purchase the Interests, subsequent losses will constitute an absolute loss to such holders, not only a partial give-back of profits. In addition, certain trading approaches may follow profit-taking strategies whereby they will liquidate or partially liquidate a position after it has generated a predetermined amount of profit. Since the new Interests will not have had the benefit of any such profit prior to the date on which they were issued, Partners holding such Interests may find themselves liquidated out of a position (which would have continued to generate substantial profits) due to an Investment Manager “taking profits,” none of which had inured to their benefit. Some approaches apply similar analyses based on overall portfolio performance, not just the performance of particular positions, with generally analogous effects.

Provision of Tax Information to Members; Tax Preparation Expenses

The Fund furnishes to Partners as soon as practicable after the end of each taxable year such information as is necessary for them to complete federal and state tax or information returns along with any tax information required by law. This information in certain cases will likely include estimates. It is not likely that the Master Fund will receive tax information from Investment Funds in a sufficiently timely manner to enable the Master Fund and the Fund to prepare their information returns in time for Partners to file their returns without requesting an extension of the time to file from the Internal Revenue Service (the “IRS”) or state taxing agencies. Accordingly, investors in the Fund will be required to obtain extensions of time to file their tax returns. The use of estimates or the lack of timely information from Investment Funds could result in material variances in the tax estimates provided by the Fund or may result in the Fund later amending its information returns, requiring the Partners to also amend their returns and report additional income or deductions not previously reported and pay federal and state income tax at applicable rates (together with applicable penalties and interest, if any, related to estimates or amended returns).

In addition, the Fund will not be in a position to independently verify the accuracy of tax information provided by the Investment Funds. In the event the IRS or state taxing agencies challenge tax positions taken by the Investment Funds or by the Fund, Partners of the Fund could be adversely affected. In particular, Partners in the Fund could be required to amend prior tax returns and include additional amounts of income not previously reported, and pay federal and/or state income tax at applicable rates (together with applicable penalties and interest, if any) if the tax information that Investment Funds provide to the Fund or positions taken by the Investment Funds or the Fund are determined to be materially inaccurate or otherwise changes as a result of a successful challenge by the IRS or state taxing agencies.

Because the Fund expects to be treated as a partnership for federal income tax purposes, the Fund expects to deliver such tax information to Partners on IRS Schedule K-1 (not Form 1099). In light of the Master Fund’s investments in numerous Investment Funds as of the date hereof, the nature of the tax reporting on a Partner’s own federal income tax return of its allocable share of the Fund’s

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income, gain, loss, deduction or credit will be complicated, and the Partner will likely need the assistance of a certified public accountant or other tax professional to prepare its federal and state income tax returns. The Partner could experience a substantial increase in the amount of fees payable to such tax professionals, and such increase could be material. Investors subscribing for

Interests in the Fund for the first time late in the Fund’s fiscal year (which is currently the calendar year) may wish to consider such expenses in deciding whether to subscribe at such time or to delay the subscription until the beginning of the next fiscal year. See “CERTAIN TAX CONSIDERATIONS.”

SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE

This section discusses certain risks related to the fact that the Master Fund generally invests in Investment Funds.

Investments in the Investment Funds Generally

Because the Master Fund invests in Investment Funds, the value of an investment in the Master Fund will be affected by the investment policies and decisions of the Investment Manager of each Investment Fund in direct proportion to the amount of Master Fund assets that are invested in each Investment Fund. The NAV of the interests of the Investment Funds, and as a result, the NAV of the Master Fund and the Fund, will fluctuate in response to, among other things, various market and economic factors related to the markets in which the Investment Funds invest and the financial condition and prospects of issuers in which the Investment Funds invest. Certain risks related to the investment strategies and techniques utilized by the Investment Managers are described under “INVESTMENT RELATED RISKS” below.

Investment Funds Generally Not Registered

The Investment Funds in which the Master Fund invests generally are not registered as investment companies under the Investment Company Act. Therefore, the Master Fund and the Fund are not entitled to the protections of the Investment Company Act with respect to investments in unregistered Investment Funds. In addition, the Investment Managers of the Investment Funds often are not registered as investment advisers under the Advisers Act. Therefore, the Master Fund as an investor in the Investment Funds managed by such Investment Managers, and the Fund, as an indirect investor through its investment in the Master Fund, does not have the benefit of certain of the protections of the Advisers Act. In addition, to the extent that such an unregistered Investment Manager registers, there is a risk that the Investment Manager may not comply with the requirements of the Adviser Act, or may encounter operational or regulatory difficulties that arise from such compliance requirements. The Investment Funds typically do not maintain their securities and other assets in the custody of a bank or a member of a securities exchange, as generally required of registered investment companies under SEC rules. A registered investment company that places its securities in the custody of a member of a securities exchange is required to have a written custodian agreement, which provides that securities held in custody will be at all times individually segregated from the securities of any other person and marked to clearly identify such securities as the property of such investment company and which contains other provisions designed to protect the assets of such investment company. It is anticipated that the Investment Funds in which the Master Fund invests generally maintain custody of their assets with brokerage firms that do not separately segregate such customer assets as would be required in the case of registered investment companies. Under the provisions of the Securities Investor Protection Act of 1970, as amended, the

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bankruptcy of any such brokerage firm could have a greater adverse effect on the Master Fund than would be the case if custody of assets were maintained in accordance with the requirements applicable to registered investment companies. There is also a risk that an Investment Manager could convert assets committed to it by the Master Fund to its own use or that a custodian could convert assets committed to it by an Investment Manager to its own use. There can be no assurance that the Investment Managers or the entities they manage will comply with all applicable laws and that assets entrusted to the Investment Managers will be protected.

Investment Funds Generally Non-Diversified

Investment Funds may be non-diversified, although some Investment Funds may undertake to comply with certain investment concentration limits. Investment Funds may at certain times hold large positions in a relatively limited number of investments. Investment Funds may target or concentrate their investments in particular markets, sectors, or industries. Those Investment Funds that concentrate in a specific industry or target a specific sector also are subject to the risks of that industry or sector, which may include, but are not limited to, rapid obsolescence of technology, sensitivity to regulatory changes, minimal barriers to entry, and sensitivity to overall market swings. As a result, the NAVs of such Investment Funds may be subject to greater volatility than those of investment companies that are more fully diversified and this may negatively impact the NAV of the Master Fund and the Fund.

Investment Funds’ Securities Are Generally Illiquid

The securities of the Investment Funds in which the Master Fund invests or plans to invest may be illiquid. Subscriptions to purchase the securities of Investment Funds are generally subject to restrictions or delays. Similarly, the Master Fund may not be able to dispose of Investment Fund securities that it has purchased in a timely manner and, if adverse market conditions were to develop during any period in which the Master Fund is unable to sell Investment Fund securities, the Master Fund might obtain a less favorable price than that which prevailed when it decided to buy or sell such securities.

Industry Trend Towards Longer Lock-Ups; Modification of Portfolio Liquidity Requirements

Some Investment Funds have lengthened the lock-up periods during which an investor must hold an investment in an Investment Fund and the Adviser believes that this trend may continue. If this trend does continue, it could negatively impact the liquidity of the Master Fund (and consequently the Fund), which may force the Adviser to forgo investing in certain Investment Funds that are attractive due to the longer lock-up periods being employed, or require that the Master Fund modify its current liquidity guidelines. The Board has discretion over future changes to the Master Fund’s portfolio liquidity requirements, including changes which could increase the illiquidity of the portfolio, without a vote of Partners.

Valuation of Investments in Investment Funds

The valuation of the Master Fund’s investments in Investment Funds is ordinarily determined based upon valuations calculated by the Independent Administrator, in many cases based on information provided by the Investment Managers of such Investment Funds. Certain securities in which the Investment Funds invest may not have a readily ascertainable market price and are valued by the Investment Managers or their administrators. In this regard, an Investment Manager may face a conflict of

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interest in valuing the securities, as their value will affect the Investment Manager’s compensation. The Board Valuation Committee is responsible for overseeing the Master Fund’s valuation policies, making recommendations to the Board on valuation-related matters, and overseeing implementation by the Adviser’s Valuation Committee of the Master Fund’s valuation policies that the Board of the Master Fund has approved for purposes of determining the value of securities held by the Master Fund, including the fair value of the Master Fund’s investments in Investment Funds. The Board has also authorized the establishment of the Adviser’s Valuation Committee. The Adviser’s Valuation Committee’s function, subject to the oversight of the Board Valuation Committee and the Board, is generally to review the Investment Funds’ valuation methodologies, valuation determinations, and any information provided to the Adviser’s Valuation Committee by the Adviser or the Independent Administrator. Certain members of the Adviser’s Valuation Committee may face conflicts of interest in overseeing the value of the Master Fund’s investments, as the value of the Master Fund’s investments will affect the Adviser’s compensation. Although the Adviser’s Valuation Committee reviews the valuation procedures used by all Investment Managers, neither the Adviser’s Valuation Committee, the Adviser, the Independent Administrator, the Board nor the Board Valuation Committee can confirm or review the accuracy of valuations provided by Investment Managers or their administrators.

If an Investment Manager’s valuations are consistently delayed or inaccurate, the Adviser generally will consider whether the Investment Fund continues to be an appropriate investment for the Fund. The Master Fund may be unable to sell interests in such an Investment Fund quickly, and could therefore be obligated to continue to hold such interests for an extended period of time. In such a case, such interests would continue to be valued without the benefit of the Investment Manager’s valuations, and the Adviser’s Valuation Committee may determine to discount the value of the interests or value them at zero, if deemed to be the estimated fair value of such holding in keeping with the Fund’s fair valuation procedures.

Multiple Levels of Fees and Expenses

Although in many cases investor access to the Investment Funds may be limited or unavailable, an investor who meets the conditions imposed by an Investment Fund may be able to invest directly with the Investment Fund. By investing in Investment Funds indirectly through the Fund and the Master Fund, the investor bears asset-based fees at the Fund and Master Fund level, in addition to any asset-based fees and performance-based fees and allocations at the Investment Fund level. Moreover, an investor in the Fund bears a proportionate share of the fees and expenses of the Fund and the Master Fund (including organizational and private placement expenses, operating costs, sales charges, brokerage transaction expenses, and administrative fees) and, indirectly, similar expenses of the Investment Funds. Thus, an investor in the Fund may be subject to higher operating expenses than if he or she invested in an Investment Fund directly or in a closed-end fund which did not utilize a “fund of funds” structure.

Certain of the Investment Funds may be subject to a performance-based fee or allocation, irrespective of the performance of other Investment Funds and the Fund generally. Accordingly, an Investment Manager to an Investment Fund with positive performance may receive performance-based compensation from the Investment Fund, and thus indirectly from the Fund and its Partners, even if the Fund’s overall performance is negative. Generally, fees payable to Investment Managers of the Investment Funds will range from 0.5% to 3% (annualized) of the average NAV of the Fund’s investment. In addition, certain Investment Managers charge an incentive allocation or fee generally ranging from 10% to 30% of an Investment Fund’s net profits, although it is possible that such ranges may be exceeded for certain Investment Managers. The performance-based compensation received by an Investment Manager also may create an incentive for that Investment Manager to make investments that

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are riskier or more speculative than those that it might have made in the absence of the performance-based allocation. Such compensation may be based on calculations of realized and unrealized gains made by the Investment Manager without independent oversight. In addition, if performance of Investment Funds falls, Investment Fund expenses may increase as a percentage of gross returns, which could result in disproportional decreases in the Fund’s performance. Investment Fund expenses in certain instances also may remain relatively fixed and not decrease as performance falls.

Duplicative Transaction Costs

Investment decisions of the Investment Funds are generally made by their Investment Managers independently of each other. As a result, at any particular time, one Investment Fund may be purchasing securities of an issuer whose securities are being sold by another Investment Fund. Consequently, the Master Fund could indirectly incur transaction costs without accomplishing any net investment result.

Turnover

The Investment Funds may invest on the basis of short-term market considerations. The turnover rate within the Investment Funds may be significant, potentially involving substantial brokerage commissions and fees. The Master Fund will have no control over this turnover. As a result, it is anticipated that a significant portion of the Master Fund’s income and gains, if any, may be derived from ordinary income and short-term capital gains. In addition, the withdrawal of the Master Fund from an Investment Fund could involve expenses to the Master Fund under the terms of the Master Fund’s investment with that Investment Fund.

Affiliate Funds

The Master Fund may invest in Investment Funds sponsored, managed or co-managed by certain of the Related Parties, subject to obtaining required exemptive relief from the SEC and an affirmative vote of a majority of the Independent Directors. Such an investment may create a conflict of interest between the Master Fund and the Related Party that has sponsored or is managing or co-managing such Investment Fund. The Independent Directors will review, among other things, such conflicts of interest in determining whether to approve such investment. However, the Adviser will manage certain portions of the portfolio directly.

Inability to Vote

The Master Fund may determine to purchase non-voting securities in or contractually waive or limit its voting interest in certain Investment Funds (for example, to facilitate investments in smaller Investment Funds determined attractive by the Adviser) in order to avoid becoming subject to certain Investment Company Act prohibitions with respect to affiliated transactions. Although the Master Fund may hold non-voting interests, the Investment Company Act and the rules and regulations thereunder may nevertheless require the Master Fund to limit its position in any one Investment Fund in accordance with applicable regulatory requirements, as may be determined by the Master Fund in consultation with its counsel. These restrictions could change from time to time as applicable laws, rules or interpretations thereof are modified.

To the extent the Master Fund holds non-voting securities, or contractually forgoes the right to vote in respect of the voting securities of an Investment Fund, the Master Fund will not be able to vote on matters that require the approval of the interest holders of the Investment Fund, including matters adverse to the Fund’s interests.

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Waiver of Voting

Although the Adviser does not expect that a significant number of waivers of voting rights will be undertaken, the Adviser may, under a policy adopted by the Board, waive certain voting rights in certain instances, subject to reporting to the Board. Waiving such rights may allow the Master Fund to make an additional investment in an Investment Fund that could be deemed a portfolio affiliate of the Master Fund, in the absence of a waiver, where such investment in such fund is determined to be desirable and in the best interests of the Fund. A waiver could allow an additional investment where it was determined that an existing investment in the same fund by a Master Fund affiliate could otherwise prevent such an investment. Any waiver may be undertaken as an irrevocable contractual agreement to waive or limit the Master Fund’s ability to vote with regard to the election or removal of Investment Fund directors (or their equivalent). No rights would be waived or contractually limited for an Investment Fund that does not provide an ongoing ability for follow-on investment, such as an Investment Fund having a single initial funding, closing or commitment, after which no new investment typically would occur.

Investment Managers Invest Independently

The Investment Managers generally invest wholly independently of one another and may at times hold economically offsetting positions. To the extent that the Investment Managers do, in fact, hold such positions, the Master Fund’s portfolio, considered as a whole, may not achieve any gain or loss despite incurring fees and expenses in connection with such positions. In addition, Investment Managers are compensated based on the performance of their portfolios. Accordingly, there often may be times when a particular Investment Manager may receive incentive compensation in respect of its portfolio for a period even though the Fund’s NAV may have decreased during such period. Furthermore, it is possible that from time to time, various Investment Managers selected by the Adviser may be competing with each other for the same positions in one or more markets.

Investment Managers May Have Limited Capacity to Manage Additional Fund Investments

Certain Investment Managers’ trading approaches presently can accommodate only a certain amount of capital. Each Investment Manager will normally endeavor not to undertake to manage more capital than such Investment Manager’s approach can accommodate without risking a potential deterioration in returns. Accordingly, each Investment Manager has the right, in consultation with the Adviser, to refuse to manage some or all of the Master Fund’s assets that the Adviser may wish to allocate to such Investment Manager. Further, in the case of Investment Managers that limit the amount of additional capital that they will accept from the Master Fund, continued sales of Interests to others would dilute the indirect participation of existing Partners with such Investment Manager.

Limitations on Ability to Invest in Investment Funds

In the event that the Master Fund is able to make investments in Investment Funds only at certain times, the Master Fund may invest any portion of its assets that is not invested in Investment Funds in short-term debt securities or money market securities pending investment in Investment Funds. During the time that the Master Fund’s assets are not invested in Investment Funds, that portion of the Master Fund’s assets will not be used to pursue the investment objective of the Master Fund and the Fund.

Indemnification of Investment Funds and Investment Managers

The Master Fund may agree to indemnify certain of the Investment Funds and the Investment Managers and their respective officers, directors, and affiliates from any liability, damage, cost, or

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expense arising out of, among other things, acts or omissions relating to the offer or sale of Interests. In addition, the Master Fund may be required to agree to indemnify Investment Funds and Investment Managers in connection with a division of the Master Fund’s portfolio or any related transfer of Investment Fund interests.

INVESTMENT RELATED RISKS

This section discusses the types of investments that are expected to be made by the Investment Funds and the principal risks associated with such investments. The Master Fund may make Direct Investments for hedging purposes in limited circumstances where the Adviser believes it beneficial to create exposure to certain asset classes, as well as in certain circumstances to gain access to an asset class or strategy in a cost-effective manner, and in this regard the risks below apply to such Direct Investments at the Master Fund level, as well as such investments by the Investment Funds. In general, these principal risks exist whether the investment is made by an Investment Fund or by the Master Fund directly and therefore for convenience purposes, the description of such risks in terms of an Investment Fund is intended to include the same risks for investments made directly by the Master Fund. It is possible that an Investment Fund or the Master Fund will make an investment that is not described below, and any such investment will be subject to its own particular risks. For purposes of this discussion, references to the activities of the Investment Funds should generally be interpreted to include the activities of an Investment Manager.

Risks of Investment Activities Generally

All securities investing and trading activities risk the loss of capital. No assurance can be given that the Master Fund’s or any Investment Fund’s investment activities will be successful or that the Partners will not suffer losses.

Leverage

The Master Fund and Investment Funds may use direct leverage by means of borrowing, or gain economic (indirect) leverage by means of certain investments. With respect to borrowing, the Master Fund, but not Investment Funds, is currently limited as a fundamental policy to 25% of the Master Fund’s NAV, after taking into consideration the investment of the proceeds from the loan. The Master Fund may borrow to meet capital calls in Investment Funds, to pay operating expenses, to repurchase Interests (while awaiting proceeds from redemptions in underlying Investment Funds) and for certain other purposes including investment operations. The Fund may borrow to the extent permitted by its fundamental policy on borrowing. In addition, certain Investment Funds may utilize leverage by borrowing in their investment programs. In addition, although not borrowing, use by the Master Fund and/or Investment Funds of futures contracts, forward contracts, swaps and certain other instruments will have the economic effect of financial leverage. Whether leverage takes the direct form of loans for borrowed money, or an indirect form through trading on margin or other forms of indirect borrowings, or derivative instruments, including, among others, forward contracts, futures contracts, options, swaps and reverse repurchase agreements, and other instruments and transactions that are inherently leveraged, Borrowing and making such investment has significant risk. Financial leverage magnifies exposure to the swings in prices of an asset class underlying an Instrument and results in increased volatility, which means the Fund will have the potential for greater gains, as well as the potential for greater losses, than if the Master Fund and/or Investment Funds do not borrow or use Instruments that have a leveraging effect. There is no assurance that the Master Fund’s or Investment Funds’ use of borrowing or of Instruments providing enhanced exposure will enable achieving investment objectives. The utilization of leverage,

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either directly or through instruments that inherently contain economic leverage, will increase the volatility of the Master Fund’s investments because leveraging tends to magnify, sometimes significantly, the effect of any increase or decrease in the exposure to an asset class and may cause volatility. In addition, buying and selling securities on margin and use of derivative instruments further increasing the volatility of the Master Fund’s investments. The use of direct or economic leverage by the Master Fund or the Investment Funds can substantially increase the adverse impact of risks to which an investment in the Fund may be subject. Trading securities on margin results in interest charges and, depending on the amount of trading activity, such charges could be substantial. The level of interest rates generally, and the rates at which the Master Fund and the Investment Funds can borrow in particular, can affect the operating results of the Fund. The low margin deposits normally required in futures and forward trading permit a high degree of leverage; accordingly, a relatively small price movement in a futures contract can result in immediate and substantial losses to the investor. Such a high degree of leverage necessarily entails a high degree of risk.

In the case of direct borrowing, the rights of any lenders to the Fund, the Master Fund or the Investment Funds to receive payments of interest or repayments of principal will be senior to those of the Partners or the investors in the Master Fund or such Investment Funds, respectively, and the terms of any borrowings may contain provisions that limit certain activities of the Fund, the Master Fund or the Investment Funds, including the ability to make distributions or to repurchase Interests.

Highly Volatile Markets

The prices of an Investment Fund’s investments, and therefore the NAV of the Fund’s Interests, can be highly volatile. Price movements of forward contracts, futures contracts and other derivative contracts in which an Investment Fund or the Master Fund may invest are influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments, and national and international political and economic events and policies. In addition, governments from time to time intervene, directly and by regulation, in certain markets, particularly those in currencies, financial instruments and interest rate-related futures and options. Such intervention often is intended directly to influence prices and may, together with other factors, cause all of such markets to move rapidly in the same direction because of, among other things, interest rate fluctuations. Moreover, since internationally there may be less government supervision and regulation of worldwide stock exchanges and clearinghouses than in the U.S., Investment Funds also are subject to the risk of the failure of the exchanges on which their positions trade or of their clearinghouses, and there may be a higher risk of financial irregularities and/or lack of appropriate risk monitoring and controls.

Equity and Equity-Related Instruments

Investment Funds and the Master Fund may invest long and short in equities and equity-related instruments in their investment programs. Stocks, options and other equity-related instruments may be subject to various types of risk, including market risk, liquidity risk, counterparty credit risk, legal risk and operations risk. In addition, equity-related instruments can involve significant economic leverage and may, in some cases, involve significant risk of loss. “Equity securities” may include common stocks, preferred stocks, interests in REITs, convertible debt obligations, convertible preferred stocks, equity interests in trusts, partnerships, joint ventures or limited liability companies and similar enterprises, warrants and stock purchase rights. In general, stock values fluctuate in response to the activities of individual companies and in response to general market and economic conditions. Accordingly, the value

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of the stocks and other securities and instruments that an Investment Fund holds may decline over short or extended periods. The stock markets tend to be cyclical, with periods when stock prices generally rise and periods when stock prices generally decline. The volatility of equity securities means that the value of an investment in the Fund may increase or decrease.

Short Selling

Investment Funds and the Master Fund may engage in short selling. Short selling involves selling securities which may or may not be owned and borrowing the same securities for delivery to the purchaser, with an obligation to replace the borrowed securities at a later date. Short selling allows the investor to profit from declines in securities. A short sale creates the risk of a theoretically unlimited loss, in that the price of the underlying security could theoretically increase without limit, thus increasing the cost of buying those securities to cover the short position. There can be no assurance that the security necessary to cover a short position will be available for purchase. Purchasing securities to close out the short position can itself cause the price of the securities to rise further, thereby exacerbating the loss. In addition, regulation modifying, preventing and/or limiting short sales may adversely affect the ability of certain Investment Funds, the Master Fund or the Fund to meet their objectives.

Fixed Income Securities

Investment Funds and the Master Fund may invest in fixed income securities. Investment in these securities may offer opportunities for income and capital appreciation, and also may be used for temporary defensive purposes and to maintain liquidity. Fixed income securities are obligations of the issuer to make payments of principal and/or interest on future dates, and include, among other securities: bonds, notes, and debentures issued by corporations; debt securities issued or guaranteed by the U.S. government or one of its agencies or instrumentalities or by a foreign government; Munis; and MBS and ABS. These securities may pay fixed, variable, or floating rates of interest, and may include zero coupon obligations. Fixed income securities are subject to the risk of the issuer’s or a guarantor’s inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer, and general market liquidity (i.e., market risk). In addition, MBS and ABS also may be subject to call risk and extension risk. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can either shorten (i.e., call risk) or lengthen (i.e., extension risk). In general, if interest rates on new mortgage loans fall sufficiently below the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to increase. Conversely, if mortgage loan interest rates rise above the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to decrease. In either case, a change in the prepayment rate can result in losses to investors. The same would be true of asset-backed securities, such as securities backed by car loans.

Fixed Income Risk

Certain types of fixed income securities and other credit instruments may be subject to heightened liquidity risk arising from the credit crisis beginning in 2007. Such investments include CDOs, high-yield bonds, debt issued in leveraged buyout transactions, mortgage and asset-backed securities, and short-term asset-backed commercial paper, which became very illiquid in the latter half of 2007, and that, in many cases, have remained illiquid or relatively illiquid. General market uncertainty and consequent re-pricing of risk led to market imbalances between sellers and buyers, which in turn

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resulted in significant valuation uncertainties in mortgage and credit-related securities and other instruments. These conditions resulted, and in many cases continue to result in, greater volatility, less liquidity, widening credit spreads and a lack of price transparency, with many instruments remaining illiquid and of uncertain value. Such market conditions and the above factors may increase the level of difficulty encountered in valuing such securities and other credit instruments which could result in sudden and significant valuation increases or declines in the NAV of the Master Fund and the Fund.

High Yield Debt; Distressed Debt

High yield bonds (commonly known as “junk bonds”), distressed debt instruments and other lower-rated (or similar but unrated) debt securities (collectively referred to here as “high yield debt”) in which Investment Funds and the Master Fund may invest will typically be junior to the obligations of companies to senior creditors, trade creditors and employees. The lower rating of high yield debt reflects a greater possibility that adverse changes in the financial condition of the issuer or in general economic, financial, competitive, regulatory or other conditions may impair the ability of the issuer to make payments of principal and interest. High yield debt securities have historically experienced greater default rates than investment grade securities. The ability of holders of high yield debt to influence a company’s affairs, especially during periods of financial distress or following an insolvency, will be substantially less than that of senior creditors.

Adverse changes in economic conditions or developments regarding the individual issuer are more likely to cause price volatility and weaken the capacity of the issuers of high-yield debt securities to make principal and interests payments than issuers of higher grade debt securities. An economic downturn affecting an issuer of high-yield debt securities may result in an increased incidence of default. In addition, the market for lower grade debt securities may be thinner and less active than for higher grade debt securities, and thus less liquid because, among other reasons, certain investors, due to their investment mandates, are precluded from owning such securities.

As with other investments, there may not be a liquid market for certain high yield debt, which could result in an Investment Fund being unable to sell such securities for an extended period of time, if at all. In addition, as with other types of investments, the market for high yield debt has historically been subject to disruptions that have caused substantial volatility in the prices of such securities. Consolidation in the financial services industry has resulted in there being fewer market makers for high yield debt, which may result in further risk of illiquidity and volatility with respect to high yield debt, and this trend may continue in the future.

Insolvency Considerations with Respect to Issuers of Indebtedness

Various laws enacted for the protection of creditors may apply to indebtedness in which the Investment Funds and the Master Fund invests. The information in this and the following paragraph is applicable with respect to U.S. issuers subject to U.S. federal bankruptcy law. Insolvency considerations may differ with respect to other issuers. If, in a lawsuit brought by an unpaid creditor or representative of creditors of an issuer of indebtedness, a court were to find that the issuer did not receive fair consideration or reasonably equivalent value for incurring the indebtedness and that, after giving effect to such indebtedness, the issuer (i) was insolvent, (ii) was engaged in a business for which the remaining assets of such issuer constituted unreasonably small capital or (iii) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature, such court could determine to invalidate, in whole or in part, such indebtedness as a fraudulent conveyance, to subordinate such indebtedness to existing or future creditors of such issuer, or to recover amounts previously paid by such issuer in

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satisfaction of such indebtedness. The measure of insolvency for purposes of the foregoing will vary. Generally, an issuer would be considered insolvent at a particular time if the sum of its debts was then greater than all of its property at a fair valuation, or if the present fair saleable value of its assets was then less than the amount that would be required to pay its probable liabilities on its existing debts as they became absolute and matured. There can be no assurance as to what standard a court would apply in order to determine whether the issuer was “insolvent” after giving effect to the incurrence of the indebtedness in which an Investment Fund invested or that, regardless of the method of valuation, a court would not determine that the issuer was “insolvent” upon giving effect to such incurrence. In addition, in the event of the insolvency of an issuer of indebtedness in which an Investment Fund invests, payments made on such indebtedness could be subject to avoidance as a “preference” if made within a certain period of time (which may be as long as one year) before insolvency.

In general, if payments on indebtedness are avoidable, whether as fraudulent conveyances or preferences, such payments can be recaptured from the Investment Fund to which such payments were made.

The Fund and the Master Fund do not anticipate that the Investment Funds will engage in conduct that would form the basis for a successful cause of action based upon fraudulent conveyance, preference or equitable subordination. There can be no assurance, however, as to whether any lending institution or other party from which the Investment Fund may acquire such indebtedness engaged in any such conduct (or any other conduct that would subject such indebtedness and the Investment Fund to insolvency laws) and, if it did, as to whether such creditor claims could be asserted in a U.S. court (or in the courts of any other country) against the Investment Fund.

Indebtedness consisting of obligations of non-U.S. issuers may be subject to various laws enacted in the countries of their issuance for the protection of creditors. These insolvency considerations will differ depending on the country in which each issuer is located or domiciled and may differ depending on whether the issuer is a non-sovereign or a sovereign entity.

Non-U.S. Investments

Investment Funds and the Master Fund may invest in securities of non-U.S. issuers and the governments of non-U.S. countries. These investments involve special risks not usually associated with investing in securities of U.S. companies or the U.S. government, including political and economic considerations, such as greater risks of expropriation and nationalization, confiscatory taxation, the potential difficulty of repatriating funds, general social, political and economic instability and adverse diplomatic developments; the possibility of the imposition of withholding or other taxes on dividends, interest, capital gain or other income; the small size of the securities markets in such countries and the low volume of trading, resulting in potential lack of liquidity and in price volatility; fluctuations in the rate of exchange between currencies and costs associated with currency conversion; and certain government policies that may restrict the Investment Funds’ investment opportunities. In addition, because non-U.S. entities are not subject to uniform accounting, auditing, and financial reporting standards, practices and requirements comparable with those applicable to U.S. companies, there may be different types of, and lower quality, information available about a non-U.S. company than a U.S. company. There is also less regulation, generally, of the securities markets in many foreign countries than there is in the U.S., and such markets may not provide the same protections available in the U.S. With respect to certain countries there may be the possibility of political, economic or social instability, the imposition of trading controls, import duties or other protectionist measures, various laws enacted for the protection of creditors, greater risks of nationalization or diplomatic developments which could materially

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adversely affect the Investment Funds’ investments in those countries. Furthermore, individual economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency, and balance of payments position. An Investment Fund’s investment in non-U.S. countries may also be subject to withholding or other taxes, which may be significant and may reduce the Investment Fund’s returns.

Brokerage commissions, custodial services and other costs relating to investment in international securities markets generally are more expensive than in the U.S. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, such procedures have been unable to keep pace with the volume of securities transactions, thus making it difficult to conduct such transactions.

Investment in sovereign debt obligations of non-U.S. governments involves additional risks not present in debt obligations of corporate issuers and the U.S. government. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or pay interest when due in accordance with the terms of such debt, and an Investment Fund may have limited recourse to compel payment in the event of a default. A sovereign debtor’s willingness or ability to repay principal and to pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign currency reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor’s policy toward international lenders, and the political constraints to which the sovereign debtor may be subject. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt to a greater extent than the volatility inherent in debt obligations of other types of issues.

Investment in Emerging Markets

The Master Fund invests in Investment Funds that focus on “emerging markets” (defined below), and the Adviser anticipates that this will continue. Investment Funds and the Master Fund may invest in securities of companies based in emerging markets or issued by the governments of such countries. Securities traded in certain emerging markets may be subject to risks due to the inexperience of financial intermediaries, the lack of modern technology, the lack of a sufficient capital base to expand business operations, and the possibility of temporary or permanent termination of trading. Political and economic structures in many emerging markets may be undergoing significant evolution and rapid development, and emerging markets may lack the social, political and economic stability characteristics of more developed countries. As a result, the risks relating to investments in foreign securities described above, including the possibility of nationalization or expropriation, may be heightened. In addition, certain countries may restrict or prohibit investment opportunities in issuers or industries deemed important to national interests. Such restrictions may affect the market price, liquidity and rights of securities that may be purchased by Investment Funds. Settlement mechanisms in emerging securities markets may be less efficient and less reliable than in more developed markets and placing securities with a custodian or broker-dealer in an emerging country also may present considerable risks. The small size of securities markets in such countries and the low volume of trading may result in a lack of liquidity and in substantially greater price volatility. Many emerging market countries have experienced substantial, and in some periods extremely high rates of inflation for many years. Inflation and rapid fluctuations in inflation rates and corresponding currency devaluations and fluctuations in the rate of exchange between currencies and costs associated with currency conversion have had and may continue to have negative effects on the economies and securities markets of certain emerging market countries. In addition,

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accounting and financial reporting standards that prevail in certain of such countries are not equivalent to standards in more developed countries and, consequently, less information is available to investors in companies located in such countries.

Foreign Currency Transactions and Exchange Rate Risk

Investment Funds and the Master Fund may invest in equity and equity-related securities denominated in non-U.S. currencies and in other financial instruments, the price of which is determined with reference to such currencies. Investment Funds may engage in foreign currency transactions for a variety of purposes, including to “lock in” the U.S. dollar price of the security, between the trade and the settlement dates, the value of a security an Investment Fund has agreed to buy or sell, or to hedge the U.S. dollar value of securities the Investment Fund already owns. The Investment Funds also may engage in foreign currency transactions for non-hedging purposes to generate returns. The Master Fund will, however, value its investments and other assets in U.S. dollars. To the extent unhedged, the value of the Master Fund’s net assets will fluctuate with U.S. dollar exchange rates as well as with price changes of an Investment Fund’s investments in the various local markets and currencies. Forward currency contracts and options may be utilized by Investment Funds to hedge against currency fluctuations, but the Investment Funds are not required to utilize such techniques, and there can be no assurance that such hedging transactions will be available or, even if undertaken, effective.

Money Market and Other Liquid Investments

Investment Funds may invest, for defensive purposes or otherwise, some or all of their assets in fixed income securities, money market instruments, and money market mutual funds, or hold cash or cash equivalents in such amounts as their Investment Managers deem appropriate under the circumstances. From time to time, the Master Fund also may invest in these instruments. Money market instruments are short-term fixed income obligations, which generally have remaining maturities of one year or less, and may include U.S. government securities, commercial paper, certificates of deposit, bankers’ acceptances issued by domestic branches of U.S. banks that are members of the Federal Deposit Insurance Corporation, and repurchase agreements. The Master Fund may be prevented from achieving its objective during any period in which the Master Fund’s assets are not substantially invested in accordance with its principal investment strategies.

Restricted and Illiquid Investments

Investment Funds and the Master Fund may invest a portion or all of the value of their assets in restricted securities and other investments that are illiquid. Restricted securities are securities that may not be sold to the public without an effective registration statement under the Securities Act or, if they are unregistered, may be sold only in a privately negotiated transaction or pursuant to an exemption from registration. These may include restricted securities that can be offered and sold only to “qualified institutional buyers” under Rule 144A of the Securities Act. There is no limit to the percentage of an Investment Fund’s net assets that may be invested in illiquid securities. Positions in restricted or non-publicly traded securities, securities on foreign exchanges and certain futures contracts may be illiquid because certain exchanges limit fluctuations in certain securities and futures contract prices during a single day by regulations referred to as “daily price fluctuation limits” or “daily limits.” Under such daily limits, during a single trading day no trades may be executed at prices beyond the daily limits. Once the price of a particular security or futures contract has increased or decreased by an amount equal to the daily limit, positions in that security or contract can neither be taken nor liquidated unless traders are willing to effect

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trades at or within the limit. This constraint could prevent the Investment Funds from promptly liquidating unfavorable positions and subject the Master Fund, and therefore the Fund, to substantial losses. This could also impair the Fund’s ability to repurchase Partners’ Interests in a timely manner.

Convergence Risk

The Master Fund will invest in Investment Funds whose Investment Managers take long positions in securities believed to be undervalued and short positions in securities believed to be overvalued. In the event that the perceived mispricings underlying one or more Investment Managers’ trading positions were to fail to converge toward, or were to diverge further from, relationships expected by such Investment Managers, the Master Fund, and therefore the Fund, may incur significant losses.

Corporate Event Risks

Substantial transaction failure risks are involved in companies that are the subject of publicly disclosed mergers, takeover bids, exchange offers, tender offers, spin-offs, liquidations, corporate restructuring, and other similar transactions. Similarly, substantial risks are involved in investments in companies facing negative publicity or uncertain litigation. Thus, there can be no assurance that any expected transaction will take place, that negative publicity will not continue to affect a company or that litigation will be resolved in a company’s favor. Certain transactions are dependent on one or more factors to become effective, such as market conditions which may lead to unexpected positive or negative changes in a company profile, shareholder approval, regulatory and various other third party constraints, changes in earnings or business lines or shareholder activism as well as many other factors. No assurance can be given that the transactions entered into will result in a profitable investment for the Investment Funds or that the Investment Funds will not incur substantial losses.

Issuer Risks

The issuers of securities acquired by Investment Funds sometimes involve a high degree of business and financial risk. These companies may be in an early stage of development, may not have a proven operating history, may be operating at a loss or have significant variations in operating results, may be engaged in a rapidly changing business with products subject to a substantial risk of obsolescence, may require substantial additional capital to support their operations, to finance expansion or to maintain their competitive position, or may otherwise have a weak financial condition.

Issuers of securities acquired by Investment Funds may be highly leveraged. Leverage may have important adverse consequences to these companies and an Investment Fund as an investor. These companies may be subject to restrictive financial and operating covenants. The leverage may impair these companies’ ability to finance their future operations and capital needs. As a result, these companies’ flexibility to respond to changing business and economic conditions and to business opportunities may be limited. A leveraged company’s income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used. In addition, such companies may face intense competition, including competition from companies with greater financial resources, more extensive development, manufacturing, marketing, and other capabilities, and a larger number of qualified managerial and technical personnel.

Small and Mid-Capitalization Companies

Investment Funds and the Master Fund may invest in securities of small capitalization companies, mid-capitalization companies and recently organized companies and, conversely, the Investment Funds

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may establish significant short positions in such securities. Historically, such securities, and particularly securities of smaller capitalization companies, have been more volatile in price than those of larger capitalized, more established companies. Many of the risks apply equally to mid-capitalization companies, and such companies are included in the term “small capitalization companies” for the purposes of this risk factor. The securities of small capitalization and recently organized companies pose greater investment risks because such companies may have limited product lines, distribution channels and financial and managerial resources. In particular, small capitalization companies may be operating at a loss or have significant variations in operating results; may be engaged in a rapidly changing business with products subject to substantial risk of obsolescence; may require substantial additional capital to support their operations, to finance expansion or to maintain their competitive position; and may have substantial borrowings or may otherwise have a weak financial condition. In addition, these companies may face intense competition, including competition from companies with greater financial resources, more extensive development, manufacturing, marketing, and other capabilities, and a larger number of qualified managerial and technical personnel. Further, there is often less publicly available information concerning such companies than for larger, more established businesses. The equity securities of small capitalization companies are often traded over-the-counter or on regional exchanges and may not be traded in the volumes typical on a national securities exchange. Consequently, the Investment Funds or entities in which the Investment Funds invest may be required to dispose of such securities or cover a short position over a longer (and potentially less favorable) period of time than is required to dispose of or cover a short position with respect to the securities of larger, more established companies. Investments in small capitalization companies also may be more difficult to value than other types of securities because of the foregoing considerations as well as lower trading volumes. Investments in companies with limited or no operating histories are more speculative and entail greater risk than do investments in companies with an established operating record.

Additionally, transaction costs for these types of investments are often higher than those of larger capitalization companies.

Exchange Traded Funds

The Master Fund and Investment Funds may purchase and sell shares of exchange traded funds (“ETFs”), which are a type of investment company bought and sold on a securities exchange. An ETF represents a fixed portfolio of securities designed to track a particular market index. A fund could purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market or to hedge other investments. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although lack of liquidity in an ETF could result in it being more volatile. ETFs also have management fees that increase their costs. As a shareholder of an ETF directly, the Master Fund would bear its pro rata portion of the ETF’s expenses, including advisory fees. Similarly, an Investment Fund investing in ETFs also would bear its pro rata portion of the ETF’s expenses, including advisory fees, which the Master Fund indirectly would bear by investing in the Investment Fund. These expenses would be in addition to the fees and other expenses that the Fund or Investment Fund bears directly in connection with its own operations.

Purchasing Securities in Initial Public Offerings

Investment Funds may purchase securities of companies in initial public offerings or shortly after those offerings are complete. Special risks associated with these securities may include a limited number of shares available for trading, lack of a trading history, lack of investor knowledge of the issuer, and limited or no operating history. These factors may contribute to substantial price volatility for the shares

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of these companies. The limited number of shares available for trading in some initial public offerings may make it more difficult for an Investment Fund to buy or sell significant amounts of shares without an unfavorable effect on prevailing market prices. In addition, some companies in initial public offerings are involved in relatively new industries or lines of business, which may not be widely understood by investors. Some of these companies may be undercapitalized or regarded as developmental stage companies, without revenues or operating income, or near-term prospects of achieving revenues or operating income.

Risks Associated with Derivative Instruments

Investment Funds and, to a lesser extent, the Master Fund may invest in, or enter into transactions involving, derivative instruments. These are financial instruments that derive their performance, at least in part, from the performance of an underlying asset, index, or interest rate. Examples of derivatives include, but are not limited to, futures contracts, options contracts, and options on futures contracts. A futures contract is an exchange-traded agreement between two parties, a buyer and a seller, to exchange a particular commodity or financial instrument at a specific price on a specific date in the future. An option transaction generally involves a right, which may or may not be exercised, to buy or sell a commodity or financial instrument at a particular price on a specified future date.

The Master Fund’s most likely use of derivatives is investment in futures and options, as well as swaps. The Adviser has used options on behalf of the Master Fund’s investment program to hedge interest rates and currency rates. The successful use of futures is subject to the ability to predict correctly movements in the direction of the relevant market, and, to the extent the transaction is entered into for hedging purposes, to ascertain the appropriate correlation between the transaction being hedged and the price movements of the futures contract.

An Investment Fund’s use of derivatives (as well as the Master Fund’s, if any) involves risks different from, or possibly greater than, the risks associated with investing directly in securities or more traditional investments, depending upon the characteristics of the particular derivative and the Investment Fund’s portfolio as a whole. Derivatives permit an Investment Fund (or the Master Fund) to increase or decrease the level of risk of its portfolio, or change the character of the risk to which its portfolio is exposed, in much the same way as the Investment Fund (or Master Fund) can increase or decrease the level of risk, or change the character of the risk, of its portfolio by making investments in specific securities.

Derivatives may entail investment exposures that are greater than their cost would suggest, meaning that a small investment in derivatives could have a large potential impact on an Investment Fund’s and potentially the Master Fund’s performance. If an Investment Fund or the Master Fund invests in derivatives at inopportune times or judges market conditions incorrectly, such investments may lower the Investment Fund’s or Master Fund’s return or result in a loss. An Investment Fund or the Master Fund also could experience losses if derivatives are poorly correlated with its other investments, or if an Investment Fund or the Master Fund is unable to liquidate its position because of an illiquid secondary market. The market for many derivatives is, or suddenly can become, illiquid. Changes in liquidity may result in significant, rapid, and unpredictable changes in the prices for derivatives.

The Investment Funds’ or the Master Fund’s engagement in these transactions involves risk of loss to the Master Fund that could materially adversely affect the value of the Master Fund’s and the Fund’s respective net assets. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time.

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Futures Contracts

Investment Funds and, to a lesser extent, the Master Fund may enter into futures contracts. The primary risks associated with the use of futures contracts are (a) the imperfect correlation between the change in market value of the instruments held by the Master Fund and the price of the futures contract; (b) possible lack of a liquid secondary market for a futures contract and the resulting inability to close a futures contract when desired; (c) losses caused by unanticipated market movements, which are potentially unlimited; (d) the Adviser’s inability to predict correctly the direction of securities prices, interest rates, currency exchange rates and other economic factors; (e) the possibility that the counterparty will default in the performance of its obligations; and (f) if the Master Fund has insufficient cash, it may have to sell securities from its portfolio to meet daily variation margin requirements, and the Master Fund may have to sell securities at a time when it may be disadvantageous to do so.

Commodities Risk

Exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities. The value of commodity-linked derivative investments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or sectors affecting a particular industry or commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatory developments.

Forward Contracts

Investment Funds and, to a lesser extent, the Master Fund may enter into forward contracts, which are the purchase or sale of a specific quantity of a commodity, government security, foreign currency, or other financial instrument at the current or spot price, with delivery and settlement at a specified future date.

Because it is a completed contract, a purchase forward contract can be a cover for the sale of a futures contract. The Investment Funds may enter into forward contracts for hedging purposes and non-hedging purposes (i.e., to increase returns). Forward contracts are transactions involving an Investment Fund’s obligation to purchase or sell a specific instrument at a future date at a specified price. Forward contracts may be used by the Investment Funds for hedging purposes to protect against uncertainty in the level of future foreign currency exchange rates, such as when an Investment Manager of an Investment Fund anticipates purchasing or selling a foreign security. For example, this technique would allow the Investment Fund to “lock in” the U.S. dollar price of the security. Forward contracts also may be used to attempt to protect the value of an Investment Fund’s existing holdings of foreign securities. There may be, however, an imperfect correlation between an Investment Fund’s foreign securities holdings and the forward contracts entered into with respect to those holdings. Forward contracts also may be used for non-hedging purposes to pursue an Investment Fund’s investment objective, such as when an Investment Fund’s Investment Manager anticipates that particular foreign currencies will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Investment Fund’s portfolio. There is no requirement that the Investment Funds hedge all or any portion of their exposure to foreign currency risks.

Forward contracts and options thereon, unlike futures contracts, are not traded on exchanges and are not standardized; rather, banks and dealers act as principals in these markets, negotiating each transaction on an individual basis. Forward and “cash” trading is substantially unregulated; there is no

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limitation on daily price movements and speculative position limits are not applicable. The principals who deal in the forward markets are not required to continue to make markets in the currencies or commodities they trade and these markets can experience periods of illiquidity, sometimes of significant duration. There have been periods during which certain participants in these markets have refused to quote prices for certain currencies or commodities or have quoted prices with an unusually wide spread between the price at which they were prepared to buy and that at which they were prepared to sell. Disruptions can occur in any market traded by an Investment Manager due to unusually high trading volume, political intervention or other factors. Arrangements to trade forward contracts may be made with only one or a few counterparties, and liquidity problems therefore might be greater than if such arrangements were made with numerous counterparties. The imposition of controls by governmental authorities might also limit such forward (and futures) trading to less than that which the Investment Manager would otherwise recommend, to the possible detriment of an Investment Fund. Market illiquidity or disruption could result in major losses to an Investment Fund. In addition, Investment Funds will be exposed to credit risks with regard to counterparties with whom the Investment Funds trades as well as risks relating to settlement default. Such risks could result in substantial losses to the Investment Fund, the Master Fund and the Fund.

Swap Agreements

Investment Funds and, to a lesser extent, the Master Fund may enter into equity, interest rate, index, currency rate, total return and other types of swap agreements. The transactions are entered into in an attempt to obtain a particular return without the need to actually purchase the reference asset. Swap agreements can be individually negotiated and structured to include exposure to a variety of different types of investments or market factors. Depending on their structure, swap agreements may increase or decrease the Investment Funds’ exposure to long-term or short-term interest rates (in the U.S. or abroad), foreign currency values, mortgage securities, corporate borrowing rates, or other factors such as security prices, baskets of securities, or inflation rates.

Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than a year. In a standard swap transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a “basket” of securities representing a particular index.

Swap agreements will tend to shift investment exposure from one type of investment to another. For example, if an Investment Fund agrees to exchange payments in dollars for payments in foreign currency, the swap agreement would tend to decrease the Master Fund’s exposure to U.S. interest rates and increase its exposure to foreign currency and interest rates. Depending on how they are used, swap agreements may increase or decrease the overall volatility of an Investment Fund’s portfolio.

Most swap agreements entered into by an Investment Fund would require the calculation of the obligations of the parties to the agreements on a “net basis.” Consequently, an Investment Fund’s current obligations (or rights) under a swap agreement generally will be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”). The risk of loss with respect to swaps is limited to the net amount of interest payments that an Investment Fund is contractually obligated to make. If the other party to a swap

(“Counterparty”) defaults, an Investment Fund’s risk of loss consists of the net amount of payments that

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the Investment Fund contractually is entitled to receive. If a swap agreement calls for payments by the Investment Fund, it must be prepared to make such payments when due. In addition, if the Counterparty’s creditworthiness declined, the value of a swap agreement would be likely to decline, potentially resulting in losses to the Investment Fund. Recent economic events have increased the potential for, and thus risk involved with, Counterparty creditworthiness.

Structured Securities

Investment Funds and, to a lesser extent, the Master Fund may invest in structured securities. Structured securities are securities whose value is determined by reference to changes in the value of specific currencies, interest rates, commodities, indexes or other financial indicators (each, a “Reference”) or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference. Structured securities may be positively or negatively indexed, so that appreciation of the Reference may produce an increase or decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rates or the value of the security at maturity may be a multiple of changes in the value of the Reference. Consequently, structured securities may present a greater degree of market risk than other types of fixed income securities and may be more volatile, less liquid and more difficult to price accurately than less complex securities.

When-Issued and Forward Commitment Securities

Investment Funds and, to a lesser extent, the Master Fund may purchase securities on a “when-issued” basis and may purchase or sell securities on a “forward commitment” basis in order to hedge against anticipated changes in interest rates and prices or for speculative purposes. These transactions involve a commitment by an Investment Fund to purchase or sell securities at a future date (ordinarily at least one or two months later). The price of the underlying securities, which is generally expressed in terms of yield, is fixed at the time the commitment is made, but delivery and payment for the securities takes place at a later date. No income accrues on securities that have been purchased pursuant to a forward commitment or on a when-issued basis prior to delivery to the Investment Fund. When-issued securities and forward commitments may be sold prior to the settlement date. If an Investment Fund disposes of the right to acquire a when-issued security prior to its acquisition or disposes of its right to deliver or receive against a forward commitment, it may incur a gain or loss. There is a risk that securities purchased on a when-issued basis may not be delivered and that the purchaser of securities sold by an Investment Fund on a forward basis will not honor its purchase obligation. In such cases, an Investment Fund may incur a loss.

Derivatives with Respect to High Yield and Other Indebtedness

In addition to the credit risks associated with holding high yield debt securities, with respect to derivatives involving high yield and other debt, an Investment Fund or the Master Fund will usually have a contractual relationship only with the Counterparty of the derivative, and not with the issuer of the indebtedness. An Investment Fund generally will have no right to directly enforce compliance by the issuer with the terms of the derivative nor any rights of set-off against the issuer, nor have any voting rights with respect to the indebtedness. An Investment Fund will not directly benefit from the collateral supporting the underlying indebtedness and will not have the benefit of the remedies that would normally be available to a holder of the indebtedness. In addition, in the event of the insolvency of the Counterparty to the derivative, the Investment Fund will be treated as a general creditor of such

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Counterparty, and will not have any claim with respect to the underlying indebtedness. Consequently, the Investment Fund will be subject to the credit risk of the Counterparty as well as that of the issuer of the indebtedness. As a result, concentrations of such derivatives in any one

Counterparty subject the Investment Fund, and/or the Master Fund, to an additional degree of risk with respect to defaults by such Counterparty as well as by the issuer of the underlying indebtedness.

Failure of the Investment Funds’ Counterparties, Brokers and Exchanges

Investment Funds and the Master Fund will be exposed to the credit risk of the Counterparties with which, or the brokers, dealers and exchanges through which, they deal, whether they engage in exchange-traded or off-exchange transactions. An Investment Fund may be subject to risk of loss of its assets on deposit with a broker in the event of the broker’s bankruptcy, the bankruptcy of any clearing broker through which the broker executes and clears transactions on behalf of the Investment Fund, or the bankruptcy of an exchange clearing house. Although the CEA requires a commodity broker to segregate the funds of its customers, if a commodity broker fails to properly segregate customer funds, the Investment Fund may be subject to a risk of loss of its funds on deposit with such broker in the event of such broker’s bankruptcy or insolvency. The Investment Fund may be subject to risk of loss of its funds on deposit with foreign brokers because foreign regulatory bodies may not require such brokers to segregate customer funds. The Investment Fund may be required to post margin for its foreign exchange transactions either with their broker or other foreign exchange dealers who are not required to segregate funds (although such funds are generally maintained in separate accounts on the foreign exchange dealer’s books and records in the name of the Investment Fund). Under certain circumstances, such as the inability of another customer of the commodity broker or foreign exchange dealer or the commodity broker or foreign exchange dealer itself to satisfy substantial deficiencies in such other customer’s account, the Investment Fund may be subject to a risk of loss of its funds on deposit with such broker or dealer, even if such funds are properly segregated. In the case of any such bankruptcy or customer loss, the Investment Fund might recover, even in respect of property specifically traceable to the Investment Fund, only a pro rata share of all property available for distribution to all of such broker’s or dealer’s customers.

Many of the markets in which the Investment Funds or the Master Fund effects their transactions are “over-the-counter” or “interdealer” markets. Participants in these markets are typically not subject to credit evaluation and regulatory oversight as are members of “exchange-based” markets. To the extent an Investment Fund invests in swaps, derivatives or synthetic instruments, or other over-the-counter transactions in these markets, the Investment Fund may take a credit risk with regard to parties with which it trades and also may bear the risk of settlement default. These risks may differ materially from those involved in exchange-traded transactions, which generally are characterized by clearing organization guarantees, daily marking-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions entered into directly between two Counterparties generally do not benefit from these protections, which in turn may subject an Investment Fund to the risk that a Counterparty will not settle a transaction in accordance with agreed terms and conditions because of a dispute over the terms of the contract or because of a credit or liquidity problem. Such “Counterparty risk” is increased for contracts with longer maturities when events may intervene to prevent settlement. The ability of the Investment Funds to transact business with any one or any number of Counterparties, the lack of any independent evaluation of the Counterparties’ financial capabilities or their creditworthiness, and the absence of a regulated market to facilitate settlement, may increase the potential for losses by the Master Fund and, therefore, the Fund.

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In addition, certain of the Investment Funds may engage in direct or indirect trading of securities, currencies, forward contracts, options, swaps and repurchase agreements on a principal basis. As such, an Investment Fund and/or the Investment Managers as transferee or Counterparty could experience both delays in liquidating the underlying security, future or other investment and losses, including: (a) the risk of the inability or refusal to perform with respect to such transactions on the part of the principals with which the Investment Fund trades; (b) possible decline in the value of any collateral during the period in which the Investment Fund seeks to enforce its rights with respect to such collateral; (c) possible subnormal levels of income and lack of access to income during such period; (d) expenses of enforcing its rights; and (e) legal uncertainty concerning the enforceability of certain rights under swap agreements and possible lack of priority against collateral posted under the swap agreements. Any such failure or refusal, whether due to insolvency, bankruptcy or other causes, could subject the Investment Fund, and in turn the Master Fund and the Fund, to substantial losses. The Investment Fund will not be excused from performance on any such transactions due to the default of third parties in respect of other trades which in the Investment Fund’s trading strategies were to have substantially offset such contracts.

To the extent legislation is adopted regulating or affecting derivatives, banks or other financial organizations including hedge funds, it could have a significant negative impact on existing counterparties for many types of instruments and transactions. While impossible to predict, legislative change could result in a material adverse impact on many investment strategies employed by the Investment Funds and the Adviser.

Growth Stock Risk

Certain Investment Funds invest in “growth” stocks. Securities of growth companies may be more volatile since such companies usually invest a high portion of earnings in their business, and they may lack the dividends of value stocks that can cushion stock prices in a falling market. In addition, earnings disappointments often lead to sharply falling prices because investors buy growth stocks in anticipation of superior earnings growth.

Value Stock Risk

Certain Investment Funds invest in “value” stocks. An Investment Manager to an Investment Fund may be wrong in its assessment of a company’s value and the stocks the Investment Fund holds may not reach what the Investment Manager believes are their full values. A particular risk of an Investment Fund’s value approach is that some holdings may not recover and provide the capital growth anticipated or a stock judged to be undervalued may actually be appropriately priced. Further, because the prices of value-oriented securities tend to correlate more closely with economic cycles than growth-oriented securities, they generally are more sensitive to changing economic conditions, such as changes in interest rates, corporate earnings, and industrial production. The market may not favor value-oriented stocks and may not favor equities at all. During those periods, the Investment Fund’s relative performance may suffer.

Convertible Securities Risk

Certain Investment Funds may invest in convertible securities. The value of convertible securities may fall when interest rates rise and increase when interest rates fall. Convertible securities with longer maturities tend to be more sensitive to changes in interest rates, usually making them more volatile than convertible securities with shorter maturities. Their value also tends to change whenever the market value of the underlying common or preferred stock fluctuates. An Investment Fund could lose money if the issuer of a convertible security is unable to meet its financial obligations or goes bankrupt.

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Arbitrage Strategies Risk

Certain Investment Funds may invest in various arbitrage strategies, including convertible arbitrage, merger/event-driven arbitrage, fixed income arbitrage, volatility arbitrage and statistical arbitrage. Arbitrage investment typically seeks to take advantage of temporary perceived inefficiencies in the pricing of certain assets. Through research and analysis, arbitrage investors seek to find investment opportunities that have not been deemed to be viable by other investors. Such investments may be available only cyclically or not at all. Furthermore, if assumptions used in the research and analysis of the arbitrage investment are incorrect or if the model used to evaluate arbitrage investments is flawed, arbitrage strategies may be unsuccessful.

Global Macro Investing Risk

Investment Managers using Global Macro strategies typically seek to generate income and/or capital appreciation through a portfolio of investments focused on macro-economic opportunities across numerous markets and instruments. Such strategies rely on the use of, among other things, currency and derivative markets, each of which bear their own risks, as well as certain assumptions about global macro-economic trends. There can be no assurance that such macro-economic assumptions will prove to be correct.

Energy Investing Risk

The production and marketing of commodities, energy and natural resources may be affected by actions and changes in governments. Securities of such companies may be subject to broad price fluctuations, reflecting volatility of energy and basic materials prices and possible instability of supply of various hard assets, as well as changes in demand due to international economic conditions. In addition, some such companies also may be subject to the risks of mining and oil drilling, and the risks of other hazards, such as fire, drought, and increased regulatory and environmental costs.

Model and Data Risk

Some Investment Funds, and the Adviser with regard to certain investments, may rely on quantitative models (both proprietary models developed by the advisor, and those supplied by third party vendors) and information and data supplied by third party vendors (“Models and Data”). Models and Data are used to construct sets of transactions and investments and to provide risk management insights.

When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. The success of relying on such models may depend on the accuracy and reliability of historical data supplied by third party vendors.

All models rely on correct market data inputs. If incorrect market data is entered into even a well-founded model, the resulting information will be incorrect. However, even if market data is input correctly, “model prices” will often differ substantially from market prices, especially for securities with complex characteristics, such as derivative securities.

Risk of Programming and Modelling Errors

The research and modelling process engaged in by some Investment Managers and in certain cases by the Adviser is extremely complex and involves financial, economic, econometric and statistical theories,

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research and modelling; the results of that process must then be translated into computer code. Although the Adviser seeks to hire individuals skilled in each of these functions and to provide appropriate levels of oversight, the complexity of the individual tasks, the difficulty of integrating such tasks, and the limited ability to perform “real world” testing of the end product raises the chances that the finished model may contain an error; one or more of such errors could adversely affect the Fund’s performance.

Real Estate

Investing in real estate, including real estate investment trusts (“REITs”) may subject a fund to risks associated with the ownership of real estate, including terrorist attacks, war or other acts that destroy real property (in addition to securities market risks). Some REITs may invest in a limited number of properties, in a narrow geographic area, or in a single property type, which increases the risk that a fund could be unfavorably affected by the poor performance of a single investment or investment type. These companies are also sensitive to factors such as changes in real estate values and property taxes, interest rates, cash flow of underlying real estate assets, supply and demand, and the management skill and creditworthiness of the issuer. Borrowers could default on or sell investments the REIT holds, which could reduce the cash flow needed to make distributions to investors. In addition, REITs also may be affected by tax and regulatory requirements in that a REIT may not qualify for preferential tax treatments or exemptions. REITs require specialized management and pay management expenses. Securities issued by private partnerships in real estate may be more illiquid than securities issued by other Investment Funds generally, because the partnerships’ underlying real estate investments may tend to be less liquid than other types of investments.

Private Equity

Investment in private equity involves the same types of risks associated with an investment in any operating company. However, securities issued by private partnerships investing in private equity investments may be more illiquid than securities issued by other Investment Funds generally, because the partnerships’ underlying investments may tend to be less liquid than other types of investments. Attractive investment opportunities in private equity may occur only periodically, if at all.

Investment Funds’ Investment Strategies

Investment Managers will, among other things, seek to utilize specialized investment strategies, follow allocation methodologies, apply investment models or assumptions, achieve a certain level of performance relative to specified benchmarks, and enter into hedging and other strategies intended, among other things, to affect the Investment Funds’ performance, risk levels, and/or market correlation. There can be no assurance that any Investment Manager will have success in achieving any goal related to such practices. The Investment Managers may be unable to or may choose in their judgment not to seek to achieve such goals.

The success of an Investment Manager’s trading activities will depend on, among other things, the Investment Manager’s ability to identify overvalued and undervalued investment opportunities and to exploit price discrepancies in the capital markets. Identification and exploitation of the investment strategies to be pursued by an Investment Manager involve a high degree of uncertainty. No assurance can be given that the Investment Managers will be able to locate suitable investment opportunities in which to deploy all their capital. A reduction in the volatility and pricing inefficiency of the markets in which an Investment Manager may seek to invest, as well as other market factors, will reduce the scope for an Investment Manager’s investment strategies.

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Limits of Risk Disclosure

The above discussions relating to various risks associated with the Master Fund, the Fund, the Interests, and the Investment Funds are not, and are not intended to be, a complete enumeration or explanation of the risks involved in an investment in the Fund. Prospective investors should read this entire Memorandum and the LP Agreement and should consult with their own advisers before deciding whether to invest in the Fund. In addition, as the Master Fund’s or the Fund’s investment program or market conditions change or develop over time, an investment in the Fund may be subject to risk factors not currently contemplated or described in this Memorandum.

IN VIEW OF THE RISKS NOTED ABOVE, THE FUND SHOULD BE CONSIDERED A LONG-TERM AND ILLIQUID INVESTMENT AND INVESTORS SHOULD INVEST IN THE FUND ONLY IF THEY CAN MEET THEIR FORESEEABLE LIQUIDITY NEEDS WITH RESOURCES OUTSIDE OF AN INVESTMENT IN THE FUND.

NO GUARANTEE OR REPRESENTATION IS MADE THAT THE INVESTMENT PROGRAM OF THE FUND, THE MASTER FUND OR ANY INVESTMENT FUND WILL BE SUCCESSFUL, THAT THE VARIOUS INVESTMENT FUNDS SELECTED WILL PRODUCE POSITIVE RETURNS OR THAT THE FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE.

MANAGEMENT OF THE FUND

The General Partner

The Endowment Fund GP, L.P., a Delaware limited partnership, serves as the General Partner. The General Partner currently serves and may in the future serve as general partner of other registered investment companies and/or unregistered investment funds. The General Partner is an affiliate of the Adviser. The General Partner retains all rights, duties and powers to manage the affairs of the Fund that may not be delegated under Delaware law, and that are not otherwise delegated by the General Partner to the Board or assumed by the Adviser pursuant to the terms of the Investment Management Agreement. The General Partner, among other things, acts as Tax Matters Partner (as defined below in “CERTAIN TAX CONSIDERATIONS”). The General Partner may be removed by vote of the Board, or by vote of Partners holding not less than 80% of the total number of votes eligible to be cast by all Partners.

The Board of Directors

The General Partner, to the fullest extent permitted by applicable law, has irrevocably delegated to the Board its rights and powers to monitor and oversee the business affairs of the Fund, including the complete and exclusive authority to oversee and establish policies regarding the management, conduct and operation of the Fund’s business. Accordingly, the Board has overall responsibility for the management and supervision of the business operations of the Fund. The Board exercises the same powers, authority and responsibilities on behalf of the Fund as are customarily exercised by the directors of an investment company organized as a corporation and registered under the Investment Company Act. The Directors, in their capacities as such, are not general partners of the Fund and, accordingly, each Director in his or her capacity as such has no liability as a general partner. Directors will not contribute to the capital of the Fund in their capacity as Directors, but may subscribe for Interests as limited partners, subject to the eligibility requirements described in this Memorandum.

A majority of the Directors are Independent Directors. To the extent permitted by the Investment Company Act and other applicable law, the Board may delegate any of its rights, powers and authority to,

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among others, any person, including without limitation, the officers of the Fund, the Adviser or any committee of the Board. See “Directors, Officers and Portfolio Management” for the identities of the Directors and executive officers of the Fund, brief biographical information regarding each of them, and other information regarding the Directors.

Directors, Officers and Portfolio Management

The Fund’s operations are managed under the direction and oversight of the Board. Each Director serves for an indefinite term or until he or she reaches mandatory retirement, if any, as established by the Board. The Board appoints officers of the Fund who are responsible for the Fund’s day-to-day business decisions based on policies set by the Board. The officers serve at the pleasure of the Board.

The Directors and officers of the Fund also may be directors or officers of some or all of the other registered investment companies managed by the Adviser or its affiliates. The table below shows, for each Director and executive officer, his or her full name, address and age, the position held with the Fund, the length of time served in that position, his or her principal occupations during the last five years, the number of portfolios in the Fund Complex (as defined below) overseen by the Director, and other directorships held by such Director for at least the past five years. Unless otherwise noted, each principal occupation and other directorship has been held for the past five years. The address of each Director and officer is c/o The Endowment Funds, 4265 San Felipe, Suite 800, Houston, Texas 77027.

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Interested Directors

Name and Age*	Position(s) with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex Overseen	Other Directorships During the Past 5 Years
John A. Blaisdell(1) Age: 52	Director, Co-Principal Executive Officer	Since 2009	Member, Investment Committee of the Adviser; Managing Director of Salient.	8(2)	The Endowment Master Fund, L.P., since 2004; The Endowment Institutional TEI Fund W, L.P., since 2010; The Endowment Registered Fund, L.P., since 2004; The Endowment TEI Fund, L.P., since 2005 and Salient Alternative Strategies Funds (formerly Salient Absolute Return Funds) (investment companies) (three funds), since 2010; The Endowment PMF Funds (investment companies) (three funds) Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (two funds) since 2012.

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Name and Age*	Position(s) with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex Overseen	Other Directorships During the Past 5 Years
Andrew B. Linbeck(1) Age: 48	Director, Co-Principal Executive Officer	Since 2009	Member, Investment Committee of the Adviser; Managing Director of Salient.	5(3)	The Endowment Master Fund, L.P., since 2004; The Endowment Institutional TEI Fund W, L.P., since 2010; The Endowment Registered Fund, L.P., since 2004; The Endowment TEI Fund, L.P., since 2005 and Salient Alternative Strategies Funds (formerly Salient Absolute Return Funds) (investment companies) (three funds), since 2010-2012; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011.

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Name and Age*	Position(s) with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex Overseen	Other Directorships During the Past 5 Years
A. Haag Sherman(1) Age: 47	Director	Since 2009	Member, Investment Committee of the Adviser (until 2011); Managing Director of Salient (until 2011).	5(3)	The Endowment Master Fund, L.P., since 2004; The Endowment Institutional TEI Fund W, L.P., since 2010; The Endowment Registered Fund, L.P., since 2004; The Endowment TEI Fund, L.P., since 2005 and Salient Alternative Strategies Funds (formerly Salient Absolute Return Funds) (investment companies) (three funds), 2010-2012; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Plains Capital Corporation, since 2009.

* As of December 31, 2013

⁽¹⁾  This person’s status as an “interested” director arises from his affiliation with the Adviser.

⁽²⁾  Includes the Fund, three other registered feeder funds, the Master Fund, The Endowment PMF Master Fund, LP, PMF Fund, L.P. and PMF TEI Fund, L.P.

⁽³⁾  Includes the Fund, three other registered feeder funds and the Master Fund

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Independent Directors

Name, Address  and Age*	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director During the Last 5 Years
Karin B. Bonding, CFA Age: 73	Director	Since 2010	Lecturer, University of Virginia, since 1996; President of Capital Markets Institute, Inc. (fee-only financial planner and investment advisor) since 1996.	5(1)	The Endowment Master Fund, L.P., The Endowment Registered Fund, L.P., The Endowment TEI Fund, L.P. and The Endowment Institutional TEI Fund W, L.P., since 2010; Salient Alternative Strategies Funds (formerly Salient Absolute Return Funds) (investment companies) (three funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (two funds) since 2012; Brandes Investment Trust (investment companies) (four funds) since 2006; Credit Suisse Alternative Capital Funds (investment companies) (six funds) 2005-2010.

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Name, Address  and Age*	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director During the Last 5 Years
Jonathan P. Carroll Age: 51	Director	Since 2009	President of Lazarus Financial LLC (holding company) since 2006; private investor for past five years.	8(2)	The Endowment Master Fund, L.P., since 2004; The Endowment Institutional TEI Fund W, L.P., since 2010; The Endowment PMF Funds (investment companies) (three funds); The Endowment Registered Fund, L.P., since 2004; The Endowment TEI Fund, L.P., since 2005; Salient Alternative Strategies Funds (formerly Salient Absolute Return Funds) (investment companies) (three funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (two funds) since 2012; LRR Energy, L.P. (energy company) effective January 31, 2014.

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Name, Address  and Age*	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director During the Last 5 Years
Dr. Bernard A. Harris Age: 56	Director	Since 2009	Chief Executive Officer and Managing Partner, Vesalius Ventures, Inc. (venture investing), since 2002; President of The Space Agency (marketing) since 1999; President of The Harris Foundation (non-profit), since 1998; clinical scientist, flight surgeon and astronaut for NASA, 1986 to 1996.	5(1)	The Endowment Master Fund, L.P., since 2009; The Endowment Institutional TEI Fund W, L.P., since 2010; The Endowment Registered Fund, L.P., since 2009; The Endowment TEI Fund, L.P., since 2009; Salient Alternative Strategies Funds (formerly Salient Absolute Return Funds) (investment companies) (three funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (two funds) since 2012; Monebo Technologies Inc., since 2009; The National Math and Science Initiative, and Space Agency, since 2008; Sterling Bancshares, Inc., since 2007; Communities in Schools, since 2007; American Telemedicine Association, since 2007; RMD Networks, Inc., since 2006; BioHouston, since 2006; U.S. Physical Therapy, Inc., since 2005; Houston Technology Center, since 2004; The Harris Foundation, Inc., since 1998.

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Name, Address  and Age*	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director During the Last 5 Years
Richard C. Johnson Age: 75	Director	Since 2009	Senior Partner (retired), Baker Botts LLP (law firm), since 2002; Managing Partner, Baker Botts, 1998 to 2002; practiced law at Baker Botts, 1966 to 2002 (1972 to 2002 as a partner).	8(2)	The Endowment Master Fund, L.P., since 2004; The Endowment Institutional TEI Fund W, L.P., since 2010; The Endowment PMF Funds (investment companies) (three funds); The Endowment Registered Fund, L.P., since 2004; The Endowment TEI Fund, L.P., since 2005; Salient Alternative Strategies Funds (formerly Salient Absolute Return Funds) (investment companies) (three funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (two funds) since 2012.

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Name, Address  and Age*	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director During the Last 5 Years
G. Edward Powell Age: 77	Director	Since 2009	Principal, Mills & Stowell (private equity), since 2002; Managing Partner, Price Waterhouse & Co. (Houston office), 1982 to 1994.	8(2)	The Endowment Master Fund, L.P., since 2004; The Endowment Institutional TEI Fund W, L.P., since 2010; The Endowment PMF Funds (investment companies) (three funds); The Endowment Registered Fund, L.P., since 2004; The Endowment TEI Fund, L.P., since 2005; Salient Alternative Strategies Funds (formerly Salient Absolute Return Funds) (investment companies) (three funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (two funds) since 2012; Therapy Track, LLC, 2009 to 2012; Energy Services International, Inc., 2004 to 2013.

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Name, Address  and Age*	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships Held by Director During the Last 5 Years
Scott E. Schwinger Age: 47	Director	Since 2009	President, The McNair Group (management), since 2006; Senior Vice President and Chief Financial Officer, the Houston Texans (professional football team) since 1999.	8(2)	The Endowment Master Fund, L.P., since 2004; The Endowment Institutional TEI Fund W, L.P., since 2010; The Endowment PMF Funds (investment companies) (three funds); The Endowment Registered Fund, L.P., since 2004; The Endowment TEI Fund, L.P., since 2005; Salient Alternative Strategies Funds (formerly Salient Absolute Return Funds) (investment companies) (three funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (two funds) since 2012; The Make-A-Wish Foundation, since 2008; YES Prep Public Schools, since 2001.

* As of December 31, 2013

⁽¹⁾  Includes the Fund, three other registered feeder funds and the Master Fund.

⁽²⁾  Includes the Fund, three other registered feeder funds, the Master Fund, The Endowment PMF Master Fund, LP, PMF Fund, L.P. and PMF TEI Fund, L.P.

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Officers of the Fund Who Are Not Directors

Name and Age*	Position(s) Held with Fund	Principal Occupation(s) During the Past 5 Years
Paul A. Bachtold Age: 39	Chief Compliance Officer	Consultant, Chicago Investment Group (compliance consulting), 2009-2010; US Compliance Manager, Barclays Global Investors, 2005-2008; Consultant, Wells Fargo Bank, 2000-2005.
John E. Price Age: 45	Treasurer; Principal Financial Officer	Director and Chief Financial Officer of the Adviser; Partner, Director and Chief Financial Officer of Salient.
Jeremy L. Radcliffe Age: 39	Secretary	Managing Director of Salient, since 2002.

* As of December 31, 2013

Leadership Structure of the Board of Directors

The Board monitors the level and quality of services, including commitments of service providers and the performance of the Adviser. In addition, the Board oversees that processes are in place to assure the Fund’s compliance with applicable rules, regulations, and investment policies and addresses possible conflicts of interest. The Board evaluates the services received under the contracts with service providers by, among other things, receiving reports covering investment performance, shareholder services, marketing, and the Adviser’s profitability in order to determine whether to continue existing contracts or negotiate new contracts.

Mr. Blaisdell, the Chairman of the Board, is an “interested person” (as defined in the Investment Company Act) of the Fund. Mr. Powell serves as each Board’s Lead Independent Director. As Chairman, Mr. Blaisdell presides at meetings of the Directors and, as necessary, the Fund’s Partners. In the context of the specific characteristics of the Fund, including its size and focus on alternative investments, the Board has determined it appropriate that Mr. Blaisdell fulfill the role of Chairman. The Board based its determination on Mr. Blaisdell’s experience and insight in light of the Fund’s characteristics. Prior to each Board meeting, Mr. Blaisdell discusses and formulates with Mr. Powell, the Lead Independent Director, an agenda to be addressed at the meeting, as well as conferring with other representatives of management and with counsel to the Independent Directors.

As a registered investment company, the Fund is subject to a number of investment risks (described in this registration statement), as well as financial and compliance risks. These risks are mitigated by written policies approved and overseen by the Board. The Adviser conducts the Fund’s operations and the Board administers an oversight function. The Board oversees the Adviser’s operations and the Fund’s risk management with the assistance of the Board’s Audit, Compliance and Valuation Committees. Each of these Committees is discussed below under “Committees.” At each Board meeting, the Board considers reports regarding the Fund’s operations and oversight thereof, including oversight of risks, as well as reports from the CCO, who also routinely meets privately with the Independent Directors, and presentations by and discussions with Adviser personnel who monitor risk management. Board Committees receive reports, and meetings may entail further discussion of issues concerning oversight of the Fund’s risk management. The Board also may discuss particular risks that are not addressed in the Committee process. Committee Chairs may confer with the Chairman of the Board to discuss various issues discussed in the Committee that may require further discussion by the full Board or separate

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reports by the Adviser. In addition, the Chairman of the Board confers with the CCO, the Directors, the Adviser and counsel, including counsel to the Independent Directors, to discuss risk management issues.

Director Qualifications

This section discusses, for each Director, the experience, qualifications, attributes or skills that led to the conclusion that the person should serve as a Director. The information in this section should not be understood to mean that any of the Directors is an “expert” within the meaning of the federal securities laws or for any other purpose under state or federal law.

John A. Blaisdell — Through his experience as a senior executive of financial organizations, Mr. Blaisdell contributes his experience in the investment management industry to the Board. Mr. Blaisdell serves as the Chairman of the Board. The Board also benefits from his experience as a member of the board of other funds.

Karin B. Bonding, CFA — Through her role as a teacher and her insights on financial markets, Ms. Bonding contributes her experience in marketing to the Board. The Board also benefits from her experience as a member of the boards of other funds.

Jonathan P. Carroll — Through his experience as the executive of business enterprises, Mr. Carroll contributes experience in overseeing financial and investment organizations to the Board. The Board also benefits from his experience as a member of the board of other funds.

Dr. Bernard A. Harris — Through his experience as a senior officer of and board member of financial and other organizations, Dr. Harris contributes his management and oversight experience to the Board. The Board also benefits from his experience as a member of the board of other funds and operating companies.

Richard C. Johnson — Through his experience as an attorney, Mr. Johnson contributes his insight and management experience to the Board. The Board also benefits from his experience as a member of the board of other funds.

Andrew B. Linbeck — Through his experience as a senior executive of financial organizations, Mr. Linbeck contributes his experience in the investment management industry to the Board. The Board also benefits from his experience as a member of the board of other funds.

G. Edward Powell — Through his experience as a senior executive and accountant, Mr. Powell contributes his accounting and management experience to the Board. The Board also benefits from his experience as a member of the board of other funds and operating companies.

Scott E. Schwinger — Through his experience as a senior executive and financial officer of financial and business enterprises, Mr. Schwinger contributes his financial and management experience to the Board. The Board also benefits from his experience as a member of the board of other funds and operating companies.

A. Haag Sherman — Through his experience as a senior executive of financial organizations, Mr. Sherman contributes his experience in the investment management industry to the Board. The Board also benefits from his experience as a member of the board of other funds.

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Committees

Audit Committee

The Board has formed an audit committee (the “Audit Committee”) that is responsible for meeting with the Fund’s independent auditors, the Independent Administrator and corporate officers to review financial statements, reports, issues and compliance matters. The Audit Committee reports significant issues to the Board and makes recommendations regarding the selection, retention, or termination of the Fund’s auditors, evaluates their independence, and reviews their fees. Messrs. Carroll, Harris, Powell and Schwinger, each an Independent Director, constitute the Audit Committee. Mr. Powell is chair of the Audit Committee. During the last fiscal year, the Audit Committee met four times in person with additional meetings held telephonically.

Nominating Committee

The Board has formed a nominating committee (the “Nominating Committee”) that recommends nominations for membership on the Board. It evaluates candidates’ qualifications for Board membership and, with respect to nominees for positions as Independent Directors, as well as their independence from the Adviser and other principal service providers. The Committee meets as necessary to identify and evaluate nominees for Director and to make its recommendations to the Board. The Nominating Committee is composed of all Independent Directors. Mr. Powell is the chair of this Committee.

While the Nominating Committee is solely responsible for the selection and nomination of potential candidates to serve on the Board, the Nominating Committee may consider and evaluate nominations properly submitted by Partners of the Fund. Nominations proposed by Partners will be properly submitted for consideration by the Committee only if a Partner submits a nomination in accordance with the procedures set forth in the charter of the Nominating Committee. It is in the Nominating Committee’s sole discretion whether to seek corrections of a deficient submission or to exclude a nominee from consideration.

The Nominating Committee of the Master Fund did not meet during the last fiscal year.

Compliance Committee

The Board has formed a Compliance Committee that is responsible for meeting with the Fund’s CCO to review matters relating to compliance with the federal securities laws. The Committee meets at least annually with the CCO without the presence of management to discuss issues arising, among other things, under the Fund’s compliance program and operations. Messrs. Carroll, Johnson and Powell, each an Independent Director, constitute the Compliance Committee. Mr. Johnson is the chair of the Compliance Committee. The Compliance Committee of the Master Fund met three times during the last fiscal year. ‘

Valuation Committee

The Board has formed a valuation committee (the “Board Valuation Committee”) that is responsible for overseeing the Fund’s valuation policy, making recommendations to the Board on valuation-related matters, and overseeing implementation by the Adviser’s Valuation Committee (as defined below) of the Fund’s valuation policy and procedures. Ms. Bonding and Messrs. Harris, Johnson and Schwinger constitute the Board Valuation Committee. Mr. Schwinger is the chair of this Committee. The Board Valuation Committee of the Master Fund met 4 times during the last fiscal year.

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In addition, the Board has authorized the establishment of the Adviser’s Valuation Committee consisting of Messrs. Blaisdell, Linbeck, Partridge (see “MANAGEMENT OF THE FUND”) and additional officers of the Fund’s and representatives of the Adviser to serve as the Fund’s Adviser’s Valuation Committee. The Adviser’s Valuation Committee is not a Board committee. The Adviser’s Valuation Committee’s function, subject to the oversight of the Board Valuation Committee and the Board, is generally to review the Investment Fund’s valuation methodologies, valuation determinations, and any information provided to the Adviser’s Valuation Committee by the Adviser or the Independent Administrator. The Adviser’s Valuation Committee has been assigned to act in accordance with the Fund’s valuation procedures as approved by the Board and to report to the Board and the Board Valuation Committee. Changes in its membership are subject to Board notification. The Board Valuation Committee reviews matters arising from the Adviser’s Valuation Committee’s considerations. During the last fiscal year, the Adviser’s Valuation Committee met twelve times.

Other Information

In addition, the Adviser has established an Investment Committee, which is not a Board committee, but to which the Board has authorized the Adviser to delegate certain activities. The Investment Committee considers investment management policies and strategies, investment performance, risk management techniques, and securities trading practices and reports areas of concern to the Board.

Actions taken by a committee of the Board are recorded and reported to the full Board at its next meeting following such actions.

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Directors’ Holdings

The Fund

The dollar range of equity securities owned by each Director is set forth below

Name of Director	Dollar Range of Equity Securities in the  Institutional Fund as of June 30, 2013(1)	Aggregate Dollar Range of Equity Securities in all Registered Investment Companies Overseen by Director in the fund complex as of June 30, 2013(1) (2)
Independent Directors
Karin B. Bonding	None	None
Jonathan P. Carroll	None	None
Bernard A. Harris	None	None
Richard C. Johnson	None	None
G. Edward Powell	None	None
Scott E. Schwinger	None	Over $100,000
Directors who are “Interested Persons”
John A. Blaisdell	Over $100,000	Over $100,000
Andrew B. Linbeck	Over $100,000	Over $100,000
A. Haag Sherman	Over $100,000	Over $100,000

⁽¹⁾  The dollar ranges of equity securities reflected in the table above are as follows: None; $1 to $10,000; $10,001 to $50,000; $50,001 to $100,000; or over $100,000.

⁽²⁾  The investment companies include the Master Fund, the Fund and other registered feeder funds in the fund complex.

The total of equity securities of the Fund held by all Fund directors, officers and members of any advisory board is equal to $5,662,079 as of June 30, 2013. This amount does not include ownership in the Master Fund.

Independent Director Ownership of Securities

As of December 31, 2012, the Independent Directors (and their respective immediate family members) did not beneficially own securities of the Adviser or Placement Agent, or an entity controlling, controlled by or under common control with the Adviser or Placement Agent (not including registered investment companies).

As a group, Directors and Officers own less than 1% of the outstanding Interests of the Master Fund and less than 30% of the outstanding Interests of the Fund.

Independent Director Compensation

The Master Fund pays each Independent Director an annual retainer fee of $38,000, paid quarterly, an annual Board meeting fee of $15,000, a fee of $1,250 per informal Board meeting, a fee of $1,250 per telephonic Board meeting, an annual fee of $4,000 for membership on each committee, an

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annual fee of $5,000 for the audit committee chairman and $2,500 for each other committee chair, each of which is paid quarterly, and an annual fee of $7,500, paid quarterly, to the Lead Independent Director. There are currently six Independent Directors. In the interest of retaining Independent Directors of the highest quality, the Board intends to periodically review such compensation and may modify it as the Board deems appropriate. In addition, the Fund reimburses each Independent Director for travel and other expenses incurred in connection with attendance at such meetings. The Directors do not receive pension or retirement benefits from the Fund. Other officers (apart from the Chief Compliance Officer) and Directors of the Fund receive no compensation from the Fund. During the period ending June 30, 2013, the Directors received the following compensation:

NAME OF DIRECTOR	AGGREGATE COMPENSATION FROM FUND		PENSION OR RETIREMENT BENEFITS ACCRUED AS PART OF FUND EXPENSES		ESTIMATED ANNUAL BENEFITS UPON RETIREMENT		TOTAL COMPENSATION FROM FUND AND FUND COMPLEX(1) PAID TO DIRECTOR*
Karin B. Bonding	$	0	$	0	$	0	$	34,750
Jonathan P. Carroll	$	0	$	0	$	0	$	37,000
Bernard A. Harris	$	0	$	0	$	0	$	36,000
Richard C. Johnson	$	0	$	0	$	0	$	39,500
G. Edward Powell	$	0	$	0	$	0	$	45,125
Scott E. Schwinger	$	0	$	0	$	0	$	39,500
John A. Blaisdell	$	0	$	0	$	0	$	0
Andrew B. Linbeck	$	0	$	0	$	0	$	0
A. Haag Sherman	$	0	$	0	$	0	$	0

* For the period ended June 30, 2013.

⁽¹⁾  The Fund Complex includes the Fund, three other registered feeder funds and the Master Fund.

The Adviser

Endowment Advisers, L.P., a Delaware limited partnership registered as an investment adviser under the Advisers Act with principal offices at 4265 San Felipe, Suite 800, Houston, Texas 77027, serves as the Fund’s investment adviser. Subject to the general supervision of the Board and in accordance with the investment objective, policies, and restrictions of the Fund, the Adviser is responsible for the management and operation of the Fund and the selection of the Investment Funds and Investment Managers with which the Fund invests its assets pursuant to an Investment Management Agreement. The Adviser also serves as investment adviser to the Master Fund pursuant to an investment management agreement.

The Adviser may reallocate the Fund’s assets among Investment Funds, terminate its relationship with Investment Funds and select additional Investment Funds, subject in each case to the ultimate supervision of, and any policies established by, the Board. The Adviser also may reallocate the Fund’s assets among sub-advisers, subject to the condition that the retention of any sub-adviser will require the approval of a majority of the Independent Directors and, unless the Fund receives an exemption from certain provisions of the Investment Company Act, of a majority vote of the outstanding Interests. Subject to the requirements of the Investment Company Act, the Adviser is permitted to delegate certain of its investment management responsibilities to other persons as set forth in the LP Agreement. The Adviser’s

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principal business is to function as an investment adviser for investment programs and accounts similar to the Fund and accounts and to select investment managers to make investments on behalf of such funds and accounts.

The Adviser is owned by Salient Partners, L.P. (“Salient” or the “Principal.”). Messrs. Lee G. Partridge, Jeremy L. Radcliffe, William K. Enszer, William B. Hunt and William R. Guinn are the members of the Adviser’s Investment Committee (the “Investment Committee”). The Adviser is an affiliate of Salient, a Texas-based investment firm that advises or consults on approximately $17.86 billion in assets as of June 30, 2013. Mr. William K. Enszer is the portfolio manager for the Fund.

The Adviser’s Investment Committee Members

The Investment Committee is responsible for the day-to-day management of the Master Fund’s portfolios. The Fund is referenced to below as a “Fund” and, collectively with the Master Fund and three other registered feeder funds, as the “Fund Complex.” The members of the Investment Committee (each an “Investment Committee Member”) are: Messrs. Lee G. Partridge, Jeremy L. Radcliffe, William K. Enszer, William B. Hunt and William R. Guinn. Mr. Partridge serves as the Adviser’s Chief Investment Officer.

Mr. Partridge has served as an Investment Committee Member since January 15, 2013, and has served as Chief Investment Officer, of Salient Partners, which owns Salient Trust Co., LTA, a trust company chartered under the laws of the State of Texas, since January 15, 2013. Mr. Radcliffe has served as an Investment Committee Member since 2014 and Managing Director of Salient since 2002. Previously, he held the position of Partner of The Redstone Companies, L.P. and certain affiliates thereof (from 1998-2002 (collectively, “Redstone”)). Mr. Enszer has served as an Investment Committee Member since 2014 and Director of Salient since 2010. Previously, he held the position of Vice President of Redstone Asset Management (from 2005-2010). Mr. Hunt has served as an Investment Committee Member since 2014 and as Chief Risk Officer of Salient since 2014. He previously held positions as a Senior Analyst and Portfolio Manager of Iridian Asset Management (from 1996-2011) and Professor at Southern Methodist University (from 1991-2000). Mr. Guinn has served as an Investment Committee Member since 2014 and Director of Salient since 2013. Previously, he held the position of Director of Strategic Partnerships and Opportunistic Investments at the Teacher Retirement System of Texas (2009-2013). Each member of the Investment Committee reviews asset allocation recommendations made by the Adviser’s representatives, manager due diligence and recommendations and, by a majority vote of the Investment Committee, determines asset allocation and manager selection.

The Adviser and certain other entities controlled by the Principal manage investment programs which are similar to that of the Fund, and the Adviser and/or the Principal may in the future serve as an investment adviser or otherwise manage or direct the investment activities of other registered and/or private investment companies with investment programs similar to the Fund’s. See “CONFLICTS OF INTEREST.”

Other Accounts Managed by the Investment Committee Members

Certain Investment Committee Members, who are primarily responsible for the day-to-day management of the Fund and the Master Fund, also manage other registered investment companies, other pooled investment vehicles and other accounts, as indicated below. The following tables identify, as of June 30, 2013: (i) the number of registered investment companies, other pooled investment vehicles and

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other accounts managed by the Investment Committee Members and the total assets of such companies, vehicles and accounts; and (ii) the number and total assets of such companies, vehicles and accounts with respect to which the advisory fee is based on performance.

Name of Investment Committee Member	Registered Investment Companies Managed by Investment Committee Member(1)		Pooled Investment Vehicles Managed by Investment Committee Member(1)		Other Accounts  Managed by Investment Committee Member
	Number	Total Assets	Number	Total Assets	Number	Total Assets
Lee G. Partridge	8	$2.885 billion	14	$505 million	>1,420	$>10.684 billion(2)
Jeremy L. Radcliffe	3	$189 million	13	$839 million	1	$8.712 billion
William K. Enszer	2	$116 million	1	$32 million	0	0
William B. Hunt	0	$0	0	$0	0	$0
William R. Guinn	11	$3.415 billion	21	$1.150 billion	>1,420	$>11.269 billion

⁽¹⁾  For registered investment companies and pooled investment vehicles managed, the number of vehicles reported for master-feeder structures includes both the master fund and the feeder funds while the corresponding total assets reported reflect the assets of the master fund only.

⁽²⁾  Mr. Partridge and Mr. Radcliffe serve as officers of Salient Partners, which owns Salient Trust Co., LTA, a trust company chartered under the laws of the State of Texas. In such capacities, Messrs. Partridge and Radcliffe have investment responsibilities for the clients of such entities. However, the number of accounts and asset figures cited in the table relate to the accounts and assets over which Messrs. Partridge and Radcliffe have discretion in their capacity as officers of such entities.

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Name of Investment Committee Member	Registered Investment Companies Managed by Investment Committee Member(1)		Pooled Investment Vehicles Managed by Investment Committee Member(1)		Other Accounts  Managed by Investment Committee Member
	Number with Performance- Based Fees	Total Assets with Performance Based Fees	Number with Performance- Based Fees	Total Assets with Performance- Based Fees	Number with Performance- Based Fees	Total Assets with Performance- Based Fees
Lee G. Partridge	0	$0	1	$18 million	3	$8.712 billion
Jeremy L. Radcliffe	0	$0	2	$187 million	1	$8.712 billion
William K. Enszer	0	$0	0	$0	0	$0
William B. Hunt	0	$0	0	$0	0	$0
William R. Guinn	0	$0	5	$499 million	2	$8.780 billion

⁽¹⁾  For registered investment companies and pooled investment vehicles managed, the number of vehicles reported for master-feeder structures includes both the master fund and feeder funds while the corresponding total assets reported reflect the assets of the master fund only.

Conflicts of Interest of the Adviser

From time to time, potential conflicts of interest may arise between an Investment Committee Member’s management of the investments of the Fund, on the one hand, and the management of other registered investment companies, pooled investment vehicles and other accounts (collectively, “other accounts”), on the other. The other accounts might have similar investment objectives or strategies as the Fund, track the same index the Fund tracks or otherwise hold, purchase, or sell securities that are eligible to be held, purchased or sold by the Fund. The other accounts might also have different investment objectives or strategies than the Fund.

Knowledge and Timing of Fund Trades.  A potential conflict of interest may arise as a result of the Investment Committee Member’s day-to-day management of the Fund. Because of their positions with the Fund, the Investment Committee Members know the size, timing and possible market impact of the Fund’s trades. It is theoretically possible that the Investment Committee Members could use this information to the advantage of other accounts they manage and to the possible detriment of the Fund.

Investment Opportunities.  A potential conflict of interest may arise as a result of the Investment Committee Member’s management of a number of accounts. Often, an investment opportunity may be suitable for both the Fund and other accounts managed by the Investment Committee Member, but may not be available in sufficient quantities for both the Fund and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by the Fund and other accounts. The Adviser has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time. However, there is a risk that a conflict of interest

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may occur when allocating investment opportunities and that the conflict may not be resolved in favor of the Fund. See “CONFLICTS OF INTEREST.”

Performance Fees.  An Investment Committee Member may advise certain accounts with respect to which the advisory fee is based entirely or partially on performance. Performance fee arrangements may create a conflict of interest for the Investment Committee Member in that the Member may have an incentive to allocate the investment opportunities that he or she believes might be the most profitable to such other accounts instead of allocating them to the Fund.

Compensation to Investment Committee Members

Messrs. Partridge and Radcliffe indirectly own equity interests in the Adviser. Messrs. Enszer, Hunt and Guinn receive all of their compensation based on objective and subjective performance assessments of their work, which may take into account the size of the Master Fund and the other funds within the Fund Complex and the management and servicing fees charged thereon, as well as other funds managed by Salient affiliates for which they has significant involvement. Messrs. Partridge and Radcliffe also own, directly or indirectly, equity in the general partner of another fund, and are compensated directly on performance (based on an incentive allocation) and the size of the fund’s asset base. In addition, Messrs. Partridge and Radcliffe are partners and principal executive officers of Salient and related affiliates and subsidiaries (collectively, the “Salient Group”), which pays them a base salary and potential bonus. These individuals are responsible for the investment processes and management of the Salient Group. Messrs. Partridge and Radcliffe believe that to the extent that they are successful in their investment endeavors, the greater the number of assets over time and the more significant their compensation and equity value will be from the Salient Group.

Securities Ownership of Investment Committee Members

The table below shows the dollar range of the interests of the Fund beneficially owned as of June 30, 2013 by each Investment Committee Member.

Investment Committee Member	Master Fund	Institutional Fund	Other Feeders
Lee G. Partridge	None	None	None
Jeremy L. Radcliffe	None	$492,612	None
William K. Enszer	None	None	None
William B. Hunt	None	None	None
William R. Guinn	None	None	None

Portfolio Manager Compensation

Mr. Enszer has significant day-to-day duties in the management of the portfolio of the Master Fund, including providing analysis and recommendations on asset allocation and Investment Fund selection to the Investment Committee. Mr. Enszer receives all of his compensation based on objective and subjective performance assessments of his work, which may take into account the size of the Master Fund and the other funds within the Fund Complex and the management and servicing fees charged thereon, as well as other funds managed by Salient affiliates for which he has significant involvement.

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Securities Ownership of Portfolio Manager

The table below shows the dollar range of shares of the Fund beneficially owned as of June 30, 2013, by Mr. Enszer:

Master Fund	Institutional Fund
None	None

Investment Management Agreements

Under separate Investment Management Agreements, subject to the general supervision of the Board and in accordance with the investment objective, policies, and restrictions of the Fund, the Adviser provides each of the Fund and the Master Fund with ongoing investment guidance, policy direction and monitoring of the Fund and the Master Fund.

Each Investment Management Agreement provides that the Adviser (or its delegate) will, subject to the Board’s oversight, provide investment advice consistent with the Fund’s investment objective and policies; buy, retain and sell the Fund’s portfolio investments; select brokers or dealers to execute transactions; prepare and make available to the Fund all necessary research and statistical data; maintain or cause to be maintained all required books, records, and reports, and other information not maintained or furnished by another service provider of the Fund; and all other services required in connection with management of the Fund. The Adviser may, subject to Board approval and oversight, enter into a sub-advisory agreement (a “Sub-Advisory Agreement”), pursuant to which a sub-adviser (“Sub-Adviser”) would provide day-to-day investment management services with respect to such portions of the Fund’s assets as the Adviser in its discretion may determine from time to time. Provided that the Fund obtains the appropriate exemptive relief from the SEC, the Fund or the Adviser may enter into such sub-advisory arrangements with Sub-Advisers without first obtaining the approval of the Partners.

The Investment Management Agreement became effective as of March 10, 2004 with respect to the Master Fund and December 8, 2009 for the Fund. After an initial term, each Investment Management Agreement continues in effect from year to year thereafter, but only so long as the continuance of such agreement is specifically approved at least annually by the affirmative vote of (i) a majority of the Directors who are not parties to the Investment Management Agreement or interested persons of any party to the Investment Management Agreement, or of any entity regularly furnishing investment advisory services with respect to the Fund pursuant to an agreement with any party to the Investment Management Agreement, cast in person at a meeting called for the purpose of voting on such approval, and (ii) a majority of the Fund’s Directors or the holders of a majority of the outstanding voting securities of the Fund.

A discussion of the factors considered by the Directors when last approving the Investment Management Agreement is contained in the semi-annual shareholder report of the Fund and the Master Fund covering the period ending June 30, 2013.

Each Investment Management Agreement is terminable at any time without penalty upon 60 days’ written notice by the Board, by vote of holders of a majority of the outstanding voting securities of the Fund, or by the Adviser. Each Investment Management Agreement will terminate automatically with respect to the Fund in the event of its assignment, as defined in the Investment Company Act, provided that an assignment to a corporate successor to all or substantially all of the Adviser’s business or

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to a wholly owned subsidiary of such corporate successor which does not result in a change of actual control or management of the Adviser’s business will not be deemed to be an assignment for the purposes of the Investment Management Agreement. A Sub-Advisory Agreement would terminate upon the termination of the Investment Management Agreement.

Certain affiliates of the Adviser or a Sub-Adviser may provide services to the Investment Funds in compliance with applicable law. SEE “CONFLICTS OF INTEREST.”

Each Investment Management Agreement provides that, in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations to the Fund, the Adviser and any partner, director, officer or employee of the Adviser, or any of their affiliates, executors, heirs, assigns, successors or other legal representatives, will not be liable to the Fund for any error of judgment, for any mistake of law or for any act or omission by the person in connection with the performance of services to the Fund. Each Investment Management Agreement also provides for indemnification, to the fullest extent permitted by law, by the Fund or the Adviser, or any partner, director, officer or employee of the Adviser, and any of their affiliates, executors, heirs, assigns, successors or other legal representatives, against any liability or expense to which the person may be liable that arises in connection with the performance of services to the Fund, so long as the liability or expense is not incurred by reason of the person’s willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations to the Fund.

Prior Performance of the Master Fund

Appendix B contains performance information for the Master Fund since its commencement of operations as an investment company registered under the Investment Company Act, adjusted for the estimated expenses of the Fund. For the period prior to the Master Fund’s registration, the Appendix also shows the performance, adjusted for the estimated expenses of the Fund, of a private fund that was the Master Fund’s predecessor. The Master Fund’s predecessor was managed by the members of the Adviser’s Investment Committee and operated with substantially the same investment objectives, policies and strategies as the Master Fund. Prospective investors should carefully read the notes that accompany the investment performance data and charts in the Appendices. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE INVESTMENT RESULTS.

INVESTMENT MANAGEMENT FEE

In consideration of the advisory and other services provided by the Adviser to the Master Fund pursuant to the Investment Management Agreement, each of the Fund and the Master Fund pay the Adviser an Investment Management Fee, accrued monthly and payable monthly in arrears, equal to 1.00% on an annualized basis of the Master Fund’s average net assets as of each month-end. In the case of a partial month, the Investment Management Fee is based on the number of days during the month in which the Adviser invested Fund or Master Fund assets. The Investment Management Fee is paid to the Adviser out of the capital account of each limited partner of the Master Fund and will decrease the net profits or increase the net losses of the Master Fund that are credited to or debited against the capital accounts of its limited partners. The Investment Management Fee is computed as a percentage of the capital account of each limited partner of the Master Fund, valued based on the net assets of the Master Fund as of the last business day of each month, and is due and payable in arrears within five business days after the end of the quarter. Net assets means the total value of all assets of the Master Fund, less an amount equal to all accrued debts, liabilities and obligations of the Master Fund.

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So long as the Fund invests all of its investable assets in the Master Fund, the Fund will not directly pay the Adviser an investment management fee; however, the Fund’s Partners bear an indirect share of the Investment Management Fee through Fund’s investment in the Master Fund.

In 2010, 2011 and 2012, the Master Fund paid $54,407,790, $51,624,925, and $38,703,653 respectively, in investment management fees to the Adviser. In 2010, 2011 and 2012, the Fund indirectly paid (through its ownership in the Master Fund) paid $100,186, $414,361 and $471,815 respectively, in investment management fees to the Adviser.

PLACEMENT AGENTS

The Fund may engage one or more Placement Agents to assist it in placing Interests in the Fund. Investments in the Fund are not subject to any placement fee. See “PURCHASING INTERESTS.” The Adviser or its affiliates may pay a fee out of their own resources to Placement Agents and/or Sub-Placement Agents, as discussed below.

The Fund has entered into a placement agreement with Salient Capital, L.P., an affiliate of Salient, which is an affiliate of the Adviser, to serve as a Placement Agent and solicit investors. Executives of Salient may have a conflict of interest in recommending Interests to Salient clients; provided, however, that such executives shall be required to provide any such prospective client with notice of their relationship with Salient or an affiliate of Salient and the Fund.

A Placement Agent may engage one or more Sub-Placement Agents. The Adviser or its affiliates may pay a fee out of their own resources to Sub-Placement Agents. Sub-Placement Agents may charge an investor a fee for their services in conjunction with an investment in the Fund and/or maintenance of investor accounts. Such a fee is not a sales charge or placement fee imposed by the Fund or a Placement Agent, and will be in addition to any fees charged or paid by the Fund. The payment of any such fees, and their impact on a particular investor’s investment returns, would not be reflected in the returns of the Fund. Sub-Placement Agents or other financial intermediaries also may impose terms and conditions on investor accounts and investments in the Fund that are in addition to the terms and conditions set forth in this Memorandum. Such terms and conditions are not imposed by the Fund, the Placement Agent or any other service provider of the Fund. Any terms and conditions imposed by a Sub-Placement Agent or other financial intermediary, or operational limitations applicable to such parties, may affect or limit a Partner’s ability to subscribe for Interests or tender Interests for repurchase, or otherwise transact business with the Fund. Investors should direct any questions regarding fees, terms and conditions applicable to their accounts, or relevant operational limitations to the Sub-Placement Agent or other financial intermediary.

The Placement Agent to the Fund and other feeder funds that invest in the Master Fund has entered into arrangements with Sub-Placement Agents and other financial intermediaries. As of June 30, 2013, the two largest nonaffiliated Sub-Placement Agents serviced approximately 80.98% of the assets of all feeder funds that invest in the Master Fund. To the extent that substantial numbers of investors have a relationship with a particular Sub-Placement Agent, such Sub-Placement Agent may have the ability to influence investor behavior, which may affect the Fund. See “General Risks – Significant Placement Agents.”

Placement Agent Payments

The Adviser or its affiliates also may pay from their resources additional compensation to the Placement Agents and/or Sub-Placement Agents in connection with placement of Interests or servicing of Partners (if such Placement Agent or Sub-Placement Agent serves as a Sub-Administrative Servicing

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Agent and enters into a servicing agreement with the Servicing Agent, as discussed below). As to each investor referred by a Placement Agent and/or Sub-Placement Agent, or serviced by a Sub-Administrative Servicing Agent, such additional compensation may vary.

In some instances, these arrangements could result in receipt by the Placement Agents and/or Sub-Placement Agents and their respective personnel (who themselves may receive all or a substantial part of the relevant payments) of compensation in excess of that which may be available with regard to or paid in connection with their placement of shares or interests of a different investment fund. Any Partner or prospective investor with questions regarding these arrangements may obtain additional detail by contacting his or her intermediary directly. Prospective investors also should be aware that these payments could create incentives on the part of the intermediaries to view one fund more positively relative to other funds not making payments of this nature or making smaller such payments.

ADMINISTRATION

Administrative Servicing Agent

Endowment Advisers, L.P. serves as Administrative Servicing Agent of the Fund and has responsibility for such investor services and Fund administrative assistance as may include, but shall not be limited to, the provision of personal, continuing services to their customers who are investors in the Fund, establishment of investor accounts, communicating periodically with Partners and providing information about the Fund, the Fund’s Interests, and repurchase offers, handling correspondence from investors about their accounts, maintaining account records, receiving, aggregating and processing purchase and repurchase transactions, providing and keeping retirement plan records, acting as the sole Partner of record and nominee for Partners, providing beneficial owners with account statements, processing dividend payments, issuing reports to Partners and transaction confirmations, providing or procuring accounting services for the Fund and limited partner account, providing subaccounting services for Interests held beneficially, forwarding Partner communications to beneficial owners, receiving, tabulating and transmitting proxies executed by beneficial owners, general account administration activities, administering board, committee and shareholder meetings, preparing meeting minutes upon request, administering tender offers, including preparation of filings, assisting the Master Fund’s Valuation Committee upon request, maintaining Fund records, coordinating regulatory and other filings by the Fund, administering investor application review, administering compulsory redemptions upon request, and providing such other administration services as the Fund may request from time to time. In consideration for such services, the Fund will pay the Administrative Servicing Agent a quarterly Administrative Servicing Fee based on the month-end net assets of the Fund over the course of the applicable quarter. The Administrative Servicing Fee will equal 0.35% (on an annualized basis) of the Fund’s average net assets as of each month-end, is accrued monthly and payable quarterly in arrears, and is paid out of the Fund’s assets. The Fund paid $164,846 in Administrative Servicing Fees in 2012. The Administrative Servicing Agent may engage one or more Sub-Administrative Servicing Agents to provide some or all of the above services. Compensation to any Sub-Administrative Servicing Agent will be paid by the Servicing Agent. The Adviser or its affiliates also may pay a fee out of their own resources to Sub-Administrative Servicing Agents.

Although Servicing Fees are paid for the provision of ongoing investor services and are intended primarily for such services, to any extent that the Servicing Fees could be considered to support the distribution of the Fund, investors would be paying for distribution of Fund interests out of the Fund’s assets. To any extent that the Servicing Fees could be considered to support distribution of the Fund, the

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Adviser would not have to pay such expenses from its other resources, which is an incentive to maintain Servicing Fees and considered a conflict of interest. See “CONFLICTS OF INTEREST.”

Independent Administrator

Citi Fund Services, Inc. serves as the Independent Administrator of the Fund and the Master Fund and has the responsibility for providing administrative services, and for assisting the Fund with its operational needs, pursuant to an administration agreement (the “Administration Agreement”). Under the Administration Agreement, the Independent Administrator is responsible for, among other things: (1) maintaining a list of Partners and generally performing all actions related to the issuance and repurchase of Interests, if any; (2) providing the Fund with certain administrative, clerical, recordkeeping and bookkeeping services; (3) supervising the entities retained by the Fund, if any, to provide transfer agency services, services related to the payment of distributions, and accounting services; (4) computing the NAV of the Fund; (5) preparing, or overseeing the preparation of, monthly, quarterly, semi-annual and annual financial statements of the Fund, quarterly reports of the operations of the Fund and maintaining information to facilitate the preparation of annual tax returns; (6) supervising regulatory compliance matters and preparing certain regulatory filings; and (7) performing additional services, as agreed upon, in connection with the administration of the Fund. Subject to approval of the Board, the Independent Administrator may from time to time delegate its responsibilities under the Administration Agreement to one or more parties selected by the Independent Administrator.

In consideration for administrative services, the Master Fund pays the Independent Administrator a monthly administration fee (the “Administration Fee”) based on the month-end net assets of the Master Fund. The Administration Fee equals, (on an annualized basis), 0.06% of the Master Fund’s month-end net assets for the first $2 billion of net assets, 0.05% of the Master Fund’s month-end net assets for that portion of the Master Fund’s net assets that exceeds $2 billion and is equal to or less than $5 billion, 0.02% of the Master Fund’s month-end net assets for that portion of the Master Fund’s net assets that exceeds $5 billion and is equal to or less than $15 billion, and 0.0125% of the Master Fund’s month-end net assets for that portion of the Master Fund’s net assets that exceeds $15 billion. In addition, the Independent Administrator charges fees for legal, compliance, and certain other services, which amounted to $27,970, $11,454 and $15,610 in 2010, 2011 and 2012, respectively. The Master Fund paid $2,769,915, $2,702,019, and $2,115,865 in 2010, 2011 and 2012, respectively, in Administrative Fees. The Fund indirectly paid (through the Master Fund) $25,756 in Administration Fees in 2012. The Administration Fee is paid to the Independent Administrator out of the Master Fund’s assets, which will decrease the net profits or increase the net losses of the Fund because the fee will be partially and indirectly borne by the Fund as an indirect investor in the Master Fund.

CUSTODIAN

Custodial Trust Company (“CTC”), located at 101 Carnegie Center, Princeton, NJ 08540, a wholly owned subsidiary of JP Morgan Chase & Co., served as the custodian for the Master Fund until June 15, 2009, at which time JP Morgan Chase & Co. located at One American Lane, Floor 1, Greenwich, Connecticut, 06831 (the “Custodian”) succeeded CTC as custodian for the Master Fund. Pursuant to a custodian agreement (“Custodian Agreement”), the Custodian maintains a separate account in the name of the Master Fund, holds and transfers portfolio securities on account of the Master Fund, accepts receipts and makes disbursements of money on behalf of the Master Fund, collects and receives all income and other payments and distributions on account of the Master Fund’s securities. The Master Fund also may enter into principal transactions with one or more affiliates of the Custodian.

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FUND EXPENSES

The Fund and the Master Fund pay all of their expenses other than those that the Adviser or an affiliate of the Adviser assumes, if any. The expenses of the Fund (whether directly or indirectly through the Master Fund) include, but are not limited to, all fees and expenses related to portfolio transactions and positions made in Investment Funds, and enforcing rights in respect of such investments; the Investment Management Fee, the Administrative Servicing Fee and the Administration Fee; brokerage commissions; interest and fees on any borrowings; directors’ fees; directors’ and officers’ insurance; professional fees (including, without limitation, expenses of consultants, experts and specialists); research expenses; fees and expenses of outside legal counsel (including fees and expenses associated with the review of documentation for prospective investments by the Master Fund), including foreign legal counsel; accounting, auditing and tax preparation expenses; fees and expenses in connection with repurchase offers and any repurchases or redemptions of Interests; taxes and governmental fees (including tax preparation fees); fees and expenses of any custodian, subcustodian, transfer agent, and registrar, and any other agent of the Fund or the Master Fund; all costs and charges for equipment or services used in communicating information regarding the Fund’s or the Master Fund’s transactions among the Adviser and any custodian or other agent engaged by the Master Fund; bank services fees; expenses of preparing, printing, and distributing copies of this Memorandum, and any other sales material (and any supplements or amendments thereto), reports, notices, other communications to Partners, and proxy materials; expenses of preparing, printing, and filing reports and other documents with government agencies; expenses of Partners’ meetings; expenses of corporate data processing and related services; Partner recordkeeping and Partner account services, fees, and disbursements; expenses relating to investor and public relations; fees and expenses of the Independent Directors; insurance premiums; and extraordinary expenses such as litigation expenses. The Master Fund may need to sell portfolio securities to pay fees and expenses, which could affect investment returns to Partners of the Fund.

The Adviser bears all of its expenses and its own costs incurred in providing investment advisory services to the Fund, including travel and other expenses related to the selection and monitoring of Investment Funds. In addition, the Adviser is responsible for the payment of the compensation and expenses of those Directors and officers of the Fund affiliated with the Adviser, and making available, without expense to the Fund, the services of such individuals, subject to their individual consent to serve and to any limitations imposed by law.

The Fund’s Organizational Expenses were initially borne by the Adviser or an affiliate. For audited financial statement purposes, the Fund’s Organizational Expenses were expensed upon commencement of operations in accordance with GAAP. For capital account allocation purposes such expenses will be amortized over a period of sixty months or less from the date the expenses were incurred. Any offering costs will be amortized over a period of twelve months or less upon commencement of operations. The Fund’s direct Organizational Expenses were $48,461.

Investments in the Fund are not subject to a placement fee. As described above, the Adviser or its affiliates may pay a fee out of their own resources to Placement Agents, Sub-Placement Agents and Sub-Administrative Servicing Agents. Sub-Placement Agents may charge an investor a fee for their services in conjunction with an investment in the Fund and/or maintenance of investor accounts. Such a fee is not a sales charge imposed by or paid by the Fund. Investors should direct any questions regarding such fees to the relevant Sub-Placement Agent.

The Investment Funds will bear various fees and expenses in connection with their operations. These fees and expenses are similar to those incurred by the Fund. In addition, the Investment Funds will

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pay asset-based fees to their Investment Managers and generally may pay performance-based fees or allocations to their Investment Managers, which effectively reduce the investment returns of the Investment Funds. These expenses, fees, and allocations are in addition to those incurred by the Fund themselves. As an investor in the Investment Funds, the Fund will indirectly bear a portion of the expenses and fees of the Investment Funds.

The Fund’s fees and expenses will decrease the net profits or increase the net losses of the Fund that are credited to or debited against each Partner’s capital account.

PORTFOLIO TRANSACTIONS

The Fund

It is the policy of the Fund to obtain the best execution of its direct investment portfolio transactions, if any, taking into account certain factors as set forth below. In most instances, the Fund will purchase securities directly from an Investment Fund, and such purchases by the Fund may be, but are generally not, subject to transaction expenses. Nevertheless, the Fund anticipates that some of their portfolio transactions may be subject to expenses.

The Fund contemplates that, consistent with the policy of obtaining the best net result, any brokerage transactions of the Fund may be conducted through affiliates of the Adviser. The Board has adopted procedures in conformity with Section 17(e) of the Investment Company Act to ensure that all brokerage commissions paid to affiliates are fair and reasonable. As discussed below, the Investment Funds also may conduct brokerage transactions through affiliates of the Adviser. Transactions for the Fund will not be effected on a principal basis with the Adviser, the Placement Agent, any of their affiliates, or other affiliates of the Fund (unless permitted under the Investment Company Act). However, such entities may effect brokerage transactions for the Fund. These transactions would be effected in accordance with procedures adopted by the Fund pursuant to Section 17(e) of the Investment Company Act and rules and regulations promulgated thereunder. Among other things, Section 17(e) and those procedures provide that, when acting as broker for the Fund in connection with the sale of securities to or by the Fund, the Adviser, the Placement Agent, or their affiliates may receive compensation not exceeding: (i) the usual and customary broker’s commission for transactions effected on a national securities exchange; (ii) 2% of the sales price for secondary distributions of securities; and (iii) 1% of the sales price for other purchases or sales. Brokerage transactions effected by the Investment Funds with the Adviser, the Placement Agent, or any of their affiliates will not be subject to the limitations imposed by Section 17(e) of the Investment Company Act.

The Fund will bear any commissions or spreads in connection with its portfolio transactions. In placing orders, it is the policy of the Fund to obtain the best results taking into account the broker-dealer’s general execution and operational facilities, the type of transaction involved, and other factors such as the broker-dealer’s risk in positioning the securities involved. While the Adviser generally seeks reasonably competitive spreads or commissions, the Fund will not necessarily be paying the lowest spread or commission available. In executing portfolio transactions and selecting brokers or dealers, the Adviser seeks to obtain the best overall terms available for the Fund. In assessing the best overall terms available for any transaction, the Adviser considers factors deemed relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. The overall reasonableness of brokerage commissions paid is evaluated by the Adviser

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based upon its knowledge of available information as to the general level of commission paid by other institutional investors for comparable services. Transactions on U.S. stock exchanges and on some foreign stock exchanges involve the payment of negotiated brokerage commissions. On the great majority of foreign stock exchanges, however, commissions are fixed. No stated commission is generally applicable to securities traded in over-the-counter markets, but the prices of those securities include undisclosed commissions or mark-ups.

The Investment Funds

The Investment Funds incur transaction expenses in the management of their portfolios, which will decrease the value of the Fund’s investment in the Investment Funds. In view of the fact that the investment program of certain of the Investment Funds may include trading as well as investments, short-term market considerations will frequently be involved, and it is anticipated that the turnover rates of the Investment Funds may be substantially greater than the turnover rates of other types of investment vehicles. In addition, the order execution practices of the Investment Funds may not be transparent to the Fund. Each Investment Fund is responsible for placing orders for the execution of its portfolio transactions and for the allocation of its brokerage. The Adviser will have no direct or indirect control over the brokerage or portfolio trading policies employed by the investment advisers of the Investment Funds. The Adviser expects that each Investment Fund will generally select broker-dealers to effect transactions on the Investment Fund’s behalf substantially in the manner set forth below.

Each Investment Fund generally will seek reasonably competitive commission rates. However, Investment Funds will not necessarily pay the lowest commission available on each transaction, and may engage in transactions with broker-dealers based on different criteria than those considered by the Fund. Investment Funds may not be subject to the same regulatory restrictions on principal and agency transactions. The Fund will indirectly bear the commissions or spreads in connection with the portfolio transactions of the Investment Funds.

No guarantee or assurance can be made that an Investment Fund’s brokerage transaction practices will be transparent or that the Investment Fund will establish, adhere to, or comply with its stated practices. However, as the Investment Funds generally are not investment companies registered under the Investment Company Act, they may select brokers on a basis other than that outlined above and may receive benefits other than research or that benefit the Investment Fund’s investment adviser or its affiliates rather than the Investment Fund.

As with the Fund, Investment Funds may make investments directly in the issuers of their underlying securities, and in some instances may not be subject to transaction expenses.

VOTING

Each Partner will have the right to cast a number of votes based on the value of such Partner’s investment percentage at any meeting of Partners called by the (i) Board or (ii) Partners holding at least a majority of the total number of votes eligible to be cast by all Partners. Partners will be entitled to vote on any matter on which shareholders of a registered investment company organized as a corporation would be entitled to vote, including the selection of members of the Board and the approval of the Investment Management Agreement. Notwithstanding their ability to exercise their voting privileges, Partners are not entitled to participate in the management or control of the Fund’s business, and may not act for or bind the Fund.

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CONFLICTS OF INTEREST

The investment activities of the Adviser, the Investment Managers, and their respective affiliates (including the Principal), and their directors, trustees, managers, members, partners, officers, and employees (collectively, the “Related Parties”), for their own accounts and other accounts they manage, may give rise to conflicts of interest that could disadvantage the Fund, its Partners, and the Master Fund. The Adviser and other Related Parties provide other investment management services to other funds and discretionary managed accounts that follow an investment program certain aspects of which are similar to certain aspects of the Fund’s investment program or that replicate certain asset classes within the Fund’s investment program. The Adviser and other Related Parties, are involved with a broad spectrum of financial services and asset management activities, and may, for example, engage in the ordinary course of business in activities in which their interests or the interests of their clients may conflict with those of the Fund or the Partners. The trading activities of the Related Parties are carried out without references to positions held directly or indirectly by the Fund. In addition and more significantly, the Related Parties may be involved with other investment programs, investment partnerships or separate accounts that use Investment Managers or Investment Funds that are either already a part of the Master Fund’s portfolio or that may be appropriate for investment by the Master Fund. In some cases, these Investment Funds may be capacity constrained. The Related Parties are under no obligation to provide the Master Fund with capacity with respect to these Investment Funds and, accordingly, the Master Fund may not have exposure or may have reduced exposure with respect to these Investment Funds. The Master Fund’s and the Fund’s operations may give rise to other conflicts of interest that could disadvantage the Fund and the Partners.

Salient provides wealth management and advisory services to its clientele. As a result, the Related Parties and their respective affiliates, directors, partners, trustees, managers, members, officers and employees, including those who may be involved in the investment activities and business operations of the Fund and the Master Fund, are engaged in businesses, and have interests, other than that of managing the Fund and the Master Fund. These are considerations of which investors in the Fund should be aware, and which may cause conflicts that could disadvantage the Fund. These activities and interests include potential multiple advisory, transactional, financial and other interests in securities, instruments and companies that may be purchased or sold by the Master Fund. Present and future activities of the Related Parties may give rise to additional conflicts of interest.

In acquiring an Interest in the Fund, a Partner is deemed to have acknowledged and assented to the existence of potential conflicts of interest relating to the Related Parties and to the Fund’s and the Master Fund’s operating in the face of these conflicts.

Certain of the Related Parties may participate in the fixed income, equity and other markets in which the Fund and Master Fund directly or indirectly invests. In addition, certain of the Related Parties could engage as investors, advisers, agents and principals, in relation to certain of the same securities, issuers, currencies and other instruments in which the assets of the Fund (through the Master Fund or the Investment Funds) may be invested, and these activities may have a negative effect on the Fund.

Certain of the Related Parties may give advice, and take action, with respect to any of its clients or proprietary or other accounts, that may conflict with the advice given to the Fund, or may involve a different timing or nature of action taken than with respect to the Fund. Such transactions, whether in respect of proprietary accounts, customer accounts other than those advised by the Adviser, or certain other accounts that are advised by the Adviser, may affect the prices and availability of the securities,

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currencies and other instruments in which the Fund (directly or indirectly through the Master Fund and the Investment Funds) may invest. In addition, accounts or funds managed by the Related Parties may compete with the Fund (directly or indirectly through the Master Fund and the Investment Funds) for investment opportunities. As a result, transactions for the Fund (directly or indirectly through the Master Fund and the Investment Funds) may be effected at prices or rates that may be less favorable than would have been the case absent such conflicts, and the Fund may be negatively affected. The results of the investment activities of the Fund may differ significantly from the results achieved by Related Parties for accounts or accounts managed by them and from the results achieved by the Adviser for other advised accounts. This may have a negative effect on the Fund.

Subject to applicable regulatory requirements, the Fund may invest (directly or indirectly through the Master Fund and the Investment Funds) in securities of companies affiliated with the Related Parties or in which certain of the Related Parties have an equity or participation interest. The purchase, holding and sale of such investments by the Fund (directly or indirectly through the Master Fund and the Investment Funds) may enhance the profitability of the Related Parties’ own investments in such companies.

Certain of the Related Parties may buy and sell securities or other investments for their own accounts, including interests in Investment Funds, and conduct other activities that may cause the same types of conflicts as those conflicts described herein applicable to the proprietary, management, advisory and other activities of Related Parties. As a result of differing trading and investment strategies or constraints, positions may be taken by directors, officers and employees and affiliates of the Adviser that are the same, different from or made at different times than positions taken for the Fund and the Master Fund or an Investment Fund in which the Fund participates. In connection with the above, each of the Fund and the Adviser has adopted a code of ethics (collectively, the “Codes of Ethics”) in compliance with Section 17(j) of the Investment Company Act and regulations thereunder that restrict securities trading in the personal accounts of investment professionals and others who normally come into possession of information regarding the Fund’s portfolio transactions. See “CODES OF ETHICS” below.

Accounts or investment funds managed or advised by Related Parties (including those managed by the Adviser) may have investment objectives that are similar to those of the Fund and/or may engage in transactions in the same types of securities, currencies and instruments as the Fund, and from which the Adviser or the Related Parties may receive more or less compensation for its services than the Adviser receives from the Fund. As a result, Related Parties and accounts or funds which Related Parties may manage or advise (including, without limitation, those funds discussed in greater detail below), or in which Related Parties and its personnel may have a proprietary interest, may compete with the Fund for appropriate investment opportunities. For example, Investment Managers may limit the number of investors in or size of an Investment Fund or the amount of assets and accounts that they will manage. The allocation of such opportunities among Related Parties’ funds and accounts may present conflicts, as may the potentially different investment objectives of different investors. In determining such allocations, a number of factors may be considered, which may include the relative sizes of the applicable funds and accounts and their expected future sizes, the expected future capacity of the applicable Investment Funds, the funds available for allocation at any given time and the investment objectives of the Fund and such other funds and accounts. Allocation of investment opportunities among the Fund and other funds and accounts will be made by the Adviser or by Related Parties in their capacities as the managers of such funds and accounts in a reasonable and equitable manner, as determined by them in their sole discretion. The disposition of any such investments is subject to the same conditions.

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The Related Parties are not under an obligation to share investment opportunities, ideas or strategies with the Fund. The Related Parties may keep any profits, commissions, and fees accruing to them in connection with its activities (including activities described in this “CONFLICTS OF INTEREST” section and its other activities) for themselves and their clients, and the fees or allocations from the Fund will not be reduced thereby.

Subject to applicable regulatory requirements, Related Parties from time to time may invest proprietary or client capital with investment advisers, including Investment Managers selected by the Fund, and may also invest in Investment Funds in which the Fund invests on terms different than the interest held by the Fund. In addition, Related Parties may have other business relationships with such Investment Managers. Related Parties may seek to perform financial services for, and will receive compensation from, Investment Funds, the sponsors of Investment Funds, companies in which Investment Funds invest, or other parties in connection with transactions related to those investments, or otherwise. This compensation could include financial advisory fees, as well as other types of compensation. Compensation for other financial services will not be shared with the Fund or the Partners and may be received before the Fund realizes a return on its investment.

Related Parties may, from time to time, invest in the Fund. Any repurchase of Interests held by the Related Parties will be effected pursuant to an offer to repurchase Interests which is made by the Fund to all of the Partners. Such repurchases may have an adverse effect on the Fund’s investment strategies, the breadth of its allocation of investments and on the fees, expenses and costs incurred by the Partners.

To the extent permitted by applicable law, including, without limitation, the Investment Company Act, an Investment Fund may enter into transactions and invest in futures, securities, currencies, swaps, options, forward contracts or other instruments on behalf of the Fund in which one of the Related Parties, acting as principal or on a proprietary basis for its customers, serves as the Counterparty. The Adviser and Related Parties will not, directly or indirectly, purchase securities or other property from, or sell securities or other property to, the Fund. However, subject to compliance with applicable law, including without limitation, the Investment Company Act, the Fund may engage in transactions with accounts which are affiliated with the Fund because they are advised by Related Parties or because they have common officers, directors or managers. Such transactions would be made in circumstances where the Adviser has determined that it would be appropriate for the Fund to purchase and the Adviser or another client of the Related Parties to sell, or the Fund to sell and another client of the Related Parties to purchase, the same security or instrument on the same day.

Purchases or sales of securities for the account of the Fund or an Investment Fund or through a sub-adviser may be bunched or aggregated with orders for other accounts of the Related Parties, including other investment partnerships (including those in which the Related Parties or their employees have a beneficial interest). Because of the prevailing trading activity, it is frequently not possible to receive the same price or execution on the entire volume of securities purchased or sold. When this occurs, the various prices may be averaged, which may be disadvantageous to the Fund.

Subject to the Fund first obtaining any necessary exemptive relief from the provisions of the Investment Company Act, the Adviser may invest the Fund’s assets in Investment Funds or managed accounts managed by Investment Managers affiliated with the Related Parties. There can be no assurance that such exemptive relief will be sought or, if sought, that it will be granted.

Although the Administrative Servicing Fee is paid for the provision of ongoing investor services and is intended primarily for such services, to any extent that the Administrative Servicing Fee could be

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considered to support the distribution of the Fund, Partners would be paying for distribution of Fund interests out of the Fund’s assets. To any extent that the Administrative Servicing Fee could be considered to support distribution of the Fund, the Adviser would not have to pay such expenses from its other resources, which is an incentive to maintain the Administrative Servicing Fee and considered a conflict of interest in this respect. An investment adviser would benefit from the payment by an investment company of distribution expenses, including compensation to intermediaries, to the extent that an investment adviser does not itself need to make such payments.

CONFLICTS OF INTEREST RELATING TO THE INVESTMENT MANAGERS

The Adviser anticipates that each Investment Manager will consider participation by the applicable Investment Fund in all appropriate investment opportunities that are also under consideration for investment by the Investment Manager for other investment funds and accounts managed by the Investment Manager (“Investment Manager Accounts”) that pursue investment programs similar to that of the applicable Investment Fund or the Fund. However, there can be no guarantee or assurance that Investment Managers will follow such practices or that an Investment Manager will adhere to, and comply with, its stated practices, if any. In addition, circumstances may arise under which an Investment Manager will cause its Investment Manager Accounts to commit a larger percentage of their assets to an investment opportunity than to which the Investment Manager will commit assets of the Investment Fund. Circumstances also may arise under which an Investment Manager will consider participation by its Investment Manager Accounts in investment opportunities in which the Investment Manager intends not to invest on behalf of the Investment Fund, or vice versa.

Situations may occur where the Fund could be disadvantaged by investment activities conducted by the Investment Manager for the Investment Manager Accounts. These situations may arise as a result of, among other things: (1) legal restrictions on the combined size of positions that may be taken for an Investment Fund in which the Fund and/or Investment Manager Accounts participate (collectively, “Co-Investors” and, individually, a “Co-Investor”), limiting the size of the Investment Fund’s position; (2) legal prohibitions on the Co-Investors’ participating in the same instruments; (3) the difficulty of liquidating an investment for a Co-Investor when the market cannot absorb the sale of the combined positions; and (4) the determination that a particular investment is warranted only if hedged with an option or other instrument and the availability of those options or other instrument is limited.

An Investment Manager may from time to time cause an Investment Fund to effect certain principal transactions in securities with one or more Investment Manager Accounts, subject to certain conditions. For example, these transactions may be made in circumstances in which the Investment Manager determined it was appropriate for the Investment Fund to purchase and an Investment Manager Account to sell, or the Investment Fund to sell and the Investment Account to purchase, the same security or instrument on the same day.

Each Investment Manager, its affiliates and their directors, officers and employees, may buy and sell securities or other investments for their own accounts, including interests in Investment Funds, and may have conflicts of interest with respect to investments made on behalf of an Investment Fund in which the Master Fund participates. As a result of differing trading and investment strategies or constraints, positions may be taken by directors, officers, employees and affiliates of the Investment Manager that are the same as, different from or made at different times than positions taken for the Investment Fund in which the Fund participates. Future investment activities of the Investment Managers, or their affiliates, and the principals, partners, directors, officers or employees of the foregoing, may give rise to additional conflicts of interest that could disadvantage the Fund and its Partners.

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Investment Managers or their affiliates may from time to time provide investment advisory or other services to private investment funds and other entities or accounts managed by the Investment Manager or its affiliates. In addition, Investment Managers or their affiliates may from time to time receive research products and services in connection with the brokerage services that brokers (including, without limitation, affiliates of the Investment Manager) may provide to one or more Investment Manager Accounts.

CODES OF ETHICS

The Fund, the Adviser and the Placement Agent each has adopted a code of ethics as required by applicable law, which is designed to prevent affiliated persons of the Fund, the Adviser and the Placement Agent from engaging in deceptive, manipulative or fraudulent activities in connection with securities held or to be acquired by the Fund (which also may be held by persons subject to a code of ethics). There can be no assurance that the codes of ethics will be effective in preventing such activities. Each code of ethics may be examined on the Internet from the SEC’s website at www.sec.gov. In addition, each code of ethics can be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Copies of these codes of ethics may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, Washington, DC 20549-0102.

The Adviser’s code of ethics allows personnel to invest in securities for their own account, but requires compliance with the code’s provisions. The code of ethics requires prior approval of purchases of securities in initial public offerings or private placements.

LIQUIDITY REQUIREMENTS

Certain asset classes and/or Investment Funds that have the potential of providing investors with attractive risk-adjusted returns over time have limitations on liquidity (e.g., private equity, private energy, private real estate and certain other Investment Funds with limitations on the ability of an investor to withdraw capital, such as long lock-up periods). Accordingly, the Investment Funds in which the Master Fund invests may have limitations on withdrawals, such as quarterly withdrawals with notice provisions or even more limited withdrawal rights or none at all (such as in the case of self-liquidating funds, where the investor typically only receives liquidity as the fund liquidates underlying investments).

The Fund’s portfolio is not subject to any minimum liquidity requirement imposed by regulation. The Fund’s policy with respect to the liquidity of the Master Fund’s investment portfolio is such that, as of any calendar quarter-end, the Master Fund ordinarily will not have more than 75% of its capital invested in Investment Funds that either (i) do not provide liquidity and are self-liquidating (such as private equity funds), or (ii) allow for periodic withdrawals on an annual or lesser frequency. The Master Fund includes in this category Investment Funds that only make distributions as the underlying portfolio’s assets or investments are liquidated (i.e., the investor in such Investment Funds does not have the right to request withdrawals on any specified periodic basis), which may include, without limitation, private equity funds, real estate funds, or natural resources or energy funds that only make distributions when an investment is monetized or generates cash flow through distributions, dividends, etc. The Master Fund will calculate the percentage of its assets invested in this category using the lesser of: (a) the amount of called and invested capital or (b) the fair value of the interests in such Investment Funds on the financial statements of the Master Fund. The Master Fund also includes in this category Investment Funds that

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allow for periodic withdrawals at the time of investment but have lengthy redemption periods or extended lock-up periods remaining. Sidepockets and/or special purpose vehicles (and any similar interests or investments, including certain types of distributions in-kind) remaining upon redemption from an Investment Fund (collectively, “Residual Interests”) and having anticipated lengthy and/or unknown periods of existence shall also each be included.

The remaining portion of the Master Fund’s investment portfolio may be invested in liquid assets and Investment Funds that have withdrawal rights more frequent than annually, for example, quarterly, and not more than a one-year lock-up remaining. Investment Funds with investor-level gates, fund-level gates, redemption fees and/or penalties, sidepockets and/or special purpose vehicles housing less liquid investments may be included in this category. Ordinarily, standard and customary audit hold-backs which remain after redeeming from an Investment Fund will be classified within this category. Any other holdings which remain (e.g., “sidepockets” and/or other Residual Interests) may be included within the 75% category discussed above.

In measuring these liquidity categories, the Master Fund will make its calculation on a gross asset basis divided by the sum of the total Master Fund assets in the respective categories. If at the end of any calendar quarter the Master Fund’s portfolio is invested outside of the above categories, the Master Fund will endeavor to bring its portfolio into conformance, taking into consideration the best interests of all investors. During such time the Master Fund will not commit any additional capital to more illiquid investments that would be included within the 75% category. During any such time, however, the Master Fund may fund existing capital commitments to Investment Funds.

Investment in each particular tranche of an Investment Fund, depending upon such Investment Fund’s structure, may be treated separately for purposes of the above categories. In general, Investment Funds may be initially categorized as less liquid and, through the passage of time or changed circumstances, may be characterized as more liquid and thus outside the 75% category. Likewise, an Investment Fund may have been initially categorized as more liquid and, through the passage of time or changed circumstances, may be characterized as less liquid and thus within the 75% category. The Board in the future may approve changes to the above liquidity categories without the vote of the Partners, subject to ninety (90) days’ prior written notice to Partners of such change.

THE ADVISER USES THE LIQUIDITY CHARACTERIZATIONS TO STRUCTURE THE MASTER FUND’S PORTFOLIO IN A MANNER THAT THE ADVISER REASONABLY BELIEVES WILL ENABLE IT (AND CONSEQUENTLY THE FUND) TO MAKE LIMITED PERIODIC REPURCHASE OFFERS FOR INTERESTS. HOWEVER, SUCH DEFINITIONS SHOULD NOT BE CONSTRUED BY PARTNERS OR PROSPECTIVE INVESTORS TO MEAN THAT THE FUND PROVIDES INVESTORS WITH LIQUIDITY. THE INTERESTS WILL NOT BE LISTED ON ANY SECURITIES EXCHANGE AND IT IS NOT ANTICIPATED THAT A SECONDARY MARKET FOR THE INTERESTS WILL DEVELOP. THE INTERESTS ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE FUND’S LIMITED PARTNERSHIP AGREEMENT. ALTHOUGH THE FUND MAY OFFER TO REPURCHASE INTERESTS FROM TIME TO TIME, INTERESTS WILL NOT BE REDEEMABLE AT A PARTNER’S OPTION NOR WILL THEY BE EXCHANGEABLE FOR INTERESTS OR SHARES OF ANY OTHER FUND. AS A RESULT, AN INVESTOR MAY NOT BE ABLE TO SELL OR OTHERWISE LIQUIDATE HIS OR HER INTEREST. THE INTERESTS ARE APPROPRIATE ONLY FOR THOSE INVESTORS WHO DO NOT REQUIRE A LIQUID INVESTMENT AND WHO ARE AWARE OF THE RISKS INVOLVED IN INVESTING IN THE FUND. TO THE EXTENT THAT AN INVESTOR REQUIRES

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THAT A PORTION OF ITS INVESTMENT PORTFOLIO PROVIDE LIQUIDITY, SUCH PORTION SHOULD NOT BE INVESTED IN THE FUND. SEE “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE – INVESTMENT FUNDS’ SECURITIES ARE GENERALLY ILLIQUID.”

A PARTNER OR POTENTIAL INVESTOR MAY REQUEST THE FUND’S MOST RECENT PORTFOLIO LIQUIDITY SCHEDULE BY CONTACTING THE FUND’S SALES DESK AT 1-800-725-9456. THE FUND PROVIDES PARTNERS WITH SUCH REPORTING PERIODICALLY, WHICH INCLUDES INFORMATION ON CURRENT HOLDINGS OF LONG-TERM ILLIQUID ASSETS, SUCH AS PRIVATE EQUITY FUNDS, REAL ESTATE FUNDS AND NATURAL RESOURCES OR ENERGY FUNDS, AND MAY INCLUDE METRICS RELATED TO SUCH HOLDINGS WITHIN THE PORTFOLIO. TO REQUEST THE MOST RECENT SUCH REPORT WITHIN THE LIQUIDITY SCHEDULE, PLEASE CONTACT THE FUND’S SALES DESK AT 1-800-725-9456.

OUTSTANDING SECURITIES

The Fund*

Title of Class	Amount Authorized	Amount Held by Registrant or for its Account	Amount Outstanding Exclusive  of Amount Shown Under “Amount Held by Registrant or for its Account”
Limited Partnership Interests	Unlimited	N/A	$38,637,573

* As of June 30, 2013

As of June 30, 2013, the Master Fund is not aware of any person who owns of record or beneficially 5% or more of its outstanding interests (other than certain feeder funds that invest in the Master Fund).

As of June 30, 2013, the following persons own of record or beneficially 5% or more of the Fund’s outstanding interests:

Partner	Percent of the Assets  Held by the Partner
Darla S. Grazdan 2602 Sara Ridge Lane Katy, TX 77450	6.29%
JWT Cash LLC 11985 N Vintha Canyon Rd Neola, UT 84053	5.22%

PERFORMANCE INFORMATION

Sales literature relating to the Fund and reports to Partners may include quotations of investment performance of the Fund. In these materials, the Fund’s performance will normally be portrayed as the net return to an investor during each month or quarter of the period for which investment performance is

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being shown. Cumulative performance and year-to-date performance computed by aggregating quarterly or monthly return data also may be used. Investment returns will be reported on a net basis, after all fees and expenses. Other methods also may be used to portray the Fund’s investment performance.

The Fund’s performance results will vary from time to time, and past results are not necessarily indicative of future investment results.

Comparative performance information, as well as any published ratings, rankings and analyses, reports and articles discussing the Fund, also may be used to provide to prospective investors in the Fund, including data and materials prepared by recognized sources of such information. Such information may include comparisons of the Master Fund’s investment performance to the performance of recognized market indices, including but not limited to the S&P 500, the Russell 2000, or other lesser known indices (including indices of other pooled investment vehicles investing in hedge funds and private equity venture and buyout funds). Comparisons also may be made to economic and financial trends and data that may be relevant for investors to consider in determining whether to invest in the Fund.

REPURCHAS ES OF INTERESTS

No Right of Redemption

No Partner (or other person holding an Interest or a portion of an Interest acquired from a Partner) will have the right to require the Fund to redeem its Interest or any portion thereof. No public market exists for the Interests, and none is expected to develop. Consequently, Partners may not be able to liquidate their investment other than as a result of repurchases of Interests by the Fund, as described below.

Periodic Repurchases

The Board, from time to time and in its sole discretion, may determine to cause the Fund to offer to repurchase Interests from Partners, including the Adviser, pursuant to written tenders by Partners. However, the Fund’s assets consist primarily of its interest in the Master Fund. Therefore, in order to finance the repurchase of Interests pursuant to repurchase offers, the Fund may find it necessary to liquidate all or a portion of its interest in the Master Fund. Because interests in the Master Fund, the Fund may withdraw a portion of its interest only pursuant to repurchase offers by the Master Fund. The Fund will not conduct a repurchase offer for Interests unless the Master Fund simultaneously conducts a repurchase offer for its limited partnership interests. In addition, the Adviser, which also serves as investment adviser to the Master Fund, may recommend to the Master Fund’s Board that the Master Fund conduct repurchase offers on a quarterly basis in order to permit the Fund to conduct repurchase offers for Interests. However, the Master Fund’s Board retains the discretion to approve such requests and, therefore, there are no assurances that the Master Fund’s Board will, in fact, decide to undertake any repurchase offer. The Fund cannot make a repurchase offer larger than a repurchase offer made by the Master Fund. The Master Fund will make repurchase offers, if any, to the Fund and to the other investors in the Master Fund on similar terms, which may affect the size of the Fund’s repurchase offer. Consequently, the Fund will conduct repurchase offers, if any, on a schedule and in amounts that will depend on the Master Fund’s repurchase offers. In addition, the Fund may determine not to conduct a repurchase offer each time the Master Fund conducts a repurchase offer.

It is not anticipated that the Board will consider a repurchase of Interests until the fourth quarter of 2014 at the earliest. Any future repurchase offers will likely offer to purchase a substantially smaller percentage of the Fund’s NAV than that which the Fund has offered to purchase historically.

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Subject to the discussion above, the aggregate value of Interests to be repurchased at any time will be determined by the Board in its sole discretion, and such amount may be a percentage of the value of the Fund’s outstanding Interests. If a repurchase offer is oversubscribed by Partners and not amended to increase the offer, the Fund will repurchase only a pro rata portion of the Interest tendered by each Partner. In determining whether the Fund should offer to repurchase Interests from Partners pursuant to written requests, the Board will consider the recommendation of the Adviser. In determining whether to accept the Adviser’s recommendation (in whole or in part), the Board considers the following factors, among others:

— whether any Partners have requested to tender Interests or portions of Interests to the Fund;

— as discussed in more detail below, the composition and liquidity of the Fund’s assets (including fees and costs associated with withdrawing from Investment Funds and/or disposing of assets allocated to Sub-Advisers);

— the investment plans and working capital of the Fund;

— the relative economies of scale of the repurchase requests with respect to the size of the Fund;

— the past practice of the Fund in repurchasing Interests;

— the availability of information as to the value of the Fund’s interests in underlying Investment Funds;

— the condition of the securities markets and the economy generally, as well as political, national or international developments or current affairs; and

— the anticipated tax consequences of any proposed repurchases of Interests.

As a general matter, the Master Fund will be unable to make withdrawals from many of its assets to make payment for its limited partnership interests that are tendered for repurchase. Consequently, to the extent the Fund conducts repurchases, the proportion of the Master Fund’s consisting of more illiquid assets will fluctuate with, among other things, (i) new capital contributions in the Master Fund and (ii) the repurchase by the Master Fund of its limited partnership interests. If the Master Fund must make withdrawals from less liquid assets to make payment for limited partnership interests tendered for repurchase, and does not receive new capital contributions with which it can make new purchases of more liquid assets, the proportion of the Master Fund’s portfolio that consists of more illiquid assets will increase. Such an increase could be detrimental to the Master Fund and its limited partners, and thus the Fund and its Partners, by, for example, (i) preventing the Master Fund from pursuing its investment program, (ii) exposing the limited partners that remain invested in the Master Fund to the risks associated with an increasingly illiquid portfolio, or (iii) limiting the Master Fund’s and the Fund’s capacities to repurchase limited partnership interests. As a result, the Master Fund, and thus the Fund, will conduct a repurchase offer only if the Master Fund’s Board determines that payment for tendered limited partnership interests would not disrupt the Master Fund’s investment program or adversely affect limited partners that remain invested in the Master Fund.

Many Investment Funds have lengthened the lock-up periods during which an investor must hold an investment in an Investment Fund and the Adviser believes that this trend may

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continue. If this trend does continue, it could negatively impact the liquidity of the Master Fund (and, consequently the Fund), which may force the Adviser to forgo investing in certain Investment Funds that are attractive due to the longer lock-up periods being employed, or require that the Master Fund modify its current liquidity guidelines. The Board has discretion over future changes to the Master Fund’s portfolio liquidity requirements, including changes which could increase the illiquidity of the portfolio, without a vote of Partners. “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Industry Trend Towards Longer Lock-Ups; Modification of Portfolio Liquidity Requirements”.

The Board will determine if the Fund will offer to repurchase Interests (or portions of Interests) pursuant to written tenders only on terms that the Board deems to be fair to the Fund and the Partners. The amount due to any Partner whose Interest (or portion thereof) is repurchased will be equal to the value of the Partner’s capital account (or portion thereof being repurchased) based on the Fund’s NAV, as of the Valuation Date (as defined below), after giving effect to all allocations made as of that date. If the Board determines that the Fund will offer to repurchase Interests, written notice will be provided to Partners that describes the commencement date of the repurchase offer, specifies the date on which repurchase requests must be received by the Fund, and contains other information Partners should consider in deciding whether and how to participate in such repurchase opportunity. The expiration date of the repurchase offer (the “Expiration Date”) will be a date set by the Board occurring no sooner than 20 business days after the commencement date of the repurchase offer, provided that such Expiration Date may be extended by the Board in its sole discretion. The Fund generally will not accept any repurchase request received by it or its designated agent after the Expiration Date.

Payment by the Fund upon a repurchase of Interests will be made in part or in whole in cash or securities of equivalent value. The Fund does not generally expect to distribute securities as payment for repurchased Interests except in unusual circumstances, including if making a cash payment would result in a material adverse effect on the Fund or the Partners, or if the Fund has received distributions from Investment Funds in the form of securities that are transferable to the Partners. Securities that are distributed in-kind in connection with a repurchase of Interests may be illiquid. Any in-kind distribution of securities will be valued in accordance with the Fund’s valuation procedures and LP Agreement and will be distributed to all tendering Partners on a proportional basis. See “CALCULATION OF NET ASSET VALUE; VALUATION.”

In light of liquidity constraints associated with the Fund’s investments in Investment Funds and the possibility that the Fund may have to effect withdrawals from those Investment Funds to pay for Interests being repurchased, the Fund expects to employ the following repurchase procedures:

— The value of Interests (or portions of Interests) being repurchased will be determined as of a date, determined by the Board, in its sole discretion, which in no event is earlier than 30 days, after the Expiration Date (the “Valuation Date”).

— The initial payment (the “Initial Payment”) in respect of a repurchase will be made in an amount equal to at least 95% of the estimated value of the repurchased Interest (or portion thereof), determined as of the Valuation Date. The Initial Payment will be made as of the later of (1) the 30th day after the Valuation Date, or (2) in the sole discretion of the Adviser, if the Fund has requested withdrawals of its capital from any Investment Funds in order to fund the repurchase of Interests, within ten business days after the Fund has received at least 95% of the aggregate amount so requested to be withdrawn by the Fund from the Investment Funds (the “Investment Fund Payment Date”).

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— The second and final payment (the “Final Payment”) is expected to be in an amount equal to the excess, if any, of (1) the value of the repurchased Interest (or portion thereof), determined as of the Valuation Date based upon the results of the annual audit of the Fund’s financial statements for the fiscal year in which the Valuation Date of such repurchase occurred, over (2) the Initial Payment. The Adviser anticipates that the annual audit of the Fund’s financial statements will be completed within 60 days after the end of each fiscal year of the Fund and that the Final Payment will be made as promptly as practicable after the completion of such audit.

— Although the amounts required to be paid by the Fund will generally be paid in cash, the Fund may under certain limited circumstances pay all or a portion of the amounts due by an in-kind distribution of securities.

— Notwithstanding anything in the foregoing to the contrary, in the event that a Partner has requested the repurchase of a portion of its Interest which would result in such Partner continuing to hold at least 5% of the value of its Interest as of December 31 of the fiscal year ending immediately prior to the fiscal year in which such request was made, the Final Payment in respect of such repurchase shall be made on or before the 60th day after the Valuation Date, provided that if the Fund, in the sole discretion of the Adviser, has requested withdrawals of its capital from any Investment Funds in order to fund the repurchase of Interests, such payment may be postponed until 10 business days after the applicable Investment Fund Payment Date. Such payment shall be in an amount equal to the excess, if any, of (1) the value of the repurchased Interest (or portion thereof), determined as of the Valuation Date, based upon information known to the Fund as of the date of the Final Payment, over (2) the Initial Payment. If, based upon the results of the annual audit of the Fund’s financial statements for the fiscal year in which the Valuation Date of such repurchase occurred, it is determined that the value at which the Interest was repurchased was incorrect, the Fund shall, as promptly as practicable after the completion of such audit, decrease such Partner’s capital account balance by the amount of any overpayment, or increase such Partner’s capital account balance by the amount of any underpayment, as applicable.

The repurchase of Interests is subject to regulatory requirements imposed by the SEC. The Fund’s repurchase procedures are intended to comply with such requirements. However, in the event that the Board determines that modification of the repurchase procedures described above is required or appropriate, the Board will adopt revised repurchase procedures as necessary to ensure the Fund’s compliance with applicable regulations or as the Board in its sole discretion deems appropriate. Following the commencement of an offer to repurchase Interests, the Fund may suspend, postpone or terminate such offer in certain circumstances upon the determination of a majority of the Board, including a majority of the Independent Directors, that such suspension, postponement or termination is advisable for the Fund and its Partners, including, without limitation, circumstances as a result of which it is not reasonably practicable for the Fund to dispose of its investments or to determine the value of its net assets, and other unusual circumstances.

Each Partner whose Interest (or portion thereof) has been accepted for repurchase will continue to be a Partner of the Fund until the Valuation Date (and thereafter if its Interest is repurchased in part) and may exercise its voting rights with respect to the repurchased Interest (or portion thereof) until the Valuation Date. Moreover, the capital account maintained in respect of a Partner whose Interest (or portion thereof) has been accepted for repurchase will be adjusted for the net profits or net losses of the

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Fund through the Valuation Date, and such Partner’s capital account shall not be adjusted for the amount withdrawn, as a result of the repurchase, prior to the Valuation Date.

Upon its acceptance of tendered Interests or portions of Interests for repurchase, the Fund will maintain daily on its books (1) cash, (2) liquid securities or (3) interests in Investment Funds that the Fund has requested be withdrawn (or any combination of them), in an amount equal to the aggregate estimated unpaid dollar amount due to Partners tendering Interests.

Payments for repurchased Interests may require the Fund to liquidate portfolio holdings in Investment Funds earlier than the Adviser otherwise would liquidate such holdings, potentially resulting in losses, and may increase the Fund’s portfolio turnover. The Adviser intends to take measures to attempt to avoid or minimize such potential losses and turnover. The Fund may, but need not, maintain cash or borrow money to meet repurchase requests. Such a practice could increase the Fund’s operating expenses and impact the ability of the Fund to achieve its investment objective.

A 2% Early Repurchase Fee generally will be charged by the Fund (and inure to the benefit of the remaining Partners) with respect to any repurchase of an Interest (or portion thereof) from a Partner at any time prior to the business day immediately preceding the one-year anniversary of the Partner’s purchase of such Interest (or portion thereof). The Early Repurchase Fee may be waived by the Fund, in its sole discretion, if Fund management believes such waiver is consistent with the best interests of the Fund and its Partners. Partial Interests tendered for repurchase will be treated as having been repurchased on a “first in—first out” basis. Therefore, the portion of an Interest repurchased will be deemed to have been taken from the earliest capital contribution made by such Partner (adjusted for subsequent net profits and net losses) until that capital contribution is decreased to zero, and then from each subsequent capital contribution made by such Partner (adjusted for subsequent net profits and net losses) until such capital contribution is decreased to zero.

In the event the Fund ever winds down investment operations and terminates, the Fund would be unable to offer to repurchase all Interests immediately and Partners would receive the value of the Interests over time as the Master Fund liquidated its assets, which could require a significant period to realize certain illiquid assets.

Waiver of Repurchase Fee

The Board has adopted certain waivers that apply to the Early Repurchase Fee. A waiver therefor may be available to Partners for certain repurchases that otherwise would be subject to the Early Repurchase Fee in the following circumstances:

Partners who are subject to make a required minimum distribution of their assets on a yearly basis and who submit a written acknowledgement in a form suitable to the Adviser and who otherwise meet the terms of such waiver;

Certain repurchases of Interests as a result of desired transfers either (i) between a Partner and another Eligible Investor or (ii) between the Fund and another registered feeder fund which cannot otherwise be accomplished without a repurchase and reinvestment. Such repurchase may require a written letter of intent in a form suitable to the Adviser;

A de minimus repurchase, which is defined as a repurchase of Interests not in excess of 5% of the Partner’s Interests that are subject to the Early Repurchase Fee; and

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Certain follow-on investments where a Partner that has made one or more follow-on investments since the Partner’s initial investment in the Fund, if a Partner sought repurchase of the entire investment in the Fund and meets the following conditions. The waiver of the Early Repurchase Fee applies on the portion of the amount that is subject to the fee (which would be that portion of the investment that the Partner purchased during the one-year period before the repurchase) that does not exceed 15% of the Partner’s total investment being repurchased, if the Partner has been a Partner for two years or more from the date of the initial investment.

Other than the Early Repurchase Fee, the Fund does not presently intend to impose any charges on the repurchase of Interests, although they may each allocate to Partners whose Interests are repurchased withdrawal or similar charges imposed by Investment Funds if the Adviser determines to withdraw from one or more Investment Funds as a result of Partner repurchase tenders and such charges are imposed on the Fund.

Sub-Placement Agents or other financial intermediaries also may impose terms and conditions on investor accounts and investments in the Fund that are in addition to the terms and conditions set forth in this Memorandum. Such terms and conditions are not imposed by the Fund, the Placement Agent or any other service provider of the Fund. Any terms and conditions imposed by a Sub-Placement Agent or other financial intermediary, or operational limitations applicable to such parties, may affect or limit a Partner’s ability to tender Interests for repurchase, or otherwise transact business with the Fund. Investors should direct any questions regarding terms and conditions applicable to their accounts or relevant operational limitations to the Sub-Placement Agent or other financial intermediary.

A Partner who tenders some but not all of the Partner’s Interest for repurchase will be required to maintain a minimum capital account balance of $100,000. Such minimum capital account balance requirement may be waived by the Fund, in its sole discretion. The Fund reserves the right to reduce the amount to be repurchased from a Partner so that the required capital account balance is maintained, or to accommodate operational limitations of the Sub-Placement Agent.

In the event that the Adviser or any of its affiliates holds an Interest (or portion of an Interest) in its capacity as a Partner, such Interest (or portion of an Interest) may be tendered for repurchase in connection with any repurchase offer made by the Fund, without notice to the other Partners.

Mandatory Redemption by the Fund

In accordance with the terms and conditions of the LP Agreement, the Fund may cause a mandatory redemption of an Interest of a Partner (or portion thereof), or any person acquiring an Interest from or through a Partner, under certain circumstances, including if: (i) all or a portion of its Interest has been transferred to, or has vested in, any person, by operation of law in connection with the death, divorce, bankruptcy, insolvency, or adjudicated incompetence of a Partner; (ii) ownership of the Interest by such Partner or other person will cause the Fund to be in violation of, or subject the Fund or the Adviser to additional registration or regulation under the securities, commodities, or other laws of the U.S. or any other jurisdiction; (iii) continued ownership of the Interest may be harmful or injurious to the business or reputation of the Fund or the Adviser, or may subject the Fund or any Partners to an undue risk of adverse tax or other fiscal consequences; (iv) if the Adviser or General Partner learns of any representation or warranty made by a Partner in connection with the acquisition of an Interest was not true when made or has ceased to be true; or (v) it would be in the best interests of the Fund for the Fund to cause a mandatory redemption of such Interest.

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Partners whose Interests are redeemed by the Fund will not be entitled to a return of any amount of sales load or any other fees that were charged in connection with the Partner’s purchase of such Interest.

TRANSFERS OF INTERESTS

No person shall become a substituted Partner of the Fund without the consent of the Fund, which consent may be reasonably withheld in its sole discretion. Interests held by Partners may be transferred only: (i) by operation of law in connection with the death, divorce, bankruptcy, insolvency, or adjudicated incompetence of the Partner; or (ii) under other limited circumstances, with the consent of the Board (which may be reasonably withheld in its sole discretion and is expected to be granted, if at all, only under extenuating circumstances).

Unless counsel to the Fund confirms that the transfer will not cause the Fund to be treated as a “publicly traded partnership” taxable as a corporation, the Board generally will not consider consenting to a transfer of an Interest (or portion of an Interest) unless the transfer is: (i) one in which the tax basis of the Interest in the hands of the transferee is determined, in whole or in part, by reference to its tax basis in the hands of the transferring Partner (e.g., certain transfers to affiliates, gifts and contributions to family entities); (ii) to members of the transferring Partner’s immediate family (siblings, spouse, parents, or children); or (iii) a distribution from a qualified retirement plan or an individual retirement account.

Notice to the Fund of any proposed transfer must include evidence satisfactory to the Board or its delegee that the proposed transferee, at the time of transfer, meets any requirements imposed by the Fund with respect to investor eligibility and suitability. See “ELIGIBLE INVESTORS.” Notice of a proposed transfer of an Interest must also be accompanied by a properly completed Subscription Agreement in respect of the proposed transferee. In connection with any request to transfer an Interest (or portion of an Interest), the Fund may require the Partner requesting the transfer to obtain, at the Partner’s expense, an opinion of counsel selected by the Fund as to such matters as the Fund may reasonably request. The Board generally will not consent to a transfer of an Interest by a Partner (i) unless such transfer is to a single transferee, or (ii) if, after the transfer of the Interest, the balance of the capital account of each of the transferee and transferor is less than $100,000. Each transferring Partner and transferee may be charged reasonable expenses, including, but not limited to, attorneys’ and accountants’ fees, incurred by the Fund in connection with the transfer.

Any transferee acquiring an Interest or a portion of an Interest by operation of law in connection with the death, divorce, bankruptcy, insolvency, or adjudicated incompetence of the Partner, will be entitled to the allocations and distributions allocable to the Interest or a portion of the Interest so acquired, to transfer the Interest or a portion of the Interest in accordance with the terms of the LP Agreement and to request repurchase of the Interest or a portion of the Interest by the Fund, but will not be entitled to the other rights of a Partner unless and until the transferee becomes a substituted Partner as specified in the LP Agreement. If a Partner transfers an Interest with the approval of the Board, the Fund shall as promptly as practicable take all necessary actions so that each transferee or successor to whom the Interest is transferred is admitted to the Fund as a Partner.

By subscribing for an Interest, each Partner agrees to indemnify and hold harmless the Fund, the Board, the General Partner, the Adviser, and each other Partner, and any affiliate of the foregoing against all losses, claims, damages, liabilities, costs, and expenses (including legal or other expenses incurred in investigating or defending against any losses, claims, damages, liabilities, costs, and expenses or any

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judgments, fines, and amounts paid in settlement), joint or several, to which such persons may become subject by reason of or arising from any transfer made by that Partner in violation of the LP Agreement or any misrepresentation made by that Partner in connection with any such transfer.

CALCULATION OF NE T ASSET VALUE; VALUATION

Each of the Fund and the Master Fund will calculate its NAV as of the close of business on the last business day of each accounting period (as defined under “CAPITAL ACCOUNTS AND ALLOCATIONS—Capital Accounts”) and at such other times as the Board may determine, including in connection with repurchases of Interests, in accordance with the procedures described below or as may be determined from time to time in accordance with policies established by the Board. The NAV of the Fund will equal the value of the total assets of the Fund, less all of its liabilities, including accrued fees and expenses. The NAV of the Master Fund will equal the value of the total assets of the Master Fund, less all of its liabilities, including accrued fees and expenses. Because the Fund intends to invest substantially all of its investable assets in the Master Fund, the value of the assets of the Fund will depend on the value of their share of the Investment Funds or other investments in which the Master Fund invests.

The Board Valuation Committee of the Master Fund oversees, and the Adviser’s Valuation Committee implements, the valuation of the Master Fund’s investments, including interests in the Investment Funds, in accordance with written policies and procedures (the “Valuation Procedures”) that the Boards of the Master Fund and the Fund have approved for purposes of determining the value of securities held by the Master Fund, including the fair value of the Master Fund’s investments in Investment Funds. The Adviser’s Valuation Committee consists of members of the Investment Committee, additional officers of the Fund, and one or more representatives of the Adviser. The Directors, including the Independent Directors, and the members of the Board Valuation Committee and the Adviser’s Valuation Committee, respectively, have been advised of their duties with respect to valuation as described in the Valuation Procedures.

As a general principle, the fair valuation of a security should reflect the amount that the Adviser’s Valuation Committee determines that the Master Fund might reasonably expect to receive for the security upon the orderly sale or redemption of the security, based on information available at the time, that the Adviser’s Valuation Committee believes to be reliable. In the case of a security issued by an Investment Fund, this would typically be equal to the amount that the Fund might reasonably expect to receive from the Investment Fund if the Fund’s interest were redeemed on the date as of which it was valued. It is anticipated that the Adviser’s Valuation Committee will make this determination based on the valuation most recently provided by the Investment Fund in accordance with the policies the Investment Fund has established, which may constitute the Investment Fund’s best estimate at the time based upon data then available, as well as any other relevant information reasonably available at the time of the valuation of the Master Fund’s portfolio.

Prior to an investment by the Master Fund in any Investment Fund, the Adviser’s Valuation Committee will conduct a due diligence review of the valuation methodologies used by the Investment Fund. As a general matter Investment Funds selected by the Master Fund will use market value when available, and otherwise will use principles of fair value applied in good faith. The Adviser’s Valuation Committee will consider whether it is appropriate, in light of the relevant circumstances, to value interests at the NAV as reported at the time of valuation, or whether to adjust such value to reflect a premium or discount.

The Valuation Procedures approved by the Board provide that, where deemed appropriate by the Adviser and consistent with the Investment Company Act, investments in Investment Funds may be

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valued at cost. Cost would be used only when cost is determined to best approximate the fair value of the particular security under consideration. For example, cost may not be appropriate when the Master Fund is aware of sales of similar securities to third parties at different prices or in other circumstances where cost may not approximate fair value (which could include situations where there are no sales to third parties). In such a situation, the Master Fund’s investment will be revalued in a manner that the Adviser’s Valuation Committee, in accordance with the Valuation Procedures, determines in good faith best reflects fair value. In addition, certain Investment Funds holding assets that may not vary widely on a near-term basis (for example, those holding certain private equity or real estate investments) may report values less frequently than other Investment Funds holding more liquid assets which may be anticipated to vary in value on a near-term basis. The Board and Board Valuation Committee will be responsible for ensuring that the Valuation Procedures are fair to the Fund and consistent with applicable regulatory guidelines.

To the extent the Adviser invests the assets of the Master Fund in securities or other instruments that are not investments in Investment Funds (e.g., directly or through Separate Accounts), the Master Fund will generally value such assets as described below. Securities traded (1) on one or more of the U.S. national securities exchanges or the OTC Bulletin Board will be valued at their last sales price, and (2) on the Nasdaq Stock Market will be valued at the Nasdaq Official Closing Price (“NOCP”), at the close of trading on the exchanges or markets where such securities are traded for the business day as of which such value is being determined. Securities traded on the Nasdaq Stock Market for which the NOCP is not available will be valued at the mean between the closing bid and asked prices in this market. Securities traded on a foreign securities exchange will generally be valued at their closing prices on the exchange where such securities are primarily traded and translated into U.S. dollars at the current exchange rate. If an event occurs between the close of the foreign exchange and the computation of the Master Fund’s net asset value that would materially affect the value of the security, the value of such a security will be adjusted to its fair value. Except as specified above, the value of a security, derivative, or synthetic security that is not actively traded on an exchange shall be determined by an unaffiliated pricing service that may use actual trade data or procedures using market indices, matrices, yield curves, specific trading characteristics of certain groups of securities, pricing models, or combinations of these. The Adviser’s Valuation Committee or Independent Administrator, as applicable, will monitor the value assigned to each security by the pricing service to determine if it believes the value assigned to a security is correct. If the Independent Administrator or Adviser’s Valuation Committee, as applicable, believes that the value received from the pricing service is incorrect, then the value of the security will be its fair value as determined in accordance with the Valuation Procedures.

In general, fair value represents a good faith approximation of the current value of an asset and will be used when there is no public market or possibly no market at all for the asset. The fair values of one or more assets may not be the prices at which those assets are ultimately sold. In such circumstances, the Adviser’s Valuation Committee and/or the Board Valuation Committee, in consultation with the Independent Administrator or the Adviser, will reevaluate the Fund’s fair value methodology to determine, what, if any, adjustments should be made to the methodology.

Although the Valuation Procedures approved by the Board provide that the Adviser’s Valuation Committee will review the valuations provided by the Independent Administrator (via the Investment Managers or their administrators), none of the Board Valuation Committee, the Independent Administrator, the Adviser’s Valuation Committee or the Adviser will be able to confirm independently the accuracy of any unaudited valuations provided thereby.

Prospective investors should be aware that situations involving uncertainties as to the valuation of portfolio positions could have an adverse effect on the Fund’s net assets if the judgments of the Board, the

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Board Valuation Committee, the Adviser’s Valuation Committee and/or the Independent Administrator (in reliance on the Investment Funds, the Investment Managers and/or their administrators) regarding appropriate valuations should prove incorrect. The Master Fund may desire to dispose of an interest in an Investment Fund, but be unable to dispose of such interest, and could therefore be obligated to continue to hold the interests for an extended period of time. In such a case, the Independent Administrator, upon consultation with the Adviser’s Valuation Committee or the Adviser, may continue to value the interests without the benefit of the Investment Manager’s or its administrator’s valuations, and may, in its sole discretion, determine to discount the value of the interests in accordance with the Valuation Procedures.

CAPITAL ACCOUNTS AND ALLOCATIONS

Capital Accounts

The Fund will maintain a separate capital account on its books for each Partner. Each Partner’s capital account will have an opening balance equal to the Partner’s initial contribution to the capital of the Fund (which may be net of any fee charged directly by a Sub-Placement Agent for services in conjunction with an investment in the Fund and/or maintenance of investor accounts), and thereafter, will be (i) increased by the amount of any additional capital contributions by such Partner (which may be net of any fee charged directly by a Sub-Placement Agent for services in conjunction with an investment in the Fund and/or maintenance of investor accounts), (ii) decreased for any payments upon repurchase or in redemption of such Partner’s Interest or any distributions in respect of such Partner, and (iii) increased or decreased as of the close of each accounting period (as defined below) by such Partner’s allocable share of the net profits or net losses of the Fund. A Partner’s capital account will also be adjusted for any amounts debited against the Partner’s capital account as described below.

Partners’ capital accounts are adjusted on the last business day of each accounting period, other than for capital contributions, which are credited to the Partners’ capital accounts as of the beginning of each accounting period. The initial accounting period begins upon the commencement of operations of the Fund. Each subsequent accounting period begins on the business day after the last business day of the preceding accounting period, and each accounting period (including the initial accounting period) ends on the first to occur of (1) the last business day of each fiscal year of the Fund, (2) the last business day of each taxable year of the Fund; (3) the business day preceding the effective date on which a contribution of capital is made to the Fund; (4) the Valuation Date with respect to any repurchase of an Interest or portion of an Interest by the Fund, or the business day preceding the effective date of any repurchase of any Interest or portion of an Interest of any Partner or the complete withdrawal by a Partner; (5) the business day preceding the business day on which a substituted Partner is admitted to the Fund; or (6) the effective date on which any amount is credited to or debited from the capital account of any Partner other than an amount to be credited to or debited from the capital accounts of all Partners in accordance with their respective investment percentages (as defined below).

In addition, the final accounting period shall end on the date the Fund dissolves. An “investment percentage” will be determined for each Partner as of the start of each accounting period by dividing the balance of the Partner’s capital account as of the commencement of the period by the sum of the balances of all capital accounts of all Partners as of that date, as adjusted for any capital contributions as of the beginning of such accounting period.

Investors should note that fees charged directly by a Sub-Placement Agent for services in conjunction with an investment in the Fund and/or maintenance of investor accounts may reduce the amount of an initial or subsequent contribution of capital and may impact an investor’s capital account.

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Allocation of Profit and Loss

Net profits or net losses of the Fund for each accounting period will be allocated among and credited to or debited against the capital accounts of all Partners as of the last business day of each accounting period in accordance with Partners’ respective investment percentages as of the start of such accounting period. Net profits or net losses will be measured as the net change in the value of the net assets of the Fund, including any net change in unrealized appreciation or depreciation of investments and realized income and gains or losses and expenses (including private placement and organizational expenses) during an accounting period, adjusted to exclude any items to be allocated among the capital accounts of the Partners other than in accordance with the Partners’ respective investment percentages.

Allocation of Special Items—Certain Withholding Taxes and Other Expenditures

Withholding taxes or other tax obligations incurred by the Fund that are attributable to any Partner will be debited against the capital account of that Partner as of the close of the accounting period during which the Fund accrued or paid those obligations, and any amounts then or thereafter distributable to the Partner will be reduced by the amount of those taxes accrued or paid. If the amount of those taxes is greater than the distributable amounts, then the Partner and any successor to the Partner’s Interest is required to pay upon demand to the Fund, as a contribution to the capital of the Fund, the amount of the excess. The Fund is not obligated to apply for or obtain a reduction of or exemption from withholding tax on behalf of any Partner, although in the event that the Fund determines that a Partner is eligible for a refund of any withholding tax, it may, at the request and expense of that Partner, assist the Partner in applying for the refund.

Any expenditures payable by the Fund, to the extent paid or withheld on behalf of, or by reason of particular circumstances applicable to, one or more but fewer than all of the Partners, will generally be charged to only those Partners on whose behalf the payments are made or whose circumstances gave rise to the payments. These charges will be debited to the capital accounts of the applicable Partners as of the close of the accounting period during which the items were paid or accrued by the Fund.

Reserves

Appropriate reserves may be created, accrued, and charged against net assets and proportionately against the capital accounts of the Partners for contingent liabilities including taxes as of the date the contingent liabilities become known to the Fund or the Board. Reserves will be in such amounts (subject to increase or reduction) that the Fund or the Board may deem necessary or appropriate.

Unclaimed Property

A Partner’s unclaimed property may be transferred to the appropriate state under certain circumstances specified by applicable state law.

CERTAIN TAX CONSIDERATIONS

The following summary describes certain significant United States federal income tax consequences of owning Interests to investors who are U.S. persons, i.e., a citizen or resident of the United States, a corporation or partnership created or organized in the United States or any state thereof, or an estate or trust, the income of which is includible in income for federal income tax purposes

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regardless of its source. The summary does not discuss all of the tax consequences that may be relevant to a particular investor or to certain investors (e.g., tax-exempt and foreign investors and insurance companies) subject to special treatment under the federal income tax laws.

THIS SUMMARY IS NECESSARILY GENERAL, AND EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT WITH ITS OWN TAX ADVISER WITH RESPECT TO THE FEDERAL, FOREIGN, STATE AND LOCAL TAX CONSEQUENCES OF PURCHASING AND HOLDING INTERESTS.

This summary is based on the Code as in effect on the date of this Memorandum, the U.S. Treasury Regulations promulgated thereunder (the “Treasury Regulations”), rulings of the U.S. Internal Revenue Service (the “IRS”), and court decisions in existence on the date hereof, all of which are subject to change. The Fund has not sought a ruling from the IRS or any other federal, state or local agency with respect to any of the tax issues affecting the Fund.

Investors’ Reliance on Federal Tax Advice in this Memorandum

THE DISCUSSION CONTAINED IN THIS MEMORANDUM AS TO TAX CONSIDERATIONS IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING PENALTIES. SUCH DISCUSSION IS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE OFFERING MATERIALS, INCLUDING THE PRIVATE PLACEMENT OF INTERESTS IN THE FUND IN THE UNITED STATES. EACH TAXPAYER SHOULD SEEK FEDERAL TAX ADVICE BASED ON THE TAXPAYER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

The following discussion presents tax considerations with respect to the Fund. The Master Fund will be managed with a focus on investment performance, rather than on the tax consequences to any particular feeder fund or the Fund and their respective investors.

Partnership Status of the Fund and the Master Fund

In general, the federal income tax consequences of an investment in the Fund will depend on whether the Fund is treated for federal income tax purposes as a partnership rather than as an association taxable as a corporation. No application will be made to the IRS for a ruling on the classification of the Fund for tax purposes. For the reasons described below, the Fund is expected to be treated as a partnership for federal income tax purposes.

If the Fund is classified as a “partnership” for federal income tax purposes and is not a “publicly traded partnership,” it will not be subject to any federal income tax. Instead the Partners in the Fund will be subject to tax on their distributive shares of Fund income and gain and, subject to certain limitations described below, will be entitled to claim distributive shares of Fund losses. On the other hand, if the Fund were to be classified as an association taxable as a corporation or as a “publicly traded partnership,” Partners would be treated as shareholders of a corporation. Consequently, (a) items of income, gain, loss and deduction would not flow through to the Partners to be accounted for on their individual federal income tax returns; (b) cash distributions would be treated as corporate distributions to the Partners, some or all of which might be taxable as dividends, and (c) the taxable income of the Fund would be subject to the federal income tax imposed on corporations.

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Under Section 7704 of the Code, “publicly traded partnerships” are generally treated as corporations for federal income tax purposes. A publicly traded partnership is any partnership the interests in which are traded on an established securities market or are readily tradable on a secondary market (or the substantial equivalent thereof). Interests in the Fund will not be traded on an established securities market. Treasury Regulations concerning the classification of partnerships as publicly traded partnerships (the “Section 7704 Regulations”) provide certain safe harbors under which interests in a partnership will not be considered readily tradable on a secondary market (or the substantial equivalent thereof).

The Section 7704 Regulations include a “redemption or repurchase agreement” safe harbor under which partnership interests can avoid being treated as readily tradable. The Section 7704 Regulations provide that this safe harbor applies in the case of a “redemption or repurchase agreement,” which is defined as “a plan of redemption or repurchase maintained by a partnership whereby the partners may tender their partnership interests for purchase by the partnership, another partner or a person related to another partner.” The Section 7704 Regulations provide that the transfer of an interest in a partnership pursuant to a redemption or repurchase agreement is disregarded in determining whether interests in the partnership are readily tradable if (1) the redemption or repurchase agreement provides that the redemption or repurchase cannot occur until at least 60 calendar days after the partner notifies the partnership in writing of the partner’s intention to exercise the redemption or repurchase right, (2) the redemption or repurchase price is established not more than four times during the partnership’s taxable year, and (3) the sum of the percentage interests in partnership capital or profits transferred during the taxable year of the partnership does not exceed 10 percent of the total interests in partnership capital or profits (calculated by adding the percentages of total interests transferred at the time of each transfer, but excluding certain transfers such as block transfers).

The repurchase procedures established by the Fund satisfy the first of the requirements for a safe-harbor redemption or repurchase agreement. The value of the Interests being repurchased is established on a date no earlier than 30 days after the expiration of the period during which tenders may be submitted, and the initial payment is made no sooner than the 30th day after the valuation date. Accordingly, the repurchase cannot occur until at least 60 calendar days after the tendering Partner submits its tender.

The Fund’s LP Agreement contains provisions satisfying the second of the requirements for a safe-harbor redemption or repurchase agreement. The LP Agreement provides that the Fund will not offer to repurchase Interests on more than four occasions in any Fiscal Year and, therefore, the repurchase price for Interests will be established not more than four times during the year.

The third condition of the “redemption or repurchase agreement” safe harbor is that the repurchased interests’ partnership capital or profits not exceed 10 percent per year of the total interests in partnership capital or profits. The LP Agreement does not contain an explicit limitation on the percentage of Interests that can be repurchased in any year. Nevertheless, the transfer restrictions and repurchase provisions of the LP Agreement and the Fund’s procedures are sufficient to meet the requirements of the “redemption or repurchase agreement” safe harbor as set forth in the Section 7704 Regulations in any year in which the Fund repurchases Interests not in excess of 10 percent of the total interests in the Fund’s capital or profits.

In the event that, in any year, the Fund repurchases Interests in excess of 10 percent of the total interests in its capital or profits, the Fund will not satisfy the “redemption or repurchase agreement” safe harbor. The Section 7704 Regulations specifically provide that the fact that a partnership does not qualify

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for the safe harbors is disregarded for purposes of determining whether interests in a partnership are readily tradable on a secondary market (or the substantial equivalent thereof). Rather, in this event, the partnership’s status is examined to determine whether, taking into account all of the facts and circumstances, the partners are readily able to buy, sell, or exchange their partnership interests in a manner that is comparable, economically, to trading on an established securities market.

If it were determined that the Fund should be treated as an association or a publicly traded partnership taxable as a corporation for federal income tax purposes (as a result of a successful challenge by the IRS, changes in the Code, the Treasury Regulations or judicial interpretations thereof, a material adverse change in facts or otherwise), the taxable income of the Fund would be subject to corporate income tax when recognized by the Fund; distributions of such income, other than in certain redemptions of Interests, would be treated as dividend income when received by the Partners to the extent of the current or accumulated earnings and profits of the Fund; and Partners would not be entitled to report profits or losses realized by the Fund.

As an entity treated as a partnership for tax purposes, the Fund is not itself subject to federal income tax. The Fund will file an annual partnership information return with the IRS that will report the results of operations. Each Partner will be required to report separately on its income tax return its distributive share of the Fund’s net long-term capital gain or loss, net short-term capital gain or loss and all other items of ordinary income or loss. The Fund does not presently intend to make periodic distributions of its net income or gains, if any, to Partners. The amount and times of distributions, if any, will be determined in the sole discretion of the Fund’s Board. Each Partner will be taxed on its distributive share of the Fund’s taxable income and gain regardless of whether it has received or will receive a distribution from the Fund. Partners will also be allocated taxable gain based upon the timing of the recognition and allocation of such gain to the Master Fund, which could result in the allocation to a Partner of taxable gain recognized with respect to capital appreciation occurring prior to the Partner’s investment in the Fund.

Taxation of the Fund and Investment Funds

The Fund invests in the Master Fund, which in turn generally invests in Investment Funds that are taxable as partnerships. However, the Master Fund may invest from time to time in Investment Funds that are taxable as corporations. The Fund and the Investment Funds that are taxable as partnerships are not subject to federal income tax. The Fund’s income will include its allocable share of the income, gain, loss, deduction and credit of the Master Fund’s partnership investments. References below to positions held or transactions effected by the Fund include its allocable share of the Master Fund’s interests in managed accounts and its allocable interest in positions held and transactions effected by the partnerships in which the Master Fund invests.

Corporate Investment Funds that are organized in foreign jurisdictions will be subject to federal income tax on their net income that is effectively connected with a U.S. trade or business and U.S. withholding tax on certain non-effectively connected U.S. source income. In general, the Fund will recognize taxable gain or loss when the Master Fund disposes of stock in a corporate Investment Fund. Moreover, any corporate Investment Fund that is formed in a foreign jurisdiction will likely be treated as a “passive foreign investment company,” in which case, each Partner will be required to pay tax at ordinary income rates (as determined under Section 1291 of the Code) on its allocable share of any gain recognized on the sale of its indirect interest in the foreign corporate Investment Fund, plus a deemed interest charge (treated as an addition to tax) to reflect the deferral of income over the term for which the

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stock was held. The deferred tax charge will not apply if the Master Fund elects to recognize its allocable share of any foreign corporate Investment Fund’s income and gain annually. The Master Fund generally intends to make such an election when and to the extent available, but no assurances can be given that such election will be available or that if available the Master Fund will make such election.

Taxation of Partners

Each Partner will be required to report on its federal income tax return, and will be taxed upon, its allocable share of each item of the Fund’s income, gain, loss, deduction and credit for each taxable year of the Fund ending with or within the Partner’s taxable year. See “Allocations of Income, Gain, Loss and Deduction” below. Each item generally will have the same character and source (either U.S. or foreign), as though the Partner realized the item directly. Partners must report these items regardless of the extent to which, or whether, they receive cash distributions from the Fund for such taxable year. Moreover, investments in certain securities, such as original issue discount obligations or preferred stock with redemption or repayment premiums, or in the stock of certain types of foreign corporations, such as a “controlled foreign corporation” or “passive foreign investment company,” could cause the Fund, and consequently the Partners, to recognize taxable income without the Fund or the Partners receiving any related cash distribution. An investment in a “passive foreign investment company” could also, in the absence of a specific election, cause a Partner to pay a deferred tax and interest charge on taxable income that is treated as having been deferred. In addition, because the net profits or net losses of the Fund that are allocated to a Partner’s capital account reflect both gain and loss realized for federal income tax purposes and the unrealized appreciation and depreciation of investments, a Partner’s share of the taxable income of the Fund in any year may be more or less than the amount of net profits or net losses allocated to the Partner’s capital account for that year.

FOR THE REASONS DESCRIBED ABOVE AND BECAUSE, AMONG OTHER THINGS, THE FUND IS NOT GENERALLY OBLIGATED TO MAKE DISTRIBUTIONS, PARTNERS MAY RECOGNIZE SUBSTANTIAL AMOUNTS OF TAXABLE INCOME IN EACH YEAR, THE TAXES ON WHICH ARE FAR IN EXCESS OF ANY DISTRIBUTIONS FROM THE FUND.

Partners will receive annual tax information necessary for completion of U.S. federal, state and local tax returns. This information in certain cases may include estimates, which could increase the likelihood of being audited, and may lack certain reportable information for their tax returns. The Fund intends to furnish to Partners such information as soon as practicable after receipt of the necessary information from the Investment Funds. However, such annual tax information will be provided by the Fund after April 15 of each year and, accordingly, Partners will need to file for extensions for the completion of their state and federal tax returns.

In addition, the Fund will not be in a position to independently verify the accuracy of tax information provided by the Investment Funds, their administrators or the Investment Managers. In the event the IRS challenges tax positions taken by the Investment Funds, Partners of the Fund could be adversely affected. In particular, Partners in the Fund could be required to amend prior tax returns and include additional amounts of income not previously reported, and pay federal income tax at applicable rates (together with applicable penalties and interest, if any) if the tax information that Investment Funds provide to the Fund is materially inaccurate or otherwise changes as a result of a successful challenge by the IRS.

Because the Fund expects to be treated as a partnership for federal income tax purposes, the Fund expects to deliver such tax information to Partners on IRS Schedule K-1 (not Form 1099). In light of the

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Master Fund’s investments in numerous Investment Funds as of the date hereof, the nature of the tax reporting on a Partner’s own federal income tax return of its allocable share of the Fund’s income, gain, loss, deduction or credit will be complicated, and the Partner will likely need the assistance of a certified public accountant or other tax professional to prepare its federal and state income tax returns. The Partner could experience an increase in the amount of fees payable to such tax professionals, and such increase could be material. Investors subscribing for Interests in the Fund for the first time late in the Fund’s fiscal year (which is currently the calendar year) may wish to consider such expenses in deciding whether to subscribe at such time or to delay the subscription until the beginning of the next fiscal year.

The Code generally allows certain partnerships with 100 or more partners to elect to have a special set of rules and procedures apply that are intended to simplify the calculation and reporting of certain partnership items. The Fund does not intend to make this election if it becomes available, but it reserves the right, in its sole discretion, to make the election if it determines that the election would be in the best interest of the Partners. In certain cases, it is possible that the election would have an adverse effect on the Partners.

Tax-Exempt Investors

Because the Master Fund and any Investment Fund may incur debt in connection with the purchase of securities, futures and other investments, the Fund may generate income that is taxable to tax-exempt Partners as unrelated business taxable income (“UBTI”). See “Unrelated Business Taxable Income” below. In addition, a tax-exempt Partner may recognize UBTI if it incurs indebtedness to finance its investment in the Fund, and it is possible that certain investments by the Fund could result in UBTI, even if such investments are not debt financed.

An individual retirement account may be required to pay income taxes, make estimated income tax payments, and file an income tax return for any taxable year in which it has UBTI. To file an income tax return, an individual retirement account may need to obtain a taxpayer identification number. The Fund is not designed for investment by charitable remainder trusts and an investment in the Fund is not likely to be appropriate for a charitable remainder trust. The charitable contribution deduction for charitable lead trusts and other trusts under Section 642(c) of the Code may be limited for any year in which the trusts have UBTI. Additional tax considerations may also be applicable to private foundations and private operating foundations.

Prospective investors that are individual retirement accounts, title holding companies, private foundations, and private operating foundations, as well as any other tax-exempt investors, should consult their own tax advisers with respect to the tax consequences of investing in, and receiving UBTI from, the Fund.

Distributions

Distributions to a Partner by the Fund, other than in liquidation in whole or in part of the Partner’s Interest in the Fund, will not result in the recognition of gain or loss by such Partner, except that gain will be recognized to the extent that cash distributed exceeds the Partner’s adjusted tax basis in its Interest in the Fund. Any such gain recognized will generally be treated as capital gain.

On the complete liquidation of a Partner’s Interest in the Fund, a Partner that receives only cash will recognize gain or loss equal to the difference between the amount of cash received and such Partner’s adjusted tax basis for its Interest in the Fund. If a Partner receives cash and other property, or only other

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property, it will not recognize loss but will recognize gain to the extent that the amount of cash received exceeds the adjusted tax basis of its Interest in the Fund. Any such gain recognized will generally be treated as capital gain.

Allocations of Income, Gain, Loss and Deduction

Under the LP Agreement, the net profits or net losses of the Fund for each accounting period are allocated among the Partners and to their capital accounts without regard to the amount of income or loss actually recognized by the Fund for federal income tax purposes. The LP Agreement provides that items of taxable income, deduction, gain, loss or credit actually recognized by the Fund for each taxable year generally are to be allocated for income tax purposes among the Partners pursuant to the principles of Treasury Regulations issued under Sections 704(b) and 704(c) of the Code, to reflect equitably the amounts of net profits or net losses of the Fund allocated to each Partner’s capital account for the current and prior taxable years.

The Fund may specially allocate items of Fund taxable income and gain to a withdrawing Partner having all or a portion of its Interest repurchased to the extent its book capital account exceeds its adjusted tax basis in its repurchased Interest and may specially allocate items of Fund loss to a Partner having all or a portion of its Interest repurchased to the extent its adjusted tax basis in its Interest exceeds its book capital account. There can be no assurance that, if the Fund makes such a special allocation, the IRS will accept such allocation. If such allocation is successfully challenged by the IRS, the Fund’s income and gain or loss, as the case may be, allocable to the remaining Partners will be increased.

Tax Treatment of Portfolio Investments

In General.  The Fund expects that the Master Fund and the Investment Funds each will act as a trader or investor, and not as a dealer, with respect to its securities transactions. A trader and an investor are persons who buy and sell securities for their own accounts. A dealer, on the other hand, is a person who purchases securities for resale to customers rather than for investment or speculation.

Generally, the gains and losses realized by a trader or an investor on the sale of securities are capital gains and losses. Thus, subject to the treatment of certain currency exchange gains as ordinary income (see “Currency Fluctuations – ‘Section 988’ Gains or Losses” below) and certain other transactions described below, the Fund expects that the gains and losses from the securities transactions of the Master Fund and the Investment Funds typically will be capital gains and capital losses. These capital gains and losses may be long-term or short-term depending, in general, upon the length of time the Master Fund or a Investment Fund, as the case may be, maintains a particular investment position and, in some cases, upon the nature of the transaction. Property held for more than one year generally will be eligible for long-term capital gain or loss treatment. The application of certain rules relating to short sales, to so-called “straddle” and “wash sale” transactions and to Section 1256 Contracts (defined below) may serve to alter the manner in which the holding period for a security is determined or may otherwise affect the characterization as short-term or long-term, and also the timing of the realization, of certain gains or losses. Moreover, the straddle rules and short sale rules may require the capitalization of certain related expenses of the Master Fund.

The Master Fund may realize ordinary income from dividends and accruals of interest on securities. The Master Fund may hold debt obligations with “original issue discount.” In such case, the Master Fund would be required to include amounts in taxable income on a current basis even though

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receipt of such amounts may occur in a subsequent year. The Master Fund may also acquire debt obligations with “market discount.” Upon disposition of such an obligation, the Master Fund generally would be required to treat gain realized as interest income to the extent of the market discount that accrued during the period the debt obligation was held by the Master Fund. Income or loss from transactions involving certain derivative instruments, such as swap transactions, will also generally constitute ordinary income or loss. Moreover, gain recognized from certain “conversion transactions” will be treated as ordinary income. Generally, a conversion transaction is one of several enumerated transactions where substantially all of the taxpayer’s return is attributable to the time value of the net investment in the transaction. The enumerated transactions are (i) the holding of any property (whether or not actively traded) and entering into a contract to sell such property (or substantially identical property) at a price determined in accordance with such contract, but only if such property was acquired and such contract was entered into on a substantially contemporaneous basis, (ii) certain straddles, (iii) generally any other transaction that is marketed or sold on the basis that it would have the economic characteristics of a loan but the interest-like return would be taxed as capital gain or (iv) any other transaction specified in the Treasury Regulations.

Fluctuations – “Section 988” Gains or Losses.  To the extent that its investments are made in securities denominated in a foreign currency, gain or loss realized by the Master Fund or an Investment Fund frequently will be affected by the fluctuation in the value of such foreign currencies relative to the value of the dollar. Generally, gains or losses with respect to the investments in common stock of foreign issuers will be taxed as capital gains or losses at the time of the disposition of such stock. However, under Section 988 of the Code, gains and losses on the acquisition and disposition of foreign currency (e.g., the purchase of foreign currency and subsequent use of the currency to acquire stock) will be treated as ordinary income or loss. Moreover, under Section 988, gains or losses on disposition of debt securities denominated in a foreign currency to the extent attributable to fluctuation in the value of the foreign currency between the date of acquisition of the debt security and the date of disposition will be treated as ordinary income or loss. Similarly, gains or losses attributable to fluctuations in exchange rates that occur between the time the Master Fund or an Investment Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the Master Fund or Investment Fund actually collects such receivables or pays such liabilities may be treated as ordinary income or ordinary loss.

As indicated above, the Master Fund or an Investment Fund may acquire foreign currency forward contracts, enter into foreign currency futures contracts and acquire put and call options on foreign currencies. Generally, foreign currency regulated futures contracts and option contracts that qualify as “Section 1256 Contracts” (see “Section 1256 Contracts” below), will not be subject to ordinary income or loss treatment under Section 988. However, if the Master Fund or an Investment Fund acquires currency futures contracts or option contracts that are not Section 1256 Contracts, or any currency forward contracts, any gain or loss realized by the Master Fund or Investment Fund with respect to such instruments will be ordinary, unless (i) the contract is a capital asset in the hands of the Master Fund or Investment Fund and is not a part of a straddle transaction and (ii) an election is made (by the close of the day the transaction is entered into) to treat the gain or loss attributable to such contract as capital gain or loss.

Section 1256 Contracts.  In the case of Section 1256 Contracts, the Code generally applies a “mark to market” system of taxing unrealized gains and losses on such contracts and otherwise provides for special rules of taxation. A Section 1256 Contract includes certain regulated futures contracts, certain foreign currency forward contracts, and certain options contracts. Under these rules, Section 1256

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Contracts held by the Master Fund or Investment Fund at the end of each taxable year of the Master Fund or Investment Fund are treated for federal income tax purposes as if they were sold by the Master Fund or Investment Fund for their fair market value on the last business day of such taxable year. The net gain or loss, if any, resulting from such deemed sales (known as “marking to market”), together with any gain or loss resulting from actual sales of Section 1256 Contracts, must be taken into account by the Master Fund or Investment Fund in computing its taxable income for such year. If a Section 1256 Contract held by the Master Fund or Investment Fund at the end of a taxable year is sold in the following year, the amount of any gain or loss realized on such sale will be adjusted to reflect the gain or loss previously taken into account under the “mark to market” rules.

Capital gains and losses from such Section 1256 Contracts generally are characterized as short-term capital gains or losses to the extent of 40% thereof and as long-term capital gains or losses to the extent of 60% thereof. Such gains and losses will be taxed under the general rules described above. Gains and losses from certain foreign currency transactions will be treated as ordinary income and losses. (See “Currency Fluctuations – ‘Section 988’ Gains or Losses.”) If an individual taxpayer incurs a net capital loss for a year, the portion thereof, if any, which consists of a net loss on Section 1256 Contracts may, at the election of the taxpayer, be carried back three years. Losses so carried back may be deducted only against net capital gain to the extent that such gain includes gains on Section 1256 Contracts.

Straddles.  The Code contains special rules that apply to “straddles,” defined generally as the holding of “offsetting positions with respect to personal property.” For example, the straddle rules apply when a taxpayer holds stock and an offsetting option with respect to such stock or substantially identical stock or securities. In general, investment positions will be offsetting if there is a substantial diminution in the risk of loss from holding one position by reason of holding one or more other positions (although certain covered call stock options would not be treated as part of a straddle). The Master Fund expects to indirectly enter into investments that may constitute positions in a straddle when considered in conjunction with the other investments of the Master Fund. If two or more positions constitute a straddle, recognition of a realized loss from one position must be deferred to the extent of unrecognized gain in an offsetting position. In addition, long-term capital gain may be recharacterized as short-term capital gain, or short-term capital loss as long-term capital loss. Interest and other carrying charges allocable to personal property that is part of a straddle are not currently deductible but must instead be capitalized. Similarly, “wash sale” rules apply to prevent the recognition of loss by the Master Fund from the disposition of stock or securities at a loss in a case in which identical or substantially identical stock or securities (or an option to acquire such property) is or has been acquired within a prescribed period.

Mixed Straddle Election.  The Code allows a taxpayer to elect to offset gains and losses from positions which are part of a “mixed straddle.” A “mixed straddle” is any straddle in which one or more but not all positions are Section 1256 Contracts. The Master Fund (and any Investment Fund) may be eligible to elect to establish one or more mixed straddle accounts for certain of its mixed straddle trading positions. The mixed straddle account rules require a daily “marking to market” of all open positions in the account and a daily netting of gains and losses from positions in the account. At the end of a taxable year, the annual net gains or losses from the mixed straddle account are recognized for tax purposes. The application of the Treasury Regulations’ mixed straddle account rules is not entirely clear. Therefore, there is no assurance that a mixed straddle account election by the Master Fund or Investment Fund will be accepted by the IRS.

Short Sales.  Gain or loss from a short sale of property is generally considered as capital gain or loss to the extent the property used to close the short sale constitutes a capital asset in the Master Fund’s

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or an Investment Fund’s hands. Except with respect to certain situations where the property used to close a short sale has a long-term holding period on the date the short sale is entered into, gains on short sales generally are short-term capital gains. A loss on a short sale will be treated as a long-term capital loss if, on the date of the short sale, “substantially identical property” has been held by the Master Fund or an Investment Fund for more than one year. In addition, these rules may also terminate the running of the holding period of “substantially identical property” held by the Master Fund or an Investment Fund.

Gain or loss on a short sale will generally not be realized until such time that the short sale is closed. However, if the Master Fund or an Investment Fund holds a short sale position with respect to stock, certain debt obligations or partnership interests that have appreciated in value, and it then acquires property that is the same as or substantially identical to the property sold short, the Master Fund or an Investment Fund generally will recognize gain on the date it acquires such property as if the short sale were closed on such date with such property. Similarly, if the Master Fund or an Investment Fund holds an appreciated financial position with respect to stock, certain debt obligations, or partnership interests and then enters into a short sale with respect to the same or substantially identical property, the Master Fund or an Investment Fund generally will recognize gain as if the appreciated financial position were sold at its fair market value on the date it enters into the short sale. The subsequent holding period for any appreciated financial position that is subject to these constructive sale rules will be determined as if such position were acquired on the date of the constructive sale.

Foreign Taxes.  It is possible that certain dividends and interest directly or indirectly received by the Master Fund or an Investment Fund from sources within foreign countries will be subject to withholding taxes imposed by such countries. In addition, the Master Fund or an Investment Fund may also be subject to capital gains taxes in some of the foreign countries where they purchase and sell securities. Tax treaties between certain countries and the United States may reduce or eliminate such taxes.

Deductibility of Fund Investment Expenditures

Subject to certain exceptions, all miscellaneous itemized deductions, as defined by the Code, of an individual taxpayer, and certain of such deductions of an estate or trust, including in each case a partner’s allocable share of any such deductions with respect to expenses incurred by a partnership, are deductible only to the extent that such deductions exceed 2% of the taxpayer’s adjusted gross income. The Code also requires an individual whose adjusted gross income exceeds a specified threshold amount to reduce the amount allowable for itemized deductions (including such amount of miscellaneous itemized deductions as remain deductible after applying the 2% “floor” described above) by the lesser of: (i) 3% of the excess of the individual’s adjusted gross income over the specified amount; or (ii) 80% of the amount of certain itemized deductions otherwise allowable for the taxable year. Moreover, expenses which are miscellaneous itemized deductions are not deductible by a non-corporate taxpayer in calculating its alternative minimum tax liability. The foregoing limitations on deductibility do not apply to deductions attributable to a trade or business. The trading of stocks or securities is generally considered engaging in a trade or business for this purpose while investing in stocks or securities is generally not so considered.

At the end of each taxable year the Fund will determine the extent to which its expenses are attributable to a trade or business or are miscellaneous itemized deductions. The manager or other authorized person of each entity taxed as a partnership will make this determination for such entity. There can be no assurance that the IRS will agree with such determinations.

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Organizational and operating expenses of the Fund, including the Investment Management Fee and any other amounts treated as compensation paid to the Adviser, as well as certain investment expenses of the Fund, to the extent not attributable to a trade or business, may be treated as miscellaneous itemized deductions subject to the foregoing rules or may be required to be capitalized.

Under Section 163(d) of the Code, “investment interest” expense of a non-corporate taxpayer (including in the case of a Partner its allocable share of any such expense incurred by a partnership) is deductible only to the extent of such taxpayer’s “net investment income” (including in the case of a Partner its allocable share of any net investment income of a partnership). Interest expense incurred by the Fund should constitute “investment interest” and accordingly may be subject to the foregoing limitation.

Losses

A Partner may deduct its allocable share of the Fund’s losses only to the extent of such Partner’s adjusted tax basis for its Interest in the Fund. Under current law, the deduction of capital losses is limited to the extent of capital gains in the case of a corporation and to the extent of capital gains plus $3,000 in the case of an individual.

The Code restricts the deductibility of losses from a “passive activity” against certain income which is not derived from a passive activity. This restriction applies to individuals, personal service corporations and certain closely held corporations. Pursuant to temporary Treasury Regulations issued by the Treasury Department, income or loss from securities trading or investing activity generally will not constitute income or loss from a passive activity. Therefore, passive losses from other sources generally could not be deducted against a Partner’s share of such income and gain.

Tax Elections

The Fund may make various elections for federal income tax purposes which could result in certain items of income, gain, loss, deduction and credit being treated differently for tax and accounting purposes.

The Code generally permits a partnership to elect to adjust the basis of its property on the sale or exchange of a partnership interest, the death of a partner and on the distribution of property to a partner (a “754 election”), except in certain circumstances in which such adjustments are mandatory. Such adjustments generally are mandatory in the case of a transfer of a partnership interest with respect to which there is substantial built-in loss, or a distribution of partnership property which results in a substantial basis reduction. A substantial built-in loss exists if a partnership’s adjusted basis in its asset exceeds the fair market value of such assets by more than $250,000. A substantial basis reduction results if a downward adjustment of more than $250,000 would be made to the basis of partnership assets if a 754 election were in effect. The general effect of such an election or mandatory adjustment is that transferees of partnership interests are treated as though they had acquired a direct interest in partnership assets. Any such election, once made, may not be revoked without the IRS’s consent. Although the LP Agreement authorizes the Fund, at its option, to make this election (or any other elections permitted under the Code), because of the tax accounting complexities inherent in making this election to adjust the basis of the Fund, it is unlikely that the Fund would decide to make such an election unless circumstances existed which required such adjustments. The absence of this election and of the power to compel the making of such election may, in some circumstances, results in a reduction in value of an interest in the Fund to a potential transferee.

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The Fund decides how to report the tax items on its information returns, and all Partners are required under the Code to treat the items consistently on their own returns, unless they file a statement with the IRS disclosing the inconsistency. In the event the income tax returns of the Fund are audited by the IRS, the tax treatment of the Fund’s income and deductions generally is determined at the partnership level in a single proceeding rather than by individual audits of the Partners. The General Partner, who is designated as the “Tax Matters Partner,” has considerable authority to make decisions affecting the tax treatment and procedural rights of all Partners. In addition, the Tax Matters Partner has the authority to bind certain Partners to settlement agreements and the right on behalf of all Partners to extend the statute of limitations relating to the Partners’ tax liabilities with respect to Fund items.

Tax Shelter Disclosure

Certain rules require taxpayers to disclose – on their federal income tax returns and, under certain circumstances, separately to the Office of Tax Shelter Analysis – their participation in “reportable transactions” and require “material advisors” to maintain investor lists with respect thereto. These rules apply to a broad range of transactions, including transactions that would not ordinarily be viewed as tax shelters, and to indirect participation in a reportable transaction (such as through a partnership). For example, a Partner who is an individual will be required to disclose participation in a loss transaction, which would include a tax loss resulting from the sale or exchange of his or her Interest, if the loss is at least $2 million in any single taxable year or $4 million in the taxable year in which the transaction is entered into and the five succeeding taxable years – those thresholds are $10 and $20 million, respectively, for Partners that are C corporations. A loss transaction would also include a loss from foreign currency transactions of at least $50,000 in any single taxable year for individuals and trusts, either directly or through a pass-through entity, such as the Fund. Losses are adjusted for any insurance or other compensation received but determined without taking into account offsetting gains or other income or limitations on deductibility.

An excise tax and additional disclosure requirements may apply to certain tax-exempt entities that are “parties” to certain types of reportable transactions. A notice issued by the IRS provides that a tax-exempt investor in a partnership will generally not be treated as a “party” to a prohibited tax shelter transaction, even if the partnership engages in such a transaction, if the tax-exempt investor does not facilitate the transaction by reason of its tax-exempt, tax indifferent or tax-favored status. There can be no assurance, however, that the IRS or Treasury Department will not provide guidance in the future, either generally or with respect to particular types of investors, holding otherwise.

Failure to comply with the disclosure requirements for reportable transactions or prohibited tax shelter transactions can result in the imposition of penalties. Partners may be eligible for a disclosure safe harbor, as described in IRS Notice 2006-16, with respect to transactions in which the Fund may participate. The Fund may file protective disclosures with respect to transactions for purposes of satisfying the safe harbor requirements. Prospective investors are urged to consult with their own tax advisers with respect to the effect of these rules on an investment in the Fund.

NOTWITHSTANDING ANYTHING TO THE CONTRARY, EACH PARTNER (AND EACH EMPLOYEE, REPRESENTATIVE, OR OTHER AGENT OF THE PARTNER) MAY DISCLOSE TO ANY AND ALL PERSONS, WITHOUT LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF AN INVESTMENT IN THE INSTITUTIONAL FUND AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSIS) THAT ARE PROVIDED TO THE PARTNER RELATING TO SUCH TAX TREATMENT AND TAX STRUCTURE (AS SUCH TERMS ARE DEFINED IN TREASURY REGULATION SECTION 1.6011-4).

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Unrelated Business Taxable Income

Generally, an exempt organization is exempt from federal income tax on its passive investment income, such as dividends, interest and capital gains, whether realized by the organization directly or indirectly through a partnership in which it is a partner. This type of income is exempt even if it is realized from securities trading activity that constitutes a trade or business.

This general exemption from tax does not apply to the “unrelated business taxable income” (“UBTI”) of an exempt organization. Generally, except as noted above with respect to certain categories of exempt trading activity, UBTI includes income or gain derived (either directly or through partnerships) from a trade or business, the conduct of which is substantially unrelated to the exercise or performance of the organization’s exempt purpose or function. UBTI also includes “unrelated debt-financed income,” which generally consists of (i) income derived by an exempt organization (directly or through a partnership) from income-producing property with respect to which there is “acquisition indebtedness” at any time during the taxable year, and (ii) gains derived by an exempt organization (directly or through a partnership) from the disposition of property with respect to which there is “acquisition indebtedness” at any time during the twelve-month period ending with the date of such disposition. With respect to its investments, if any, in partnerships engaged in a trade or business, the Master Fund’s income (or loss) from these investments may be of a type that would constitute UBTI if received by a tax-exempt organization.

The Master Fund and the Investment Funds may incur “acquisition indebtedness” with respect to certain of their transactions, such as the purchase of securities on margin. Based upon a published ruling issued by the IRS which generally holds that income and gain with respect to short sales of publicly traded stock does not constitute income from debt financed property for purposes of computing UBTI, the Master Fund will treat its short sales of securities, if any, and short sales of securities in which Investment Funds might engage, as not involving “acquisition indebtedness” and therefore not resulting in UBTI. Moreover, income realized from option writing and futures contract transactions generally would not constitute UBTI. To the extent the Master Fund recognizes income (i.e., dividends and interest) from securities with respect to which there is “acquisition indebtedness” during a taxable year, the percentage of such income which would be treated as UBTI generally will be based on the percentage which the “average acquisition indebtedness” incurred with respect to such securities is of the “average amount of the adjusted basis” of such securities during the taxable year.

To the extent the Master Fund recognizes gain from securities with respect to which there is “acquisition indebtedness” at any time during the twelve-month period ending with the date of their disposition, the percentage of such gain which would be treated as UBTI (if received by a tax-exempt organization) will be based on the percentage which the highest amount of such “acquisition indebtedness” is of the “average amount of the adjusted basis” of such securities during the taxable year. In determining the unrelated debt-financed income of the Master Fund, an allocable portion of deductions directly connected with the Master Fund’s debt-financed property is taken into account. Thus, for instance, a percentage of losses from debt-financed securities (based on the debt/basis percentage calculation described above) would offset gains treated as UBTI.

In general, if UBTI is allocated to an exempt organization such as a qualified retirement plan or a private foundation, the portion the exempt organization’s income and gains which is not treated as UBTI will continue to be exempt from tax. Therefore, the possibility of realizing UBTI should not affect the tax-exempt status of such an exempt organization. A charitable remainder trust must pay a federal excise

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tax equal to 100% of its UBTI; however, other income remains exempt from federal income tax. Moreover, the charitable contribution deduction for a trust under Section 642(c) of the Code may be limited for any year in which the trust has UBTI.

A prospective investor should consult its tax adviser with respect to the tax consequences of receiving UBTI from the Fund. See “ERISA Considerations.”

Provision of Tax Information to Members; Tax Preparation Expenses

The Fund furnishes to Partners as soon as practicable after the end of each taxable year such information as is necessary for them to complete federal and state tax or information returns along with any tax information required by law. This information in certain cases will likely include estimates. It is not likely that the Master Fund will receive tax information from Investment Funds in a sufficiently timely manner to enable the Master Fund and the Fund to prepare their respective information returns in time for Partners to file their returns without requesting an extension of the time to file from the IRS or state taxing agencies. Accordingly, investors in the Fund will be required to obtain extensions of time to file their tax returns. The use of estimates or the lack of timely information from Investment Funds could result in material variances in the tax estimates provided by the Fund or may result in the Fund later amending its information returns, requiring the Partners to also amend their returns and report additional income or deductions not previously reported and pay federal and state income tax at applicable rates (together with applicable penalties and interest, if any, related to estimates or amended returns).

In addition, the Fund will not be in a position to independently verify the accuracy of tax information provided by the Investment Funds. In the event the IRS or state taxing agencies challenge tax positions taken by the Investment Funds or by the Fund, Partners of the Fund could be adversely affected. In particular, Partners in the Fund could be required to amend prior tax returns and include additional amounts of income not previously reported, and pay federal and/or state income tax at applicable rates (together with applicable penalties and interest, if any) if the tax information that Investment Funds provide to the Fund or positions taken by the Investment Funds or the Fund are determined to be materially inaccurate or otherwise change as a result of a successful challenge by the IRS or state taxing agencies.

Because the Fund expects to be treated as a partnership for federal income tax purposes, the Fund expects to deliver such tax information to Partners on IRS Schedule K-1 (not Form 1099). In light of the Master Fund’s investments in numerous Investment Funds as of the date hereof, the nature of the tax reporting on a Partner’s own federal income tax return of its allocable share of the Fund’s income, gain, loss, deduction or credit will be complicated, and the Partner will likely need the assistance of a certified public accountant or other tax professional to prepare its federal and state income tax returns. The Partner could experience a substantial increase in the amount of fees payable to such tax professionals, and such increase could be material. Investors subscribing for

Interests in the Fund for the first time late in the Fund’s fiscal year (which is currently the calendar year) may wish to consider such expenses in deciding whether to subscribe at such time or to delay the subscription until the beginning of the next fiscal year.

State and Local Taxes

Prospective investors should also consider the potential state and local tax consequences of an investment in the Fund. In addition to being taxed in its own state or locality of residence, a Partner may

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be subject to tax return filing obligations and income, franchise and other taxes in jurisdictions in which the Fund or the Investment Funds operate. The Fund may be required to withhold state and local taxes on behalf of the Partners. Any amount withheld generally will be treated as a distribution to each particular Partner. However, an individual Partner may be entitled to claim a credit on his or her resident state income tax return for the income taxes paid to the nonresident jurisdictions. Further, the Fund (and the Investment Funds) may be subject to state and/or local taxes and may be required to make certain notices and other filings or face penalties.

Foreign Taxation

The manner in which the Fund and/or Investment Funds and its income will be subject to taxation in the various countries in which it conducts investment activities (including activities conducted by the Master Fund and Investment Funds) depends on whether the Fund is treated as having a trade or business in the particular country, and foreign taxes may apply irrespective of the nature of the Fund’s activities. Although the Fund will endeavor, to the extent consistent with achieving its management and investment objectives, to minimize the risk that it is treated as engaged in a trade or business in a particular country that might result in significant taxation, no assurance can be provided in this regard. It is possible that certain amounts received from sources within foreign countries will be subject to withholding taxes imposed by such countries. In addition, the Fund and/or Investment Funds may also be subject to other withholding and capital gains, stamp duty or other taxes in some of the foreign countries where they purchase and sell securities. It may be difficult or burdensome for the Fund to obtain the benefit of tax treaties potentially applicable to its foreign investments.

The Partners will be informed by the Fund as to their proportionate share of the foreign taxes paid by or on behalf of the Fund, which they will be required to include in their income. The Partners may be entitled to claim either a credit (subject, however, to various limitations on foreign tax credits) or, if they itemize their deductions, a deduction (subject to the limitations generally applicable to deductions) for their share of such foreign taxes in computing their federal income taxes.

ERISA CONSIDERATIONS

The Fund

Persons who are fiduciaries with respect to an employee benefit plan or other arrangement subject to the Employee Retirement Income Security Act of 1974, as amended (an “ERISA Plan” and “ERISA,” respectively), and persons who are fiduciaries with respect to an IRA, Keogh Plan, or other plan that is subject to the prohibited transaction provisions of Section 4975 of the Code (together with ERISA Plans, “Plans”) should consider, among other things, the matters described below before determining whether to invest in the Fund.

A Plan fiduciary considering an investment in the Fund should consult with its legal counsel concerning all the legal implications of investing in the Fund, especially the issues discussed in the following paragraphs. In addition, a Plan fiduciary should consider whether an investment in the Fund will result in any UBTI to the Plan. See “CERTAIN TAX CONSIDERATIONS.”

ERISA imposes certain general and specific responsibilities on persons who are fiduciaries with respect to an ERISA Plan, including prudence, diversification, an obligation not to engage in a prohibited transaction and other standards. In determining whether a particular investment is appropriate for an ERISA Plan, Department of Labor (“DOL”) regulations provide that a fiduciary of an ERISA Plan must

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give appropriate consideration to, among other things, whether the investment is permitted under the Plan’s governing instruments, the role that the investment plays in the ERISA Plan’s portfolio, taking into consideration whether the investment is designed reasonably to further the ERISA Plan’s purposes, an examination of the risk and return factors, the fund’s composition with regard to diversification, the liquidity and current return of the total portfolio relative to the anticipated cash flow needs of the ERISA Plan, the income tax consequences of the investment (see “Tax Considerations – Unrelated Business Taxable Income”) and the projected return of the total portfolio relative to the ERISA Plan’s funding objectives. Before investing the assets of an ERISA Plan in the Fund, a fiduciary should determine whether such an investment is consistent with its fiduciary responsibilities and the foregoing regulations. If a fiduciary with respect to any such ERISA Plan breaches its or his responsibilities with regard to selecting an investment or an investment course of action for such ERISA Plan, the fiduciary itself or himself may be held liable for losses incurred by the ERISA Plan as a result of such breach.

Because the Fund is registered as an investment company under the Investment Company Act, the underlying assets of the Fund should not be considered to be “plan assets” of the Plans investing in the Fund for purposes of the fiduciary responsibility and prohibited transaction rules under ERISA and/or the Code. Thus, the Adviser will not be a fiduciary within the meaning of ERISA or the Code with respect to the assets of any Plan that invests in the Fund solely by reason of the Plan’s investment in the Fund.

Certain prospective Plan investors may currently maintain relationships with the Adviser or its affiliates. Each of such persons may be deemed to be a party in interest to and/or a fiduciary of any Plan to which it provides investment management, investment advisory, or other services. ERISA and the relevant provisions of the Code prohibit the use of Plan assets for the benefit of a party in interest and also prohibit a Plan fiduciary from using its position to cause the Plan to make an investment from which it or certain third parties in which such fiduciary has an interest would receive a fee or other consideration. Plan investors should consult with counsel to determine if participation in the Fund is a transaction that is prohibited by ERISA or the Code and fiduciaries of such plans should not permit an investment in the Fund with Plan assets if the Adviser or any of its affiliates perform or have investment powers over such assets, unless an exemption from the prohibited transaction rules apply with respect to such purchase.

The Fund requires Plan fiduciaries proposing to invest in the Fund to certify that (a) the investment by such Plan interest holder in the Fund is prudent for the Plan (taking into account any applicable liquidity and diversification requirements of ERISA); (b) the investment in the Fund is permitted under ERISA, the Code, other applicable law and the Plan’s governing plan documents; (c) neither the Adviser nor any of its affiliates (including, without limitation, any of the Related Parties) has acted as a fiduciary under ERISA with respect to such purchase; (d) no advice provided by the Adviser or any of its affiliates (including, without limitation, any of the Related Parties) has formed a primary basis for any investment decision by such Plan interest holder in connection with such purchase; and (e) the purchase, holding and disposition of the interest in the Fund will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or any substantively similar provisions of other law for which an exemption is not available.

The provisions of ERISA and the Code are subject to extensive and continuing administrative and judicial interpretation and review. The discussion of ERISA and the Code contained herein is, of necessity, general and may be affected by future publication of regulations and rulings. Potential Plan investors should consult with their legal advisers regarding the consequences under ERISA and the Code of the acquisition and ownership of an investment in the Fund.

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Employee benefit plans that are governmental plans (as defined in Section 3(32) of ERISA) are not subject to requirements of ERISA or the Code discussed above but may be subject to substantively similar provisions of other applicable federal or state law or may be subject to other legal restrictions on their ability to invest in the Fund. Accordingly, any such governmental plans and the fiduciaries of such plans should consult with their legal counsel concerning all the legal implications of investing in the Fund.

THE FUND’S SALE OF INTERESTS TO PLANS IS IN NO RESPECT A REPRESENTATION OR WARRANTY BY THE FUND, THE ADVISER OR ANY OF THEIR AFFILIATES (INCLUDING, WITHOUT LIMITATION, ANY OF THE RELATED PARTIES), OR BY ANY OTHER PERSON ASSOCIATED WITH THE SALE OF THE INTERESTS, THAT SUCH INVESTMENT BY PLANS MEETS ALL RELEVANT LEGAL REQUIREMENTS APPLICABLE TO PLANS GENERALLY OR TO ANY PARTICULAR PLAN, OR THAT SUCH INVESTMENT IS OTHERWISE APPROPRIATE FOR PLANS GENERALLY OR FOR ANY PARTICULAR PLAN.

ELIGIBLE INVESTORS

Each prospective investor will be required to complete the Fund’s subscription agreement (“Subscription Agreement”), a form of which is set forth in Appendix A to this Memorandum, and satisfy the investor eligibility standards set forth therein in order to be permitted to invest in the Fund. Appendix A qualifies the following summary in its entirety.

An investment in the Fund involves risks and it is possible that an investor may lose some of its investment. In addition, an investment in the Fund is not liquid and investors should provide for adequate liquidity outside of their investment in the Fund to meet their foreseeable liquidity needs. Before making an investment decision, an investor and/or its adviser should (i) consider the suitability of this investment with respect to its investment objectives and personal situation and (ii) consider factors such as its personal net worth, income, age, risk tolerance, and liquidity needs. See “RISK FACTORS.” Short-term investors and investors who cannot bear the loss of some of their investment and/or the risks associated with a lack of liquidity should not invest in the Fund.

The Fund

Only those Eligible Investors (as defined below) that (i) compensate their financial intermediaries directly for their services (for example, investors participating in a “wrap fee” or similar account with their intermediary), or (ii) in the case of certain institutional investors, invest directly through their financial intermediary or are internally managed (for example, an endowment or similar large institutional investor advised internally or by a separately-retained consultant or other intermediary), may invest in the Fund. In addition, employees of the Adviser or its affiliates who otherwise are Eligible Investors (as defined below) may invest in the Fund. The Subscription Agreement requires that an investor certify that it is an “accredited investor” for purposes of Regulation D under the Securities Act. An “accredited investor” includes, among other investors, an individual who: (i) has a net worth (or a joint net worth with that person’s spouse) immediately prior to the time of purchase in excess of $1 million (subject to applicable net worth calculation requirements); or (ii) an individual who has income in excess of $200,000 (or joint income with the investor’s spouse in excess of $300,000) in each of the two preceding years and has a reasonable expectation of reaching the same income level in the current year. The above is only a summary of certain “accredited investor” requirements. For a full description of the above-referenced requirements as well as other categories of “accredited investor” or other eligible investor

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standards applicable to companies and other investors, please refer to the Subscription Agreement included in Appendix A, which is incorporated herein by reference. In addition, Interests are generally being offered only to investors that are U.S. persons for U.S. federal income tax purposes. Additional requirements are set forth in the Subscription Agreement. Investors who meet the qualifications set forth in the Subscription Agreement are referred to in this Memorandum as Eligible Investors.

An investment in the Fund is not likely to be appropriate for certain types of tax-exempt entities, including charitable remainder trusts. Tax-exempt entities should consult with their tax advisers prior to making an investment in the Fund.

All prospective Partners must complete the Subscription Agreement Signature Pages of the Subscription Agreement in which they certify that, among other things, they meet the foregoing requirements and that they will not transfer their Interest (or any portion thereof) except in accordance with the LP Agreement. Existing Partners who request to purchase additional Interests are required to qualify as Eligible Investors and to complete additional Subscription Agreement Signature Pages prior to the additional purchase.

The Subscription Agreement requires that an investor certify as an “accredited investor” for purposes of Regulation D under the Securities Act. Categories of “accredited investor” and other eligible investor standards applicable to investors are set forth in the Subscription Agreement included in Appendix A.

Investors who meet the qualifications set forth in the Subscription Agreement are referred to in this Memorandum as Eligible Investors. All prospective Partners must complete the Subscription Agreement Signature Pages of the Subscription Agreement in which they certify that, among other things, they meet the foregoing requirements and that they will not transfer their Interest (or any portion thereof) except in accordance with the LP Agreement. Existing Partners who request to purchase additional Interests are required to qualify as Eligible Investors and to complete additional Subscription Agreement Signature Pages prior to the additional purchase.

PURCHASING INTERESTS

The minimum initial investment in the Fund by any investor is $100,000, and the minimum additional investment in the Fund by any investor is $25,000. However, the Fund, in its sole discretion, may accept investments below these minimums, and will accept investments that are reduced below such minimums due to the assessment of fees charged directly by a Sub-Placement Agent for services in conjunction with an investment in the Fund and/or maintenance of investor accounts. Interests will generally be offered for purchase at NAV as of the first business day of each calendar month, except that Interests may be offered more or less frequently as determined by the Board in its sole discretion. The Board also may suspend or terminate the availability for purchase of Interests at any time. No investment in the Fund (or any other relationship with the Adviser) will qualify an investor for any type of “breakpoint” or otherwise qualify investors for special treatment.

Except as otherwise permitted by the Board, initial and subsequent purchases of Interests will be payable in cash. Because of anti-money laundering concerns, the Fund will not accept currency (i.e., coin or paper money), cashier’s checks, bank drafts, travelers’ checks, money orders, starter checks, credit card convenience checks, third party checks, or any checks issued from foreign banks or denominated in foreign currency. Each initial or subsequent purchase of Interests will be payable in one installment which

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will generally be due prior to the proposed acceptance of the purchase, which period is longer if payment is other than by wire. Payments will be deposited to the Fund’s account as received but will not be considered invested in the Fund until the next available subscription date and no interest is earned by the investor in the interim. A prospective investor must submit a completed Subscription Agreement before the acceptance date set by the Fund. The Fund reserves the right, in its sole discretion, to reject in whole or in part, any subscription to purchase Interests in the Fund at any time. Furthermore, the Fund will generally cancel a subscription if the issuing bank subsequently does not honor a deposit that was issued to the Fund’s account. If a subscription is cancelled, the prospective investor will be responsible for any losses that may result from any decline in the value of the cancelled subscription. Although the Fund may, in its sole discretion, elect to accept a subscription prior to receipt of cleared funds, an investor will not become a Partner until cleared funds have been received.

Sub-Placement Agents or other financial intermediaries also may impose terms and conditions on investor accounts and investments in the Fund that are in addition to the terms and conditions set forth in this Memorandum. Such terms and conditions are not imposed by the Fund, the Placement Agent or any other service provider of the Fund. Any terms and conditions imposed by a Sub-Placement Agent or other financial intermediary, or operational limitations applicable to such parties, may affect or limit a Partner’s ability to subscribe for Interests, or otherwise transact business with the Fund. Investors should direct any questions regarding terms and conditions applicable to their accounts or relevant operational limitations to the Sub-Placement Agent or other financial intermediary.

PROXY VOTING POLICIES AND PROCEDURES

The Fund invests substantially all of its investable assets in the Master Fund. The Master Fund invests a substantial portion of its assets in securities of Investment Funds, some of which are private partnerships, limited liability companies or similar entities managed by Investment Managers (commonly referred to as “hedge funds”, “private equity funds” or “private funds”, etc.). These securities do not typically convey traditional voting rights to the holder and the occurrence of corporate governance or other notices for this type of investment is substantially less than that encountered in connection with registered equity securities. On occasion, however, the Adviser and/or the Master Fund may receive notices from such Investment Funds seeking the consent of holders in order to materially change certain rights within the structure of the security itself or change material terms of the Investment Funds’ limited partnership agreement, limited liability company operating agreement or similar agreement with investors. To the extent that the Master Fund receives notices or proxies from Investment Funds (or receives proxy statements or similar notices in connection with any other portfolio securities) or holds securities in a Separate Account (and thus retains or could retain some voting rights with respect to such securities), the Master Fund has delegated proxy voting responsibilities with respect to the Master Fund’s portfolio securities to the Adviser, subject to the Board’s general oversight and with the direction that proxies should be voted consistent with the Master Fund’s best economic interests.

With respect to proxies issued by the Master Fund, the Fund will not delegate to the Adviser, but will instead retain, its proxy voting authority and shall exercise such authority as described below. After the Fund receives a proxy issued by the Master Fund, the Fund will solicit its Partners to instruct the Fund to vote for or against the matter presented by the Master Fund. The Fund will then calculate the proportion of Interests voted for to those voted against (ignoring for purposes of this calculation the Interests for which it receives no voting instructions) and will subsequently vote its interest in the Master Fund for or against the matter in the same proportion. The Fund will not hold its own meeting to solicit Partner instructions.

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The Adviser has adopted its own proxy voting policies and procedures for this purpose. As a general principle, the Adviser will vote to maximize shareholder value, while considering all relevant factors, and vote without undue influence from individuals or groups who may have an economic interest in the outcome of the proxy vote. If it is determined that a proxy presents a material conflict of interest, then the Adviser shall vote the proxy in accordance with the recommendations of Institutional Shareholder Services (“ISS”) or another nationally recognized party, if available, or, if ISS or such party has disclosed that it has a conflict of interest with the vote, another independent third party.

The Master Fund is required to file Form N-PX, with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. The Master Fund’s most recent Form N-PX filing is available: (i) without charge, upon request, by calling 1-800-725-9456, or (ii) by visiting the SEC’s website at www.sec.gov.

ADDITIONAL INFORMATION AND SUMMARY OF THE LP AGREEMENT

An investor in the Fund will be a Partner of the Fund and his or her rights in the Fund will be established and governed by the LP Agreement, which shall be in substantially the form attached as Appendix C to this Memorandum. A prospective investor and his or her advisors should carefully review the LP Agreement as each Partner will agree to be bound by its terms and conditions. The following is a summary description of additional items and of select provisions of the LP Agreement that may not be described elsewhere in this Memorandum. The description of such items and provisions is not definitive and reference should be made to the complete text of the LP Agreement.

Partners; Additional Classes of Interests

Persons who purchase Interests will be Partners of the Fund. In addition, to the extent permitted by the Investment Company Act or any required exemptive relief, the Fund reserves the right to issue additional classes of Interests in the future subject to fees, charges, repurchase rights and other characteristics different from those of the Interests offered in this Memorandum.

Liability of Partners

Under Delaware law and the LP Agreement, each Partner will be liable for the debts and obligations of the Fund only to the extent of the value of such Partner’s Interest. A Partner, in the sole discretion of the Board, may be obligated to return to the Fund amounts distributed to the Partner in accordance with the LP Agreement in certain circumstances where, after giving effect to the distribution, certain liabilities of the Fund exceed the fair market value of the Fund’s assets.

Limitation of Liability; Indemnification

The LP Agreement provides that the members and former members of the Board and the Adviser (including certain of its affiliates, among others) shall not be liable to the Fund or any of the Partners for any loss or damage occasioned by any act or omission in the performance of their services as such in the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of their office or as otherwise required by applicable law. The LP Agreement also contains provisions for the indemnification, to the extent permitted by law, of the members and former members of the Board and the Adviser (including certain of its affiliates, among others) by the Fund (but not by the Partners individually) against any liability and expense to which any of them may be liable that arise in connection with the performance of their activities on behalf of a Fund. None of these persons shall be

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personally liable to any Partner for the repayment of any positive balance in the Partner’s capital account or for contributions by the Partner to the capital of the Fund or by reason of any change in the federal or state income tax laws applicable to the Fund or its investors. The rights of indemnification and exculpation provided under the LP Agreement shall not be construed so as to limit liability or provide for indemnification of the members and former members of the Board and the Adviser (including certain of its affiliates, among others) for any liability (including liability under applicable federal or state securities laws which, under certain circumstances, impose liability even on persons that act in good faith), to the extent (but only to the extent) that such indemnification or limitation on liability would be in violation of applicable law, but shall be construed so as to effectuate the applicable provisions of the LP Agreement to the fullest extent permitted by law.

Power of Attorney

In subscribing for an Interest, a Partner will appoint the General Partner as his, her or its attorney-in-fact for purposes of filing required certificates and documents relating to the formation and maintenance of the Fund as a limited partnership under Delaware law or signing all instruments effecting authorized changes in the Fund or the LP Agreement and conveyances and other instruments deemed necessary to effect the dissolution or termination of the Fund. This power of attorney, which will be contained in the Subscription Agreement, is a special power of attorney and is coupled with an interest in favor of the General Partner and as such will be irrevocable and will continue in full force and effect notwithstanding the subsequent death or incapacity of any Partner granting the power of attorney. In addition, the power of attorney will survive the delivery of a transfer by a Partner of all or any portion of the Partner’s Interest, except that when the transferee of the Interest or portion of the Interest has been approved by the Fund for admission to the Fund as a substitute Partner, or upon the withdrawal of a Partner from the Fund pursuant to a repurchase of Interests or otherwise, the power of attorney given by the transferor will terminate.

Amendment of the LP Agreement

The LP Agreement may generally be amended, in whole or in part, with the approval of a majority of the Directors (including a majority of the Independent Directors, if required by the Investment Company Act) and without the approval of the Partners unless the approval of Partners is required under the Investment Company Act. However, certain amendments to the LP Agreement involving capital accounts and allocations thereto may not be made without the written consent of each Partner materially adversely affected thereby or unless each Partner has received written notice of the amendment and any Partner objecting to the amendment has been allowed a reasonable opportunity (pursuant to any procedures as may be prescribed by the Board) to have all of its Interest repurchased by the Fund.

Term, Dissolution and Liquidation

The Fund shall be dissolved: (1) upon the affirmative vote to dissolve the Fund by both (i) a majority of the Directors, and (ii) Partners holding at least two-thirds (2/3) of the total number of votes eligible to be cast by all Partners; (2) upon either (i) an election by the General Partner to dissolve the Fund, or (ii) under certain conditions, in the event that the General Partner ceases to be General Partner of the Fund; (3) upon the failure of Partners to approve successor Directors when no Director remains to continue the business of the Fund; or (4) as required by operation of law.

In the event of the dissolution of the Master Fund, the Board will seek to act in the best interests of the Fund and the Partners in determining whether, for example, to invest the Fund’s assets directly, rather than through the Master Fund, or to dissolve the Fund. The Master Fund may be dissolved (1) upon

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the affirmative vote to dissolve the Fund by either (i) a majority of the Directors, and (ii) Partners holding at least three-fifths (3/5) of the total number of votes eligible to be cast by all Partners; or (2) as required by operation of law.

Any investor in the Master Fund, including the Fund or other feeder funds that invests in the Master Fund, also may, in connection with the dissolution and liquidation of such investor in the Master Fund, tender to the Master Fund for redemption all of such investor’s interest in the Master Fund. In the event of such a tender for redemption, the Master Fund, subject always to the terms of its limited partnership agreement and the Master Fund’s ability to liquidate sufficient Master Fund investments in an orderly fashion determined by the Master Fund’s directors to be fair and reasonable to the Master Fund and all of its limited partners (including the Fund), shall pay to such redeeming limited partner within 90 days the proceeds of such redemption, provided that such proceeds may be paid in cash, by means of in-kind distribution of Master Fund investments, or as a combination of cash and in-kind distribution of Master Fund investments.

Upon the occurrence of any event of dissolution of the Fund, the Board or the Adviser, acting as liquidator under appointment by the Board (or another liquidator, if the Board does not appoint the Adviser to act as liquidator or is unable to perform this function) is charged with winding up the affairs of the Fund and liquidating its assets. Net profits or net loss during the fiscal period including the period of liquidation will be allocated as described in the section titled “CAPITAL ACCOUNTS AND ALLOCATIONS.”

Upon the liquidation of the Fund, its assets will be distributed: (i) first to satisfy the debts, liabilities, and obligations of the Fund (other than debts to Partners) including actual or anticipated liquidation expenses; (ii) next to repay debts, liabilities and obligations owing to the Partners; and (iii) finally to the Partners proportionately in accordance with the balances in their respective capital accounts. Assets may be distributed in-kind on a pro rata basis if the Board or liquidator determines that such a distribution would be in the interests of the Partners in facilitating an orderly liquidation.

The Board may, in its sole discretion, and if determined to be in the best interests of the Partners, distribute the assets of the Fund into and through a liquidating trust to effect the liquidation of the Fund. The use of a liquidating trust would be subject to the regulatory requirements of the Investment Company Act and applicable Delaware law, and could result in additional expenses to the Partners.

REPORTS TO PARTNERS

Partners will receive annual tax information necessary for completion of federal, state and local tax returns. The Fund intends to furnish to Partners such information as soon as practicable after receipt of the necessary information from the Investment Funds. However, such annual tax information is provided by the Fund after April 15 of each year and, accordingly, Partners will need to file extensions for the completion of their federal, state and local tax returns.

The Fund anticipates sending Partners an unaudited semi-annual and an audited annual report within 60 days after the close of the period for which the report is being made, or as otherwise required by the Investment Company Act. Partners also may be sent additional reports regarding the Fund’s operations, at the discretion of the Adviser.

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FISCAL YEAR

For accounting and tax purposes, the Fund’s fiscal and taxable year is the 12-month period ending on December 31.

ACCOUNTANTS AND LEGAL COUNSEL

The Board has selected KPMG, LLP as the independent public accountants of the Fund. KPMG, LLP’s principal business address is located at 191 W. Nationwide Blvd., Suite 500, Columbus, OH 43215.

K&L Gates LLP, located at One Lincoln Street, Boston, Massachusetts 02111, serves as legal counsel to the Fund and also serves as legal counsel to the Independent Directors.

INQUIRIES

Inquiries concerning the Fund and the Interests (including procedures for purchasing Interests) should be directed to:

Endowment Advisers, L.P.

4265 San Felipe, Suite 800

Houston, Texas 77027

Attention: Fund Operations

Toll-Free 1-800-725-9456

FINANCIAL STATEMENTS

The Fund issues semi-annual and audited financial statements. The Fund’s and the Master Fund’s audited financial statements for the period ended December 31, 2012 are incorporated herein by reference the Fund’s annual report dated December 31, 2012, as filed on Form N-CSR (File No. 811-22367.)

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Appendix A

THE ENDOWMENT INSTITUTIONAL FUND, L.P.

Subscription Agreement

The Endowment Institutional Fund, L.P.

4265 San Felipe

Suite 800

Houston, TX 77027

Phone: (800) 725-9456

Fax: (713) 583-1330

Attention: Fund Operations

Gentlemen:

The undersigned (the “Subscriber”) hereby acknowledges having received and read the current Private Placement Memorandum (the “Memorandum”) of:

The Endowment Institutional Fund, L.P., a limited partnership organized under the laws of the State of Delaware (the “Fund”), the form of Agreement of Limited Partnership of the Fund, as amended to the date hereof (the “Partnership Agreement”) and the Privacy Policy of the Fund, attached hereto as Exhibit A. Capitalized terms not herein defined are used as defined in the Memorandum.

THE INTERESTS OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PARTNERSHIP AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE INTERESTS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THESE INTERESTS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. FURTHERMORE, THE INTERESTS ARE NOT TRANSFERABLE WITHOUT THE CONSENT OF THE RELEVANT FUND, WHICH CONSENT MAY BE GRANTED OR DENIED IN ITS DISCRETION. THERE WILL BE NO PUBLIC MARKET FOR THE INTERESTS. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

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AN INVESTMENT IN THE INTERESTS IS SUBJECT TO SUBSTANTIAL RISKS. NO PERSON SHOULD INVEST IN THE INTERESTS WHO CANNOT AFFORD THE LOSS OF HIS ENTIRE INVESTMENT. SEE “RISK FACTORS” IN THE ACCOMPANYING MEMORANDUM.

The Subscriber hereby agrees with the Fund as follows:

Subscription Commitment

The Subscriber hereby subscribes for a limited partnership interest in the Fund (the “LP Interest”) and, as full payment therefore, agrees to pay to the Fund, in cash, the amount set forth in the accompanying Subscription Agreement Signature Pages completed and signed by the Subscriber (which shall be considered an integral part of this Subscription Agreement and hereinafter referred to as the “Subscription Agreement Signature Pages”). Such capital contribution (“Capital Contribution”) shall be payable in readily available funds by check or by wire transfer to the bank account of the Fund. The initial Capital Contribution shall be payable in one installment as of the proposed acceptance of the Subscription Agreement specified by the Fund or on such later date as the Fund shall determine.

The Subscriber understands that this subscription is not binding on the Fund until accepted by the Fund and may be rejected by the Fund in whole or in part in its absolute discretion. If so rejected, the Fund shall return to the Subscriber, without interest or deduction, any Capital Contribution tendered by the Subscriber, and the Fund and the Subscriber shall have no further obligation to each other hereunder. Unless and until rejected by the Fund, this subscription shall be irrevocable by the Subscriber.

Representations, Warranties and Covenants

To induce the Fund to accept this subscription, the Subscriber hereby makes the following representations, warranties and covenants to the Fund and to the Fund’s general and limited partners:

(a)         The Subscriber certifies that it either (i) compensate its financial intermediary directly for their services (for example, investors participating in a “wrap fee” or similar account with their intermediary), or (ii) in the case of certain institutional investors, invests directly through its financial intermediary (for example, an endowment or similar large institutional investor advised by a separately-retained consultant or other intermediary), and that the Subscriber is an “accredited investor” for purposes of Regulation D under the Securities Act. Guidelines are as follows:

(A1) For individual investors, grantors of revocable grantor trusts, to meet the qualification as an “accredited investor” for purposes of Regulation D, one (or more) of the following must apply:

(a)         A natural person whose net worth¹ (or joint net worth with a spouse) at the time of purchase exceeds $1,000,000; excluding the value of the primary residence of such natural person; or

(b)         A natural person who had an individual income in excess of $200,000 for each of the last two years (or joint income with a spouse in excess of $300,000 in each of those years) and who reasonably expects to reach the same income level in the current year.

¹As used herein, “net worth” means the excess of total assets at fair market value over total liabilities. For the purposes of determining “net worth”, the primary residence owned by an individual shall be excluded as an asset and the amount of indebtedness secured by the such primary residence shall be excluded as a liability except to the extent that: (1) such indebtedness exceeds the fair market value of the primary residence; and (2) such indebtedness was incurred within 60 days of the purchase of the Interests, unless such indebtedness was incurred as a result of the acquisition of the primary residence.

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(A2) For entities to meet the qualification as an “accredited investor” for purposes of Regulation D, one (or more) of the following must apply:

(a)         A trust (i) with total assets in excess of $5,000,000, (ii) that was not formed for the specific purpose of investing in the Fund, and (iii) of which the person responsible for directing the investment of assets in the Fund has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment;

(b)         An entity with total assets in excess of $5,000,000 that was not formed for the specific purpose of investing in the Fund and that is:

a corporation;	a Massachusetts or similar business trust; or
a partnership;       a limited liability company;	an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”);

(c)         An entity licensed, or subject to supervision, by U.S. federal or state examining authorities as a “bank,” (as defined in Section 3(a)(2) of the Securities Act, a “savings and loan association,” (or other institution as described in Section 3(a)(5)(A) of the Securities Act), or an account for which a bank or savings and loan association is subscribing in a fiduciary capacity;

(d)         An entity registered with the U.S. Securities and Exchange Commission as a broker or dealer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), an “insurance company” (as defined in Section 2(13) of the Securities Act) or an investment company registered under the Investment Company; or an entity that has elected to be treated or qualifies as a “business development company” (within the meaning of Section 2(a)(48) of the Investment Company Act);

(e)         A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;

(f)         A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended (the “Advisers Act”); or

(g)         An entity which all of the unit owners and participants (i.e., all partners (including limited partners) of a partnership, shareholders of a corporation, or beneficiaries of an estate) are Accredited Investors. THIS OPTION IS NOT APPLICABLE FOR NON-GRANTOR TRUSTS.

(b)         The information set forth in the accompanying Subscription Agreement Signature Pages, as well as any information regarding Subscriber’s identity, is accurate and complete as of the date hereof, and the Subscriber will promptly notify the Fund of any change in such information. The Subscriber consents to the disclosure of any such information, and any other information furnished to the Fund, to any governmental authority, self-regulatory organization or, to the extent required by law, to any other person, or as otherwise provided in the Fund’s Privacy Policy, in each case in accordance with the Fund’s Privacy Policy attached as Exhibit A (of which the Subscriber hereby acknowledges receipt).

(c)         The undersigned has received and read and is familiar with the Memorandum, including the exhibits, attachments and annexes attached thereto, and he confirms that all documents, records, and books pertaining to this proposed investment in the LP Interests have been made available to him.

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(d)         The Subscriber is not acquiring the LP Interests of the Fund with a view to or for sale in connection with any distribution of the LP Interests. The Subscriber (i) will not transfer or deliver all or any part of its LP Interest except in accordance with the restrictions set forth in the Partnership Agreement and the Memorandum and (ii) will notify the Fund immediately if it becomes a non-United States Person at any time during which it holds or owns any LP Interests.

(e)         Other than the Memorandum, the Subscriber is not relying upon any representation or other information purported to be given on behalf of the Fund or the Fund in determining to invest in the Fund (it being understood that no person has been authorized by the Fund or the Fund to furnish any representations or other information).

(f)         The Subscriber or an advisor or consultant relied upon by the Subscriber in reaching a decision to subscribe has such knowledge and experience in financial, tax and business matters as to enable the Subscriber or such advisor or consultant to evaluate the merits and risks of an investment in the Fund and to make an informed investment decision with respect thereto. The Subscriber understands the Fund’s compensation arrangements with the Adviser and understands the risks described in the Memorandum.

(g)         The Subscriber acknowledges that an investment in the LP Interests of the Fund includes significant risks as described in the Memorandum, including without limitation those risks outlined in the sections of the Memorandum entitled “GENERAL RISKS,” “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE” and “INVESTMENT RELATED RISKS.”

(h)         The Subscriber is satisfied that it has received adequate disclosure from the Fund to enable it to understand and evaluate the compensation arrangements of the Fund with the Adviser and other terms of the Partnership Agreement and the risks associated therewith.

(i)         The Subscriber understands that the LP Interests have not been and will not be registered under the Securities Act of 1933, as amended, or any state law. No federal or state agency has made any finding or determination as to the fairness of the offering, or has recommended an investment in, or otherwise endorsed, the Fund. The Subscriber agrees to notify the Fund prior to any proposed sale, transfer, distribution or other disposition of any LP Interests or any beneficial interest therein, and will not sell, transfer, distribute or otherwise dispose of any LP Interests without the consent of the Fund, which may be granted or withheld in the Fund’s sole discretion, and unless the LP Interests are registered or such sale, transfer, distribution or other disposition is exempt from registration. The Subscriber understands that the Fund has no intention to register the LP Interests with the United States Securities and Exchange Commission or any State of the United States and is under no obligation to assist the Subscriber in obtaining or complying with any exemption from such registration requirements. The Fund may require that a proposed transferee meet appropriate financial suitability standards and that the transferor furnish a legal opinion satisfactory to the Fund and its counsel that the proposed transfer complies with applicable federal, state and any other applicable securities laws. An appropriate stop transfer instructions may be placed with respect to the LP Interests.

(j)         Any document representing ownership of an LP Interest by the Subscriber will bear a restrictive legend reflecting the restrictions on transferability set forth in sections (h).

(k)         Illiquidity

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(i)         The Subscriber recognizes that there is not now any public market for LP Interests of the Fund and that such a market is not expected to develop; accordingly, it may not be possible for the Subscriber readily to liquidate the Subscriber’s investment in the Fund. The Subscriber’s overall commitment to the Fund and other investments which are not readily marketable are not disproportionate to the Subscriber’s net worth and the Subscriber has no need for immediate liquidity of the Subscriber’s interest in the LP Interests. As described in the Memorandum, the Subscriber acknowledges that the LP Interests are subject to significant restrictions on the right to withdraw capital, which means that the liquidity of the LP Interests will be limited.

(ii) The Subscriber understands the repurchase offer process described in the Memorandum is likely to be the sole means of liquidity for Subscriber’s investment in the Fund. If a significant number of Partners sought to have their LP Interests repurchased at the same time, the illiquidity that results from the Fund’s significant indirect investment in long-term investments, which ordinarily cannot be liquidated without significant discount, if at all, may prevent the Fund from repurchasing more than a specified amount of LP Interests. In addition, to the extent that the Fund ever was to repurchase significant amounts of LP Interests, the illiquidity of the remaining investment portfolio would increase based on the Fund’s indirect investment in long-term investments, a factor that the Board would consider when determining the amount of LP Interests to repurchase. In the event the Fund ever winds down investment operations and terminates, the Fund would be unable to offer to repurchase all LP Interests immediately and Partners would receive the value of their LP Interests over time as the Fund liquidated its assets, which could require a significant period of time to realize certain illiquid assets.

(l)         The Subscriber has carefully read the Memorandum of the Adviser, and specifically accepts, adopts and agrees to each and every provision described in such materials.

(m)         If the Subscriber is a natural person, the Subscriber has the legal capacity to execute, deliver and perform this Subscription Agreement and the Partnership Agreement.

(n)         The Subscriber represents and warrants that no party which either (i) has had any of its assets blocked under U.S. sanctions laws, or (ii) has been identified by the U.S. Government as a person whose assets are to be blocked under such laws, has or will have any beneficial interest in the LP Interests subscribed for hereby.

(o)         If the Subscriber is a corporation, partnership, trust or other entity, it is authorized and qualified to become a limited partner of, and authorized to make its Capital Contribution to, the Fund and otherwise to comply with its obligations under the Partnership Agreement; the person signing this Subscription Agreement on behalf of such entity has been duly authorized by such entity to do so; and this Subscription Agreement has been duly executed and delivered on behalf of the Subscriber and is the valid and binding agreement of the Subscriber, enforceable against the Subscriber in accordance with its terms. In addition, such Subscriber will, upon request of the Fund, deliver any documents, including an opinion of counsel to the Subscriber, evidencing the existence of the Subscriber, the legality of an investment in LP Interests of the Fund and the authority of the person executing this Subscription Agreement on behalf of the Subscriber.

(p)         If the Subscriber is, or is acting on behalf of, an employee benefit plan (a “Plan”) which is subject to ERISA: (a) the investment by such Plan interest holder in the Fund is prudent for the Plan (taking into account any applicable liquidity and diversification requirements of ERISA); (b) the investment in the Fund is permitted under ERISA, the Code, other applicable law and the Plan’s

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governing plan documents; (c) neither the Adviser nor any of its affiliates (including, without limitation, any of the Related Parties) has acted as a fiduciary under ERISA with respect to such purchase; (d) no advice provided by the Adviser or any of its affiliates (including, without limitation, any of the Related Parties) has formed a primary basis for any investment decision by such Plan interest holder in connection with such purchase; and (e) the purchase, holding and disposition of the interest in the Fund will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or any substantively similar provisions of other law for which an exemption is not available.

(q)         In the event the Subscriber makes any subsequent capital contributions to the Fund, the Subscriber acknowledges that the representations and warranties contained herein will be deemed to be made again as of the date of such subsequent capital contribution.

(r)         Neither the Subscriber, nor any person controlling, controlled by, or under common control with, the Subscriber, nor any person having a beneficial interest in the Subscriber, or for whom the Subscriber is acting as agent or nominee in connection with this investment, is (i) a country, person, or entity named on an Office of Foreign Assets Control list, (ii) a person or entity that resides or has a place of business in a country or territory named on such list, or (iii) a senior foreign political figure,³ an immediate family member⁴ or close associate⁵ of a senior foreign political figure within the meaning of the USA PATRIOT Act of 2001.⁶ The Subscriber agrees to promptly notify the relevant Fund of any change in information affecting this representation and covenant. The Subscriber is advised that, by law, the Fund may be required to disclose the Subscriber’s identity to OFAC.

(s)         The Subscriber is not a Charitable Remainder Trust.

(t)         The Subscriber is not a tax-exempt investor that, by the terms of its governing documents, investment guidelines or by choice, cannot receive any “Unrelated Business Taxable Income.”

(u)         If the Subscriber is subject to Title 1 of ERISA, the subscriber represents that it has consulted its own counsel as to the legality of making an investment in the Fund and the appropriateness of such an investment under ERISA.

(v)         If the Subscriber is a Plan⁷ fiduciary, the Subscriber certifies that (a) the investment by such Plan interest holder in the Fund is prudent for the Plan (taking into account any applicable liquidity

³ A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

⁴ “Immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws.

⁵ A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior political figure

⁶ The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56 (2001).

⁷ For purposes of this question, a “Plan” is any employee benefit plan to which ERISA applies and certain other plans and accounts (such as individual retirement accounts and Keogh plans) that, although not subject to ERISA, are subject to certain similar rules of the Code.

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and diversification requirements of ERISA); (b) the investment in the Fund is permitted under ERISA, the Code, other applicable law and the Plan’s governing plan documents; (c) neither The Endowment Fund GP, L.P. (the “General Partner of the Fund”), the Adviser nor any of their affiliates has acted as a fiduciary under ERISA with respect to such purchase; (d) no advice provided by the Adviser, the General Partner of the Fund, or any of their affiliates has formed a primary basis for any investment decision by such Plan interest holder in connection with such purchase; and (e) the purchase, holding and disposition of the interest in the Fund will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or any materially similar provisions of other law for which an exemption is not available.

Indemnification

The Subscriber understands the meaning and legal consequences of the representations, warranties, agreements, covenants and confirmations set out above and agrees that the subscription made hereby may be accepted in reliance thereon. The Subscriber agrees to indemnify and hold harmless the Fund, its general partner, and the Adviser (including for this purpose each of their directors, officers, shareholders, affiliates, partners, managers and employees, and each person who controls the Fund and each of such entities within the meaning of Section 20 of the Exchange Act) from and against any and all loss, damage, liability or expense, including reasonable costs and attorneys’ fees and disbursements, which the Fund may incur by reason of, or in connection with, any representation or warranty made herein (or in the accompanying Subscription Agreement Signature Pages) not having been true when made, any misrepresentation made by the Subscriber or any failure by the Subscriber to fulfill any of the covenants or agreements set forth herein, in the Subscription Agreement Signature Pages or in any other document provided by the Subscriber to the Fund.

Miscellaneous

(a)         The Subscriber agrees that neither this Subscription Agreement nor any of the Subscriber’s rights or interest herein or hereunder is transferable or assignable by the Subscriber and further agrees that the transfer or assignment of any LP Interests acquired pursuant hereto shall be made only in accordance with the provisions hereof and all applicable laws.

(b)         The Subscriber agrees that, except as permitted by applicable law, it may not cancel, terminate or revoke this Subscription Agreement or any agreement of the Subscriber made hereunder and that this Subscription Agreement shall survive the death or legal disability of the Subscriber and shall be binding upon the Subscriber’s heirs, executors, administrators, successors and assigns.

(c)         All of the representations, warranties, covenants, agreements and confirmations set out above and in the Subscription Agreement Signature Pages shall survive the acceptance of the subscription made herein and the issuance of any LP Interests of the Fund.

(d)         This Subscription Agreement together with the Subscription Agreement Signature Pages constitute the entire agreement between the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by both parties.

(e)         The Subscriber acknowledges that due to anti-money laundering laws and regulations, the Fund may require further identification of the Subscriber before the subscription can be accepted and the Fund shall be held harmless and indemnified against any loss arising as a result of a failure to process the application if such has not been provided by the Subscriber or has been provided incompletely or after a delay.

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(f)         Within ten days after receipt of a written request therefor from the Fund, the Subscriber agrees to provide such information and to execute and deliver such documents as the Fund may deem reasonably necessary to comply with any and all laws and ordinances to which the Fund is or may be subject.

Power of Attorney

Subject only to the acceptance of this Subscription Agreement by the Fund, the Subscriber hereby (a) requests to be admitted to the Fund as a limited partner and requests that the Fund reflect such admission in the Fund’s register of partners; (b) joins in and agrees to be bound by the Partnership Agreement as a limited partner; and (c) makes, constitutes and appoints The Endowment Fund GP, L.P., acting through any of its authorized members, directors, managers, partners and officers and with power of substitution, the Subscriber’s true and lawful agent and attorney, with full power and authority in such Subscriber’s name, place and stead, to make, execute, acknowledge, record and/or file (i) the Partnership Agreement, (ii) any certificate or other document required to effect the formation, continuation, qualification or dissolution of the Fund in accordance with the terms of the Partnership Agreement or which legal counsel to the Fund deems necessary or desirable to comply with any federal, state or other law applicable to the Fund, and (iii) any amendments to any of the foregoing adopted or otherwise made in accordance with the provisions of the Partnership Agreement. The power of attorney granted hereby is a special power of attorney coupled with an interest and shall be irrevocable to the fullest extent permitted by law.

Notices

Any notice required or permitted to be given to the Subscriber in relation to the Fund shall be sent to the address specified in Subscription Agreement Signature Pages accompanying this Subscription Agreement or to such other address as the Subscriber designates by written notice received by the Fund.

Governing Law

This Subscription Agreement shall be governed by the laws of the State of Delaware without regard to the conflicts of law principles thereof.

A-8

EXHIBIT A

Privacy Policy of The Endowment Institutional Fund, L.P.

The Endowment Institutional Fund, L.P. (the “Fund”) recognizes how important it is for you to feel confident in the knowledge that your personal financial information is secure. It is our policy to safeguard any personal and financial information that you may entrust to us. The following is a description of the Fund’s policy regarding disclosure of nonpublic personal information.

We collect nonpublic personal information as follows:

We collect information about you, including, but not limited to, your name, address, telephone number, e-mail address, social security number and date of birth. We collect that information from subscription agreements, other forms of correspondence that we receive from you, and from personal conversations.

We receive information about your transactions with us, including, but not limited to, your account number, account balance, investment amounts, withdrawal amounts and other financial information.

We are permitted by law to disclose nonpublic information we collect, as described above, to the Fund’s service providers, including the Fund’s general partner, investment adviser, sub-advisers, servicing agent, independent administrator, custodian, legal counsel, accountant and auditor. We do not disclose any nonpublic information about our current or former investors to nonaffiliated third parties, except as required or permitted by law. We restrict access to your nonpublic personal information to those persons who require such information to provide products or services to you. We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.

If your investment relationship with the Fund involves a financial intermediary, including, but not limited to, a broker-dealer, bank or trust company, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared by them with nonaffiliated third parties.

Regards,

Paul A. Bachtold

Compliance Officer

A-9

Appendix B

PERFORMANCE HISTORY OF THE FUND

This appendix presents past performance information (“Performance”) of (i) the Master Fund’s predecessor, a private fund that utilized a multi-manager, multi-strategy investment approach from the private fund’s establishment in April 2003 through March 2004, and (ii) the Master Fund thereafter. The private fund was organized in March 2003 as a Cayman Islands limited partnership and, without having commenced investment operations, re-domesticated as a Delaware limited partnership in March 2003. After this re-domestication, the private fund operated as an unregistered investment vehicle from April 1, 2003 until March 10, 2004, at which time it became the Master Fund by registering as a closed-end investment company under the Investment Company Act. Upon the registration of the private fund as an investment company, the personnel that had made investment decisions for the private fund became the Adviser’s investment committee, which makes investment decisions for the Master Fund. The Adviser employs an investment program for the Fund and the Master Fund that is substantially similar to the investment program that was employed in managing the private fund. The private fund, during the period for which performance is reported, was the only non-proprietary, fully invested account managed by The Endowment Fund GP, L.P. (the predecessor to the Adviser), the Adviser, or their affiliates that had an investment program with substantially the same investment objectives, policies, and strategies as the Master Fund. The Adviser manages the Master Fund in a manner substantially similarly to the private fund. Accordingly, by the Fund investing substantially all of its assets in the Master Fund, the Fund participates in the substantially similar investment management that the Adviser renders to the Master Fund and previously rendered to the private fund.

The Master Fund and private fund Performance has been adjusted to reflect the projected fees and estimated expenses of the Fund. SEE “SUMMARY OF FUND EXPENSES.”

THE PAST PERFORMANCE OF THE ADJUSTED PRIVATE FUND AND THE MASTER FUND AND THE PERFORMANCE OF THE INSTITUTIONAL FUND IS NO GUARANTEE OF FUTURE RESULTS OF EITHER THE MASTER FUND OR THE FUND.

PERFORMANCE FIGURES PRIOR TO THE SECOND QUARTER OF 2004 ARE NOT THE PERFORMANCE OF THE MASTER FUND BUT ARE THE HISTORICAL PERFORMANCE OF THE INVESTMENT PORTFOLIO OF THE PRIVATE FUND, ALL THE ASSETS OF WHICH WERE, AS A RESULT OF THE REORGANIZATION, HELD BY THE MASTER FUND IN WHICH THE FUND INVESTS SUBSTANTIALLY ALL OF ITS INVESTABLE ASSETS. The Performance shown is not an indication of how the Master Fund or the Fund will perform in the future. The Master Fund’s and the Fund’s performance in the future may be different from that shown due to factors such as differences in cash flows, fees, expenses, performance calculation methods, portfolio size, number of underlying pooled investments, investment limitations, diversification requirements and other restrictions imposed on registered funds by the Investment Company Act of 1940, as amended (the “1940 Act”), all of which, if applicable, could have a negative impact on the Master Fund’s and the Fund’s performance. In particular, the private fund’s Performance is not necessarily an indication of how the Master Fund and the Fund will perform in the future, as the private fund was not subject to investment limitations, and other restrictions imposed on registered management investment companies by the 1940 Act which, could have had a negative impact on the private fund’s Performance.

B-1

The total return figures in the chart are intended to provide investors with information about the historical experience of the Adviser in managing the private fund and the Master Fund. Investors should not consider this performance data as an indication of future performance. The table should be read in conjunction with the notes thereto. The performance information in the table has not been audited and does not comply with the standards established by the CFA Institute (formerly the Association of Investment Management and Research (AIMR)).

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

THE FOLLOWING INFORMATION MUST BE READ IN CONJUNCTION WITH THE ACCOMPANYING FOOTNOTES APPEARING BELOW.

Adjusted Performance Record of the private fund and the Master Fund and the Performance of the Institutional Fund

	2003
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			YTD
Endowment private fund—Adjusted											3.16	%		4.19	%		2.22	%		-0.31	%		2.22	%		2.05	%		3.14	%		1.30	%		2.91	%		22.85	%
60/40 Portfolio											5.25	%		3.97	%		0.74	%		-0.03	%		1.27	%		0.38	%		3.02	%		0.58	%		3.49	%		20.12	%
S&P 500											8.24	%		5.27	%		1.28	%		1.76	%		1.95	%		-1.06	%		5.66	%		0.88	%		5.24	%		32.87	%
Barclays Int. Gov/Cdt Index											0.76	%		2.01	%		-0.07	%		-2.72	%		0.24	%		2.53	%		-0.94	%		0.14	%		0.87	%		2.76	%
CSBCH											1.50	%		1.84	%		0.47	%		-0.26	%		0.60	%		0.70	%		0.86	%		0.62	%		1.08	%		7.63	%
HFRI Fund of Funds Composite Index											1.22	%		2.08	%		0.67	%		0.23	%		0.83	%		1.18	%		1.53	%		0.62	%		1.55	%		10.33	%
	2004
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			YTD
Endowment private fund and The Endowment Master Fund—Adjusted		1.81	%		1.48	%		1.29	%		-2.60	%		-1.26	%		0.94	%		-0.91	%		0.47	%		1.78	%		0.78	%		3.12	%		1.74	%		8.83	%
60/40 Portfolio		1.37	%		1.24	%		-0.59	%		-1.89	%		0.64	%		1.28	%		-1.65	%		0.91	%		0.72	%		1.19	%		2.07	%		2.31	%		7.75	%
S&P 500		1.84	%		1.39	%		-1.51	%		-1.57	%		1.37	%		1.94	%		-3.31	%		0.40	%		1.08	%		1.53	%		4.05	%		3.40	%		10.88	%
Barclays Int. Gov/Cdt Index		0.66	%		1.02	%		0.78	%		-2.37	%		-0.45	%		0.30	%		0.84	%		1.67	%		0.17	%		0.67	%		-0.91	%		0.68	%		3.04	%
CSBCH		1.25	%		1.32	%		0.05	%		-1.01	%		-0.39	%		-0.24	%		-0.17	%		-0.29	%		0.47	%		1.43	%		1.74	%		1.07	%		5.31	%
HFRI Fund of Funds Composite Index		1.59	%		1.10	%		0.45	%		-0.88	%		-0.87	%		0.24	%		-0.58	%		-0.01	%		0.89	%		0.78	%		2.55	%		1.46	%		6.86	%
	2005
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			YTD
The Endowment Master Fund—Adjusted		-0.23	%		2.24	%		-1.57	%		-1.80	%		0.96	%		1.76	%		2.71	%		0.80	%		2.44	%		-2.48	%		2.42	%		2.42	%		9.88	%
60/40 Portfolio		-1.39	%		1.04	%		-1.27	%		-0.68	%		2.27	%		0.25	%		1.90	%		-0.08	%		0.15	%		-1.22	%		2.44	%		0.27	%		3.64	%
S&P 500		-2.44	%		2.10	%		-1.77	%		-1.90	%		3.18	%		0.14	%		3.72	%		-0.91	%		0.81	%		-1.67	%		3.78	%		0.03	%		4.89	%
Barclays Int. Gov/Cdt Index		0.19	%		-0.55	%		-0.52	%		1.14	%		0.90	%		0.42	%		-0.83	%		1.17	%		-0.85	%		-0.55	%		0.44	%		0.63	%		1.57	%
CSBCH		-0.64	%		0.77	%		-0.08	%		-1.09	%		0.33	%		0.94	%		0.94	%		0.51	%		1.27	%		-0.76	%		0.81	%		0.57	%		3.60	%
HFRI Fund of Funds Composite Index		0.00	%		1.36	%		-0.55	%		-1.41	%		0.24	%		1.36	%		1.74	%		0.84	%		1.55	%		-1.45	%		1.68	%		1.98	%		7.49	%
	2006
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			YTD
The Endowment Master Fund—Adjusted		3.36	%		-0.12	%		1.96	%		1.83	%		-2.25	%		-0.64	%		-0.37	%		1.41	%		-0.03	%		1.83	%		2.57	%		1.87	%		11.85	%
60/40 Portfolio		1.58	%		0.19	%		0.57	%		0.82	%		-1.72	%		0.14	%		0.82	%		1.93	%		1.86	%		2.17	%		1.50	%		0.68	%		11.00	%
S&P 500		2.65	%		0.27	%		1.24	%		1.34	%		-2.88	%		0.14	%		0.62	%		2.38	%		2.58	%		3.26	%		1.90	%		1.40	%		15.79	%
Barclays Int. Gov/Cdt Index		-0.02	%		0.07	%		-0.44	%		0.05	%		0.01	%		0.15	%		1.12	%		1.25	%		0.79	%		0.53	%		0.91	%		-0.41	%		4.07	%
CSBCH		1.86	%		0.25	%		1.61	%		1.86	%		-0.79	%		-0.10	%		0.27	%		0.54	%		-0.13	%		0.95	%		1.14	%		1.84	%		9.66	%
HFRI Fund of Funds Composite Index		2.88	%		0.35	%		1.70	%		1.76	%		-1.91	%		-0.60	%		-0.21	%		0.78	%		-0.03	%		1.69	%		1.86	%		1.76	%		10.39	%

B-2

	2007
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			YTD
The Endowment Master Fund—Adjusted		0.71	%		1.00	%		1.57	%		2.21	%		2.67	%		0.84	%		1.38	%		-0.96	%		2.74	%		4.45	%		-1.41	%		0.64	%		16.88	%
60/40 Portfolio		0.92	%		-0.62	%		0.74	%		2.85	%		1.84	%		-0.99	%		-1.48	%		1.38	%		2.52	%		1.25	%		-1.75	%		-0.31	%		6.40	%
S&P 500		1.51	%		-1.96	%		1.12	%		4.43	%		3.49	%		-1.66	%		-3.10	%		1.50	%		3.74	%		1.59	%		-4.18	%		-0.69	%		5.50	%
Barclays Int. Gov/Cdt Index		0.04	%		1.38	%		0.17	%		0.48	%		-0.64	%		0.02	%		0.95	%		1.21	%		0.69	%		0.73	%		1.90	%		0.26	%		7.40	%
CSBCH		1.23	%		0.09	%		0.97	%		1.61	%		2.04	%		0.32	%		-0.85	%		-1.81	%		1.92	%		2.64	%		-1.08	%		0.20	%		7.42	%
HFRI Fund of Funds Composite Index		1.30	%		0.82	%		1.01	%		1.69	%		2.10	%		0.68	%		0.33	%		-2.18	%		2.16	%		3.07	%		-1.50	%		0.45	%		10.25	%
	2008
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			YTD
The Endowment Master Fund—Adjusted		-3.71	%		2.27	%		-3.10	%		1.11	%		2.46	%		-0.10	%		-4.34	%		-2.37	%		-8.57	%		-7.64	%		-2.29	%		0.10	%		-23.81	%
60/40 Portfolio		-2.75	%		-1.60	%		-0.26	%		2.63	%		0.45	%		-5.05	%		-0.43	%		1.16	%		-6.18	%		-10.63	%		-3.00	%		1.81	%		-22.08	%
S&P 500		-6.00	%		-3.25	%		-0.43	%		4.87	%		1.29	%		-8.43	%		-0.84	%		1.45	%		-8.91	%		-16.80	%		-7.18	%		1.06	%		-37.01	%
Barclays Int. Gov/Cdt Index		2.13	%		0.87	%		-0.01	%		-0.74	%		-0.80	%		0.01	%		0.19	%		0.72	%		-2.08	%		-1.37	%		3.27	%		2.93	%		5.08	%
CSBCH		-0.97	%		1.07	%		-2.38	%		0.62	%		1.89	%		-1.08	%		-2.57	%		-1.63	%		-8.70	%		-11.35	%		-4.09	%		-0.04	%		-26.31	%
HFRI Fund of Funds Composite Index		-2.90	%		1.36	%		-2.71	%		1.01	%		1.74	%		-0.85	%		-2.66	%		-1.53	%		-6.54	%		-6.22	%		-2.64	%		-1.49	%		-21.37	%
	2009
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			YTD
The Endowment Master Fund—Adjusted		1.47	%		0.14	%		-0.72	%		-0.81	%		4.56	%		-0.14	%		2.37	%		1.36	%		2.54	%		0.40	%		1.65	%		0.85	%		14.45	%
60/40 Portfolio		-5.21	%		-6.63	%		5.64	%		5.92	%		3.65	%		0.31	%		5.09	%		2.56	%		2.58	%		-0.94	%		4.14	%		0.57	%		18.09	%
S&P 500		-8.43	%		-10.65	%		8.76	%		9.57	%		5.59	%		0.20	%		7.56	%		3.61	%		3.73	%		-1.86	%		6.00	%		1.93	%		26.46	%
Barclays Int. Gov/Cdt Index		-0.39	%		-0.60	%		0.95	%		0.45	%		0.74	%		0.47	%		1.38	%		0.99	%		0.85	%		0.44	%		1.34	%		-1.46	%		5.24	%
CSBCH		0.73	%		-1.54	%		-0.03	%		0.88	%		2.33	%		0.60	%		1.59	%		1.04	%		1.90	%		1.89	%		3.25	%		3.61	%		17.39	%
HFRI Fund of Funds Composite Index		0.71	%		-0.37	%		0.03	%		1.05	%		3.32	%		0.38	%		1.54	%		1.09	%		1.74	%		-0.09	%		0.80	%		0.76	%		11.47	%
	2010
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			YTD
The Endowment Master Fund—Adjusted and The Endowment Institutional Fund		0.29	%		0.08	%		1.59	%		1.63	%		-2.53	%		-0.90	%		-0.25	%		0.90	%		2.44	%		1.56	%		0.73	%		2.47	%		8.18	%
60/40 Portfolio		-1.60	%		2.03	%		3.51	%		1.30	%		-4.51	%		-2.59	%		4.64	%		-2.24	%		5.54	%		2.48	%		-0.26	%		3.51	%		11.84	%
S&P 500		-3.60	%		3.10	%		6.03	%		1.58	%		-7.99	%		-5.23	%		7.01	%		-4.51	%		8.92	%		3.81	%		0.01	%		6.68	%		15.06	%
Barclays Int. Gov/Cdt Index		1.39	%		0.43	%		-0.28	%		0.87	%		0.71	%		1.36	%		1.09	%		1.17	%		0.47	%		0.48	%		-0.67	%		-1.25	%		5.89	%
CSBCH		1.35	%		4.02	%		2.04	%		0.89	%		-3.19	%		0.13	%		2.05	%		0.19	%		3.48	%		1.94	%		-1.10	%		3.83	%		16.52	%
HFRI Fund of Funds Composite Index		-0.37	%		0.13	%		1.66	%		0.90	%		-2.60	%		-0.89	%		0.77	%		0.13	%		2.35	%		1.48	%		-0.10	%		2.20	%		5.70	%
	2011
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			YTD
The Endowment Institutional Fund		-0.40	%		1.62	%		-0.08	%		1.58	%		-0.68	%		-1.30	%		1.66	%		-2.02	%		-3.90	%		1.53	%		-0.74	%		-0.83	%		-3.67	%
60/40 Portfolio		1.58	%		2.05	%		0.02	%		2.23	%		-0.22	%		-1.07	%		-0.65	%		-2.83	%		-4.27	%		6.68	%		-0.23	%		0.92	%		3.86	%
S&P 500		2.37	%		3.43	%		0.04	%		2.96	%		-1.13	%		-1.67	%		-2.03	%		-5.43	%		-7.03	%		10.93	%		-0.22	%		1.02	%		2.11	%
Barclays Int. Gov/Cdt Index		0.39	%		-0.03	%		-0.02	%		1.13	%		1.14	%		-0.16	%		1.43	%		1.07	%		-0.12	%		0.30	%		-0.24	%		0.78	%		5.80	%
CSBCH		0.63	%		1.56	%		0.09	%		2.00	%		-1.47	%		-1.49	%		0.93	%		-2.30	%		-2.90	%		1.31	%		-1.25	%		-0.10	%		-3.08	%
HFRI Fund of Funds Composite Index		0.15	%		0.83	%		-0.10	%		1.22	%		-1.08	%		-1.30	%		0.39	%		-2.64	%		-2.79	%		1.07	%		-0.98	%		-0.55	%		-5.72	%
	2012
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			YTD
The Endowment Institutional Fund		2.23	%		0.53	%		-0.79	%		0.48	%		-1.70	%		-0.03	%		0.61	%		0.65	%		-0.37	%		-0.80	%		0.25	%		1.06	%		2.08	%
60/40 Portfolio		3.10	%		2.57	%		1.83	%		-0.01	%		-3.41	%		2.50	%		1.22	%		1.43	%		1.64	%		-1.05	%		0.47	%		0.51	%		11.15	%
S&P 500		4.48	%		4.32	%		3.29	%		-0.63	%		-6.01	%		4.12	%		1.39	%		2.25	%		2.58	%		-1.85	%		0.58	%		0.91	%		16.00	%
Barclays Int. Gov/Cdt Index		1.02	%		-0.05	%		-0.36	%		0.92	%		0.48	%		0.08	%		0.97	%		0.19	%		0.24	%		0.14	%		0.30	%		-0.10	%		3.89	%
CSBCH		2.32	%		1.63	%		-0.46	%		-0.29	%		-1.51	%		-0.91	%		1.90	%		0.28	%		0.95	%		-0.87	%		0.75	%		1.60	%		5.44	%
HFRI Fund of Funds Composite Index		1.79	%		1.51	%		0.05	%		-0.26	%		-1.72	%		-0.35	%		0.78	%		0.75	%		0.87	%		-0.27	%		0.39	%		1.19	%		4.79	%

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	2013
	Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec	YTD
The Endowment Institutional Fund		1.37	%		-0.47	%		1.47	%		2.22	%		-1.12	%		-5.52	%		1.48	%		-1.09	%		1.80	%		1.12	%		0.32	%			1.33	%
60/40 Portfolio		2.96	%		1.01	%		2.31	%		1.41	%		0.95	%		-1.28	%		3.18	%		-1.94	%		2.21	%		3.01	%		1.83	%			16.65	%
S&P 500		5.18	%		1.36	%		3.75	%		1.93	%		2.34	%		-1.34	%		5.09	%		-2.90	%		3.14	%		4.60	%		3.05	%			29.12	%
Barclays Int. Gov/Cdt Index		-0.36	%		0.48	%		0.14	%		0.63	%		-1.13	%		-1.20	%		0.31	%		-0.50	%		0.81	%		0.62	%		-0.01	%			-0.23	%
CSBCH		2.13	%		-0.86	%		1.31	%		1.53	%		-0.44	%		-2.18	%		0.53	%		-0.69	%		1.08	%		1.71	%		1.26	%			5.42	%
HFRI Fund of Funds Composite Index		2.13	%		0.28	%		0.89	%		0.82	%		0.63	%		-1.39	%		1.01	%		-0.71	%		1.35	%		1.24	%		1.04	%			7.48	%

Performance Analysis	Inst	60/40	S&P 500	BIGCI	CSBCH	HFRI FOF
November 2013	0.32%	1.83%	3.05%	-0.01%	1.26%	1.04%
Annualized Compound Return	5.69%	7.65%	9.56%	4.15%	3.89%	3.99%
Monthly Average	0.48%	0.65%	0.85%	0.34%	0.34%	0.34%
Annualized Standard Deviation	7.29%	8.86%	14.55%	3.19%	6.74%	5.44%
Annualized Sharpe Ratio (1.60%)	0.58	0.70	0.59	0.80	0.37	0.46
% Down Months	35.94%	32.81%	32.03%	30.47%	34.38%	32.81%
Maximum Drawdown	-24.48%	-32.45%	-50.95%	-4.04%	-27.58%	-22.20%
Correlations Analysis*				Alpha	Beta	R2
60/40 Portfolio				1.90%	0.506	0.378
S&P 500				2.79%	0.299	0.357
Barclays Int. Gov/Cdt Index				4.16%	0.420	0.034
CSBCH				2.25%	0.886	0.672
HFRI Fund of Funds Composite Index				0.77%	1.242	0.860

* Calculations use annualized return and volatility data for each index

NOTES TO PERFORMANCE INFORMATION

The performance and related information above is based on the Fund’s investment performance. This information was prepared based on the following facts and assumptions:

1.         The private fund commenced investment operations on April 1, 2003. The Master Fund commenced investment operations on April 1, 2004. The Fund commenced investment operations on February 1, 2010. The information is based on investment returns derived from the private fund’s, Master Fund’s, and the Fund’s unaudited financial statements as prepared by the funds’ administrators. The financial statements prepared by these administrators are prepared on the accrual basis but depart from U.S. generally accepted accounting principles (“GAAP”) based on how organizational expenses are treated. The 2010 total return calculated in accordance with GAAP was 6.74% versus the 7.87% calculated by the administrator based on investors’ capital account balances (the annual report covered the period from February 2010 – December 2010). The total return figures in the chart are intended to provide investors with information about the historical experience of the Adviser in managing the private fund and the Master Fund. Investors should not consider this performance data as an indication of future performance. The performance information in the table has not been audited and does not comply with the standards established by the CFA Institute (formerly the Association of Investment Management and Research (AIMR)).

2.         The returns shown above reflect the performance of the Endowment private fund and the Master Fund through January 31, 2010, which have been adjusted, and performance of the Fund beginning in February 2010. Performance is shown net of fees and expenses. The Partners of the Master Fund were subject to an annual investment management fee of 1%, an administration fee and other expenses, all of which were incurred at the Master Fund and allocated to the feeder funds. Additionally, investors in the Fund are subject to a 0.35% Administrative Servicing Fee and other fund expenses incurred directly at the Fund level which are reflected in the adjusted performance of the private fund and Master Fund. The

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performance information does not reflect the payment of any fee to a financial intermediary or any taxes payable by a particular investor, which, if reflected, would reduce the performance shown. The return is calculated by dividing the end-of-month account balances by the beginning-of-month account balances. Performance results are calculated on a total return basis, including all portfolio income and expenses, unrealized and realized capital gains and losses and any income, expenses and realized gains and losses allocated from the Master Fund. Calculations account for periodic contributions and withdrawals and are geometrically linked. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

3.         The Standard and Poor’s (“S&P”) 500 Composite Stock Price Index (“S&P 500 Index”) is an unmanaged, capitalization-weighted index comprising publicly traded common stocks issued by companies in various industries. The S&P 500 Index is widely recognized as the leading broad-based measurement of changes in conditions of the U.S. equities market.

4.         Dow Jones Credit Suisse/Blue Chip Hedge Fund Index (“CSBCH”) is an investable, asset-weighted hedge fund index comprised of 60 funds. The index universe is defined as funds that are accepting new investments and redemptions and have a minimum of US $50,000,000 in assets under management. Eligible funds are separated into ten primary subcategories based on their investment style and ranked in order of AUM. The largest six eligible funds by AUM in each of the ten sectors are then selected. The index is rebalanced semi-annually.

The S&P 500 Index reflects the total return of its constituent securities, including changes in market prices as well as accrued investment income, which is presumed to be reinvested. CSBCH’s performance is based on a composite of the weighted net capital appreciation or depreciation of each Included Account for the indicated period, but does not take into account the reinvestment of dividends or other distributions. The performance information for each of the S&P 500 Index and the CSBCH does not take into account any taxes imposed on, or any fees, expenses, commissions or other charges that are borne by, a fund or its investors.

Performance and other information relating to these indexes were obtained from sources believed to be accurate, but no warranty is made as to the accuracy or completeness thereof. The Master Fund, the Fund, S&P and Dow Jones Credit Suisse neither make guarantees regarding the accuracy of, nor recommend any investment decision based on, such information.

5.         The Barclays Intermediate Government/Credit Index (“BIGCI”) is an unmanaged, market-weighted index generally representative of intermediate government and investment grade corporate debt securities having maturities of greater than one year. The performance information of the BIGCI does not take into account any taxes imposed on, or any fees, expenses, commissions or other charges that are borne by, a fund or its investors.

6.         The HFRI Fund of Funds Composite Index is comprised of over 650 constituent fund of funds, including both domestic and offshore funds. This is an equal-weighted index with all funds reporting returns net of fees on a monthly basis. In order to report to this index, funds are required to have at least $50 million under management or have been actively trading for at least twelve months.

7.         The 60/40 Portfolio provides an indication of the performance of a hypothetical portfolio that invested 60% of the value of its assets in the S&P 500 Index and 40% of the value of its assets in the BIGCI for the indicated period. Inclusion of the performance of the 60/40 Portfolio is intended to provide a benchmark against which to compare the allocation of assets between equity investments and fixed income investments. The proportion of the assets invested in equity investments and fixed income

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investments varied during the indicated period, but comparison to the 60/40 Portfolio reflects that, under normal circumstances, the portfolio was weighted in favor of equities. The performance information for the 60/40 Portfolio does not take into account any taxes imposed on, or any fees, expenses, commissions or other charges that are borne by, a fund or its investors.

Neither S&P nor Barclays has compiled, maintained, reviewed or verified the performance information listed for the 60/40 Portfolio. Such information was obtained from sources believed to be accurate, but no warranty is made as to the accuracy or completeness thereof. The Master Fund, the Fund, S&P and Barclays neither make guarantees regarding the accuracy of, nor recommends any investment decision based on, such information.

8.         Standard Deviation quantifies the volatility in the returns of a fund by measuring the amount of variation in the group of returns that make up the fund’s average return.

9.         Sharpe Ratio quantifies a fund’s total return in excess of the return of a guaranteed investment (typically 90-day U.S. treasury bills), relative to the fund’s volatility as measured by its standard deviation. The higher a fund’s Sharpe Ratio, the better the fund’s returns have been relative to the amount of investment risk the fund has taken.

10.         Maximum Drawdown represents the maximum loss that an investor in a fund could have experienced during a given period.

11.         Alpha measures the actual return of a fund compared to its expected return given its risk (as measured by its beta, which is described below). Generally, the expected return for a given period is computed by multiplying the advance or decline in a fund’s benchmark index by the fund’s beta. For a given period, alpha can be calculated by subtracting the sum of the return on a guaranteed investment (typically 90-day U.S. treasury bills) and a fund’s expected return from the fund’s actual return. A positive alpha quantifies the value that a fund manager has added, and a negative alpha quantifies the value that a fund manager has lost.

The “Correlations Analysis” table above calculates the Fund’s alpha with reference to each of the S&P 500 Index, the BIGCI, the 60/40 Portfolio, and the Credit Suisse / Tremont Blue Chip Hedge Fund Index.

12.         Beta is a quantitative measure of how volatile a fund’s performance has been relative to a measure of broad market performance. For example, with the S&P 500 Index as a measure of broad market performance, the performance of a fund with a beta of 1.50 tends to be 50% more than the S&P 500 Index’s performance, in the same direction. The performance of a fund with a beta of 0.5 tends to be 50% less than the S&P 500 Index’s performance, in the same direction. Thus, a fund with a beta above 1 is more volatile than the S&P 500 Index, and a fund with a beta below 1 is less volatile than the S&P 500 Index.

The “Correlations Analysis” table above calculates the Master Fund’s beta relative to each of the S&P 500 Index, the BIGCI, the 60/40 Portfolio, and the CSBCH.

13.         R² is a historical measurement that indicates how closely a fund’s past fluctuations in performance have correlated with the fluctuations in performance of a benchmark index. For example, an R² of 0.80 indicates that 80% of a fund’s past fluctuations in performance were explained by fluctuations in the fund’s benchmark index.

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Appendix C

THE ENDOWMENT INSTITUTIONAL FUND, L.P.

FORM OF

AGREEMENT OF LIMITED PARTNERSHIP

THIS AGREEMENT OF LIMITED PARTNERSHIP of THE ENDOWMENT INSTITUTIONAL FUND, L.P. (the “Fund” or the “Partnership”), dated as of December 8, 2009, is entered into by and among THE ENDOWMENT FUND GP, L.P., as General Partner, Salient Partners, L.P., as Organizational Limited Partner, and those Persons who execute this Agreement and whose names are reflected on the books and records of the Partnership as Limited Partners.

ARTICLE I.

DEFINITIONS

For purposes of this Agreement:

“1933 Act” means the Securities Act of 1933 and the rules, regulations and orders under the 1933 Act, as amended from time to time, or any successor law.

“1940 Act” means the Investment Company Act of 1940 and the rules, regulations and orders under the 1940 Act, as amended from time to time, or any successor law.

“Advice and Management” means those services provided to the Partnership by the Adviser under Section 3.5(b) of this Agreement.

“Adviser” means Endowment Advisers, L.P., a limited partnership formed under the laws of the State of Delaware, and any other Person or Persons subsequently engaged to provide investment management services to the Partnership in a similar capacity.

“Advisers Act” means the Investment Advisers Act of 1940 and the rules, regulations and orders under the Advisers Act, as amended from time to time, or any successor law.

“Affiliate” means affiliated person as that term is defined in the 1940 Act.

“Agreement” means this Agreement of Limited Partnership, as amended and/or restated from time to time.

“Asset Allocation Ranges” bears the meaning set forth in Section 3.5(b).

“Board of Directors” means the board of the Directors who have been delegated the authority described in this Agreement.

“Business Day” means any day when the New York Stock Exchange is open for business.

“Capital Account” means, with respect to each Partner, the capital account established and maintained on behalf of the Partner in accordance with Section 5.3 of this Agreement.

“Capital Contribution” means the contribution, if any, made, or to be made, as the context requires, to the capital of a Partnership by a Partner or former Partner, as the case may be.

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“Certificate” means the Certificate of Limited Partnership of the Partnership as filed with the office of the Secretary of State of the State of Delaware and any amendments to the Certificate and/or restatements of the Certificate as filed with the office of the Secretary of State of the State of Delaware pursuant to this Agreement.

“Closing Date” means the first date on or as of which a Limited Partner is admitted to a Partnership.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor law.

“Commodity Exchange Act” means the Commodity Exchange Act and the rules, regulations and orders under the Commodity Exchange Act, as amended from time to time, or any successor law.

“Delaware Act” means the Delaware Revised Uniform Limited Partnership Act, as amended from time to time, or any successor law.

“Directors” means those natural Persons designated as “Directors” in accordance with this Agreement who are delegated the authority provided for in this Agreement and includes John A. Blaisdell, Jonathan P. Carroll, Dr. Bernard A. Harris, Richard Johnson, Andrew B. Linbeck, Edward Powell, Scott E. Schwinger, and A. Haag Sherman, as the initial Directors, or any other natural Persons who, from time to time after the date of this Agreement, become Directors in accordance with the terms and conditions of this Agreement.

“Fiscal Period” means the period commencing on the Closing Date, and thereafter each period commencing on the day immediately following the last day of the preceding Fiscal Period, and ending in each case at the close of business on the first to occur of the following dates:

(1)            the last day of a Fiscal Year;

(2)            the day preceding the date as of which a contribution to the capital of a Partnership is made by any Partner in accordance with Section 5.1 of this Agreement;

(3)            the day on which a Partnership repurchases the Interest or portion of the Interest of any Partner in accordance with Section 4.5 of this Agreement;

(4)            the day as of which a Partnership admits a substituted Partner to whom or which an Interest or portion of an Interest of a Partner has been Transferred (unless the Transfer of the Interest or portion of the Interest results in no change of beneficial ownership of the Interest or portion of the Interest);

(5)            the day as of which any amount is credited to or debited against the Capital Account of any Partner, other than an amount that is credited to or debited against the Capital Accounts of all Partners in accordance with their respective Investment Percentages; or

(6)            December 31, or any other date that is the last day of the taxable year of a Partnership.

“Fiscal Year” means the period commencing on the Closing Date and ending on December 31, 2010, and thereafter each period commencing on January 1 of each year and ending on December 31 of that year (or on the date of a final distribution made in accordance with Section 6.2 of this Agreement), unless the Directors designate another fiscal year for the Partnership. The taxable year of the Partnership will end on December 31 of each year, or on any other date designated by the General Partner that is a permitted taxable year-end for tax purposes, and need not be the same as the Fiscal Year.

“Form N-2” means the Partnership’s Registration Statement on Form N-2 filed with the Securities and Exchange Commission, as amended from time to time.

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“General Partner” means The Endowment Fund GP, L.P., a limited partnership formed under the laws of the State of Delaware, and any other Person or Persons admitted to a Partnership as a general partner of the Partnership, collectively, in their capacities as general partners of a Partnership, and “General Partner” means any of the General Partners. When the term General Partner is used in this Agreement and a Partnership has more than one General Partner, the term “General Partner” will refer to each General Partner.

“Independent Directors” mean those Directors who are not “interested persons” of the Partnership as that term is defined in the 1940 Act.

“Interest” means the entire partnership interest in the Partnership at any particular time of a Partner or other Person to whom or which an Interest or portion of an Interest has been Transferred in accordance with Section 4.3 or 4.4 of this Agreement, including the rights and obligations of the Partner or other Person under this Agreement and the Delaware Act.

“Investment Advisory Agreement” has the meaning set out in Section 3.5(a) of this Agreement.

“Investment Fund” means an investment company, a general or limited partnership, a limited liability company or other pooled investment vehicle in which a Partnership has invested and that is advised by an Investment Manager; whether or not, in each case, the entity is registered under the 1940 Act, and includes the Master Partnership and Investment Funds that may be formed by the Partnership.

“Investment Manager” means any Person designated by the Adviser to manage a portion of the assets of the Partnership, either directly or through the investment by the Partnership in an Investment Fund. For purposes of this Agreement, the term “Investment Manager” includes Subadvisers.

“Investment Percentage” means a percentage established for each Partner on the Partnership’s books as of the first day of each Fiscal Period. The Investment Percentage of a Partner for a Fiscal Period will be determined by dividing the balance of the Partner’s Capital Account as of the commencement of the Fiscal Period by the sum of the Capital Accounts of all of the Partners as of the commencement of the Fiscal Period. The sum of the Investment Percentages of all Partners for each Fiscal Period will equal 100%.

“Limited Partner” means any Person admitted to the Partnership as a limited Partner of the Partnership (including any Person who or that is a General Partner when acting in the Person’s capacity as a Limited Partner) until the Partnership repurchases the entire Interest of the Person as a Limited Partner in accordance with Section 4.5 of this Agreement, or a substituted Limited Partner or Partners are admitted with respect to the Person’s entire Interest as a Limited Partner in accordance with Section 4.4 of this Agreement, in the Person’s capacity as a limited Partner of the Partnership. For purposes of the Delaware Act, the Limited Partners will constitute a single class or group.

“Management Fee” means the fee paid to the Adviser out of the Partnership’s assets, and debited against Limited Partners’ Capital Accounts, as provided in Section 3.11(a) of this Agreement.

“Master Partnership” means The Endowment Master Fund, L.P., a limited partnership organized under the laws of the State of Delaware.

“Memorandum” means the Partnership’s private placement memorandum, as included in the Form N-2, as amended or supplemented from time to time.

“Net Assets” means the total value of all assets of the Partnership, less an amount equal to all accrued debts, liabilities and obligations of the Partnership, calculated before giving effect to any repurchases of Interests.

“Net Profit” or “Net Loss” means the amount by which the Net Assets as of the close of business on the last day of a Fiscal Period exceed (in the case of Net Profit) or are less than (in the case of Net Loss) the Net Assets as of the

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commencement of the same Fiscal Period (or, with respect to the initial Fiscal Period of the Partnership, at the close of business on the Closing Date), the amount of any Net Profit or Net Loss to be adjusted to exclude any items to be allocated among the Capital Accounts of the Partners on a basis that is not in accordance with the Investment Percentages of all Partners as of the commencement of the Fiscal Period in accordance with Section 5.7 of this Agreement.

“Offering Materials” means the Memorandum and subscription materials provided to prospective Limited Partners in connection with an investment to be made in the Partnership.

“Partners” means the General Partner(s) and the Limited Partners, collectively, and “Partner” means any General Partner or Limited Partner.

“Person” means any individual, entity, corporation, partnership, limited liability company, joint stock company, trusts, estate, joint venture, or unincorporated organization.

“Placement Agent” means any Person retained by the Partnership or the General Partner to assist in the placement of Interests, which Persons will be designated by the General Partner, subject to approval by the Directors.

“Securities” means securities (including, without limitation, equities, debt obligations, options, and other “securities” as that term is defined in Section 2(a)(36) of the 1940 Act) and any contracts for forward or future delivery of any security, debt obligation, currency or commodity, all manner of derivative instruments and any contracts based on any index or group of securities, debt obligations, currencies or commodities, and any options on those contracts.

“Subadviser” means an Investment Manager responsible either (1) for directly managing a portion of the assets of the Partnership in a managed account or (2) for managing a special purpose investment vehicle in which the Investment Manager and the Partnership are the sole limited Partners, members or other interest holders.

“Transfer” means the assignment, transfer, sale or other disposition of all or any portion of an Interest, including any right to receive any allocations and distributions attributable to an Interest. Verbs, adverbs or adjectives such as “Transfer,” “Transferred” and “Transferring” have correlative meanings.

Other capitalized terms used herein but not otherwise defined shall have the meanings given to them in the Memorandum.

ARTICLE II.

ORGANIZATION, ADMISSION OF PARTNERS, DIRECTORS

2.1. FORMATION OF LIMITED PARTNERSHIP

(a)            The Partnership is formed as a limited partnership pursuant to the Certificate and this Agreement. The Partners agree that their rights, duties and liabilities will be as provided in the Delaware Act, except as otherwise provided in this Agreement. The General Partner will cause the Certificate to be executed and filed in accordance with the Delaware Act and will cause to be executed and filed with applicable governmental authorities any other instruments, documents and certificates that the General Partner concludes may from time to time be required by the laws of the United States of America, the State of Delaware or any other jurisdiction in which the General Partner determines that the Partnership should do business, or any political subdivision or agency of any such jurisdiction, or that the General Partner determines is necessary or appropriate to effectuate, implement and continue the valid existence and business of the Partnership.

(b)            The Partnership is formed for the object and purpose of (and the nature of the business to be conducted by the Partnership is) engaging in any lawful activity for which limited partnerships may be formed under the Delaware Act and engaging in any and all activities necessary or incidental to the foregoing.

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2.2. NAME

The name of the Partnership is “The Endowment Institutional Fund, L.P.” or any other name that the General Partner may adopt after the date of this Agreement upon (a) causing an appropriate amendment to this Agreement to be executed and to the Certificate to be filed in accordance with the Delaware Act and (b) sending notice of the amendment to each Limited Partner.

2.3. PRINCIPAL AND REGISTERED OFFICE

The Partnership will have its principal office at the principal office of the General Partner or at any other place designated from time to time by the General Partner. The Partnership’s registered agent in the State of Delaware shall be The Corporation Trust Company, and the Partnership’s registered office in the State of Delaware at Corporation Trust Center, 1209 Orange Street, unless the General Partner designates a different registered agent or office from time to time in accordance with the Delaware Act.

2.4. DURATION

The term of the Partnership will continue until the Partnership is dissolved and wound up and the Certificate is canceled in accordance with Section 6.1 of this Agreement.

2.5. BUSINESS OF EACH PARTNERSHIP

(a)            The business of the Partnership is to purchase, sell, invest and trade in Securities and engage in any financial or derivative transactions relating to Securities. Portions of the Partnership’s assets (which may constitute, in the aggregate, all of the Partnership’s assets) may be invested in Investment Funds that invest and trade in Securities or in separate managed accounts through which the Partnership may invest and trade in Securities, some or all of which may be advised by one or more Investment Managers or Subadvisers. The Fund may invest some or all of its assets in the Master Partnership. The Partnership may execute, deliver and perform all contracts, agreements and other undertakings and engage in all activities and transactions as the General Partner, the Directors or the Adviser may deem necessary or advisable to carry out its objective or business.

(b)            The Partnership will operate as a closed-end, management investment company in accordance with the 1940 Act and subject to any fundamental policies and investment restrictions described in the Form N-2.

(c)            The Partnership may designate from time to time persons to act as signatories for the Partnership, including, without limitation, persons authorized to execute and deliver any filings with the Securities and Exchange Commission or applicable federal or state regulatory authorities or self-regulatory organizations.

2.6. GENERAL PARTNER

(a)            The Endowment Fund GP, L.P. is the General Partner. The General Partner may admit to the Partnership as an additional General Partner any Person who agrees in writing to be bound by all of the terms of this Agreement as a General Partner. The General Partner may admit to the Partnership as a substituted General Partner any Person to which it has Transferred its Interest as the General Partner in accordance with Section 4.3 of this Agreement. Any substituted General Partner will be admitted to the Partnership upon the Transferring General Partner’s consenting to such admission and is authorized to, and will, continue the business of the Partnership without dissolution. The name and mailing address of the General Partner and the Capital Contribution of the General Partner will be reflected on the books and records of the Partnership. If at any time the Partnership has more than one General Partner, unless otherwise provided in this Agreement, any action allowed to be taken, or required to be taken, by the General Partners may be taken only with the unanimous approval of all of the General Partners.

(b)            Each General Partner will serve for the duration of the term of the Partnership, unless the General Partner ceases to be a General Partner in accordance with Section 4.1 of this Agreement.

2.7. LIMITED PARTNERS

(a)            The General Partner may, at any time and without advance notice to or consent from any other Partner, admit to the Partnership any Person who agrees to be bound by all of the terms of this Agreement as an additional

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Limited Partner. The General Partner may in its absolute discretion reject subscriptions for Interests (or portions of Interests) and/or may suspend subscriptions. The admission of any Person as an additional Limited Partner will be effective upon the General Partner’s acceptance on behalf of the Partnership of such Person’s subscription for Interests and the execution and delivery by, or on behalf of, the additional Limited Partner of this Agreement or an instrument that constitutes the execution and delivery of this Agreement. The General Partner will cause the books and records of the Partnership to reflect the name and the required contribution to the capital of the Partnership of the additional Limited Partner.

(b)            Subject to Section 2.9 of this Agreement, when the entire Capital Contribution attributable to an Interest for which a Partner has subscribed is paid for, that Interest will be deemed to be validly issued and fully paid and non-assessable.

2.8. BOTH GENERAL AND LIMITED PARTNER

A Partner may be simultaneously a General Partner and a Limited Partner, in which event the Partner’s rights and obligations in each capacity will be determined separately in accordance with the terms and provisions of this Agreement and as provided in the Delaware Act.

2.9. LIMITED LIABILITY

Except for payment obligations under this Agreement, including Capital Contribution obligations, and as provided under applicable law, a Limited Partner will not be liable for the Partnership’s obligations in any amount in excess of the Limited Partner’s Capital Account balance, plus the Limited Partner’s share of undistributed profits and assets. Subject to applicable law, a Limited Partner may be obligated to return to the Partnership certain amounts distributed to the Limited Partner.

2.10. DIRECTORS

(a)            The number of Directors at the date of this Agreement is fixed at not more than fourteen (14) Directors and no fewer than two (2). After the Closing Date, the number of Directors will be fixed from time to time by the Directors then in office, which number may be greater, or lesser, than fourteen (14), but no fewer than the minimum number of directors permitted to corporations organized under the laws of the State of Delaware, except that no reduction in the number of Directors will serve to effect the removal of any Director. Each Partner approves the delegation by the General Partner to the Directors, in accordance with Section 3.1 of this Agreement, of certain of the General Partner’s rights and powers.

(b)            Each Director will serve for the duration of the term of the Partnership, unless his or her status as a Director is terminated sooner in accordance with Section 2.11(d) of this Agreement. Except to the extent the 1940 Act requires election by Limited Partners, if any vacancy in the position of a Director occurs, including by reason of an increase in the number of Directors as contemplated by Section 2.11(a) of this Agreement, the remaining Directors may appoint an individual to serve in that capacity in accordance with the provisions of the 1940 Act. Independent Directors will at all times constitute at least a majority of the Directors then serving. An Independent Director will be replaced by another Independent Director selected and nominated by the remaining Independent Directors, or in a manner otherwise permissible under the 1940 Act.

(c)            If no Director remains, the General Partner will promptly call a meeting of the Partners, to be held within 60 days after the date on which the last Director ceased to act in that capacity, for the purpose of determining whether to continue the business of the Partnership and, if the business is to be continued, approving the appointment of the requisite number of Directors. If the Partners determine at the meeting not to continue the business of the Partnership, or if the approval of the appointment of the requisite number of Directors is not approved within 60 days after the date on which the last Director ceased to act in that capacity, then the Partnership will be dissolved in accordance with Section 6.1 of this Agreement and the assets of the Partnership will be liquidated and distributed in accordance with Section 6.2 of this Agreement.

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(d)            The status of a Director will terminate (1) if the Director dies; (2) if the Director resigns as a Director; (3) if the Director is removed in accordance with Section 2.11(e) of this Agreement; or (4) on December 31 in the year in which the Director reaches 72 years of age, unless such termination is waived by resolution of a majority of the Directors.

(e)            Any Director may be removed with or without cause by a vote of a majority of the Limited Partners or by written consent of Limited Partners holding not less than two-thirds of the total number of votes eligible to be cast by all Limited Partners.

(f)            The Directors may establish and maintain committees of the Board of Directors, and the Directors may grant to such committees the authority to, among other things: value the assets of the Partnership; select and nominate the Independent Directors of the Partnership; recommend to the Board of Directors the compensation to be paid to the Independent Directors; and recommend to the Board of Directors the firm of certified public accountants that will conduct the Partnership’s audits.

(g)            The Directors may establish or designate committees of the Board of Directors for the Partnership, whose members may include the Directors and/or other Persons who are not Directors, to provide advice and other services to the Partnership, which committees may include (but are not limited to) a committee that will value the assets of the Partnership.

(h)            The Independent Directors will receive compensation for their services as Independent Directors, as determined by the Board of Directors.

ARTICLE III.

MANAGEMENT; ADVICE AND MANAGEMENT

3.1. MANAGEMENT AND CONTROL

(a)            The General Partner delegates to the Directors those rights and powers of the General Partner necessary for the Directors to manage and control the business affairs of the Partnership and to carry out their oversight obligations with respect to the Partnership required under the 1940 Act, state law, and any other applicable laws or regulations. Rights and powers delegated to the Directors include, without limitation, the authority as Directors to oversee and to establish policies regarding the management, conduct and operation of the Partnership’s business, and to do all things necessary and proper as Directors to carry out the objective and business of the Partnership, including, without limitation, the power to engage the Adviser to provide Advice and Management and to remove the Adviser, as well as to exercise any other rights and powers expressly given to the Directors under this Agreement. The Partners intend that, to the fullest extent permitted by law, and except to the extent otherwise expressly provided in this Agreement, (1) each Director is vested with the same powers and authority on behalf of the Partnership as are customarily vested in each director of a Delaware corporation and (2) each Independent Director is vested with the same powers and authority on behalf of the Partnership as are customarily vested in each director who is not an “interested person” (as that term is defined in the 1940 Act) of a closed-end, management investment company registered under the 1940 Act that is organized as a Delaware corporation. During any period in which the Partnership has no Directors, the General Partner will manage and control the Partnership. Each Director will be the agent of the Partnership but will not, for any purpose, be a General Partner. Notwithstanding the delegation described in this Section 3.1(a), the General Partner will not cease to be the General Partner and will continue to be liable as such and in no event will a Director be considered a General Partner by agreement, estoppel or otherwise as a result of the performance of his or her duties under this Agreement or otherwise. The General Partner retains those rights, powers and duties that have not been delegated under this Agreement. Any Director may be admitted to the Partnership in accordance with Section 2.7 of this Agreement and make Capital Contributions and own an Interest, in which case the Director will also become a Limited Partner.

(b)            The Partnership will file a tax return as a partnership for U.S. federal income tax purposes. All decisions for the Partnership relating to tax matters including, without limitation, whether to make any tax elections (including

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the election under Section 754 of the Code), the positions to be made on the Partnership’s tax returns and the settlement or further contest or litigation of any audit matters raised by the Internal Revenue Service or any other taxing authority, will be made by the Directors. All actions (other than ministerial actions) taken by the tax matters Partner, as designated in Section 3.1(c) below, will be subject to the approval of the Directors.

(c)            The General Partner will be the designated tax matters Partner for purposes of the Code. Each Partner agrees not to treat, on his, her or its personal income tax return or in any claim for a refund, any item of income, gain, loss, deduction or credit in a manner inconsistent with the treatment of the item by the Partnership. The tax matters Partner will have the exclusive authority and discretion to make any elections required or permitted to be made by the Partnership under any provisions of the Code or any other revenue laws.

(d)            No Limited Partner will have any right to participate in or take any part in the management or control of the Partnership’s business, and no Limited Partner will have any right, power or authority to act for or bind the Partnership. Limited Partners will have the right to vote on any matters only as provided in this Agreement or on any matters that require the approval of the holders of voting securities under the 1940 Act and will have no right to exercise any other vote granted to Limited Partners under the Delaware Act, any such rights being vested in the Directors (or the General Partner if there are no Directors) and may be exercised without requiring the approval of the Limited Partners.

3.2. POWERS RESERVED BY THE GENERAL PARTNER

Notwithstanding anything in this Agreement to the contrary, the General Partner retains all rights, duties and powers to manage the affairs of the Partnership that may not be delegated under Delaware law, and that are not otherwise delegated by the General Partner to the Directors or assumed by the Adviser or any other Person under the terms of any agreement between the Partnership and the Adviser or any other Person. Specifically, and without limitation, the General Partner will retain full power and authority on behalf of and in the name of the Partnership:

(1)            to issue to any Partner an instrument certifying that the Partner is the owner of an Interest;

(2)            to call and conduct meetings of Partners at the Partnership’s principal office or elsewhere as it may determine, and to assist the Directors in calling and conducting meetings of the Directors;

(3)            to engage and terminate attorneys, accountants (subject to the provisions of the 1940 Act) and other professional advisers and consultants as the General Partner deems necessary or advisable in connection with the affairs of the Partnership or as may be directed by the Directors;

(4)            to act as tax matters Partner in accordance with Section 3.1(c) of this Agreement, and to assist in the preparation and filing of any required tax or information returns to be made by the Partnership;

(5)            as directed by the Directors, to commence, defend and conclude any action, suit, investigation or other proceeding that pertains to the Partnership or any assets of the Partnership;

(6)            as directed by the Directors, to arrange for the purchase of any insurance covering the potential liabilities of the Partnership or relating to the performance of the Directors, the General Partner, the Adviser or any of their principals, Partners, directors, officers, members, employees and agents;

(7)            to execute, deliver and perform any contracts, agreements and other undertakings, and to engage in activities and transactions that are necessary or appropriate for the conduct of the business of the Partnership and to bind the Partnership by those contracts, agreements, and other undertakings, provided that the officers of the Partnership, as directed by the Directors, may execute and deliver contracts and agreements on behalf of the Partnership and bind the Partnership to those contracts and agreements;

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(8)            to make determinations regarding subscriptions for and/or the Transfer of Interests, including, without limitation, determinations regarding the suspension of subscriptions, and to execute, deliver and perform subscription agreements, placement agency agreements relating to the placement of Interests, administration agreements appointing an administrator to perform various administrative action on behalf of the Partnership, escrow agreements and custodial agreements without the consent of or notice to any other Person, notwithstanding any other provision of this Agreement;

(9)            to make determinations regarding appropriate reserves to be created for the contingent, conditional or unmatured liabilities of the Partnership;

(10)            as provided in Section 7.2 of this Agreement, to make determinations regarding adjustments to the computation of Net Profit or Net Loss and allocations among the Partners under Article V of this Agreement;

(11)            to manage or oversee the general administrative and operational aspects of the Partnership; and

(12)            as directed by the Directors, to establish additional series of Limited Partners, General Partners, or Interests having separate rights, powers, or duties with respect to specified property or obligations of the Partnership or profits or losses associated with specified property or obligations of the Partnership, and having separate business purposes or investment objectives as the Directors may determine, consistent with the 1940 Act and the Delaware Act, so long as the assets and liabilities of one series are limited to the assets and liabilities of that series.

3.3. ACTIONS BY DIRECTORS

(a)            Unless provided otherwise in this Agreement, the Directors will act only: (1) by the affirmative vote of a majority of the Directors (which majority will include any requisite number of Independent Directors required by the 1940 Act) present at a meeting duly called at which a quorum of the Directors is present either in person or, to the extent consistent with the provisions of the 1940 Act, by conference telephone or other communications equipment by means of which all Persons participating in the meeting can hear each other; or (2) by unanimous written consent of all of the Directors without a meeting, if permissible under the 1940 Act.

(b)            The Directors may designate from time to time a Director or an officer of the Partnership or the General Partner who will preside at all meetings. Meetings of the Directors may be called by the General Partner, the Chairman of the Board of Directors, or any two Directors, and may be held on any date and at any time and place determined by the Directors. Each Director will be entitled to receive written notice of the date, time and place of a meeting within a reasonable time in advance of the meeting. Notice need not be given to any Director who attends a meeting without objecting to the lack of notice or who executes a written waiver of notice with respect to the meeting. A majority of the Directors then in office will constitute a quorum at any meeting of Directors.

(c)            The Directors may appoint from time to time agents and employees of the Partnership who will have the same powers and duties on behalf of the Partnership as are customarily vested in officers of a corporation incorporated under Delaware law, or such other powers and duties as may be designated by the Directors, in their sole discretion, and designate them as officers or agents of the Partnership by resolution of the Directors specifying their titles or functions.

3.4. MEETINGS OF PARTNERS

(a)            Actions requiring the vote of the Partners may be taken at any duly constituted meeting of the Partners at which a quorum is present or by means of a written consent. Meetings of the Partners may be called by the General Partner, by the affirmative vote of a majority of Directors then in office, or by Partners holding at least a majority of the total number of votes eligible to be cast by all Partners, and may be held at any time, date and place determined by the General Partner in the case of meetings called by the General Partner or the Partners and at any time, date and place determined by the Directors in the case of meetings called by the Directors. In each case, the General Partner will provide notice of the meeting, stating the date, time and place of the meeting and the record date for the meeting, to each Partner entitled to vote at the meeting within a reasonable time prior to the meeting. Failure to

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receive notice of a meeting on the part of any Partner will not affect the validity of any act or proceeding of the meeting, so long as a quorum is present at the meeting. Except as otherwise required by applicable law, only matters set out in the notice of a meeting may be voted on by the Partners at the meeting. The presence in person or by proxy of Partners holding a majority of the total number of votes eligible to be cast by all Partners as of the record date will constitute a quorum at any meeting of Partners. In the absence of a quorum, a meeting may be adjourned to the time or times as determined by the General Partner and communicated to the Directors in the manner described above in this Section 3.4(a). Except as otherwise required by any provision of this Agreement or of the 1940 Act, (1) those candidates receiving a plurality of the votes cast at any meeting of Partners called pursuant to Section 2.11(c) of this Agreement or elected pursuant to the requirement of Section 2.11(b) will be elected as Directors and (2) all other actions of the Partners taken at a meeting will require the affirmative vote of Partners holding a majority of the total number of votes eligible to be cast by those Partners who are present in person or by proxy at the meeting. In the event the Partnership invests in another investment company pursuant to Section 12(d)(1)(E) of the 1940 Act, and such other investment company holds a meeting of its investors, the Partnership shall seek instructions from its Partners, without the necessity of holding a meeting or obtaining a quorum of Partners, and vote all of the Partnership’s interests in such other investment company proportionately to the instructions received from the Partners. For the avoidance of doubt, any such seeking of Partner instructions by the Partnership also may, but need not be, sought through means of a meeting of the Partners or use of a proxy, or both.

(b)            Each Partner will be entitled to cast at any meeting of Partners or pursuant to written consent a number of votes equivalent to the Partner’s Investment Percentage as of the record date for the meeting or the date of the written consent. The General Partner will establish a record date not less than 10 nor more than 60 days prior to the date of any meeting of Partners or mailing (including by electronic transmission) to the Partners of any written consent, to determine eligibility to vote at the meeting and the number of votes that each Partner will be entitled to cast at the meeting, and will maintain for each record date a list setting out the name of each Partner and the number of votes that each Partner will be entitled to cast at the meeting.

(c)            Partners may vote at any meeting of Partners by a properly executed proxy transmitted to the Partnership at any time at or before the time of the meeting by telegram, telecopier or other means of electronic communication or other readable reproduction as contemplated by the provisions relating to proxies applicable to corporations incorporated under the laws of Delaware now or in the future in effect. A proxy may be suspended or revoked, as the case may be, by the Partner executing the proxy by a later writing delivered to the Partnership at any time prior to exercise of the proxy or if the Partner executing the proxy is present at the meeting and votes in person. Any action of the Partners that is permitted to be taken at a meeting of the Partners may be taken without a meeting if consents in writing, setting out the action to be taken, are signed by Partners holding a majority of the total number of votes eligible to be cast or any greater percentage as may be required under this Agreement to approve the action.

3.5. ADVICE AND MANAGEMENT

(a)            The Directors will, among their powers, have the authority to cause the Partnership to engage the Adviser to provide Advice and Management to the Partnership under their direction, subject to any approval of such engagement by the Partners that may be required under the 1940 Act. As directed by the Directors, the Partnership and the General Partner, on behalf of the Partnership, among its powers described in Section 3.2 of this Agreement, will have the authority to execute, deliver and monitor the performance of any contract or agreement to provide Advice and Management to the Partnership (each, an “Investment Advisory Agreement”). Any such Investment Advisory Agreement will require that the Adviser acknowledge its obligations under this Agreement.

(b)            The assets of the Fund shall be invested directly, or indirectly, through an investment in the Master Partnership, or otherwise in accordance with the “Asset Allocation Ranges” set forth in Exhibit A to this Agreement, as such Asset Allocation Ranges are further described in the Memorandum and as such Asset Allocation Ranges may be amended by the Directors from time to time. So long as the Adviser has been and continues to be authorized to provide Advice and Management pursuant to an Investment Advisory Agreement, it will have, subject to any policies and restrictions described in the Memorandum or adopted from time to time by the

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Directors and communicated in writing to the Adviser (in each case, as more fully described in such Investment Advisory Agreement), full discretion and authority on behalf of and in the name of the Partnership (1) to manage the assets and liabilities of the Partnership, (2) to identify and evaluate Investment Managers and Investment Funds and to determine the assets of the Partnership to be committed to each Investment Manager and Investment Fund from time to time subject to the provisions of Section 3.5(b)(8) of this Agreement in the case of Subadvisers, in each case subject to the terms and conditions of the governing documents of each Investment Manager and Investment Fund, and (3) to invest directly the assets of the Partnership in investments pending allocation or reallocation of the assets in Investment Funds or to ensure the availability of cash as required by the Partnership in the ordinary course of its business. In furtherance of, and subject to the provisions of this Section 3.5(b), the Adviser, except as otherwise provided in the applicable Investment Advisory Agreement (and at all times subject to the provisions of the 1940 Act), will have full discretion and authority on behalf of and in the name of the Partnership:

(1)            to purchase, sell, exchange, trade and otherwise deal in and with Securities and other property of the Partnership, including, without limitation, interests in Investment Funds, and to loan Securities of the Partnership;

(2)            to do any and all facts and exercise all rights with respect to the Partnership’s interest as an investor in any Person, including, without limitation, the voting of limited partnership interests or shares of Investment Funds;

(3)            to enter into subscription or other agreements relating to investments in Investment Funds (subject to Section 3.5(b)(8) of this Agreement in the case of agreements with Subadvisers), including, without limitation, agreements irrevocably to forego the Partnership’s right to vote its limited partnership (or similar) interests or shares of Investment Funds;

(4)            to negotiate the terms of and enter into agreements with Investment Managers and Investment Funds (subject to Section 3.5(b)(8) of this Agreement in the case of agreements with Subadvisers) that provide for, among other things, the payment of management fees, reimbursement of expenses and allocations of profits to Investment Managers and the indemnification by the Partnership of Investment Managers and Investment Funds to the same or different extent as provided for with respect to the Adviser, and to amend, modify, terminate or grant waivers in respect of those agreements;

(5)            to open, maintain and close accounts with brokers and dealers, to make all decisions relating to the manner, method and timing of Securities and other investment transactions, to select and place orders with brokers, dealers or other financial intermediaries for the execution, clearance or settlement of any transactions on behalf of the Partnership on those terms that the Adviser considers appropriate, and to grant limited discretionary authorization to brokers, dealers or other financial intermediaries with respect to price, time and other terms of investment and trading transactions;

(6)            to borrow from banks or other financial institutions and to pledge the assets of the Partnership as collateral for those borrowings, to trade on margin, to exercise or refrain from exercising all rights regarding the Partnership’s investments, and to instruct custodians regarding the settlement of transactions, the disbursement of payments to Partnership with respect to repurchases of Interests or portions of Interests and the payment of Partnership expenses, including those relating to the organization and registration of the Partnership;

(7)            subject to Section 3.5(b)(8) of this Agreement, to engage the services of Persons, including Affiliates of the Adviser, to assist the Adviser in providing, or to provide under the Adviser’s control and supervision, Advice and Management to the Partnership at the expense of the Adviser and to amend, modify or terminate or grant waivers in respect of these services;

(8)            (A) to commit all or part of the Partnership’s assets to the discretionary management of one or more Subadvisers, the selection of which will be subject to the approval of a majority (as defined in the 1940 Act) of the Partnership’s outstanding voting securities, unless the Partnership receives an exemption from the provisions of the 1940 Act requiring such approval, (B) to negotiate and enter into agreements with the Subadvisers that provide for,

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among other things, the indemnification by the Partnership of the Subadvisers to the same or different extent as provided for with respect to the Adviser, and to amend, modify, terminate or grant waivers in respect of those agreements (subject to the requirements of the 1940 Act and applicable and (C) to authorize the payment of fees, reimbursement of expenses and allocations of profits to Subadvisers in accordance with their respective governing documents; and

(9)            subject to applicable law, to take all such other actions that the Adviser considers necessary or advisable in furtherance of its duties and powers under the applicable Investment Advisory Agreement.

(c)            The Adviser, to the extent of its powers set out in this Agreement or otherwise vested in it by action of the Directors not inconsistent with this Agreement, is an agent of the Partnership, and the actions of the Adviser taken or refrained from being taken in accordance with such powers will bind the Partnership.

3.6. CUSTODY OF ASSETS OF EACH PARTNERSHIP

Notwithstanding anything to the contrary in this Agreement, the General Partner will not have any authority to hold or have possession or custody of any funds, Securities or other property of a Partnership. The physical possession of all funds, Securities or other property of the Partnership will at all times be held, controlled and administered by one or more custodians retained by the Partnership. The General Partner will have no responsibility, other than that associated with the oversight and supervision of custodians retained by the Partnership, with respect to the collection of income or the physical acquisition or safekeeping of the funds, Securities or other property of the Partnership, all duties of collection, physical acquisition or safekeeping being the sole obligation of such custodians.

3.7. BROKERAGE

In the course of selecting brokers, dealers and other financial intermediaries for the execution, clearance and settlement of transactions for the Partnership under Sections 3.5(b)(5) and (6) of this Agreement, the Adviser may, subject to policies adopted by the Partnership and to the provisions of applicable law, agree to commissions, fees and other charges on behalf of the Partnership as the Adviser deems reasonable in the circumstances, taking into account all such factors as it deems relevant, including the reliability of the broker, financial responsibility of the broker, strength of the broker, ability of the broker to efficiently execute transactions, the broker’s facilities, and the broker’s provision or payment of the costs of research and other services that are of benefit to the Partnership, the Adviser and other clients of and accounts managed by the Adviser, even if the cost of these services does not represent the lowest cost available. The Adviser will be under no obligation to combine or arrange orders so as to obtain reduced charges unless otherwise required under the U.S. federal securities laws. The Adviser, subject to procedures adopted by the Directors, may use Affiliates of the Adviser and the General Partner as brokers to effect the Partnership’s Securities transactions and the Partnership may pay commissions to these brokers in amounts as are permissible under applicable law.

3.8. OTHER ACTIVITIES

(a)            None of the General Partner, the Adviser and their principals, Partners, directors, officers, members, employees and beneficial owners nor the Directors will be required to devote full time to the affairs of the Partnership, but each will devote such time as each may reasonably be required to perform its obligations under this Agreement and under the 1940 Act.

(b)            The Adviser, the Directors, any Partner, and any Affiliate of any Partner may engage in or possess an interest in other business ventures or commercial dealings of every kind and description, independently or with others, including, but not limited to, acquisition and disposition of Securities, provision of investment advisory or brokerage services, serving as directors, officers, employees, advisors or agents of other companies, Partners of the Partnership, members of any limited liability company, or trustees of any trust, or entering into any other commercial arrangements. No Partner will have any rights in or to such activities of any other Partner, the Adviser, the Directors or any Affiliate of any Partner or any profits derived from these activities.

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(c)            The General Partner, the Adviser and their principals, Partners, directors, officers, members, employees and beneficial owners and the Directors, from time to time may acquire, possess, manage, hypothecate and dispose of Securities or other investment assets, and engage in any other investment transaction for any account over which they exercise discretionary authority, including their own accounts, the accounts of their families, the account of any entity in which they have a beneficial interest or the accounts of others for whom or which they may provide investment advisory or other services.

(d)            To the extent that at law or in equity the Directors, the Adviser or the General Partner has duties (including fiduciary duties) and liabilities relating to those duties to the Partnership or to any other Partner or other Person bound by this Agreement, any such Person acting under this Agreement will not be liable to the Partnership or to any other Partner or other Person bound by this Agreement for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of the General Partner, the Adviser or the Directors otherwise existing at law or in equity, are agreed by the Partners to replace the other duties and liabilities of the General Partner, the Adviser or the Directors.

3.9. DUTY OF CARE

(a)            The Directors, the Adviser and the General Partner, including any officer, director, Partner, member, principal, employee or agent of any of them, will not be liable to the Partnership or to any of its Partners for any loss or damage occasioned by any act or omission in the performance of the Person’s services under this Agreement, in the absence of a final judicial decision on the merits from which no further right to appeal may be taken that the loss is due to an act or omission of the Person constituting willful misfeasance, bad faith, gross negligence or reckless disregard of the Person’s duties under this Agreement.

(b)            No Director who has been designated an “audit committee financial expert” (for purposes of Section 407 of the Sarbanes-Oxley Act of 2002 or any successor provision thereto, and any rules issued thereunder by the Commission) in the Partnership’s registration statement or other reports required to be filed with the Commission shall be subject to any greater duty of care in discharging such Director’s duties and responsibilities by virtue of such designation than is any Director who has not been so designated.

(c)            Limited Partners not in breach of any obligation under this Agreement or under any agreement pursuant to which the Limited Partner subscribed for Interests will be liable to the Partnership, any Partner or third parties only as required by this Agreement or applicable law.

3.10. INDEMNIFICATION

(a)            To the fullest extent permitted by law, the Partnership will, subject to Section 3.10(c) of this Agreement, indemnify each General Partner and Adviser (including for this purpose each officer, director, member, Partner, principal, employee or agent of, or any Person who controls, is controlled by or is under common control with, a General Partner or Adviser or Partner of a General Partner or Adviser, and their executors, heirs, assigns, successors or other legal representatives) and each Director (and his executors, heirs, assigns, successors or other legal representatives) (each such Person being referred to as an “indemnitee”) against all losses, claims, damages, liabilities, costs and expenses arising by reason of being or having been a General Partner, Adviser or Director of the Partnership, or the past or present performance of services to the Partnership by the indemnitee, except to the extent that the loss, claim, damage, liability, cost or expense has been finally determined in a judicial decision on the merits from which no further right to appeal may be taken in any such action, suit, investigation or other proceeding to have been incurred or suffered by the indemnitee by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office. These losses, claims, damages, liabilities, costs and expenses include, but are not limited to, amounts paid in satisfaction of judgments, in compromise, or as fines or penalties, and counsel fees and expenses incurred in connection with the defense or disposition of any action, suit, investigation or other proceeding, whether civil or criminal, before any judicial, arbitral, administrative or legislative body, in which the indemnitee may be or may have been involved as a party or otherwise, or with which such indemnitee may be or may have been threatened, while in office or thereafter. The rights of indemnification provided under this Section 3.10 are not to be construed so as to provide for

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indemnification of an indemnitee for any liability (including liability under U.S. federal securities laws which, under certain circumstances, impose liability even on Persons that act in good faith) to the extent (but only to the extent) that indemnification would be in violation of applicable law, but will be construed so as to effectuate the applicable provisions of this Section 3.10.

(b)            Expenses, including counsel fees and expenses, incurred by any indemnitee (but excluding amounts paid in satisfaction of judgments, in compromise, or as fines or penalties) may be paid from time to time by the Partnership in advance of the final disposition of any action, suit, investigation or other proceeding upon receipt of an undertaking by or on behalf of the indemnitee to repay to the Partnership amounts paid if a determination is made that indemnification of the expenses is not authorized under Section 3.10(a) of this Agreement, so long as (1) the indemnitee provides security for the undertaking, (2) the Partnership is insured by or on behalf of the indemnitee against losses arising by reason of the indemnitee’s failure to fulfill his, her or its undertaking, or (3) a majority of the Independent Directors (excluding any Director who is either seeking advancement of expenses under this Agreement or is or has been a party to any other action, suit, investigation or other proceeding involving claims similar to those involved in the action, suit, investigation or proceeding giving rise to a claim for advancement of expenses under this Agreement) or independent legal counsel in a written opinion determines, based on a review of readily available facts (as opposed to a full trial-type inquiry), that reason exists to believe that the indemnitee ultimately will be entitled to indemnification.

(c)            As to the disposition of any action, suit, investigation or other proceeding (whether by a compromise payment, pursuant to a consent decree or otherwise) without an adjudication or a decision on the merits by a court, or by any other body before which the proceeding has been brought, that an indemnitee is liable to the Partnership or its Partners by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office, indemnification will be provided in accordance with Section 3.10(a) of this Agreement if (1) approved as in the best interests of the Partnership by a majority of the Independent Directors (excluding any Director who is either seeking indemnification under this Agreement or is or has been a party to any other action, suit, investigation or proceeding involving claims similar to those involved in the action, suit, investigation or proceeding giving rise to a claim for indemnification under this Agreement) upon a determination, based upon a review of readily available facts (as opposed to a full trial-type inquiry), that the indemnitee acted in good faith and in the reasonable belief that the actions were in the best interests of the Partnership and that the indemnitee is not liable to the Partnership or its Partners by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office, or (2) the Directors secure a written opinion of independent legal counsel, based upon a review of readily available facts (as opposed to a full trial-type inquiry), to the effect that indemnification would not protect the indemnitee against any liability to the Partnership or its Partners to which the indemnitee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office.

(d)            Any indemnification or advancement of expenses made in accordance with this Section 3.10 will not prevent the recovery from any indemnitee of any amount if the indemnitee subsequently is determined in a final judicial decision on the merits in any action, suit, investigation or proceeding involving the liability or expense that gave rise to the indemnification or advancement of expenses to be liable to the Partnership or its Partners by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office. In any suit brought by an indemnitee to enforce a right to indemnification under this Section 3.10, it will be a defense that the indemnitee has not met the applicable standard of conduct described in this Section 3.10. In any suit in the name of the Partnership to recover any indemnification or advancement of expenses made in accordance with this Section 3.10, the Partnership will be entitled to recover the expenses upon a final adjudication from which no further right of appeal may be taken. In any suit brought to enforce a right to indemnification or to recover any indemnification or advancement of expenses made in accordance with this Section 3.10, the burden of proving that the indemnitee is not entitled to be indemnified, or to any indemnification or advancement of expenses, under this Section 3.10 will be on the Partnership (or any Partner acting derivatively or otherwise on behalf of the Partnership or its Partners).

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(e)            An indemnitee may not satisfy any right of indemnification or advancement of expenses granted in this Section 3.10 or to which he, she or it may otherwise be entitled except out of the assets of the Partnership, and no Partner will be personally liable with respect to any such claim for indemnification or advancement of expenses.

(f)            The rights of indemnification provided in this Section 3.10 will not be exclusive of or affect any other rights to which any Person may be entitled by contract or otherwise under law. Nothing contained in this Section 3.10 will affect the power of the Partnership to purchase and maintain liability insurance on behalf of any General Partner, any Director, the Adviser or other Person.

(g)            The General Partner may enter into agreements indemnifying Persons providing services to the Partnership to the same, lesser or greater extent as set out in this Section 3.10.

3.11. FEES, EXPENSES AND REIMBURSEMENT

(a)            As consideration for providing Advice and Management, and for so long as the Adviser provides Advice and Management to the Partnership pursuant to an Investment Advisory Agreement, the Partnership will pay the Adviser a management fee at an annual rate and at such intervals as determined by the Directors and approved in the manner contemplated by the 1940 Act of the value of each Limited Partner’s Capital Account as of the first Business Day of each month (the “Management Fee”), which amount will be charged as of that date to the Capital Account of each Limited Partner. The Management Fee will be computed based on the Capital Account of each Limited Partner as of the end of business on the last Business Day of each month, after adjustment for any subscriptions effective on that date and before giving effect to any repurchase of Interests or portions of Interests effective as of that date, and will be due and payable in arrears within five Business Days after the end of the month. Subject to applicable law, the Adviser is authorized, but not required, to waive, reduce or rebate the Management Fee calculated with respect to, and deducted from, the Capital Accounts of Limited Partners and to pay all or part of the Management Fee to third parties for services rendered in connection with the placement of Interests.

(b)            The Partnership will compensate each Independent Director for his or her services rendered in connection with the Partnership as may be agreed to by the Directors and the General Partner, and as described in the Memorandum. In addition, the Partnership will reimburse the Directors for reasonable out-of-pocket expenses incurred by them in performing their duties with respect to the Partnership.

(c)            The Partnership will add to all subscriptions for Interests or portions of Interests any sales charge or fee, in form and amount as determined by the General Partner, subject to approval by the Directors, payable to Placement Agents for the placement of such Interests or portions of Interests. Any sales charge or fee paid in accordance with this Section 3.11(c) will not constitute a Capital Contribution made by the Partner to the Partnership nor part of the assets of the Partnership.

(d)            The Partnership will bear all expenses incurred in connection with its business other than those specifically required to be borne by the Adviser under this Agreement or an Investment Advisory Agreement. Expenses to be borne by the Partnership include, but are not limited to, the following:

(1)            all investment-related expenses, including, but not limited to, fees paid and expenses reimbursed, directly or indirectly, to Investment Managers (including management fees, performance or incentive fees or allocations and redemption or withdrawal fees, however titled or structured), all costs and expenses directly related to portfolio transactions and positions for the Partnership’s account, such as direct and indirect expenses associated with the Partnership’s investments, including its investments in Investment Funds or with Subadvisers (whether or not consummated), and enforcing the Partnership’s rights in respect of such investments, transfer taxes and premiums, taxes withheld on non-U.S. dividends, fees for data and software providers, research expenses, professional fees (including, without limitation, the fees and expenses of consultants, attorneys and experts) and, if applicable in the event the Partnership utilizes a Subadviser (or in connection with the Partnership’s temporary or cash management investments), brokerage commissions, interest and commitment fees on loans and debit balances, borrowing charges on Securities sold short, dividends on Securities sold but not yet purchased and margin fees;

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(2)            all costs and expenses associated with the establishment of Investment Funds (whether or not consummated) managed by Subadvisers;

(3)            any non-investment-related interest expense;

(4)            attorneys’ fees and disbursements associated with preparing and updating any Offering Materials and with reviewing subscription materials in connection with qualifying prospective investors or prospective holders of Transferred Interests;

(5)            fees and disbursements of any accountants engaged by the Partnership, and expenses related to the annual audit of the Partnership and compliance with any applicable U.S. federal or state laws;

(6)            fees paid and out-of-pocket expenses reimbursed to the Partnership’s administrator;

(7)            recordkeeping, custody and escrow fees and expenses;

(8)            the costs of an errors and omissions/directors’ and officers’ liability insurance policy and a fidelity bond;

(9)            the costs of preparing and mailing reports and other communications, including proxy, tender offer correspondence or similar materials, to Limited Partners;

(10)            the Management Fee;

(11)            fees of Independent Directors and travel expenses of Directors relating to meetings of the Board of Directors and committees thereof;

(12)            all costs and charges for equipment or services used in preparing or communicating information regarding the Partnership’s transactions or the valuation of its assets among the Adviser and any custodian, administrator or other agent engaged by the Partnership;

(13)            any extraordinary expenses, including indemnification expenses as provided for in Section 3.10 of this Agreement;

(14)            any other expenses as may be approved from time to time by the Directors, other than those required to be borne by the Adviser or the General Partner; and

(15)            the organizational and offering expenses of the Partnership which were initially borne by the Adviser or an affiliate thereof and expensed by the Partnership upon commencement of operations.

The Partnership will account for these expenditures, through monthly expense allocations (or at such other frequency or times as the Board of Directors may direct) to Limited Partners’ Capital Accounts, for a period not to exceed the first sixty months after the Closing Date. The amount of each such expense allocation to the Limited Partners’ Capital Accounts will be determined by the Directors and the Adviser and will equal an amount sufficient to reimburse the Adviser or an affiliate thereof within a sixty-month period.

(e)            Each of the Adviser and the General Partner will be entitled to reimbursement from the Partnership for any of the above expenses that it pays on behalf of the Partnership, other than as provided in Section 3.11(d)(15) above.

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ARTICLE IV.

TERMINATION OF STATUS OF GENERAL PARTNER REMOVAL OF GENERAL PARTNER; TRANSFERS AND REPURCHASES

4.1. TERMINATION OF STATUS OF GENERAL PARTNER

A General Partner will cease to be a general Partner of the Partnership if the General Partner (a) is dissolved or otherwise terminates its existence; (b) voluntarily withdraws as General Partner (which it may do at any time in its sole discretion); (c) is removed; (d) Transfers its entire Interest as General Partner as permitted under Section 4.3 of this Agreement and the Person to which the Interest is Transferred is admitted as a substituted General Partner under Section 2.6(a) of this Agreement; or (e) otherwise ceases to be a General Partner under the Delaware Act.

4.2. REMOVAL OF GENERAL PARTNER

Any General Partner may be removed by the vote or written consent of Partners holding not less than 80% of the total number of votes eligible to be cast by all Partners.

4.3. TRANSFER OF INTEREST OF GENERAL PARTNER

A General Partner may not Transfer all or any portion of its Interest as the General Partner except to Persons who have agreed to be bound by all of the terms of this Agreement and applicable law. If a General Partner Transfers its entire Interest as General Partner, it will not cease to be a General Partner unless and until the transferee is admitted to the Partnership as a substituted General Partner pursuant to Section 2.6(a) of this Agreement. In executing this Agreement, each Partner is deemed to have consented to any Transfer contemplated by this Section 4.3.

4.4. TRANSFER OF INTERESTS OF LIMITED PARTNERS

(a)            Any Interest or portion of any Interest held by a Limited Partner may be Transferred only (1) by operation of law pursuant to the death, bankruptcy, insolvency, adjudicated incompetence, or dissolution of the Limited Partner; or (2) under certain limited instances set out in this Agreement, with the written consent of the General Partner (which may be withheld in the General Partner’s sole and absolute discretion). Unless the Partnership consults with legal counsel to the Partnership and counsel confirms that the Transfer will not cause the Partnership to be treated as a “publicly traded Partnership” taxable as a corporation, however, the General Partner may not consent to a Transfer unless the following conditions are met: (i) the Transferring Limited Partner has been a Limited Partner for at least six months; (ii) the proposed Transfer is to be made on the effective date of an offer by the Partnership to repurchase Interests; and (iii) the Transfer is (A) one in which the tax basis of the Interest in the hands of the transferee is determined, in whole or in part, by reference to its tax basis in the hands of the Transferring Limited Partner (e.g., certain Transfers to affiliates, gifts and contributions to family entities), (B) to members of the Transferring Limited Partner’s immediate family (siblings, spouse, parents and children), or (C) a distribution from a qualified retirement plan or an individual retirement account. In addition, the General Partner may not consent to a Transfer unless the Person to whom or which an Interest or portion of an Interest is Transferred (or each of the Person’s equity owners if the Person is a “private investment company” as defined in Rule 205-3(d)(3) under the Advisers Act, an investment company registered under the 1940 Act, or a business development company as defined under the Advisers Act) is a Person whom or which the General Partner believes is an “accredited investor” as defined in Regulation D under the 1933 Act and meets the requirements of paragraph (d)(1) of Rule 205-3 under the Advisers Act or successor provision of any of those rules, or is otherwise exempt from the requirements of those rules. In the event that other investor eligibility requirements are established by the Partnership, the Person to whom or which an Interest or portion of an Interest is Transferred must satisfy these other requirements. If any transferee does not meet the investor eligibility requirements described in this Section 4.4(a), the General Partner may not consent to the Transfer. In addition, no Limited Partner will be permitted to Transfer his, her or its Interest or portion of an Interest unless after the Transfer the balance of the Capital Account of the transferee, and of the Limited Partner Transferring less than the Partner’s entire Interest, is at least equal to the amount of the Limited Partner’s initial Capital Contribution. Any permitted transferee will be entitled to the allocations and distributions allocable to the Interest or portion of an Interest so acquired and to Transfer the Interest or portion of an Interest in accordance with the terms of this Agreement, but will not be entitled to the other rights of

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a Limited Partner unless and until the transferee becomes a substituted Limited Partner. If a Limited Partner Transfers an Interest or portion of an Interest with the approval of the General Partner, the General Partner will promptly take all necessary actions so that each transferee or successor to whom or to which the Interest or portion of an Interest is Transferred is admitted to the Partnership as a Limited Partner. The admission of any transferee as a substituted Limited Partner will be effective upon the execution and delivery by, or on behalf of, the substituted Limited Partner of this Agreement or an instrument that constitutes the execution and delivery of this Agreement. Each Limited Partner and transferee agrees to pay all expenses, including attorneys’ and accountants’ fees, incurred by the Partnership in connection with any Transfer. In connection with any request to Transfer an Interest or portion of an Interest, the Partnership may require the Limited Partner requesting the Transfer to obtain, at the Limited Partner’s expense, an opinion of counsel selected by the General Partner as to such matters as the General Partner may reasonably request. If a Limited Partner Transfers its entire Interest as a Limited Partner, it will not cease to be a Limited Partner unless and until the transferee is admitted to the Partnership as a substituted Limited Partner in accordance with this Section 4.4(a).

(b)            Each Limited Partner will indemnify and hold harmless the Partnership, the General Partner, the Adviser, the Directors, each other Limited Partner and any Affiliate of the Partnership, the General Partner, the Adviser, the Director and each of the other Limited Partners against all losses, claims, damages, liabilities, costs and expenses (including legal or other expenses incurred in investigating or defending against any losses, claims, damages, liabilities, costs and expenses or any judgments, fines and amounts paid in settlement), joint or several, to which these Persons may become subject by reason of or arising from (1) any Transfer made by the Limited Partner in violation of this Section 4.4 and (2) any misrepresentation by the Transferring Limited Partner or substituted Limited Partner in connection with the Transfer. A Limited Partner Transferring an Interest may be charged reasonable expenses, including attorneys’ and accountants’ fees, incurred by the Partnership in connection with the Transfer.

4.5. REPURCHASE OF INTERESTS

(a)            Except as otherwise provided in this Agreement, no Partner or other Person holding an Interest or portion of an Interest will have the right to withdraw or tender an Interest or portion of an Interest to the Partnership for repurchase. The Directors may, from time to time, in their complete and exclusive discretion and on terms and conditions as they may determine, cause the Partnership to repurchase Interests or portions of Interests in accordance with written tenders. The Partnership will not offer, however, to repurchase Interests or portions of Interests on more than four occasions during any one Fiscal Year, unless the Partnership has been advised by its legal counsel that more frequent offers would not cause any adverse tax consequences to the Partnership or the Partners. In determining whether to cause the Partnership to repurchase Interests or portions of Interests, pursuant to written tenders, the Directors will consider the following factors, among others:

(1)            whether any Partners have requested to tender Interests or portions of Interests;

(2)            the liquidity of the Partnership’s assets (including fees and costs associated with withdrawing from Investment Funds and/or disposing of assets managed by Subadvisers);

(3)            the investment plans and working capital and reserve requirements of the Partnership;

(4)            the relative economies of scale with respect to the size of the Partnership;

(5)            the history of the Partnership in repurchasing Interests or portions of Interests;

(6)            the availability of information as to the value of the Partnership’s interests in the Investment Funds;

(7)            existing conditions of the securities markets and the economy generally, as well as political, national or international developments or current affairs;

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(8)            the anticipated tax consequences to the Partnership of any proposed repurchases of Interests or portions of Interests; and

(9)            the recommendations of the General Partner and/or the Adviser.

The Directors will cause the Partnership to repurchase Interests or portions of Interests in accordance with written tenders only on terms fair to the Partnership and to all Partners and Persons holding Interests or portions of Interests acquired from Partners.

(b)            Except as provided in Section 4.5(c) of this Agreement, a General Partner may tender its Interest or portion of an Interest under Section 4.5(a) of this Agreement only if and to the extent that (1) the repurchase would not cause the value of the Capital Account of the General Partner to be less than the value required to be maintained under Section 5.1(c) of this Agreement or (2) in the view of legal counsel to the Partnership, the repurchase would not jeopardize the classification of the Partnership as a partnership for U.S. federal income tax purposes.

(c)            If a General Partner ceases to serve in that capacity under Section 4.1 of this Agreement (other than pursuant to Section 4.1(d)) and the business of the Partnership is continued in accordance with Section 6.1(a)(2)(B) of this Agreement, the former General Partner (or its trustee or other legal representative) may, by written notice to the Directors within 60 days of the action resulting in the continuation of the Partnership under Section 6.1(a)(2)(B), tender to the Partnership all or any portion of its Interest. Within 30 days after the receipt of notice, the Directors will cause the Interest or portion of an Interest to be repurchased by the Partnership for cash in an amount equal to the balance of the former General Partner’s Capital Account or applicable portion of the Capital Account. If the former General Partner does not tender to the Partnership all of its Interest as permitted by this Section 4.5(c), the Interest will automatically convert to and will be treated in all respects as the Interest of a Limited Partner. If the General Partner ceases to serve in this capacity under Section 4.1 of this Agreement (other than pursuant Section 4.1(d)) and the Partnership is not continued under Section 6.1(a)(2)(B) of this Agreement, the liquidation and distribution provisions of Article VI of this Agreement will apply to the General Partner’s Interest.

(d)            The General Partner may cause the Partnership to repurchase an Interest or portion of an Interest of a Limited Partner or any Person acquiring an Interest from or through a Limited Partner, on terms fair to the Partnership and to the Limited Partner or Person acquiring an Interest from or through such Limited Partner, in the event that the General Partner, in its sole discretion, determines or has reason to believe that:

(1)            the Interest or portion of an Interest has been Transferred in violation of Section 4.4 of this Agreement, or the Interest or portion of an Interest has vested in any Person other than by operation of law as the result of the death, dissolution, bankruptcy, insolvency or adjudicated incompetence of the Limited Partner;

(2)            ownership of the Interest or portion of an Interest by a Partner or other Person is likely to (A) cause the Partnership to be in violation of, or (B) (x) require registration of any Interest or portion of any Interest under, or (y) subject the Partnership to additional registration or regulation under, the securities, commodities or other laws of the United States or any other relevant jurisdiction;

(3)            continued ownership of the Interest or portion of an Interest may be harmful or injurious to the business or reputation of the Partnership, the Directors, the General Partner or the Adviser or any of their Affiliates, or may subject the Partnership or any of the Partners to an undue risk of adverse tax or other fiscal or regulatory consequences;

(4)            any of the representations and warranties made by a Partner or other Person in connection with the acquisition of the Interest or portion of an Interest was not true when made or has ceased to be true;

(5)            with respect to a Limited Partner subject to special regulatory or compliance requirements, such as those imposed by ERISA, the Bank Holding Company Act or certain Federal Communication Commission regulations

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(collectively, “Special Laws or Regulations”), such Limited Partner will likely be subject to additional regulatory or compliance requirements under these Special Laws or Regulations by virtue of continuing to hold an Interest or portion of an Interest; or

(6)            it would be in the best interests of the Partnership, as determined by the General Partner or the Directors, for the Partnership to repurchase the Interest or portion of an Interest.

(e)            Repurchases of Interests or portions of Interests by the Partnership will be payable promptly after the date of each repurchase or, in the case of an offer by the Partnership to repurchase Interests or portions of Interests, promptly after the expiration date of the repurchase offer in accordance with the terms of the repurchase offer. Payment of the purchase price for an Interest or portion of an Interest will consist of: (1) cash or a promissory note, which will be non-transferable and need not bear interest, in an amount equal to the percentage, as may be determined by the Directors, of the estimated unaudited net asset value of the Interest or portion of an Interest repurchased by the Partnership determined as of the date of the repurchase (the “Initial Payment”); and (2) if determined to be appropriate by the Directors or if the Initial Payment is less than 100% of the estimated unaudited net asset value, a promissory note, which may or may not be incorporated into the note applicable to the Initial Payment, entitling its holder to a contingent payment (the “Post-Audit Payment”) equal to the excess, if any, of (A) the net asset value of the Interest or portion of an Interest repurchased by the Partnership as of the date of the repurchase, determined based on the audited financial statements of the Partnership for the Fiscal Year in which the repurchase was effective, over (B) the Initial Payment. Any obligation under such a promissory note with respect to the Initial Payment will be due and payable not more than 30 days after the date of repurchase or, if the Partnership has requested withdrawal of its capital from any Investment Funds in funding the repurchase of Interests, ten Business Days after the Partnership has received at least 90% of the aggregate amount withdrawn by the Partnership from the Investment Funds. Any obligation under such a promissory note with respect to the Post-Audit Payment will be due and payable promptly following the preparation of the applicable audited financial statements. Notwithstanding anything to the contrary in this Section 4.5(e), the Directors, in their discretion, may cause the Partnership to pay all or any portion of the repurchase price in Securities (or any combination of Securities and cash) having a value, determined as of the date of repurchase, equal to the amount to be repurchased. All repurchases of Interests or portions of Interest will be subject to any and all conditions as the Directors may impose in their sole discretion. The General Partner may, in its discretion, cause the Partnership to repurchase a Limited Partner’s entire Interest, if the Limited Partner’s Capital Account balance in the Partnership, as a result of repurchase or Transfer requests by the Limited Partner, is less than $100,000 or such other minimum amount established by the General Partner from time to time in its sole discretion. Subject to the procedures of this Section 4.5(e), the amount due to any Partner whose Interest or portion of an Interest is repurchased will be equal to the value of the Partner’s Capital Account or portion of such Capital Account, as of the effective date of repurchase, after giving effect to all allocations to be made to the Partner’s Capital Account as of that date. If a Limited Partner’s entire Interest is repurchased, that Limited Partner will cease to be a Limited Partner.

ARTICLE V.

CAPITAL

5.1. CONTRIBUTIONS TO CAPITAL

(a)            The minimum initial Capital Contribution of each Limited Partner will be $100,000 or such other amount as the General Partner determines from time to time. The amount of the initial Capital Contribution of each Partner will be recorded by the Partnership upon acceptance as a contribution to the capital of the Partnership. Each Limited Partner’s entire initial Capital Contribution will be paid to the Partnership immediately prior to the Partnership’s acceptance of the Limited Partner’s subscription for Interests, unless otherwise agreed by the Partnership and such Limited Partner.

(b)            The Limited Partners may make additional Capital Contributions effective as of those times and in amounts as the General Partner may permit, but no Limited Partner will be obligated to make any additional Capital

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Contribution except to the extent provided in Sections 5.5 and 5.7 of this Agreement. Each additional Capital Contribution made by a Limited Partner (other than a contribution made pursuant to Section 5.5 or Section 5.7 of this Agreement) will be in the minimum amount of $25,000 or such other amount as the General Partner determines from time to time.

(c)            A General Partner may make additional Capital Contributions effective as of those times and in such amounts as it determines, and will be required to make additional Capital Contributions from time to time to the extent necessary to maintain the balance of its Capital Account at an amount, if any, necessary to ensure that the Partnership will be treated as a partnership for U.S. federal income tax purposes. Except as provided in this Section 5.1 or in the Delaware Act, no General Partner will be required or obligated to make any additional contributions to the capital of the Partnership.

(d)            Subject to the provisions of the 1940 Act, and except as otherwise permitted by the General Partner, (1) initial and any additional Capital Contributions by any Partner will be payable in cash or in Securities that the General Partner, in its absolute discretion, causes the Partnership to accept, and (2) initial and any additional Capital Contributions in cash will be payable in readily available funds at the date of the proposed acceptance of the contribution. The Partnership will charge each Partner making a Capital Contribution in Securities to the capital of the Partnership an amount as may be determined by the General Partner to reimburse the Partnership for any costs incurred by the Partnership by reason of accepting the Securities, and any charge will be due and payable by the contributing Partner in full at the time the Capital Contribution to which the charges relate is due. The value of contributed Securities will be determined in accordance with Section 7.3 of this Agreement as of the date of contribution.

(e)            An Adviser may make Capital Contributions and own Interests in the Partnership and, in so doing, will become a Limited Partner with respect to the contributions.

(f)            The minimum initial and additional contributions set out in paragraphs (a) and (b) of this Section 5.1 may be increased or reduced by the General Partner from time to time. Reductions may be applied to all investors, individual investors or to classes of investors, in each case in the sole discretion of the General Partner.

5.2. RIGHTS OF PARTNERS TO CAPITAL

No Partner will be entitled to interest on the Partner’s Capital Contribution, nor will any Partner be entitled to the return of any capital of the Partnership except (a) upon the repurchase by the Partnership of all or a portion of the Partner’s Interest in accordance with Section 4.5 of this Agreement, (b) in accordance with the provisions of Section 5.7(b) of this Agreement or (c) upon the liquidation of the Partnership’s assets in accordance with Section 6.2 of this Agreement. Except as specified in the Delaware Act, or with respect to distributions or similar disbursements made in error, no Partner will be liable for the return of any such amounts.

To the fullest extent permitted by applicable law, no Partner will have the right to require partition of the Partnership’s property or to compel any sale or appraisal of the Partnership’s assets.

5.3. CAPITAL ACCOUNTS

(a)            The Partnership will maintain a separate Capital Account for each Partner.

(b)            Each Partner’s Capital Account will have an initial balance equal to the amount of cash and the value of any Securities (determined in accordance with Section 7.3 of this Agreement) constituting the Partner’s initial Capital Contribution.

(c)            Each Partner’s Capital Account will be increased by the sum of (1) the amount of cash and the value of any Securities (determined in accordance with Section 7.3 of this Agreement) constituting additional Capital Contributions by the Partner permitted under Section 5.1 of this Agreement, plus (2) any amount credited to the Partner’s Capital Account under Sections 5.4 through 5.7 of this Agreement.

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(d)            Each Partner’s Capital Account will be reduced by the sum of (1) the amount of any repurchase of the Interest or portion of the Interest of the Partner or distributions to the Partner under Section 4.5, 5.11 or 6.2 of this Agreement that are not reinvested, plus (2) any amounts debited against the Partner’s Capital Account under Sections 5.4 through 5.7 of this Agreement.

(e)            In the event all or a portion of the Interest of a Partner is Transferred in accordance with the terms of this Agreement, the transferee will succeed to the Capital Account of the transferor to the extent of the Transferred Interest or portion of an Interest.

(f)            Subject to Section 5.7(b) of this Agreement, no Partner will be required to pay to the Partnership or any other Partner any deficit in such Partner’s Capital Account upon dissolution of the Partnership or otherwise.

5.4. ALLOCATION OF NET PROFIT AND LOSS

Subject to Section 5.8 of this Agreement, as of the last day of each Fiscal Period, any Net Profit or Net Loss for the Fiscal Period will be allocated among and credited to or debited against the Capital Accounts of the Partners in accordance with their respective Investment Percentages for the Fiscal Period.

5.5. ALLOCATION OF CERTAIN WITHHOLDING TAXES AND OTHER EXPENDITURES

(a)            If the Partnership incurs a withholding tax or other tax obligation with respect to the share of Partnership income allocable to any Partner, then the General Partner, without limitation of any other rights of the Partnership or the General Partner, will cause the amount of the obligation to be debited against the Capital Account of the Partner when the Partnership pays the obligation, and any amounts then or in the future distributable to the Partner will be reduced by the amount of the taxes. If the amount of the taxes is greater than any distributable amounts, then the Partner and any successor to the Partner’s Interest or portion of an Interest will pay to the Partnership as a Capital Contribution, upon demand by the General Partner, the amount of the excess. A General Partner will not be obligated to apply for or obtain a reduction of or exemption from withholding tax on behalf of any Partner that may be eligible for the reduction or exemption, except that, in the event that the General Partner determines that a Partner is eligible for a refund of any withholding tax, the General Partner may, at the request and expense of the Partner, assist the Partner in applying for such refund.

(b)            Except as otherwise provided for in this Agreement and unless prohibited by the 1940 Act, any expenditures payable by the Partnership, to the extent determined by the General Partner to have been paid or withheld on behalf of, or by reason of particular circumstances applicable to, one or more but fewer than all of the Partners, will be charged to only those Partners on whose behalf the payments are made or whose particular circumstances gave rise to such payments. The charges will be debited from the Capital Accounts of the Partners as of the close of the Fiscal Period during which the items were paid or accrued by the Partnership.

5.6. RESERVES

(a)            The General Partner may cause appropriate reserves to be created, accrued and charged by the Partnership against Net Assets and proportionately against the Capital Accounts of the Partners for contingent liabilities, if any, as of the date any contingent liability becomes known to the General Partner, the reserves to be in the amounts that the General Partner in its sole discretion deems necessary or appropriate. The General Partner may increase or reduce any reserves from time to time by amounts as it in its sole discretion deems necessary or appropriate. The amount of any reserve, or any increase or decrease in a reserve, will be proportionately charged or credited to the Capital Accounts of those Persons who or that are Partners at the time the reserve is created, or increased or decreased, except that if any individual reserve item, adjusted by any increase in the item, exceeds the lesser of $500,000 or 1% of the aggregate value of the Capital Accounts of all of those Partners, then the amount of the reserve, increase or decrease may instead, at the discretion of the General Partner, be charged or credited to those Persons who or that were Partners at the time, as determined by the General Partner in its sole discretion, of the act or omission giving rise to the contingent liability for which the reserve was established, increased or decreased in proportion to their Capital Accounts.

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(b)            If any amount is required by Section 5.7(a) of this Agreement to be charged or credited to a Person who or that is no longer a Partner, the amount will be paid by or to the party, in cash, with interest from the date on which the General Partner determines that the charge or credit is required. In the case of a charge, the former Partner will be obligated to pay as a Capital Contribution the amount of the charge, plus interest as provided in this Section 5.7(b), to the Partnership on demand, except that (1) in no event will a former Partner be obligated to make a payment exceeding the amount of the Partner’s Capital Account at the time to which the charge relates and (2) no demand will be made after the expiration of three years from the date on which the Person ceased to be a Partner. To the extent that a former Partner fails to pay to the Partnership, in full, any amount required to be charged to the former Partner under Section 5.7(a) of this Agreement, the deficiency will be charged proportionately to the Capital Accounts of the Partners at the time of the act or omission giving rise to the charge to the extent feasible, and otherwise proportionately to the Capital Accounts of the current Partners.

5.7. ALLOCATION TO AVOID CAPITAL ACCOUNT DEFICITS

To the extent that any debits under Sections 5.4 through 5.7 of this Agreement would reduce the balance of the Capital Account of any Limited Partner below zero, that portion of any such debits will be allocated instead to the Capital Account of the General Partner. Any credits in any subsequent Fiscal Period that otherwise would be allocable under Sections 5.4 through 5.7 of this Agreement to the Capital Account of any Limited Partner previously affected by the application of this Section 5.8 will instead be allocated to the Capital Account of the General Partner in amounts necessary to offset all previous debits attributable to the Limited Partner, made in accordance with this Section 5.8, that have not been recovered.

5.8. ALLOCATIONS PRIOR TO CLOSING DATE

Any net cash profits or any net cash losses realized by the Partnership from the purchase or sale of Securities during the period ending on the day prior to the Closing Date will be allocated to the Capital Account of the General Partner. No unrealized item of profit or loss will be allocated under this Section 5.9 to the Capital Account of any Partner.

5.9. TAX ALLOCATIONS

For each taxable year of the Partnership, items of income, deduction, gain, loss or credit will be allocated for income tax purposes among the Partners in a manner so as to reflect equitably amounts credited or debited to each Partner’s Capital Account for the current and prior taxable years (or relevant portions of those years). Allocations under this Section 5.10 will be made in accordance with the principles of Sections 704(b) and 704(c) of the Code, and in conformity with Treasury Regulations promulgated under these Sections, or the successor provisions to such Sections and Regulations. Notwithstanding anything to the contrary in this Agreement, the Partnership will allocate to the Partners those gains or income necessary to satisfy the “qualified income offset” requirement of Treasury Regulations Section 1.704-1(b)(2)(ii)(d). If the Partnership realizes net capital gains for U.S. federal income tax purposes for any taxable year during or as of the end of which one or more Positive Basis Partners (as defined in this Section 5.10) withdraw from the Partnership under Article IV or VI of this Agreement, the General Partner may elect to allocate net gains as follows: (a) to allocate net gains among Positive Basis Partners, in proportion to the Positive Basis (as defined in this Section 5.10) of each Positive Basis Partner, until either the full amount of the net gains has been so allocated or the Positive Basis of each Positive Basis Partner has been eliminated, and (b) to allocate any net gains not so allocated to Positive Basis Partners to the other Partners in a manner that reflects equitably the amounts credited to the Partners’ Capital Accounts. If the Partnership realizes capital losses for U.S. federal income tax purposes for any fiscal year during or as of the end of which one or more Negative Basis Partners (as defined in this Section 5.10) withdraw from the Partnership under Article IV or VI of this Agreement, the General Partner may elect to allocate net losses as follows: (i) to allocate net losses among Negative Basis Partners, in proportion to the Negative Basis (as defined in this Section 5.10) of each Negative Basis Partner, until either the full amount of net losses will have been so allocated or the Negative Basis of each Negative Basis Partner has been eliminated, and (ii) to allocate any net losses not so allocated to Negative Basis Partners, to the other Partners in a manner that reflects equitably the amounts credited to the Partners’ Capital Accounts. As used in this Section 5.10, the term “Positive Basis” means, with respect to any Partner and as of any time of calculation, the amount by which the total of the Partners’ Capital Accounts as of that time exceeds the Partner’s “adjusted tax basis,” for U.S. federal

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income tax purposes, in the Partner’s Interest in the Partnership as of that time (determined without regard to any adjustments made to the “adjusted tax basis” by reason of any Transfer or assignment of the Interest, including by reason of death). As used in this Section 5.10, the term “Positive Basis Partner” means any Partner who or that withdraws from the Partnership and who or that has a Positive Basis as of the effective date of the Partner’s withdrawal. As used in this Section 5.10, the term “Negative Basis” means, with respect to any Partner and as of any time of calculation, the amount by which the Partner’s “adjusted tax basis,” for U.S. federal income tax purposes, in the Partner’s Interest in the Partnership as of that time (determined without regard to any adjustments made to the “adjusted tax basis” by reason of any Transfer or assignment of the Interest, including by reason of death, and without regard to such Partner’s share of the liabilities of the Partnership under section 752 of the Code) exceeds the Partner’s Capital Account as of such time. As used in this Section 5.10, the term “Negative Basis Partner” means any Partner who or that withdraws from the Partnership and who or that has a Negative Basis as of the effective date of the Partner’s withdrawal.

5.10. DISTRIBUTIONS

(a)            The General Partner may cause the Partnership to make distributions in cash or in kind at any time to all of the Partners on a proportionate basis in accordance with the Partners’ Investment Percentages.

(b)            The General Partner may withhold taxes from any distribution to any Partner to the extent required by the Code or any other applicable law. For purposes of this Agreement, any taxes so withheld by the Partnership with respect to any amount distributed by the Partnership to any Partner will be deemed to be a distribution or payment to the Partner, reducing the amount otherwise distributable to the Partner under this Agreement and reducing the Capital Account of the Partner. Neither the General Partner nor the Directors will be obligated to apply for or obtain a reduction of or exemption from withholding tax on behalf of any Partner that may be eligible for reduction or exemption. To the extent that a Partner claims to be entitled to a reduced rate of, or exemption from, a withholding tax pursuant to an applicable income tax treaty, or otherwise, the Partner will furnish the Partnership with any information and forms that the Partner may be required to complete if necessary to comply with any and all laws and regulations governing the obligations of withholding tax agents. Each Partner represents and warrants that any information and forms furnished by the Partner will be true and accurate and agrees to indemnify the Partnership and each of the Partners from any and all losses, claims, damages, liabilities costs and expenses resulting from the filing of inaccurate or incomplete information or forms relating to the withholding taxes (including legal or other expenses incurred in investigating or defending against any such losses, claims, damages, liabilities, costs and expenses).

(c)            Notwithstanding any provision to the contrary contained in this Agreement, the Partnership and the General Partner on behalf of the Partnership will not repurchase any Interest or portion of an Interest or make a distribution to any Partner on account of the Partner’s Interest or portion of an Interest, if such repurchase or distribution would violate the Delaware Act or other applicable law.

ARTICLE VI.

DISSOLUTION AND LIQUIDATION

(a)            The Partnership will be dissolved if at any time it has no Limited Partners or upon the occurrence of any of the following events:

(1)            upon the affirmative vote to dissolve the Partnership by both (A) a majority of the Directors (including the vote of a majority of the Independent Directors) and (B) Partners holding at least two-thirds of the total number of votes eligible to be cast by all Partners;

(2)            upon either of: (A) an election by the General Partner to dissolve the Partnership or (B) a General Partner’s ceasing to be a General Partner in accordance with Section 4.1 of this Agreement (other than in conjunction with a Transfer of the Interest of a General Partner in accordance with Section 4.3 of this Agreement to a Person who or that is admitted as a substituted General Partner under Section 2.6(a) of this Agreement), unless, as to the event

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described in clause (B) of this Section 6.1(a)(2), (i) the Partnership has at least one other General Partner who or that is authorized to and does carry on the business of the Partnership, or (ii) both the Directors and Partners holding not less than two-thirds of the total number of votes eligible to be cast by all Partners elect within 60 days after the event to continue the business of the Partnership and a Person to be admitted to the Partnership, effective as of the date of the event, as an additional General Partner who has agreed to make the contributions to the capital of the Partnership required to be made under Section 5.1(c) of this Agreement;

(3)            upon the failure of Partners to approve successor Directors at a meeting called by the General Partner in accordance with Section 2.11(c) of this Agreement when no Director remains to continue the business of the Partnership; or

(4)            as otherwise required by operation of law.

Dissolution of the Partnership will be effective on the later of the day on which the event giving rise to the dissolution occurs or, to the extent permitted by the Delaware Act, the conclusion of any applicable 60-day period during which the Directors and Partners elect to continue the business of the Partnership as provided in Section 6.1(a)(2), but the Partnership will not terminate until the assets of the Partnership have been liquidated in accordance with Section 6.2 of this Agreement and the Certificate has been canceled.

(b)            Except as provided in Section 6.1(a) of this Agreement or in the Delaware Act, the death, adjudicated incompetence, dissolution, termination, liquidation, bankruptcy, reorganization, merger, sale of substantially all of the stock or assets of, or other change in the ownership or nature of a Partner, the admission to the Partnership of a new Partner, the withdrawal of a Partner from the Partnership, or the Transfer by a Partner of the Partner’s Interest or a portion of the Interest to a third party will not cause the Partnership to dissolve.

6.2. LIQUIDATION OF ASSETS

(a)            Upon the dissolution of a Partnership as provided in Section 6.1 of this Agreement, the General Partner will promptly liquidate the business and administrative affairs of the Partnership, except that if the General Partner is unable to perform this function, a liquidator elected by Partners holding a majority of the total number of votes eligible to be cast by all Partners and whose fees and expenses will be paid by the Partnership will promptly liquidate the business and administrative affairs of the Partnership. Net Profit and Net Loss during the period of liquidation will be allocated in accordance with Article V of this Agreement. Subject to the Delaware Act, the proceeds from liquidation (after establishment of appropriate reserves for all claims and obligations, including all contingent, conditional or unmatured claims and obligations in an amount that the General Partner or liquidator deems appropriate in its sole discretion as applicable) will be distributed in the following manner:

(1)            the debts of the Partnership, other than debts, liabilities or obligations to Limited Partners, and the expenses of liquidation (including legal and accounting fees and expenses incurred in connection with the liquidation), up to and including the date on which distribution of the Partnership’s assets to the Partners has been completed, will first be paid on a proportionate basis;

(2)            any debts, liabilities or obligations owing to the Limited Partners will be paid next in their order of seniority and on a proportionate basis; and

(3)            the Partners are paid next on a proportionate basis the positive balances of their Capital Accounts after giving effect to all allocations to be made to the Partners’ Capital Accounts for the Fiscal Period ending on the date of the distributions under this Section 6.2(a)(3).

(b)            Notwithstanding the provisions of this Section 6.2, upon dissolution of the Partnership, subject to the Delaware Act and the priorities set out in Section 6.2(a) of this Agreement, the General Partner or liquidator may distribute ratably in kind any assets of the Partnership. If any in-kind distribution is to be made under this Section 6.2(b), (1) the assets distributed in kind will be valued in accordance with Section 7.3 of this Agreement as

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of the actual date of their distribution and charged as so valued and distributed against amounts to be paid under Section 6.2(a) of this Agreement, and (2) any profit or loss attributable to property distributed in kind will be included in the Net Profit or Net Loss for the Fiscal Period ending on the date of the distribution. Notwithstanding any provision of this Agreement to the contrary, the General Partner may compel a Partner to accept a distribution of any asset in kind from the Partnership even if the percentage of the asset distributed to the Partner exceeds a percentage of the asset that is equal to the percentage in which the Partner shares in distributions from the Partnership.

ARTICLE VII.

ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS

7.1. ACCOUNTING AND REPORTS

(a)            The Partnership will adopt for tax accounting purposes any accounting method that the General Partner decides in its sole discretion is in the best interests of the Partnership. The Partnership’s accounts will be maintained in U.S. currency.

(b)            After the end of each taxable year of the Partnership, the Partnership will furnish to Partners information regarding the operation of the Partnership and the Partners’ Interests as is necessary for Partners to complete U.S. federal and state income tax or information returns and any other tax information required by U.S. federal or state law.

(c)            Except as otherwise required by the 1940 Act, or as may otherwise be permissible under other applicable law, within 60 days after the close of the period for which a report required under this Section 7.1 is being made, the Partnership will furnish to each Limited Partner a semiannual report and an annual report containing the information required by the 1940 Act. The Partnership will cause financial statements contained in each annual report furnished under this Section 7.1 to be accompanied by a certificate of independent public accountants based upon an audit performed in accordance with generally accepted accounting principles. The Partnership may furnish to each Partner any other periodic reports the General Partner deems necessary or appropriate in its discretion.

(d)            The General Partner will notify the Directors of any change in the holders of interests of the General Partner within a reasonable time after the change.

7.2. DETERMINATIONS BY GENERAL PARTNER

(a)            All matters concerning the determination and allocation among the Partners of the amounts to be determined and allocated pursuant to Article V of this Agreement, including any taxes on those amounts and accounting procedures applicable with respect to those amounts, will be determined by the General Partner unless specifically and expressly otherwise provided for by the provisions of this Agreement or as required by law. Any such determinations and allocations will be final and binding on all of the Partners.

(b)            The General Partner may make any adjustments to the computation of Net Profit and/or Net Loss, or any components (withholding any items of income, gain, loss or deduction) constituting Net Profit and/or Net Loss as the General Partner deems appropriate to reflect fairly and accurately the financial results of the Partnership and the intended allocation of Net Profit and/or Net Loss among the Partners.

7.3. VALUATION OF ASSETS

(a)            Except as may be required by the 1940 Act, the Directors will value or cause to have valued any Securities or other assets and liabilities of the Partnership as of the close of business on the last day of each Fiscal Period and at such other times as the Directors may determine, in their discretion, in accordance with valuation procedures as established from time to time by the Directors. Assets of the Partnership that are invested in an Investment Fund managed by a Subadviser will be valued in accordance with the terms and conditions of the agreement or other document governing the operation of the Investment Fund. Assets of the Partnership invested in an Investment Fund

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not managed by a Subadviser will be valued at fair value, which ordinarily will be the net redemption value determined by the Investment Fund’s Investment Manager in accordance with the policies established by the Investment Manager. In determining the value of the assets of the Partnership, no value will be placed on the goodwill or name of the Partnership, or the office records, files, statistical data or any similar intangible assets of the Partnership not normally reflected in the Partnership’s accounting records. Any items of income earned but not received, expenses incurred but not yet paid, liabilities fixed or contingent, and any other prepaid expenses to the extent not otherwise reflected in the books of account, and the value of options or commitments to purchase or sell Securities or commodities pursuant to agreements entered into prior to the valuation date will, however, be taken into account in determining the value of the Partnership’s assets.

(b)            Subject to the provisions of the 1940 Act, the value of Securities and other assets of the Partnership and the net asset value of the Partnership as a whole determined pursuant to this Section 7.3 will be conclusive and binding on all of the Partners and all Persons claiming through or under them.

ARTICLE VIII.

MISCELLANEOUS PROVISIONS

8.1. AMENDMENT OF PARTNERSHIP AGREEMENT

(a)            Except as otherwise provided in this Section 8.1, this Agreement may be amended, in whole or in part, with respect to the Partnership, with the approval of a majority of the Directors (including the vote of a majority of the Independent Directors, but only if such vote is required by the 1940 Act), except that any amendment also must be approved by a majority (as defined in the 1940 Act) of the outstanding voting securities of the Partnership if such vote is required by the 1940 Act.

(b)            Any amendment that would:

(1)            increase the obligation of a Partner to make any Capital Contribution,

(2)            reduce the Capital Account of a Partner other than in accordance with Article V of this Agreement, or

(3)            modify the events causing the dissolution of the Partnership, may be made only if (A) the written consent of each Partner adversely affected by the proposed action is obtained prior to the effectiveness of the action or (B) the amendment does not become effective until (i) each Limited Partner has received written notice of the amendment and (ii) any Limited Partner objecting to the amendment has been afforded a reasonable opportunity (under procedures prescribed by the General Partner in its sole discretion) to tender the Partner’s entire Interest for repurchase by the Partnership. Notwithstanding the preceding sentence or the provisions of Subsection 8.1(c), any amendment that would alter the provisions of Section 8.1 relating to the material amendment of this Agreement or the provisions of Section 3.10 of this Agreement relating to indemnification may be made only with the unanimous consent of the Partners and, to the extent required by the 1940 Act, approval of a majority of the Directors (and, if so required, a majority of the Independent Directors).

(c)            Notwithstanding the provisions of Sections 8.1(a) and 8.1(b) of this Agreement, the General Partner, at any time without the consent of any other Partner, may:

(1)            restate this Agreement, together with any amendments to this Agreement that have been duly adopted in accordance with the provisions of this Agreement to incorporate the amendments in a single, integrated document;

(2)            amend this Agreement (other than with respect to the matters described in Section 8.1(b) of this Agreement) to change the name of the Partnership in accordance with Section 2.2 hereof or to effect compliance with any applicable law or regulation, including, but not limited to, to satisfy the requirements of applicable U.S. banking law or regulation, or to cure any ambiguity or to correct or supplement any provision of this Agreement that

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may be inconsistent with any other provision of this Agreement, so long as the action does not adversely affect the rights of any Partner in any material respect; and

(3)            amend this Agreement to make any changes necessary or desirable, based on advice of legal counsel to the Partnership, to assure the Partnership’s continuing eligibility to be classified for U.S. federal income tax purposes as a partnership that is not treated as a corporation for tax purposes under the Code; subject, however, to the limitation that any material amendment to this Agreement under Section 8.1(c)(2) or (3) of this Agreement will be valid only if approved by a majority of the Directors (including the vote of a majority of the Independent Directors, if required by the 1940 Act).

(d)            The General Partner will give prior written notice of any proposed amendment to this Agreement (other than any amendment of the type contemplated by Section 8.1(c) (1) of this Agreement) to each Partner, which notice sets out (1) the text of the proposed amendment or (2) a summary of the amendment and a statement that the text of the amendment will be furnished to any Partner upon request.

8.2. SPECIAL POWER OF ATTORNEY

(a)            Each Partner irrevocably makes, constitutes and appoints the General Partner and each of the Directors, acting severally, and any liquidator of the Partnership’s assets appointed pursuant to Section 6.2 of this Agreement with full power of substitution, the true and lawful representatives and attorneys-in-fact of, and in the name, place and stead of, the Partner, with the power from time to time to make, execute, sign, acknowledge, swear to, verify, deliver, record, file and/or publish:

(1)            any amendment to this Agreement;

(2)            any amendment to the Certificate, including, without limitation, any such amendment required to reflect any amendments to this Agreement, and including, without limitation, an amendment to effectuate any change in the membership of the Partnership; and

(3)            all other such instruments, documents and certificates that, in the view of legal counsel to the Partnership, from time to time may be required by the laws of the United States of America, the State of Delaware or any other jurisdiction in which the General Partner determines that the Partnership should do business, or any political subdivision or agency of any such jurisdiction, or that legal counsel may deem necessary or appropriate to effectuate, implement and continue the valid existence and business of the Partnership as a limited partnership under the Delaware Act.

(b)            Each Partner is aware that the terms of this Agreement permit certain amendments to this Agreement to be effected and certain other actions to be taken or omitted by or with respect to the Partnership without the Partner’s consent. Each Partner agrees that if an amendment to the Certificate or this Agreement or any action by or with respect to the Partnership is taken in the manner contemplated by this Agreement, notwithstanding any objection that the Partner may assert with respect to the action, the attorneys-in-fact appointed under this Agreement are authorized and empowered, with full power of substitution, to exercise the authority granted in this Section 8.2 in any manner that may be necessary or appropriate to permit the amendment to be made or action lawfully taken or omitted. Each Partner is fully aware that each Partner will rely on the effectiveness of this special power of attorney with a view to the orderly administration of the affairs of the Partnership.

(c)            The power of attorney contemplated by this Section 8.2 is a special power of attorney and is coupled with an interest in favor of the General Partner and each of the Directors, acting severally, and any liquidator of the Partnership’s assets appointed under Section 6.2 of this Agreement, and as such the power of attorney:

(1)            will be irrevocable and continue in full force and effect notwithstanding the subsequent death or incapacity of any Person granting the power of attorney, regardless of whether the Partnership, the General Partner, the Directors or any liquidator has had notice of the death or incapacity; and

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(2)            will survive the delivery of a Transfer by a Partner of the whole or any portion of the Partner’s Interest, except that, when the transferee of an Interest or portion of an Interest has been approved by the General Partner for admission to the Partnership as a substituted Partner, the power of attorney given by the transferor will survive the delivery of the assignment for the sole purpose of enabling the General Partner, the Directors or any liquidator to execute, acknowledge and file any instrument necessary to effect the substitution.

8.3. NOTICES

Notices that may or are required to be provided under this Agreement will be made to a Partner by hand delivery, regular mail (registered or certified mail return receipt requested in the case of notice to the General Partner), commercial courier service, telecopier, or electronic mail (with a confirmation copy by registered or certified mail in the case of notices to the General Partner by telecopier or electronic mail), and will be addressed to the Partner at his, her or its address as set out in the books and records of the Partnership (or to any other address as may be designated by any Partner by notice addressed to the General Partner in the case of notice given to any Partner, and to each of the Partners in the case of notice given to the General Partner). Notices will be deemed to have been provided when delivered by hand, on the date indicated as the date of receipt on a return receipt or when received if sent by regular mail, commercial courier service, telecopier or by electronic mail. A document that is not a notice and that is required to be provided under this Agreement by any party to another party may be delivered by any reasonable means.

8.4. AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS

This Agreement will be binding upon and inure to the benefit of the Partners and their respective heirs, successors, assigns, executors, trustees or other legal representatives, but the rights and obligations of the Partners may not be Transferred or delegated except as provided in this Agreement, and any attempted Transfer or delegation of those rights and obligations that is not made in accordance with the terms of this Agreement will be void.

8.5. CHOICE OF LAW; ARBITRATION

(a)            Notwithstanding the location at which this Agreement is executed by any of the Partners, the Partners expressly agree that all the terms and provisions of this Agreement are governed by and will be construed under the laws of the State of Delaware, including the Delaware Act, without regard to the conflict of law principles of the State of Delaware.

(b)            To the extent such action is consistent with the provisions of the 1940 Act and any other applicable law, except as provided in Section 8.10(b) of this Agreement, each Partner agrees to submit all controversies arising between or among Partners or one or more Partners and the Partnership in connection with the Partnership or its business or concerning any transaction, dispute or the construction, performance or breach of this Agreement or any other agreement relating to Partnership, whether entered into prior to, on or subsequent to the date of this Agreement, to arbitration in accordance with the provisions set out in this Section 8.5. EACH PARTNER UNDERSTANDS THAT ARBITRATION IS FINAL AND BINDING ON THE PARTNERS AND THAT THE PARTNERS IN EXECUTING THIS AGREEMENT ARE WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO JURY TRIAL.

(c)            Controversies will be finally settled by, and only by, arbitration in accordance with the commercial arbitration rules of the American Arbitration Association (the “AAA”) to the fullest extent permitted by law. The place of arbitration will be Houston, Texas. Any arbitration under this Section 8.5 will be conducted before a panel of three arbitrators. The Partner or Partners initiating arbitration under this Section 8.5 will appoint one arbitrator in the demand for arbitration. The Partner or Partners against whom or which arbitration is sought will jointly appoint one arbitrator within 30 Business Days after notice from the AAA of the filing of the demand for arbitration. The two arbitrators nominated by the Partners will attempt to agree on a third arbitrator within 30 Business Days of the appointment of the second arbitrator. If the two arbitrators fail to agree on the third arbitrator within the 30-day period, then the AAA will appoint the third arbitrator within 30 Business Days following the expiration of the 30-day period. Any award rendered by the arbitrators will be final and binding on the Partners, and judgment upon the award may be entered in the supreme court of the state of New York and/or the U.S. District Court for the

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Southern District of New York, or any other court having jurisdiction over the award or having jurisdiction over the Partners or their assets. The arbitration agreement contained in this Section 8.5 will not be construed to deprive any court of its jurisdiction to grant provisional relief (including by injunction or order of attachment) in aid of arbitration proceedings or enforcement of an award. In the event of arbitration as provided in this Section 8.5, the arbitrators will be governed by and will apply the substantive (but not procedural) law of Delaware, to the exclusion of the principles of the conflicts of law of Delaware. The arbitration will be conducted in accordance with the procedures set out in the commercial arbitration rules of the AAA. If those rules are silent with respect to a particular matter, the procedure will be as agreed by the Partners, or in the absence of agreement among or between the Partners, as established by the arbitrators. Notwithstanding any other provision of this Agreement, this Section 8.5(c) will be construed to the maximum extent possible to comply with the laws of the State of Delaware, including the Uniform Arbitration Act (10 Del. C.§5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it is determined by a court of competent jurisdiction that any provision or wording of this Section 8.5(c), including any rules of the AAA, are invalid or unenforceable under the Delaware Arbitration Act or other applicable law, such invalidity will not invalidate all of this Section 8.5(c). In that case, this Section 8.5(c) will be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act or other applicable law, and, in the event such term or provision cannot be so limited, this Section 8.5(c) will be construed to omit such invalid or unenforceable provision.

8.6. NOT FOR BENEFIT OF CREDITORS

The provisions of this Agreement are intended only for the regulation of relations among past, existing and future Partners, their assignees and the Partnership. This Agreement is not intended for the benefit of non-Partner creditors and, except to the extent provided in Section 3.10 of this Agreement, no rights are granted to non-Partner creditors under this Agreement.

8.7. CONSENTS

Any and all consents, agreements or approvals provided for or permitted by this Agreement (including minutes of any meeting) must be in writing and a signed copy of any such consent, agreement or approval will be filed and kept with the books of the Partnership.

8.8. MERGER AND CONSOLIDATION

(a)            The Partnership may merge or consolidate with or into one or more limited partnerships formed under the Delaware Act or other business entities under an agreement of merger or consolidation that has been approved in the manner contemplated by the Delaware Act.

(b)            Notwithstanding anything to the contrary in this Agreement, an agreement of merger or consolidation approved in accordance with the Delaware Act may, to the extent permitted by the Delaware Act, (1) effect any amendment to this Agreement, (2) effect the adoption of a new Partnership agreement for the Partnership if it is the surviving or resulting limited partnership in the merger or consolidation, or (3) provide that a Partnership agreement of any other constituent Partnership to the merger or consolidation (including a limited partnership formed for the purpose of consummating the merger or consolidation) will be the Partnership agreement of the surviving or resulting limited partnership.

(c)            The Partnership may convert to another Delaware business entity in accordance with the Delaware Act upon the approval of the Partners representing a majority (as defined in the 1940 Act) of the outstanding voting securities of the Partnership.

8.9. PRONOUNS

All pronouns used in this Agreement will be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Person or Persons, firm or entity may require in the context in which they are used.

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8.10. CONFIDENTIALITY

(a)            A Limited Partner may obtain from the General Partner, upon reasonable demand for any purpose reasonably related to the Limited Partner’s Interest in the Partnership, information regarding the affairs of the Partnership as is just and reasonable under the Delaware Act, subject to reasonable standards (including standards governing the information and documents to be furnished, at what time and location and at whose expense) established by the General Partner in its sole discretion.

(b)            Each Limited Partner agrees in executing this Agreement that, except as required by applicable law or any regulatory body, the Limited Partner will not divulge, furnish or make accessible to any other Person the name or address (whether business, residence or mailing) of any Limited Partner (collectively, “Confidential Information”) without the prior written consent of the General Partner, which consent may be withheld in its sole discretion.

(c)            Each Partner recognizes that in the event that this Section 8.10 is breached by any Partner or any of its principals, Partners, members, directors, officers, employees or agents or any of the Partner’s Affiliates, including any of the Affiliate’s principals, Partners, members, directors, officers, employees or agents, irreparable injury may result to the non-breaching Partners and the Partnership. In recognition of that irreparable injury, any non-breaching Partner may have, in addition to any and all other remedies at law or in equity to which the non-breaching Partner and the Partnership may be entitled, the right to obtain equitable relief, including, without limitation, injunctive relief, to prevent any disclosure of Confidential Information, plus reasonable attorneys’ fees and other litigation expenses incurred in connection with obtaining the equitable relief. If any non-breaching Partner or the Partnership (“Initiating Non-Breaching Party”) determines that any other Partner or any of that Partner’s principals, Partners, members, directors, officers, employees or agents or any of the Partner’s Affiliates, including any of the Affiliates’ principals, Partners, members, directors, officers, employees or agents, should be enjoined from or required to take any action to prevent the disclosure of Confidential Information, each of the other non-breaching Partners agrees to join the non-breaching Initiating Non-Breaching Party in pursuing injunctive relief in a court of appropriate jurisdiction.

(d)            The General Partner will have the right to keep confidential from the Limited Partners, for any period of time as the General Partner deems reasonable in its sole discretion, any information that the General Partner reasonably believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interest of the Partnership or could damage the Partnership or its business or that the Partnership is required by law or by agreement with a third party to keep confidential.

8.11. CERTIFICATION OF NON-FOREIGN STATUS

Each Limited Partner or transferee of an Interest or a portion of an Interest from a Limited Partner who or that is admitted to the Partnership in accordance with this Agreement will certify, upon admission to the Partnership and at any other time as the General Partner may request, whether the Limited Partner or transferee is a “United States Person” within the meaning of the Code on forms to be provided by the Partnership, and will notify the Partnership within 30 days of any change in the status of the Limited Partner or transferee. Any Limited Partner or transferee who or that fails to provide certification when requested to do so by the General Partner may be treated as a non-United States Person for purposes of U.S. federal tax withholding.

8.12. SEVERABILITY

Each Partner agrees that the Partner intends that, if any provision of this Agreement is determined by a court of competent jurisdiction or regulatory authority with jurisdiction over the Partnership, the General Partner or the Adviser not to be enforceable in the manner set out in this Agreement, then the provision should be enforceable to the maximum extent possible under applicable law. If any provision of this Agreement is held to be invalid or unenforceable, the invalidation or unenforceability will not affect the validity or enforceability of any other provision of this Agreement (or portion of the provision).

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8.13. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement among the Partners pertaining to the subject matter of this Agreement and supersedes all prior agreements and understandings pertaining to that subject matter.

Notwithstanding any other provision of this Agreement, including Section 8.1, each Partner, in executing this Agreement, acknowledges and agrees that the General Partner, on its own behalf or on behalf of the Partnership, without the approval of the Limited Partners or any other Person, may enter into a written agreement or agreements with any other Partner, executed contemporaneously with the admission of the other Partner to the Partnership, affecting or modifying the terms of, or establishing rights under, this Agreement or any subscription agreement. Each Partner agrees that any terms contained in any such other agreement with another Partner will govern with respect to the other Partner notwithstanding the provisions of this Agreement or any subscription agreement, and that the Partner will have no rights in respect of those granted in favor of such other Partner.

8.14. DISCRETION

To the fullest extent permitted by law, whenever in this Agreement a Person is permitted or required to make a decision (a) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, the Person will be entitled to consider only those interests and factors as he, she or it desires, including his, her or its own interests, and, to the fullest extent permitted by law, will have no duty or obligation to give any consideration to any interest of or factors affecting the Partnership or the Limited Partners, or (b) in its “good faith” or under another express standard, then the Person will act under the express standard and will not be subject to any other or different standards imposed by this Agreement or any other agreement contemplated by this Agreement or by relevant provisions of law or in equity or otherwise.

8.15. CONFLICTS

The Partners acknowledge and agree that the General Partner and its Affiliates may engage in activities in which their respective interests or the interests of their clients may conflict with the interests of the Partnership or the Limited Partners, and that the resolution of such conflicts may not always be resolved by the General Partner or its Affiliates in favor of the Partnership or the Limited Partners.

8.16. COUNTERPARTS

This Agreement may be executed in several counterparts, all of which together will constitute one agreement binding on all Partners, notwithstanding that all the Partners have not signed the same counterpart.

8.17. HEADINGS

The headings in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions of this Agreement or otherwise affect their construction or effect.

[Remainder of Page Intentionally Left Blank]

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IN EXECUTING THIS AGREEMENT, EACH PARTNER ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS ENTIRETY BEFORE SIGNING, INCLUDING THE PRE-DISPUTE ARBITRATION CLAUSES SET OUT IN SECTION 8.5 AND THE CONFIDENTIALITY CLAUSES SET OUT IN SECTION 8.10.

The Partners have executed this Agreement as of the day and year first above written.

GENERAL PARTNER:
THE ENDOWMENT FUND GP, L.P.
By:	THE ENDOWMENT FUND MANAGEMENT, LLC, as its General Partner
By:
Name:
Title:
LIMITED PARTNERS:

Each Person who or that has signed, or has had signed on the Person’s behalf, a Limited Partner Signature Page, which will constitute a counterpart of this Agreement.

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EX-99.5

PMF FUND, L.P.

PMF TEI FUND, L.P.

PRIVATE PLACEMENT MEMORANDUM

SHARES OF LIMITED PARTNERSHIP INTEREST

February 20, 2014

This private placement memorandum describes two separate funds (each, a “Fund” and collectively the “Funds”): PMF Fund, L.P. (the “PMF Fund”) and PMF TEI Fund, L.P. (the “TEI Fund”). Each Fund is a limited partnership registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as a non-diversified, closed-end management investment company.

The PMF Fund invests substantially all of its investable assets into The Endowment PMF Master Fund, L.P., a Delaware limited partnership (the “Master Fund”), which holds investments in a wide range of investment vehicles (“Investment Funds”) managed by third party investment managers (“Investment Managers”). The TEI Fund invests substantially all of its investable assets in PMF TEI (Offshore) Fund, Ltd. (the “Offshore Fund”) a Cayman Islands exempted company limited by shares that has the same investment objective as the TEI Fund. The Offshore Fund in turn invests substantially all of its investable assets in the Master Fund.

Each Fund and the Master Fund at the date of this private placement Memorandum (“Memorandum”) is a wholly-owned subsidiary of The Endowment Master Fund, L.P. (the “Legacy Master Fund”), as described below.

The Funds’ investment objective is to manage a portfolio of Investment Funds and cash to preserve value while prioritizing liquidity to investors over active management, until such time as the Master Fund’s portfolio has been liquidated. The Master Fund will hold assets reflecting an approximately pro rata division of the portfolio of the Legacy Master Fund. The Funds, through investment in the Master Fund, thus will hold a portfolio of Investment Funds managed in a broad range of investment strategies and asset categories. The Funds intend to distribute capital as the Master Fund portfolio liquidates, subject to certain thresholds discussed herein. It is not expected that the Funds will make additional investments other than fulfilling capital commitments to certain Investment Funds, and investments for cash and liquidity management purposes. SEE “GENERAL RISKS,” “RISKS OF THE TEI FUND,” “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE” AND “INVESTMENT RELATED RISKS.”

Each Fund and the Master Fund is governed by its Board of Directors (each individually a “Director” and collectively the “Board”). Endowment Advisers, L.P., a Delaware limited partnership, serves as each Fund’s and the Master Fund’s investment adviser (the “Adviser”).

Investments in the Funds may be made only by “Eligible Investors” as defined herein. See “ELIGIBLE INVESTORS.” Eligible Investors who acquire shares of limited liability interest of a Fund (“Shares”) and are admitted to a Fund will become limited partners in the Fund (“Partners”). In addition, the TEI Fund is designed solely for investment by tax-exempt and tax-deferred investors (“Tax-Exempt Investors”) and investment in the TEI Fund is limited only to Tax-Exempt Investors that are Eligible Investors. The above structure, as discussed further below, should enable Tax-Exempt Investors to invest in the TEI Fund without receiving certain income in a form that would otherwise be taxable to such investors regardless of their tax-exempt or tax-deferred status.

Shares of the PMF Fund and the TEI Fund are generally available only to those participating investors who receive Shares as in-kind repurchase proceeds for their tendered interests in one of the feeder funds to the Legacy Master Fund (collectively, the “Legacy Feeder Funds”). Each Legacy Feeder Fund invests, directly or indirectly, substantially all of its assets in the Legacy Master Fund (collectively with the Legacy Feeder Funds, the “Legacy Funds”). Shares of the Funds will generally not otherwise be offered or sold. No person who is admitted as a Partner has the right to require the Funds to redeem such Partner’s Shares. The Shares are not listed on any securities exchange and it is not anticipated that a secondary market for the Shares will develop. The Shares are subject to substantial restrictions on transferability and resale and may not be transferred or resold except as permitted under the agreement of limited partnership of each Fund (each, an “LP Agreement”). Shares are not redeemable at a Partner’s option nor are they exchangeable for Shares or shares of any other fund. As a result, an investor may not be able to sell or otherwise liquidate his or her Shares. The Shares are appropriate only for those investors who do not require a liquid investment and who are aware of the risks involved in investing in the Funds including the potentially substantial time frame needed for Master Fund liquidation.

This Memorandum applies to the private placement of Shares of each Fund. This Memorandum provides information that you should know about the Funds. You are advised to read this Memorandum carefully and to retain it for future reference. The information in this Memorandum may be changed. If you choose Shares of a Fund, you will become bound by the terms and conditions of the LP Agreement, which shall be in substantially the form attached as Appendix B to this Memorandum.

The Shares are not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state. The Funds issue Shares only in private placement transactions in accordance with Regulation D or other applicable exemptions under the Securities Act. This Memorandum is not an offer to sell, or a solicitation of an offer to buy, any security to or from the public within the meaning of the Securities Act. This Memorandum is not an offer to sell the Shares and is not soliciting an offer to buy the Shares in any state or jurisdiction where such offer or sale is not permitted. This Memorandum is intended for use only by the person to whom it has been issued. Reproduction of this Memorandum is prohibited.

Neither the Securities and Exchange Commission (“SEC”) nor any state securities commission has determined whether this Memorandum is truthful or complete, nor have they made, nor will they make, any determination as to whether anyone should buy these securities. Any representation to the contrary is a criminal offense.

You should not construe the contents of this Memorandum as legal, tax or financial advice. You should consult with your own professional advisors as to the legal, tax, financial or other matters relevant to the suitability of an investment in the Funds.

You should rely only on the information contained in this Memorandum. The Funds have not authorized anyone to provide you with different information. You should not assume that the information provided by this Memorandum is accurate as of any date other than the date on the front of this Memorandum.

The date of this Memorandum is February 20, 2014.

TABLE OF CONTENTS

SUMMARY	i
SUMMARY OF FUND EXPENSES	1
INVESTMENT OBJECTIVE	5
INVESTMENT PORTFOLIO	6
BORROWING BY THE FUNDS AND THE MASTER FUND	6
ADDITIONAL INVESTMENT POLICIES	7
GENERAL RISKS	10
SPECIAL RISKS OF THE TEI FUND	16
SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE	16
INVESTMENT RELATED RISKS	20
MANAGEMENT OF THE FUNDS	37
INVESTMENT MANAGEMENT FEE	51
ADMINISTRATION	52
CUSTODIAN	53
FUND EXPENSES	54
PORTFOLIO TRANSACTIONS	55
VOTING	56
CONFLICTS OF INTEREST	56
CONFLICTS OF INTEREST RELATING TO THE INVESTMENT MANAGERS	59
CODES OF ETHICS	60
LIQUIDITY REQUIREMENTS	60
OUTSTANDING SECURITIES	61
REPURCHASES OF SHARES	62
TRANSFERS OF SHARES	62
CALCULATION OF NET ASSET VALUE; VALUATION	63
CAPITAL ACCOUNTS AND ALLOCATIONS	65
CERTAIN TAX CONSIDERATIONS	67
ERISA CONSIDERATIONS	91
ELIGIBLE INVESTORS	95
PROXY VOTING POLICIES AND PROCEDURES	96
ADDITIONAL INFORMATION AND SUMMARY OF THE LP AGREEMENT	97
REPORTS TO PARTNERS	100
FISCAL YEAR	100

ACCOUNTANTS AND LEGAL COUNSEL	100
INQUIRIES	100
FINANCIAL STATEMENTS	100
Appendix A – Portfolio Holdings	A-1
Appendix B – Form of Subscription Agreements	B-1
Appendix C – Form of Agreement of Limited Partnership	C-1

SUMMARY

This is only a summary and does not contain all of the information that you should consider before investing in the Funds. Before investing in a Fund, you should carefully read the more detailed information appearing elsewhere in this Memorandum and the LP Agreement.

THE FUNDS

The Funds are Delaware limited partnerships that are registered under the Investment Company Act as non-diversified closed-end management investment companies. The PMF Fund invests substantially all of its investable assets directly in the Master Fund and the TEI Fund invests substantially all of its investable assets in the Offshore Fund, which in turn invests substantially all of its investable assets in the Master Fund. The Master Fund is organized as a Delaware limited partnership and is registered under the Investment Company Act as a non-diversified closed-end management investment company. The Master Fund currently has other investors that are feeder funds advised by the Adviser (as defined below) or one or more affiliates of the Adviser, and it may have additional investors in the future. The Master Fund has the same investment objective as the Funds, and the Funds and the Master Fund are each managed by Endowment Advisers, L.P. (the “Adviser”), a Delaware limited partnership registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The address of the Funds, the Master Fund and Adviser is 4265 San Felipe, Suite 800, Houston, Texas 77027 and the telephone number at such address is: (800) 725 9456.

For convenience, reference to the TEI Fund may include the Master Fund and the Offshore Fund as the context requires. Reference to the PMF Fund may include the Master Fund as the context requires. Also, the Master Fund’s investments may be referred to as investments with Investment Managers or Investment Funds.

The Offshore Fund is interposed between the TEI Fund and the Master Fund and serves as an intermediate entity so that any unrelated business taxable income (“UBTI”), generated by certain investment activities of the Master Fund and through the Investment Funds, should not be ultimately incurred by a Partner. UBTI therefore should not flow through the Offshore Fund to Partners of the TEI Fund. Eligible Investors therefore should not receive UBTI that would otherwise be taxable income to them despite their tax-deferred or tax-exempt status. Income received by the Offshore Fund, including income from its investment in the Master Fund, will be subject to U.S. withholding or income tax to the extent that any of such income is U.S. source income of a type subject to withholding or is effectively connected to a U.S. trade or business. To the extent that legislative or regulatory changes are made to the taxation regime for tax-deferred or tax-exempt partners regarding UBTI, or to the taxation of widely-held partnerships, there is a risk that the Offshore Fund could no longer be able to fulfill its intended function. See “RISK FACTORS – Legal, Taxation and Regulatory Risks” and “– Special Risks of the TEI Fund” and “CERTAIN TAX CONSIDERATIONS.”

Each Fund and the Master Fund as of the date of this Memorandum is a wholly-owned subsidiary of the Legacy Master Fund. As discussed herein, the Funds will be held by Eligible Investors who participate in the in-kind repurchase of tendered interests of the Legacy Feeder Funds.

MANAGEMENT

The Endowment Fund GP, L.P., a Delaware limited partnership, serves as the general partner of the Funds and the Master Fund (in each case, the “General Partner”) and may in the future serve as

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general partner of other registered investment companies and/or unregistered investment funds. The General Partner is an affiliate of the Adviser. The General Partner retains all rights, duties and powers to manage the affairs of the Funds that may not be delegated under Delaware law, and that are not otherwise delegated by the General Partner to the Board or contractually assumed by the Adviser. The General Partner is responsible for, among other things, acting as Tax Matters Partner (as defined below in “CERTAIN TAX CONSIDERATIONS”).

The General Partner, to the fullest extent permitted by applicable law, has irrevocably delegated to the Board its rights and powers to monitor and oversee the business affairs of the Funds, including the complete and exclusive authority to oversee and establish policies regarding the management, conduct and operation of the Funds’ business. Accordingly, the Board has the overall responsibility for the management and supervision of the business operations of the Funds. To the extent permitted by applicable law, the Board may delegate any of its rights, powers and authority to, among others, the officers of the Funds, the Adviser or any committee of the Board. The Board exercises the same powers, authority and responsibilities on behalf of the Funds as are customarily exercised by the directors of an investment company organized as a corporation and registered under the Investment Company Act. The Directors, in their capacities as such, are not general partners of, or investment advisers to, the Funds.

Under the supervision of the Board and pursuant to investment management agreements (each an “Investment Management Agreement”), Endowment Advisers, L.P., an investment adviser registered under the Advisers Act, serves as the Funds’ Adviser. The Adviser also serves as investment adviser to the Master Fund pursuant to an investment management agreement.

The Adviser is owned by Salient Partners, L.P. (“Salient” or the “Principal”). Messrs. Lee G. Partridge, Jeremy L. Radcliffe, William K. Enszer, William B. Hunt and William R. Guinn are the members of the Adviser’s Investment Committee (the “Investment Committee”). The Adviser is an affiliate of Salient, a Texas-based investment firm that advises or consults on approximately $19.07 billion in assets as of October 31, 2013. Mr. William K. Enszer is the portfolio manager for each Fund.

See “MANAGEMENT OF THE FUNDS—The Adviser.”

INVESTMENT OBJECTIVE

The Funds’ investment objective is to manage a portfolio of Investment Funds and cash to preserve value while prioritizing liquidity to investors over active management, until such time as the Master Fund’s portfolio has been liquidated.

The Funds’ portfolio will initially reflect an approximately pro rata division of the Legacy Master Fund’s portfolio. The Adviser will manage the Master Fund portfolio primarily in a passive manner whereby the Master Fund will hold to self-liquidation private equity and other similarly illiquid interests in Investment Funds and oversee the liquidation of other Investment Funds that provide for redemption while managing the Master Fund’s cash to ensure the Master Fund’s ability to satisfy outstanding capital commitments relating to such portfolio holdings. The Adviser may also consider secondary sales of hedge fund interests held by the Master Fund to enhance liquidity. Any secondary sale of the Master Fund’s assets prior to the relevant Liquidation Period (as defined below) must be unanimously approved by the Master Fund’s board of directors. Withdrawal requests have been, or will be, submitted to each Investment Fund that permits such requests. It is not expected that the Funds will make additional investments other than fulfilling capital commitments to certain Investment Funds, and investments for cash and liquidity management purposes.

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The Funds, indirectly through the Master Fund, will hold interests in various Investment Funds, including private partnerships, limited liability companies, and other investment vehicles, which are managed by a group of Investment Managers previously identified by the Adviser within the Legacy Master Fund. As stated above, the Master Fund’s anticipated portfolio holdings will reflect an approximately pro rata division of the Legacy Master Fund’s portfolio. The Legacy Master Fund’s portfolio holdings as of December 31, 2013 are listed in Appendix A to this Memorandum. The approximately pro rata division of the Legacy Master Fund’s portfolio and transfer of such assets to the Master Fund is referred to in this Memorandum as the “Legacy Master Fund Division.” To the extent that an Investment Fund held by the Legacy Master Fund does not consent to the division and transfer of the Legacy Master Fund’s interest in the Investment Fund but the Legacy Master Fund is nevertheless able to transfer an approximately pro rata division of its portfolio, the Master Fund will receive an amount in cash equal to the net asset value of the relevant portion of the Legacy Master Fund’s interest in any such Investment Fund proposed but unable to be acquired by the Master Fund.

The term “private partnerships,” as used throughout this Memorandum, refers to limited partnerships, limited liability companies or other funds and investment vehicles that are private and issue interests to investors that meet certain suitability standards. In general, these interests are not freely tradable and/or have substantial transfer restrictions and no active trading market, but may have certain rights as to redemption.

There can be no assurance that the investment objectives of the Investment Managers or Investment Funds will be achieved.

LIQUIDATING PORTFOLIO; LIMITATIONS ON LIQUIDITY

Certain asset classes and/or Investment Funds have limitations on liquidity (e.g., private equity, private energy, private real estate and certain other Investment Funds with limitations on the ability of an investor to withdraw capital, such as long lock-up periods). Accordingly, the Investment Funds have limitations on withdrawals, such as quarterly withdrawals with notice provisions or often more limited withdrawal rights or none at all (such as in the case of self-liquidating funds, where the investor typically only receives liquidity as the fund liquidates underlying investments).

The Funds’ portfolio is not subject to any minimum liquidity requirement imposed by regulation. The Funds’ anticipated portfolio, as of the date hereof, will consist primarily of Investment Funds that are largely illiquid. The remaining portion of the Funds’ investment portfolio is invested in liquid assets and Investment Funds that have withdrawal rights more frequent than annually, for example, quarterly, and not more than a one-year lock-up remaining. These percentages will change over time as investments liquidate; however, due to the long-term, illiquid nature of many of the Investment Funds, it is expected that the percentage of such assets will increase over time as the Master Fund receives withdrawal and/or liquidation proceeds from the more liquid investments and as self-liquidating Investment Funds make distributions.

THE SHARES WILL NOT BE LISTED ON ANY SECURITIES EXCHANGE AND IT IS NOT ANTICIPATED THAT A SECONDARY MARKET FOR THE SHARES WILL DEVELOP. THE SHARES ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE APPROPRIATE FUND’S LIMITED PARTNERSHIP AGREEMENT. THE FUNDS DO NOT ANTICIPATE TO REPURCHASE SHARES FROM INVESTORS EXCEPT IN LIMITED

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CIRCUMSTANCES, AND SHARES WILL NOT BE REDEEMABLE AT A PARTNER’S OPTION NOR WILL THEY BE EXCHANGEABLE FOR SHARES OR SHARES OF ANY OTHER FUND. AS A RESULT, AN INVESTOR MAY NOT BE ABLE TO SELL OR OTHERWISE LIQUIDATE HIS OR HER SHARES. THE SHARES ARE APPROPRIATE ONLY FOR THOSE INVESTORS WHO DO NOT REQUIRE A LIQUID INVESTMENT AND WHO ARE AWARE OF THE RISKS INVOLVED IN INVESTING IN THE FUNDS. IN ADDITION, THE FUNDS MAY HAVE A LENGTHY EXISTENCE BASED ON THE LIQUIDATION OF THE INVESTMENT FUNDS. SEE “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE – INVESTMENT FUNDS’ SECURITIES ARE GENERALLY ILLIQUID.”

In light of the Funds’ objective and portfolio, the Funds will liquidate over time and have a limited lifespan. It is currently anticipated that after five years following the effective date of the Legacy Master Fund Division, the Master Fund will seek to liquidate any remaining Hedge Fund Assets. Furthermore, after ten years following the effective date of the Legacy Master Fund Division, the Master Fund will enter a formal dissolution process and will seek to liquidate all remaining assets (the period beginning five years after the effective date of the Legacy Master Fund Division with respect to Hedge Fund Assets, and the period beginning ten years after the effective date of the Legacy Master Fund Division with respect to all other assets, each a “Liquidation Period”). It is expected that the Master Fund will terminate upon the complete liquidation of the its investment portfolio or as otherwise terminated under the terms of the LP Agreement.

RISK FACTORS

An investment in the Funds involves certain risks and special considerations. Listed below are summaries of several of such risks and considerations.

— Investment Funds may be illiquid. The Master Fund may make withdrawals from certain Investment Funds only at certain specified times, which may affect the ability to make distributions to Partners. In the case of long-term illiquid assets, the Master Fund may not be permitted to make withdrawals at all, and instead must wait until the investment liquidates in the ordinary course. It is anticipated that the Master Fund will have significant holdings in long-term, illiquid assets, and the Master Fund may be unable to liquidate such holdings for extended periods of time. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Investment Funds’ Securities Are Generally Illiquid.”

— Shares are not listed for trading on any national securities exchange, are subject to substantial restrictions on transfer, and have limited liquidity. Due to the illiquid nature of the Funds’ portfolio and the objective of the Funds to liquidate their holdings, the Adviser does not anticipate recommending to the Board that the Funds conduct regular repurchase offers. See “Repurchases of Shares” below and “GENERAL RISKS—Shares Not Listed; Repurchases of Shares.”

— The performance of the Funds depends upon the success of the Investment Managers in managing the assets of the Investment Funds. See “GENERAL RISKS—Dependence on the Investment Managers.”

— Certain governance standards of the Master Fund and provisions of the Master Fund’s limited partnership agreement may only be changed by Minimum Limited Partner Approval (as defined below). To the extent that a feeder fund’s investment in the Master

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Fund is sufficiently large so as to satisfy Minimum Limited Partner Approval, such a feeder fund would have the ability effectively to veto actions requiring a vote or unilaterally determine the outcome of a Master Fund vote. To the extent that the such a large feeder fund’s interests conflict with those of the Fund or Partners, the feeder fund’s ability to determine the outcome of certain Master Fund votes may adversely affect the Fund and Partners. The Master Fund may have other investors (including other feeder funds) in addition to the Funds. Because each feeder fund has its own feeder-specific expenses, and other conditions, one feeder fund could offer access to the Master Fund on more attractive terms, or could experience better performance, than another feeder fund. See “GENERAL RISKS—Master/Feeder Structure.”

— The Master Fund may agree to indemnify certain of the Investment Funds and the Investment Managers and their respective officers, directors, and affiliates from any liability, damage, cost, or expense arising out of, among other things, acts or omissions relating to the offer or sale of Interests. To obtain consents, the Legacy Master Fund and the Master Fund may be required to agree to jointly and severally indemnify Investment Funds and Investment Managers in connection with the division of the Legacy Master Fund’s portfolio or any related transfers of Investment Fund interests to the Master Fund, which could expose the Master Fund, and thus the Fund, to additional liabilities. The Legacy Master Fund may bear expenses of transfers imposed by Investment Funds, including fees and expenses of counsel to the Investment Funds, as well as accounting fees and expenses that the Investment Funds may incur in the future in connection with the Investment Fund’s compliance with any U.S. federal tax requirements or elections as a result of the transfers. To the extent the Legacy Master Fund does not or is unable to pay such expenses, the Master Fund may be liable for such expenses. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Indemnification of Investment Funds and Investment Managers.”

— After five years following the effective date of the Legacy Master Fund Division, the Master Fund will seek to liquidate any remaining Hedge Fund Assets (as defined herein). After ten years following the effective date of the Legacy Master Fund Division, the Master Fund will enter a formal dissolution process and will seek to liquidate all remaining assets. Such liquidation of Investment Funds will require the sale of such assets on a secondary basis. Any such secondary sales of assets would likely be at a discount to the net asset value of the relevant Investment Fund interests, which would reduce the amounts realized by the Master Fund and distributed to investors. See “GENERAL RISKS—Portfolio Liquidation Risk.”

— Certain Investment Funds may use investment strategies and techniques that involve greater risks than the strategies typically used by open-end registered investment companies (i.e., mutual funds). Although Investment Funds invest in equity and debt securities, certain of them may invest in and trade equity-related instruments, debt-related instruments, currencies, financial futures, swap agreements, and other types of instruments. In addition, the Investment Funds may sell securities short and use a wide range of other investment techniques, including leverage and derivative instruments used for both hedging and non-hedging purposes. The use of such instruments and techniques may be an integral part of an Investment Fund’s investment strategy, and may increase the risk to which the Funds’ portfolios are subject. See “INVESTMENT RELATED RISKS.”

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— The Investment Managers, on behalf of Investment Funds, may consider it appropriate, subject to applicable regulations, to utilize forward and futures contracts, options, swaps, other derivative instruments, short sales, margin and other forms of leverage in their investment programs. Such investment techniques can substantially increase the adverse impact of investment risks to which the Funds’ investment portfolio may be subject. See “INVESTMENT RELATED RISKS—Leverage” and “Risks Associated with Derivative Instruments.”

— Certain of the Investment Funds may invest in private securities for which there is no readily available market and that are generally illiquid. In addition, certain of these investments carry a high degree of risk. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Investment Funds’ Securities are Generally Illiquid.”

— The Investment Funds may invest a substantial portion of their assets in securities of non-U.S. issuers and the governments of non-U.S. countries. These investments involve special risks not usually associated with investing in securities of U.S. companies or the U.S. government, including, but not limited to, political and economic considerations, such as greater risks of expropriation and nationalization, confiscatory taxation, the potential difficulty of repatriating funds, general social, political and economic instability and adverse diplomatic developments. See “INVESTMENT RELATED RISKS—Non-U.S. Investments” and “Investment in Emerging Markets.”

— Certain of the Investment Funds may have limited operating histories. See “GENERAL RISKS—Limited Operating History of Certain Investments Funds and/or Investment Strategies.”

— Legal, tax and regulatory changes may occur which may materially adversely affect the Funds. See “GENERAL RISKS—Legal, Tax and Regulatory Risks” and “CERTAIN TAX CONSIDERATIONS.” Additionally, there are certain tax risks associated with an investment in the Funds, including without limitation with respect to tax positions taken by and tax estimates made by the Funds and the Investment Funds held by the Master Fund, as well as the potential for legislative or regulatory change that could impact the Funds. There can be no assurance that positions taken or estimates made by the Funds or the Investment Funds will be accepted by tax authorities. See “CERTAIN TAX CONSIDERATIONS.”

— Certain Investment Funds may purchase and sell futures contracts and options on futures contracts. Last year, the Commodity Futures Trading Commission (“CFTC”) amended certain regulations governing commodity pools that could require the Funds to be deemed commodity pools under the Commodity Exchange Act (“CEA”) and to be subject to additional regulatory and compliance burdens. However, the Adviser has claimed no-action relief from CFTC registration available to funds-of-funds with respect to its operation of the Funds. As a result of such claim, the Adviser will not be required to act as a registered CPO with respect to the Funds until six months after the CFTC issues new guidance with respect to the CFTC registration obligations of CPOs of funds-of-funds. Such new guidance may dictate the appropriate course of action for the Funds with respect to their CFTC compliance obligations. Changes in the Funds’ CFTC compliance obligations, when determined, may increase costs for the Funds. Such regulatory aspects, when determined, may increase costs for the Funds. See “GENERAL RISKS—Uncertain Commodities Regulation.”

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— Investment Managers charge the Master Fund asset-based fees, and most are also entitled to receive performance-based fees or allocations. Such fees and performance-based compensation are in addition to the fees charged to the Master Fund and the Funds by the Adviser. Moreover, an investor in a Fund bears a proportionate share of the expenses of the Master Fund, the Fund, in the case of the TEI Fund, the Offshore Fund and, indirectly, similar expenses of the Investment Funds. Investors could avoid the additional level of fees and expenses at the Master Fund and Fund level by investing directly with the Investment Funds, although access to many Investment Funds may be limited or unavailable. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Multiple Levels of Fees and Expenses.”

— Performance-based allocations may create incentives for Investment Managers to make risky investments, and may be payable by the Master Fund to an Investment Manager based on an Investment Fund’s positive returns even if the Master Fund’s overall returns are negative. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Multiple Levels of Fees and Expenses.”

— Investment Funds generally are not registered as investment companies under the Investment Company Act and, therefore, the Master Fund as an investor in Investment Funds does not have the benefit of the protections afforded by the Investment Company Act. Investment Managers may not be registered as investment advisers under the Advisers Act, in which case the Master Fund as an investor in Investment Funds managed by such Investment Managers will not have the benefit of certain of the protections afforded by the Advisers Act. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Investment Funds Generally Not Registered.”

— Pursuant to Board approval, to the extent the Master Fund holds non-voting interests of, or contractually has foregone the right to vote its interests in, an Investment Fund, it will not be able to vote on matters that require the approval of the investors of the Investment Fund, including matters that could adversely affect the Master Fund’s investment in such Investment Fund. See “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Inability to Vote.”

— The valuation of the Master Fund’s investments in Investment Funds is ordinarily calculated by Citi Fund Services, Inc., the Funds’ independent administrator (the “Independent Administrator”) in consultation with the Adviser. The Board has formed a valuation committee (the “Board Valuation Committee”) that is responsible for overseeing the Master Fund’s valuation policies, making recommendations to the Board on valuation-related matters, and overseeing implementation by the Adviser’s Valuation Committee (as defined below) of the Master Fund’s valuation policies that the Board of the Master Fund has approved for purposes of determining the value of securities held by the Master Fund, including the fair value of the Master Fund’s investments in Investment Funds. The Board has also authorized the establishment of a valuation committee of the Adviser (the “Adviser’s Valuation Committee”). The Adviser’s Valuation Committee’s function, subject to the oversight of the Board Valuation Committee and the Board, is generally to review the Investment Funds’ valuation methodologies, valuation determinations, and any information provided to the Adviser’s Valuation Committee by the Adviser or the Independent Administrator. The Master Fund’s investments are

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ordinarily based upon valuations provided to it by the Investment Managers of such Investment Funds or, in many cases, the administrators of those Investment Funds. Certain securities in which the Investment Funds invest may not have a readily ascertainable market price and are fair valued by the Investment Managers and/or their administrators. An Investment Manager may face a conflict of interest in valuing such securities since their values affect the Investment Manager’s compensation. The Adviser’s Valuation Committee reviews the valuation procedures used by each Investment Manager and monitors the returns provided by the Investment Funds, including performing ongoing due diligence. However, none of the Adviser’s Valuation Committee, the Adviser, the Independent Administrator, the Board or the Board Valuation Committee is able to confirm or review the accuracy of valuations provided by Investment Managers or their administrators. Inaccurate valuations provided by Investment Funds could materially adversely affect the value of Shares. Illiquid investments may be harder to value, potentially increasing risks regarding valuation. “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE—Valuation of Investments in Investment Funds,” and “CALCULATION OF NET ASSET VALUE; VALUATION.”

— For cash management purposes, the Master Fund may invest in money market instruments, and money market mutual funds, or hold cash or cash equivalents in such amounts as the Adviser deems appropriate under the circumstances. Money market instruments are short-term fixed income obligations, which generally have remaining maturities of one year or less, and may include U.S. government securities, commercial paper, certificates of deposit, bankers’ acceptances issued by domestic branches of U.S. banks that are members of the Federal Deposit Insurance Corporation, and repurchase agreements. Such instruments may be adversely affected by market and economic events, such as a sharp rise in prevailing short-term interest rates; adverse developments in the banking industry, which issues or guarantees many money market securities; adverse economic, political or other developments affecting domestic issuers of money market securities; changes in the credit quality of issuers; and default by a counterparty. See “INVESTMENT RELATED RISKS—Money Market and Other Liquid Investments.”

— Although the Funds will not use investment leverage, the Master Fund may borrow money (currently limited, as a fundamental policy, to 5% of net asset value (“NAV”) determined as of the time of borrowing and after taking into account such borrowings and the use of proceeds therefrom) (i) for cash management purposes in order to manage timing issues relating to capital calls, returns of capital and self-liquidations, (ii) to pay operating expenses and (iii) for certain other operational purposes. Each Fund also may borrow to the extent permitted by its fundamental policy on borrowing, although such borrowings are not anticipated. In addition, certain Investment Funds may utilize leverage in their investment programs. The utilization of leverage could increase the volatility of the Master Fund’s investments. In addition, certain of the Investment Funds may buy and sell securities on margin and otherwise utilize leverage, further increasing the volatility of the Master Fund’s investments. Use of leverage by the Investment Funds can substantially increase the adverse impact of risks to which an investment in the Funds may be subject. See “GENERAL RISKS—Ability to Borrow” and “INVESTMENT RELATED RISKS—Leverage.”

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No guarantee or representation is made that the investment program of the Funds or any Investment Fund will be successful, that the various Investment Funds selected will produce positive returns or that the Funds will achieve their investment objective.

A more detailed discussion of the risks associated with an investment in the Funds can be found under “GENERAL RISKS,” “RISKS OF THE TEI FUND,” “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE,” and “INVESTMENT RELATED RISKS.”

RISKS IN RELATION TO THE TEI FUND AND THE OFFSHORE FUND

The Offshore Fund is not registered under the Investment Company Act, and is not subject to the investor protections offered by that Act. The TEI Fund, by investing in the Offshore Fund, does not have the protections offered to investors in registered investment companies. The TEI Fund, however, controls the Offshore Fund, making it unlikely that the Offshore Fund will take action contrary to the interests of investors in the TEI Fund.

There are certain tax risk factors associated with an investment in the TEI Fund. There can be no assurance that the positions of the TEI Fund relating to the tax consequences of its investment transactions will be accepted by the tax authorities. In addition, the regulatory environment for leveraged investors, Tax-Exempt Investors and for hedge funds generally is evolving. To the extent that legislative or regulatory changes are made to the taxation regime for tax-deferred or tax-exempt partners regarding UBTI, or to the taxation of widely-held partnerships, there is a risk that the Offshore Fund could no longer be able to fulfill its intended function. In such circumstances, the Board would be required to assess what steps to take, including potentially eliminating the Offshore Fund. To the extent that changes occur in the direct or indirect regulation of leveraged investors, Tax-Exempt Investors or hedge funds, including tax regulation applicable thereto, there may be material adverse effects on the ability of the TEI Fund to pursue its investment objective or strategies which could force the TEI Fund to change, or even cease, its operations. Under recent legislation, known as FATCA, beginning in 2014 a 30% U.S. withholding tax may apply to “withholdable payments” made to the Offshore Fund unless the Offshore Fund registers with the IRS and collects and provides to the IRS or the Cayman Tax Information Authority annually substantial information regarding shares owned by “specified United States persons” or “United States owned foreign entities.” The term “withholdable payment” includes any payment of interest, dividends, and the gross proceeds of a disposition of stock (including a liquidating distribution from a corporation) or debt instruments, in each case with respect to any U.S. investment. The withholding tax is scheduled to begin in 2014 with respect to U.S.-source income and in 2017 with respect to U.S.-source investment sale proceeds. Under recently adopted regulations, the Offshore Fund will need to register with the IRS by April 25, 2014 to insure that it will be identified as FATCA-compliant in sufficient time to allow the Offshore Fund to avoid such withholding on its U.S.-source income beginning on July 1, 2014. The Offshore Fund intends to register with the IRS. See “CERTAIN TAX CONSIDERATIONS – The TEI Fund” In view of the risks noted above, an investment in both Funds is suitable only for investors who can bear the risks associated with limited liquidity of the Shares and should be viewed as a long-term investment.

BORROWING BY THE FUNDS AND THE MASTER FUND

The Master Fund and, although not anticipated, the Funds and the Offshore Fund, may borrow money for cash management purposes, to pay operating expenses including, without limitation, investment management fees, or to meet capital calls of Investment Funds, including but not limited to

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investments in private equity, real estate, natural resources and energy; provided, however, that, as a fundamental policy, the Master Fund may not borrow more than 5% of its NAV (determined as of the time of investment and after taking into account such borrowings and the use of proceeds therefrom). The Master Fund from time to time may have a line of credit under which the Master Fund may borrow money for the purposes described above. To any extent that the Master Fund may utilize such line of credit, there can be no assurance that such line of credit would continue to be available in the future and the loss by the Master Fund of any such line of credit could create adverse consequences.

FUND ADMINISTRATION

The Adviser also acts as servicing agent to the Funds (“Servicing Agent”), whereby it provides or procures certain investor servicing and administrative assistance. Investor servicing entails the provision of personal, continuing services to investors in the Funds. The Servicing Agent may, in turn, retain certain parties to act as sub-servicing agents to assist with investor servicing and administrative assistance. The Funds compensate the Servicing Agent for providing or procuring these services and, when the Servicing Agent employs sub-servicing agents, the Servicing Agent compensates such sub-servicing agents out of its own resources.

Citi Fund Services, Inc. serves as the Independent Administrator of the Funds, the Offshore Fund, and the Master Fund. The Master Fund compensates the Independent Administrator for providing administrative services. See “ADMINISTRATION.”

FEES AND EXPENSES

Each Fund bears its own operating expenses, and a pro rata portion of the operating expenses of the Master Fund and, in the case of the TEI Fund, the Offshore Fund. A more detailed discussion of the Funds’ expenses can be found under “FUND EXPENSES.” As required by the Master Fund’s limited partnership agreement, the Adviser has contractually agreed to waive and/or reimburse the Master Fund for its management fees and other expenses to the extent necessary to limit the total annualized expenses (excluding fees and expenses directly charged by Investment Funds and Investment Managers, borrowing and other trading and execution costs and fees, taxes, litigation and indemnification expenses, judgments and other extraordinary expenses not incurred in the ordinary course of the Master Fund’s business) of the Master Fund to 1.25% of the net asset value of the Master Fund (the “Master Fund Expense Limitation Agreement”). The Master Fund Expense Limitation Agreement will be applied on an annualized basis such that total expenses incurred by the Master Fund through the end of any fiscal quarter are limited to the pro-rated portion of 1.25% based on the relevant quarter end during the fiscal year (e.g. as of September 30, the limitation would be 3/4 of 1.25%).

Investment Management Fee.

The Master Fund pays the Adviser an investment management fee out of its average month-end net assets, accrued monthly and payable monthly in arrears equal to 0.70% (on an annualized basis) for the six quarters following the date of the Legacy Master Fund Division (as defined herein) and 0.40% (on an annualized basis) for periods thereafter until the period ending ten years after the date of the Legacy Master Fund Division, when the Adviser will no longer receive an investment management fee. In addition, following the period ending five years after the date of the Legacy Master Fund Division, no fee will be charged on Hedge Fund Assets (as defined below), with any such Hedge Fund Assets remaining at that time being excluded from the calculation of net assets for purposes of determining the management

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fee (the “Investment Management Fee”). “Hedge Fund Assets” include Investment Funds held by the Master Fund that are designated as Hedge Fund Assets in the Master Fund’s limited partnership agreement. So long as each Fund invests all of its investable assets in the Master Fund (directly or through the Offshore Fund), the Funds do not directly pay the Adviser an investment management fee. See “INVESTMENT MANAGEMENT FEE.”

Servicing and Administration Fees.

In consideration for investor services and administrative assistance, each Fund pays Endowment Advisers, L.P., as Servicing Agent, a quarterly servicing fee (“Servicing Fee”) based on its average month-end net assets over the course of the applicable quarter, payable quarterly in arrears equal to 0.50% (on an annualized basis) for the six quarters following the date of the Legacy Master Fund Division (as defined herein) and 0.40% (on an annualized basis) for periods thereafter until the period ending ten years after the date of the Legacy Master Fund Division, when the Servicing Agent will no longer receive a Servicing Fee. The Servicing Agent may engage one or more sub-servicing agents (each, a “Sub- Servicing Agent”) to provide some or all of the services. Compensation to any Sub-Servicing Agent is paid by the Servicing Agent. The Adviser or its affiliates also may pay a fee out of their own resources to Sub-Servicing Agents.

In consideration for administrative services, the Master Fund pays the Independent Administrator a monthly administration fee (the “Administration Fee”) based on the month-end net assets of the Master Fund. The Administration Fee is determined, on an annualized basis, on a base rate of a percentage of the Master Fund’s month-end net assets for the first $2 billion of net assets. In addition, the Independent Administrator charges fees for legal, transfer agency, compliance, and certain other services. See “ADMINISTRATION.”

ALLOCATION OF PROFIT AND LOSS

The net profits or net losses of the Funds (including, without limitation, net realized gain or loss and the net change in unrealized appreciation or depreciation of investments) are credited to or debited against the capital accounts represented by Shares held by the Partners at the end of each accounting period (as defined in “CAPITAL ACCOUNTS AND ALLOCATIONS”) in accordance with their respective share ownership as of the start of such period. See “CAPITAL ACCOUNTS AND ALLOCATIONS.”

DISTRIBUTIONS

Beginning with the second quarter of 2014, as a fundamental policy, the Master Fund anticipates making a quarterly distribution pro rata to all investors in an amount equal to the Master Fund’s excess cash, which is the amount of cash on hand over and above Required Cash and cash required to repay any outstanding borrowings (“Excess Cash”). “Required Cash” is defined as the amount determined by the Adviser, with oversight by the Board, to be necessary or prudent for operational and regulatory purposes, including to meet capital commitments to certain Investment Funds and/or other compliance purposes. Required Cash is expected to generally be no more than 5% of the Master Fund’s NAV but may exceed such an amount in certain circumstances. Quarterly distributions will generally be made subject to the Master Fund having a minimum of $10 million of Excess Cash as of the end of a calendar quarter, otherwise, such Excess Cash will generally be distributed in the subsequent quarter or quarters where the aggregate of Excess Cash from such subsequent quarter(s) and prior quarters exceeds $10 million. The

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Master Fund will also make intra-quarter distributions if the Master Fund has Excess Cash of $25 million or more as of the 45th day after the end of any quarter. The Funds will distribute to Partners, subject to the above discussion, all distributions received from the Master Fund except as necessary to fund operating expenses. The Funds may make in-kind distributions of portfolio securities to Partners, although such distributions are unlikely in the judgment of the Adviser.

CONFLICTS OF INTEREST

The investment activities of the Adviser, the Investment Managers, and their respective affiliates (including the Principals), and their directors, trustees, managers, members, partners, officers, and employees (collectively, the “Related Parties”), for their own accounts and other accounts they manage, may give rise to conflicts of interest that potentially could disadvantage each Fund and its Partners. The Adviser and other Related Parties are involved with a broad spectrum of financial services and asset management activities, and may, for example, engage in the ordinary course of business in activities in which their interests or the interests of their clients may conflict with those of the Funds or the Partners. The trading activities of the Adviser’s affiliates are carried out without references to positions held directly or indirectly by the Funds. In addition and more significantly, the Related Parties may be involved with other investment programs, investment partnerships or separate accounts that use Investment Managers or Investment Funds that are a part of the Master Fund’s portfolio. The Master Fund’s and the Funds’ operations may give rise to other conflicts of interest that could disadvantage the Funds and the Partners. See “CONFLICTS OF INTEREST” AND “CONFLICTS OF INTEREST RELATING TO THE INVESTMENT MANAGERS.”

ELIGIBLE INVESTORS

Shares are generally only available to participating Legacy Feeder Fund investors that have tendered their Legacy Feeder Fund interests for repurchase in-kind. Each prospective investor is required to complete the correct subscription agreement signature pages (“Subscription Agreement Signature Pages”) to the Funds’ subscription agreement, and satisfy the investor eligibility standards set forth therein in order to be permitted to invest in that Fund. The Subscription Agreement Signature Pages and the Funds’ subscription agreement are referred to collectively as the “Subscription Agreement,” a form of which is set forth in Appendix B to this Memorandum. The qualifications required to invest in each Fund will appear in the Subscription Agreement. See “ELIGIBLE INVESTORS.”

An investment in either Fund involves risks and it is possible that an investor may lose some of its investment. In addition, an investment in the Funds is not liquid and investors should provide for adequate liquidity outside of their investment in the Funds to meet their foreseeable liquidity needs. Before making an investment decision, an investor and/or its adviser should (i) consider the suitability of this investment with respect to its investment objectives and personal situation and (ii) consider factors such as its personal net worth, income, age, risk tolerance, and liquidity needs. See “RISK FACTORS.” Short-term investors and investors who cannot bear the loss of some of their investment and/or the risks associated with a lack of liquidity should not invest in the Funds.

Generally, the Subscription Agreement requires that an investor certify that it is an “accredited investor” for purposes of Regulation D under the Securities Act. In addition, Shares are being offered only to investors that are U.S. persons for U.S. federal income tax purposes. Investors who meet the qualifications set forth in the Subscription Agreement are referred to in this Memorandum as “Eligible Investors.” Only certain categories of Eligible Investors may be able to invest in a particular Fund. See “ELIGIBLE INVESTORS.”

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REPURCHASES OF SHARES

No Partner has the right to require a Fund to redeem its Shares (or any portion thereof) in the Funds. The Funds do not anticipate offering to repurchase Shares on a regular basis. Repurchase offers may be made at such times and on such terms as may be determined by the Board from time to time in its sole discretion. The Funds may also entertain offers by third-parties to purchase Master Fund interests, potentially below net asset value, and under such circumstances may conduct a corresponding offer to repurchase Fund Shares, potentially at a discount to the net asset value of the Shares. There is no guarantee that the Funds will conduct any repurchase offers in the future.

In the event of an offer to repurchase, the Funds may elect to repurchase less than the full amount that a Partner requests to be repurchased. If a repurchase offer is oversubscribed and not amended to increase the offer, the Funds will repurchase only a pro rata portion of the amount tendered by each Partner. In determining whether the Funds should offer to repurchase Shares from Partners, the Board may consider, among other things, the terms of any proposed third-party agreement aimed at providing liquidity, the recommendation of the Adviser as well as a variety of other operational, business, legal and economic factors.

The Board may under certain circumstances elect to postpone, suspend or terminate any offer to repurchase Shares. See “REPURCHASES OF SHARES.”

TRANSFER RESTRICTIONS

A Partner may assign, transfer, sell, encumber, pledge or otherwise dispose of (each, a “transfer”) its Shares only (1) by operation of law pursuant to the death, divorce, insolvency, bankruptcy, or adjudicated incompetence of the Partner; or (2) under other limited circumstances, with the consent of the Board (which may be withheld in its sole discretion and is expected to be granted, if at all, only under extenuating circumstances). Unless counsel to the Funds confirms that the transfer will not cause a Fund to be treated as a “publicly traded partnership” taxable as a corporation, the Board generally will not consider consenting to a transfer of Shares unless the transfer is: (1) one in which the tax basis of the Shares in the hands of the transferee is determined, in whole or in part, by reference to its tax basis in the hands of the transferring Partner (e.g., certain transfers to affiliates, gifts and contributions to family entities); (2) to members of the transferring Partner’s immediate family (siblings, spouse, parents or children); or (3) a distribution from a qualified retirement plan or an individual retirement account. In connection with any request to transfer Shares, the Funds may require the Partner requesting the transfer to obtain, at the Partner’s expense, an opinion of counsel selected by the Funds as to such matters as the Funds may reasonably request. Each transferring Partner and transferee may be charged reasonable expenses, including attorneys’ and accountants’ fees, incurred by the relevant Fund in connection with the transfer. See “TRANSFERS OF SHARES.”

TAXES

The Funds believe that they are treated as partnerships for U.S. federal income tax purposes, and, as a result, each Partner is required to include in income its allocable share of the relevant Fund’s taxable income each year, regardless of whether such Fund makes a distribution to such Partner in such year. In addition, for a variety of reasons, a Partner’s allocation of taxable income of a Fund in any year may be more or less than the amount of net profits or net losses allocated to the Partner’s capital account for that year.

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For a discussion of certain tax risks and considerations relating to an investment in the Funds, see “CERTAIN TAX CONSIDERATIONS.”

Investors should consult their own tax advisers with respect to the specific federal, state, local, U.S. and non-U.S. tax consequences of the purchase and ownership of Shares of a Fund and/or the filing requirements, if any, associated with the purchase and ownership of Shares of a Fund.

ERISA PLANS AND OTHER TAX-EXEMPT ENTITIES

Prospective investors subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and other tax-exempt entities, including employee benefit plans, individual retirement accounts and Keogh Plans, may purchase Shares of the Funds. The Funds’ assets should not be considered to be “plan assets” for purposes of ERISA’s fiduciary responsibility and prohibited transaction rules or similar provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code” or the “Code”).

PMF Fund

Because many of the Investment Funds incur debt in connection with the purchase of securities, futures and other investments, the PMF Fund may generate income that is taxable to tax-exempt Partners as unrelated business taxable income (“UBTI”). In addition, a tax-exempt Partner will likely recognize UBTI if it incurs indebtedness to finance its investment in the PMF Fund, and it is possible that certain investments by the PMF Fund could result in UBTI, even if such investments are not debt financed. Due to these considerations, an investment in the PMF Fund is not appropriate for certain types of tax-exempt entities, including charitable remainder trusts. See “CERTAIN TAX CONSIDERATIONS.”

An investment in the PMF Fund by tax-exempt entities may not be appropriate. Trustees or administrators of such entities are urged to review carefully the matters discussed in this Memorandum and to consult with their tax advisers prior to making an investment in the PMF Fund. See “ERISA CONSIDERATIONS.”

TEI Fund

The TEI Fund, because of its structure, should not pass UBTI on to its investors and is designed as an investment for Tax-Exempt Investors that are Eligible Investors. See “CERTAIN TAX CONSIDERATIONS.” Trustees or administrators of tax-exempt entities are urged to review carefully the matters discussed in this Memorandum and to consult with their tax advisers prior to making an investment in the TEI Fund. See “ERISA CONSIDERATIONS.”

TERM

In light of the Funds’ objective and portfolio, the Funds will liquidate over time and have a limited lifespan. It is currently anticipated that after five years following the effective date of the Legacy Master Fund Division, the Master Fund will seek to liquidate any remaining Hedge Fund Assets. Furthermore, after ten years following the effective date of the Legacy Master Fund Division, the Master Fund will enter a formal dissolution process and will seek to liquidate all remaining assets. It is expected that the Funds will terminate upon the complete liquidation of the Master Fund’s investment portfolio or as otherwise terminated under the terms of the LP Agreement. See “ADDITIONAL INFORMATION AND SUMMARY OF THE LP AGREEMENT—Term, Dissolution and Liquidation.”

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REPORTS TO PARTNERS

The Funds intend to send the Partners annual tax information necessary for completion of U.S. federal, state and local tax returns. The Funds intend to furnish to Partners such information as soon as practicable after receipt of the necessary information from the Investment Funds. However, such annual tax information will be provided by the Funds after April 15 of each year and, accordingly, Partners will need to file for extensions for the completion of their tax returns.

The Funds anticipate sending Partners an unaudited semi-annual and an audited annual report within 60 days after the close of the period for which the report is being made. Partners also may be sent additional reports regarding the Funds’ operations each quarter, at the discretion of the Adviser. See “REPORTS TO PARTNERS.”

The Funds also anticipate sending quarterly statements reporting the net asset value of Partners’ Shares.

In the event that the Investment Company Act or the SEC in the future requires more frequent reporting, the Funds will comply with such additional reporting requirements.

FISCAL YEAR

For accounting purposes, each Fund’s fiscal year is the period ending on December 31. Each Fund’s taxable year is the period ending December 31.

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SUMMARY OF FUND EXPENSES

PMF Fund

The following table illustrates the approximate expenses and fees that Partners in the PMF Fund are expected to bear directly or indirectly. The information below and specifically the Acquired Fund Fees and Expenses (as described below in footnote 2) are a required disclosure for investment companies that are registered under the Investment Company Act. Since the Master Fund and the Funds are registered under such act, they are required to include these disclosures in their Memorandum. Unregistered funds that may resemble the Master Fund in that they invest in underlying funds also incur expenses from the underlying funds in which they invest. However, unlike the Master Fund, these unregistered funds of funds are not required to disclose Acquired Fund Fees and Expense information to investors because they are not registered under the Investment Company Act.

PARTNER TRANSACTION EXPENSES
Maximum Placement Fee (as a percentage of purchase amount)	None
Maximum Early Repurchase Fee (as a percentage of repurchased amount)	None
ANNUAL EXPENSES (as a percentage of average net assets)
Management Fees (1)	0.70	%
Other Expenses (2)	1.30	%
TOTAL ANNUAL FUND OPERATING EXPENSES	2.00	%
Acquired Fund Fees and Expenses (3)	5.87	%
TOTAL ANNUAL EXPENSES	7.87	%

(1) As a contractual matter, so long as the PMF Fund invests all of its investable assets in the Master Fund, the PMF Fund does not directly pay the Adviser an investment management fee. However, as reflected in the preceding line item in the Fee Table, the PMF Fund’s Partners bear an indirect share of the Master Fund’s annualized investment management fee of 0.70% (on an annualized basis) for the six quarters following the date of the Legacy Master Fund Division (as defined herein) and 0.40% (on an annualized basis) for periods thereafter until the period ending ten years after the date of the Legacy Master Fund Division, when the Adviser will no longer receive an investment management fee. In addition, following the period ending five years after the date of the Legacy Master Fund Division, no fee will be charged on Hedge Fund Assets (as defined below), with any such Hedge Fund Assets remaining at that time being excluded from the calculation of net assets for purposes of determining the management fee. If the PMF Fund invested directly, it would pay the Adviser the same investment management fee directly.

(2) Other Expenses are based on estimated PMF Fund assets of $493,852,954 and anticipated expenses for the first year of the PMF Fund’s operations, the Servicing Fee of 0.50% on an annualized basis out of the Fund’s assets, the PMF Fund’s direct operating expenses (including professional fees, transfer agency fees and other operating expenses) and the PMF Fund’s pro rata share of the operating expenses borne directly at the Master Fund level (these expenses include administration fees, custodial fees, professional fees, interest expense (if any) and other operating expenses). As required by the Master Fund’s limited partnership agreement, the Adviser has contractually agreed to waive and/or reimburse the Master Fund for its management fees and other expenses to the extent necessary to limit the total annualized expenses (excluding fees and expenses directly charged by Investment Funds and Investment Managers, borrowing and other trading and execution costs and fees, taxes, litigation and indemnification expenses, judgments and other extraordinary expenses not incurred in the ordinary course of the Master Fund’s business) of the

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Master Fund to 1.25% of the net asset value of the Master Fund. The Master Fund Expense Limitation Agreement will be applied on an annualized basis such that total expenses incurred by the Master Fund through the end of any fiscal quarter are limited to the pro-rated portion of 1.25% based on the relevant quarter end during the fiscal year (e.g. as of September 30, the limitation would be 3/4 of 1.25%). Other costs may be allocated amongst the Master Fund, the PMF Fund and the TEI Fund. As discussed above, the PMF Fund pays a Servicing Fee based on its average month-end net assets over the course of the applicable quarter, payable quarterly in arrears equal to 0.50% (on an annualized basis) for the six quarters following the date of the Legacy Master Fund Division (as defined herein) and 0.40% (on an annualized basis) for periods thereafter until the period ending ten years after the date of the Legacy Master Fund Division, when the Servicing Agent will no longer receive a Servicing Fee. The Adviser or its affiliates also may pay a fee out of their own resources to sub-servicing agents.

(3) The Acquired Fund Fees and Expenses include the PMF Fund’s share of operating expenses and performance-based incentive fees of the underlying Investment Funds. The Acquired Fund Fees and Expenses are based on assumptions as to the specific Investment Funds to be held by the PMF Fund. The costs incurred at the underlying Investment Fund level include management fees, administration fees, professional fees, incentive fees and other operating expenses. In addition the underlying Investment Funds also incur trading expenses, which may include interest and dividend expenses, which are the byproduct of leveraging or hedging activities employed by the Investment Managers in order to seek to enhance or preserve the Investment Funds’ returns. Of the approximately 5.87% representing costs incurred at the underlying Investment Fund level, such costs consists of approximately 1.64% in management fees, approximately 3.07% in other expenses (trading, etc.) and approximately 1.16% in incentive fee allocations.

The Acquired Fund Fees and Expenses were calculated in good faith by the Adviser. There are several components that go into the calculation and for some Investment Funds, complete, updated information was not available. Generally the calculation is based on responses received from the underlying Investment Funds, the most recent shareholder reports, the most recent investor communication (which in some cases may be the Investment Funds offering documents) or other materials/communications from/with the underlying Investment Funds. The fees and expenses disclosed above are based on historic earnings of the Investment Funds, which may (and which should be expected to) change substantially over time and, therefore, significantly affect Acquired Fund Fees and Expenses. In addition, the Investment Funds to be held by the Master Fund will change as liquidations occur, which further impacts the calculation of the Acquired Fund Fees and Expenses. Generally, fees payable to Investment Managers of the Investment Funds will range from 1% to 2.5% (annualized) of the average NAV of the Master Fund’s investment in such Investment Funds. In addition, certain Investment Managers charge an incentive allocation or fee generally ranging from 15% to 20% of an Investment Fund’s net profits, although it is possible that such ranges may be exceeded for certain Investment Managers. The expenses charged by the underlying Investment Funds are not paid to the Fund or the Adviser and represent the costs incurred to invest in the underlying Investment Funds.

The purpose of the table above is to assist prospective investors in understanding the various fees and expenses Partners bear directly or indirectly. For a more complete description of the various fees and expenses of the Fund, see “INVESTMENT MANAGEMENT FEE,” “ADMINISTRATION,” “FUND EXPENSES,” “REPURCHASES OF SHARES,” and “PURCHASING SHARES.”

The following example is intended to help you compare the cost of investing in the PMF Fund with the cost of investing in other funds. The assumed 5% annual return, which is required by the SEC, is not a prediction of, and does not represent, the projected or actual performance of the PMF Fund.

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Example

You would pay the following fees and expenses on a $1,000 investment, assuming a 5% annual return:

1 YEAR		3 YEARS		5 YEARS		10 YEARS
	$78	$	226	$	366	$	682

The example is based on the anticipated fees and expenses incurred by the PMF Fund, including the Acquired Fund Fees and Expenses, as set out in the table above and should not be considered a representation of future expenses. Actual expenses may be greater or less than those shown. The rate of return of the PMF Fund may be greater or less than the hypothetical 5% return used in the example. A greater rate of return than that used in the example would increase the dollar amount of the investment advisory fee paid by the PMF Fund.

TEI Fund

The following table illustrates the approximate expenses and fees that Partners in the TEI Fund are expected to bear directly or indirectly. The information below and specifically the Acquired Fund Fees and Expenses (as described below in footnote 2) are a required disclosure for investment companies that are registered under the Investment Company Act. Since the Master Fund and the Funds are registered under such Act, they are required to include these disclosures in their Memorandum. Unregistered funds that may resemble the Master Fund in that they invest in underlying funds also incur expenses from the underlying funds in which they invest. However, unlike the Master Fund, these unregistered funds of funds are not required to disclose Acquired Fund Fees and Expense information to investors because they are not registered under the Investment Company Act.

PARTNER TRANSACTION EXPENSES
Maximum Placement Fee (as a percentage of purchase amount)	None
Maximum Early Repurchase Fee (as a percentage of repurchased amount)	None
ANNUAL EXPENSES (as a percentage of average net assets)
Management Fees (1)	0.70	%
Other Expenses (2)	1.30	%
TOTAL ANNUAL FUND OPERATING EXPENSES	2.00	%
Acquired Fund Fees and Expenses (3)	5.87	%
TOTAL ANNUAL EXPENSES	7.87	%

(1) As a contractual matter, so long as the TEI Fund invests all of its investable assets in the Offshore Fund, which in turn invests all of its investable assets in the Master Fund, the TEI Fund does not directly pay the Adviser an investment management fee. However, as reflected in the preceding line item in the Fee Table, the TEI Fund’s Partners bear an indirect share of the Master Fund’s annualized investment management fee of 0.70% (on an annualized basis) for the six quarters following the date of the Legacy Master Fund Division (as defined herein) and 0.40% (on an annualized basis) for periods thereafter until the period ending ten years after the date of the Legacy Master Fund Division, when the Adviser will no longer receive an investment management fee. In addition, following the period ending five years after the date of the Legacy Master Fund Division, no fee will be charged on Hedge Fund Assets (as defined herein), with any such Hedge Fund Assets remaining at that time being excluded from the calculation of net assets for purposes of determining the management fee. If the TEI Fund invested directly, it would pay the Adviser the same investment management fee directly.

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(2) Other Expenses are based on estimated TEI Fund assets of $497,114,265 and anticipated expenses for the first year of the TEI Fund’s operations, the Servicing Fee of 0.50% on an annualized basis out of the TEI Fund’s assets, the TEI Fund’s direct operating expenses (including professional fees, transfer agency fees and other operating expenses) and the TEI Fund’s pro rata share of the operating expenses borne directly at the Offshore Fund level and at the Master Fund level (these expenses include administration fees, custodial fees, professional fees, interest expense (if any), withholding tax and other operating expenses). As required by the Master Fund’s limited partnership agreement, the Adviser has contractually agreed to waive and/or reimburse the Master Fund for its management fees and other expenses to the extent necessary to limit the total annualized expenses (excluding fees and expenses directly charged by Investment Funds and Investment Managers, borrowing and other trading and execution costs and fees, taxes, litigation and indemnification expenses, judgments and other extraordinary expenses not incurred in the ordinary course of the Master Fund’s business) of the Master Fund to 1.25% of the net asset value of the Master Fund. The Master Fund Expense Limitation Agreement will be applied on an annualized basis such that total expenses incurred by the Master Fund through the end of any fiscal quarter are limited to the pro-rated portion of 1.25% based on the relevant quarter end during the fiscal year (e.g. as of September 30, the limitation would be 3/4 of 1.25%). Other costs may be allocated amongst the Master Fund, the PMF Fund and the TEI Fund. As discussed above, the TEI Fund pays a Servicing Fee based on its average month-end net assets over the course of the applicable quarter, payable quarterly in arrears equal to 0.50% (on an annualized basis) for the six quarters following the date of the Legacy Master Fund Division (as defined herein) and 0.40% (on an annualized basis) for periods thereafter until the period ending ten years after the date of the Legacy Master Fund Division, when the Servicing Agent will no longer receive a Servicing Fee. Any compensation to a sub-servicing agent is paid by the Servicing Agent. The Adviser or its affiliates also may pay a fee out of their own resources to sub-servicing agents.

(3) The Acquired Fund Fees and Expenses include the TEI Fund’s share of operating expenses and performance-based incentive fees of the underlying Investment Funds. The Acquired Fund Fees and Expenses are based on assumptions as to the specific Investment Funds to be held by the TEI Fund. The costs incurred at the underlying Investment Fund level include management fees, administration fees, professional fees, incentive fees and other operating expenses. In addition the underlying Investment Funds also incur trading expenses, which may include interest and dividend expenses, which are the byproduct of leveraging or hedging activities employed by the Investment Managers in order to seek to enhance or preserve the Investment Funds’ returns. Of the approximately 5.87% representing costs incurred at the underlying Investment Fund level, such costs consists of approximately 1.64% in management fees, approximately 3.07% in other expenses (trading, etc.) and approximately 1.16% in incentive fee allocations.

The Acquired Fund Fees and Expenses were calculated in good faith by the Adviser. There are several components that go into the calculation and for some Investment Funds, complete, updated information was not available. Generally the calculation is based on responses received from the underlying Investment Funds, the most recent shareholder reports, the most recent investor communication (which in some cases may be the Investment Funds offering documents) or other materials/communications from/with the underlying Investment Funds. The fees and expenses disclosed above are based on historic earnings of the Investment Funds, which may (and which should be expected to) change substantially over time and, therefore, significantly affect Acquired Fund Fees and Expenses. In addition, the Investment Funds to be held by the Master Fund will change as liquidations occurs, which further impacts the calculation of the Acquired Fund Fees and Expenses. Generally, fees payable to Investment Managers of the Investment Funds will range from 1% to 2.25% (annualized) of the average NAV of the Master Fund’s investment in such Investment Funds. In addition, certain Investment Managers charge an incentive allocation or fee generally ranging from 15% to 25% of an Investment Fund’s net profits,

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although it is possible that such ranges may be exceeded for certain Investment Managers. The expenses charged by the underlying Investment Funds are not paid to the Fund or the Adviser and represent the costs incurred to invest in the underlying Investment Funds.

The purpose of the table above is to assist prospective investors in understanding the various fees and expenses Partners bear directly or indirectly. For a more complete description of the various fees and expenses of the Fund, see “INVESTMENT MANAGEMENT FEE,” “ADMINISTRATION,” “FUND EXPENSES,” and “REPURCHASES OF SHARES.”

The following example is intended to help you compare the cost of investing in the TEI Fund with the cost of investing in other funds. The assumed 5% annual return, which is required by the SEC, is not a prediction of, and does not represent, the projected or actual performance of the TEI Fund.

Example

You would pay the following fees and expenses on a $1,000 investment, assuming a 5% annual return:

1 YEAR		3 YEARS		5 YEARS		10 YEARS
	$78	$	226	$	366	$	683

The example is based on the anticipated fees and expenses incurred by the TEI Fund, including the Acquired Fund Fees and Expenses, as set out in the table above and should not be considered a representation of future expenses. Actual expenses may be greater or less than those shown. The rate of return of the TEI Fund may be greater or less than the hypothetical 5% return used in the example. A greater rate of return than that used in the example would increase the dollar amount of the investment advisory fee paid by the TEI Fund.

INVESTMENT OBJECTIVE

The Funds’ investment objective is to manage a portfolio of Investment Funds and cash to preserve value while prioritizing liquidity to investors over active management, until such time as the Master Fund’s portfolio has been liquidated.

Both Funds invest substantially all of their investable assets in the securities of the Master Fund (via the Offshore Fund in the case of the TEI Fund), through which the Funds pursue their investment objective. Although substantially all of the Funds’ investments are made through the Master Fund, this Memorandum generally refers to the Funds’ investments as if they were made directly by the Funds, in order to make the Funds’ and Master Fund’s investment programs easier to understand. Accordingly, references in this Memorandum to the Funds’ investment activities actually describe the Master Fund’s investment activities, unless the context requires otherwise.

The Funds’ portfolio will initially reflect an approximately pro rata division of the Legacy Master Fund’s portfolio. The Adviser will manage the Master Fund portfolio primarily in a passive manner whereby the Master Fund will hold to self-liquidation private equity and other similarly illiquid interests in Investment Funds and oversee the liquidation of other Investment Funds that provide for redemption while managing the Master Fund’s cash to ensure the Master Fund’s ability to satisfy outstanding capital commitments relating to such portfolio holdings. The Adviser may also consider secondary sales of hedge fund interests held by the Master Fund to enhance liquidity. Any secondary sale of the Master Fund’s

5

assets prior to the relevant Liquidation Period (as defined below) must be unanimously approved by the Master Fund’s board of directors. Withdrawal requests have been, or will be, submitted to each Investment Fund that permits such requests. It is not expected that the Funds will make additional investments other than fulfilling capital commitments to certain Investment Funds, and investments for cash and liquidity management purposes.

The Master Fund’s investment objective is fundamental and may not be changed by the Board without the approval of the limited partners of the Master Fund. Except as otherwise stated in this Memorandum or the LP Agreement, the investment policies, strategies and restrictions of the Funds are not fundamental and may be changed by the Board without the approval of the Partners.

INVESTMENT PORTFOLIO

The Funds’ investment portfolio will initially reflect an approximately pro rata division of the Legacy Master Fund’s portfolio. The Legacy Master Fund’s portfolio holdings as of December 31, 2013 are listed in Appendix A to this Memorandum. To the extent that an Investment Fund held by the Legacy Master Fund does not consent to the division and transfer of the Legacy Master Fund’s interest in the Investment Fund but the Legacy Master Fund is nevertheless able to transfer an approximately pro rata division of its portfolio, the Master Fund will receive an amount in cash equal to the net asset value of the relevant portion of the Legacy Master Fund’s interest in any such Investment Fund proposed but unable to be acquired by the Master Fund.

BORROWING BY THE FUNDS AND THE MASTER FUND

Although the Funds will not use investment leverage, the Master Fund and, although not anticipated, the Funds and the Offshore Fund, may borrow money for cash management purposes, to pay operating expenses, including, without limitation, investment management fees or to meet capital calls of Investment Funds, including but not limited to investments in private equity, real estate, natural resources and energy; provided, however, that, as a fundamental policy, the Master Fund may not borrow more than 5% of its NAV (determined as of the time of investment and after taking into account such borrowings and the use of proceeds therefrom). The Master Fund from time to time may have a line of credit under which the Master Fund may borrow money for the purposes described above. To any extent that the Master Fund may utilize such line of credit, there can be no assurance that such line of credit would continue to be available in the future and the loss by the Master Fund of any such line of credit could create adverse consequences.

Under the Investment Company Act, each of the Funds and the Master Fund are not permitted to borrow for any purposes if, immediately after such borrowing, such Fund would have an asset coverage ratio (as defined in the Investment Company Act) of less than 300% with respect to indebtedness or less than 200% with respect to preferred stock. The Investment Company Act also provides that each of the Funds and the Master Fund may not declare distributions, or purchase its Shares (including through repurchase offers) if, immediately after doing so, it will have an asset coverage ratio of less than 300% or 200%, as applicable. Under the Investment Company Act, certain short-term borrowings (such as for the purpose of meeting repurchases, for bridge financing of investments in Investment Funds or for cash management purposes) if (i) repaid within 60 days, (ii) not extended or renewed, and (iii) which are not in excess of 5% of the total assets of a Fund are not considered the use of investment leverage. Borrowing requirements generally do not apply to Investment Funds that are not registered under the Investment Company Act.

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To the extent permitted by the Funds’ and the Master Fund’s fundamental policy on borrowing (described below) and the Investment Company Act, the Board may modify the Funds’ borrowing policies. The rights of any lenders to the Funds or the Master Fund to receive payments of interest or repayments of principal may be senior to those of the Partners, and the terms of any borrowings may contain provisions that limit certain activities of the Funds or the Master Fund.

ADDITIONAL INVESTMENT POLICIES

Applicability of Investment Company Act Limitations

For purposes of determining compliance with the Funds’ investment restrictions and certain investment limitations under the Investment Company Act, including for example, the Funds’ leverage limitations, the Funds do not “look through” Investment Funds in which the Funds invest, except for (i) Investment Funds managed or distributed by the Funds’ investment manager or placement agent, respectively, or their affiliates, and (ii) any subsidiary vehicles established to pursue the Funds’ investment program. Investment Funds are not subject to the Funds’ investment restrictions and, unless registered under the Investment Company Act, are generally not subject to any investment limitations under the Investment Company Act or the Internal Revenue Code.

Futures Transactions

Certain Investment Funds’ use of derivatives that are subject to regulation by the CFTC and National Futures Association (“NFA”) could cause the Funds to be deemed a commodity pool or the Adviser a commodity pool operator (“CPO”), which would require the Funds and the Adviser to comply with certain rules which could result in additional costs to the Funds. Although the Funds are not expected to use futures investments ordinarily, pursuant to regulations and/or published positions of the SEC, the Funds may be required to segregate cash or liquid securities in connection with any futures transactions. Certain Investment Funds, may purchase and sell futures contracts and options on futures contracts. Last year, the CFTC amended certain regulations governing commodity pools that could require the Funds to be deemed commodity pools under the CEA and to be subject to additional regulatory and compliance burdens. However, the Adviser has claimed no-action relief from CFTC registration available to funds-of-funds with respect to its operation of the Funds. As a result of such claim, the Adviser will not be required to act as a registered CPO with respect to the Funds until six months after the CFTC issues new guidance with respect to the CFTC registration obligations of CPOs of funds-of-funds. Such new guidance may dictate the appropriate course of action for the Funds with respect to their CFTC compliance obligations. Changes in the Funds’ CFTC compliance obligations, when determined, may increase costs for the Funds.

Fundamental Policies

The Funds’ fundamental policies listed below may not be changed without an affirmative vote of a majority of the Funds’ voting securities, which means the lesser of: (i) 67% of the Shares (by value) present at a meeting at which holders of more than 50% of the Shares (by value) are present in person or by proxy; or (ii) more than 50% of the Shares (by value). The Master Fund has also adopted each of the fundamental policies listed below; such policies cannot be changed without the approval of (A) both of (i) a majority (as such majority vote is defined in the following sentence) of the outstanding voting securities of the Master Fund, and (ii) Minimum Limited Partner Approval; and (B) as required by the Master Fund’s limited partnership agreement with respect to certain of the fundamental policies, the

7

unanimous approval of the board of directors of the Master Fund. No other policy is a fundamental policy of the Funds Within the limits of the Funds’ and Master Fund’s fundamental policies, each of the Funds’ and the Master Fund’s management has reserved freedom of action. To the extent permitted by the Investment Company Act, the rules and regulations thereunder, or interpretations, orders, or other guidance provided by the SEC or its staff, each of the Funds and the Master Fund may:

1) Borrow money or issue any senior security, to the extent permitted under the 1940 Act, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time for purposes of cash management or to pay operating expenses, including, without limitation, investment management fees or to meet capital calls of Investment Funds, including but not limited to investments in private equity, real estate, natural resources and energy; provided however, that in no event shall the Master Fund be entitled to borrow money in an amount greater than 5% of its NAV (determined as of the time of borrowing and after taking into account such borrowings and the use of proceeds therefrom).

2) Not invest 25% or more of the value of its total assets in the securities of issuers in any single industry or group of industries, except that securities issued by the U.S. Government, its agencies or instrumentalities and repurchase agreements collateralized by securities issued by the U.S. Government, its agencies or instrumentalities may be purchased without limitation, and each of the Funds and the Master Fund may invest substantially all of its investable assets in one or more registered investment companies. For purposes of this investment restriction, the Investment Funds are not considered part of any industry or group of industries. Each of the Funds and the Master Fund may invest in Investment Funds that may concentrate their assets in one or more industries. None of the Funds will invest 25% or more of the value of its total assets in Investment Funds that focus on investing in any single industry or group of related industries.

3) Not act as an underwriter of securities of other issuers, except to the extent that in connection with the disposition of portfolio securities, it may be deemed to be an underwriter under the federal securities laws.

4) Not purchase real estate, nor sell real estate except insofar as such transaction is made through a vehicle whereby the risk of loss is not greater than the investment therein, although it may sell securities secured by real estate or interests therein, or securities issued by companies which invest in real estate or interests therein.

5) Not make loans.

6) Not make a purchase of physical commodities and commodity contracts; nor make a direct sale of physical commodities and commodity contracts, except (a) insofar as such transaction is made through a vehicle whereby the risk of loss is not greater than the investment therein, and (b) it may sell physical commodities if acquired as a result of ownership or other instruments. The Master Fund will not consider stock index, currency and other financial futures contracts, swaps, or hybrid instruments to be commodities for purposes of this investment policy.

As an additional fundamental policy, each Fund may pursue its investment program through one or more subsidiary vehicles and the establishment of such vehicles and the Funds’ utilization thereof is wholly within the discretion of the Board.

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In addition, the Master Fund has adopted the following fundamental investment policies, which may only be changed with the approval of (A) both of (i) a majority (as such majority vote is defined above) of the outstanding voting securities of the Master Fund, and (ii) Minimum Limit Partner Approval (as defined below); and (B) as required by the Master Fund’s limited partnership agreement with respect to certain of the fundamental policies, the unanimous approval of the Master Fund’s board of directors:

1) the Master Fund’s investment objective is to manage a portfolio of Investment Funds and cash to preserve value while prioritizing liquidity to investors over active management, until such time as the Master Fund’s portfolio has been liquidated;

2) the Master Fund will not make additional investments other than fulfilling capital commitments to certain Investment Funds, and investments for cash and liquidity management purposes; and

3) beginning in the second quarter 2014, the Master Fund will pay a quarterly distribution in an amount equal to the amount of the Master Fund’s Excess Cash (as defined below), but only to the extent that Excess Cash as of the end of such quarter exceeds $10 million; provided however, that upon dissolution of the Master Fund as set forth in the Master Fund’s limited partnership agreement, Excess Cash will distributed on a quarterly basis without regard to any minimum Excess Cash threshold amount.

“Minimum Limited Partner Approval” requires the affirmative vote of the partners of the Master Fund holding the greater of (i) (A) 100% of the outstanding Master Fund interests less (B) the Repurchase Participation Percentage (as defined in the Master Fund’s limited partnership agreement) minus 1%, or (ii) a majority of all outstanding Master Fund interests. However, in the event that the aggregate dollar amount of the feeder fund interests repurchased as of the date of the Legacy Master Fund Division represents less than 20% of the net asset value of the Legacy Master Fund immediately prior to the Legacy Master Fund Division, “Minimum Limited Partner Approval” means the affirmative vote of the Limited Partners holding a majority of all outstanding Master Fund interests.

The Master Fund’s “Excess Cash” is the amount of cash on hand over and above Required Cash and cash required to repay any outstanding borrowings. “Required Cash” is defined as the amount determined by the Adviser, with oversight by the Board, to be necessary or prudent for operational and regulatory purposes, including to meet capital commitments to certain Investment Funds and/or other compliance purposes. Required Cash is expected to generally be no more than 5% of the Master Fund’s NAV but may exceed such an amount in certain circumstances. Quarterly distributions will generally be made subject to the Master Fund having a minimum of $10 million of Excess Cash as of the end of a calendar quarter, otherwise, such Excess Cash will be distributed in the subsequent quarter or quarters where the aggregate of Excess Cash from such subsequent quarter(s) and prior quarters exceeds $10 million. The Master Fund will also make intra-quarter distributions if the Master Fund has Excess Cash of $25 million or more as of the 45th day after the end of any quarter.

With respect to these policies and other policies and investment restrictions described in this Memorandum (except the Funds’ and the Master Fund’s fundamental policies on borrowings and the issuance of senior securities), if a percentage restriction is adhered to at the time of an investment or transaction, a later change in percentage resulting from liquidation of other positions or, a change in the values of investments or the value of the Funds’ or the Master Fund’s total assets, unless otherwise stated, will not constitute a violation of such policy or restriction. The Funds’ and the Master Fund’s investment policies and restrictions do not apply to the activities and transactions of Investment Funds in which assets of the Master Fund are invested, but will apply to investments made by the Funds and the Master

9

Fund directly (or any account consisting solely of the Funds’ or the Master Fund’s assets). The Investment Funds may have different or contrary investment policies.

GENERAL RISKS

The Master Fund’s investment program entails certain risks to which the Funds are subject through their investment in the Master Fund. As the Funds liquidate, there can be no assurance that the investment objective of the Funds or the Master Fund will produce positive returns or those of the Investments Funds in which the Funds invest will be achieved or that their investment programs will be successful. Because the Funds invest substantially all of their investable assets in the Master Fund (in the case of the TEI Fund, via the Offshore Fund), the risks associated with an investment in the Funds are substantially the same as the risks associated with an investment in the Master Fund. Certain risks associated with an investment in the Funds are set forth below.

Master/Feeder Structure

Certain governance standards of the Master Fund and provisions of the Master Fund’s limited partnership agreement may only be changed by Minimum Limited Partner Approval (as defined below). To the extent that a feeder fund’s investment in the Master Fund is sufficiently large so as to satisfy Minimum Limited Partner Approval, such a feeder fund would have the ability effectively to veto actions requiring a vote or unilaterally determine the outcome of a Master Fund vote. To the extent that the such a large feeder fund’s interests conflict with those of the Fund or Partners, the feeder fund’s ability to determine the outcome of certain Master Fund votes may adversely affect the Fund and Partners. The Master Fund may have other investors (including other feeder funds) in addition to the Funds. Because each feeder fund has its own feeder-specific expenses, and other conditions, one feeder fund could offer access to the Master Fund on more attractive terms, or could experience better performance, than another feeder fund.

Portfolio Liquidation Risk

After five years following the effective date of the Legacy Master Fund Division, the Master Fund will seek to liquidate any remaining Hedge Fund Assets (as defined herein). After ten years following the effective date of the Legacy Master Fund Division, the Master Fund will enter a formal dissolution process and will seek to liquidate all remaining assets. Such liquidation of Investment Funds will require the sale of such assets on a secondary basis. Any such secondary sales of assets would likely be at a discount to the net asset value of the relevant Investment Fund interests, which would reduce the amounts realized by the Master Fund and distributed to investors.

Declining Assets Risk

As the Funds liquidate, the asset value of each Fund will decline. All other things being equal, each fund’s expense ratios may increase as costs are spread over a smaller asset base.

Closed-End Fund; Limited Liquidity

The Funds are non-diversified, closed-end management investment companies designed primarily for long-term investors, and are not intended to be trading vehicles. You should not invest in the Funds if you need a liquid investment. The Funds will over time hold substantially all their assets in illiquid

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investments. Closed-end funds differ from open-end management investment companies (commonly known as mutual funds) in that investors in a closed-end fund do not have the right to redeem their shares on a daily basis at a price based on NAV. In order to be able to meet daily redemption requests, mutual funds are subject to more stringent liquidity requirements than closed-end funds. In particular, a mutual fund generally may not invest more than 15% of its net assets in illiquid securities, while a closed-end fund, such as the Funds, may invest all or substantially all of its assets in illiquid investments (as is the Funds’ investment practice).

An investment in the Funds provides limited liquidity since the Shares are not freely transferable and Partners may not cause the Funds to redeem their Shares. As described below, the Funds do not anticipate routinely offering to repurchase Shares from the Partners. While the Funds liquidate, the Funds may offer to repurchase Shares in certain circumstances, and may offer to repurchase Shares at less than the current net asset value of the Shares. In the event the Funds do offer to repurchase Shares, distributions of proceeds upon the repurchase of a Partner’s Shares may be subject to restrictions imposed upon withdrawals under the terms of the Investment Funds or, in the event that the Funds and/or the Adviser has engaged one or more sub-advisers, restrictions imposed by investment advisory agreements pursuant to which the Funds’ assets are invested. An investment in the Funds is suitable only for certain sophisticated investors that do not need liquidity.

If the Funds conduct repurchase offers, and if a significant number of Partners sought to have their Shares repurchased at the same time, the illiquidity that results from the Master Fund’s significant investment in long-term investments, which ordinarily cannot be liquidated without significant discount, if at all, may prevent the Master Fund from repurchasing more than a specified amount of Shares.

Payment for repurchased Shares of the Funds may require the Master Fund to liquidate its investments in Investment Funds earlier than the Adviser would otherwise liquidate these holdings in due course, potentially resulting in losses. In addition, to the extent that the Funds ever were to repurchase significant amounts of Shares, the illiquidity of the remaining portfolio would increase, a factor that the Board would consider when determining the amount of Shares to repurchase. The Adviser intends to take measures (subject to such policies as may be established by the Investment Committee) to attempt to avoid or minimize potential losses resulting from the repurchase of Shares. The Funds intend to distribute capital as the Master Fund portfolio liquidates, subject to certain thresholds, as described in this Memorandum.

Shares Not Listed; Repurchases of Shares

The Funds do not intend to list their Shares for trading on any national securities exchange. There is no secondary trading market for the Shares, and none is expected to develop. The Shares are, therefore, not readily marketable. Because the Funds are closed-end investment companies, their Shares are not redeemable at the option of Partners and they are not exchangeable for interests of any other fund. Although the Board may, in its sole discretion, cause the Funds to offer to repurchase outstanding Shares, including possibly at less than NAV, the Shares are considerably less liquid than shares of funds that trade on a stock exchange, or shares of open-end registered investment companies.

If the Funds conduct repurchase offers, there will be a substantial period of time between the date as of which Partners must accept the Funds’ offer to repurchase their Shares and the date they can expect to receive payment for their Shares from the Funds. Partners whose Shares are accepted for repurchase bear the risk that the Funds’ NAV may fluctuate significantly between the time that they accept the

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Funds’ offer to repurchase their Shares and the date as of which such Shares are valued for purposes of such repurchase. Partners will have to decide whether to accept the Funds’ offer to repurchase their Shares without the benefit of having current information regarding the value of Shares on a date proximate to the date on which Shares are valued by the Funds for purposes of effecting such repurchases. See “REPURCHASES OF SHARES.”

Further, repurchases of Shares, if any, may be suspended, postponed or terminated by the Board under certain circumstances. See “REPURCHASES OF SHARES—Periodic Repurchases.” An investment in the Funds is suitable only for investors who can bear the risks associated with the limited liquidity of the Shares and the underlying investments of the Funds. Also, because the Shares are not listed on any securities exchange, the Funds are not required, and do not intend, to hold annual meetings of their Partners.

Non-Diversified Status

The Funds are “non-diversified” investment companies. Thus, there are no percentage limitations imposed by the Investment Company Act on the percentage of the Funds’ assets that may be invested in the securities of any one issuer. Although the Adviser followed a general policy of seeking to diversify the Legacy Master Fund’s capital among multiple Investment Funds, as the Funds liquidate one or more Investment Funds may represent a relatively large percentage of the Funds’ assets. As a consequence of a large position in a particular Investment Fund, losses suffered by such an Investment Fund could result in a higher reduction in the Funds’ capital than if such capital had been more proportionately allocated among a larger number of Investment Funds.

Limited Operating History of Certain Investment Funds and/or Investment Strategies

Certain of the Investment Funds may have limited operating histories, and certain investment strategies, such as quantitative and/or model-based strategies, pursued by Investment Funds may have limited histories.

Ability to Borrow

Although the Master Fund will not utilize borrowings for leverage purposes, to the extent the Master Fund became unable to borrow, or lost its line of credit, such inability to borrow could adversely impact the Master Fund’s operations to the extent the Master Fund needed to access borrowed funds. Investment Funds may utilize leverage in their investment programs. The utilization of leverage will increase the volatility of the Master Fund’s investments. The use of leverage by the Master Fund or the Investment Funds can substantially increase the adverse impact of risks to which an investment in the Funds may be subject. The level of interest rates generally, and the rates at which the Master Fund and the Investment Funds can borrow in particular, can affect the operating results of the Funds. In addition, although not direct borrowing, use of futures contracts, forward contracts, swaps and certain other Instruments has the economic effect of financial leverage based on inherent, or implicit, leverage in such instruments. See “Investment Related Risks—Leverage” for discussion of leverage risks related to such investments.

Dependence on the Investment Managers

The Master Fund is dependent upon the ability of the Investment Managers to develop and implement strategies that achieve their investment objectives. Partners have no right or power to

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participate in the management or control of the Funds, the Master Fund or the Investment Funds, and will not have an opportunity to evaluate the specific investments made by the Investment Funds or the Investment Managers, or the terms of any such investments.

Governmental, Legal, Tax and Regulatory Risks

The global financial markets continue to be subject to pervasive and fundamental disruptions that have led to extensive and unprecedented governmental intervention. Such intervention has in certain cases been implemented on an “emergency” basis with little or no notice, with the consequence that some market participants’ ability to continue to implement certain strategies or manage the risk of their outstanding positions has been suddenly and/or substantially eliminated or otherwise negatively implicated. Given the complexities of the global financial markets and the limited time frame within which governments have been able to take action, these interventions have sometimes been unclear in scope and application, resulting in confusion and uncertainty, which in itself has been materially detrimental to the efficient functioning of such markets as well as previously successful investment strategies.

Legal, tax and regulatory changes could occur that may materially adversely affect the Funds. For example, the regulatory and tax environment for Investment Funds and for derivative instruments in which Investment Managers may participate is changing rapidly, and changes in the regulation or taxation of derivative instruments may materially adversely affect the value of derivative instruments held by the Investment Funds or the Funds and the ability of the Investment Managers or the Adviser to pursue their trading strategies. Similarly, the regulatory environment for leveraged investors and for hedge funds generally is changing rapidly, and changes in the direct or indirect regulation of leveraged investors or hedge funds, including tax regulation applicable thereto, may materially adversely affect the ability of the Funds to pursue investment objectives or strategies. In particular, Congress has enacted sweeping legislation regarding the operations of banks, private fund managers and other financial institutions. Congress also has held hearings regarding taxation policy as it relates to leveraged investors, tax-exempt investors and hedge funds, and the SEC has engaged in a general investigation of hedge funds, which has resulted in increased regulatory oversight and other legislation and regulation relating to hedge fund managers, hedge funds and funds of hedge funds. Due to events in the markets over the past several years, and recent legislation, additional regulatory change may be more likely than not and should be expected to occur.

It is impossible to predict with certainty what additional interim or permanent governmental restrictions may be imposed on the markets and/or the effect of such restrictions on the Adviser’s ability to fulfill the Funds’ investment objective. Legislation or regulation, which could be substantial and is unpredictable, could pose additional risks and result in material adverse consequences to the Investment Funds or the Funds and/or limit potential investment strategies that would have otherwise been used by the Investment Managers or the Funds in order to seek to obtain higher returns. The Adviser believes that there is a high likelihood of significantly increased regulation of the global financial markets, and that such increased regulation could be materially detrimental to the performance of the Funds. Certain tax risks associated with an investment in the Funds are discussed in “CERTAIN TAX CONSIDERATIONS.”

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Uncertain Impact of Legislation and Follow-On Regulation

The financial services industry generally, and the activities of private investment funds and their managers in particular, have been subject to intense and increasing regulatory scrutiny. Such scrutiny may increase the Funds’, the Master Fund’s, the Adviser’s, the Investment Managers’ or the Investment Funds’ exposure to potential liabilities and to legal, compliance and other related costs. Increased regulatory oversight also can impose administrative burdens on the Investment Manager, including, without limitation, responding to investigations and implementing new policies and procedures. Such burdens may divert the Investment Manager’s time, attention and resources from portfolio management activities. In addition, it is anticipated that, in the normal course of business, the Investment Manager’s officers will have contact with governmental authorities, and/or be subjected to responding to questionnaires or examinations. The Funds and/or the Investment Funds also may be subject to regulatory inquiries concerning its positions and trading.

On July 21, 2010, the President signed into law major financial services reform legislation in the form of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Dodd-Frank Act, among other things, grants regulatory authorities, such as the CFTC and SEC, broad rulemaking authority to implement various provisions of the Dodd-Frank Act, including comprehensive regulation of the over-the-counter derivatives and swaps markets. It is unclear how these regulators will exercise these revised and expanded powers and whether they will undertake rulemaking, supervisory or enforcement actions that would adversely affect the Funds’ or investments made by the Funds’ and the Master Fund. Possible regulatory actions taken under these revised and expanded powers may include actions related to financial consumer protection, proprietary trading and derivatives. There can be no assurance that future regulatory actions authorized by the Dodd-Frank Act will not significantly impact investments and/or operations of the Funds. The implementation of the Dodd-Frank Act could adversely affect the Funds by increasing transaction and/or regulatory compliance costs. In addition, greater regulatory scrutiny may increase the Funds’ and the Investment Manager’s exposure to potential liabilities. Increased regulatory oversight can also impose administrative burdens on the Funds and the Investment Funds, including, without limitation, responding to examinations or investigations and implementing new policies and procedures.

Uncertain Commodities Regulation

Certain actions by the CFTC relating both to registered investment company (including amendment of CFTC Rule 4.5 and accompanying “harmony” rules for investment companies, and guidance for fund-of-funds specifically) and Investment Fund investment in, and exposure to investment in, commodities and other derivatives may have uncertain but negative impacts on investment companies and Investment Funds, including increased operating costs and substantive restrictions. It is not possible to determine the ultimate impact at the current time.

Diverse Investors may Result in Conflicts of Shares between Taxable Investors and Tax-Exempt Investors

Investors in the Funds and other investment vehicles that invest in the Master Fund, taken collectively, include taxable and tax-exempt U.S. investors and non-U.S. investors. As a result, conflicts of interest may arise in connection with decisions made by the Adviser that may be more beneficial for one type of investor than for another type of investor. The Adviser may make any such determinations in its sole discretion, including whether and to what extent to take into account the tax considerations

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applicable to one or more investors in making decisions for the Master Fund. To the extent any such tax considerations are taken into account, a particular Fund may incur additional costs or expenses, potentially including additional tax or other risks that otherwise would not have occurred, and may structure or dispose of investments in a manner that is less beneficial for other investors, than might otherwise have been the case. Certain tax risks associated with an investment in the Funds are discussed in “CERTAIN TAX CONSIDERATIONS.”

Provision of Tax Information to Members; Tax Preparation Expenses

The Funds furnish to Partners as soon as practicable after the end of each taxable year such information as is necessary for them to complete federal and state tax or information returns along with any tax information required by law. This information in certain cases will likely include estimates. It is not likely that the Master Fund will receive tax information from Investment Funds in a sufficiently timely manner to enable the Funds to prepare their respective information returns in time for Partners to file their returns without requesting an extension of the time to file from the Internal Revenue Service (the “IRS” or the “Service”) or state taxing agencies. Accordingly, investors in the Funds will be required to obtain extensions of time to file their tax returns. The use of estimates or the lack of timely information from Investment Funds could result in material variances in the tax estimates provided by a Fund or may result in the Fund later amending its information returns, requiring the Partners to also amend their returns and report additional income or deductions not previously reported and pay federal and state income tax at applicable rates (together with applicable penalties and interest, if any, related to estimates or amended returns).

In addition, the Funds will not be in a position to independently verify the accuracy of tax information provided by the Investment Funds. In the event the IRS or state taxing agencies challenge tax positions taken by the Investment Funds or by the Funds, Partners of the Funds could be adversely affected. In particular, Partners in the Funds could be required to amend prior tax returns and include additional amounts of income not previously reported, and pay federal and/or state income tax at applicable rates (together with applicable penalties and interest, if any) if the tax information that Investment Funds provide to the Funds or positions taken by the Investment Funds or the Funds are determined to be materially inaccurate or otherwise change as a result of a successful challenge by the IRS or state taxing agencies.

Because the Funds expect to be treated as partnerships for federal income tax purposes, the Funds expect to deliver such tax information to Partners on IRS Schedule K-1 (not Form 1099). In light of the Master Fund’s investments in numerous Investment Funds as of the date hereof, the nature of the tax reporting on a Partner’s own federal income tax return of its allocable share of a Fund’s income, gain, loss, deduction or credit will be complicated, and the Partner will likely need the assistance of a certified public accountant or other tax professional to prepare its federal and state income tax returns. The Partner could experience a substantial increase in the amount of fees payable to such tax professionals, and such increase could be material. Investors subscribing for Shares of a Fund for the first time late in the Fund’s fiscal year (which is currently the calendar year) may wish to consider such expenses in deciding whether to subscribe at such time or to delay the subscription until the beginning of the next fiscal year. See “CERTAIN TAX CONSIDERATIONS.”

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SPECIAL RISKS OF THE TEI FUND

Changes in United States and/or Cayman Islands Law

If there are changes in the laws of the United States and/or the Cayman Islands, under which the TEI Fund and the Offshore Fund, respectively, are organized, so as to result in the inability of the TEI Fund and/or the Offshore Fund to operate as set forth in this Memorandum, there may be a material adverse effect on investors. There can be no assurance that the positions of the TEI Fund relating to the tax consequences of its investment transactions will be accepted by the tax authorities. In addition, the regulatory environment for leveraged investors, Tax-Exempt Investors and hedge funds generally is evolving. To the extent that legislative or other regulatory changes occur in the direct or indirect regulation of leveraged investors, Tax-Exempt Investors, widely-held partnerships or hedge funds, including tax regulation applicable thereto, all of which have preliminarily been discussed by members of Congress, there may be materially adverse effects on the ability of the TEI Fund to pursue its investment objective or strategies, which could force the TEI Fund to change, or even cease, its operations. For example, if Congress were to change treatment of investment in offshore corporations by Tax-Exempt Investors, the TEI Fund likely would suffer a materially adverse impact including decreased investment returns. In such circumstances, the Board would be required to assess what steps to take, including potentially eliminating the Offshore Fund or the TEI Fund. In addition, if Cayman Islands law changes such that the Offshore Fund must conduct business operations within the Cayman Islands, or pay taxes, investors in the TEI Fund would likely suffer decreased investment returns.

Investment in Offshore Fund

The Offshore Fund is not registered under the Investment Company Act, and is not subject to the investor protections offered by that act. The TEI Fund, by investing in the Offshore Fund, does not have the protections offered to investors in registered investment companies. However, the TEI Fund is the sole managing member of the Offshore Fund. Accordingly, the TEI Fund, through the Board, controls the Offshore Fund, making it unlikely that the Offshore Fund will take action contrary to the interests of investors in the TEI Fund.

ERISA Matters

Most pension and profit sharing plans, individual retirement accounts and other tax-advantaged retirement funds are subject to provisions of the Internal Revenue Code of 1986, as amended (the “Code”), the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or both, which may be relevant to a decision as to whether such an investor should invest in the TEI Fund. There may, for example, be issues as to whether such an investment is “prudent” or whether it results in “prohibited transactions.” Legal counsel should be consulted by such an investor before investing in the TEI Fund. See “CERTAIN TAX CONSIDERATIONS” and “ERISA CONSIDERATIONS.”

SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE

This section discusses certain risks related to the fact that the Master Fund is generally invested in Investment Funds.

Investments in the Investment Funds Generally

Because the Master Fund will invest in Investment Funds, the value of an investment in the Master Fund will be affected by the investment policies and decisions of the Investment Manager of each

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Investment Fund in direct proportion to the amount of Master Fund assets that are invested in each Investment Fund. The NAV of the interests of the Investment Funds, and as a result, the NAV of the Master Fund, the Offshore Fund and the Funds, will fluctuate in response to, among other things, various market and economic factors related to the markets in which the Investment Funds invest and the financial condition and prospects of issuers in which the Investment Funds invest. Certain risks related to the investment strategies and techniques utilized by the Investment Managers are described under “INVESTMENT RELATED RISKS” below.

Investment Funds Generally Not Registered

The Investment Funds generally are not registered as investment companies under the Investment Company Act. Therefore, the Master Fund, the Offshore Fund and the Funds are not entitled to the protections of the Investment Company Act with respect to investments in unregistered Investment Funds. In addition, Investment Managers of certain Investment Funds may not be registered as investment advisers under the Advisers Act. Therefore, the Master Fund as an investor in the Investment Funds managed by such Investment Managers, and the Funds as an indirect investor through their investment in the Master Fund (via, in the case of the TEI Fund, the Offshore Fund), does not have the benefit of certain of the protections of the Advisers Act. In addition, to the extent that such an unregistered Investment Manager registers, there is a risk that the Investment Manager may not comply with the requirements of the Adviser Act, or may encounter operational or regulatory difficulties that arise from such compliance requirements. The Investment Funds typically do not maintain their securities and other assets in the custody of a bank or a member of a securities exchange, as generally required of registered investment companies under SEC rules. A registered investment company that places its securities in the custody of a member of a securities exchange is required to have a written custodian agreement, which provides that securities held in custody will be at all times individually segregated from the securities of any other person and marked to clearly identify such securities as the property of such investment company and which contains other provisions designed to protect the assets of such investment company. It is anticipated that the Investment Funds generally maintain custody of their assets with brokerage firms that do not separately segregate such customer assets, as would be required in the case of registered investment companies. Under the provisions of the Securities Investor Protection Act of 1970, as amended, the bankruptcy of any such brokerage firm could have a greater adverse effect on the Master Fund than would be the case if custody of assets were maintained in accordance with the requirements applicable to registered investment companies. There is also a risk that an Investment Manager could convert assets committed to it by the Master Fund to its own use or that a custodian could convert assets committed to it by an Investment Manager to its own use. There can be no assurance that the Investment Managers or the entities they manage will comply with all applicable laws and that assets entrusted to the Investment Managers will be protected.

Investment Funds Generally Non-Diversified

Investment Funds may be non-diversified, although some Investment Funds may undertake to comply with certain investment concentration limits. Investment Funds may at certain times hold large positions in a relatively limited number of investments. Investment Funds may target or concentrate their investments in particular markets, sectors, or industries. Those Investment Funds that concentrate in a specific industry or target a specific sector also are subject to the risks of that industry or sector, which may include, but are not limited to, rapid obsolescence of technology, sensitivity to regulatory changes, minimal barriers to entry, and sensitivity to overall market swings. As a result, the NAVs of such Investment Funds may be subject to greater volatility than those of investment companies that are more fully diversified and this may negatively impact the NAV of the Master Fund, the Offshore Fund and the Funds.

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Investment Funds’ Securities Are Generally Illiquid

The securities of the Investment Funds may be illiquid. The Master Fund may not be able to dispose of Investment Fund securities that it has purchased in a timely manner and, if adverse market conditions were to develop during any period in which the Master Fund is unable to sell Investment Fund securities, the Master Fund might obtain a less favorable price than that which originally or previously prevailed for such securities.

Valuation of Investments in Investment Funds

The valuation of the Master Fund’s investments in Investment Funds is ordinarily determined based upon valuations calculated by the Independent Administrator, in many cases based on information provided by the Investment Managers of such Investment Funds. Certain securities in which the Investment Funds invest may not have a readily ascertainable market price and are valued by the Investment Managers or their administrators. In this regard, an Investment Manager may face a conflict of interest in valuing the securities, as their value will affect the Investment Manager’s compensation. The Board Valuation Committee is responsible for overseeing the Master Fund’s valuation policies, making recommendations to the Board on valuation-related matters, and overseeing implementation by the Adviser’s Valuation Committee of the Master Fund’s valuation policies that the Board of the Master Fund has approved for purposes of determining the value of securities held by the Master Fund, including the fair value of the Master Fund’s investments in Investment Funds. The Board has also authorized the establishment of the Adviser’s Valuation Committee. The Adviser’s Valuation Committee’s function, subject to the oversight of the Board Valuation Committee and the Board, is generally to review the Investment Funds’ valuation methodologies, valuation determinations, and any information provided to the Adviser’s Valuation Committee by the Adviser or the Independent Administrator. Certain members of the Adviser’s Valuation Committee may face conflicts of interest in overseeing the value of the Master Fund’s investments, as the value of the Master Fund’s investments will affect the Adviser’s compensation. Although the Adviser’s Valuation Committee reviews the valuation procedures used by all Investment Managers, neither the Adviser’s Valuation Committee, the Independent Administrator, nor the Adviser, the Board Valuation Committee or Board can confirm or review the accuracy of valuations provided by Investment Managers or their administrators.

If an Investment Manager’s valuations are consistently delayed or inaccurate, such Investment Fund interests would continue to be valued without the benefit of the Investment Manager’s valuations, and the Adviser’s Valuation Committee may determine to discount the value of the interests or value them at zero, if deemed to be the estimated fair value of such holding in keeping with the Funds’ fair valuation procedures.

Multiple Levels of Fees and Expenses

Although in many cases investor access to the Investment Funds may be limited or unavailable, an investor who meets the conditions imposed by an Investment Fund may be able to invest directly with the Investment Fund. By investing in Investment Funds indirectly through the Funds, Offshore Fund, and the Master Fund, the investor bears asset-based fees at the Funds and Master Fund level, in addition to any asset-based fees and performance-based fees and allocations at the Investment Fund level. Moreover, an investor in the Funds bears a proportionate share of the fees and expenses of the relevant Fund and the Master Fund (including organizational and private placement expenses, operating costs, sales charges, brokerage transaction expenses, and administrative fees) and, indirectly, similar expenses of the Investment

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Funds. Thus, an investor in the Funds may be subject to higher operating expenses than if he or she invested in an Investment Fund directly or in a closed-end fund which did not utilize a “fund of funds” structure.

Certain of the Investment Funds may be subject to a performance-based fee or allocation, irrespective of the performance of other Investment Funds and the Funds generally. Accordingly, an Investment Manager to an Investment Fund with positive performance may receive performance-based compensation from the Investment Fund, and thus indirectly from the Funds and their Partners, even if the Funds’ overall performance is negative. Generally, fees payable to Investment Managers of the Investment Funds will range from 0.50% to 3% (annualized) of the average NAV of the Funds’ investment. In addition, certain Investment Managers charge an incentive allocation or fee generally ranging from 10% to 30% of an Investment Fund’s net profits, although it is possible that such ranges may be exceeded for certain Investment Managers. The performance-based compensation received by an Investment Manager also may create an incentive for that Investment Manager to make investments that are riskier or more speculative than those that it might have made in the absence of the performance-based allocation. Such compensation may be based on calculations of realized and unrealized gains made by the Investment Manager without independent oversight. In addition, if performance of Investment Funds falls, Investment Fund expenses may increase as a percentage of gross returns, which could result in disproportional decreases in the Funds’ performance. Investment Fund expenses in certain instances also may remain relatively fixed and not decrease as performance falls.

Duplicative Transaction Costs

Investment decisions of the Investment Funds are generally made by their Investment Managers independently of each other. As a result, at any particular time, one Investment Fund may be purchasing securities of an issuer whose securities are being sold by another Investment Fund. Consequently, the Master Fund could indirectly incur transaction costs without accomplishing any net investment result.

Turnover

The Investment Funds may invest on the basis of short-term market considerations. The turnover rate within the Investment Funds may be significant, potentially involving substantial brokerage commissions and fees. The Master Fund will have no control over this turnover. As a result, it is anticipated that a significant portion of the Master Fund’s income and gains, if any, may be derived from ordinary income and short-term capital gains. In addition, the withdrawal of the Master Fund from an Investment Fund could involve expenses to the Master Fund under the terms of the Master Fund’s investment with that Investment Fund.

Inability to Vote

The Master Fund may hold non-voting securities or may hold contractually waived or limited its voting interest in certain Investment Funds (for example, originally to facilitate investments in smaller Investment Funds by the Legacy Master Fund) in order to avoid becoming subject to certain Investment Company Act prohibitions with respect to affiliated transactions. Although the Master Fund may hold non-voting interests, the Investment Company Act and the rules and regulations thereunder may nevertheless require the Master Fund to limit its position in any one Investment Fund in accordance with applicable regulatory requirements, as may be determined by the Master Fund in consultation with its counsel. These restrictions could change from time to time as applicable laws, rules or interpretations thereof are modified.

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To the extent the Master Fund holds non-voting securities, or has contractually forgone the right to vote in respect of the voting securities of an Investment Fund, the Master Fund will not be able to vote on matters that require the approval of the interest holders of the Investment Fund, including matters adverse to the Funds’ interests.

Investment Managers Invest Independently

The Investment Managers generally invest wholly independently of one another and may at times hold economically offsetting positions. To the extent that the Investment Managers do, in fact, hold such positions, the Master Fund’s portfolio, considered as a whole, may not achieve any gain or loss despite incurring fees and expenses in connection with such positions. In addition, Investment Managers are compensated based on the performance of their portfolios. Accordingly, there often may be times when a particular Investment Manager may receive incentive compensation in respect of its portfolio for a period even though the Funds’ NAV may have decreased during such period. Furthermore, it is possible that from time to time, various Investment Managers selected by the Adviser may be competing with each other for the same positions in one or more markets.

Investment Managers May Have Limited Capacity to Manage Additional Fund Investments

Certain Investment Managers’ trading approaches presently can accommodate only a certain amount of capital. Each Investment Manager will normally endeavor not to undertake to manage more capital than such Investment Manager’s approach can accommodate without risking a potential deterioration in returns. Accordingly, each Investment Manager has the right, in consultation with the Adviser, to refuse to manage some or all of the Master Fund’s assets. Further, in the case of Investment Managers that limit the amount of additional capital that they will accept from investors, continued sales to others would dilute the indirect participation of the Master Fund with such Investment Manager.

Indemnification of Investment Funds and Investment Managers

The Master Fund may agree to indemnify certain of the Investment Funds and the Investment Managers and their respective officers, directors, and affiliates from any liability, damage, cost, or expense arising out of, among other things, acts or omissions relating to the offer or sale of Interests. To obtain consents, the Legacy Master Fund and the Master Fund may be required to agree to jointly and severally indemnify Investment Funds and Investment Managers in connection with the division of the Legacy Master Fund’s portfolio or any related transfers of Investment Fund interests to the Master Fund, which could expose the Master Fund, and thus the Fund, to additional liabilities. The Legacy Master Fund may bear expenses of transfers imposed by Investment Funds, including fees and expenses of counsel to the Investment Funds, as well as accounting fees and expenses that the Investment Funds may incur in the future in connection with the Investment Fund’s compliance with any U.S. federal tax requirements or elections as a result of the transfers. To the extent the Legacy Master Fund does not or is unable to pay such expenses, the Master Fund may be liable for such expenses.

INVESTMENT RELATED RISKS

This section discusses the types of investments that are expected to be made by the Investment Funds (or if the Master Fund ever receives or holds investments directly, which it will generally not do except for cash and liquidity management purposes) and the principal risks associated with such investments. In general, these principal risks exist whether the investment is made by an Investment Fund

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or held by the Master Fund directly and therefore for convenience purposes, the description of such risks in terms of an Investment Fund is intended to include the same risks for investments made directly by the Master Fund. It is possible that an Investment Fund (or the Master Fund) will make (or hold) an investment that is not described below, and any such investment will be subject to its own particular risks. For purposes of this discussion, references to the activities of the Investment Funds should generally be interpreted to include the activities of an Investment Manager. The risks and considerations described below are intended to reflect the Funds’ anticipated holdings as of the date of this Memorandum. Upon commencement of operations, the Funds’ holdings will change as investments are liquidated and as a result, the risk profile of the Funds may change as well.

Risks of Investment Activities Generally

All securities investing and trading activities risk the loss of capital. No assurance can be given that the Master Fund’s or any Investment Fund’s investment activities will be successful or that the Partners will not suffer losses.

Leverage

The Investment Funds may use direct leverage by means of borrowing, or gain economic (indirect) leverage by means of certain investments. With respect to borrowing, the Master Fund, may borrow for cash management purposes and is currently limited as a fundamental policy to 5% of the Master Fund’s NAV, after taking into consideration the investment of the proceeds from the loan. The Master Fund may borrow (i) for cash management purposes in order to manage timing issues relating to capital calls, returns of capital and self-liquidation; and (ii) to pay operating expenses. Each Fund may borrow to the extent permitted by its fundamental policy on borrowing. In addition, certain Investment Funds may utilize leverage by borrowing in their investment programs. In addition, although not borrowing, use by the Investment Funds of futures contracts, forward contracts, swaps and certain other instruments will have the economic effect of financial leverage. Whether leverage takes the direct form of loans for borrowed money, or an indirect form through trading on margin or other forms of indirect borrowings, or derivative instruments, including, among others, forward contracts, futures contracts, options, swaps and reverse repurchase agreements, and other instruments and transactions that are inherently leveraged, Borrowing and making such investment has significant risk. Financial leverage magnifies exposure to the swings in prices of an asset class underlying an Instrument and results in increased volatility, which means the Fund will have the potential for greater gains, as well as the potential for greater losses, than if the Investment Funds do not borrow or use Instruments that have a leveraging effect. There is no assurance that the Investment Funds’ use of borrowing or of Instruments providing enhanced exposure will enable achieving investment objectives. The utilization of leverage, either directly or through instruments that inherently contain economic leverage, will increase the volatility of the Master Fund’s investments because leveraging tends to magnify, sometimes significantly, the effect of any increase or decrease in the exposure to an asset class and may cause volatility. In addition, buying and selling securities on margin and use of derivative instruments further increasing the volatility of the Master Fund’s investments. The use of direct or economic leverage by the Investment Funds can substantially increase the adverse impact of risks to which an investment in the Funds may be subject. Trading securities on margin results in interest charges and, depending on the amount of trading activity, such charges could be substantial. The level of interest rates generally, and the rates at which the Master Fund and the Investment Funds can borrow in particular, can affect the operating results of the Funds. The low margin deposits normally required in futures and forward trading permit a high degree of leverage; accordingly, a relatively small price movement in a futures contract can result in immediate and substantial losses to the investor. Such a high degree of leverage necessarily entails a high degree of risk.

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In the case of direct borrowing, the rights of any lenders to the Funds, the Master Fund or the Investment Funds to receive payments of interest or repayments of principal will be senior to those of the Partners or the investors in the Master Fund or such Investment Funds, respectively, and the terms of any borrowings may contain provisions that limit certain activities of the Funds, the Master Fund or the Investment Funds, including the ability to make distributions.

Highly Volatile Markets

The prices of an Investment Fund’s investments, and therefore the NAV of the Funds’ Shares, can be highly volatile. Price movements of forward contracts, futures contracts and other derivative contracts in which an Investment Fund may invest are influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments, and national and international political and economic events and policies. In addition, governments from time to time intervene, directly and by regulation, in certain markets, particularly those in currencies, financial instruments and interest rate-related futures and options. Such intervention often is intended directly to influence prices and may, together with other factors, cause all of such markets to move rapidly in the same direction because of, among other things, interest rate fluctuations. Moreover, since internationally there may be less government supervision and regulation of worldwide stock exchanges and clearinghouses than in the U.S., Investment Funds also are subject to the risk of the failure of the exchanges on which their positions trade or of their clearinghouses, and there may be a higher risk of financial irregularities and/or lack of appropriate risk monitoring and controls.

Equity and Equity-Related Instruments

Investment Funds may invest long and short in equities and equity-related instruments in their investment programs. Stocks, options and other equity-related instruments may be subject to various types of risk, including market risk, liquidity risk, counterparty credit risk, legal risk and operations risk. Equity-related instruments can involve significant economic leverage and may, in some cases, involve significant risk of loss. “Equity securities” may include common stocks, preferred stocks, interests in real estate investment trusts (“REITS”), convertible debt obligations, convertible preferred stocks, equity interests in trusts, partnerships, joint ventures or limited liability companies and similar enterprises, warrants and stock purchase rights. In general, stock values fluctuate in response to the activities of individual companies and in response to general market and economic conditions. Accordingly, the value of the stocks and other securities and instruments that an Investment Fund holds may decline over short or extended periods. The stock markets tend to be cyclical, with periods when stock prices generally rise and periods when stock prices generally decline. The volatility of equity securities means that the value of an investment in the Funds may increase or decrease.

Short Selling

Investment Funds may engage in short selling. Short selling involves selling securities which may or may not be owned and borrowing the same securities for delivery to the purchaser, with an obligation to replace the borrowed securities at a later date. Short selling allows the investor to profit from declines in securities. A short sale creates the risk of a theoretically unlimited loss, in that the price of the underlying security could theoretically increase without limit, thus increasing the cost of buying those securities to cover the short position. There can be no assurance that the security necessary to cover a short position will be available for purchase. Purchasing securities to close out the short position can itself cause the price of the securities to rise further, thereby exacerbating the loss. In addition, regulation

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modifying, preventing and/or limiting short sales may adversely affect the ability of certain Investment Funds, the Master Fund or the Funds to meet their objectives.

Fixed Income Securities

Investment Funds may invest in fixed income securities. Investment in these securities may offer opportunities for income and capital appreciation, and also may be used for temporary defensive purposes and to maintain liquidity. The Master Fund may hold such instruments in the course of cash management. Fixed income securities are obligations of the issuer to make payments of principal and/or interest on future dates, and include, among other securities: bonds, notes, and debentures issued by corporations; debt securities issued or guaranteed by the U.S. government or one of its agencies or instrumentalities or by a foreign government; municipal securities; mortgage-backed securities (“MBS”) and asset-backed securities (“ABS”). These securities may pay fixed, variable, or floating rates of interest, and may include zero coupon obligations. Fixed income securities are subject to the risk of the issuer’s or a guarantor’s inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer, and general market liquidity (i.e., market risk). In addition, MBS and ABS also may be subject to call risk and extension risk. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can either shorten (i.e., call risk) or lengthen (i.e., extension risk). In general, if interest rates on new mortgage loans fall sufficiently below the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to increase. Conversely, if mortgage loan interest rates rise above the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to decrease. In either case, a change in the prepayment rate can result in losses to investors. The same would be true of asset-backed securities, such as securities backed by car loans.

Fixed Income Risk

Certain types of fixed income securities and other credit instruments may be subject to heightened liquidity risk arising from the credit crisis beginning in 2007. Such investments include collateralized debt obligations, high-yield bonds, debt issued in leveraged buyout transactions, mortgage and asset-backed securities, and short-term asset-backed commercial paper, which became very illiquid in the latter half of 2007, and that, in many cases, have remained illiquid or relatively illiquid. General market uncertainty and consequent re-pricing of risk led to market imbalances between sellers and buyers, which in turn resulted in significant valuation uncertainties in mortgage and credit-related securities and other instruments. These conditions resulted, and in many cases continue to result in, greater volatility, less liquidity, widening credit spreads and a lack of price transparency, with many instruments remaining illiquid and of uncertain value. Such market conditions and the above factors may increase the level of difficulty encountered in valuing such securities and other credit instruments which could result in sudden and significant valuation increases or declines in the NAV of the Master Fund and the Funds.

High Yield Debt; Distressed Debt

High yield bonds (commonly known as “junk bonds”), distressed debt instruments and other lower-rated (or similar but unrated) debt securities (collectively referred to here as “high yield debt”) in which Investment Funds may invest will typically be junior to the obligations of companies to senior creditors, trade creditors and employees. The lower rating of high yield debt reflects a greater possibility that adverse changes in the financial condition of the issuer or in general economic, financial,

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competitive, regulatory or other conditions may impair the ability of the issuer to make payments of principal and interest. High yield debt securities have historically experienced greater default rates than investment grade securities. The ability of holders of high yield debt to influence a company’s affairs, especially during periods of financial distress or following an insolvency, will be substantially less than that of senior creditors.

Adverse changes in economic conditions or developments regarding the individual issuer are more likely to cause price volatility and weaken the capacity of the issuers of high-yield debt securities to make principal and interest payments than issuers of higher grade debt securities. An economic downturn affecting an issuer of high-yield debt securities may result in an increased incidence of default. In addition, the market for lower grade debt securities may be thinner and less active than for higher grade debt securities, and thus less liquid because, among other reasons, certain investors, due to their investment mandates, are precluded from owning such securities.

As with other investments, there may not be a liquid market for certain high yield debt, which could result in an Investment Fund being unable to sell such securities for an extended period of time, if at all. In addition, as with other types of investments, the market for high yield debt has historically been subject to disruptions that have caused substantial volatility in the prices of such securities. Consolidation in the financial services industry has resulted in there being fewer market makers for high yield debt, which may result in further risk of illiquidity and volatility with respect to high yield debt, and this trend may continue in the future.

Insolvency Considerations with Respect to Issuers of Indebtedness

Various laws enacted for the protection of creditors may apply to indebtedness in which the Investment Funds invest. The information in this and the following paragraph is applicable with respect to U.S. issuers subject to U.S. federal bankruptcy law. Insolvency considerations may differ with respect to other issuers. If, in a lawsuit brought by an unpaid creditor or representative of creditors of an issuer of indebtedness, a court were to find that the issuer did not receive fair consideration or reasonably equivalent value for incurring the indebtedness and that, after giving effect to such indebtedness, the issuer (i) was insolvent, (ii) was engaged in a business for which the remaining assets of such issuer constituted unreasonably small capital or (iii) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature, such court could determine to invalidate, in whole or in part, such indebtedness as a fraudulent conveyance, to subordinate such indebtedness to existing or future creditors of such issuer, or to recover amounts previously paid by such issuer in satisfaction of such indebtedness. The measure of insolvency for purposes of the foregoing will vary. Generally, an issuer would be considered insolvent at a particular time if the sum of its debts was then greater than all of its property at a fair valuation, or if the present fair saleable value of its assets was then less than the amount that would be required to pay its probable liabilities on its existing debts as they became absolute and matured. There can be no assurance as to what standard a court would apply in order to determine whether the issuer was “insolvent” after giving effect to the incurrence of the indebtedness in which an Investment Fund invested or that, regardless of the method of valuation, a court would not determine that the issuer was “insolvent” upon giving effect to such incurrence. In addition, in the event of the insolvency of an issuer of indebtedness in which an Investment Fund invests, payments made on such indebtedness could be subject to avoidance as a “preference” if made within a certain period of time (which may be as long as one year) before insolvency. In general, if payments on indebtedness are avoidable, whether as fraudulent conveyances or preferences, such payments can be recaptured from the Investment Fund to which such payments were made.

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The Funds and the Master Fund do not anticipate that the Investment Funds will engage in conduct that would form the basis for a successful cause of action based upon fraudulent conveyance, preference or equitable subordination. There can be no assurance, however, as to whether any lending institution or other party from which the Investment Fund may acquire such indebtedness engaged in any such conduct (or any other conduct that would subject such indebtedness and the Investment Fund to insolvency laws) and, if it did, as to whether such creditor claims could be asserted in a U.S. court (or in the courts of any other country) against the Investment Fund.

Indebtedness consisting of obligations of non-U.S. issuers may be subject to various laws enacted in the countries of their issuance for the protection of creditors. These insolvency considerations will differ depending on the country in which each issuer is located or domiciled and may differ depending on whether the issuer is a non-sovereign or a sovereign entity.

Non-U.S. Investments

Investment Funds may invest in securities of non-U.S. issuers and the governments of non-U.S. countries. These investments involve special risks not usually associated with investing in securities of U.S. companies or the U.S. government, including political and economic considerations, such as greater risks of expropriation and nationalization, confiscatory taxation, the potential difficulty of repatriating funds, general social, political and economic instability and adverse diplomatic developments; the possibility of the imposition of withholding or other taxes on dividends, interest, capital gain or other income; the small size of the securities markets in such countries and the low volume of trading, resulting in potential lack of liquidity and in price volatility; fluctuations in the rate of exchange between currencies and costs associated with currency conversion; and certain government policies that may restrict the Investment Funds’ investment opportunities. In addition, because non-U.S. entities are not subject to uniform accounting, auditing, and financial reporting standards, practices and requirements comparable with those applicable to U.S. companies, there may be different types of, and lower quality, information available about a non-U.S. company than a U.S. company. There is also less regulation, generally, of the securities markets in many foreign countries than there is in the U.S., and such markets may not provide the same protections available in the U.S. With respect to certain countries there may be the possibility of political, economic or social instability, the imposition of trading controls, import duties or other protectionist measures, various laws enacted for the protection of creditors, greater risks of nationalization or diplomatic developments which could materially adversely affect the Investment Funds’ investments in those countries. Furthermore, individual economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency, and balance of payments position. An Investment Fund’s investment in non-U.S. countries may also be subject to withholding or other taxes, which may be significant and may reduce the Investment Fund’s returns.

Brokerage commissions, custodial services and other costs relating to investment in international securities markets generally are more expensive than in the U.S. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, such procedures have been unable to keep pace with the volume of securities transactions, thus making it difficult to conduct such transactions.

Investment in sovereign debt obligations of non-U.S. governments involves additional risks not present in debt obligations of corporate issuers and the U.S. government. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay

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principal or pay interest when due in accordance with the terms of such debt, and an Investment Fund may have limited recourse to compel payment in the event of a default. A sovereign debtor’s willingness or ability to repay principal and to pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign currency reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor’s policy toward international lenders, and the political constraints to which the sovereign debtor may be subject. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt to a greater extent than the volatility inherent in debt obligations of other types of issues.

Investment in Emerging Markets

The Master Fund may hold investments in Investment Funds that focus on “emerging markets” (defined below), and the Adviser anticipates that this will continue. Investment Funds may invest in securities of companies based in emerging markets or issued by the governments of such countries. Securities traded in certain emerging markets may be subject to risks due to the inexperience of financial intermediaries, the lack of modern technology, the lack of a sufficient capital base to expand business operations, and the possibility of temporary or permanent termination of trading. Political and economic structures in many emerging markets may be undergoing significant evolution and rapid development, and emerging markets may lack the social, political and economic stability characteristics of more developed countries. As a result, the risks relating to investments in foreign securities described above, including the possibility of nationalization or expropriation, may be heightened. In addition, certain countries may restrict or prohibit investment opportunities in issuers or industries deemed important to national interests. Such restrictions may affect the market price, liquidity and rights of securities that may be purchased by Investment Funds. Settlement mechanisms in emerging securities markets may be less efficient and less reliable than in more developed markets and placing securities with a custodian or broker-dealer in an emerging country also may present considerable risks. The small size of securities markets in such countries and the low volume of trading may result in a lack of liquidity and in substantially greater price volatility. Many emerging market countries have experienced substantial, and in some periods extremely high rates of inflation for many years. Inflation and rapid fluctuations in inflation rates and corresponding currency devaluations and fluctuations in the rate of exchange between currencies and costs associated with currency conversion have had and may continue to have negative effects on the economies and securities markets of certain emerging market countries. In addition, accounting and financial reporting standards that prevail in certain of such countries are not equivalent to standards in more developed countries and, consequently, less information is available to investors in companies located in such countries.

Foreign Currency Transactions and Exchange Rate Risk

Investment Funds may invest in equity and equity-related securities denominated in non-U.S. currencies and in other financial instruments, the price of which is determined with reference to such currencies. Investment Funds may engage in foreign currency transactions for a variety of purposes, including to “lock in” the U.S. dollar price of the security, between the trade and the settlement dates, the value of a security an Investment Fund has agreed to buy or sell, or to hedge the U.S. dollar value of securities the Investment Fund already owns. The Investment Funds also may engage in foreign currency transactions for non-hedging purposes to generate returns. The Master Fund will, however, value its investments and other assets in U.S. dollars. To the extent unhedged, the value of the Master Fund’s net assets will fluctuate with U.S. dollar exchange rates as well as with price changes of an Investment

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Fund’s investments in the various local markets and currencies. Forward currency contracts and options may be utilized by Investment Funds to hedge against currency fluctuations, but the Investment Funds are not required to utilize such techniques, and there can be no assurance that such hedging transactions will be available or, even if undertaken, effective.

Money Market and Other Liquid Investments

The Master Fund may invest for cash management purposes, and the Investment Funds may invest for defensive purposes, cash management purposes or otherwise, some or all of their assets in fixed income securities, money market instruments, and money market mutual funds, or hold cash or cash equivalents in such amounts as their Investment Managers deem appropriate under the circumstances. Money market instruments are short-term fixed income obligations, which generally have remaining maturities of one year or less, and may include U.S. government securities, commercial paper, certificates of deposit, bankers’ acceptances issued by domestic branches of U.S. banks that are members of the Federal Deposit Insurance Corporation, and repurchase agreements. Such instruments may be adversely affected by market and economic events, such as a sharp rise in prevailing short-term interest rates; adverse developments in the banking industry, which issues or guarantees many money market securities; adverse economic, political or other developments affecting domestic issuers of money market securities; changes in the credit quality of issuers; and default by a counterparty.

Restricted and Illiquid Investments

Investment Funds may invest a portion or all of the value of their assets in restricted securities and other investments that are illiquid. Restricted securities are securities that may not be sold to the public without an effective registration statement under the Securities Act or, if they are unregistered, may be sold only in a privately negotiated transaction or pursuant to an exemption from registration. These may include restricted securities that can be offered and sold only to “qualified institutional buyers” under Rule 144A of the Securities Act. There is no limit to the percentage of an Investment Fund’s net assets that may be invested in illiquid securities.

Positions in restricted or non-publicly traded securities, securities on foreign exchanges and certain futures contracts may be illiquid because certain exchanges limit fluctuations in certain securities and futures contract prices during a single day by regulations referred to as “daily price fluctuation limits” or “daily limits.” Under such daily limits, during a single trading day no trades may be executed at prices beyond the daily limits. Once the price of a particular security or futures contract has increased or decreased by an amount equal to the daily limit, positions in that security or contract can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. This constraint could prevent the Investment Funds from promptly liquidating unfavorable positions and subject the Master Fund, and therefore the Funds, to substantial losses.

Convergence Risk

The Master Fund will hold Investment Funds whose Investment Managers take long positions in securities believed to be undervalued and short positions in securities believed to be overvalued. In the event that the perceived mispricings underlying one or more Investment Managers’ trading positions were to fail to converge toward, or were to diverge further from, relationships expected by such Investment Managers, the Master Fund, and therefore the Funds, may incur significant losses.

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Corporate Event Risks

Substantial transaction failure risks are involved in companies that are the subject of publicly disclosed mergers, takeover bids, exchange offers, tender offers, spin-offs, liquidations, corporate restructuring, and other similar transactions. Similarly, substantial risks are involved in investments in companies facing negative publicity or uncertain litigation. Thus, there can be no assurance that any expected transaction will take place, that negative publicity will not continue to affect a company or that litigation will be resolved in a company’s favor. Certain transactions are dependent on one or more factors to become effective, such as market conditions which may lead to unexpected positive or negative changes in a company profile, shareholder approval, regulatory and various other third party constraints, changes in earnings or business lines or shareholder activism as well as many other factors. No assurance can be given that the transactions entered into will result in a profitable investment for the Investment Funds or that the Investment Funds will not incur substantial losses.

Issuer Risks

The issuers of securities acquired by Investment Funds sometimes involve a high degree of business and financial risk. These companies may be in an early stage of development, may not have a proven operating history, may be operating at a loss or have significant variations in operating results, may be engaged in a rapidly changing business with products subject to a substantial risk of obsolescence, may require substantial additional capital to support their operations, to finance expansion or to maintain their competitive position, or may otherwise have a weak financial condition.

Issuers of securities acquired by Investment Funds may be highly leveraged. Leverage may have important adverse consequences to these companies and an Investment Fund as an investor. These companies may be subject to restrictive financial and operating covenants. The leverage may impair these companies’ ability to finance their future operations and capital needs. As a result, these companies’ flexibility to respond to changing business and economic conditions and to business opportunities may be limited. A leveraged company’s income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used.

In addition, such companies may face intense competition, including competition from companies with greater financial resources, more extensive development, manufacturing, marketing, and other capabilities, and a larger number of qualified managerial and technical personnel.

Small and Mid-Capitalization Companies

Investment Funds may invest in securities of small capitalization companies, mid-capitalization companies and recently organized companies and, conversely, the Investment Funds may establish significant short positions in such securities. Historically, such securities, and particularly securities of smaller capitalization companies, have been more volatile in price than those of larger capitalized, more established companies. Many of the risks apply equally to mid-capitalization companies, and such companies are included in the term “small capitalization companies” for the purposes of this risk factor. The securities of small capitalization and recently organized companies pose greater investment risks because such companies may have limited product lines, distribution channels and financial and managerial resources. In particular, small capitalization companies may be operating at a loss or have significant variations in operating results; may be engaged in a rapidly changing business with products subject to substantial risk of obsolescence; may require substantial additional capital to support their

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operations, to finance expansion or to maintain their competitive position; and may have substantial borrowings or may otherwise have a weak financial condition. In addition, these companies may face intense competition, including competition from companies with greater financial resources, more extensive development, manufacturing, marketing, and other capabilities, and a larger number of qualified managerial and technical personnel. Further, there is often less publicly available information concerning such companies than for larger, more established businesses. The equity securities of small capitalization companies are often traded over-the-counter or on regional exchanges and may not be traded in the volumes typical on a national securities exchange. Consequently, the Investment Funds or entities in which the Investment Funds invest may be required to dispose of such securities or cover a short position over a longer (and potentially less favorable) period of time than is required to dispose of or cover a short position with respect to the securities of larger, more established companies. Investments in small capitalization companies also may be more difficult to value than other types of securities because of the foregoing considerations as well as lower trading volumes. Investments in companies with limited or no operating histories are more speculative and entail greater risk than do investments in companies with an established operating record.

Additionally, transaction costs for these types of investments are often higher than those of larger capitalization companies.

Exchange Traded Funds

Investment Funds may purchase and sell shares of exchange traded funds (“ETFs”), which are a type of investment company bought and sold on a securities exchange. An ETF represents a fixed portfolio of securities designed to track a particular market index. A fund could purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market or to hedge other investments. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although lack of liquidity in an ETF could result in it being more volatile. ETFs also have management fees that increase their costs. As a shareholder of an ETF directly, the Master Fund would bear its pro rata portion of the ETF’s expenses, including advisory fees. Similarly, an Investment Fund investing in ETFs also would bear its pro rata portion of the ETF’s expenses, including advisory fees, which the Master Fund indirectly would bear by investing in the Investment Fund. These expenses would be in addition to the fees and other expenses that the Fund or Investment Fund bears directly in connection with its own operations.

Purchasing Securities in Initial Public Offerings

Investment Funds may purchase securities of companies in initial public offerings or shortly after those offerings are complete. Special risks associated with these securities may include a limited number of shares available for trading, lack of a trading history, lack of investor knowledge of the issuer, and limited or no operating history. These factors may contribute to substantial price volatility for the shares of these companies. The limited number of shares available for trading in some initial public offerings may make it more difficult for an Investment Fund to buy or sell significant amounts of shares without an unfavorable effect on prevailing market prices. In addition, some companies in initial public offerings are involved in relatively new industries or lines of business, which may not be widely understood by investors. Some of these companies may be undercapitalized or regarded as developmental stage companies, without revenues or operating income, or near-term prospects of achieving revenues or operating income.

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Risks Associated with Derivative Instruments

Investment Funds may invest in, or enter into transactions involving, derivative instruments. These are financial instruments that derive their performance, at least in part, from the performance of an underlying asset, index, or interest rate. Examples of derivatives include, but are not limited to, futures contracts, options contracts, and options on futures contracts. A futures contract is an exchange-traded agreement between two parties, a buyer and a seller, to exchange a particular commodity or financial instrument at a specific price on a specific date in the future. An option transaction generally involves a right, which may or may not be exercised, to buy or sell a commodity or financial instrument at a particular price on a specified future date.

An Investment Fund’s use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in securities or more traditional investments, depending upon the characteristics of the particular derivative and the Investment Fund’s portfolio as a whole. Derivatives permit an Investment Fund to increase or decrease the level of risk of its portfolio, or change the character of the risk to which its portfolio is exposed, in much the same way as the Investment Fund can increase or decrease the level of risk, or change the character of the risk, of its portfolio by making investments in specific securities.

Derivatives may entail investment exposures that are greater than their cost would suggest, meaning that a small investment in derivatives could have a large potential impact on an Investment Fund’s and potentially the Master Fund’s performance. If an Investment Fund invests in derivatives at inopportune times or judges market conditions incorrectly, such investments may lower the Investment Fund’s return or result in a loss. An Investment Fund also could experience losses if derivatives are poorly correlated with its other investments, or if an Investment Fund is unable to liquidate its position because of an illiquid secondary market. The market for many derivatives is, or suddenly can become, illiquid. Changes in liquidity may result in significant, rapid, and unpredictable changes in the prices for derivatives.

The Investment Funds’ engagement in these transactions involves risk of loss to the Master Fund that could materially adversely affect the value of the Master Fund’s and the Funds’ respective net assets. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time.

Futures Contracts

Investment Funds may enter into futures contracts. The primary risks associated with the use of futures contracts are (a) the imperfect correlation between the change in market value of the instruments held by the Investment Funds and the price of the futures contract; (b) possible lack of a liquid secondary market for a futures contract and the resulting inability to close a futures contract when desired; (c) losses caused by unanticipated market movements, which are potentially unlimited; (d) the Investment Manager’s inability to predict correctly the direction of securities prices, interest rates, currency exchange rates and other economic factors; (e) the possibility that the counterparty will default in the performance of its obligations; and (f) if an Investment Fund has insufficient cash, it may have to sell securities from its portfolio to meet daily variation margin requirements, and the Investment Fund may have to sell securities at a time when it may be disadvantageous to do so.

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Commodities Risk

Exposure to the commodities markets may subject the Funds to greater volatility than investments in traditional securities. The value of commodity-linked derivative investments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or sectors affecting a particular industry or commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatory developments.

Forward Contracts

Investment Funds may enter into forward contracts, which are the purchase or sale of a specific quantity of a commodity, government security, foreign currency, or other financial instrument at the current or spot price, with delivery and settlement at a specified future date.

Because it is a completed contract, a purchase forward contract can be a cover for the sale of a futures contract. The Investment Funds may enter into forward contracts for hedging purposes and non-hedging purposes (i.e., to increase returns). Forward contracts are transactions involving an Investment Fund’s obligation to purchase or sell a specific instrument at a future date at a specified price. Forward contracts may be used by the Investment Funds for hedging purposes to protect against uncertainty in the level of future foreign currency exchange rates, such as when an Investment Manager of an Investment Fund anticipates purchasing or selling a foreign security. For example, this technique would allow the Investment Fund to “lock in” the U.S. dollar price of the security. Forward contracts also may be used to attempt to protect the value of an Investment Fund’s existing holdings of foreign securities. There may be, however, an imperfect correlation between an Investment Fund’s foreign securities holdings and the forward contracts entered into with respect to those holdings. Forward contracts also may be used for non-hedging purposes to pursue an Investment Fund’s investment objective, such as when an Investment Fund’s Investment Manager anticipates that particular foreign currencies will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Investment Fund’s portfolio. There is no requirement that the Investment Funds hedge all or any portion of their exposure to foreign currency risks.

Forward contracts and options thereon, unlike futures contracts, are not traded on exchanges and are not standardized; rather, banks and dealers act as principals in these markets, negotiating each transaction on an individual basis. Forward and “cash” trading is substantially unregulated; there is no limitation on daily price movements and speculative position limits are not applicable. The principals who deal in the forward markets are not required to continue to make markets in the currencies or commodities they trade and these markets can experience periods of illiquidity, sometimes of significant duration. There have been periods during which certain participants in these markets have refused to quote prices for certain currencies or commodities or have quoted prices with an unusually wide spread between the price at which they were prepared to buy and that at which they were prepared to sell. Disruptions can occur in any market traded by an Investment Manager due to unusually high trading volume, political intervention or other factors. Arrangements to trade forward contracts may be made with only one or a few counterparties, and liquidity problems therefore might be greater than if such arrangements were made with numerous counterparties. The imposition of controls by governmental authorities might also limit such forward (and futures) trading to less than that which the Investment Manager would otherwise recommend, to the possible detriment of an Investment Fund. Market illiquidity or disruption could result in major losses to an Investment Fund. In addition, Investment Funds will be exposed to credit risks with regard to counterparties with whom the Investment Funds trades as well as risks relating to settlement default. Such risks could result in substantial losses to the Investment Fund, the Master Fund and the Funds.

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Swap Agreements

Investment Funds may enter into equity, interest rate, index, currency rate, total return and other types of swap agreements. The transactions are entered into in an attempt to obtain a particular return without the need to actually purchase the reference asset. Swap agreements can be individually negotiated and structured to include exposure to a variety of different types of investments or market factors. Depending on their structure, swap agreements may increase or decrease the Investment Funds’ exposure to long-term or short-term interest rates (in the U.S. or abroad), foreign currency values, mortgage securities, corporate borrowing rates, or other factors such as security prices, baskets of securities, or inflation rates.

Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than a year. In a standard swap transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a “basket” of securities representing a particular index.

Swap agreements will tend to shift investment exposure from one type of investment to another. For example, if an Investment Fund agrees to exchange payments in dollars for payments in foreign currency, the swap agreement would tend to decrease the Master Fund’s exposure to U.S. interest rates and increase its exposure to foreign currency and interest rates. Depending on how they are used, swap agreements may increase or decrease the overall volatility of an Investment Fund’s portfolio.

Most swap agreements entered into by an Investment Fund would require the calculation of the obligations of the parties to the agreements on a “net basis.” Consequently, an Investment Fund’s current obligations (or rights) under a swap agreement generally will be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”). The risk of loss with respect to swaps is limited to the net amount of interest payments that an Investment Fund is contractually obligated to make. If the other party to a swap (“Counterparty”) defaults, an Investment Fund’s risk of loss consists of the net amount of payments that the Investment Fund contractually is entitled to receive. If a swap agreement calls for payments by the Investment Fund, it must be prepared to make such payments when due. In addition, if the Counterparty’s creditworthiness declined, the value of a swap agreement would be likely to decline, potentially resulting in losses to the Investment Fund. Recent economic events have increased the potential for, and thus risk involved with, Counterparty creditworthiness.

Structured Securities

Investment Funds may invest in structured securities. Structured securities are securities whose value is determined by reference to changes in the value of specific currencies, interest rates, commodities, indexes or other financial indicators (each, a “Reference”) or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference. Structured securities may be positively or negatively indexed, so that appreciation of the Reference may produce an increase or decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rates or the value of the security at maturity may be a multiple of changes in the value of the Reference.

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Consequently, structured securities may present a greater degree of market risk than other types of fixed income securities and may be more volatile, less liquid and more difficult to price accurately than less complex securities.

When-Issued and Forward Commitment Securities

Investment Funds may purchase securities on a “when-issued” basis and may purchase or sell securities on a “forward commitment” basis in order to hedge against anticipated changes in interest rates and prices or for speculative purposes. These transactions involve a commitment by an Investment Fund to purchase or sell securities at a future date (ordinarily at least one or two months later). The price of the underlying securities, which is generally expressed in terms of yield, is fixed at the time the commitment is made, but delivery and payment for the securities takes place at a later date. No income accrues on securities that have been purchased pursuant to a forward commitment or on a when-issued basis prior to delivery to the Investment Fund. When-issued securities and forward commitments may be sold prior to the settlement date. If an Investment Fund disposes of the right to acquire a when-issued security prior to its acquisition or disposes of its right to deliver or receive against a forward commitment, it may incur a gain or loss. There is a risk that securities purchased on a when-issued basis may not be delivered and that the purchaser of securities sold by an Investment Fund on a forward basis will not honor its purchase obligation. In such cases, an Investment Fund may incur a loss.

Derivatives with Respect to High Yield and Other Indebtedness

In addition to the credit risks associated with holding high yield debt securities, with respect to derivatives involving high yield and other debt, an Investment Fund will usually have a contractual relationship only with the Counterparty of the derivative, and not with the issuer of the indebtedness. An Investment Fund generally will have no right to directly enforce compliance by the issuer with the terms of the derivative nor any rights of set-off against the issuer, nor have any voting rights with respect to the indebtedness. An Investment Fund will not directly benefit from the collateral supporting the underlying indebtedness and will not have the benefit of the remedies that would normally be available to a holder of the indebtedness. In addition, in the event of the insolvency of the Counterparty to the derivative, the Investment Fund will be treated as a general creditor of such Counterparty, and will not have any claim with respect to the underlying indebtedness. Consequently, the Investment Fund will be subject to the credit risk of the Counterparty as well as that of the issuer of the indebtedness. As a result, concentrations of such derivatives in any one Counterparty subject the Investment Fund to an additional degree of risk with respect to defaults by such Counterparty as well as by the issuer of the underlying indebtedness.

Failure of the Investment Funds’ Counterparties, Brokers and Exchanges

Investment Funds will be exposed to the credit risk of the Counterparties with which, or the brokers, dealers and exchanges through which, they deal, whether they engage in exchange-traded or off-exchange transactions. An Investment Fund may be subject to risk of loss of its assets on deposit with a broker in the event of the broker’s bankruptcy, the bankruptcy of any clearing broker through which the broker executes and clears transactions on behalf of the Investment Fund, or the bankruptcy of an exchange clearing house. Although the CEA requires a commodity broker to segregate the funds of its customers, if a commodity broker fails to properly segregate customer funds, the Investment Fund may be subject to a risk of loss of its funds on deposit with such broker in the event of such broker’s bankruptcy or insolvency. The Investment Fund may be subject to risk of loss of its funds on deposit with foreign brokers because foreign regulatory bodies may not require such brokers to segregate customer funds. The

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Investment Fund may be required to post margin for its foreign exchange transactions either with their broker or other foreign exchange dealers who are not required to segregate funds (although such funds are generally maintained in separate accounts on the foreign exchange dealer’s books and records in the name of the Investment Fund). Under certain circumstances, such as the inability of another customer of the commodity broker or foreign exchange dealer or the commodity broker or foreign exchange dealer itself to satisfy substantial deficiencies in such other customer’s account, the Investment Fund may be subject to a risk of loss of its funds on deposit with such broker or dealer, even if such funds are properly segregated. In the case of any such bankruptcy or customer loss, the Investment Fund might recover, even in respect of property specifically traceable to the Investment Fund, only a pro rata share of all property available for distribution to all of such broker’s or dealer’s customers.

Many of the markets in which the Investment Funds effect their transactions are “over-the-counter” or “interdealer” markets. Participants in these markets are typically not subject to credit evaluation and regulatory oversight as are members of “exchange-based” markets. To the extent an Investment Fund invests in swaps, derivatives or synthetic instruments, or other over-the-counter transactions in these markets, the Investment Fund may take a credit risk with regard to parties with which it trades and also may bear the risk of settlement default. These risks may differ materially from those involved in exchange-traded transactions, which generally are characterized by clearing organization guarantees, daily marking-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions entered into directly between two Counterparties generally do not benefit from these protections, which in turn may subject an Investment Fund to the risk that a Counterparty will not settle a transaction in accordance with agreed terms and conditions because of a dispute over the terms of the contract or because of a credit or liquidity problem. Such “Counterparty risk” is increased for contracts with longer maturities when events may intervene to prevent settlement. The ability of the Investment Funds to transact business with any one or any number of Counterparties, the lack of any independent evaluation of the Counterparties’ financial capabilities or their creditworthiness, and the absence of a regulated market to facilitate settlement, may increase the potential for losses by the Master Fund and, therefore, the Funds.

In addition, certain of the Investment Funds may engage in direct or indirect trading of securities, currencies, forward contracts, options, swaps and repurchase agreements on a principal basis. As such, an Investment Fund and/or the Investment Managers as transferee or Counterparty could experience both delays in liquidating the underlying security, future or other investment and losses, including: (a) the risk of the inability or refusal to perform with respect to such transactions on the part of the principals with which the Investment Fund trades; (b) possible decline in the value of any collateral during the period in which the Investment Fund seeks to enforce its rights with respect to such collateral; (c) possible subnormal levels of income and lack of access to income during such period; (d) expenses of enforcing its rights; and (e) legal uncertainty concerning the enforceability of certain rights under swap agreements and possible lack of priority against collateral posted under the swap agreements. Any such failure or refusal, whether due to insolvency, bankruptcy or other causes, could subject the Investment Fund, and in turn the Master Fund and the Funds, to substantial losses. The Investment Fund will not be excused from performance on any such transactions due to the default of third parties in respect of other trades which in the Investment Fund’s trading strategies were to have substantially offset such contracts.

To the extent legislation is adopted regulating or affecting derivatives, banks or other financial organizations including hedge funds, it could have a significant negative impact on existing counterparties for many types of instruments and transactions. While impossible to predict, legislative change could result in a material adverse impact on many investment strategies employed by the Investment Funds.

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Growth Stock Risk

Certain Investment Funds invest in “growth” stocks. Securities of growth companies may be more volatile since such companies usually invest a high portion of earnings in their business, and they may lack the dividends of value stocks that can cushion stock prices in a falling market. In addition, earnings disappointments often lead to sharply falling prices because investors buy growth stocks in anticipation of superior earnings growth.

Value Stock Risk

Certain Investment Funds invest in “value” stocks. An Investment Manager to an Investment Fund may be wrong in its assessment of a company’s value and the stocks the Investment Fund holds may not reach what the Investment Manager believes are their full values. A particular risk of an Investment Fund’s value approach is that some holdings may not recover and provide the capital growth anticipated or a stock judged to be undervalued may actually be appropriately priced. Further, because the prices of value-oriented securities tend to correlate more closely with economic cycles than growth-oriented securities, they generally are more sensitive to changing economic conditions, such as changes in interest rates, corporate earnings, and industrial production. The market may not favor value-oriented stocks and may not favor equities at all. During those periods, the Investment Fund’s relative performance may suffer.

Convertible Securities Risk

Certain Investment Funds may invest in convertible securities. The value of convertible securities may fall when interest rates rise and increase when interest rates fall. Convertible securities with longer maturities tend to be more sensitive to changes in interest rates, usually making them more volatile than convertible securities with shorter maturities. Their value also tends to change whenever the market value of the underlying common or preferred stock fluctuates. An Investment Fund could lose money if the issuer of a convertible security is unable to meet its financial obligations or goes bankrupt.

Arbitrage Strategies Risk

Certain Investment Funds may invest in various arbitrage strategies, including convertible arbitrage, merger/event-driven arbitrage, fixed income arbitrage, volatility arbitrage and statistical arbitrage. Arbitrage investment typically seeks to take advantage of temporary perceived inefficiencies in the pricing of certain assets. Through research and analysis, arbitrage investors seek to find investment opportunities that have not been deemed to be viable by other investors. Such investments may be available only cyclically or not at all. Furthermore, if assumptions used in the research and analysis of the arbitrage investment are incorrect or if the model used to evaluate arbitrage investments is flawed, arbitrage strategies may be unsuccessful.

Global Macro Investing Risk

Investment Managers using global macro strategies typically seek to generate income and/or capital appreciation through a portfolio of investments focused on macro-economic opportunities across numerous markets and instruments. Such strategies rely on the use of, among other things, currency and derivative markets, each of which bear their own risks, as well as certain assumptions about global macro-economic trends. There can be no assurance that such macro-economic assumptions will prove to be correct.

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Long/Short Public Equity

Long/short public equity strategy Investment Managers make investments in publicly traded equity instruments in developed countries (generally). This strategy involves identifying securities that are mispriced relative to related securities, groups of securities, or the overall market. The strategy may rely on the use of derivatives, leverage and a number of assumptions about the intrinsic value of publicly traded equity instruments. There can be no assurance that such assumptions will prove to be correct or that the strategy will be implemented correctly.

Energy/Natural Resources Investing Risk

The production and marketing of commodities, energy and natural resources may be affected by actions and changes in governments. Securities of such companies may be subject to broad price fluctuations, reflecting volatility of energy and basic materials prices and possible instability of supply of various hard assets, as well as changes in demand due to international economic conditions. In addition, some such companies also may be subject to the risks of mining and oil drilling, and the risks of other hazards, such as fire, drought, and increased regulatory and environmental costs.

Real Estate

Holdings in real estate, including REITs may subject a fund to risks associated with the ownership of real estate, including terrorist attacks, war or other acts that destroy real property (in addition to securities market risks). Some REITs may invest in a limited number of properties, in a narrow geographic area, or in a single property type, which increases the risk that a fund could be unfavorably affected by the poor performance of a single investment or investment type. These companies are also sensitive to factors such as changes in real estate values and property taxes, interest rates, cash flow of underlying real estate assets, supply and demand, and the management skill and creditworthiness of the issuer. Borrowers could default on or sell investments the REIT holds, which could reduce the cash flow needed to make distributions to investors. In addition, REITs also may be affected by tax and regulatory requirements in that a REIT may not qualify for preferential tax treatments or exemptions. REITs require specialized management and pay management expenses. Securities issued by private partnerships in real estate may be more illiquid than securities issued by other Investment funds generally, because the partnerships’ underlying real estate investments may tend to be less liquid than other types of investments.

Private Equity

Investment in private equity involves the same types of risks associated with an investment in any operating company. However, securities issued by private partnerships investing in private equity investments may be more illiquid than securities issued by other Investment Funds generally, because the partnerships’ underlying investments may tend to be less liquid than other types of investments. Attractive investment opportunities in private equity may occur only periodically, if at all.

Investment Funds’ Investment Strategies

Investment Managers will, among other things, seek to utilize specialized investment strategies, follow allocation methodologies, apply investment models or assumptions, achieve a certain level of performance relative to specified benchmarks, and enter into hedging and other strategies intended, among other things, to affect the Investment Funds’ performance, risk levels, and/or market correlation.

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There can be no assurance that any Investment Manager will have success in achieving any goal related to such practices. The Investment Managers may be unable to or may choose in their judgment not to seek to achieve such goals.

The success of an Investment Manager’s trading activities will depend on, among other things, the Investment Manager’s ability to identify overvalued and undervalued investment opportunities and to exploit price discrepancies in the capital markets. Identification and exploitation of the investment strategies to be pursued by an Investment Manager involve a high degree of uncertainty. No assurance can be given that the Investment Managers will be able to locate suitable investment opportunities in which to deploy all their capital. A reduction in the volatility and pricing inefficiency of the markets in which an Investment Manager may seek to invest, as well as other market factors, will reduce the scope for an Investment Manager’s investment strategies.

Limits of Risk Disclosure

The above discussions relating to various risks associated with the Master Fund, the Funds, the Shares, and the Investment Funds are not, and are not intended to be, a complete enumeration or explanation of the risks involved in an investment in the Funds. Prospective investors should read this entire Memorandum and the LP Agreement and should consult with their own advisers before deciding whether to invest in the Funds. In addition, as the Master Fund’s or the Funds’ investment program or market conditions change or develop over time, an investment in the Funds may be subject to risk factors not currently contemplated or described in this Memorandum.

IN VIEW OF THE RISKS NOTED ABOVE, THE FUNDS SHOULD BE CONSIDERED A LONG-TERM AND ILLIQUID INVESTMENT AND INVESTORS SHOULD INVEST IN THE FUNDS ONLY IF THEY CAN MEET THEIR FORESEEABLE LIQUIDITY NEEDS WITH RESOURCES OUTSIDE OF AN INVESTMENT IN THE FUNDS.

NO GUARANTEE OR REPRESENTATION IS MADE THAT THE INVESTMENT PROGRAM OF THE FUNDS, THE MASTER FUND OR ANY INVESTMENT FUND WILL BE SUCCESSFUL, THAT THE VARIOUS INVESTMENT FUNDS SELECTED WILL PRODUCE POSITIVE RETURNS OR THAT THE FUNDS WILL ACHIEVE THEIR INVESTMENT OBJECTIVE.

MANAGEMENT OF THE FUNDS

The General Partner

The Endowment Fund GP, L.P., a Delaware limited partnership, serves as the General Partner. The General Partner currently serves and may in the future serve as general partner of other registered investment companies and/or unregistered investment funds. The General Partner is an affiliate of the Adviser. The General Partner retains all rights, duties and powers to manage the affairs of the Funds that may not be delegated under Delaware law, and that are not otherwise delegated by the General Partner to the Board or assumed by the Adviser pursuant to the terms of the Investment Management Agreement. The General Partner, among other things, acts as Tax Matters Partner (as defined below in “CERTAIN TAX CONSIDERATIONS”). The General Partner may be removed by vote of the Board, or by vote of Partners holding not less than 80% of the total number of votes eligible to be cast by all Partners.

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The Board of Directors

The General Partner, to the fullest extent permitted by applicable law, has irrevocably delegated to the Board its rights and powers to monitor and oversee the business affairs of the Funds, including the complete and exclusive authority to oversee and establish policies regarding the management, conduct and operation of the Funds’ business. Accordingly, the Board has overall responsibility for the management and supervision of the business operations of the Funds. The Board exercises the same powers, authority and responsibilities on behalf of the Funds as are customarily exercised by the directors of an investment company organized as a corporation and registered under the Investment Company Act. The Directors, in their capacities as such, are not general partners of the Funds and, accordingly, each Director in his or her capacity as such has no liability as a general partner. Directors will not contribute to the capital of the Funds in their capacity as Directors, but may subscribe for Shares as limited partners, subject to the eligibility requirements described in this Memorandum.

A majority of the Directors are Independent Directors. To the extent permitted by the Investment Company Act and other applicable law, the Board may delegate any of its rights, powers and authority to, among others, any person, including without limitation, the officers of the Funds, the Adviser or any committee of the Board. See “Directors, Officers and Portfolio Management” for the identities of the Directors and executive officers of the Funds, brief biographical information regarding each of them, and other information regarding the Directors.

Directors, Officers and Portfolio Management

The Funds’ operations are managed under the direction and oversight of the Board. Each Director serves for an indefinite term or until he or she reaches mandatory retirement, if any, as established by the Board. The Board appoints officers of the Funds who are responsible for the Funds’ day-to-day business decisions based on policies set by the Board. The officers serve at the pleasure of the Board.

The Directors and officers of the Funds also may be directors or officers of some or all of the other registered investment companies managed by the Adviser or its affiliates. The table below shows, for each Director and executive officer, his or her full name, address and age, the position held with the Funds, the length of time served in that position, his or her principal occupations during the last five years, the number of portfolios in the Funds Complex (as defined below) overseen by the Director, and other directorships held by such Director for at least the past five years. Unless otherwise noted, each principal occupation and other directorship has been held for the past five years. The address of each Director and officer is c/o The Endowment Funds, 4265 San Felipe, Suite 800, Houston, Texas 77027.

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Interested Director

Name and Age*	Position(s) with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex(2) Overseen	Other Directorships During  the Past 5 Years
John A. Blaisdell(1) Age: 52	Director, Co-Principal Executive Officer	Since 2014	Member, Investment Committee of the Adviser; Managing Director of Salient.	9	The Endowment Funds (investment companies) (six funds) since 2004; Salient Alternative Strategies Funds (investment companies) (two funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (five funds) since 2012.

* As of December 31, 2013.

⁽¹⁾  This person’s status as an “interested” director arises from his affiliation with the Adviser.

⁽²⁾  The Fund Complex includes the Funds, the Master Fund and the Legacy Funds.

Independent Directors

Name and Age*	Position Held with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex(1) Overseen	Other Directorships During  the Past 5 Years
Jonathan P. Carroll Age: 51	Director	Since 2014	President, Lazarus Financial LLC (holding company) since 2006; private investor for past six years.	9	The Endowment Funds (investment companies) (six funds) since 2004; Salient Alternative Strategies Funds (investment companies) (two funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (five funds) since 2012; LRR Energy, L.P. (energy company) since 2014.

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Name and Age*	Position Held with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex(1) Overseen	Other Directorships During  the Past 5 Years
Richard C. Johnson Age: 75	Director	Since 2014	Senior Partner (retired), Baker Botts LLP (law firm), since 2002; Managing Partner, Baker Botts, 1998 to 2002; practiced law at Baker Botts, 1966 to 2002 (1972 to 2002 as a partner).	9	The Endowment Funds (investment companies) (six funds) since 2004; Salient Alternative Strategies Funds (investment companies) (two funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (five funds) since 2012.
G. Edward Powell Age: 77	Director	Since 2014	Principal, Mills & Stowell (private equity), since 2002; Managing Partner, Price Waterhouse & Co. (Houston office), 1982 to 1994.	9	The Endowment Funds (investment companies) (six funds) since 2004; Salient Alternative Strategies Funds (investment companies) (two funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (five funds) since 2012; Therapy Track, LLC, 2009-2012; Energy Services International, Inc., 2004-2013.

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Name and Age*	Position Held with Fund	Length of Time Served	Principal Occupation(s) During the Past 5 Years	Number of Portfolios in Fund Complex(1) Overseen	Other Directorships During  the Past 5 Years
Scott E. Schwinger Age: 47	Director	Since 2014	President, The McNair Group (management), since 2006; Senior Vice President and Chief Financial Officer, the Houston Texans (professional football team), since 1999.	9	The Endowment Funds (investment companies) (six funds) since 2004; Salient Alternative Strategies Funds (investment companies) (two funds), since 2010; Salient Midstream & MLP Fund (investment company) since 2012; Salient MLP & Energy Infrastructure Fund (investment company) since 2011; Salient MF Trust (investment company) (five funds) since 2012.

* As of December 31, 2013.

⁽¹⁾  The Fund Complex includes the Master Fund, the Funds and the Legacy Funds.

Officers of the Funds Who Are Not Directors

Name and Age*	Position(s) Held with Fund	Principal Occupation(s) During the Past 5 Years
Paul A. Bachtold Age: 39	Chief Compliance Officer	Consultant, Chicago Investment Group (compliance consulting), 2009-2010; US Compliance Manager, Barclays Global Investors, 2005-2008; Consultant, Wells Fargo Bank, 2000-2005.
John E. Price Age: 45	Treasurer; Principal Financial Officer	Director and Chief Financial Officer of Adviser; Partner, Director and Chief Financial Officer of Salient.
Jeremy L. Radcliffe Age: 39	Secretary	Managing Director of Salient, since 2002.

* As of December 31, 2013.

Leadership Structure of the Board of Directors

The Board monitors the level and quality of services, including commitments of service providers and the performance of the Adviser. In addition, the Board oversees that processes are in place to assure each Fund’s compliance with applicable rules, regulations, and investment policies and addresses possible conflicts of interest. The Board evaluates the services received under the contracts with service providers

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by, among other things, receiving reports covering investment performance, shareholder services, marketing, and the Adviser’s profitability in order to determine whether to continue existing contracts or negotiate new contracts.

Mr. Blaisdell, the Chairman of the Board, is an “interested person” (as defined in the Investment Company Act) of each Fund. Mr. Powell serves as each Board’s Lead Independent Director. As Chairman, Mr. Blaisdell presides at meetings of the Directors and, as necessary, each Fund’s Partners. In the context of the specific characteristics of the Funds, including their size and focus on alternative investments, the Board has determined it appropriate that Mr. Blaisdell fulfill the role of Chairman. The Board based its determination on Mr. Blaisdell’s experience and insight in light of the Funds’ characteristics. Prior to each Board meeting, Mr. Blaisdell discusses and formulates with Mr. Powell, the Lead Independent Director, an agenda to be addressed at the meeting, as well as conferring with other representatives of management and with counsel to the Independent Directors.

As a registered investment company, each Fund is subject to a number of investment risks (described in this registration statement), as well as financial and compliance risks. These risks are mitigated by written policies approved and overseen by the Board. The Adviser conducts each Fund’s operations and the Board administers an oversight function. The Board oversees the Adviser’s operations and the Fund’s risk management with the assistance of the Board’s Audit, Compliance and Valuation Committees. Each of these Committees is discussed below under “Committees.” At each Board meeting, the Board considers reports regarding each Fund’s operations and oversight thereof, including oversight of risks, as well as reports from the CCO, who also routinely meets privately with the Independent Directors. Board Committees receive reports, and meetings may entail further discussion of issues concerning oversight of the Fund’s risk management. The Board also may discuss particular risks that are not addressed in the Committee process. Committee Chairs may confer with the Chairman of the Board to discuss various issues discussed in the Committee that may require further discussion by the full Board or separate reports by the Adviser. In addition, the Chairman of the Board confers with the CCO, the Directors, the Adviser and counsel, including counsel to the Independent Directors, to discuss risk management issues.

Director Qualifications

This section discusses, for each Director, the experience, qualifications, attributes or skills that led to the conclusion that the person should serve as a Director. The information in this section should not be understood to mean that any of the Directors is an “expert” within the meaning of the federal securities laws or for any other purpose under state or federal law.

John A. Blaisdell — Through his experience as a senior executive of financial organizations, Mr. Blaisdell contributes his experience in the investment management industry to the Board. Mr. Blaisdell serves as the Chairman of the Board. The Board also benefits from his experience as a member of the board of other funds.

Jonathan P. Carroll — Through his experience as the executive of business enterprises, Mr. Carroll contributes experience in overseeing financial and investment organizations to the Board. The Board also benefits from his experience as a member of the board of other funds.

Richard C. Johnson — Through his experience as an attorney, Mr. Johnson contributes his insight and management experience to the Board. The Board also benefits from his experience as a member of the board of other funds.

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G. Edward Powell — Through his experience as a senior executive and accountant, Mr. Powell contributes his accounting and management experience to the Board. The Board also benefits from his experience as a member of the board of other funds and operating companies.

Scott E. Schwinger — Through his experience as a senior executive and financial officer of financial and business enterprises, Mr. Schwinger contributes his financial and management experience to the Board. The Board also benefits from his experience as a member of the board of other funds and operating companies.

Committees

Audit Committee

The Board has formed an audit committee (the “Audit Committee”) that is responsible for meeting with the Funds’ independent auditors, the Independent Administrator and corporate officers to review financial statements, reports, issues and compliance matters. The Audit Committee reports significant issues to the Board and makes recommendations regarding the selection, retention, or termination of the Funds’ auditors, evaluates their independence, and reviews their fees. All members of the Audit Committee must be Independent Directors. Messrs. Carroll, Powell and Schwinger, each an Independent Director, constitute the Audit Committee. Mr. Powell is chair of the Audit Committee.

Nominating Committee

The Board has formed a nominating committee (the “Nominating Committee”) that recommends nominations for membership on the Board. It evaluates candidates’ qualifications for Board membership and, with respect to nominees for positions as Independent Directors, as well as their independence from the Adviser and other principal service providers. The Committee meets as necessary to identify and evaluate nominees for Director and to make its recommendations to the Board. The Nominating Committee is composed of all Independent Directors. Mr. Powell is the chair of this Committee.

While the Nominating Committee is solely responsible for the selection and nomination of potential candidates to serve on the Board, the Nominating Committee may consider and evaluate nominations properly submitted by Partners of the Funds. Nominations proposed by Partners will be properly submitted for consideration by the Committee only if a Partner submits a nomination in accordance with the procedures set forth in the charter of the Nominating Committee. Only Independent Directors may nominate other Independent Directors. It is in the Nominating Committee’s sole discretion whether to seek corrections of a deficient submission or to exclude a nominee from consideration.

Compliance Committee

The Board has formed a Compliance Committee that is responsible for meeting with the Funds’ CCO to review matters relating to compliance with the federal securities laws. The Committee meets at least annually with the CCO without the presence of management to discuss issues arising, among other things, under the Funds’ compliance program and operations. Messrs. Carroll, Johnson and Powell, each an Independent Director, constitute the Compliance Committee. Mr. Johnson is the chair of the Compliance Committee.

Valuation Committee

The Board Valuation Committee is responsible for overseeing the Funds’ valuation policy, making recommendations to the Board on valuation-related matters, and overseeing implementation by

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the Adviser’s Valuation Committee of the Funds’ valuation policy and procedures. Messrs. Johnson and Schwinger constitute the Board Valuation Committee. Mr. Schwinger is the chair of this Committee.

In addition, the Board has authorized the establishment of the Adviser’s Valuation Committee consisting of Messrs. Blaisdell, Linbeck, Partridge (see “MANAGEMENT OF THE FUNDS”) and additional officers of the Funds and representatives of the Adviser to serve as the Funds’ Adviser’s Valuation Committee. The Adviser’s Valuation Committee is not a Board committee. The Adviser’s Valuation Committee’s function, subject to the oversight of the Board Valuation Committee and the Board, is generally to review the Investment Funds’ valuation methodologies, valuation determinations, and any information provided to the Adviser’s Valuation Committee by the Adviser or the Independent Administrator. The Adviser’s Valuation Committee has been assigned to act in accordance with the Funds’ valuation procedures as approved by the Board and to report to the Board and the Board Valuation Committee. Changes in its membership are subject to Board notification. The Board Valuation Committee reviews matters arising from the Adviser’s Valuation Committee’s considerations. During the last fiscal year, the Adviser’s Valuation Committee met twelve times.

Other Information

In addition, the Adviser has established an Investment Committee, which is not a Board committee, but to which the Board has authorized the Adviser to delegate certain activities. The Investment Committee considers investment management policies and strategies, investment performance, risk management techniques, and securities trading practices and reports areas of concern to the Board.

Actions taken by a committee of the Board are recorded and reported to the full Board at its next meeting following such actions.

Directors’ Holdings

PMF Fund

The dollar range of equity securities owned by each Director is set forth below.

Name of Director	Dollar Range of Equity Securities in the PMF Fund as of December 31, 2013(1)	Aggregate Dollar Range  of Equity Securities in all Registered Investment Companies Overseen by Director in the fund complex as of December 31, 2013(1)(2)
Independent Directors
Jonathan P. Carroll	None	None
Richard C. Johnson	None	None
G. Edward Powell	None	None
Scott E. Schwinger	None	Over $100,000
Director who is an “Interested Person”
John A. Blaisdell	None	Over $100,000

⁽¹⁾  The dollar ranges of equity securities reflected in the table above are as follows: None; $1 to $10,000; $10,001 to $50,000; $50,001 to $100,000; or over $100,000.

⁽²⁾  The investment companies include the Master Fund, the Funds and the Legacy Funds.

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TEI Fund

The dollar range of equity securities owned by each Director is set forth below.

Name of Director	Dollar Range of Equity Securities in the TEI Fund as of December 31, 2013(3)	Aggregate Dollar Range  of Equity Securities in all Registered Investment Companies Overseen by Director in the fund complex as of December 31, 2013(3)(4)
Independent Directors
Jonathan P. Carroll	None	None
Richard C. Johnson	None	None
G. Edward Powell	None	None
Scott E. Schwinger	None	Over $100,000
Director who is an “Interested Person”
John A. Blaisdell	None	Over $100,000

⁽³⁾  The dollar ranges of equity securities reflected in the table above are as follows: None; $1 to $10,000; $10,001 to $50,000; $50,001 to $100,000; or over $100,000.

⁽⁴⁾  The family of investment companies includes the Master Fund, the Funds and the Legacy Funds.

As of the date hereof, the Fund directors, officers and members of any advisory board hold none of the equity securities of the PMF Fund or the TEI Fund.

Independent Director Ownership of Securities

As of the date hereof, the Independent Directors (and their respective immediate family members) did not beneficially own securities of the Adviser, or an entity controlling, controlled by or under common control with the Adviser (not including registered investment companies).

As a group, Directors and Officers own less than 1% of the outstanding Shares of the Master Fund and of each Fund.

Independent Director Compensation

The Master Fund pays each Independent Director an annual fee of $35,000, paid quarterly. There are currently four Independent Directors. In the interest of retaining Independent Directors of the highest quality, the Board intends to periodically review such compensation and may modify it as the Board deems appropriate. In addition, the Funds reimburse each Independent Director for travel and other expenses incurred in connection with attendance at such meetings. The Directors do not receive pension or retirement benefits from the Funds. Other officers (apart from the CCO) and Directors of the Funds

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receive no compensation from the Funds. During the fiscal year ending December 31, 2013, the Independent Directors received the following compensation:

NAME OF DIRECTOR	AGGREGATE COMPENSATION FROM FUNDS		PENSION OR RETIREMENT BENEFITS ACCRUED AS PART OF FUND EXPENSES		ESTIMATED ANNUAL BENEFITS UPON RETIREMENT		TOTAL COMPENSATION FROM FUNDS AND FUND COMPLEX(1) PAID TO DIRECTOR*
Jonathan P. Carroll	$	0	$	0	$	0	$	72,500
Richard C. Johnson	$	0	$	0	$	0	$	76,250
G. Edward Powell	$	0	$	0	$	0	$	86,875
Scott E. Schwinger	$	0	$	0	$	0	$	76,250
John A. Blaisdell	$	0	$	0	$	0	$	0

* For calendar year 2013

⁽¹⁾  The Fund Complex includes the Master Fund, the Funds and the Legacy Funds.

The Adviser

Endowment Advisers, L.P., a Delaware limited partnership registered as an investment adviser under the Advisers Act with principal offices at 4265 San Felipe, Suite 800, Houston, Texas 77027, serves as the Funds’ investment adviser. Subject to the general supervision of the Board and in accordance with the investment objective, policies, and restrictions of the Funds, the Adviser is responsible for the management and operation of the Funds. The Adviser also serves as investment adviser to the Master Fund pursuant to an investment management agreement.

The Adviser will manage the Master Fund’s portfolio, prioritizing liquidity to investors over active management, until such time as the Master Fund’s portfolio has been liquidated. The Adviser’s principal business is to function as an active investment adviser for investment programs and accounts similar to the Funds and accounts and to select investment managers to make investments on behalf of such funds and accounts.

The Adviser is owned by Salient Partners, L.P. (“Salient” or the “Principal”). Messrs. Lee G. Partridge, Jeremy L. Radcliffe, William K. Enszer, William B. Hunt and William R. Guinn are the members of the Adviser’s Investment Committee (the “Investment Committee”). The Adviser is an affiliate of Salient, a Texas-based investment firm that advises or consults on approximately $19.07 billion in assets as of October 31, 2013. Mr. William K. Enszer is the portfolio manager for each Fund.

The Adviser’s Investment Committee Members

The Investment Committee is responsible for the day-to-day management of the Master Fund’s portfolios. The Funds are each individually referenced to below as a “Fund” and, collectively with the Master Fund and other registered feeder funds in the fund complex, as the “Fund Complex.” The members of the Investment Committee (each an “Investment Committee Member”) are: Messrs. Lee G. Partridge, Jeremy L. Radcliffe, William K. Enszer, William B. Hunt and William R. Guinn. Mr. Partridge serves as the Adviser’s Chief Investment Officer.

Mr. Partridge has served as an Investment Committee Member since January 15, 2013, and has served as Chief Investment Officer, of Salient Partners, which owns Salient Trust Co., LTA, a trust company chartered under the laws of the State of Texas, since January 15, 2013. Mr. Radcliffe has served as

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an Investment Committee Member since 2014 and Managing Director of Salient since 2002. Previously, he held the position of Partner of The Redstone Companies, L.P. and certain affiliates thereof (from 1998-2002 (collectively, “Redstone”)). Mr. Enszer has served as an Investment Committee Member since 2014 and Director of Salient since 2010. Previously, he held the position of Vice President of Redstone Asset Management (from 2005-2010). Mr. Hunt has served as an Investment Committee Member since 2014 and as Chief Risk Officer of Salient since 2014. He previously held positions as a Senior Analyst and Portfolio Manager of Iridian Asset Management (from 1996-2011) and Professor at Southern Methodist University (from 1991-2000). Mr. Guinn has served as an Investment Committee Member since 2014 and Director of Salient since 2013. Previously, he held the position of Director of Strategic Partnerships and Opportunistic Investments at the Teacher Retirement System of Texas (2009-2013).

Each member of the Investment Committee reviews asset allocation recommendations made by the Adviser’s representatives, manager due diligence and recommendations and, by a majority vote of the Investment Committee, determines asset allocation and manager selection.

The Adviser and certain other entities controlled by the Principals manage investment programs which are similar to that of the Legacy Funds, and the Adviser and/or the Principals may in the future serve as an investment adviser or otherwise manage or direct the investment activities of other registered and/or private investment companies with investment programs similar to the Fund’s. See “CONFLICTS OF INTEREST.”

Other Accounts Managed by the Investment Committee Members

Certain Investment Committee Members, who are primarily responsible for the day-to-day management of the Funds and the Master Fund, also manage other registered investment companies, other pooled investment vehicles and other accounts, as indicated below. The following tables identify, as of June 30, 2013: (i) the number of registered investment companies, other pooled investment vehicles and other accounts managed by the Investment Committee Members and the total assets of such companies, vehicles and accounts; and (ii) the number and total assets of such companies, vehicles and accounts with respect to which the advisory fee is based on performance.

Name of Investment Committee Member	Registered Investment Companies Managed by Investment  Committee Member(1)		Pooled Investment Vehicles Managed by Investment  Committee Member(1)		Other Accounts  Managed by Investment Committee Member
	Number	Total Assets	Number	Total Assets	Number	Total Assets
Lee G. Partridge	8	$2.885 billion	14	$505 million	>1,420	>$10.684 billion(2)
Jeremy L. Radcliffe	3	$189 million	13	$839 million	1	$8.712 billion
William K. Enszer	2	$116 million	1	$32 million	0	$0
William B. Hunt	0	$0	0	$0	0	$0
William R. Guinn	11	$3.415 billion	21	$1.150 billion	>1,420	>$11.269 billion

⁽¹⁾  For registered investment companies and pooled investment vehicles managed, the number of vehicles reported for master-feeder structures includes both the master fund and feeder funds while the corresponding total assets reported reflect the assets of the master fund only.

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⁽²⁾  Mr. Partridge and Mr. Radcliffe serve as officers of Salient Partners, which owns Salient Trust Co., LTA, a trust company chartered under the laws of the State of Texas. In such capacities, Messrs. Partridge and Radcliffe have investment responsibilities for the clients of such entities. However, the number of accounts and asset figures cited in the table relate to the accounts and assets over which Messrs. Partridge and Radcliffe have discretion in their capacity as officers of such entities.

Name  of Investment Committee Member	Registered Investment Companies Managed by Investment  Committee Member(1)		Pooled Investment Vehicles Managed by Investment  Committee Member(1)		Other Accounts  Managed by Investment Committee Member
	Number with Performance- Based Fees	Total Assets with Performance Based Fees	Number with Performance- Based Fees	Total Assets with Performance- Based Fees	Number with Performance- Based Fees	Total Assets with Performance- Based Fees
Lee G. Partridge	0	$0	1	$18 million	3	$8.712 billion
Jeremy L. Radcliffe	0	$0	2	$187 million	1	$8.712 billion
William K. Enszer	0	$0	0	$0	0	$0
William B. Hunt	0	$0	0	$0	0	$0
William R. Guinn	0	$0	5	$499 million	2	$8.780 billion

⁽¹⁾  For registered investment companies and pooled investment vehicles managed, the number of vehicles reported for master-feeder structures includes both the master fund and feeder funds while the corresponding total assets reported reflect the assets of the master fund only.

Conflicts of Interest of the Adviser

From time to time, potential conflicts of interest may arise between an Investment Committee Member’s management of the investments of the Fund, on the one hand, and the management of other registered investment companies, pooled investment vehicles and other accounts (collectively, “other accounts”), on the other. The other accounts might hold, purchase, or sell securities that are eligible to be held by the Fund. The other accounts might have different investment objectives or strategies than the Fund.

Knowledge and Timing of Fund Trades.  A potential conflict of interest may arise as a result of the Investment Committee Member’s day-to-day management of a Fund. Because of their positions with the Fund, the Investment Committee Members know the size, timing and possible market impact of the Fund’s trades. It is theoretically possible that the Investment Committee Members could use this information to the advantage of other accounts they manage and to the possible detriment of the Fund.

Investment Opportunities.  A potential conflict of interest may arise as a result of the Investment Committee Member’s management of a number of accounts. Often, an investment opportunity may be

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suitable for both the Fund and other accounts managed by the Investment Committee Member, but may not be available in sufficient quantities for both the Fund and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by the Fund and other accounts. The Adviser has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time. However, there is a risk that a conflict of interest may occur when allocating investment opportunities and that the conflict may not be resolved in favor of the Funds. See “CONFLICTS OF INTEREST.”

Performance Fees.  An Investment Committee Member may advise certain accounts with respect to which the advisory fee is based entirely or partially on performance. Performance fee arrangements may create a conflict of interest for the Investment Committee Member in that the Member may have an incentive to allocate the investment opportunities that he or she believes might be the most profitable to such other accounts instead of allocating them to the Fund.

Compensation to Investment Committee Members

Messrs. Partridge and Radcliffe indirectly own equity interests in the Adviser. Messrs. Enszer, Hunt and Guinn receive all of their compensation based on objective and subjective performance assessments of their work, which may take into account the size of the Master Fund and the other funds within the Fund Complex and the management and servicing fees charged thereon, as well as other funds managed by Salient affiliates for which they has significant involvement. Messrs. Partridge and Radcliffe also own, directly or indirectly, equity in the general partner of another fund, and are compensated directly on performance (based on an incentive allocation) and the size of the fund’s asset base. In addition, Messrs. Partridge and Radcliffe are partners and principal executive officers of Salient and related affiliates and subsidiaries (collectively, the “Salient Group”), which pays them a base salary and potential bonus. These individuals are responsible for the investment processes and management of the Salient Group. Messrs. Partridge and Radcliffe believe that to the extent that they are successful in their investment endeavors, the greater the number of assets over time and the more significant their compensation and equity value will be from the Salient Group.

Securities Ownership of Investment Committee Members

The table below shows the dollar range of the Shares of each Fund beneficially owned as of the date hereof by each Investment Committee Member.

Investment Committee Member	Master Fund	PMF Fund	TEI Fund
Lee G. Partridge	None	None	None
Jeremy L. Radcliffe	None	None	None
William K. Enszer	None	None	None
William B. Hunt	None	None	None
William R. Guinn	None	None	None

Portfolio Manager Compensation

Mr. Enszer has significant day-to-day duties in the management of the portfolio of the Master Fund, including providing analysis and recommendations on asset sales and liquidations to the Investment Committee. Mr. Enszer receives all of his compensation based on objective and subjective performance

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assessments of his work, which may take into account the size of the Master Fund and the other funds within the Fund Complex and the management and servicing fees charged thereon, as well as other funds managed by Salient affiliates for which he has significant involvement.

Securities Ownership of Portfolio Manager

Mr. Enszer owns no Interests in the Master Fund as of the date hereof.

Investment Management Agreements

Under separate Investment Management Agreements, subject to the general supervision of the Board and in accordance with the investment objective, policies, and restrictions of the Funds, the Adviser provides each of the Funds and the Master Fund with ongoing investment guidance, policy direction and monitoring of the Funds and the Master Fund.

Each Fund’s Investment Management Agreement provides that the Adviser (or its delegate) will, subject to the Board’s oversight, provide investment advice consistent with the Funds’ investment objective and policies; buy, retain and sell the Funds’ portfolio investments; select brokers or dealers to execute transactions; prepare and make available to the Funds all necessary research and statistical data; maintain or cause to be maintained all required books, records, and reports, and other information not maintained or furnished by another service provider of the Funds; and all other services required in connection with management of the Funds. The Adviser may, subject to Board approval and oversight, enter into a sub-advisory agreement (a “Sub-Advisory Agreement”), effective upon shareholder approval, pursuant to which a sub-adviser (“Sub-Adviser”) would provide day-to-day investment management services with respect to such portions of the Funds’ assets as the Adviser in its discretion may determine from time to time.

The Master Fund’s Investment Management Agreement provides that the Adviser will, subject to the Board’s oversight, provide investment advice consistent with the Master Fund’s investment objective and policies; sell the Master Fund’s portfolio investments; select brokers or dealers to execute transactions; prepare and make available to the Master Fund all necessary research and statistical data; maintain or cause to be maintained all required books, records, and reports, and other information not maintained or furnished by another service provider of the Master Fund; and all other services required in connection with management of the Master Fund.

The Investment Management Agreement became effective as of February 12, 2014, with respect to the Master Fund and the Funds. After an initial two-year term, each Investment Management Agreement continues in effect from year to year thereafter, but only so long as the continuance of such agreement is specifically approved at least annually by the affirmative vote of (i) a majority of the Directors who are not parties to the Investment Management Agreement or interested persons of any party to the Investment Management Agreement, or of any entity regularly furnishing investment advisory services with respect to the Funds pursuant to an agreement with any party to the Investment Management Agreement, cast in person at a meeting called for the purpose of voting on such approval, and (ii) a majority of the Funds’ Directors or the holders of a majority of the outstanding voting securities of the Funds.

A discussion of the factors considered by the Directors when approving the Investment Management Agreement will be contained in the semi-annual shareholder reports of the PMF Fund, the TEI Fund and the Master Fund covering the period ending June 30, 2014.

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Each Fund’s Investment Management Agreement is terminable at any time without penalty upon 60 days’ written notice by a majority of the Board who are not parties to the Investment Management Agreements and are not interested persons of any party to the Investment Management Agreement, by vote of holders of a majority of the outstanding voting securities of the Funds, or by the Adviser. The Master Fund’s Investment Management Agreement is terminable at any time without penalty upon 60 days’ written notice by (i) a majority of the Master Fund Directors who are not parties to the Investment Management Agreement or interested persons of any party to the Investment Management Agreement; (ii) vote of holders of a majority of the outstanding voting securities of the Master Fund; or (iii) by the Adviser, with the approval of a majority of the Independent Directors of the Master Fund. Each Investment Management Agreement will terminate automatically with respect to the Funds in the event of its assignment, as defined in the Investment Company Act, provided that with respect to the Funds’ an assignment to a corporate successor to all or substantially all of the Adviser’s business or to a wholly owned subsidiary of such corporate successor which does not result in a change of actual control or management of the Adviser’s business will not be deemed to be an assignment for the purposes of the Investment Management Agreement. A Sub-Advisory Agreement would terminate upon the termination of the Investment Management Agreement.

Certain affiliates of the Adviser or a Sub-Adviser may provide services to the Investment Funds in compliance with applicable law. SEE “CONFLICTS OF INTEREST.”

Each Investment Management Agreement provides that, in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations to the Funds, the Adviser and any partner, director, officer or employee of the Adviser, or any of their affiliates, executors, heirs, assigns, successors or other legal representatives, will not be liable to the Funds for any error of judgment, for any mistake of law or for any act or omission by the person in connection with the performance of services to the Funds. Each Investment Management Agreement also provides for indemnification, to the fullest extent permitted by law, by the Funds of the Adviser, or any partner, director, officer or employee of the Adviser, and any of their affiliates, executors, heirs, assigns, successors or other legal representatives, against any liability or expense to which the person may be liable that arises in connection with the performance of services to the Funds, so long as the liability or expense is not incurred by reason of the person’s willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations to the Funds.

INVESTMENT MANAGEMENT FEE

In consideration of the advisory and other services provided by the Adviser to the Master Fund pursuant to the Investment Management Agreement, each of the Funds and the Master Fund pay the Adviser an investment management fee out of its average month-end net assets, accrued monthly and payable monthly in arrears equal to 0.70% (on an annualized basis) for the six quarters following the date of the Legacy Master Fund Division (as defined herein) and 0.40% (on an annualized basis) for periods thereafter until the period ending ten years after the date of the Legacy Master Fund Division, when the Adviser will no longer receive an investment management fee. In addition, following the period ending five years after the date of the Legacy Master Fund Division, no fee will be charged on Hedge Fund Assets (as defined below), with any such Hedge Fund Assets remaining at that time being excluded from the calculation of net assets for purposes of determining the management fee (the “Investment Management Fee”). “Hedge Fund Assets” shall mean Investment Funds held by the Master Fund that are designated as Hedge Fund Assets in the Master Fund’s limited partnership agreement. In the case of a partial month, the Investment Management Fee is based on the number of days during the month in which

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the Adviser invested Fund or Master Fund assets. The Investment Management Fee is paid to the Adviser out of the capital account of each limited partner of the Master Fund and will decrease the net profits or increase the net losses of the Master Fund that are credited to or debited against the capital accounts of its limited partners. The Investment Management Fee is computed as a percentage of the capital account of each limited partner of the Master Fund, valued based on the net assets of the Master Fund as of the last business day of each month, and is due and payable in arrears within five business days after the end of the quarter. “Net assets” means the total value of all assets of the Master Fund, less an amount equal to all accrued debts, liabilities and obligations of the Master Fund.

So long as the Funds invests all of their investable assets in the Master Fund (via the Offshore Fund in the case of the TEI Fund), the Funds will not directly pay the Adviser an investment management fee; however, the Funds’ Partners bear an indirect share of the Investment Management Fee through the Funds’ investment in the Offshore Fund, and in turn through the Offshore Fund’s investment in the Master Fund.

ADMINISTRATION

Servicing Agent

Endowment Advisers, L.P. serves as Servicing Agent of the Funds and has responsibility for such investor services and Fund administrative assistance as may include, but shall not be limited to, the provision of personal, continuing services to their customers who are investors in the Funds, establishment of investor accounts, communicating periodically with Partners and providing information about the Funds, the Funds’ Shares, and repurchase offers, handling correspondence from investors about their accounts, maintaining account records, receiving, aggregating and processing purchase and repurchase transactions, providing and keeping retirement plan records, acting as the sole Partner of record and nominee for Partners, providing beneficial owners with account statements, processing dividend payments, issuing reports to Partners and transaction confirmations, providing or procuring accounting services for the Funds and limited partner account, providing subaccounting services for Shares held beneficially, forwarding Partner communications to beneficial owners, receiving, tabulating and transmitting proxies executed by beneficial owners, general account administration activities, administering board, committee and shareholder meetings, preparing meeting minutes upon request, administering tender offers, including preparation of filings, assisting the Master Fund’s Valuation Committee upon request, maintaining Fund records, coordinating regulatory and other filings by the Funds, administering investor application review, administering compulsory redemptions upon request, and providing such other administration services as the Funds may request from time to time.

In consideration for such services, each Fund pays a Servicing Fee based on its average month-end net assets over the course of the applicable quarter, payable quarterly in arrears equal to 0.50% (on an annualized basis) for the six quarters following the date of the Legacy Master Fund Division (as defined herein) and 0.40% (on an annualized basis) for periods thereafter until the period ending ten years after the date of the Legacy Master Fund Division, when the Servicing Agent will no longer receive a Servicing Fee.

The Servicing Agent may engage one or more Sub-Servicing Agents to provide some or all of the above services. Compensation to any Sub-Servicing Agent will be paid by the Servicing Agent and such amounts may vary. The Adviser or its affiliates also may pay a fee out of their own resources to Sub-Servicing Agents. In some instances, these arrangements could result in receipt by the Sub-Servicing

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Agents and their personnel (who themselves may receive all or a substantial part of the relevant payments) of compensation in excess of that which may be available with regard to or paid in connection with their servicing of shares or interests of a different investment fund. Any Partner or prospective investor with questions regarding these arrangements may obtain additional detail by contacting his or her intermediary directly. Prospective investors also should be aware that these payments could create incentives on the part of the intermediaries to view the Funds more positively relative to other investment funds not making payments of this nature or making smaller such payments.

Although Servicing Fees are paid for the provision of ongoing investor services and are intended primarily for such services, to any extent that the Servicing Fees could be considered to support the distribution of the Funds, investors would be paying for distribution of Fund interests out of the Fund’s assets. To any extent that the Servicing Fees could be considered to support distribution of the Funds, the Adviser would not have to pay such expenses from its other resources, which is an incentive to maintain Servicing Fees and considered a conflict of interest. See “CONFLICTS OF INTEREST.”

Independent Administrator

Citi Fund Services, Inc., located at 3435 Stelzer Road, Suite 1000, Columbus, Ohio, 43219, serves as the Independent Administrator of the Funds and the Master Fund and has the responsibility for providing administrative services, and for assisting the Funds with their operational needs, pursuant to an administration agreement (the “Administration Agreement”). Under the Administration Agreement, the Independent Administrator is responsible for, among other things: (1) maintaining a list of Partners and generally performing all actions related to the issuance and repurchase of Shares, if any; (2) providing the Funds with certain administrative, clerical, recordkeeping and bookkeeping services; (3) supervising the entities retained by the Funds, if any, to provide transfer agency services, services related to the payment of distributions, and accounting services; (4) computing the NAV of the Funds; (5) preparing, or overseeing the preparation of, monthly, quarterly, semi-annual and annual financial statements of the Funds, quarterly reports of the operations of the Funds and maintaining information to facilitate the preparation of annual tax returns; (6) supervising regulatory compliance matters and preparing certain regulatory filings; and (7) performing additional services, as agreed upon, in connection with the administration of the Funds. Subject to approval of the Board, the Independent Administrator may from time to time delegate its responsibilities under the Administration Agreement to one or more parties selected by the Independent Administrator.

In consideration for administrative services, the Master Fund pays the Independent Administrator a monthly administration fee (the “Administration Fee”) based on the month-end net assets of the Master Fund. The Administration Fee is determined, on an annualized basis, on a base rate of a percentage of the Master Fund’s month-end net assets for the first $2 billion of net assets. In addition, the Independent Administrator charges fees for legal, transfer agency, compliance, and certain other services.

CUSTODIAN

Citibank N.A., located at 388 Greenwich Street, New York, New York 10013 (the “Custodian”) acts as custodian for the Master Fund. Pursuant to a custodian agreement (“Custodian Agreement”), the Custodian maintains a separate account in the name of the Master Fund, holds and transfers portfolio securities on account of the Master Fund, accepts receipts and makes disbursements of money on behalf of the Master Fund, collects and receives income and other payments and distributions on account of the Master Fund’s securities. The Master Fund also may enter into principal transactions with one or more affiliates of the Custodian.

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FUND EXPENSES

The Funds, the Offshore Fund and the Master Fund pay all of their expenses other than those that the Adviser or an affiliate of the Adviser assumes, if any. The expenses of the Funds (whether directly or indirectly through Offshore Fund and, in turn, the Master Fund) include, but are not limited to, all fees and expenses related to portfolio transactions and positions made in Investment Funds, and enforcing rights in respect of such investments; the Investment Management Fee, the Servicing Fee and the Administration Fee; brokerage commissions; interest and fees on any borrowings; directors’ fees; directors’ and officers’ insurance; professional fees (including, without limitation, expenses of consultants, experts and specialists); research expenses; fees and expenses of outside legal counsel, including foreign legal counsel; accounting, auditing and tax preparation expenses; fees and expenses in connection with repurchase offers and any repurchases or redemptions of Shares; taxes and governmental fees (including tax preparation fees); fees and expenses of any custodian, subcustodian, transfer agent, and registrar, and any other agent of the Funds, the Offshore Fund or the Master Fund; all costs and charges for equipment or services used in communicating information regarding the Funds’, the Offshore Fund’s or the Master Fund’s transactions among the Adviser and any custodian or other agent engaged by the Master Fund; bank services fees; expenses of preparing, printing, and distributing copies of this Memorandum, and any other sales material (and any supplements or amendments thereto), reports, notices, other communications to Partners, and proxy materials; expenses of preparing, printing, and filing reports and other documents with government agencies; expenses of Partners’ meetings; expenses of corporate data processing and related services; Partner recordkeeping and Partner account services, fees, and disbursements; expenses relating to investor and public relations; fees and expenses of the Independent Directors; insurance premiums; and extraordinary expenses such as litigation expenses. The Master Fund may need to sell portfolio securities to pay fees and expenses, which could affect investment returns to Partners of the Funds. As required by the Master Fund’s limited partnership agreement, the Adviser has contractually agreed to waive and/or reimburse the Master Fund for its management fees and other expenses to the extent necessary to limit the total annualized expenses (excluding fees and expenses directly charged by Investment Funds and Investment Managers, borrowing and other trading and execution costs and fees, taxes, litigation and indemnification expenses, judgments and other extraordinary expenses not incurred in the ordinary course of the Master Fund’s business) of the Master Fund to 1.25% of the net asset value of the Master Fund. The Master Fund Expense Limitation Agreement will be applied on an annualized basis such that total expenses incurred by the Master Fund through the end of any fiscal quarter are limited to the pro-rated portion of 1.25% based on the relevant quarter end during the fiscal year (e.g. as of September 30, the limitation would be 3/4 of 1.25%).

The Adviser bears all of its expenses and its own costs incurred in providing investment advisory services to the Funds, including travel and other expenses related to the selection and monitoring of Investment Funds. In addition, the Adviser is responsible for the payment of the compensation and expenses of those Directors and officers of the Funds affiliated with the Adviser, and making available, without expense to the Funds, the services of such individuals, subject to their individual consent to serve and to any limitations imposed by law.

Each Fund’s offering costs were paid by the Legacy Master Fund.

The Investment Funds will bear various fees and expenses in connection with their operations. These fees and expenses are similar to those incurred by the Funds. In addition, the Investment Funds will pay asset-based fees to their Investment Managers and generally may pay performance-based fees or allocations to their Investment Managers, which effectively reduce the investment returns of the

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Investment Funds. These expenses, fees, and allocations are in addition to those incurred by the Funds themselves. As an investor in the Investment Funds, the Funds will indirectly bear a portion of the expenses and fees of the Investment Funds.

The Funds’ fees and expenses will decrease the net profits or increase the net losses of the Funds that are credited to or debited against each Partner’s capital account.

PORTFOLIO TRANSACTIONS

The Funds

As a result of the Funds’ investment objective, the Funds do not anticipate actively executing portfolio transactions other than incidental to liquidation activities. Nevertheless, the Funds anticipate that some of their portfolio transactions may be subject to expenses.

Each Fund will bear any commissions or spreads in connection with its portfolio transactions. In placing orders, it is the policy of the Funds to obtain the best results taking into account the broker-dealer’s general execution and operational facilities, the type of transaction involved, and other factors such as the broker-dealer’s risk in positioning the securities involved. While the Adviser generally seeks reasonably competitive spreads or commissions, the Funds will not necessarily be paying the lowest spread or commission available. In executing portfolio transactions and selecting brokers or dealers, the Adviser seeks to obtain the best overall terms available for the Funds. In assessing the best overall terms available for any transaction, the Adviser considers factors deemed relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. The overall reasonableness of brokerage commissions paid is evaluated by the Adviser based upon its knowledge of available information as to the general level of commission paid by other institutional investors for comparable services. Transactions on U.S. stock exchanges and on some foreign stock exchanges involve the payment of negotiated brokerage commissions. On the great majority of foreign stock exchanges, however, commissions are fixed. No stated commission is generally applicable to securities traded in over-the-counter markets, but the prices of those securities include undisclosed commissions or mark-ups.

The Investment Funds

The Investment Funds incur transaction expenses in the management of their portfolios, which will decrease the value of the Funds’ investment in the Investment Funds. In view of the fact that the investment program of certain of the Investment Funds may include trading as well as investments, short-term market considerations will frequently be involved, and it is anticipated that the turnover rates of the Investment Funds may be substantially greater than the turnover rates of other types of investment vehicles. In addition, the order execution practices of the Investment Funds may not be transparent to the Funds. Each Investment Fund is responsible for placing orders for the execution of its portfolio transactions and for the allocation of its brokerage. The Adviser will have no direct or indirect control over the brokerage or portfolio trading policies employed by the investment advisers of the Investment Funds. The Adviser expects that each Investment Fund will generally select broker-dealers to effect transactions on the Investment Fund’s behalf substantially in the manner set forth below.

Each Investment Fund generally will seek reasonably competitive commission rates. However, Investment Funds may not necessarily pay the lowest commission available on each transaction, and may

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engage in transactions with broker-dealers based on different criteria than those considered by the Funds. Investment Funds may not be subject to the same regulatory restrictions on principal and agency transactions. The Funds will indirectly bear the commissions or spreads in connection with the portfolio transactions of the Investment Funds.

No guarantee or assurance can be made that an Investment Fund’s brokerage transaction practices will be transparent or that the Investment Fund will establish, adhere to, or comply with its stated practices. However, as the Investment Funds generally are not investment companies registered under the Investment Company Act, they may select brokers on a basis other than that outlined above and may receive benefits other than research or that benefit the Investment Fund’s investment adviser or its affiliates rather than the Investment Fund.

As with the Funds, Investment Funds may make investments directly in the issuers of their underlying securities, and in some instances may not be subject to transaction expenses.

VOTING

Each Partner will have the right to cast a number of votes based on the value of such Partner’s investment percentage at any meeting of Partners called by the (i) Board or (ii) Partners holding at least a majority of the total number of votes eligible to be cast by all Partners. Partners will be entitled to vote on any matter on which shareholders of a registered investment company are entitled to vote under the 1940 Act. Notwithstanding their ability to exercise their voting privileges, Partners are not entitled to participate in the management or control of the Funds’ business, and may not act for or bind the Funds.

CONFLICTS OF INTEREST

The investment activities of the Adviser, the Investment Managers, and their respective affiliates (including the Principals), and their directors, trustees, managers, members, partners, officers, and employees (collectively, the “Related Parties”), for their own accounts and other accounts they manage, may give rise to conflicts of interest that could disadvantage the Funds, their Partners, and the Master Fund. The Adviser and other Related Parties are involved with a broad spectrum of financial services and asset management activities, and may, for example, engage in the ordinary course of business in activities in which their interests or the interests of their clients may conflict with those of the Funds or the Partners. The trading activities of the Related Parties are carried out without references to positions held directly or indirectly by the Funds. In addition, the Related Parties may be involved with other investment programs, investment partnerships or separate accounts that use Investment Managers or Investment Funds that are a part of the Master Fund’s portfolio. The Master Fund’s and the Funds’ operations may give rise to other conflicts of interest that could disadvantage the Funds and the Partners.

Salient provides wealth management and advisory services to its clientele. As a result, the Related Parties and their respective affiliates, directors, partners, trustees, managers, members, officers and employees, including those who may be involved in the investment activities and business operations of the Funds and the Master Fund, are engaged in businesses, and have interests, other than that of managing the Funds and the Master Fund. These are considerations of which investors in the Funds should be aware, and which may cause conflicts that could disadvantage the Funds. These activities and interests include potential multiple advisory, transactional, financial and other interests in securities, instruments and companies that may be held by the Master Fund. Present and future activities of the Related Parties may give rise to additional conflicts of interest. As a result of the Funds’ investment objective, certain conflicts of interest discussed herein may be mitigated as compared to an actively managed fund-of-funds.

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In acquiring Shares of the Funds, a Partner is deemed to have acknowledged and assented to the existence of potential conflicts of interest relating to the Related Parties and to the Funds’ and the Master Fund’s operating in the face of these conflicts.

Certain of the Related Parties may participate in the fixed income, equity and other markets in which the Funds and Master Fund directly or indirectly invests. In addition, certain of the Related Parties could engage as investors, advisers, agents and principals, in relation to certain of the same securities, issuers, currencies and other instruments in which the assets of the Funds (through the Master Fund or the Investment Funds) may be invested, and these activities may have a negative effect on the Funds.

Certain of the Related Parties may give advice, and take action, with respect to any of its clients or proprietary or other accounts, that may conflict with the advice given to the Funds, or may involve a different timing or nature of action taken than with respect to the Funds. Such transactions, whether in respect of proprietary accounts, customer accounts other than those advised by the Adviser, or certain other accounts that are advised by the Adviser, may affect the prices and availability of the securities, currencies and other instruments in which the Funds (directly or indirectly through the Master Fund and the Investment Funds) may invest. In addition, accounts or funds managed by the Related Parties may compete with the Funds (directly or indirectly through the Master Fund and the Investment Funds) for investment opportunities. As a result, transactions for the Funds (directly or indirectly through the Master Fund and the Investment Funds) may be effected at prices or rates that may be less favorable than would have been the case absent such conflicts, and the Funds may be negatively affected. The results of the investment activities of the Funds may differ significantly from the results achieved by Related Parties for accounts or accounts managed by them and from the results achieved by the Adviser for other advised accounts. This may have a negative effect on the Funds.

Subject to applicable regulatory requirements, the Funds may hold (through the Investment Funds) securities of companies affiliated with the Related Parties or in which certain of the Related Parties have an equity or participation interest. Any purchase, holding and sale of such investments by the Funds (through the Investment Funds) may enhance the profitability of the Related Parties’ own investments in such companies.

Certain of the Related Parties may buy and sell securities or other investments for their own accounts, including interests in Investment Funds, and conduct other activities that may cause the same types of conflicts as those conflicts described herein applicable to the proprietary, management, advisory and other activities of Related Parties. As a result of differing trading and investment strategies or constraints, positions may be taken by directors, officers and employees and affiliates of the Adviser that are the same, different from or made at different times than positions taken for the Funds and the Master Fund or an Investment Fund in which the Funds participate. In connection with the above, each of the Funds and the Adviser has adopted a code of ethics (collectively, the “Codes of Ethics”) in compliance with Section 17(j) of the Investment Company Act and regulations thereunder that restrict securities trading in the personal accounts of investment professionals and others who normally come into possession of information regarding the Funds’ portfolio transactions. See “CODES OF ETHICS” below.

Accounts or investment funds managed or advised by Related Parties (including those managed by the Adviser) may engage in transactions in the same types of securities, currencies and instruments as the Funds, and from which the Adviser or the Related Parties may receive more or less compensation for its services than the Adviser receives from the Funds. As a result, Related Parties and accounts or funds which Related Parties may manage or advise (including, without limitation, those funds discussed in

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greater detail below), or in which Related Parties and its personnel may have a proprietary interest, may compete with the Funds for appropriate investment opportunities. For example, Investment Managers may limit the number of investors in or size of an Investment Fund or the amount of assets and accounts that they will manage. The allocation of such opportunities among Related Parties’ funds and accounts may present conflicts, as may the potentially different investment objectives of different investors. In determining such allocations, a number of factors may be considered, which may include the relative sizes of the applicable funds and accounts and their expected future sizes, the expected future capacity of the applicable Investment Funds, the funds available for allocation at any given time and the investment objectives of the Funds and such other funds and accounts. Allocation of investment opportunities among the Funds and other funds and accounts will be made by the Adviser or by Related Parties in their capacities as the managers of such funds and accounts in a reasonable and equitable manner, as determined by them in their sole discretion. The disposition of any such investments is subject to the same conditions.

The Related Parties are not under an obligation to share investment opportunities, ideas or strategies with the Funds. The Related Parties may keep any profits, commissions, and fees accruing to them in connection with its activities (including activities described in this “CONFLICTS OF INTEREST” section and its other activities) for themselves and their clients, and the fees or allocations from the Funds will not be reduced thereby.

Subject to applicable regulatory requirements, Related Parties from time to time may invest proprietary or client capital with investment advisers, including Investment Managers selected by the Funds, and also may invest in Investment Funds in which the Funds invest on terms different than the interest held by the Funds. In addition, Related Parties may have other business relationships with such Investment Managers. Related Parties may seek to perform financial services for, and will receive compensation from, Investment Funds, the sponsors of Investment Funds, companies in which Investment Funds invest, or other parties in connection with transactions related to those investments, or otherwise. This compensation could include financial advisory fees, as well as other types of compensation. Compensation for other financial services will not be shared with the Funds or the Partners and may be received before the Funds realize a return on their investment.

Related Parties may, from time to time, invest in the Funds. Any repurchase of Shares held by the Related Parties will be effected pursuant to an offer to repurchase Shares which is made by the Funds to all of the Partners. Such repurchases may have an adverse effect on the Funds’ investment strategies, the breadth of their allocation of investments and on the fees, expenses and costs incurred by the Partners.

To the extent permitted by applicable law, including, without limitation, the Investment Company Act, an Investment Fund may enter into transactions and invest in futures, securities, currencies, swaps, options, forward contracts or other instruments on behalf of the Funds in which one of the Related Parties, acting as principal or on a proprietary basis for its customers, serves as the Counterparty. The Adviser and Related Parties will not, directly or indirectly, purchase securities or other property from, or sell securities or other property to, the Funds. However, subject to compliance with applicable law, including without limitation, the Investment Company Act, the Funds may engage in transactions with accounts which are affiliated with the Funds because they are advised by Related Parties or because they have common officers, directors or managers. Such transactions would be made in circumstances where the Adviser has determined that it would be appropriate for the Funds to purchase and the Adviser or another client of the Related Parties to sell, or the Funds to sell and another client of the Related Parties to purchase, the same security or instrument on the same day.

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Purchases or sales of securities for the account of the Funds or an Investment Fund or through a sub-adviser may be bunched or aggregated with orders for other accounts of the Related Parties, including other investment partnerships (including those in which the Related Parties or their employees have a beneficial interest). Because of the prevailing trading activity, it is frequently not possible to receive the same price or execution on the entire volume of securities purchased or sold. When this occurs, the various prices may be averaged, which may be disadvantageous to the Funds.

Although Servicing Fees are paid for the provision of ongoing investor services and are intended primarily for such services, to any extent that the Servicing Fees could be considered to support the distribution of the Funds, Partners would be paying for distribution of Fund interests out of the Funds’ assets. To any extent that the Servicing Fees could be considered to support distribution of the Funds, the Adviser would not have to pay such expenses from its other resources, which is an incentive to maintain Servicing Fees and considered a conflict of interest in this respect. An investment adviser would benefit from the payment by an investment company of distribution expenses, including compensation to intermediaries, to the extent that an investment adviser does not itself need to make such payments.

CONFLICTS OF INTEREST RELATING TO THE INVESTMENT MANAGERS

The Adviser anticipates that each Investment Manager will consider participation by the applicable Investment Fund in all appropriate investment opportunities that are also under consideration for investment by the Investment Manager for other investment funds and accounts managed by the Investment Manager (“Investment Manager Accounts”) that pursue investment programs similar to that of the applicable Investment Fund or the Funds. However, there can be no guarantee or assurance that Investment Managers will follow such practices or that an Investment Manager will adhere to, and comply with, its stated practices, if any. In addition, circumstances may arise under which an Investment Manager will cause its Investment Manager Accounts to commit a larger percentage of their assets to an investment opportunity than to which the Investment Manager will commit assets of the Investment Fund. Circumstances also may arise under which an Investment Manager will consider participation by its Investment Manager Accounts in investment opportunities in which the Investment Manager intends not to invest on behalf of the Investment Fund, or vice versa.

Situations may occur where the Funds could be disadvantaged by investment activities conducted by the Investment Manager for the Investment Manager Accounts. These situations may arise as a result of, among other things: (1) legal restrictions on the combined size of positions that may be taken for an Investment Fund in which the Funds and/or Investment Manager Accounts participate (collectively, “Co-Investors” and, individually, a “Co-Investor”), limiting the size of the Investment Fund’s position; (2) legal prohibitions on the Co-Investors’ participating in the same instruments; (3) the difficulty of liquidating an investment for a Co-Investor when the market cannot absorb the sale of the combined positions; and (4) the determination that a particular investment is warranted only if hedged with an option or other instrument and the availability of those options or other instrument is limited.

An Investment Manager may from time to time cause an Investment Fund to effect certain principal transactions in securities with one or more Investment Manager Accounts, subject to certain conditions. For example, these transactions may be made in circumstances in which the Investment Manager determined it was appropriate for the Investment Fund to purchase and an Investment Manager Account to sell, or the Investment Fund to sell and the Investment Account to purchase, the same security or instrument on the same day.

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Each Investment Manager, its affiliates and their directors, officers and employees, may buy and sell securities or other investments for their own accounts, including interests in Investment Funds, and may have conflicts of interest with respect to investments made on behalf of an Investment Fund. As a result of differing trading and investment strategies or constraints, positions may be taken by directors, officers, employees and affiliates of the Investment Manager that are the same as, different from or made at different times than positions taken for the Investment Fund in which the Funds participate. Future investment activities of the Investment Managers, or their affiliates, and the principals, partners, directors, officers or employees of the foregoing, may give rise to additional conflicts of interest that could disadvantage the Funds and their Partners.

Investment Managers or their affiliates may from time to time provide investment advisory or other services to private investment funds and other entities or accounts managed by the Investment Manager or its affiliates. In addition, Investment Managers or their affiliates may from time to time receive research products and services in connection with the brokerage services that brokers (including, without limitation, affiliates of the Investment Manager) may provide to one or more Investment Manager Accounts.

CODES OF ETHICS

The Funds and the Adviser each has adopted a code of ethics as required by applicable law, which is designed to prevent affiliated persons of the Funds and the Adviser from engaging in deceptive, manipulative or fraudulent activities in connection with securities held or to be acquired by the Funds (which also may be held by persons subject to a code of ethics). There can be no assurance that the codes of ethics will be effective in preventing such activities. Each code of ethics may be examined on the Internet from the SEC’s website at www.sec.gov. In addition, each code of ethics can be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. Copies of these codes of ethics may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, Washington, DC 20549-0102.

The Adviser’s code of ethics allows personnel to invest in securities for their own account, but requires compliance with the code’s provisions. The code of ethics requires prior approval of purchases of securities in initial public offerings or private placements.

LIQUIDITY REQUIREMENTS

Certain asset classes and/or Investment Funds have limitations on liquidity (e.g., private equity, private energy, private real estate and certain other Investment Funds with limitations on the ability of an investor to withdraw capital, such as long lock-up periods). Accordingly, the Investment Funds have limitations on withdrawals, such as quarterly withdrawals with notice provisions or often more limited withdrawal rights or none at all (such as in the case of self-liquidating funds, where the investor typically only receives liquidity as the fund liquidates underlying investments).

The Funds’ portfolio is not subject to any minimum liquidity requirement imposed by regulation. The Funds’ anticipated portfolio, as of the date hereof, will consist primarily of Investment Funds that are largely illiquid. The remaining portion of the Funds’ investment portfolio is invested in liquid assets and Investment Funds that have withdrawal rights more frequent than annually, for example, quarterly, and

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not more than a one-year lock-up remaining. These percentages will change over time as investments liquidate; however, due to the long-term, illiquid nature of many of the Investment Funds, it is expected that the percentage of such assets will increase over time as the Master Fund receives withdrawal and/or liquidation proceeds from the more liquid investments and as self-liquidating Investment Funds make distributions.

THE SHARES WILL NOT BE LISTED ON ANY SECURITIES EXCHANGE AND IT IS NOT ANTICIPATED THAT A SECONDARY MARKET FOR THE SHARES WILL DEVELOP. THE SHARES ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE APPROPRIATE FUND’S LIMITED PARTNERSHIP AGREEMENT. THE FUNDS DO NOT ANTICIPATE TO REPURCHASE SHARES FROM INVESTORS EXCEPT IN LIMITED CIRCUMSTANCES AND SHARES WILL NOT BE REDEEMABLE AT A PARTNER’S OPTION NOR WILL THEY BE EXCHANGEABLE FOR INTERESTS OR SHARES OF ANY OTHER FUND. AS A RESULT, AN INVESTOR MAY NOT BE ABLE TO SELL OR OTHERWISE LIQUIDATE HIS OR HER SHARES. THE SHARES ARE APPROPRIATE ONLY FOR THOSE INVESTORS WHO DO NOT REQUIRE A LIQUID INVESTMENT AND WHO ARE AWARE OF THE RISKS INVOLVED IN INVESTING IN THE FUNDS. IN ADDITION, THE FUNDS MAY HAVE A LENGTHY EXISTENCE BASED ON THE LIQUIDATION OF THE INVESTMENT FUNDS. SEE “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE – INVESTMENT FUNDS’ SECURITIES ARE GENERALLY ILLIQUID.”

OUTSTANDING SECURITIES

PMF Fund*

Title of Class	Amount Authorized	Amount Held by Registrant or for its Account	Amount Outstanding Exclusive  of Amount Shown Under “Amount Held by Registrant or for its Account”
Shares	Unlimited	N/A	$0

* As of the date hereof.

TEI Fund*

Title of Class	Amount Authorized	Amount Held by Registrant or for its Account	Amount Outstanding Exclusive  of Amount Shown Under “Amount Held by Registrant or for its Account”
Shares	Unlimited	N/A	$0

* As of the date hereof.

As of the date hereof, each Fund is a wholly-owned subsidiary of the Legacy Master Funds. The Funds will each own more than 5% of the Master Fund.

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REPURCHASES OF SHARES

No Right of Redemption

No Partner (or other person holding Shares acquired from a Partner) will have the right to require a Fund to redeem its Shares or any portion thereof. No public market exists for the Shares, and none is expected to develop. Consequently, Partners may not be able to liquidate their investment other than as a result of repurchases of Shares by the Funds, as described below.

Repurchases

The Funds do not anticipate conducting regular repurchases. The Board, in its sole discretion, may determine to cause each Fund to offer to repurchase Shares from Partners, including the Adviser, pursuant to written tenders by Partners. However, the Funds’ assets consist primarily of their interest in the Master Fund (via the Offshore Fund in the case of the TEI Fund). Therefore, in order to finance the repurchase of Shares pursuant to repurchase offers, each Fund may find it necessary to liquidate all or a portion of its interest in the Master Fund in the case of the PMF Fund, or, in the case of the TEI Fund, the Offshore Fund, which in turn must liquidate all or a portion of its interest in the Master Fund. Because interests in the Master Fund and Offshore Fund may not be transferred, the PMF Fund and TEI Fund may withdraw a portion of their interest only pursuant to repurchase offers by the Master Fund and Offshore Fund, respectively. The Funds generally will not conduct a repurchase offer for Shares unless the Master Fund simultaneously conducts a repurchase offer for its limited partnership interests The Funds, however, may also consider offers by third parties to purchase Master Fund Interests, which may be at a discount to net asset value, and may under such circumstances conduct a corresponding offer to repurchase Fund Shares, potentially at a discount to net asset value of the Shares, to reflect any sale by the Funds of Master Fund interests. The Master Fund’s Board retains the discretion to approve requests to tender or transfer its interests and, therefore, there are no assurances that the Master Fund’s Board will, in fact, decide to undertake any repurchase offer or allow any transfer of Master Fund interests necessary for the Funds to engage in a third party sale.

TRANSFERS OF SHARES

No person shall become a substituted Partner of a Fund without the consent of the Fund, which consent may be reasonably withheld in its sole discretion. Shares held by Partners may be transferred only: (i) by operation of law in connection with the death, divorce, bankruptcy, insolvency, or adjudicated incompetence of the Partner; or (ii) under other limited circumstances, with the consent of the Board (which may be reasonably withheld in its sole discretion and is expected to be granted, if at all, only under extenuating circumstances).

Unless counsel to the Funds confirms that the transfer will not cause a Fund to be treated as a “publicly traded partnership” taxable as a corporation, the Board generally will not consider consenting to a transfer of Shares (or portion thereof) unless the transfer is: (i) one in which the tax basis of the Shares in the hands of the transferee is determined, in whole or in part, by reference to its tax basis in the hands of the transferring Partner (e.g., certain transfers to affiliates, gifts and contributions to family entities); (ii) to members of the transferring Partner’s immediate family (siblings, spouse, parents, or children); or (iii) a distribution from a qualified retirement plan or an individual retirement account.

Notice to a Fund of any proposed transfer must include evidence satisfactory to the Board or its delegee that the proposed transferee, at the time of transfer, meets any requirements imposed by such

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Fund with respect to investor eligibility and suitability. See “ELIGIBLE INVESTORS.” Notice of a proposed transfer of Shares must also be accompanied by a properly completed Subscription Agreement in respect of the proposed transferee. In connection with any request to transfer Shares (or portion thereof), a Fund may require the Partner requesting the transfer to obtain, at the Partner’s expense, an opinion of counsel selected by the Fund as to such matters as the Fund may reasonably request. The Board generally will not consent to a transfer of Shares by a Partner (i) unless such transfer is to a single transferee, (ii) if, after the transfer of the Shares, the balance of the capital account of each of the transferee and transferor is less than $100,000; or (iii) if such a transfer does not meet certain restrictions imposed by the Board on transfers for value. Each transferring Partner and transferee may be charged reasonable expenses, including, but not limited to, attorneys’ and accountants’ fees, incurred by the Fund in connection with the transfer.

Any transferee acquiring Shares by operation of law in connection with the death, divorce, bankruptcy, insolvency, or adjudicated incompetence of the Partner, will be entitled to the allocations and distributions allocable to the Shares or a portion of the Shares so acquired, to transfer the Shares or a portion of the Shares in accordance with the terms of the LP Agreement and to request repurchase of the Shares or a portion of the Shares by the Fund, but will not be entitled to the other rights of a Partner unless and until the transferee becomes a substituted Partner as specified in the LP Agreement. If a Partner transfers Shares with the approval of the Board, the Fund shall as promptly as practicable take all necessary actions so that each transferee or successor to whom the Shares are transferred is admitted to the Fund as a Partner.

By subscribing for Shares, each Partner agrees to indemnify and hold harmless the Fund, the Board, the General Partner, the Adviser, and each other Partner, and any affiliate of the foregoing against all losses, claims, damages, liabilities, costs, and expenses (including legal or other expenses incurred in investigating or defending against any losses, claims, damages, liabilities, costs, and expenses or any judgments, fines, and amounts paid in settlement), joint or several, to which such persons may become subject by reason of or arising from any transfer made by that Partner in violation of the LP Agreement or any misrepresentation made by that Partner in connection with any such transfer.

CALCULATION OF NET ASSET VALUE; VALUATION

Each of the Funds and the Master Fund will calculate its NAV as of the close of business on the last business day of each accounting period (as defined under “CAPITAL ACCOUNTS AND ALLOCATIONS—Capital Accounts”) and at such other times as the Board may determine, including in connection with repurchases of Shares, in accordance with the procedures described below or as may be determined from time to time in accordance with policies established by the Board. The NAV of a Fund will equal the value of the total assets of the Fund, less all of its liabilities, including accrued fees and expenses. The NAV of the Master Fund will equal the value of the total assets of the Master Fund, less all of its liabilities, including accrued fees and expenses. Because the Funds intend to invest substantially all of their investable assets in the Master Fund, (in the case of the TEI Fund, indirectly through the Offshore Fund), the value of the assets of the Funds will depend on the value of their share of the Investment Funds or other investments in which the Master Fund invests.

The Board Valuation Committee of the Master Fund oversees, and the Adviser’s Valuation Committee implements, the valuation of the Master Fund’s investments, including interests in the Investment Funds, in accordance with written policies and procedures (the “Valuation Procedures”) that the Boards of the Master Fund and the Funds have approved for purposes of determining the value of

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securities held by the Master Fund, including the fair value of the Master Fund’s investments in Investment Funds. The Adviser’s Valuation Committee consists of members of the Investment Committee, additional officers of the Fund, and one or more representatives of the Adviser. The Directors, including the Independent Directors, and the members of the Board Valuation Committee and the Adviser’s Valuation Committee, respectively, have been advised of their duties with respect to valuation as described in the Valuation Procedures.

As a general principle, the fair valuation of a security should reflect the amount that the Adviser’s Valuation Committee determines that the Master Fund might reasonably expect to receive for the security upon the orderly sale or redemption of the security, based on information available at the time, that the Adviser’s Valuation Committee believes to be reliable. In the case of a security issued by an Investment Fund, this would typically be equal to the amount that the Funds might reasonably expect to receive from the Investment Fund if the Fund’s interest were redeemed on the date as of which it was valued. It is anticipated that the Adviser’s Valuation Committee will make this determination based on the valuation most recently provided by the Investment Fund, in accordance with the policies the Investment Fund has established, which may constitute the Investment Fund’s best estimate at the time based upon data then available, as well as any other relevant information reasonably available at the time of the valuation of the Master Fund’s portfolio.

At the time of an investment by the Legacy Master Fund in any Investment Fund, the Adviser’s Valuation Committee conducted a due diligence review of the valuation methodologies used by the Investment Fund. As a general matter Investment Funds selected by the Legacy Master Fund use market value when available, and otherwise will use principles of fair value applied in good faith. The Adviser’s Valuation Committee will consider whether it is appropriate, in light of the relevant circumstances, to value interests at the NAV as reported at the time of valuation, or whether to adjust such value to reflect a premium or discount.

The Valuation Procedures approved by the Board provide that, where deemed appropriate by the Adviser and consistent with the Investment Company Act, investments in Investment Funds may be valued at cost. Cost would be used only when cost is determined to best approximate the fair value of the particular security under consideration. For example, cost may not be appropriate when the Master Fund is aware of sales of similar securities to third parties at different prices or in other circumstances where cost may not approximate fair value (which could include situations where there are no sales to third parties). In such a situation, the Master Fund’s investment will be revalued in a manner that the Adviser’s Valuation Committee, in accordance with the Valuation Procedures, determines in good faith best reflects fair value. In addition, certain Investment Funds holding assets that may not vary widely on a near-term basis (for example, those holding certain private equity or real estate investments) may report values less frequently than other Investment Funds holding more liquid assets which may be anticipated to vary in value on a near-term basis. The Board and Board Valuation Committee will be responsible for ensuring that the Valuation Procedures are fair to the Funds and consistent with applicable regulatory guidelines.

To the extent the Master Fund holds securities or other instruments that are not investments in Investment Funds, the Master Fund will generally value such assets as described below. Securities traded (1) on one or more of the U.S. national securities exchanges or the over-the-counter Bulletin Board will be valued at their last sales price, and (2) on the Nasdaq Stock Market will be valued at the Nasdaq Official Closing Price (“NOCP”), at the close of trading on the exchanges or markets where such securities are traded for the business day as of which such value is being determined. Securities traded on the Nasdaq Stock Market for which the NOCP is not available will be valued at the mean between the

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closing bid and asked prices in this market. Securities traded on a foreign securities exchange will generally be valued at their closing prices on the exchange where such securities are primarily traded and translated into U.S. dollars at the current exchange rate. If an event occurs between the close of the foreign exchange and the computation of the Master Fund’s net asset value that would materially affect the value of the security, the value of such a security will be adjusted to its fair value. Except as specified above, the value of a security, derivative, or synthetic security that is not actively traded on an exchange shall be determined by an unaffiliated pricing service that may use actual trade data or procedures using market indices, matrices, yield curves, specific trading characteristics of certain groups of securities, pricing models, or combinations of these. The Adviser’s Valuation Committee or Independent Administrator, as applicable, will monitor the value assigned to each security by the pricing service to determine if it believes the value assigned to a security is correct. If the Independent Administrator or Adviser’s Valuation Committee, as applicable, believes that the value received from the pricing service is incorrect, then the value of the security will be its fair value as determined in accordance with the Valuation Procedures.

In general, fair value represents a good faith approximation of the current value of an asset and will be used when there is no public market or possibly no market at all for the asset. The fair values of one or more assets may not be the prices at which those assets are ultimately sold. In such circumstances, the Adviser’s Valuation Committee and/or the Board Valuation Committee, in consultation with the Independent Administrator or the Adviser, will reevaluate the Funds’ fair value methodology to determine, what, if any, adjustments should be made to the methodology.

Although the Valuation Procedures approved by the Board provide that the Adviser’s Valuation Committee will review the valuations provided by the Independent Administrator (via the Investment Managers or their administrators), none of the Board Valuation Committee, the Independent Administrator, the Adviser’s Valuation Committee or the Adviser will be able to confirm independently the accuracy of any unaudited valuations provided thereby.

Prospective investors should be aware that situations involving uncertainties as to the valuation of portfolio positions could have an adverse effect on the Funds’ net assets if the judgments of the Board, the Board Valuation Committee, the Adviser, the Adviser’s Valuation Committee and/or the Independent Administrator (in reliance on the Investment Funds, the Investment Managers and/or their administrators) regarding appropriate valuations should prove incorrect. The Master Fund may desire to dispose of an interest in an Investment Fund, but be unable to dispose of such interest, and could therefore be obligated to continue to hold the interests for an extended period of time. In such a case, the Independent Administrator, upon consultation with the Adviser’s Valuation Committee or the Adviser, may continue to value the interests without the benefit of the Investment Manager’s or its administrator’s valuations, and may, in its sole discretion, determine to discount the value of the interests in accordance with the Valuation Procedures.

CAPITAL ACCOUNTS AND ALLOCATIONS

Capital Accounts

Each Fund will maintain a separate capital account on its books for each Partner. Each Partner’s capital account will have an opening balance equal to the Partner’s initial contribution to the capital of the relevant Fund and thereafter, will be (i) decreased for any payments upon repurchase of such Partner’s Shares or any distributions in respect of such Partner, and (ii) increased or decreased as of the close of

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each accounting period (as defined below) by such Partner’s allocable share of the net profits or net losses of the Fund. A Partner’s capital account will also be adjusted for any amounts debited against the Partner’s capital account as described below.

Partners’ capital accounts are adjusted on the last business day of each accounting period, other than for capital contributions (which are not expected to occur following the initial contribution), which are credited to the Partners’ capital accounts as of the beginning of each accounting period. The initial accounting period begins upon the commencement of operations of a Fund. Each subsequent accounting period begins on the business day after the last business day of the preceding accounting period, and each accounting period (including the initial accounting period) ends on the first to occur of (1) the last business day of each fiscal year of each Fund, (2) the last business day of each taxable year of each Fund; (3) the business day preceding the effective date on which a contribution of capital is made to a Fund; (4) the Valuation Date with respect to any repurchase of Shares by a Fund, or the business day preceding the effective date of any repurchase of any Shares of any Partner or the complete withdrawal by a Partner; (5) the business day preceding the business day on which a substituted Partner is admitted to a Fund; or (6) the effective date on which any amount is credited to or debited from the capital account of any Partner other than an amount to be credited to or debited from the capital accounts of all Partners in accordance with their respective investment percentages (as defined below).

In addition, the final accounting period shall end on the date a Fund dissolves. An “investment percentage” will be determined for each Partner as of the start of each accounting period by dividing the balance of the Partner’s capital account as of the commencement of the period by the sum of the balances of all capital accounts of all Partners for that Fund as of that date, as adjusted for any capital contributions as of the beginning of such accounting period. The NAV of a Partner’s Shares will reflect the value of the Partner’s capital account.

Investors should note that fees charged directly for services in conjunction with an investment in a Fund and/or maintenance of investor accounts may reduce the amount of an initial or subsequent contribution of capital and may impact an investor’s capital account.

Allocation of Profit and Loss

Net profits or net losses of each Fund for each accounting period will be allocated among and credited to or debited against the capital accounts of all Partners as of the last business day of each accounting period in accordance with Partners’ respective investment percentages as of the start of such accounting period. Net profits or net losses will be measured as the net change in the value of the net assets of each Fund, including any net change in unrealized appreciation or depreciation of investments and realized income and gains or losses and expenses (including private placement and organizational expenses) during an accounting period, adjusted to exclude any items to be allocated among the capital accounts of the Partners other than in accordance with the Partners’ respective investment percentages.

Allocation of Special Items – Certain Withholding Taxes and Other Expenditures

Withholding taxes or other tax obligations incurred by a Fund that are attributable to any Partner will be debited against the capital account of that Partner as of the close of the accounting period during which the relevant Fund accrued or paid those obligations, and any amounts then or thereafter distributable to the Partner will be reduced by the amount of those taxes accrued or paid. If the amount of those taxes is greater than the distributable amounts, then the Partner and any successor to the Partner’s

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Shares is required to pay upon demand to such Fund, as a contribution to the capital of the Fund, the amount of the excess. The Funds are not obligated to apply for or obtain a reduction of or exemption from withholding tax on behalf of any Partner, although in the event that a Fund determines that a Partner is eligible for a refund of any withholding tax, it may, at the request and expense of that Partner, assist the Partner in applying for the refund.

Any expenditures payable by a Fund, to the extent paid or withheld on behalf of, or by reason of particular circumstances applicable to, one or more but fewer than all of the Partners, will generally be charged to only those Partners on whose behalf the payments are made or whose circumstances gave rise to the payments. These charges will be debited to the capital accounts of the applicable Partners as of the close of the accounting period during which the items were paid or accrued by such Fund.

Reserves

Appropriate reserves may be created, accrued, and charged against net assets and proportionately against the capital accounts of the Partners for contingent liabilities including taxes as of the date the contingent liabilities become known to the relevant Fund or the Board. Reserves will be in such amounts (subject to increase or reduction) that a Fund or the Board may deem necessary or appropriate.

Unclaimed Property

A Partner’s unclaimed property may be transferred to the appropriate state under certain circumstances specified by applicable state law.

CERTAIN TAX CONSIDERATIONS

The following summary describes certain significant United States federal income tax consequences of owning Shares to investors who are U.S. persons, i.e., a citizen or resident of the United States, a corporation or partnership created or organized in the United States or any state thereof, or an estate or trust, the income of which is includible in income for federal income tax purposes regardless of its source. The summary does not discuss all of the tax consequences that may be relevant to a particular investor or to certain investors (e.g., tax-exempt and foreign investors and insurance companies) subject to special treatment under the federal income tax laws.

THIS SUMMARY IS NECESSARILY GENERAL, AND EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT WITH ITS OWN TAX ADVISER WITH RESPECT TO THE FEDERAL, FOREIGN, STATE AND LOCAL TAX CONSEQUENCES OF PURCHASING AND HOLDING SHARES.

This summary is based on the Code as in effect on the date of this Memorandum, the U.S. Treasury Regulations promulgated thereunder (the “Treasury Regulations”), rulings of the U.S. Internal Revenue Service (the “IRS”), and court decisions in existence on the date hereof, all of which are subject to change. The Funds have not sought a ruling from the IRS or any other federal, state or local agency with respect to any of the tax issues affecting the Funds.

Investors’ Reliance on Federal Tax Advice in this Memorandum

THE DISCUSSION CONTAINED IN THIS MEMORANDUM AS TO TAX CONSIDERATIONS IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED,

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FOR THE PURPOSE OF AVOIDING PENALTIES. SUCH DISCUSSION IS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE OFFERING MATERIALS, INCLUDING THE PRIVATE PLACEMENT OF SHARES OF THE FUNDS IN THE UNITED STATES. EACH TAXPAYER SHOULD SEEK FEDERAL TAX ADVICE BASED ON THE TAXPAYER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

The following discussion presents, first, tax considerations with respect to the PMF Fund and, second, tax considerations with respect to the TEI Fund. Investments made by the Master Fund may have tax consequences with respect to the PMF Fund and its investors that are different from the tax consequences with respect to the Offshore Fund and the TEI Fund, and the TEI Fund’s investors. The Master Fund will be managed with a focus on investment performance, rather than on the tax consequences to a particular Fund and its investors.

The PMF Fund

Partnership Status of the PMF Fund and the Master Fund

In general, the federal income tax consequences of an investment in the PMF Fund will depend on whether the PMF Fund and the Master Fund will be treated for federal income tax purposes as partnerships rather than as associations taxable as corporations. No application will be made to the Service for a ruling on the classification of the PMF Fund or the Master Fund for tax purposes. For the reasons described below, the PMF Fund and the Master Fund are expected to be treated as partnerships for federal income tax purposes. If the Fund and the Master Fund are classified as “partnerships” for federal income tax purposes and are not “publicly traded partnerships,” they will not be subject to any federal income tax. Instead, the PMF Fund will be allocated a share of the Master Fund’s income and gain and Partners in the PMF Fund will be subject to tax on their distributive shares of PMF Fund income and gain and, subject to certain limitations described below, will be entitled to claim distributive shares of PMF Fund losses.

Under Section 7704 of the Code, “publicly traded partnerships” are generally treated as corporations for federal income tax purposes. A publicly traded partnership is any partnership the interests in which are traded on an established securities market or are readily tradable on a secondary market (or the substantial equivalent thereof). Shares of the PMF Fund will not be traded on an established securities market. Treasury Regulations concerning the classification of partnerships as publicly traded partnerships (the “Section 7704 Regulations”) provide certain safe harbors under which interests in a partnership will not be considered readily tradable on a secondary market (or the substantial equivalent thereof).

The Section 7704 Regulations include a “redemption or repurchase agreement” safe harbor under which partnership interests can avoid being treated as readily tradable. The Section 7704 Regulations provide that this safe harbor applies in the case of a “redemption or repurchase agreement,” which is defined as “a plan of redemption or repurchase maintained by a partnership whereby the partners may tender their partnership interests for purchase by the partnership, another partner or a person related to another partner.” The Section 7704 Regulations provide that the transfer of an interest in a partnership pursuant to a redemption or repurchase agreement is disregarded in determining whether interests in the partnership are readily tradable if (1) the redemption or repurchase agreement provides that the redemption or repurchase cannot occur until at least 60 calendar days after the partner notifies the

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partnership in writing of the partner’s intention to exercise the redemption or repurchase right, (2) the redemption or repurchase price is established not more than four times during the partnership’s taxable year, and (3) the sum of the percentage interests in partnership capital or profits transferred during the taxable year of the partnership does not exceed 10 percent of the total interests in partnership capital or profits (calculated by adding the percentages of total interests transferred at the time of each transfer, but excluding certain transfers such as block transfers).

The repurchase procedures established by the PMF Fund satisfy the first of the requirements for a safe-harbor redemption or repurchase agreement. The value of the Shares being repurchased is established on a date no earlier than 30 days after the expiration of the period during which tenders may be submitted, and the initial payment is made no sooner than the 30th day after the valuation date. Accordingly, the repurchase cannot occur until at least 60 calendar days after the tendering Partner submits its tender.

The PMF Fund’s LP Agreement contains provisions satisfying the second of the requirements for a safe-harbor redemption or repurchase agreement. The LP Agreement provides that the PMF Fund will not offer to repurchase Shares on more than four occasions in any Fiscal Year and, therefore, the repurchase price for Shares will be established not more than four times during the year.

The third condition of the “redemption or repurchase agreement” safe harbor is that the repurchased interests’ partnership capital or profits not exceed 10 percent per year of the total interests in partnership capital or profits. The LP Agreement does not contain an explicit limitation on the percentage of Shares that can be repurchased in any year. Nevertheless, the transfer restrictions and repurchase provisions of the LP Agreement and the PMF Fund’s procedures are sufficient to meet the requirements of the “redemption or repurchase agreement” safe harbor as set forth in the Section 7704 Regulations in any year in which the PMF Fund repurchases Shares not in excess of 10 percent of the total interests in the PMF Fund’s capital or profits.

In the event that, in any year, the PMF Fund repurchases Shares in excess of 10 percent of the total interests in its capital or profits, the PMF Fund will not satisfy the “redemption or repurchase agreement” safe harbor. The Section 7704 Regulations specifically provide that the fact that a partnership does not qualify for the safe harbors is disregarded for purposes of determining whether interests in a partnership are readily tradable on a secondary market (or the substantial equivalent thereof). Rather, in this event, the partnership’s status is examined to determine whether, taking into account all of the facts and circumstances, the partners are readily able to buy, sell, or exchange their partnership interests in a manner that is comparable, economically, to trading on an established securities market.

If it were determined that the PMF Fund should be treated as an association or a publicly traded partnership taxable as a corporation for federal income tax purposes (as a result of a successful challenge by the IRS, changes in the Code, the Treasury Regulations or judicial interpretations thereof, a material adverse change in facts or otherwise), the taxable income of the PMF Fund would be subject to corporate income tax when recognized by the PMF Fund; distributions of such income, other than in certain redemptions of Shares, would be treated as dividend income when received by the Partners to the extent of the current or accumulated earnings and profits of the PMF Fund; and Partners would not be entitled to report profits or losses realized by the PMF Fund.

The Master Fund will also be treated as a partnership for federal income tax purposes. As entities treated as partnerships for tax purposes, the PMF Fund and the Master Fund are not themselves subject to

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federal income tax. Each will file an annual partnership information return with the IRS that will report the results of operations. The PMF Fund will report its allocable share of the Master Fund’s net long-term capital gain or loss, net short-term capital gain or loss and all other items of ordinary income or loss; and each Partner will be required to report separately on its income tax return its distributive share of the PMF Fund’s net long-term capital gain or loss, net short-term capital gain or loss and all other items of ordinary income or loss. The amount and times of distributions, if any, will be determined in the sole discretion of the PMF Fund’s Board. Each Partner will be taxed on its distributive share of the PMF Fund’s taxable income and gain regardless of whether it has received or will receive a distribution from the PMF Fund. Partners will also be allocated taxable gain based upon the timing of the recognition and allocation of such gain to the Master Fund, which could result in the allocation to a Partner of taxable gain recognized with respect to capital appreciation occurring prior to the Partner’s investment in the PMF Fund.

Taxation of the PMF Fund and Investment Funds

The PMF Fund invests in the Master Fund, which in turn generally invests in Investment Funds that are taxable as partnerships. However, the Master Fund may invest from time to time in Investment Funds that are taxable as corporations. The PMF Fund, the Master Fund and the Investment Funds that are taxable as partnerships are not subject to federal income tax. The PMF Fund’s income will include its allocable share of the income, gain, loss, deduction and credit of the Master Fund’s partnership investments. References below to positions held or transactions effected by the PMF Fund include its allocable share of the Master Fund’s interests in managed accounts and its allocable interest in positions held and transactions effected by the partnerships in which the Master Fund invests.

Corporate Investment Funds that are organized in foreign jurisdictions will be subject to federal income tax on their net income that is effectively connected with a U.S. trade or business and U.S. withholding tax on certain non-effectively connected U.S. source income. In general, the PMF Fund will recognize taxable gain or loss when the Master Fund disposes of stock in a corporate Investment Fund. Moreover, any corporate Investment Fund that is formed in a foreign jurisdiction will likely be treated as a “passive foreign investment company,” in which case, each Partner will be required to pay tax at ordinary income rates (as determined under Section 1291 of the Code) on its allocable share of any gain recognized on the sale of its indirect interest in the foreign corporate Investment Fund, plus a deemed interest charge (treated as an addition to tax) to reflect the deferral of income over the term for which the stock was held. The deferred tax charge will not apply if the Master Fund elects to recognize its allocable share of any foreign corporate Investment Fund’s income and gain annually. The Master Fund generally intends to make such an election when and to the extent available, but no assurances can be given that such election will be available or that if available the Master Fund will make such election.

Taxation of Partners

Each Partner will be required to report on its federal income tax return, and will be taxed upon, its allocable share of each item of the PMF Fund’s income, gain, loss, deduction and credit for each taxable year of the PMF Fund ending with or within the Partner’s taxable year. See “Allocations of Income, Gain, Loss and Deduction” below. Each item generally will have the same character and source (either U.S. or foreign), as though the Partner realized the item directly. Partners must report these items regardless of the extent to which, or whether, they receive cash distributions from the PMF Fund for such taxable year. Moreover, investments in certain securities, such as original issue discount obligations or preferred stock with redemption or repayment premiums, or in the stock of certain types of foreign corporations, such as a “controlled foreign corporation” or “passive foreign investment company,” could cause the PMF Fund,

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and consequently the Partners, to recognize taxable income without the PMF Fund or the Partners receiving any related cash distribution. An investment in a “passive foreign investment company” could also, in the absence of a specific election, cause a Partner to pay a deferred tax and interest charge on taxable income that is treated as having been deferred. In addition, because the net profits or net losses of the PMF Fund that are allocated to a Partner’s capital account reflect both gain and loss realized for federal income tax purposes and the unrealized appreciation and depreciation of investments, a Partner’s share of the taxable income of the PMF Fund in any year may be more or less than the amount of net profits or net losses allocated to the Partner’s capital account for that year.

FOR THE REASONS DESCRIBED ABOVE AND BECAUSE, AMONG OTHER THINGS, THE PMF FUND IS NOT GENERALLY OBLIGATED TO MAKE DISTRIBUTIONS, PARTNERS MAY RECOGNIZE SUBSTANTIAL AMOUNTS OF TAXABLE INCOME IN EACH YEAR, THE TAXES ON WHICH ARE FAR IN EXCESS OF ANY DISTRIBUTIONS FROM THE PMF FUND.

Partners will receive annual tax information necessary for completion of U.S. federal, state and local tax returns. This information in certain cases may include estimates, which could increase the likelihood of being audited, and may lack certain reportable information for their tax returns. The PMF Fund intends to furnish to Partners such information as soon as practicable after receipt of the necessary information from the Investment Funds. However, such annual tax information will be provided by the PMF Fund after April 15 of each year and, accordingly, Partners will need to file for extensions for the completion of their state and federal tax returns.

In addition, the Funds will not be in a position to independently verify the accuracy of tax information provided by the Investment Funds, their administrators or the Investment Managers. In the event the IRS challenges tax positions taken by the Investment Funds, Partners of the Funds could be adversely affected. In particular, Partners in the Funds could be required to amend prior tax returns and include additional amounts of income not previously reported, and pay federal income tax at applicable rates (together with applicable penalties and interest, if any) if the tax information that Investment Funds provide to the Funds is materially inaccurate or otherwise changes as a result of a successful challenge by the IRS.

Because the Fund expects to be treated as a partnership for federal income tax purposes, the Fund expects to deliver such tax information to Partners on IRS Schedule K-1 (not Form 1099). In light of the Master Fund’s investments in numerous Investment Funds as of the date hereof, the nature of the tax reporting on a Partner’s own federal income tax return of its allocable share of the Fund’s income, gain, loss, deduction or credit will be complicated, and the Partner will likely need the assistance of a certified public accountant or other tax professional to prepare its federal and state income tax returns. The Partner could experience an increase in the amount of fees payable to such tax professionals, and such increase could be material.

The Code generally allows certain partnerships with 100 or more partners to elect to have a special set of rules and procedures apply that are intended to simplify the calculation and reporting of certain partnership items. The PMF Fund does not intend to make this election if it becomes available, but it reserves the right, in its sole discretion, to make the election if it determines that the election would be in the best interest of the Partners. In certain cases, it is possible that the election would have an adverse effect on the Partners.

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Tax-Exempt Investors

Because the PMF Fund and any Investment Fund may incur debt in connection with the purchase of securities, futures and other investments, the PMF Fund may generate income that is taxable to tax-exempt Partners as unrelated business taxable income (“UBTI”). See “Unrelated Business Taxable Income” below. In addition, a tax-exempt Partner may recognize UBTI if it incurs indebtedness to finance its investment in the PMF Fund, and it is possible that certain investments by the PMF Fund could result in UBTI, even if such investments are not debt financed.

An individual retirement account may be required to pay income taxes, make estimated income tax payments, and file an income tax return for any taxable year in which it has UBTI. To file an income tax return, an individual retirement account may need to obtain a taxpayer identification number. The PMF Fund is not designed for investment by charitable remainder trusts and an investment in the PMF Fund is not likely to be appropriate for a charitable remainder trust. The charitable contribution deduction for charitable lead trusts and other trusts under Section 642(c) of the Code may be limited for any year in which the trusts have UBTI. Additional tax considerations also may be applicable to private foundations and private operating foundations.

Prospective investors that are individual retirement accounts, title holding companies, private foundations, and private operating foundations, as well as any other Tax-Exempt Investors, should consult their own tax advisers with respect to the tax consequences of investing in, and receiving UBTI from, the PMF Fund.

Distributions

Distributions to a Partner by the PMF Fund, other than in liquidation in whole or in part of the Partner’s Shares of the PMF Fund, will not result in the recognition of gain or loss by such Partner, except that gain will be recognized to the extent that cash distributed exceeds the Partner’s adjusted tax basis in its Shares of the PMF Fund. Any such gain recognized will generally be treated as capital gain.

On the complete liquidation of a Partner’s Shares of the PMF Fund, a Partner that receives only cash will recognize gain or loss equal to the difference between the amount of cash received and such Partner’s adjusted tax basis for its Shares of the PMF Fund. If a Partner receives cash and other property, or only other property, it will not recognize loss but will recognize gain to the extent that the amount of cash received exceeds the adjusted tax basis of its Shares of the PMF Fund. Any such gain recognized will generally be treated as capital gain.

Allocations of Income, Gain, Loss and Deduction

Under the LP Agreement, the net profits or net losses of the PMF Fund for each accounting period are allocated among the Partners and to their capital accounts without regard to the amount of income or loss actually recognized by the PMF Fund for federal income tax purposes. The LP Agreement provides that items of taxable income, deduction, gain, loss or credit actually recognized by the PMF Fund for each taxable year generally are to be allocated for income tax purposes among the Partners pursuant to the principles of Treasury Regulations issued under Sections 704(b) and 704(c) of the Code, to reflect equitably the amounts of net profits or net losses of the PMF Fund allocated to each Partner’s capital account for the current and prior taxable years.

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The PMF Fund may specially allocate items of Fund taxable income and gain to a withdrawing Partner having all or a portion of its Shares repurchased to the extent its book capital account exceeds its adjusted tax basis in its repurchased Shares and may specially allocate items of Fund loss to a Partner having all or a portion of its Shares repurchased to the extent its adjusted tax basis in its Shares exceeds its book capital account. There can be no assurance that, if the PMF Fund makes such a special allocation, the IRS will accept such allocation. If such allocation is successfully challenged by the IRS, the PMF Fund’s income and gain or loss, as the case may be, allocable to the remaining Partners will be increased.

Tax Treatment of Portfolio Investments

In General.  The PMF Fund expects that the Master Fund and the Investment Funds each will act as a trader or investor, and not as a dealer, with respect to its securities transactions. A trader and an investor are persons who buy and sell securities for their own accounts. A dealer, on the other hand, is a person who purchases securities for resale to customers rather than for investment or speculation.

Generally, the gains and losses realized by a trader or an investor on the sale of securities are capital gains and losses. Thus, subject to the treatment of certain currency exchange gains as ordinary income (see “Currency Fluctuations – ‘Section 988’ Gains or Losses” below) and certain other transactions described below, the PMF Fund expects that the gains and losses from the securities transactions of the Master Fund and the Investment Funds typically will be capital gains and capital losses. These capital gains and losses may be long-term or short-term depending, in general, upon the length of time the Master Fund or a Investment Fund, as the case may be, maintains a particular investment position and, in some cases, upon the nature of the transaction. Property held for more than one year generally will be eligible for long-term capital gain or loss treatment. The application of certain rules relating to short sales, to so-called “straddle” and “wash sale” transactions and to Section 1256 Contracts (defined below) may serve to alter the manner in which the holding period for a security is determined or may otherwise affect the characterization as short-term or long-term, and also the timing of the realization, of certain gains or losses. Moreover, the straddle rules and short sale rules may require the capitalization of certain related expenses of the Master Fund.

The Master Fund may realize ordinary income from dividends and accruals of interest on securities. The Master Fund may hold debt obligations with “original issue discount.” In such case, the Master Fund would be required to include amounts in taxable income on a current basis even though receipt of such amounts may occur in a subsequent year. The Master Fund also may acquire debt obligations with “market discount.” Upon disposition of such an obligation, the Master Fund generally would be required to treat gain realized as interest income to the extent of the market discount that accrued during the period the debt obligation was held by the Master Fund. Income or loss from transactions involving certain derivative instruments, such as swap transactions, will also generally constitute ordinary income or loss. Moreover, gain recognized from certain “conversion transactions” will be treated as ordinary income. Generally, a conversion transaction is one of several enumerated transactions where substantially all of the taxpayer’s return is attributable to the time value of the net investment in the transaction. The enumerated transactions are (i) the holding of any property (whether or not actively traded) and entering into a contract to sell such property (or substantially identical property) at a price determined in accordance with such contract, but only if such property was acquired and such contract was entered into on a substantially contemporaneous basis, (ii) certain straddles, (iii) generally any other transaction that is marketed or sold on the basis that it would have the economic characteristics of a loan but the interest-like return would be taxed as capital gain or (iv) any other transaction specified in the Treasury Regulations.

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Fluctuations – “Section 988” Gains or Losses.  To the extent that its investments are made in securities denominated in a foreign currency, gain or loss realized by the Master Fund or an Investment Fund frequently will be affected by the fluctuation in the value of such foreign currencies relative to the value of the dollar. Generally, gains or losses with respect to the investments in common stock of foreign issuers will be taxed as capital gains or losses at the time of the disposition of such stock. However, under Section 988 of the Code, gains and losses on the acquisition and disposition of foreign currency (e.g., the purchase of foreign currency and subsequent use of the currency to acquire stock) will be treated as ordinary income or loss. Moreover, under Section 988, gains or losses on disposition of debt securities denominated in a foreign currency to the extent attributable to fluctuation in the value of the foreign currency between the date of acquisition of the debt security and the date of disposition will be treated as ordinary income or loss. Similarly, gains or losses attributable to fluctuations in exchange rates that occur between the time the Master Fund or an Investment Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the Master Fund or Investment Fund actually collects such receivables or pays such liabilities may be treated as ordinary income or ordinary loss.

As indicated above, the Master Fund or an Investment Fund may acquire foreign currency forward contracts, enter into foreign currency futures contracts and acquire put and call options on foreign currencies. Generally, foreign currency regulated futures contracts and option contracts that qualify as “Section 1256 Contracts” (see “Section 1256 Contracts” below), will not be subject to ordinary income or loss treatment under Section 988. However, if the Master Fund or an Investment Fund acquires currency futures contracts or option contracts that are not Section 1256 Contracts, or any currency forward contracts, any gain or loss realized by the Master Fund or Investment Fund with respect to such instruments will be ordinary, unless: (i) the contract is a capital asset in the hands of the Master Fund or Investment Fund and is not a part of a straddle transaction; and (ii) an election is made (by the close of the day the transaction is entered into) to treat the gain or loss attributable to such contract as capital gain or loss.

Section 1256 Contracts.  In the case of Section 1256 Contracts, the Code generally applies a “mark to market” system of taxing unrealized gains and losses on such contracts and otherwise provides for special rules of taxation. A Section 1256 Contract includes certain regulated futures contracts, certain foreign currency forward contracts, and certain options contracts. Under these rules, Section 1256 Contracts held by the Master Fund or Investment Fund at the end of each taxable year of the Master Fund or Investment Fund are treated for federal income tax purposes as if they were sold by the Master Fund or Investment Fund for their fair market value on the last business day of such taxable year. The net gain or loss, if any, resulting from such deemed sales (known as “marking to market”), together with any gain or loss resulting from actual sales of Section 1256 Contracts, must be taken into account by the Master Fund or Investment Fund in computing its taxable income for such year. If a Section 1256 Contract held by the Master Fund or Investment Fund at the end of a taxable year is sold in the following year, the amount of any gain or loss realized on such sale will be adjusted to reflect the gain or loss previously taken into account under the “mark to market” rules.

Capital gains and losses from such Section 1256 Contracts generally are characterized as short-term capital gains or losses to the extent of 40% thereof and as long-term capital gains or losses to the extent of 60% thereof. Such gains and losses will be taxed under the general rules described above. Gains and losses from certain foreign currency transactions will be treated as ordinary income and losses. (See “Currency Fluctuations – ‘Section 988’ Gains or Losses.”) If an individual taxpayer incurs a net capital loss for a year, the portion thereof, if any, which consists of a net loss on Section 1256 Contracts may, at

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the election of the taxpayer, be carried back three years. Losses so carried back may be deducted only against net capital gain to the extent that such gain includes gains on Section 1256 Contracts.

Straddles.  The Code contains special rules that apply to “straddles,” defined generally as the holding of “offsetting positions with respect to personal property.” For example, the straddle rules apply when a taxpayer holds stock and an offsetting option with respect to such stock or substantially identical stock or securities. In general, investment positions will be offsetting if there is a substantial diminution in the risk of loss from holding one position by reason of holding one or more other positions (although certain covered call stock options would not be treated as part of a straddle). The Master Fund expects to indirectly enter into investments that may constitute positions in a straddle when considered in conjunction with the other investments of the Master Fund. If two or more positions constitute a straddle, recognition of a realized loss from one position must be deferred to the extent of unrecognized gain in an offsetting position. In addition, long-term capital gain may be recharacterized as short-term capital gain, or short-term capital loss as long-term capital loss. Interest and other carrying charges allocable to personal property that is part of a straddle are not currently deductible but must instead be capitalized. Similarly, “wash sale” rules apply to prevent the recognition of loss by the Master Fund from the disposition of stock or securities at a loss in a case in which identical or substantially identical stock or securities (or an option to acquire such property) is or has been acquired within a prescribed period.

Mixed Straddle Election.  The Code allows a taxpayer to elect to offset gains and losses from positions which are part of a “mixed straddle.” A “mixed straddle” is any straddle in which one or more but not all positions are Section 1256 Contracts. The Master Fund (and any Investment Fund) may be eligible to elect to establish one or more mixed straddle accounts for certain of its mixed straddle trading positions. The mixed straddle account rules require a daily “marking to market” of all open positions in the account and a daily netting of gains and losses from positions in the account. At the end of a taxable year, the annual net gains or losses from the mixed straddle account are recognized for tax purposes. The application of the Treasury Regulations’ mixed straddle account rules is not entirely clear. Therefore, there is no assurance that a mixed straddle account election by the Master Fund or Investment Fund will be accepted by the IRS.

Short Sales.  Gain or loss from a short sale of property is generally considered as capital gain or loss to the extent the property used to close the short sale constitutes a capital asset in the Master Fund’s or Investment Fund’s hands. Except with respect to certain situations where the property used to close a short sale has a long-term holding period on the date the short sale is entered into, gains on short sales generally are short-term capital gains. A loss on a short sale will be treated as a long-term capital loss if, on the date of the short sale, “substantially identical property” has been held by the Master Fund or Investment Fund for more than one year. In addition, these rules also may terminate the running of the holding period of “substantially identical property” held by the Master Fund or Investment Fund.

Gain or loss on a short sale will generally not be realized until such time that the short sale is closed. However, if the Master Fund or Investment Fund holds a short sale position with respect to stock, certain debt obligations or partnership interests that have appreciated in value, and it then acquires property that is the same as or substantially identical to the property sold short, the Master Fund or Investment Fund generally will recognize gain on the date it acquires such property as if the short sale were closed on such date with such property. Similarly, if the Master Fund or Investment Fund holds an appreciated financial position with respect to stock, certain debt obligations, or partnership interests and then enters into a short sale with respect to the same or substantially identical property, the Master Fund or Investment Fund generally will recognize gain as if the appreciated financial position were sold at its

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fair market value on the date it enters into the short sale. The subsequent holding period for any appreciated financial position that is subject to these constructive sale rules will be determined as if such position were acquired on the date of the constructive sale.

Foreign Taxes.  It is possible that certain dividends and interest directly or indirectly received by the Master Fund or Investment Fund from sources within foreign countries will be subject to withholding taxes imposed by such countries. In addition, the Master Fund or an Investment Fund also may be subject to capital gains taxes in some of the foreign countries where they purchase and sell securities. Tax treaties between certain countries and the United States may reduce or eliminate such taxes.

Deductibility of Fund Investment Expenditures

Subject to certain exceptions, all miscellaneous itemized deductions, as defined by the Code, of an individual taxpayer, and certain of such deductions of an estate or trust, including in each case a partner’s allocable share of any such deductions with respect to expenses incurred by a partnership, are deductible only to the extent that such deductions exceed 2% of the taxpayer’s adjusted gross income. The Code also requires an individual whose adjusted gross income exceeds a specified threshold amount to reduce the amount allowable for itemized deductions (including such amount of miscellaneous itemized deductions as remain deductible after applying the 2% “floor” described above) by the lesser of: (i) 3% of the excess of the individual’s adjusted gross income over the specified amount; or (ii) 80% of the amount of certain itemized deductions otherwise allowable for the taxable year. Moreover, expenses which are miscellaneous itemized deductions are not deductible by a non-corporate taxpayer in calculating its alternative minimum tax liability. The foregoing limitations on deductibility do not apply to deductions attributable to a trade or business. The trading of stocks or securities is generally considered engaging in a trade or business for this purpose while investing in stocks or securities is generally not so considered.

At the end of each taxable year the PMF Fund will determine the extent to which its expenses are attributable to a trade or business or are miscellaneous itemized deductions. The manager or other authorized person of each entity taxed as a partnership will make this determination for such entity. There can be no assurance that the IRS will agree with such determinations.

Organizational and operating expenses of the PMF Fund, including the Investment Management Fee and any other amounts treated as compensation paid to the Adviser, as well as certain investment expenses of the PMF Fund, to the extent not attributable to a trade or business, may be treated as miscellaneous itemized deductions subject to the foregoing rules or may be required to be capitalized.

Under Section 163(d) of the Code, “investment interest” expense of a non-corporate taxpayer (including in the case of a Partner its allocable share of any such expense incurred by a partnership) is deductible only to the extent of such taxpayer’s “net investment income” (including in the case of a Partner its allocable share of any net investment income of a partnership). Interest expense incurred by the PMF Fund should constitute “investment interest” and accordingly may be subject to the foregoing limitation.

Losses

A Partner may deduct its allocable share of the PMF Fund’s losses only to the extent of such Partner’s adjusted tax basis for its Shares of the PMF Fund. Under current law, the deduction of capital losses is limited to the extent of capital gains in the case of a corporation and to the extent of capital gains plus $3,000 in the case of an individual.

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The Code restricts the deductibility of losses from a “passive activity” against certain income which is not derived from a passive activity. This restriction applies to individuals, personal service corporations and certain closely held corporations. Under temporary Treasury Regulations, income or loss from securities trading or investing activity generally will not constitute income or loss from a passive activity. Therefore, passive losses from other sources generally could not be deducted against a Partner’s share of such income and gain.

Alternative Minimum Tax.  The extent, if any, to which the federal alternative minimum tax will be imposed on any Partner, will depend on the Partner’s overall tax situation for the taxable year. Prospective investors should consult with their tax advisers regarding the alternative minimum tax consequences of an investment in the PMF Fund.

Unearned Income Medicare Tax.  Effective for tax years beginning after December 31, 2012, certain net investment income received by an individual having modified adjusted gross income in excess of $200,000 (or $250,000 for married individuals filing jointly) will be subject to a tax of 3.8 percent. Certain income and gain resulting from the PMF Fund’s investments, when allocated to individual investors, will constitute investment income of the type subject to this tax.

Tax Elections

The PMF Fund may make various elections for federal income tax purposes which could result in certain items of income, gain, loss, deduction and credit being treated differently for tax and accounting purposes.

The Code generally permits a partnership to elect to adjust the basis of its property on the sale or exchange of a partnership interest, the death of a partner and on the distribution of property to a partner (a “754 election”), except in certain circumstances in which such adjustments are mandatory. Such adjustments generally are mandatory in the case of a transfer of a partnership interest with respect to which there is substantial built-in loss, or a distribution of partnership property which results in a substantial basis reduction. A substantial built-in loss exists if a partnership’s adjusted basis in its asset exceeds the fair market value of such assets by more than $250,000. A substantial basis reduction results if a downward adjustment of more than $250,000 would be made to the basis of partnership assets if a 754 election were in effect. The general effect of such an election or mandatory adjustment is that transferees of partnership interests are treated as though they had acquired a direct interest in partnership assets. Any such election, once made, may not be revoked without the IRS’s consent. Although the LP Agreement authorizes the PMF Fund, at its option, to make a 754 election (or any other elections permitted under the Code), because of the tax accounting complexities inherent in making this election to adjust the basis of the PMF Fund, it is unlikely that the PMF Fund would decide to make such an election unless circumstances existed which required such adjustments. The absence of this election and of the power to compel the making of such election may, in some circumstances, results in a reduction in value of an interest in the PMF Fund to a potential transferee.

The PMF Fund decides how to report the tax items on its information returns, and all Partners are required under the Code to treat the items consistently on their own returns, unless they file a statement with the IRS disclosing the inconsistency. In the event the income tax returns of the PMF Fund are audited by the IRS, the tax treatment of the PMF Fund’s income and deductions generally is determined at the partnership level in a single proceeding rather than by individual audits of the Partners. The General Partner, who is designated as the “Tax Matters Partner,” has considerable authority to make decisions

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affecting the tax treatment and procedural rights of all Partners. In addition, the Tax Matters Partner has the authority to bind certain Partners to settlement agreements and the right on behalf of all Partners to extend the statute of limitations relating to the Partners’ tax liabilities with respect to Fund items.

Tax Shelter Disclosure

Certain rules require taxpayers to disclose – on their federal income tax returns and, under certain circumstances, separately to the Office of Tax Shelter Analysis – their participation in “reportable transactions” and require “material advisors” to maintain investor lists with respect thereto. These rules apply to a broad range of transactions, including transactions that would not ordinarily be viewed as tax shelters, and to indirect participation in a reportable transaction (such as through a partnership). For example, a Partner who is an individual will be required to disclose participation in a loss transaction, which would include a tax loss resulting from the sale or exchange of his or her Shares, if the loss is at least $2 million in any single taxable year or $4 million in the taxable year in which the transaction is entered into and the five succeeding taxable years – those thresholds are $10 and $20 million, respectively, for Partners that are C corporations. A loss transaction would also include a loss from foreign currency transactions of at least $50,000 in any single taxable year for individuals and trusts, either directly or through a pass-through entity, such as the PMF Fund. Losses are adjusted for any insurance or other compensation received but determined without taking into account offsetting gains or other income or limitations on deductibility.

An excise tax and additional disclosure requirements may apply to certain tax-exempt entities that are “parties” to certain types of reportable transactions. A notice issued by the IRS provides that a tax-exempt investor in a partnership will generally not be treated as a “party” to a prohibited tax shelter transaction, even if the partnership engages in such a transaction, if the tax-exempt investor does not facilitate the transaction by reason of its tax-exempt, tax indifferent or tax-favored status. There can be no assurance, however, that the IRS or Treasury Department will not provide guidance in the future, either generally or with respect to particular types of investors, holding otherwise.

Failure to comply with the disclosure requirements for reportable transactions or prohibited tax shelter transactions can result in the imposition of penalties. Partners may be eligible for a disclosure safe harbor, as described in IRS Notice 2006-16, with respect to transactions in which the Funds may participate. The Funds may file protective disclosures with respect to transactions for purposes of satisfying the safe harbor requirements. Prospective investors are urged to consult with their own tax advisers with respect to the effect of these rules on an investment in the PMF Fund.

NOTWITHSTANDING ANYTHING TO THE CONTRARY, EACH INVESTOR (AND EACH EMPLOYEE, REPRESENTATIVE, OR OTHER AGENT OF THE INVESTOR) MAY DISCLOSE TO ANY AND ALL PERSONS, WITHOUT LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF AN INVESTMENT IN THE PMF FUND AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSIS) THAT ARE PROVIDED TO THE INVESTOR RELATING TO SUCH TAX TREATMENT AND TAX STRUCTURE (AS SUCH TERMS ARE DEFINED IN TREASURY REGULATION SECTION 1.6011-4).

State and Local Taxes

Prospective investors should also consider the potential state and local tax consequences of an investment in the PMF Fund. In addition to being taxed in its own state or locality of residence, a Partner

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may be subject to tax return filing obligations and income, franchise and other taxes in jurisdictions in which the PMF Fund or the Investment Funds operate. The PMF Fund may be required to withhold state and local taxes on behalf of the Partners. Any amount withheld generally will be treated as a distribution to each particular Partner. However, an individual Partner may be entitled to claim a credit on his or her resident state income tax return for the income taxes paid to the nonresident jurisdictions. Further, the PMF Fund (and the Investment Funds) may be subject to state and/or local taxes and may be required to make certain notices and other filings or face penalties.

Foreign Taxation

The manner in which the PMF Fund and/or Investment Funds and its income will be subject to taxation in the various countries in which it conducts investment activities depend on whether the PMF Fund is treated as having a trade or business in the particular country, and foreign taxes may apply irrespective of the nature of the Fund’s activities. Although the PMF Fund will endeavor, to the extent consistent with achieving its management and investment objectives, to minimize the risk that it is treated as engaged in a trade or business in a particular country that might result in significant taxation, no assurance can be provided in this regard. It is possible that certain amounts received from sources within foreign countries will be subject to withholding taxes imposed by such countries. In addition, the PMF Fund and/or Investment Funds also may be subject to other withholding and capital gains, stamp duty or other taxes in some of the foreign countries where it purchases and sells securities. It may be difficult or burdensome for the PMF Fund to obtain the benefit of tax treaties potentially applicable to its foreign investments.

The Partners will be informed by the PMF Fund as to their proportionate share of the foreign taxes paid by the PMF Fund, which they will be required to include in their income. The Partners may be entitled to claim either a credit (subject, however, to various limitations on foreign tax credits) or, if they itemize their deductions, a deduction (subject to the limitations generally applicable to deductions) for their share of such foreign taxes in computing their federal income taxes.

The TEI Fund

THE FOLLOWING IS PRIMARILY DIRECTED TO TAX EXEMPT OR TAX DEFERRED INVESTORS. THE ADVISER DOES NOT BELIEVE THAT, IN MOST INSTANCES, AN INVESTMENT IN THE TEI FUND BY A TAXABLE U.S. INVESTOR IS ADVISABLE. TAXABLE U.S. INVESTORS INTERESTED IN AN INVESTMENT SHOULD CONTACT THEIR TAX ADVISERS AND/OR COUNSELORS TO DISCUSS WHETHER AN INVESTMENT IN THE PMF FUND, L.P. (WHICH HAS A SUBSTANTIALLY SIMILAR INVESTMENT STRATEGY) WOULD NOT BE BETTER SUITED FOR THEIR INVESTMENT NEEDS AND TAX SITUATION. FOR INFORMATION ON THE PMF FUND, L.P., PLEASE CONTACT THE FUNDS’ SALES DESK AT 1-800-725-9456.

Partnership Status of the TEI Fund

In general, the federal income tax consequences of an investment in the TEI Fund will depend on whether the TEI Fund will be treated for federal income tax purposes as a partnership rather than as an association taxable as a corporation. No application will be made to the Service for a ruling on the classification of the TEI Fund for tax purposes. For the reasons described below, the TEI Fund is expected to be treated as a partnership for federal income tax purposes.

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If the TEI Fund is classified as a “partnership” for federal income tax purposes and is not a “publicly traded partnership,” it will not be subject to any federal income tax. Instead, the Partners in the TEI Fund will be subject to tax on their distributive shares of TEI Fund income and gain and, subject to certain limitations described below, will be entitled to claim distributive shares of Fund losses. On the other hand, if the Fund were to be classified as an association taxable as a corporation or as a “publicly traded partnership,” Partners would be treated as shareholders of a corporation. Consequently, (a) items of income, gain, loss and deduction would not flow through to the Partners to be accounted for on their individual federal income tax returns; (b) cash distributions would be treated as corporate distributions to the Partners, some or all of which might be taxable as dividends, and (c) the taxable income of the Fund would be subject to the federal income tax imposed on corporations.

Under Section 7704 of the Code, “publicly traded partnerships” are generally treated as corporations for federal income tax purposes. A publicly traded partnership is any partnership the interests in which are traded on an established securities market or are readily tradable on a secondary market (or the substantial equivalent thereof). Shares of the TEI Fund will not be traded on an established securities market. Treasury Regulations concerning the classification of partnerships as publicly traded partnerships (the “Section 7704 Regulations”) provide certain safe harbors under which interests in a partnership will not be considered readily tradable on a secondary market (or the substantial equivalent thereof).

The Section 7704 Regulations include a “redemption or repurchase agreement” safe harbor under which partnership interests can avoid being treated as readily tradable. The Section 7704 Regulations provide that this safe harbor applies in the case of a “redemption or repurchase agreement,” which is defined as “a plan of redemption or repurchase maintained by a partnership whereby the partners may tender their partnership interests for purchase by the partnership, another partner or a person related to another partner.” The Section 7704 Regulations provide that the transfer of an interest in a partnership pursuant to a redemption or repurchase agreement is disregarded in determining whether interests in the partnership are readily tradable if (1) the redemption or repurchase agreement provides that the redemption or repurchase cannot occur until at least 60 calendar days after the partner notifies the partnership in writing of the partner’s intention to exercise the redemption or repurchase right, (2) the redemption or repurchase price is established not more than four times during the partnership’s taxable year, and (3) the sum of the percentage interests in partnership capital or profits transferred during the taxable year of the partnership does not exceed 10 percent of the total interests in partnership capital or profits (calculated by adding the percentages of total interests transferred at the time of each transfer, but excluding certain transfers such as block transfers).

The repurchase procedures established by the TEI Fund satisfy the first of the requirements for a safe-harbor redemption or repurchase agreement. The value of the Shares being repurchased is established on a date no earlier than 30 days after the expiration of the period during which tenders may be submitted, and the initial payment is made no sooner than the 30th day after the valuation date. Accordingly, the repurchase cannot occur until at least 60 calendar days after the tendering Partner submits its tender.

The TEI Fund’s LP Agreement contains provisions satisfying the second of the requirements for a safe-harbor redemption or repurchase agreement. The LP Agreement provides that the TEI Fund will not offer to repurchase Shares on more than four occasions in any Fiscal Year and, therefore, the repurchase price for Shares will be established not more than four times during the year.

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The third condition of the “redemption or repurchase agreement” safe harbor is that the repurchased interests’ partnership capital or profits not exceed 10 percent per year of the total interests in partnership capital or profits. The LP Agreement does not contain an explicit limitation on the percentage of Shares that can be repurchased in any year. Nevertheless, the transfer restrictions and repurchase provisions of the LP Agreement and the TEI Fund’s procedures are sufficient to meet the requirements of the “redemption or repurchase agreement” safe harbor as set forth in the Section 7704 Regulations in any year in which the TEI Fund repurchases Shares not in excess of 10 percent of the total interests in the TEI Fund’s capital or profits.

In the event that, in any year, the TEI Fund repurchases Shares in excess of 10 percent of the total interests in its capital or profits, the TEI Fund will not satisfy the “redemption or repurchase agreement” safe harbor. The Section 7704 Regulations specifically provide that the fact that a partnership does not qualify for the safe harbors is disregarded for purposes of determining whether interests in a partnership are readily tradable on a secondary market (or the substantial equivalent thereof). Rather, in this event, the partnership’s status is examined to determine whether, taking into account all of the facts and circumstances, the partners are readily able to buy, sell, or exchange their partnership interests in a manner that is comparable, economically, to trading on an established securities market.

If it were determined that the TEI Fund should be treated as an association or a publicly traded partnership taxable as a corporation for federal income tax purposes (as a result of a successful challenge by the IRS, changes in the Code, the Treasury Regulations or judicial interpretations thereof, a material adverse change in facts or otherwise), the taxable income of the TEI Fund would be subject to corporate income tax when recognized by the TEI Fund; distributions of such income, other than in certain redemptions of Shares, would be treated as dividend income when received by the Partners to the extent of the current or accumulated earnings and profits of the TEI Fund; and Partners would not be entitled to report profits or losses realized by the TEI Fund.

As an entity treated as a partnership for tax purposes, the TEI Fund is not itself subject to federal income tax. The TEI Fund will file an annual partnership information return with the IRS that will report the results of operations. Each Partner will be required to report separately on its income tax return its distributive share of the TEI Fund’s net long-term capital gain or loss, net short-term capital gain or loss and all other items of ordinary income or loss. The TEI Fund does not presently intend to make periodic distributions of their net income or gains, if any, to Partners. The amount and times of distributions, if any, will be determined in the sole discretion of the TEI Fund’s Board. Each Partner will be taxed on its distributive share of the TEI Fund’s taxable income and gain regardless of whether it has received or will receive a distribution from the TEI Fund.

Classification of the Offshore Fund; Tax Exempt Investors

The tax status of the Offshore Fund and its shareholders under the tax laws of the Cayman Islands and the United States is summarized below. The summary is based on the assumption that the Offshore Fund is owned, managed and operated as contemplated and reflects counsel’s consideration of the fact that all of the shares of the Offshore Fund will be held by the TEI Fund and that Shares of the TEI Fund will be held by U.S. tax-exempt entities. The summary is considered to be a correct interpretation of existing laws as applied on the date of this Memorandum but no representation is made or intended by the Offshore Fund (i) that changes in such laws or their application or interpretation described below as applied to the method of operation of the Offshore Fund, or (ii) that the IRS will agree with the interpretation described below as applied to the method of operation of the Offshore Fund. Persons

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interested in subscribing for Shares of the TEI Fund should consult their own tax advisers with respect to the tax consequences, including the income tax consequences, if any, to them of the purchase, holding, redemption, sale or transfer of Shares.

1.        The Offshore Fund will be classified as an association taxable as a corporation for United States federal income tax purposes.

2.        The Offshore Fund intends to conduct its affairs generally so that it will not be deemed to be engaged in a trade or business in the United States and, therefore, generally its income will not be treated as “effectively connected” with a U.S. trade or business carried on by the Offshore Fund. Section 864(b)(2) of the Code provides a safe harbor pursuant to which a foreign entity that engages in the United States in trading securities for its own account will not be deemed to be engaged in a United States trade or business. The Master Fund, in which the Offshore Fund invests, intends generally to conduct its activities in a manner so as to meet the requirements of this safe harbor. If the activities are conducted in such a manner, the Master Fund’s securities trading activities should not constitute a United States trade or business, and the Offshore Fund generally should not be subject to corporate United States federal income tax on its allocable share of the Master Fund’s trading profits. However, certain of the activities the Investment Funds in which the Master Fund invests may be determined to be outside the scope of this safe harbor, in which case the Offshore Fund will likely be considered to be engaged in a United States trade or business attributable to such Investment Funds. Gains recognized by the Master Fund upon disposition of interests in such Investment Funds, and gains recognized by the Offshore Fund upon disposition of interests in the Master Fund relating to the Master Fund’s investment in such Investment Funds, would also be outside of the safe harbor, and would result in tax on “effectively connected” income and the U.S. branch profits tax as described in paragraph 3, below. If the Offshore Fund avoids being deemed to engage in a U.S. trade or business:

a)        Under present law, the Offshore Fund will not be subject to any United States federal income tax on its capital gains whether from sources within or outside the United States to the extent that such securities are not classified as United States real property interests within the meaning of Section 897 of the Code. Interests in certain Investment Funds, or in companies in which Investment Funds may invest, including shares in REITs, may be classified as “United States real property interests” within the meaning of Code Section 897. In such cases, the gain from the sale of such “United States real property interests” would be treated as “effectively connected” income subject to United States federal income tax as discussed below. In addition, the purchaser of such securities may be required to withhold a portion of the proceeds from such sale.

b)        The Offshore Fund will be subject to a 30% withholding tax on dividends and certain interest income considered to be from sources within the United States. Investment Funds in which the Master Fund invests may generate income that, when allocated to the Offshore Fund, will be subject to such withholding tax. The Offshore Fund does not expect to maintain cash reserves, but generally intends to invest any cash reserves that may exist in a manner so as not to be subject to this 30% withholding tax.

3.        The Master Fund may invest in Investment Funds that generate income “effectively connected” with a trade or business carried on by such Investment Fund (or an investment of the Investment Fund) in the U.S. Although the Master Fund monitors and attempts to analyze whether or not income it receives from Investment Funds might be “effectively connected” income, the Master Fund

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generally must rely upon each Investment Fund to report whether, and to what extent, income generated by such Investment Fund is effectively connected income. The Master Fund might also determine that an Investment Fund generating significant effectively connected income nevertheless presents an appropriate investment opportunity for the Master Fund and the Funds notwithstanding the tax impact due to the Offshore Fund. The receipt of such effectively connected income by the Master Fund means that the Offshore Fund will be deemed to have received an allocable share of such effectively connected income, the Master Fund must withhold and pay on behalf of the Offshore Fund U.S. withholding tax at a 35% rate on such effectively connected income and the Offshore Fund must file a U.S. corporate income tax return with respect to such income. In addition, the Offshore Fund will be subject to the U.S. branch profits tax with respect to its allocable share of effectively connected income. The U.S. branch profits tax is imposed after giving effect to the 35% withholding tax on the Offshore Fund’s “dividend equivalent amount,” which is equal to the Offshore Fund’s “effectively connected earnings and profits” for the taxable year, adjusted downward to reflect increases in “United States net equity” and adjusted upward to reflect decreases in “United States net equity.” The U.S. branch profits tax rate for the Offshore Fund is 30%. Income subject to the 35% withholding tax and the subsequent 30% branch profits tax would not be subject to the 30% withholding tax described in 2(b) above.

4.        Eligible Investors generally are exempt from U.S. federal income tax except to the extent that they have UBTI. UBTI is income from a trade or business unrelated to the tax-exempt entity’s exempt purpose or function. UBTI in excess of $1,000 (U.S.) in any year is taxable and may result in an alternative minimum tax liability. In view of this special problem, a tax-exempt investor should consult its tax adviser before purchasing Shares. It will be the responsibility of any tax-exempt investor investing in the TEI Fund to keep its own records with respect to UBTI and file its own IRS Form 990-T with respect thereto.

Various types of income, including dividends, interest, royalties, rents from real property (and incidental personal property) and gains from the sale of property other than inventory and property held primarily for sale to customers are excluded from UBTI so long as such income is not derived from debt financed property. To the extent that the Offshore Fund holds property that constitutes debt-financed property (e.g., purchases securities on margin or through other means of leverage) or property primarily for sale to customers (“dealer” property), income attributable to such property or activity may constitute UBTI. However, such UBTI should not be attributable to Partners of the Fund because the Offshore Fund will be classified for U.S. income tax purposes as an association taxable as a corporation and UBTI generally should not pass through or be deemed to pass through a corporation to its U.S. tax-exempt shareholders.

The Code provides several taxing regimes that have the effect of taxing U.S. persons currently on some or all of their pro rata share of the income of a foreign corporation, even though such income has not actually been distributed to them. These regimes involve the taxation of U.S. shareholders of (i) “passive foreign investment companies” (“PFICs”) and (ii) “controlled foreign corporations” (“CFCs”). Because all of the shares of the Offshore Fund will be held by the TEI Fund, which is a U.S. partnership for income tax purposes, the Offshore Fund will be considered a CFC for U.S. income tax purposes.

A “U.S. shareholder” (as defined below) of a CFC generally must include in income currently its pro rata share of, among other things, the CFC’s “Subpart F income,” whether or not currently distributed to such shareholder. “Subpart F income” includes various types of passive investment income such as dividends, interest, gains from the sale of stock or securities, and gains from futures transactions in

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commodities. A “U.S. shareholder” is generally defined as an U.S. person (including a U.S. partnership) that owns (or, after the application of certain constructive stock ownership rules, is deemed to own) 10% or more of the total combined voting power of all classes of stock entitled to vote of the foreign corporation, determined by reference to either vote or value, is owned (or, after the application of certain constructive stock ownership rules, is deemed to be owned) by “U.S. shareholders.” Because the TEI Fund, a U.S. partnership, will own 100% of the stock of the Offshore Fund, the TEI Fund will be a U. S. Shareholder for these purposes.

“Subpart F income” of a CFC that is currently taxed to a “U.S. shareholder” is not subject to tax again in its hands when actually distributed to such shareholder. Where income is taxable under both the PFIC and Subpart F regimes, Subpart F is given precedence, and such income is taxed only once. In addition, a corporation will not be treated with respect to a shareholder as a PFIC during the “qualified portion,” which is the portion of the shareholder’s holding period during which the shareholder is a “U.S. shareholder” (as defined above) and the corporation is a CFC.

Under current law applicable to U.S. tax-exempt entities, income attributed from a CFC or PFIC to a tax-exempt entity is taxable to a tax-exempt entity only if the income attributed from the CFC or PFIC is made taxable to the tax-exempt entity under the Code and Treasury Regulations relating to particular categories of UBTI (for example, if the Offshore Fund were to generate certain insurance income as defined in Section 512(b)(17) of the Code). The Offshore Fund does not expect to generate UBTI of this type.

Accordingly, income of the TEI Fund allocable to Tax-Exempt Investors (subject to certain exceptions) should not constitute UBTI.

The foregoing discussion is intended to apply primarily to exempt organizations that are qualified plans. The UBTI of certain other exempt organizations may be computed in accordance with special rules. Further, certain types of tax-exempt entities under the Code, such as “charitable remainder trusts” that are required to make taxable distributions based upon income received from all sources, may be disadvantaged under the rules relating to CFCs and PFICs in a manner similar to taxable investors. Charitable remainder trusts are generally required, under their trust instruments and for purposes of qualifying under the Code for tax exemption, to make current distributions of all or a significant portion of their income. As an investor in a CFC, such a trust would be deemed to receive income each year from the CFC whether or not the CFC currently distributes such income. For these reasons, the TEI Fund may not be an appropriate investment for charitable remainder trusts.

5.        Under recent legislation known as FATCA, beginning in 2014, a 30% withholding tax may apply to “withholdable payments” made to the Offshore Fund unless the Offshore Fund registers with the IRS or the Cayman Islands Tax Information Authority and collects and provides to the IRS annually substantial information regarding shares owned by “specified United States persons” or “United States owned foreign entities.” The term “withholdable payment” includes any payment of interest (even if the interest is otherwise exempt from the withholding rules described above), dividends, and the gross proceeds of a disposition of stock (including a liquidating distribution from a corporation) or debt instruments, in each case with respect to any U.S. investment. The withholding tax is scheduled to begin in 2014 with respect to U.S.-source income and in 2017 with respect to U.S.-source investment sale proceeds. Under recently adopted regulations, the Offshore Fund will need to register with the IRS by April 25, 2014 to insure that it will be identified as FATCA-compliant in sufficient time to allow the Offshore Fund to avoid such withholding on its U.S.-source income beginning on July 1, 2014. The Offshore Fund intends to register with the IRS once the regulations are finalized.

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6.        There are no income, corporation, capital gains or other taxes in effect in the Cayman Islands on the basis of present legislation. The Offshore Fund is an exempted company under Cayman Islands law and has received from the Governor-in-Council of the Cayman Islands a tax concessions pursuant to Section 6 of the Tax Concessions Law (1999 Revision) which provides that, for a period of 20 years from April 12, 2005, no law thereafter enacted in the Cayman Islands imposing any taxes to be levied on profits, income, gains or appreciation will apply to the Offshore Fund or its operations. No capital or stamp duties are levied in the Cayman Islands on the issue, transfer or redemption of shares. An annual registration fee will be payable by the Offshore Fund to the Cayman Islands government which will be calculated by reference to the nominal amount of its authorized capital.

UNLESS OTHERWISE INDICATED, REFERENCES IN THE FOLLOWING DISCUSSION OF THE TAX CONSEQUENCES OF FUND INVESTMENTS, ACTIVITIES, INCOME, GAIN AND LOSS, INCLUDE INVESTMENTS, ACTIVITIES, INCOME, GAIN AND LOSS OF THE MASTER FUND AND THE INVESTMENT FUNDS, AS WELL AS THE TAX IMPACT OF SUCH INVESTMENTS, ACTIVITIES, INCOME, GAIN AND LOSS ON THE TEI FUND AS A RESULT OF IT BEING AN INVESTOR IN THE OFFSHORE FUND AND, THROUGH THE MASTER FUND, AN INDIRECT INVESTOR IN THE INVESTMENT FUNDS.

As an entity treated as a partnership for tax purposes, the TEI Fund is not itself subject to federal income tax. The TEI Fund will file an annual partnership information return with the IRS that will report the results of operations. Each Partner who is subject to tax will be required to report separately on its income tax return its distributive share of the TEI Fund’s ordinary income or loss.

Because the Offshore Fund will be treated as a corporation for federal income tax purposes, however, the TEI Fund, and therefore Partners, will receive taxable income to the extent of dividends paid by the Offshore Fund or earlier in the event that CFC rules (described above) require the TEI Fund to include some portion of the Offshore Fund’s income in its own income even when no dividends are paid. The Offshore Fund’s income will be its share of the taxable income of the Master Fund, which, in turn, will receive allocations of its share of the taxable income of the Investment Funds. Generally, neither the TEI Fund nor the Offshore Fund will have any power to control the timing of cash distributions by the Investment Funds. The amount and timing of any distributions will be determined in the sole discretion of the Board. Accordingly, it is likely that a Partner’s share of taxable income from the TEI Fund could exceed the distributions, if any, the Partner receives from the TEI Fund. As discussed below, Partners will be furnished with a tax information report annually stating each Partner’s respective share of the TEI Fund’s tax items. Partners that are tax-exempt entities generally will not be subject to income tax on their allocable share of the TEI Fund’s income and gains.

Tax Shelter Disclosure

Certain rules require taxpayers to disclose – on their federal income tax returns and, under certain circumstances, separately to the Office of Tax Shelter Analysis – their participation in “reportable transactions” and require “material advisors” to maintain investor lists with respect thereto. These rules apply to a broad range of transactions, including transactions that would not ordinarily be viewed as tax shelters, and to indirect participation in a reportable transaction (such as through a partnership). For example, a Partner who is an individual will be required to disclose participation in a loss transaction, which would include a tax loss resulting from the sale or exchange of his or her Shares, if the loss is at least $2 million in any single taxable year or $4 million in the taxable year in which the transaction is entered into and the five succeeding taxable years – those thresholds are $10 and $20 million,

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respectively, for Partners that are C corporations. A loss transaction would also include a loss from foreign currency transactions of at least $50,000 in any single taxable year for individuals and trusts, either directly or through a pass-through entity, such as the TEI Fund. Losses are adjusted for any insurance or other compensation received but determined without taking into account offsetting gains or other income or limitations on deductibility.

An excise tax and additional disclosure requirements may apply to certain tax-exempt entities that are “parties” to certain types of reportable transactions. A notice issued by the IRS provides that a tax-exempt investor in a partnership will generally not be treated as a “party” to a prohibited tax shelter transaction, even if the partnership engages in such a transaction, if the tax-exempt investor does not facilitate the transaction by reason of its tax-exempt, tax indifferent or tax-favored status. There can be no assurance, however, that the IRS or Treasury Department will not provide guidance in the future, either generally or with respect to particular types of investors, holding otherwise.

Failure to comply with the disclosure requirements for reportable transactions or prohibited tax shelter transactions can result in the imposition of penalties. Partners may be eligible for a disclosure safe harbor, as described in IRS Notice 2006-16, with respect to transactions in which the Funds may participate. The Funds may file protective disclosures with respect to transactions for purposes of satisfying the safe harbor requirements. Prospective investors are urged to consult with their own tax advisers with respect to the effect of these rules on an investment in the TEI Fund.

NOTWITHSTANDING ANYTHING TO THE CONTRARY, EACH PARTNER (AND EACH EMPLOYEE, REPRESENTATIVE, OR OTHER AGENT OF THE PARTNER) MAY DISCLOSE TO ANY AND ALL PERSONS, WITHOUT LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF AN INVESTMENT IN THE TEI FUND AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSIS) THAT ARE PROVIDED TO THE PARTNER RELATING TO SUCH TAX TREATMENT AND TAX STRUCTURE (AS SUCH TERMS ARE DEFINED IN TREASURY REGULATION SECTION 1.6011-4).

Unrelated Business Taxable Income

Generally, an exempt organization is exempt from federal income tax on its passive investment income, such as dividends, interest and capital gains, whether realized by the organization directly or indirectly through a partnership in which it is a partner. This type of income is exempt even if it is realized from securities trading activity that constitutes a trade or business.

This general exemption from tax does not apply to the “unrelated business taxable income” (“UBTI”) of an exempt organization. Generally, except as noted above with respect to certain categories of exempt trading activity, UBTI includes income or gain derived (either directly or through partnerships) from a trade or business, the conduct of which is substantially unrelated to the exercise or performance of the organization’s exempt purpose or function. UBTI also includes “unrelated debt-financed income,” which generally consists of (i) income derived by an exempt organization (directly or through a partnership) from income-producing property with respect to which there is “acquisition indebtedness” at any time during the taxable year, and (ii) gains derived by an exempt organization (directly or through a partnership) from the disposition of property with respect to which there is “acquisition indebtedness” at any time during the twelve-month period ending with the date of such disposition. With respect to its investments, if any, in partnerships engaged in a trade or business, the Master Fund’s income (or loss) from these investments may be of a type that would constitute UBTI if received by a tax-exempt organization.

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The Master Fund and the Investment Funds may incur “acquisition indebtedness” with respect to certain of their transactions, such as the purchase of securities on margin. Based upon a published ruling issued by the IRS which generally holds that income and gain with respect to short sales of publicly traded stock does not constitute income from debt financed property for purposes of computing UBTI, the Master Fund will treat its short sales of securities, if any, and short sales of securities in which Investment Funds might engage, as not involving “acquisition indebtedness” and therefore not resulting in UBTI. Moreover, income realized from option writing and futures contract transactions generally would not constitute UBTI. To the extent the Master Fund recognizes income (i.e., dividends and interest) from securities with respect to which there is “acquisition indebtedness” during a taxable year, the percentage of such income which would be treated as UBTI generally will be based on the percentage which the “average acquisition indebtedness” incurred with respect to such securities is of the “average amount of the adjusted basis” of such securities during the taxable year.

To the extent the Master Fund recognizes gain from securities with respect to which there is “acquisition indebtedness” at any time during the twelve-month period ending with the date of their disposition, the percentage of such gain which would be treated as UBTI (if received by a tax-exempt organization) will be based on the percentage which the highest amount of such “acquisition indebtedness” is of the “average amount of the adjusted basis” of such securities during the taxable year. In determining the unrelated debt-financed income of the Master Fund, an allocable portion of deductions directly connected with the Master Fund’s debt-financed property is taken into account. Thus, for instance, a percentage of losses from debt-financed securities (based on the debt/basis percentage calculation described above) would offset gains treated as UBTI.

In general, if UBTI is allocated to an exempt organization such as a qualified retirement plan or a private foundation, the portion the exempt organization’s income and gains which is not treated as UBTI will continue to be exempt from tax. Therefore, the possibility of realizing UBTI should not affect the tax-exempt status of such an exempt organization. A charitable remainder trust must pay a federal excise tax equal to 100% of its UBTI; however, other income remains exempt from federal income tax. Moreover, the charitable contribution deduction for a trust under Section 642(c) of the Code may be limited for any year in which the trust has UBTI.

Notwithstanding the extent to which the Master Fund generates income that would be treated as UBTI if received by a tax-exempt organization, such income should not be attributable to tax-exempt owners of Shares of the TEI Fund, as the TEI Fund will not own a direct interest in the Master Fund. Rather, the TEI Fund invests in the Offshore Fund, which in turn will own an interest in the Master Fund. Although the Offshore Fund might be considered to receive income that would be characterized as UBTI in the hands of a tax-exempt entity, the Offshore Fund is treated as a corporation for U.S. income tax purposes. As described above, a tax-exempt investor in an organization treated as a partnership for federal income tax purposes will be attributed its allocable share of UBTI generated by the partnership’s activities. UBTI, on the other hand, does not pass through to the shareholders of an organization that is treated as a corporation for federal income tax purposes (except in the case of a captive foreign insurance company, which the Offshore Fund is not). Accordingly, any income from the activities or investments of the Offshore Fund will not be included in the income of a tax-exempt investor in calculating its UBTI.

With certain exceptions, tax-exempt organizations that are private foundations are subject to a 2% federal excise tax on their “net investment income.” The rate of the excise tax for any taxable year may be reduced to 1% if the private foundation meets certain distribution requirements for the taxable year. A private foundation will be required to make payments of estimated tax with respect to this excise tax

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A prospective investor should consult its tax adviser with respect to the tax consequences of receiving UBTI from the TEI Fund. See “ERISA Considerations.”

Provision of Tax Information to Members; Tax Preparation Expenses

Each Fund furnishes to Partners as soon as practicable after the end of each taxable year such information as is necessary for them to complete federal and state tax or information returns along with any tax information required by law. This information in certain cases will likely include estimates. It is not likely that the Master Fund will receive tax information from Investment Funds in a sufficiently timely manner to enable the Master Fund and a Fund to prepare their respective information returns in time for Partners to file their returns without requesting an extension of the time to file from the Internal Revenue Service (the “IRS” or the “Service”) or state taxing agencies. Accordingly, investors in a Fund will be required to obtain extensions of time to file their tax returns. The use of estimates or the lack of timely information from Investment Funds could result in material variances in the tax estimates provided by a Fund or may result in a Fund later amending its information returns, requiring the Partners to also amend their returns and report additional income or deductions not previously reported and pay federal and state income tax at applicable rates (together with applicable penalties and interest, if any, related to estimates or amended returns).

In addition, each Fund will not be in a position to independently verify the accuracy of tax information provided by the Investment Funds. In the event the IRS or state taxing agencies challenge tax positions taken by the Investment Funds or by a Fund, Partners of the relevant Fund could be adversely affected. In particular, Partners in a Fund could be required to amend prior tax returns and include additional amounts of income not previously reported, and pay federal and/or state income tax at applicable rates (together with applicable penalties and interest, if any) if the tax information that Investment Funds provide to a Fund or positions taken by the Investment Funds or a Fund are determined to be materially inaccurate or otherwise change as a result of a successful challenge by the IRS or state taxing agencies.

Because each Fund expects to be treated as a partnership for federal income tax purposes, each Fund expects to deliver such tax information to Partners on IRS Schedule K-1 (not Form 1099). In light of the Master Fund’s investments in numerous Investment Funds as of the date hereof, the nature of the tax reporting on a Partner’s own federal income tax return of its allocable share of a Fund’s income, gain, loss, deduction or credit will be complicated, and the Partner will likely need the assistance of a certified public accountant or other tax professional to prepare its federal and state income tax returns. The Partner could experience a substantial increase in the amount of fees payable to such tax professionals, and such increase could be material. Investors subscribing for Shares of a Fund for the first time late in a Fund’s fiscal year (which is currently the calendar year) may wish to consider such expenses in deciding whether to subscribe at such time or to delay the subscription until the beginning of the next fiscal year.

Reporting Requirements

Regulations generally impose an information reporting requirement on a U.S. person’s direct and indirect contributions of cash to a foreign corporation such as the Offshore Fund where, immediately after the contribution, the U.S. person owns, directly or indirectly, at least 10 percent of the combined voting power or total value of the corporation, or if the amount of cash transferred during a 12-month period exceeds $100,000. Under these rules, a Partner will be deemed to have transferred a proportionate share of the cash contributed by the TEI Fund to the Offshore Fund. Substantial penalties may apply if the

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required reports are not made on time. Prospective Investors are strongly urged to consult their own tax advisors concerning these reporting requirements as they relate to an investment in Fund.

Under recent legislation, known as FATCA, beginning in 2014 a 30% U.S. withholding tax may apply to “withholdable payments” made to the Offshore Fund unless the Offshore Fund registers with the IRS or the Cayman Islands Tax Information Authority and collects and provides to the IRS annually substantial information regarding shares owned by “specified United States persons” or “United States owned foreign entities.” The term “withholdable payment” includes any payment of interest (even if the interest is exempt from the withholding rules described above), dividends, and the gross proceeds of a disposition of stock (including a liquidating distribution from a corporation) or debt instruments, in each case with respect to any U.S. investment. A specified United States person is essentially any U.S. person, other than publicly traded corporations, their affiliates, tax-exempt organizations, governments, banks, real estate investment trusts, regulated investment companies, and common trust funds. A United States owned foreign entity is a foreign entity with one or more “substantial United States owners,” generally defined as United States person owning a greater than 10% interest. The withholding tax is scheduled to begin in 2014 with respect to U.S.-source income and in 2017 with respect to U.S.-source investment sale proceeds. Under recently adopted regulations, the Offshore Fund will need to register with the IRS by April 25, 2014 to insure that it will be identified as FATCA-compliant in sufficient time to allow the Offshore Fund to avoid such withholding on its U.S.-source income beginning on July 1, 2014. The Offshore Fund intends to register with the IRS.

Certain Issues Pertaining to Specific Exempt Organizations

Private Foundations.  Private foundations and their managers are subject to excise taxes if they invest “any amount in such a manner as to jeopardize the carrying out of any of the foundation’s exempt purposes.” This rule requires a foundation manager, in making an investment, to exercise “ordinary business care and prudence” under the facts and circumstances prevailing at the time of making the investment, in providing for the short-term and long-term needs of the foundation to carry out its exempt purposes. The factors that a foundation manager may take into account in assessing an investment include the expected rate of return (both income and capital appreciation), the risks of rising and falling price levels, and the need for diversification within the foundation’s portfolio.

In order to avoid the imposition of an excise tax, a private foundation may be required to distribute on an annual basis its “distributable amount,” which includes, among other things, the private foundation’s “minimum investment return,” defined as 5% of the excess of the fair market value of its nonfunctionally related assets (assets not used or held for use in carrying out the foundation’s exempt purposes), over certain indebtedness incurred by the foundation in connection with such assets. It appears that a foundation’s investment in the TEI Fund would most probably be classified as a nonfunctionally related asset. A determination that an interest in the TEI Fund is a nonfunctionally related asset could conceivably cause cash flow problems for a prospective Partner which is a private foundation. Such an organization could be required to make distributions in an amount determined by reference to unrealized appreciation in the value of its interest in the TEI Fund. Of course, this factor would create less of a problem to the extent that the value of the investment in the TEI Fund is not significant in relation to the value of other assets held by a foundation.

In some instances, an investment in the TEI Fund by a private foundation may be prohibited by the “excess business holdings” provisions of the Code. For example, if a private foundation (either directly or together with a “disqualified person”) acquires more than 20% of the capital interest or profits

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interest of the TEI Fund, the private foundation may be considered to have “excess business holdings.” If this occurs, such foundation may be required to divest itself of its interest in the TEI Fund in order to avoid the imposition of an excise tax. However, the excise tax will not apply if at least 95% of the gross income from the TEI Fund is “passive” within the applicable provisions of the Code and Treasury Regulations. Although there can be no assurance, the Board believes that the TEI Fund will meet such 95% gross income test.

A substantial percentage of investments of certain “private operating foundations” may be restricted to assets directly devoted to their tax-exempt purposes. Otherwise, generally, rules similar to those discussed above govern their operations.

Qualified Retirement Plans.  Employee benefit plans subject to the provisions of ERISA, Individual Retirement Accounts and Keogh Plans should consult their counsel as to the implications of such an investment under ERISA. See “ERISA Considerations.”

Endowment Funds.  Investment managers of endowment funds should consider whether the acquisition of Shares is legally permissible. This is not a matter of federal law, but is determined under state statutes. It should be noted, however, that under the Uniform Management of Institutional Funds Act, which has been adopted, in various forms, by a large number of states, participation in investment partnerships or similar organizations in which funds are commingled and investment determinations are made by persons other than the governing board of the endowment fund is allowed.

State and Local Taxation

In addition to the federal income tax consequences described above, prospective investors should consider potential state and local tax consequences of an investment in the TEI Fund. State and local tax laws differ in the treatment of partnerships such as the TEI Fund. A few jurisdictions may impose entity level taxes on a partnership if it is found to have sufficient contact with that jurisdiction. Such taxes are frequently based on the income and capital of the entity that is allocated to the jurisdiction. Although there can be no assurance, the TEI Fund intends to conduct its activities so that its direct activities will not be subject to entity level taxation by any state or local jurisdiction. However, due to the activities of certain underlying Investment Funds, the Offshore Fund will likely have state tax filing requirements in certain states and may be required to pay state taxes in certain situations. In addition, a Partner may be subject to tax return filing obligations and other taxes in its own jurisdiction as well as the jurisdiction in which the TEI Fund operates. Prospective Partners should contact their tax adviser regarding the potential state and local tax consequences of an investment in the TEI Fund.

Risks of TEI Fund – Changes in United States Law

If there are changes in the laws of the United States so as to result in the inability of the TEI Fund and/or the Offshore Fund to operate as set forth in this Memorandum, there may be a material adverse effect on investors. There can be no assurance that the positions of the TEI Fund relating to the tax consequences of its investment transactions will be accepted by the tax authorities. In addition, the regulatory environment for leveraged investors, Tax-Exempt Investors and for hedge funds generally is evolving. To the extent that legislative or other regulatory changes occur in the direct or indirect regulation of leveraged investors, Tax-Exempt Investors, widely-held partnerships or hedge funds, including tax regulation applicable thereto, all of which have been discussed by members of Congress, there may be materially adverse effects on the ability of the TEI Fund to pursue its investment objective

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or strategies, which could force the TEI Fund to change, or even cease, its operations. For example, if Congress were to change treatment of investment in offshore corporations by Tax-Exempt Investors, the TEI Fund likely would suffer a materially adverse impact including decreased investment returns. In such circumstances, the Board would be required to assess what steps to take, including potentially eliminating the Offshore Fund or dissolving the TEI Fund. See “General Risks – Special Risks of the TEI Fund.”

Cayman Islands Taxation

The Government of the Cayman Islands will not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax upon the Offshore Feeders or their respective members. The Cayman Islands are not party to any double taxation treaties.

The Offshore Fund has received an undertaking from the Governor-in-Council of the Cayman Islands that, in accordance with section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, for a period of 20 years from April 20, 2005, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to the Offshore Fund or its operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (i) on the shares, debentures or other obligations of the Offshore Fund or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by the Offshore Fund to its sole managing member (the TEI Fund) or a payment of principal or interest or other sums due under a debenture or other obligation of the Offshore Fund.

ERISA CONSIDERATIONS

PMF Fund

Persons who are fiduciaries with respect to an employee benefit plan or other arrangement subject to the Employee Retirement Income Security Act of 1974, as amended (an “ERISA Plan” and “ERISA,” respectively), and persons who are fiduciaries with respect to an IRA, Keogh Plan, or other plan that is subject to the prohibited transaction provisions of Section 4975 of the Code (together with ERISA Plans, “Plans”) should consider, among other things, the matters described below before determining whether to invest in the PMF Fund.

A Plan fiduciary considering an investment in the PMF Fund should consult with its legal counsel concerning all the legal implications of investing in the PMF Fund, especially the issues discussed in the following paragraphs. In addition, a Plan fiduciary should consider whether an investment in the PMF Fund will result in any UBTI to the Plan. See “CERTAIN TAX CONSIDERATIONS.”

ERISA imposes certain general and specific responsibilities on persons who are fiduciaries with respect to an ERISA Plan, including prudence, diversification, an obligation not to engage in a prohibited transaction and other standards. In determining whether a particular investment is appropriate for an ERISA Plan, Department of Labor (“DOL”) regulations provide that a fiduciary of an ERISA Plan must give appropriate consideration to, among other things, whether the investment is permitted under the Plan’s governing instruments, the role that the investment plays in the ERISA Plan’s portfolio, taking into consideration whether the investment is designed reasonably to further the ERISA Plan’s purposes, an examination of the risk and return factors, the fund’s composition with regard to diversification, the liquidity and current return of the total portfolio relative to the anticipated cash flow needs of the ERISA

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Plan, the income tax consequences of the investment (see “Tax Considerations – Unrelated Business Taxable Income” and “– Certain Issues Pertaining to Specific Exempt Organizations”) and the projected return of the total portfolio relative to the ERISA Plan’s funding objectives. Before investing the assets of an ERISA Plan in the PMF Fund, a fiduciary should determine whether such an investment is consistent with its fiduciary responsibilities and the foregoing regulations. If a fiduciary with respect to any such ERISA Plan breaches its or his responsibilities with regard to selecting an investment or an investment course of action for such ERISA Plan, the fiduciary itself or himself may be held liable for losses incurred by the ERISA Plan as a result of such breach.

Because the PMF Fund is registered as an investment company under the Investment Company Act, the underlying assets of the PMF Fund should not be considered to be “plan assets” of the Plans investing in the PMF Fund for purposes of the fiduciary responsibility and prohibited transaction rules under ERISA or the Code. Thus, the Adviser, will not be a fiduciary within the meaning of ERISA or the Code with respect to the assets of any Plan that invests in the PMF Fund, solely by reason of the Plan’s investment in the PMF Fund.

Certain prospective Plan investors may currently maintain relationships with the Adviser or its affiliates. Each of such persons may be deemed to be a party in interest to and/or a fiduciary of any Plan to which it provides investment management, investment advisory, or other services. ERISA and the relevant provisions of the Code prohibit the use of Plan assets for the benefit of a party in interest and also prohibit a Plan fiduciary from using its position to cause the Plan to make an investment from which it or certain third parties in which such fiduciary has an interest would receive a fee or other consideration. Plan investors should consult with legal counsel to determine if participation in the PMF Fund is a transaction that is prohibited by ERISA or the Code and fiduciaries of such plans should not permit an investment in the PMF Fund with Plan assets if the Adviser or any of its affiliates perform or have investment powers over such assets, unless an exemption from the prohibited transaction rules apply with respect to such purchase.

The PMF Fund requires Plan fiduciaries proposing to invest in the PMF Fund to certify that (a) the investment by such Plan interest holder in the PMF Fund is prudent for the Plan (taking into account any applicable liquidity and diversification requirements of ERISA); (b) the investment in the PMF Fund is permitted under ERISA, the Code, other applicable law and the Plan’s governing plan documents; (c) neither the Adviser nor any of its affiliates (including, without limitation, any of the Related Parties) has acted as a fiduciary under ERISA with respect to such purchase; (d) no advice provided by the Adviser or any of its affiliates (including, without limitation, any of the Related Parties) has formed a primary basis for any investment decision by such Plan interest holder in connection with such purchase; and (e) the purchase, holding and disposition of the interest in the PMF Fund will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or any substantively similar provisions of other law for which an exemption is not available.

The provisions of ERISA and the Code are subject to extensive and continuing administrative and judicial interpretation and review. The discussion of ERISA and the Code contained herein is, of necessity, general and may be affected by future publication of regulations and rulings. Potential Plan investors should consult with their legal advisers regarding the consequences under ERISA and the Code of the acquisition and ownership of an investment in the PMF Fund.

Employee benefit plans that are governmental plans (as defined in Section 3(32) of ERISA) are not subject to requirements of ERISA or the Code discussed above but may be subject to substantively similar

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provisions of other applicable federal or state law or may be subject to other legal restrictions on their ability to invest in the PMF Fund. Accordingly, any such governmental plans and the fiduciaries of such plans should consult with their legal counsel concerning all the legal implications of investing in the PMF Fund.

THE PMF FUND’S SALE OF SHARES TO PLANS IS IN NO RESPECT A REPRESENTATION OR WARRANTY BY THE PMF FUND, THE ADVISER OR ANY OF THEIR AFFILIATES (INCLUDING, WITHOUT LIMITATION, ANY OF THE RELATED PARTIES), OR BY ANY OTHER PERSON ASSOCIATED WITH THE SALE OF THE SHARES, THAT SUCH INVESTMENT BY PLANS MEETS ALL RELEVANT LEGAL REQUIREMENTS APPLICABLE TO PLANS GENERALLY OR TO ANY PARTICULAR PLAN, OR THAT SUCH INVESTMENT IS OTHERWISE APPROPRIATE FOR PLANS GENERALLY OR FOR ANY PARTICULAR PLAN.

TEI Fund

Persons who are fiduciaries with respect to an employee benefit plan or other arrangement subject to the Employee Retirement Income Security Act of 1974, as amended (an “ERISA Plan” and “ERISA,” respectively), and persons who are fiduciaries with respect to an IRA, Keogh Plan, or other plan that is subject to the prohibited transaction provisions of Section 4975 of the Code (together with ERISA Plans, “Plans”) should consider, among other things, the matters described below before determining whether to invest in the TEI Fund.

A Plan fiduciary considering an investment in the TEI Fund should consult with its legal counsel concerning all the legal implications of investing in the TEI Fund, especially the issues discussed in the following paragraphs.

ERISA imposes certain general and specific responsibilities on persons who are fiduciaries with respect to an ERISA Plan, including prudence, diversification, an obligation not to engage in a prohibited transaction and other standards. In determining whether a particular investment is appropriate for an ERISA Plan, Department of Labor (“DOL”) regulations provide that a fiduciary of an ERISA Plan must give appropriate consideration to, among other things, whether the investment is permitted under the Plan’s governing instruments, the role that the investment plays in the ERISA Plan’s portfolio, taking into consideration whether the investment is designed reasonably to further the ERISA Plan’s purposes, an examination of the risk and return factors, the fund’s composition with regard to diversification, the liquidity and current return of the total portfolio relative to the anticipated cash flow needs of the ERISA Plan, the income tax consequences of the investment (see “Tax Considerations – Unrelated Business Taxable Income” and “– Certain Issues Pertaining to Specific Exempt Organizations”) and the projected return of the total portfolio relative to the ERISA Plan’s funding objectives. Before investing the assets of an ERISA Plan in the TEI Fund, a fiduciary should determine whether such an investment is consistent with its fiduciary responsibilities and the foregoing regulations. If a fiduciary with respect to any such ERISA Plan breaches its or his responsibilities with regard to selecting an investment or an investment course of action for such ERISA Plan, the fiduciary itself or himself may be held liable for losses incurred by the ERISA Plan as a result of such breach.

Because the TEI Fund is registered as an investment company under the Investment Company Act, the underlying assets of the TEI Fund should not be considered to be “plan assets” of the Plans investing in the TEI Fund for purposes of the fiduciary responsibility and prohibited transaction rules under ERISA and/or the Code. Thus, the Adviser will not be a fiduciary within the meaning of ERISA or the Code with respect to the assets of any Plan that invests in the TEI Fund solely by reason of the Plan’s investment in the TEI Fund.

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Certain prospective Plan investors may currently maintain relationships with the Adviser or its affiliates. Each of such persons may be deemed to be a party in interest to and/or a fiduciary of any Plan to which it provides investment management, investment advisory or other services. ERISA and the relevant provisions of the Code prohibit the use of Plan assets for the benefit of a party in interest and also prohibit a Plan fiduciary from using its position to cause the Plan to make an investment from which it or certain third parties in which such fiduciary has an interest would receive a fee or other consideration. Plan investors should consult with counsel to determine if participation in the TEI Fund is a transaction that is prohibited by ERISA or the Code and fiduciaries of such plans should not permit an investment in the TEI Fund with Plan assets if the Adviser or any of its affiliates perform or have investment powers over such assets, unless an exemption from the prohibited transaction rules apply with respect to such purchase.

The TEI Fund requires Plan fiduciaries proposing to invest in the TEI Fund to certify that (a) the investment by such Plan interest holder in the TEI Fund is prudent for the Plan (taking into account any applicable liquidity and diversification requirements of ERISA); (b) the investment in the TEI Fund is permitted under ERISA, the Code, other applicable law and the Plan’s governing plan documents; (c) neither the Adviser nor any of its affiliates (including, without limitation, any of the Related Parties) has acted as a fiduciary under ERISA with respect to such purchase; (d) no advice provided by the Adviser or any of its affiliates (including, without limitation, any of the Related Parties) has formed a primary basis for any investment decision by such Plan interest holder in connection with such purchase; and (e) the purchase, holding and disposition of the shares of the TEI Fund will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or any substantively similar provisions of other law for which an exemption is not available.

The provisions of ERISA and the Code are subject to extensive and continuing administrative and judicial interpretation and review. The discussion of ERISA and the Code contained herein is, of necessity, general and may be affected by future publication of regulations and rulings. Potential Plan investors should consult their legal advisers regarding the consequences under ERISA and the Code of the acquisition and ownership of an investment in the TEI Fund. In this regard, changes in the direct or indirect regulation of such investors or hedge funds, including tax regulation applicable thereto, may alter materially the risks for potential Plan investors investing in the TEI Fund. In particular, Congress has held hearings regarding taxation policy as it relates to leveraged investors, Tax-Exempt Investors and hedge funds. Any legislation or regulation could pose additional risks and result in material adverse consequences including limitation of investment strategies used by the TEI Fund.

Employee benefit plans that are governmental plans (as defined in Section 3(32) of ERISA) are not subject to requirements of ERISA or the Code discussed above but may be subject to substantively similar provisions of other applicable federal or state law or may be subject to other legal restrictions on their ability to invest in the TEI Fund. Accordingly, any such governmental plans and the fiduciaries of such plans should consult with their legal counsel concerning all the legal implications of investing in the TEI Fund.

THE TEI FUND’S SALE OF SHARES TO PLANS IS IN NO RESPECT A REPRESENTATION OR WARRANTY BY THE TEI FUND, THE ADVISER OR ANY OF THEIR AFFILIATES (INCLUDING, WITHOUT LIMITATION, ANY OF THE RELATED PARTIES), OR BY ANY OTHER PERSON ASSOCIATED WITH THE SALE OF THE SHARES, THAT SUCH INVESTMENT BY PLANS MEETS ALL RELEVANT LEGAL REQUIREMENTS APPLICABLE TO PLANS GENERALLY OR TO ANY PARTICULAR PLAN, OR THAT SUCH INVESTMENT IS OTHERWISE APPROPRIATE FOR PLANS GENERALLY OR FOR ANY PARTICULAR PLAN.

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ELIGIBLE INVESTORS

Shares are generally only available to participating Legacy Feeder Fund investors that have tendered their Legacy Feeder Fund interests for repurchase in-kind. Each prospective investor is required to complete the correct subscription agreement signature pages (“Subscription Agreement Signature Pages”) to the Funds’ subscription agreement, and satisfy the investor eligibility standards set forth therein in order to be permitted to invest in that Fund. The Subscription Agreement Signature Pages and the Funds’ subscription agreement are referred to collectively as the “Subscription Agreement,” a form of which is set forth in Appendix B to this Memorandum. The qualifications required to invest in each Fund will appear in the Subscription Agreement.

An investment in either Fund involves risks and it is possible that an investor may lose some of its investment. In addition, an investment in the Funds is not liquid and investors should provide for adequate liquidity outside of their investment in the Funds to meet their foreseeable liquidity needs. Before making an investment decision, an investor and/or its adviser should (i) consider the suitability of this investment with respect to its investment objectives and personal situation and (ii) consider factors such as its personal net worth, income, age, risk tolerance, and liquidity needs. See “RISK FACTORS.” Short-term investors and investors who cannot bear the loss of some of their investment and/or the risks associated with a lack of liquidity should not invest in the Funds.

PMF Fund

Generally, the Subscription Agreement requires that an investor certify that it is an “accredited investor” for purposes of Regulation D under the Securities Act. An “accredited investor” includes, among other investors, an individual who: (i) Any natural person who has a net worth or joint net worth with that person’s spouse at the time of purchase of Shares that exceeds $1 million, excluding the value of the primary residence of such natural person (subject to applicable net worth calculation requirements); or (ii) an individual who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and who has a reasonable expectation of reaching the same income level in the current year. The above is only a summary of certain “accredited investor” requirements. For a full description of the above-referenced requirements as well as other categories of “accredited investor” or other eligible investor standards applicable to companies and other investors, please refer to the Subscription Agreement included in Appendix B, which is incorporated herein by reference. In addition, Shares are generally being offered only to investors that are U.S. persons for U.S. federal income tax purposes. Additional requirements are set forth in the Subscription Agreement. Investors who meet the qualifications set forth in the Subscription Agreement are referred to in this Memorandum as Eligible Investors.

An investment in the PMF Fund is not likely to be appropriate for certain types of tax-exempt entities, including charitable remainder trusts. Tax-exempt entities should consult with their tax advisers prior to making an investment in the PMF Fund.

All prospective Partners must complete the Subscription Agreement Signature Pages of the Subscription Agreement in which they certify that, among other things, they meet the foregoing requirements and that they will not transfer their Shares (or any portion thereof) except in accordance with the LP Agreement.

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TEI Fund

Generally, the Subscription Agreement requires that an investor certify that it is an “accredited investor” for purposes of Regulation D under the Securities Act. Categories of “accredited investor” and other eligible investor standards applicable to investors are set forth in the Subscription Agreement included in Appendix B, which is incorporated herein by reference.

Shares of the TEI Fund are only available to tax-exempt and tax-deferred Eligible Investors. Shares of the TEI Fund may be held only by certain Eligible Investors, which include: (1) pension, profit-sharing, or other employee benefit trusts that are exempt from taxation under Section 501(a) of the Code, by reason of qualification under Section 401 of the Code; (2) employee benefit plans or other programs established pursuant to Sections 403(b), 408(k) and 457 of the Code; (3) certain deferred compensation plans established by corporations, partnerships, non-profit entities or state and local governments, or government-sponsored programs; (4) certain foundations, endowments and other exempt organizations under Section 501(c) of the Code (other than organizations exempt under Section 501(c)(1)); (5) IRAs (including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs and rollover IRAs) and 403(b)(7) Plans; and (6) state colleges and universities.

Investors who meet the qualifications set forth in the Subscription Agreement are referred to in this Memorandum as Eligible Investors. All prospective Partners must complete the Subscription Agreement Signature Pages of the Subscription Agreement in which they certify that, among other things, they meet the foregoing requirements and that they will not transfer their Shares (or any portion thereof) except in accordance with the LP Agreement.

PROXY VOTING POLICIES AND PROCEDURES

Each Fund invests substantially all of its investable assets in the Master Fund (via the Offshore Fund in the case of the TEI Fund). The Master Fund will hold a substantial portion of its assets in securities of Investment Funds, most of which are private partnerships, limited liability companies or similar entities managed by Investment Managers (commonly referred to as “hedge funds”, “private equity funds” or “private funds”, etc.). These securities do not typically convey traditional voting rights to the holder and the occurrence of corporate governance or other notices for this type of investment is substantially less than that encountered in connection with registered equity securities. On occasion, however, the Adviser and/or the Master Fund may receive notices from such Investment Funds seeking the consent of holders in order to materially change certain rights within the structure of the security itself or change material terms of the Investment Funds’ limited partnership agreement, limited liability company operating agreement or similar agreement with investors. To the extent that the Master Fund receives notices or proxies from Investment Funds (or receives proxy statements or similar notices in connection with any other portfolio securities) or holds securities in a Separate Account (and thus retains or could retain some voting rights with respect to such securities), the Master Fund has delegated proxy voting responsibilities with respect to the Master Fund’s portfolio securities to the Adviser, subject to the Board’s general oversight and with the direction that proxies should be voted consistent with the Master Fund’s best economic interests.

With respect to proxies issued by the Master Fund, the PMF Fund and Offshore Fund will not delegate to the Adviser, but will instead retain, their respective proxy voting authority and shall exercise such authority as described below. After the PMF Fund or Offshore Fund receives a proxy issued by the Master Fund, the PMF Fund or the TEI Fund (acting as sole managing member of the Offshore Fund) will

96

hold a meeting of its Partners at which the Partners will vote their Shares to instruct the PMF Fund or TEI Fund to vote for or against the matter presented by the Master Fund. In the case of the TEI Fund, the TEI Fund will in turn, in its capacity as sole managing member of the Offshore Fund, cause the Offshore Fund to vote for or against the matter presented by the Master Fund. Each Fund will then calculate the proportion of Shares voted for to those voted against (ignoring for purposes of this calculation the Shares for which it receives no voting instructions) and will subsequently vote its interest in the Master Fund for or against the matter in the same proportion (via, in the case of the TEI Fund, the Offshore Fund’s interest in the Master Fund).

In the case of the TEI Fund, with respect to proxies issued by the Offshore Fund, the TEI Fund will not delegate to the Adviser, but instead retain, its proxy voting authority and shall exercise such authority as described below. After the TEI Fund receives a proxy issued by the Offshore Fund, the TEI Fund will hold a meeting of its Partners at which the Partners will vote their Shares to instruct the TEI Fund to vote for or against the matter presented by the Offshore Fund. The TEI Fund will then calculate the proportion of Shares voted for to those voted against (ignoring for purposes of this calculation the Shares for which it receives no voting instructions) and will subsequently vote the TEI Fund’s interest in the Offshore Fund for or against the matter in the same proportion.

The Adviser has adopted its own proxy voting policies and procedures for this purpose. As a general principle, the Adviser will vote to maximize shareholder value, while considering all relevant factors, and vote without undue influence from individuals or groups who may have an economic interest in the outcome of the proxy vote. If it is determined that a proxy presents a material conflict of interest, then the Adviser shall vote the proxy in accordance with the recommendations of Institutional Shareholder Services (“ISS”) or another nationally recognized party, if available, or, if ISS or such party has disclosed that it has a conflict of interest with the vote, another independent third party.

The Master Fund is required to file Form N-PX, with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. The Master Fund’s Form N-PX filing when available: (i) may be provided without charge, upon request, by calling 1-800-725-9456, or (ii)  found by visiting the SEC’s website at www.sec.gov.

ADDITIONAL INFORMATION AND SUMMARY OF THE LP AGREEMENT

An investor in a Fund will be a Partner of the Fund and his or her rights in the Fund will be established and governed by the LP Agreement, which shall be in substantially the form attached as Appendix C to this Memorandum. A prospective investor and his or her advisors should carefully review the LP Agreement as each Partner will agree to be bound by its terms and conditions. The following is a summary description of additional items and of select provisions of the LP Agreement that may not be described elsewhere in this Memorandum. The description of such items and provisions is not definitive and reference should be made to the complete text of the LP Agreement.

Partners; Additional Classes of Shares

Persons who purchase Shares will be Partners of the Fund. In addition, to the extent permitted by the Investment Company Act or any required exemptive relief, the Funds reserve the right to issue additional classes of Shares in the future subject to fees, charges, repurchase rights and other characteristics different from those of the Shares described in this Memorandum.

97

Liability of Partners

Under Delaware law and the LP Agreement, each Partner will be liable for the debts and obligations of the Fund only to the extent of the value of such Partner’s Shares. A Partner, in the sole discretion of the Board, may be obligated to return to the Fund amounts distributed to the Partner in accordance with the LP Agreement in certain circumstances where, after giving effect to the distribution, certain liabilities of the Fund exceed the fair market value of the Fund’s assets.

Limitation of Liability; Indemnification

The LP Agreement provides that the members and former members of the Board and the Adviser (including certain of its affiliates, among others) shall not be liable to a Fund or any of the Partners for any loss or damage occasioned by any act or omission in the performance of their services as such in the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of their office or as otherwise required by applicable law. The LP Agreement also contains provisions for the indemnification, to the extent permitted by law, of the members and former members of the Board and the Adviser (including certain of its affiliates, among others) by each Fund (but not by the Partners individually) against any liability and expense to which any of them may be liable that arise in connection with the performance of their activities on behalf of a Fund. None of these persons shall be personally liable to any Partner for the repayment of any positive balance in the Partner’s capital account or for contributions by the Partner to the capital of a Fund or by reason of any change in the federal or state income tax laws applicable to such Fund or its investors. The rights of indemnification and exculpation provided under the LP Agreement shall not be construed so as to limit liability or provide for indemnification of the members and former members of the Board and the Adviser (including certain of its affiliates, among others) for any liability (including liability under applicable federal or state securities laws which, under certain circumstances, impose liability even on persons that act in good faith), to the extent (but only to the extent) that such indemnification or limitation on liability would be in violation of applicable law, but shall be construed so as to effectuate the applicable provisions of the LP Agreement to the fullest extent permitted by law.

Power of Attorney

In subscribing for Shares, a Partner will appoint the General Partner as his, her or its attorney-in-fact for purposes of filing required certificates and documents relating to the formation and maintenance of the Fund as a limited partnership under Delaware law or signing all instruments effecting authorized changes in the Fund or the LP Agreement and conveyances and other instruments deemed necessary to effect the dissolution or termination of such Fund. This power of attorney, which will be contained in the Subscription Agreement, is a special power of attorney and is coupled with an interest in favor of the General Partner and as such will be irrevocable and will continue in full force and effect notwithstanding the subsequent death or incapacity of any Partner granting the power of attorney. In addition, the power of attorney will survive the delivery of a transfer by a Partner of all or any portion of the Partner’s Shares, except that when the transferee of the Shares or portion of the Shares has been approved by a Fund for admission to such Fund as a substitute Partner, or upon the withdrawal of a Partner from the Funds pursuant to a repurchase of Shares or otherwise, the power of attorney given by the transferor will terminate.

Amendment of the LP Agreement

The LP Agreement may generally be amended, in whole or in part, with the approval of a majority of the Directors (including a majority of the Independent Directors, if required by the Investment Company Act) and without the approval of the Partners unless the approval of Partners is required under

98

the Investment Company Act. However, certain amendments to the LP Agreement involving capital accounts and allocations thereto may not be made without the written consent of each Partner materially adversely affected thereby or unless each Partner has received written notice of the amendment and any Partner objecting to the amendment has been allowed a reasonable opportunity (pursuant to any procedures as may be prescribed by the Board) to have all of its Shares repurchased by the relevant Fund.

Term, Dissolution and Liquidation

In light of the Funds’ objective and portfolio, the Funds will liquidate over time and have a limited lifespan. It is currently anticipated that after five years following the effective date of the Legacy Master Fund Division, the Master Fund will seek to liquidate any remaining Hedge Fund Assets. Furthermore, after ten years following the effective date of the Legacy Master Fund Division, the Master Fund will enter a formal dissolution process and will seek to liquidate all remaining assets. It is expected that the Funds will terminate upon the complete liquidation of the Master Fund’s investment portfolio or as otherwise terminated under the terms of the LP Agreement.

A Fund shall be dissolved: (1) if at any time it has no Limited Partners, (2) upon the dissolution of the Master Fund; (3) upon the withdrawal of the General Partner, unless (a) at such time there remains at least one general partner who elects to continue the business of the Fund or (b) both the Board and Partners holding not less than two-thirds of the total number of votes eligible to be cast by all Partners, within 60 days after the event, elect to continue the business of the Fund and appoint, effective as of the date of the General Partner’s withdrawal, at least one additional general partners; (4) upon the failure of Partners to approve successor Directors when no Director remains to continue the business of the Funds; or (5) as required by operation of law.

The Master Fund may be dissolved (i) if at any time it has no partners; (ii) at the ten-year anniversary of the effective date of the Legacy Master Fund Division; (iii) at such time as the net assets of the Master Fund are less than two percent (2%) of the net assets of the Master Fund immediately following the Legacy Master Fund Division; (iv) upon the withdrawal of the General Partner, unless (a) at such time there remains at least one general partner who elects to continue the business of the Master Fund or (b) both the Board and Partners holding not less than the Minimum Limited Partner Approval percentage, within 60 days after the event, elect to continue the business of the Master Fund and appoint, effective as of the date of the General Partner’s withdrawal, one or more additional general partners; (v) upon the failure of the Partners to approve successor Directors at a meeting called by the General Partner in accordance with the Master Fund’s limited partnership agreement, when no Director remains to continue the business of the Master Fund; or (vi) as otherwise required by law.

Upon the occurrence of any event of dissolution of a Fund, the Board or the Adviser, acting as liquidator under appointment by the Board (or another liquidator, if the Board does not appoint the Adviser to act as liquidator or is unable to perform this function) is charged with winding up the affairs of such Fund and liquidating their assets. Net profits or net loss during the fiscal period including the period of liquidation will be allocated as described in the section titled “CAPITAL ACCOUNTS AND ALLOCATIONS.”

Upon the liquidation of a Fund, its assets will be distributed: (i) first to satisfy the debts, liabilities, and obligations of such Fund (other than debts to Partners) including actual or anticipated liquidation expenses; (ii) next to repay debts, liabilities and obligations owing to the Partners; and (iii) finally to the Partners proportionately in accordance with the balances in their respective capital accounts. Assets may be distributed in-kind on a pro rata basis if the Board or liquidator determines that such a distribution would be in the interests of the Partners in facilitating an orderly liquidation.

99

The Board may, in its sole discretion, and if determined to be in the best interests of the Partners, distribute the assets of a Fund into and through a liquidating trust to effect the liquidation of such Fund. The use of a liquidating trust would be subject to the regulatory requirements of the Investment Company Act and applicable Delaware law, and could result in additional expenses to the Partners.

REPORTS TO PARTNERS

Partners will receive annual tax information necessary for completion of federal, state and local tax returns. The Funds intend to furnish to Partners such information as soon as practicable after receipt of the necessary information from the Investment Funds. However, such annual tax information is provided by the Funds after April 15 of each year and, accordingly, Partners will need to file extensions for the completion of their federal, state and local tax returns.

The Funds anticipate sending Partners an unaudited semi-annual and an audited annual report within 60 days after the close of the period for which the report is being made, or as otherwise required by the Investment Company Act. Partners also may be sent additional reports regarding the Funds’ operations, at the discretion of the Adviser.

The Funds also anticipate sending quarterly statements reporting the net asset value of Partners’ Shares.

In the event that the Investment Company Act or the SEC in the future requires more frequent reporting, the Funds will comply with such additional reporting requirements.

FISCAL YEAR

For accounting and tax purposes, each Fund’s fiscal and taxable year is the 12-month period ending on December 31.

ACCOUNTANTS AND LEGAL COUNSEL

The Board has selected KPMG, LLP as the independent public accountants of the Funds. KPMG, LLP’s principal business address is located at 191 W. Nationwide Blvd., Suite 500, Columbus, OH 43215.

K&L Gates LLP, located at One Lincoln Street, Boston, Massachusetts 02111, serves as legal counsel to the Funds and also serves as legal counsel to the Independent Directors.

INQUIRIES

Inquires concerning the Funds and the Shares should be directed to:

Endowment Advisers, L.P.

4265 San Felipe, Suite 800

Houston, Texas 77027

Attention: Fund Operations

Toll-Free 1-800-725-9456

FINANCIAL STATEMENTS

The Funds will issue semi-annual unaudited and annual audited financial statements once the commence operations.

100

Appendix A

THE ENDOWMENT MASTER FUND L.P.

(A Limited Partnership)

Schedule of Investments in Investment Funds (unaudited)

December 31, 2013

The Funds, indirectly through the Master Fund, will hold interests in various Investment Funds, including private partnerships, limited liability companies, and other investment vehicles, which are managed by a group of Investment Managers previously identified by the Adviser within the Legacy Master Fund. The Master Fund’s anticipated portfolio holdings will reflect an approximately pro rata division of the Legacy Master Fund’s portfolio. The Legacy Master Fund’s portfolio holdings as of December 31, 2013 are listed below.

	Shares		Fair Value
Limited Partnerships, Exempted Limited Partnerships and Limited Liability Companies
Cayman Islands
Arbitrage Strategies (0.03% of Partners’ Capital)
Montrica Global Opportunities Fund, L.P.		25,428	$	669,370
Natural Resources (1.49% of Partners’ Capital)
Sentient Global Resources Fund III, L.P.				21,944,417
Sentient Global Resources Fund IV, L.P.				8,212,383
Private Equity (13.97% of Partners’ Capital)
ABRY Advanced Securities Fund, L.P.				4,831,101
CX Partners Fund Limited				13,828,965
Gavea Investment Fund II A, L.P				1,916,000
Gavea Investment Fund III A, L.P.				37,715,000
Hillcrest Fund, L.P.				12,205,434
India Asset Recovery Fund, L.P.				228,169
J.C. Flowers III, L.P.				11,034,760
LC Fund IV, L.P.				22,891,455
New Horizon Capital III, L.P.				32,183,935
Northstar Equity Partners III Limited				6,997,547
Orchid Asia IV, L.P.				12,222,992
Reservoir Capital Partners (Cayman), L.P.				13,253,028
Tiger Global Private Investment Partners IV, L.P.				9,557,853
Tiger Global Private Investment Partners V, L.P.				22,913,165
Tiger Global Private Investment Partners VI, L.P.				8,892,810
Trustbridge Partners II, L.P.				22,000,000
Trustbridge Partners III, L.P.				41,000,000
Trustbridge Partners IV, L.P.				8,800,000
Real Estate (1.80% of Partners’ Capital)
Forum European Realty Income III, L.P.				16,592,843
Phoenix Asia Real Estate Investments II, L.P.				11,737,256
Phoenix Real Estate Fund (T), L.P.				8,010,872
Total Cayman Islands				349,639,355

A-1

	Shares	Fair Value
Guernsey
Private Equity (0.44% of Partners’ Capital)
Mid Europa Fund III, L.P.		$	8,868,119
Total Guernsey			8,868,119
Republic of Mauritius
Real Estate (0.11% of Partners’ Capital)
Orbis Real Estate Fund I			2,180,645
Total Republic of Mauritius			2,180,645
United Kingdom
Private Equity (1.02% of Partners’ Capital)
Darwin Private Equity I, L.P.			6,699,409
Sovereign Capital Limited Partnership III			13,961,805
Real Estate (0.43% of Partners’ Capital)
Benson Elliott Real Estate Partners II, L.P.			2,151,595
Patron Capital, L.P. II			541,983
Patron Capital, L.P. III			5,912,292
Total United Kingdom			29,267,084
United States
Arbitrage Strategies (11.68% of Partners’ Capital)
Blue Mountain Credit Alternatives Fund, L.P.			79,092,477
Citadel Wellington, LLC			67,582,977
Eton Park Fund, L.P.			6,121,953
Kenmont Onshore Fund, L.P.			18,684
King Street Capital, L.P.			968,383
Magnetar Capital Fund, L.P.			7,086,451
Magnetar SPV, LLC (Series L)			2,046,734
Millennium USA, L.P.			29,411,715
OZ Asia Domestic Partners, L.P.			2,071,062
PIPE Equity Partners, LLC			12,411,446
PIPE Select Fund, LLC			27,883,086
Stark Investments Limited Partnership			116,996
Stark Select Asset Fund, LLC			1,265,639
Domestic Equity (1.37% of Partners’ Capital)
CCM Small Cap Value Qualified Fund, L.P.			5,210,242
Ithan Creek Partners, L.P.			19,989,632
Kior Shares Liquidating Capital Account			70,587
Samlyn Onshore Fund, L.P.			2,462,061
Energy (11.32% of Partners’ Capital)
ArcLight Energy Partners Fund IV, L.P.			3,283,235
ArcLight Energy Partners Fund V, L.P.			4,950,946
CamCap Resources, L.P.			222,446
EnCap Energy Capital Fund VII-B, L.P.			4,406,025
EnCap Energy Infrastructure TE Feeder, L.P.			5,722,401
Intervale Capital Fund, L.P.			15,288,846
Merit Energy Partners G, L.P.			11,644,715

A-2

	Shares		Fair Value
NGP Energy Technology Partners II, L.P.			$	5,107,039
NGP IX Offshore Fund, L.P.				29,332,000
NGP Midstream & Resources, L.P.				51,206,034
Quantum Parallel Partners V, L.P.				29,590,634
Tenaska Power Fund II-A, L.P.				18,683,665
The Energy & Minerals Group Fund II				10,301,261
Velite Energy, L.P.				39,049,655
Enhanced Fixed Income (7.14% of Partners’ Capital)
BDCM Partners I, L.P.				39,147,964
Credit Distressed Blue Line Fund, L.P.				13,190,943
Fortelus Special Situations Fund, L.P.				5,704,329
Halcyon European Structured Opportunities Fund, L.P.				89,380
Harbinger Capital Partners Fund I, L.P.				25,240,685
Harbinger Capital Partners Fund II, L.P.				1,894,261
Harbinger Capital Partners Special Situations Fund, L.P.				1,790,932
Harbinger Class L Holdings (U.S.), LLC				161,786
Harbinger Class LS Holdings (U.S.) Trust		3,816		391,796
Harbinger Class PE Holdings (U.S.) Trust		10		1,620,152
Prospect Harbor Credit Partners, L.P.				2,518,673
Providence MBS Fund, L.P.				52,582,883
Global Opportunistic (10.49% of Partners’ Capital)
Blueshift Energy Fund, L.P.				33,372,298
Falcon Edge Global, L.P.				16,032,947
Hayman Capital Partners, L.P.				63,811,807
Kepos Alpha Fund, L.P.				78,659,225
Passport Global Strategies III, Ltd.		2,244		870,073
Senator Global Opportunity Fund, L.P.				5,179,906
Valiant Capital Partners, L.P.				6,550,787
Viking Global Equities, L.P.				7,644,288
International Equity (2.14% of Partners’ Capital)
Penta Asia Domestic Partners, L.P.				4,735,958
Steel Partners Japan Strategic Fund, L.P.				2,444,897
TAEF Fund, LLC				3,908,401
Tybourne Equity (U.S.) Fund				32,203,799
Natural Resources (0.00% of Partners’ Capital)
Tocqueville Gold Partners, L.P.				24,408
Private Equity (18.63% of Partners’ Capital)
Accel-KKR Capital Partners III, L.P.				14,914,167
Advent Latin American Private Equity Fund IV-F, L.P.				4,566,852
Advent Latin American Private Equity Fund V-F, L.P.				8,509,932
Audax Mezzanine Fund II, L.P.				1,404,911
Audax Mezzanine Fund III, L.P.				7,776,625
BDCM Opportunity Fund II, L.P.				9,723,831
Black River Commodity Multi-Strategy Fund, LLC				675,608
Capital Royalty Partners, L.P.				964,957
Catterton Growth Partners, L.P.				15,981,777

A-3

	Shares		Fair Value
CEF-Safety Kleen Liquidating Account		4,810	$	142,881
Chrysalis Ventures III, L.P.				2,165,345
Crosslink Crossover Fund IV, L.P.				1,539,384
Crosslink Crossover Fund V, L.P.				6,304,207
Crosslink Crossover Fund VI, L.P.				16,577,771
Dace Ventures I, L.P.				1,509,963
Fairhaven Capital Partners, L.P.				7,607,946
Garrison Opportunity Fund II A, LLC				15,608,617
Garrison Opportunity Fund, LLC				20,554,861
HealthCor Partners Fund, L.P.				8,719,201
Highland Credit Strategies Liquidation Vehicle Onshore				2,222,131
Integral Capital Partners VIII, L.P.				2,872,000
L-R Global Partners, L.P				404,777
MatlinPatterson Global Opportunities Partners III, L.P.				10,805,832
Middle East North Africa Opportunities Fund, L.P.		5,089		1,315,734
Monomoy Capital Partners II, L.P.				4,252,442
Monomoy Capital Partners, L.P.				2,683,686
Monsoon India Inflection Fund 2, L.P.				230,000
Monsoon India Inflection Fund, L.P.				130,000
Pine Brook Capital Partners, L.P.				19,798,453
Pinto America Growth Fund, L.P.				1,560,110
Private Equity Investment Fund IV, L.P.				6,231,703
Private Equity Investment Fund V, L.P.				39,915,679
Saints Capital VI, L.P.				16,440,779
Sanderling Venture Partners VI Co-Investment Fund, L.P.				1,755,251
Sanderling Venture Partners VI, L.P.				1,268,451
Sterling Capital Partners II, L.P.				1,630,110
Sterling Group Partners II, L.P.				960,582
Sterling Group Partners III, L.P.				8,599,007
Strategic Value Global Opportunities Fund I-A, L.P.				2,046,887
Tenaya Capital V, L.P.				6,732,216
Tenaya Capital VI, L.P.				3,881,287
The Column Group, L.P.				8,451,768
The Founders Fund III, L.P.				15,359,354
The Founders Fund IV, L.P.				7,648,857
The Raptor Private Holdings, L.P.		1,833		936,975
Trivest Fund IV, L.P.				19,392,683
Tuckerbrook SB Global Distressed Fund I, L.P.				5,293,587
VCFA Private Equity Partners IV, L.P.				1,382,838
VCFA Venture Partners V, L.P.				5,310,105
Voyager Capital Fund III, L.P.				3,815,370
WestView Capital Partners II, L.P.				28,067,852
Real Estate (6.99% of Partners’ Capital)
Aslan Realty Partners III, L.L.C.				484,300
Cypress Realty VI, L.P.				5,604,852
Florida Real Estate Value Fund, L.P.				8,150,000

A-4

	Shares		Fair Value
GTIS Brazil Real Estate Fund (Brazilian Real), L.P.			$	24,991,293
Lone Star Real Estate Fund II (U.S.), L.P.				5,831,654
Monsoon Infrastructure & Realty Co-Invest, L.P.				14,994,404
Northwood Real Estate Co-Investors, L.P.				7,033,803
Northwood Real Estate Partners, L.P.				13,357,102
Parmenter Realty Fund III, L.P.				5,230,480
Parmenter Realty Fund IV, L.P.				6,588,830
Pearlmark Mezzanine Realty Partners III, LLC				20,678,600
Pennybacker II, L.P.				7,726,279
SBC Latin America Housing US Fund, L.P.				7,641,872
Square Mile Partners III, L.P.				12,887,194
Total United States				1,410,217,610
Total Limited Partnerships, Exempted Limited Partnerships and Limited Liability Companies				1,800,172,813
Passive Foreign Investment Companies
Cayman Companies Limited by Shares, Exempted Companies and Limited Liability Companies
Arbitrage Strategies (1.14% of Partners’ Capital)
CRC Credit Fund Ltd.		78,050		22,220,329
Overseas CAP Partners, Inc.		92		755,517
International Equity (0.03% of Partners’ Capital)
Quorum Fund Limited		10,369		615,629
Natural Resources (0.20% of Partners’ Capital)
Ospraie Special Opportunities (Offshore), Ltd.				4,000,974
Total Cayman Companies Limited by Shares, Exempted Companies and Limited Liability Companies				27,592,449
Total Passive Foreign Investment Companies Private Corporations				27,592,449
United States
Real Estate (0.57% of Partners’ Capital)
Legacy Partners Realty Fund II, Inc.				2,548,972
Legacy Partners Realty Fund III, Inc.				6,292,656
Net Lease Private REIT V, Inc.				137,708
Net Lease Private REIT VI, Inc.				770,918
Net Lease Private REIT VII, Inc.				847,110
Net Lease Private REIT VII-A, Inc.				847,110
Total Private Corporations				11,444,474
Total Investments in Investment Funds Cost ($1,656,659,136)				1,839,209,736

A-5

Appendix B

PMF FUND, L.P.

PMF TEI FUND, L.P.

Subscription Agreement

PMF Fund, L.P.

PMF TEI Fund, L.P.

4265 San Felipe

Suite 800

Houston, TX 77027

Phone: (800) 725-9456

Fax: (713) 583-1330

Attention: Fund Operations

Gentlemen:

The undersigned (the “Subscriber”) hereby acknowledges having received and read the current Private Placement Memorandum (the “Memorandum”) of:

The PMF Fund, L.P., a limited partnership organized under the laws of the State of Delaware (the “PMF Fund”, or a “Fund”), the Agreement of Limited Partnership of the Fund (the “Partnership Agreement”); or

The PMF TEI Fund, L.P., a limited partnership organized under the laws of the State of Delaware (the “TEI Fund”, or a “Fund”), the TEI Fund’s Partnership Agreement (the “Partnership Agreement”);

and the Privacy Policy of the relevant Fund, attached hereto as Exhibit A. Capitalized terms not herein defined are used as defined in the Memorandum.

THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PARTNERSHIP AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. FURTHERMORE, THE SHARES ARE NOT TRANSFERABLE WITHOUT THE CONSENT OF THE RELEVANT FUND,

B-1

WHICH CONSENT MAY BE GRANTED OR DENIED IN ITS DISCRETION. THERE WILL BE NO PUBLIC MARKET FOR THE SHARES. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

AN INVESTMENT IN THE SHARES IS SUBJECT TO SUBSTANTIAL RISKS. NO PERSON SHOULD INVEST IN THE SHARES WHO CANNOT AFFORD THE LOSS OF HIS ENTIRE INVESTMENT. SEE “RISK FACTORS” IN THE ACCOMPANYING MEMORANDUM.

The Subscriber hereby agrees with the Fund as follows:

Subscription Commitment

The Subscriber hereby subscribes for shares of limited liability interest of a Fund (the “Shares”) and, as full payment therefore, has tendered interests of one of the legacy feeder funds of The Endowment Master Fund, L.P., for repurchase by such legacy feeder fund. The Subscriber hereby subscribes for Shares in the amount set forth in the accompanying Subscription Agreement Signature Pages completed and signed by the Subscriber (which shall be considered an integral part of this Subscription Agreement and hereinafter referred to as the “Subscription Agreement Signature Pages”).

The Subscriber understands that this subscription is not binding on the Fund until accepted by the Fund and may be rejected by the Fund in whole or in part in its absolute discretion. If so rejected, the Subscriber shall remain invested in the relevant legacy feeder fund, and the Fund and the Subscriber shall have no further obligation to each other hereunder. Unless and until rejected by the Fund, this subscription shall be irrevocable by the Subscriber.

Representations, Warranties and Covenants

To induce the Fund to accept this subscription, the Subscriber hereby makes the following representations, warranties and covenants to the Fund and to the Fund’s general and limited partners:

(a)        The Subscriber certifies that it is an “accredited investor” for purposes of Regulation D under the Securities Act. Guidelines are as follows:

(A1) For individual investors, grantors of revocable grantor trusts, and for individuals investing through an IRA, to meet the qualification as an “accredited investor” for purposes of Regulation D, one (or more) of the following must apply:

(a)        A natural person whose net worth¹ (or joint net worth with a spouse) at the time of purchase exceeds $1,000,000, excluding the value of the primary residence of such natural person; or

(b)        A natural person who had an individual income in excess of $200,000 for each of the last two years (or joint income with a spouse in excess of $300,000 in each of those years) and who reasonably expects to reach the same income level in the current year.

1 As used herein, “net worth” means the excess of total assets at fair market value over total liabilities. For the purposes of determining “net worth”, the primary residence owned by an individual shall be excluded as an asset and the amount of indebtedness secured by the such primary residence shall be excluded as a liability except to the extent that: (1) such indebtedness exceeds the fair market value of the primary residence; and (2) such indebtedness was incurred within 60 days of the purchase of the Shares, unless such indebtedness was incurred as a result of the acquisition of the primary residence.

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(A2) For entities to meet the qualification as an “accredited investor” for purposes of Regulation D, one (or more) of the following must apply:

(a)        A trust (i) with total assets in excess of $5,000,000, (ii) that was not formed for the specific purpose of investing in the Fund, and (iii) of which the person responsible for directing the investment of assets in the Fund has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment;

(b)        An entity with total assets in excess of $5,000,000 that was not formed for the specific purpose of investing in the Fund and that is:

a corporation;	a Massachusetts or similar business trust; or
a partnership;       a limited liability company;	an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”);

(c)        An entity licensed, or subject to supervision, by U.S. federal or state examining authorities as a “bank,” (as defined in Section 3(a)(2) of the Securities Act, a “savings and loan association,” (or other institution as described in Section 3(a)(5)(A) of the Securities Act), or an account for which a bank or savings and loan association is subscribing in a fiduciary capacity;

(d)        An entity registered with the U.S. Securities and Exchange Commission as a broker or dealer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), an “insurance company” (as defined in Section 2(13) of the Securities Act) or an investment company registered under the Investment Company; or an entity that has elected to be treated or qualifies as a “business development company” (within the meaning of Section 2(a)(48) of the Investment Company Act);

(e)        A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;

(f)        An employee benefit plan which (A) has total assets in excess of $5,000,000 or (B) is a self-directed plan, with investment decisions made solely by persons that are “accredited investors” (as defined in Regulation D under the Securities Act) or (C) investment decisions are made by a plan fiduciary (as defined in Section 3(21) of ERISA), which is either a bank, savings and loan association, insurance company, or registered investment adviser or (D) is not a participant-directed plan but is a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, with total assets in excess of $5,000,000;

(g)        A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended (the “Advisers Act”); or

(h)        An entity which all of the unit owners and participants (i.e., all partners (including limited partners) of a partnership, shareholders of a corporation, or beneficiaries of an estate) are Accredited Investors. THIS OPTION IS NOT APPLICABLE FOR NON-GRANTOR TRUSTS.

(b)        The information set forth in the accompanying Subscription Agreement Signature Pages, as well as any information regarding Subscriber’s identity, is accurate and complete as of the date hereof, and the Subscriber will promptly notify the Fund of any change in such information. The Subscriber

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consents to the disclosure of any such information, and any other information furnished to the Fund, to any governmental authority, self-regulatory organization or, to the extent required by law, to any other person, or as otherwise provided in the Fund’s Privacy Policy, in each case in accordance with the Fund’s Privacy Policy attached as Exhibit A (of which the Subscriber hereby acknowledges receipt).

(c)        The undersigned has received and read and is familiar with the Memorandum, including the exhibits, attachments and annexes attached thereto, and he confirms that all documents, records, and books pertaining to this proposed investment in the Shares have been made available to him.

(d)        The Subscriber is not acquiring the Shares of the Fund with a view to or for sale in connection with any distribution of the Shares. The Subscriber (i) will not transfer or deliver all or any part of its Share except in accordance with the restrictions set forth in the Partnership Agreement and the Memorandum and (ii) will notify the Fund immediately if it becomes a non-United States Person at any time during which it holds or owns any Shares.

(e)        Other than the Memorandum, the Subscriber is not relying upon any representation or other information purported to be given on behalf of the Fund or the Fund in determining to invest in the Fund (it being understood that no person has been authorized by the Fund or the Fund to furnish any representations or other information).

(f)        The Subscriber or an advisor or consultant relied upon by the Subscriber in reaching a decision to subscribe has such knowledge and experience in financial, tax and business matters as to enable the Subscriber or such advisor or consultant to evaluate the merits and risks of an investment in the Fund and to make an informed investment decision with respect thereto. The Subscriber understands the Fund’s compensation arrangements with the Adviser and understands the risks described in the Memorandum.

(g)        The Subscriber acknowledges that an investment in the Shares of the Fund includes significant risks as described in the Memorandum, including without limitation those risks outlined in the sections of the Memorandum entitled “GENERAL RISKS,” “SPECIAL RISKS OF THE FUND OF FUNDS STRUCTURE” and “INVESTMENT RELATED RISKS.”

(h)        The Subscriber is satisfied that it has received adequate disclosure from the Fund to enable it to understand and evaluate the compensation arrangements of the Fund with the Adviser and other terms of the Partnership Agreement and the risks associated therewith.

(i)        The Subscriber understands that the Shares have not been and will not be registered under the Securities Act of 1933, as amended, or any state law. No federal or state agency has made any finding or determination as to the fairness of the offering, or has recommended an investment in, or otherwise endorsed, the Fund. The Subscriber agrees to notify the Fund prior to any proposed sale, transfer, distribution or other disposition of any Shares or any beneficial interest therein, and will not sell, transfer, distribute or otherwise dispose of any Shares without the consent of the Fund, which may be granted or withheld in the Fund’s sole discretion, and unless the Shares are registered or such sale, transfer, distribution or other disposition is exempt from registration. The Subscriber understands that the Fund has no intention to register the Shares with the United States Securities and Exchange Commission or any State of the United States and is under no obligation to assist the Subscriber in obtaining or complying with any exemption from such registration requirements. The Fund may require that a proposed transferee meet appropriate financial suitability standards and that the transferor furnish a legal opinion satisfactory to the Fund and its

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counsel that the proposed transfer complies with applicable federal, state and any other applicable securities laws. An appropriate stop transfer instructions may be placed with respect to the Shares.

(j)        Any document representing ownership of a Share by the Subscriber will bear a restrictive legend reflecting the restrictions on transferability set forth in sections (h).

(k)        Illiquidity

(i)        The Subscriber recognizes that there is not now any public market for Shares of the Fund and that such a market is not expected to develop; accordingly, it may not be possible for the Subscriber readily to liquidate the Subscriber’s investment in the Fund. The Subscriber’s overall commitment to the Fund and other investments which are not readily marketable are not disproportionate to the Subscriber’s net worth and the Subscriber has no need for immediate liquidity of the Subscriber’s interest in the Shares. As described in the Memorandum, the Subscriber acknowledges that the Shares are subject to significant restrictions on the right to withdraw capital, which means that the liquidity of the Shares will be limited.

(ii)        The Subscriber understands the repurchase offer process described in the Memorandum is likely to be the sole means of liquidity for Subscriber’s investment in the Fund other than distributions of capital. The Funds will have a significant indirect investment in long-term investments, which ordinarily cannot be liquidated without significant discount, if at all, which may prevent the Fund from repurchasing Shares. Partners will receive the value of their Shares over time as the Fund liquidates its assets, which could require a significant period of time to realize certain illiquid assets.

(l)        The Subscriber has carefully read the Memorandum, and specifically accepts, adopts and agrees to each and every provision described in such materials.

(m)        If the Subscriber is a natural person, the Subscriber has the legal capacity to execute, deliver and perform this Subscription Agreement and the Partnership Agreement.

(n)        The Subscriber represents and warrants that no party which either (i) has had any of its assets blocked under U.S. sanctions or laws, or (ii) has been identified by the U.S. Government as a person whose assets are to be blocked under such laws, has or will have any beneficial interest in the Shares subscribed for hereby.

(o)        If the Subscriber is a corporation, partnership, trust or other entity, it is authorized and qualified to become a limited partner of, and authorized to make its Capital Contribution to, the Fund and otherwise to comply with its obligations under the Partnership Agreement; the person signing this Subscription Agreement on behalf of such entity has been duly authorized by such entity to do so; and this Subscription Agreement has been duly executed and delivered on behalf of the Subscriber and is the valid and binding agreement of the Subscriber, enforceable against the Subscriber in accordance with its terms. In addition, such Subscriber will, upon request of the Fund, deliver any documents, including an opinion of counsel to the Subscriber, evidencing the existence of the Subscriber, the legality of an investment in Shares of the Fund and the authority of the person executing this Subscription Agreement on behalf of the Subscriber.

(p)        If the Subscriber is, or is acting on behalf of, an employee benefit plan (a “Plan”) which is subject to ERISA: (a) the investment by such Plan interest holder in the Fund is prudent for the Plan

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(taking into account any applicable liquidity and diversification requirements of ERISA); (b) the investment in the Fund is permitted under ERISA, the Code, other applicable law and the Plan’s governing plan documents; (c) neither the Adviser nor any of its affiliates (including, without limitation, any of the Related Parties) has acted as a fiduciary under ERISA with respect to such purchase; (d) no advice provided by the Adviser or any of its affiliates (including, without limitation, any of the Related Parties) has formed a primary basis for any investment decision by such Plan interest holder in connection with such purchase; and (e) the purchase, holding and disposition of the interest in the Fund will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or any substantively similar provisions of other law for which an exemption is not available.

(q)        Neither the Subscriber, nor any person controlling, controlled by, or under common control with, the Subscriber, nor any person having a beneficial interest in the Subscriber, or for whom the Subscriber is acting as agent or nominee in connection with this investment, is (i) a country, person, or entity named on an Office of Foreign Assets Control list, (ii) a person or entity that resides or has a place of business in a country or territory named on such list, or (iii) a senior foreign political figure³ , an immediate family member⁴ or close associate⁵ of a senior foreign political figure within the meaning of the USA PATRIOT Act of 2001⁶ . The Subscriber agrees to promptly notify the relevant Fund of any change in information affecting this representation and covenant. The Subscriber is advised that, by law, the Fund may be required to disclose the Subscriber’s identity to OFAC.

(r)        If subscribing for Shares of the PMF Fund, the Subscriber is not a Charitable Remainder Trust.

(s)        If subscribing for Shares of the PMF Fund, the Subscriber is not a tax-exempt investor that, by the terms of its governing documents, investment guidelines or by choice, cannot receive any “Unrelated Business Taxable Income.”

(t)        If the Subscriber is subject to Title 1 of ERISA, the subscriber represents that it has consulted its own counsel as to the legality of making an investment in the Fund and the appropriateness of such an investment under ERISA.

(u)        If the Subscriber is a Plan⁷ fiduciary, the Subscriber certifies that (a) the investment by such Plan interest holder in the Fund is prudent for the Plan (taking into account any applicable liquidity and diversification requirements of ERISA); (b) the investment in the Fund is permitted under ERISA, the Code,

³ A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

⁴ “Immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws.

⁵A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior political figure.

⁶ The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56 (2001).

⁷ For purposes of this question, a “Plan” is any employee benefit plan to which ERISA applies and certain other plans and accounts (such as individual retirement accounts and Keogh plans) that, although not subject to ERISA, are subject to certain similar rules of the Code.

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other applicable law and the Plan’s governing plan documents; (c) neither The Endowment Fund GP, L.P. (the “General Partner of the Fund”), the Adviser nor any of their affiliates has acted as a fiduciary under ERISA with respect to such purchase; (d) no advice provided by the Adviser, the General Partner of the Fund, or any of their affiliates has formed a primary basis for any investment decision by such Plan interest holder in connection with such purchase; and (e) the purchase, holding and disposition of the Shares of the Fund will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or any materially similar provisions of other law for which an exemption is not available.

(v)        The Subscriber (including anyone who has discretionary and/or voting authority with respect to the Shares to be acquired) is not subject to any “bad actor” disqualification (as used in Rule 506(d) under the Securities Act), and it will notify the Fund in writing promptly after first becoming aware that it is subject to, or is reasonably likely to become subject to, any such disqualification. Subscriber further understands, acknowledges, and agrees that a description of any such disqualification may be subject to disclosure in accordance with applicable law.

Indemnification

The Subscriber understands the meaning and legal consequences of the representations, warranties, agreements, covenants and confirmations set out above and agrees that the subscription made hereby may be accepted in reliance thereon. The Subscriber agrees to indemnify and hold harmless the Fund, its general partner, and the Adviser (including for this purpose each of their directors, officers, shareholders, affiliates, partners, managers and employees, and each person who controls the Fund and each of such entities within the meaning of Section 20 of the Exchange Act) from and against any and all loss, damage, liability or expense, including reasonable costs and attorneys’ fees and disbursements, which the Fund may incur by reason of, or in connection with, any representation or warranty made herein (or in the accompanying Subscription Agreement Signature Pages) not having been true when made, any misrepresentation made by the Subscriber or any failure by the Subscriber to fulfill any of the covenants or agreements set forth herein, in the Subscription Agreement Signature Pages or in any other document provided by the Subscriber to the Fund.

Miscellaneous

(a)        The Subscriber agrees that neither this Subscription Agreement nor any of the Subscriber’s rights or interest herein or hereunder is transferable or assignable by the Subscriber and further agrees that the transfer or assignment of any Shares acquired pursuant hereto shall be made only in accordance with the provisions hereof and all applicable laws.

(b)        The Subscriber agrees that, except as permitted by applicable law, it may not cancel, terminate or revoke this Subscription Agreement or any agreement of the Subscriber made hereunder and that this Subscription Agreement shall survive the death or legal disability of the Subscriber and shall be binding upon the Subscriber’s heirs, executors, administrators, successors and assigns.

(c)        All of the representations, warranties, covenants, agreements and confirmations set out above and in the Subscription Agreement Signature Pages shall survive the acceptance of the subscription made herein and the issuance of any Shares of the Fund.

(d)        This Subscription Agreement together with the Subscription Agreement Signature Pages constitute the entire agreement between the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by both parties.

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(e)        The Subscriber acknowledges that due to anti-money laundering laws and regulations, the Fund may require further identification of the Subscriber before the subscription can be accepted and the Fund shall be held harmless and indemnified against any loss arising as a result of a failure to process the application if such has not been provided by the Subscriber or has been provided incompletely or after a delay.

(f)        Within ten days after receipt of a written request therefor from the Fund, the Subscriber agrees to provide such information and to execute and deliver such documents as the Fund may deem reasonably necessary to comply with any and all laws and ordinances to which the Fund is or may be subject.

(g)        The Subscriber hereby releases, remises and discharges the Fund, its general partner, the Adviser, The Endowment PMF Master Fund, L.P., The Endowment Master Fund, L.P., Endowment Registered Fund, L.P., Endowment TEI Fund, L.P., and any other feeder fund of The Endowment Master Fund, L.P. (including for this purpose each of their directors, officers, shareholders, affiliates, partners, managers and employees, and each person who controls the Fund and each of such entities within the meaning of Section 20 of the Exchange Act), from any and all actions or causes of action, suits, claims, complaints, liabilities, agreements, promises, contracts, torts, debts, damages, controversies, judgments, rights and demands, whether existing or contingent, known or unknown, that the Subscriber may have, including but not limited to (i) any and all claims arising out of or in connection with the approximately pro rata division of the assets held by The Endowment Master Fund, L.P. and transfer of such assets to The Endowment PMF Master Fund, L.P., or any action of any party listed above relating to, or arising from such division and transfer; and (ii) any and all claims based on any applicable federal, state or local law, constitution or regulation. This release is intended by the Subscriber to be all encompassing and to act as a full and total release of any claims, whether specifically enumerated herein or not.

Power of Attorney

Subject only to the acceptance of this Subscription Agreement by the Fund, the Subscriber hereby (a) requests to be admitted to the Fund as a limited partner and requests that the Fund reflect such admission in the Fund’s register of partners; (b) joins in and agrees to be bound by the Partnership Agreement as a limited partner; and (c) makes, constitutes and appoints The Endowment Fund GP, L.P., acting through any of its authorized members, directors, managers, partners and officers and with power of substitution, the Subscriber’s true and lawful agent and attorney, with full power and authority in such Subscriber’s name, place and stead, to make, execute, acknowledge, record and/or file (i) the Partnership Agreement, (ii) any certificate or other document required to effect the formation, continuation, qualification or dissolution of the Fund in accordance with the terms of the Partnership Agreement or which legal counsel to the Fund deems necessary or desirable to comply with any federal, state or other law applicable to the Fund, and (iii) any amendments to any of the foregoing adopted or otherwise made in accordance with the provisions of the Partnership Agreement. The power of attorney granted hereby is a special power of attorney coupled with an interest and shall be irrevocable to the fullest extent permitted by law.

Notices

Any notice required or permitted to be given to the Subscriber in relation to the Fund shall be sent to the address specified in Subscription Agreement Signature Pages accompanying this Subscription Agreement or to such other address as the Subscriber designates by written notice received by the Fund.

Governing Law

This Subscription Agreement shall be governed by the laws of the State of Delaware without regard to the conflicts of law principles thereof.

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EXHIBIT A

Privacy Policy of the PMF Fund, L.P.

Privacy Policy of the PMF TEI Fund, L.P.

The PMF Fund, L.P. and the PMF TEI Fund, L.P. (each, the “Fund”) recognizes how important it is for you to feel confident in the knowledge that your personal financial information is secure. It is our policy to safeguard any personal and financial information that you may entrust to us. The following is a description of the Fund’s policy regarding disclosure of nonpublic personal information.

We collect nonpublic personal information as follows:

We collect information about you, including, but not limited to, your name, address, telephone number, e-mail address, social security number and date of birth. We collect that information from subscription agreements, other forms of correspondence that we receive from you, and from personal conversations.

We receive information about your transactions with us, including, but not limited to, your account number, account balance, investment amounts, withdrawal amounts and other financial information.

We are permitted by law to disclose nonpublic information we collect, as described above, to the Fund’s service providers, including the Fund’s general partner, investment adviser, sub-advisers, servicing agent, independent administrator, custodian, legal counsel, accountant and auditor. We do not disclose any nonpublic information about our current or former investors to nonaffiliated third parties, except as required or permitted by law. We restrict access to your nonpublic personal information to those persons who require such information to provide products or services to you. We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.

If your investment relationship with the Fund involves a financial intermediary, including, but not limited to, a broker-dealer, bank or trust company, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared by them with nonaffiliated third parties.

Regards,

Paul A. Bachtold

Compliance Officer

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Appendix C

THE PMF FUND, L.P.

THE PMF TEI FUND, L.P.

FORM OF

AGREEMENT OF LIMITED PARTNERSHIP

THE PMF FUND, L.P.

THE PMF TEI FUND, L.P.

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

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TABLE OF CONTENTS

		Page
ARTICLE I. DEFINITIONS			C-4
ARTICLE II. ORGANIZATION, ADMISSION OF PARTNERS, DIRECTORS			C-8
2.1	FORMATION OF LIMITED PARTNERSHIP		C-8
2.2	NAME		C-8
2.3	PRINCIPAL AND REGISTERED OFFICE		C-8
2.4	DURATION		C-9
2.5	BUSINESS OF EACH PARTNERSHIP		C-9
2.6	GENERAL PARTNER		C-9
2.7	LIMITED PARTNERS		C-9
2.8	BOTH GENERAL AND LIMITED PARTNER		C-10
2.9	LIMITED LIABILITY		C-10
2.10	DIRECTORS		C-10
ARTICLE III. MANAGEMENT; ADVICE AND MANAGEMENT			C-11
3.1	MANAGEMENT AND CONTROL		C-11
3.2	POWERS RESERVED BY THE GENERAL PARTNER		C-12
3.3	ACTIONS BY DIRECTORS		C-13
3.4	MEETINGS OF PARTNERS		C-13
3.5	ADVICE AND MANAGEMENT		C-14
3.6	CUSTODY OF ASSETS OF EACH PARTNERSHIP		C-15
3.7	BROKERAGE		C-16
3.8	OTHER ACTIVITIES		C-16
3.9	DUTY OF CARE		C-17
3.10	INDEMNIFICATION		C-17
3.11	FEES, EXPENSES AND REIMBURSEMENT		C-19
ARTICLE IV. TERMINATION OF STATUS OF GENERAL PARTNER REMOVAL OF GENERAL PARTNER; TRANSFERS AND REPURCHASES			C-20
4.1	TERMINATION OF STATUS OF GENERAL PARTNER		C-20
4.2	REMOVAL OF GENERAL PARTNER		C-20
4.3	TRANSFER OF INTEREST OF GENERAL PARTNER		C-20
4.4	TRANSFER OF SHARES OF LIMITED PARTNERS		C-20
4.5	REPURCHASE OF SHARES		C-21
ARTICLE V. CAPITAL			C-23
5.1	CONTRIBUTIONS TO CAPITAL		C-23
5.2	RIGHTS OF PARTNERS TO CAPITAL		C-24
5.3	CAPITAL ACCOUNTS		C-24
5.4	ALLOCATION OF NET PROFIT AND LOSS		C-24
5.5	ALLOCATION OF CERTAIN WITHHOLDING TAXES AND OTHER EXPENDITURES		C-24
5.6	RESERVES		C-25
5.7	ALLOCATION TO AVOID CAPITAL ACCOUNT DEFICITS		C-26
5.8	TAX ALLOCATIONS		C-26
5.9	DISTRIBUTIONS		C-27
ARTICLE VI. DISSOLUTION AND LIQUIDATION			C-27
6.1	DISSOLUTION		C-27
6.2	LIQUIDATION OF ASSETS		C-28

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		Page
ARTICLE VII. ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS			C-28
7.1	ACCOUNTING AND REPORTS		C-28
7.2	DETERMINATIONS BY GENERAL PARTNER		C-29
7.3	VALUATION OF ASSETS		C-29
ARTICLE VIII. MISCELLANEOUS PROVISIONS			C-29
8.1	AMENDMENT OF PARTNERSHIP AGREEMENT		C-29
8.2	SPECIAL POWER OF ATTORNEY		C-30
8.3	NOTICES		C-31
8.4	AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS		C-31
8.5	CHOICE OF LAW; ARBITRATION		C-32
8.6	NOT FOR BENEFIT OF CREDITORS		C-33
8.7	CONSENTS		C-33
8.8	PRONOUNS		C-33
8.9	CONFIDENTIALITY		C-33
8.10	CERTIFICATION OF NON-FOREIGN STATUS		C-33
8.11	SEVERABILITY		C-34
8.12	ENTIRE AGREEMENT		C-34
8.13	DISCRETION		C-34
8.14	CONFLICTS		C-34
8.15	COUNTERPARTS		C-34
8.16	HEADINGS		C-34

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THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of THE PMF FUND, L.P. (the “PMF Fund”) and THE PMF TEI FUND, L.P. (the “TEI Fund”) (each of the PMF Fund and the TEI Fund separately, a “Partnership”), dated as of February 18, 2014, is entered into by and among THE ENDOWMENT FUND GP, L.P., as General Partner and those Persons who execute this Agreement and whose names are reflected on the books and records of each Partnership as Limited Partners.

RECITALS

WHEREAS each Partnership desires to register with the U.S. Securities and Exchange Commission under the 1940 Act (as defined herein) as a closed-end management investment company;

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I.

DEFINITIONS

For the avoidance of doubt, references to a Partnership refer to both the PMF Fund and TEI Fund, each as a separate entity. Rights, duties and obligations of a Limited Partner described herein relate only to the Partnership in which such Limited Partner is admitted.

For purposes of this Agreement:

“1933 Act” means the Securities Act of 1933 and the rules, regulations and orders under the 1933 Act, as amended from time to time, or any successor law.

“1940 Act” means the Investment Company Act of 1940 and the rules, regulations and orders under the 1940 Act, as amended from time to time, or any successor law.

“Advice and Management” means those services provided to each Partnership by the Adviser under Section 3.5(b) of this Agreement.

“Adviser” means Endowment Advisers, L.P., a limited partnership formed under the laws of the State of Delaware, and any other Person or Persons subsequently engaged to provide investment management services to each Partnership in a similar capacity.

“Advisers Act” means the Investment Advisers Act of 1940 and the rules, regulations and orders under the Advisers Act, as amended from time to time, or any successor law.

“Affiliate” means affiliated person as that term is defined in the 1940 Act.

“Agreement” means this Agreement of Limited Partnership, as amended and/or restated from time to time.

“Board of Directors” means the board of the Directors who have been delegated the authority described in this Agreement.

“Business Day” means any day when the New York Stock Exchange is open for business.

“Capital Account” means, with respect to each Partner, the capital account established and maintained on behalf of the Partner in accordance with Section 5.3 of this Agreement.

“Capital Contribution” means the contribution, if any, made, or to be made, as the context requires, to the capital of a Partnership by a Partner or former Partner, as the case may be.

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“Cause” means, with respect to a Director, the commission of an act of fraud or willful malfeasance or a determination by a court of competent jurisdiction that such Director has breached a fiduciary duty or violated law or engaged in another criminal act.

“Certificate” means the Certificate of Limited Partnership of each Partnership as filed with the office of the Secretary of State of the State of Delaware and any amendments to the Certificate and/or restatements of the Certificate as filed with the office of the Secretary of State of the State of Delaware pursuant to this Agreement.

“Closing Date” means the date of the Partnership Division.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor law.

“Commodity Exchange Act” means the Commodity Exchange Act and the rules, regulations and orders under the Commodity Exchange Act, as amended from time to time, or any successor law.

“Delaware Act” means the Delaware Revised Uniform Limited Partnership Act, as amended from time to time, or any successor law.

“Directors” means those natural Persons designated as “Directors” in accordance with this Agreement who are delegated the authority provided for in this Agreement and includes [                    ] (the “Initial Directors”), or any other natural Persons who, from time to time after the date of this Agreement, become Directors in accordance with the terms and conditions of this Agreement.

“Distributable Cash” means the amount held by a Partnership in cash or cash equivalents in excess of the amount determined by the Adviser to be necessary or prudent for the Partnership to continue to hold for operational or regulatory purposes, including for purposes of funding expected capital calls with respect to the Partnership’s private equity investments or for other compliance purposes.

“Fiscal Period” means the period commencing on the Closing Date, and thereafter each period commencing on the day immediately following the last day of the preceding Fiscal Period, and ending in each case at the close of business on the first to occur of the following dates:

(1)            the last day of a Fiscal Year;

(2)            the day on which a Partnership repurchases all or a portion of the Shares of any Partner in accordance with Section 4.5 of this Agreement

(3)            the day as of which a Partnership admits a substituted Partner to whom or which Shares have been Transferred (unless the Transfer of the Shares results in no change of beneficial ownership of the Shares);

(4)            the day as of which any amount is credited to or debited against the Capital Account of any Partner, other than an amount that is credited to or debited against the Capital Accounts of all Partners in accordance with their respective Investment Percentages; or

(5)            December 31, or any other date that is the last day of the taxable year of a Partnership.

“Fiscal Year” means the period commencing on the Closing Date and ending on December 31, 2014, and thereafter each period commencing on January 1 of each year and ending on December 31 of that year (or on the date of a final distribution made in accordance with Section 6.2 of this Agreement), unless the Directors designate another fiscal year for each Partnership. The taxable year of each Partnership will end on December 31 of each year, or on any other date designated by the General Partner that is a permitted taxable year-end for tax purposes, and need not be the same as the Fiscal Year.

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“Form N-2” means each Partnership’s Registration Statement on Form N-2 filed with the Securities and Exchange Commission, as amended from time to time.

“General Partner” means The Endowment Fund GP, L.P., a limited partnership formed under the laws of the State of Delaware, and any other Person or Persons admitted to a Partnership as a general partner of such Partnership, collectively, in their capacities as general partners of a Partnership, and “General Partner” means any of the General Partners. When the term General Partner is used in this Agreement and a Partnership has more than one General Partner, the term “General Partner” will refer to each General Partner.

“Independent Directors” mean those Directors who are not “interested persons” of each Partnership as that term is defined in the 1940 Act.

“Interest” means the entire partnership interest in a Partnership reflected by the Shares owned by a Partner or, in the case of a General Partner, reflected in such General Partner’s Investment Percentage, at any particular time or such other Person to whom or which all or a portion of an Interest has been Transferred in accordance with Section 4.3 or 4.4 of this Agreement, including the rights and obligations of the Partner or other Person under this Agreement and the Delaware Act.

“Investment Advisory Agreement” has the meaning set out in Section 3.5(a) of this Agreement.

“Investment Fund” means an investment company, a general or limited partnership, a limited liability company or other pooled investment vehicle in which a Partnership has invested and that is advised by an Investment Manager; whether or not, in each case, the entity is registered under the 1940 Act, and includes the Master Partnership and Investment Funds that may be formed by each Partnership.

“Investment Manager” means any Person that manages an Investment Fund.

“Investment Percentage” means a percentage established for each Partner on each Partnership’s books as of the first day of each Fiscal Period. The Investment Percentage of a Partner for a Fiscal Period will be determined by dividing the balance of the Partner’s Capital Account as of the commencement of the Fiscal Period by the sum of the Capital Accounts of all of the Partners as of the commencement of the Fiscal Period. The sum of the Investment Percentages of all Partners for each Fiscal Period will equal 100%.

“Limited Partner” means any Person admitted to a Partnership as a limited Partner of a Partnership (including any Person who or that is a General Partner when acting in the Person’s capacity as a Limited Partner) until such Partnership either distributes the entire Net Asset Value of such Shares to, or repurchases all of the Shares of, the Person in accordance with Section 4.5 of this Agreement, or a substituted Limited Partner or Partners are admitted with respect to all of the Person’s Shares in accordance with Section 4.4 of this Agreement, in the Person’s capacity as a limited Partner of a Partnership. For purposes of the Delaware Act, the Limited Partners will constitute a single class or group.

“Master Partnership” means The Endowment PMF Master Fund, L.P., a limited partnership organized under the laws of the State of Delaware.

“Master Partnership Vote” means a vote made by a Partnership as a limited partner of the Master Partnership.

“Memorandum” means each Partnership’s private placement memorandum, as included in the Form N-2, as amended or supplemented from time to time.

“Net Assets” means the total value of all assets of each Partnership, less an amount equal to all accrued debts, liabilities and obligations of each Partnership, calculated before giving effect to any repurchases of Shares.

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“Net Asset Value” means, with respect to a Share at any time, the Partnership’s Net Assets divided by the number of Shares then outstanding. The initial Net Asset Value of a Share, as of the closing of the Partnership Division, shall be $100.

“Net Profit” or “Net Loss” means the amount by which the Net Assets as of the close of business on the last day of a Fiscal Period exceed (in the case of Net Profit) or are less than (in the case of Net Loss) the Net Assets as of the commencement of the same Fiscal Period (or, with respect to the initial Fiscal Period of each Partnership, at the close of business on the Closing Date), the amount of any Net Profit or Net Loss to be adjusted to exclude any items to be allocated among the Capital Accounts of the Partners on a basis that is not in accordance with the Investment Percentages of all Partners as of the commencement of the Fiscal Period in accordance with Section 5.4 of this Agreement.

“Offering Materials” means the Memorandum and subscription materials provided to prospective Limited Partners in connection with the Partnership Division.

“Offshore Fund” means The Endowment PMF Offshore TEI Fund, Ltd., a Cayman Islands exempted company limited by shares, of which the TEI Fund is the sole management member and which has the same investment objectives as the TEI Fund.

“Partners” means the General Partner(s) and the Limited Partners, collectively, and “Partner” means any General Partner or Limited Partner.

“Partnership Division” means the establishment of the Master Partnership by the contribution of assets in kind from The Endowment Master Fund, L.P., a Delaware limited partnership, and the corresponding establishment of (i) PMF Fund by the contribution of assets in kind from The Endowment Registered Fund, L.P., a Delaware limited partnership and (ii) TEI Fund by the contribution of assets in kind from The Endowment TEI Fund, L.P., a Delaware limited partnership.

“Person” means any individual, entity, corporation, partnership, limited liability company, joint stock company, trusts, estate, joint venture, or unincorporated organization.

“Predecessor Partnership” means (i) with respect to PMF Fund, The Endowment Registered Fund, L.P., a Delaware limited partnership and (ii) with respect to TEI Fund, The Endowment TEI Fund, L.P., a Delaware limited partnership.

“Securities” means securities (including, without limitation, equities, debt obligations, options, and other “securities” as that term is defined in Section 2(a)(36) of the 1940 Act) and any contracts for forward or future delivery of any security, debt obligation, currency or commodity, all manner of derivative instruments and any contracts based on any index or group of securities, debt obligations, currencies or commodities, and any options on those contracts.

“Shares” means the shares of limited partnership interest, each representing an ownership interest in the applicable Partnership at any particular time of a Limited Partner or other person to whom Shares have been Transferred in accordance with Section 4.3 or 4.4 of this Agreement, including the rights and obligations of such Member or other person under this Agreement and the Delaware Act. Upon the closing of the initial issuance of Shares, one Share shall be issued with respect to each $100 contributed or deemed to the capital of the applicable Partnership by a Limited Partner. Thereafter Shares shall be issued at the Net Asset Value as of the date of issuance.

“Subadviser” means an Investment Manager responsible either (1) for directly managing a portion of the assets of each Partnership in a managed account or (2) for managing a special purpose investment vehicle in which the Investment Manager and each Partnership are the sole limited Partners, members or other interest holders.

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“Temporary Investment” shall mean investments in (i) cash or cash equivalents, (ii) marketable direct obligations issued or unconditionally guaranteed by the United States, or issued by any agency thereof, maturing within one year from the date of acquisition thereof, (iii) money market instruments, commercial paper or other short-term debt obligations having at the date of purchase by the Partnership the highest or second highest rating obtainable from either Standard & Poor’s Ratings Services or Moody’s Investors Services, Inc., or their respective successors, (iv) interest bearing accounts at a registered broker-dealer, (v) money market mutual funds, (vi) certificates of deposit maturing within one year from the date of acquisition thereof issued by commercial banks incorporated under the laws of the United States or any state thereof or the District of Columbia, or organized under the laws of a non-U.S. country, which banks have branches in the United States, each having at the date of acquisition by the Partnership combined capital and surplus of not less than $250 million, (vii) overnight repurchase agreements with primary Federal Reserve Bank dealers collateralized by direct U.S. Government obligations or (viii) pooled investment funds or accounts that invest only in Securities or instruments of the type described in (i) through (iv). For the avoidance of doubt, subject to the requirements of the 1940 Act, Temporary Investments may be held at, managed by, or purchased from, any Person that satisfies the foregoing requirements.

“Transfer” means the assignment, transfer, sale or other disposition of all or any portion of a Partner’s Shares, including any right to receive any allocations and distributions attributable to Shares. Verbs, adverbs or adjectives such as “Transfer,” “Transferred” and “Transferring” have correlative meanings.

Other capitalized terms used herein but not otherwise defined shall have the meanings given to them in the Memorandum.

ARTICLE II.

ORGANIZATION, ADMISSION OF PARTNERS, DIRECTORS

2.1 FORMATION OF LIMITED PARTNERSHIP

(a)            Each Partnership is formed as a limited partnership pursuant to the Certificate and this Agreement. The Partners agree that their rights, duties and liabilities will be as provided in the Delaware Act, except as otherwise provided in this Agreement. The General Partner will cause the Certificate to be executed and filed in accordance with the Delaware Act and will cause to be executed and filed with applicable governmental authorities any other instruments, documents and certificates that the General Partner concludes may from time to time be required by the laws of the United States of America, the State of Delaware or any other jurisdiction in which the General Partner determines that a Partnership should do business, or any political subdivision or agency of any such jurisdiction, or that the General Partner determines is necessary or appropriate to effectuate, implement and continue the valid existence and business of a Partnership.

(b)            Each Partnership is formed for the object and purpose of (and the nature of the business to be conducted by each Partnership is) engaging in any lawful activity for which limited partnerships may be formed under the Delaware Act and engaging in any and all activities necessary or incidental to the foregoing.

2.2 NAME

The names of the Partnerships are “The Endowment PMF Fund, L.P.” and “The Endowment TEI Fund, L.P.” or any other name that the General Partner may adopt after the date of this Agreement upon (a) causing an appropriate amendment to this Agreement to be executed and to the Certificate to be filed in accordance with the Delaware Act and (b) sending notice of the amendment to each Limited Partner.

2.3 PRINCIPAL AND REGISTERED OFFICE

Each Partnership will have its principal office at the principal office of the General Partner or at any other place designated from time to time by the General Partner. Each Partnership’s registered agent in the State of Delaware shall be The Corporation Service Company, and each Partnership’s registered office in the State of Delaware at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 unless the General Partner designates a different registered agent or office from time to time in accordance with the Delaware Act.

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2.4 DURATION

The term of a Partnership will continue until such Partnership is dissolved and wound up and the Certificate is canceled in accordance with Section 6.1 of this Agreement.

2.5 BUSINESS OF EACH PARTNERSHIP

(a)            The principal business of each Partnership shall be to hold and liquidate the portfolio of interests in Investment Funds contributed to the Partnership in the Partnership Division, and neither Partnership shall make any new investments in Investment Funds. In furtherance of such business, a Partnership may fund the capital calls of such Investment Funds, engage in secondary transactions with respect to such Investment Funds (subject to the limitations contained in this Agreement), hold and manage assets distributed in-kind by Investment Funds and, for cash and liquidity management purposes, purchase, sell, invest and trade in Temporary Investments. Portions of each Partnership’s assets (which may constitute, in the aggregate, all of each Partnership’s assets) may be invested in Investment Funds that invest and trade in Securities or in separate managed accounts through which each Partnership may invest and trade in Securities, some or all of which may be advised by one or more Investment Managers or Subadvisers. The PMF Fund shall invest substantially all of its assets in the Master Partnership. The TEI Fund shall invest substantially all of its assets in the Offshore Fund, which the TEI Fund shall in turn cause to invest substantially all of its assets in the Master Partnership. Each Partnership may execute, deliver and perform all contracts, agreements and other undertakings and engage in all activities and transactions as the General Partner, the Directors or the Adviser may deem necessary or advisable to carry out such business.

(b)            Each Partnership will operate as a closed-end, management investment company in accordance with the 1940 Act and subject to any fundamental policies and investment restrictions described in the Form N-2.

(c)            Each Partnership may designate from time to time persons to act as signatories for each Partnership, including, without limitation, persons authorized to execute and deliver any filings with the Securities and Exchange Commission or applicable federal or state regulatory authorities or self-regulatory organizations.

2.6 GENERAL PARTNER

(a)            The Endowment Fund GP, L.P. is the General Partner. The General Partner may admit to each Partnership as an additional General Partner any Person who agrees in writing to be bound by all of the terms of this Agreement as a General Partner. The General Partner may admit to a Partnership as a substituted General Partner any Person to which it has Transferred its Interest as the General Partner in accordance with Section 4.3 of this Agreement. Any substituted General Partner will be admitted to such Partnership upon the Transferring General Partner’s consenting to such admission and is authorized to, and will, continue the business of such Partnership without dissolution. The name and mailing address of the General Partner and the Capital Contribution of the General Partner will be reflected on the books and records of such Partnership. If at any time such Partnership has more than one General Partner, unless otherwise provided in this Agreement, any action allowed to be taken, or required to be taken, by the General Partners may be taken only with the unanimous approval of all of the General Partners.

(b)            Each General Partner will serve for the duration of the term of each Partnership, unless the General Partner ceases to be a General Partner in accordance with Section 4.1 of this Agreement.

2.7 LIMITED PARTNERS

The General Partner may, at any time and without advance notice to or consent from any other Partner admit to a Partnership any Person who purchases the Shares of one or more existing Limited Partners and who agrees to be bound by all of the terms of this Agreement as an additional Limited Partner. The admission of any Person as an additional or substitute Limited Partner will be effective upon the General Partner’s approval of such Person’s purchase of Shares and the execution and delivery by, or on behalf of, the additional Limited Partner of this Agreement or an instrument that constitutes the execution and delivery of this Agreement. The General Partner will cause the books and records of the Partnership to reflect the name, Shares and Capital Account of the additional or substitute Limited Partner.

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2.8 BOTH GENERAL AND LIMITED PARTNER

A Partner may be simultaneously a General Partner and a Limited Partner, in which event the Partner’s rights and obligations in each capacity will be determined separately in accordance with the terms and provisions of this Agreement and as provided in the Delaware Act.

2.9 LIMITED LIABILITY

Except for payment obligations under this Agreement, including Capital Contribution obligations, and as provided under applicable law, a Limited Partner will not be liable for a Partnership’s obligations in any amount in excess of the Limited Partner’s Capital Account balance, plus the Limited Partner’s share of undistributed profits and assets. Subject to applicable law, a Limited Partner may be obligated to return to such Partnership certain amounts distributed to the Limited Partner.

2.10 DIRECTORS

(a)            The number of Directors at the date of this Agreement is fixed at not more than fourteen (14) Directors and no fewer than two (2). After the Closing Date, the number of Directors will be fixed from time to time by the Directors then in office, which number may be greater, or lesser, than fourteen (14), but no fewer than the minimum number of directors permitted to corporations organized under the laws of the State of Delaware, except that no reduction in the number of Directors will serve to effect the removal of any Director. Each Partner approves the delegation by the General Partner to the Directors, in accordance with Section 3.1 of this Agreement, of certain of the General Partner’s rights and powers.

(b)            Each Director will serve for the duration of the term of each Partnership, unless his or her status as a Director is terminated sooner in accordance with Section 2.11(d) of this Agreement. Except to the extent the 1940 Act requires election by Limited Partners, if any vacancy in the position of a Director occurs, including by reason of an increase in the number of Directors as contemplated by Section 2.11(a) of this Agreement, the remaining Directors may appoint an individual to serve in that capacity in accordance with the provisions of the 1940 Act. Independent Directors will at all times constitute at least a majority of the Directors then serving. An Independent Director will be replaced by another Independent Director selected and nominated by the remaining Independent Directors, or in a manner otherwise permissible under the 1940 Act.

(c)            If no Director remains, the General Partner will promptly call a meeting of the Partners, to be held within 120 days after the date on which the last Director ceased to act in that capacity, for the purpose of determining whether to continue the business of a Partnership and, if the business is to be continued, approving the appointment of the requisite number of Directors. If the Partners determine at the meeting not to continue the business of a Partnership, or if the approval of the appointment of the requisite number of Directors is not approved within 120 days after the date on which the last Director ceased to act in that capacity, then such Partnership will be dissolved in accordance with Section 6.1 of this Agreement and the assets of such Partnership will be liquidated and distributed in accordance with Section 6.2 of this Agreement.

(d)            The status of a Director will terminate (1) if the Director dies; (2) if the Director resigns as a Director; (3) if the Director is removed in accordance with Section 2.10(e) of this Agreement; or (4) on December 31 in the year in which the Director reaches 82 years of age, unless such termination due to age is waived by resolution of a majority of the Directors.

(e)            Any Director may be removed only for Cause as determined by a majority of the other Directors.

(f)            The Directors may establish and maintain committees of the Board of Directors, and the Directors may grant to such committees the authority to, among other things: value the assets of each Partnership; select and nominate the Independent Directors of each Partnership; recommend to the Board of Directors the compensation to be paid to the Independent Directors; and recommend to the Board of Directors the firm of certified public accountants that will conduct each Partnership’s audits.

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(g)            The Directors may establish or designate committees of the Board of Directors or each Partnership, whose members may include the Directors and/or other Persons who are not Directors, to provide advice and other services to each Partnership, which committees may include (but are not limited to) a committee that will value the assets of each Partnership.

(h)            The Independent Directors will receive compensation for their services as Independent Directors, as determined by the Board of Directors.

ARTICLE III.

MANAGEMENT; ADVICE AND MANAGEMENT

3.1 MANAGEMENT AND CONTROL

(a)            The General Partner delegates to the Directors those rights and powers of the General Partner necessary for the Directors to manage and control the business affairs of each Partnership and to carry out their oversight obligations with respect to each Partnership required under the 1940 Act, state law, and any other applicable laws or regulations. Rights and powers delegated to the Directors include, without limitation, the authority as Directors to oversee and to establish policies regarding the management, conduct and operation of each Partnership’s business, and to do all things necessary and proper as Directors to carry out the objective and business of each Partnership, including, without limitation, the power to engage the Adviser to provide Advice and Management and to remove the Adviser, as well as to exercise any other rights and powers expressly given to the Directors under this Agreement. The Partners intend that, to the fullest extent permitted by law, and except to the extent otherwise expressly provided in this Agreement, (1) each Director is vested with the same powers and authority on behalf of each Partnership as are customarily vested in each director of a Delaware corporation and (2) each Independent Director is vested with the same powers and authority on behalf of each Partnership as are customarily vested in each director who is not an “interested person” (as that term is defined in the 1940 Act) of a closed-end, management investment company registered under the 1940 Act that is organized as a Delaware corporation. During any period in which a Partnership has no Directors, the General Partner will manage and control such Partnership. Each Director will be the agent of each Partnership but will not, for any purpose, be a General Partner. Notwithstanding the delegation described in this Section 3.1(a), the General Partner will not cease to be the General Partner and will continue to be liable as such and in no event will a Director be considered a General Partner by agreement, estoppel or otherwise as a result of the performance of his or her duties under this Agreement or otherwise. The General Partner retains those rights, powers and duties that have not been delegated under this Agreement. Any Director may be admitted to a Partnership in accordance with Section 2.7 of this Agreement and make Capital Contributions and own Shares, in which case the Director will also become a Limited Partner.

(b)            For each taxable year of a Partnership, each Partnership will file a tax return as a partnership for U.S. federal income tax purposes. Neither Partnership shall elect to be treated as an association taxable as a corporation for U.S. federal, state or local income tax purposes under Section 301.7701-3(a) of the Treasury Regulations or under any corresponding provision of state or local law. Neither Partnership shall participate in the establishment of an “established securities market” (within the meaning of Section 1.7704-1(b) of the Treasury Regulations) or a “secondary market or the substantial equivalent thereof” (within the meaning of Section 1.7704-1(c) of the Treasury Regulations) or, in either case, the inclusion of interests in such Partnership thereon. All decisions for each Partnership relating to tax matters including, without limitation, whether to make any tax elections (including the election under Section 754 of the Code), the positions to be made on each Partnership’s tax returns and the settlement or further contest or litigation of any audit matters raised by the Internal Revenue Service or any other taxing authority, will be made by the Directors. All actions (other than ministerial actions) taken by the tax matters Partner, as designated in Section 3.1(c) below, will be subject to the approval of the Directors.

(c)            The General Partner will be the designated tax matters Partner for purposes of the Code. Each Partner agrees not to treat, on his, her or its personal income tax return or in any claim for a refund, any item of income, gain, loss, deduction or credit in a manner inconsistent with the treatment of the item by each Partnership. The tax

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matters Partner will have the exclusive authority and discretion to make any elections required or permitted to be made by each Partnership under any provisions of the Code or any other revenue laws.

(d)            No Limited Partner will have any right to participate in or take any part in the management or control of a Partnership’s business, and no Limited Partner will have any right, power or authority to act for or bind a Partnership. Limited Partners will have the right to vote on any matters only as provided in this Agreement or on any matters that require the approval of the holders of voting securities under the 1940 Act and will have no right to exercise any other vote granted to Limited Partners under the Delaware Act, any such rights being vested in the Directors (or the General Partner if there are no Directors) and may be exercised without requiring the approval of the Limited Partners.

(e)            In the event that a Partnership is asked to make a Master Partnership Vote, the General Partner shall call a meeting of the Limited Partners for purposes of directing the General Partner on how to make such Master Partnership Vote. Following such meeting of Limited Partners, the General Partner shall make such Master Partnership Vote in the manner directed by the affirmative vote of Limited Partners holding a majority of the total number of votes eligible to be cast by those Limited Partners who are present in person or by proxy at the meeting.

3.2 POWERS RESERVED BY THE GENERAL PARTNER

Notwithstanding anything in this Agreement to the contrary, the General Partner retains all rights, duties and powers to manage the affairs of each Partnership that may not be delegated under Delaware law, and that are not otherwise delegated by the General Partner to the Directors or assumed by the Adviser or any other Person under the terms of any agreement between each Partnership and the Adviser or any other Person. Specifically, and without limitation, the General Partner will retain full power and authority on behalf of and in the name of each Partnership:

(1)            to issue to any Partner an instrument certifying that the Partner is the owner of Shares;

(2)            to call and conduct meetings of Partners at each Partnership’s principal office or elsewhere as it may determine, and to assist the Directors in calling and conducting meetings of the Directors;

(3)            to engage and terminate attorneys, accountants (subject to the provisions of the 1940 Act) and other professional advisers and consultants as the General Partner deems necessary or advisable in connection with the affairs of each Partnership or as may be directed by the Directors;

(4)            to act as tax matters Partner in accordance with Section 3.1(c) of this Agreement, and to assist in the preparation and filing of any required tax or information returns to be made by each Partnership;

(5)            as directed by the Directors, to commence, defend and conclude any action, suit, investigation or other proceeding that pertains to each Partnership or any assets of each Partnership;

(6)            as directed by the Directors, to arrange for the purchase of any insurance covering the potential liabilities of each Partnership or relating to the performance of the Directors, the General Partner, the Adviser or any of their principals, Partners, directors, officers, members, employees and agents;

(7)            to execute, deliver and perform any contracts, agreements and other undertakings, and to engage in activities and transactions that are necessary or appropriate for the conduct of the business of each Partnership and to bind each Partnership by those contracts, agreements, and other undertakings, provided that the officers of each Partnership, as directed by the Directors, may execute and deliver contracts and agreements on behalf of each Partnership and bind each Partnership to those contracts and agreements;

(8)            to make determinations regarding subscriptions for and/or the Transfer of Shares, including, without limitation, determinations regarding the suspension of subscriptions, and to execute, deliver and perform subscription agreements, placement agency agreements relating to the placement of Shares, administration

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agreements appointing an administrator to perform various administrative action on behalf of each Partnership, escrow agreements and custodial agreements without the consent of or notice to any other Person, notwithstanding any other provision of this Agreement;

(9)            to make determinations regarding appropriate reserves to be created for the contingent, conditional or unmatured liabilities of each Partnership;

(10)            as provided in Section 7.2 of this Agreement, to make determinations regarding adjustments to the computation of Net Profit or Net Loss and allocations among the Partners under Article V of this Agreement;

(11)            to manage or oversee the general administrative and operational aspects of each Partnership;

(12)            as directed by the Directors, to create one or more subsidiaries for purposes of conducting all or a portion of the Partnership’s business provided that any such subsidiary shall not take any action that a Partnership would be prohibited by this Agreement from taking directly.

3.3 ACTIONS BY DIRECTORS

(a)            Unless provided otherwise in this Agreement, the Directors will act only: (1) by the affirmative vote of a majority of the Directors (which majority will include any requisite number of Independent Directors required by the 1940 Act) present at a meeting duly called at which a quorum of the Directors is present either in person or, to the extent consistent with the provisions of the 1940 Act, by conference telephone or other communications equipment by means of which all Persons participating in the meeting can hear each other; or (2) by unanimous written consent of all of the Directors without a meeting, if permissible under the 1940 Act.

(b)            The Directors may designate from time to time a Director or an officer of each Partnership or the General Partner who will preside at all meetings. Meetings of the Directors may be called by the General Partner, the Chairman of the Board of Directors, or any two Directors, and may be held on any date and at any time and place determined by the Directors. Each Director will be entitled to receive written notice of the date, time and place of a meeting within a reasonable time in advance of the meeting. Notice need not be given to any Director who attends a meeting without objecting to the lack of notice or who executes a written waiver of notice with respect to the meeting. A majority of the Directors then in office will constitute a quorum at any meeting of Directors.

(c)            The Directors may appoint from time to time agents and employees of each Partnership who will have the same powers and duties on behalf of each Partnership as are customarily vested in officers of a corporation incorporated under Delaware law, or such other powers and duties as may be designated by the Directors, in their sole discretion, and designate them as officers or agents of each Partnership by resolution of the Directors specifying their titles or functions.

3.4 MEETINGS OF PARTNERS

(a)            Actions requiring the vote of the Partners may be taken at any duly constituted meeting of the Partners at which a quorum is present or by means of a written consent. Meetings of the Partners may be called by the General Partner, by the affirmative vote of a majority of Directors then in office, or by Partners holding at least a majority of the total number of votes eligible to be cast by all Partners, and may be held at any time, date and place determined by the General Partner in the case of meetings called by the General Partner or the Partners and at any time, date and place determined by the Directors in the case of meetings called by the Directors. In each case, the General Partner will provide notice of the meeting, stating the date, time and place of the meeting and the record date for the meeting, to each Partner entitled to vote at the meeting within a reasonable time prior to the meeting. Failure to receive notice of a meeting on the part of any Partner will not affect the validity of any act or proceeding of the meeting, so long as a quorum is present at the meeting. Except as otherwise required by applicable law, only matters set out in the notice of a meeting may be voted on by the Partners at the meeting. The presence in person or by proxy of Partners holding a majority of the total number of votes eligible to be cast by all Partners as of the record date will constitute a quorum at any meeting of Partners. In the absence of a quorum, a meeting may be adjourned to

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the time or times as determined by the General Partner and communicated to the Directors in the manner described above in this Section 3.4(a). Except as otherwise required by any provision of this Agreement or of the 1940 Act, (1) those candidates receiving a plurality of the votes cast at any meeting of Partners called pursuant to Section 2.11(c) of this Agreement or elected pursuant to the requirement of Section 2.11(b) will be elected as Directors and (2) all other actions of the Partners taken at a meeting will require the affirmative vote of Partners holding a majority of the total number of votes eligible to be cast by those Partners who are present in person or by proxy at the meeting.

(b)            Each Partner will be entitled to cast at any meeting of Partners or pursuant to written consent a number of votes equivalent to the Partner’s Investment Percentage as of the record date for the meeting or the date of the written consent. The General Partner will establish a record date not less than 10 nor more than 60 days prior to the date of any meeting of Partners or mailing (including by electronic transmission) to the Partners of any written consent, to determine eligibility to vote at the meeting and the number of votes that each Partner will be entitled to cast at the meeting, and will maintain for each record date a list setting out the name of each Partner and the number of votes that each Partner will be entitled to cast at the meeting.

(c)            Partner may vote at any meeting of Partners by a properly executed proxy transmitted to a Partnership at any time at or before the time of the meeting by telegram, telecopier or other means of electronic communication or other readable reproduction as contemplated by the provisions relating to proxies applicable to corporations incorporated under the laws of Delaware now or in the future in effect. A proxy may be suspended or revoked, as the case may be, by the Partner executing the proxy by a later writing delivered to such Partnership at any time prior to exercise of the proxy or if the Partner executing the proxy is present at the meeting and votes in person. Any action of the Partners that is permitted to be taken at a meeting of the Partners may be taken without a meeting if consents in writing, setting out the action to be taken, are signed by Partners holding a majority of the total number of votes eligible to be cast or any greater percentage as may be required under this Agreement to approve the action.

3.5 ADVICE AND MANAGEMENT

(a)            The Directors will, among their powers, have the authority to cause each Partnership to engage the Adviser to provide Advice and Management to each Partnership under their direction, subject to any approval of such engagement by the Partners that may be required under the 1940 Act. As directed by the Directors, each Partnership and the General Partner, on behalf of each Partnership, among its powers described in Section 3.2 of this Agreement, will have the authority to execute, deliver and monitor the performance of any contract or agreement to provide Advice and Management to each Partnership (each, an “Investment Advisory Agreement”). Any such Investment Advisory Agreement will require that the Adviser acknowledge its obligations under this Agreement.

(1)            So long as the Adviser has been and continues to be authorized to provide Advice and Management pursuant to an Investment Advisory Agreement, it will have, subject to this Agreement and to any policies and restrictions adopted from time to time by the Directors and communicated in writing to the Adviser (in each case, as more fully described in such Investment Advisory Agreement), full discretion and authority on behalf of and in the name of each Partnership in Temporary Investments (1) to manage the assets and liabilities of each Partnership, and (2) to invest directly the assets of each Partnership to ensure the availability of cash as required by each Partnership in the ordinary course of its business. In no case may the Adviser make a new investment in an Investment Fund, except that the Adviser may, on behalf of each Partnership, fund capital calls of Investment Funds consistent with Section 2.5 hereof. In furtherance of, and subject to the provisions of this Section 3.5(b), the Adviser, except as otherwise provided in the applicable Investment Advisory Agreement (and at all times subject to the provisions of the 1940 Act), will have full discretion and authority on behalf of and in the name of each Partnership:

(2)            to purchase, sell, exchange, trade and otherwise deal in and with Securities and other property of each Partnership, including, without limitation, interests in Investment Funds, and to loan Securities of each Partnership;

(3)            to do any and all acts and exercise all rights with respect to each Partnership’s interest as an investor in any Person, including, without limitation, the voting of limited partnership interests or shares of Investment Funds;

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(4)            to enter into subscription or other agreements relating to investments in Investment Funds (subject to Section 3.5(b)(8) of this Agreement in the case of agreements with Subadvisers), including, without limitation, agreements irrevocably to forego each Partnership’s right to vote its limited partnership (or similar) interests or shares of Investment Funds;

(5)            to negotiate the terms of and enter into agreements with Investment Managers and Investment Funds (subject to Section 3.5(b)(8) of this Agreement in the case of agreements with Subadvisers) that provide for, among other things, the payment of management fees, reimbursement of expenses and allocations of profits to Investment Managers and the indemnification by each Partnership of Investment Managers and Investment Funds to the same or different extent as provided for with respect to the Adviser, and to amend, modify, terminate or grant waivers in respect of those agreements;

(6)            to open, maintain and close accounts with brokers and dealers, to make all decisions relating to the manner, method and timing of Securities and other investment transactions, to select and place orders with brokers, dealers or other financial intermediaries for the execution, clearance or settlement of any transactions on behalf of each Partnership on those terms that the Adviser considers appropriate, and to grant limited discretionary authorization to brokers, dealers or other financial intermediaries with respect to price, time and other terms of investment and trading transactions;

(7)            to borrow from banks or other financial institutions and to pledge the assets of each Partnership as collateral for those borrowings, to trade on margin, to exercise or refrain from exercising all rights regarding each Partnership’s investments, and to instruct custodians regarding the settlement of transactions, the disbursement of payments to Partnership with respect to repurchases of Shares and the payment of Partnership expenses, including those relating to the organization and registration of each Partnership;

(8)            subject to Section 3.5(b)(8) of this Agreement, to engage the services of Persons, including Affiliates of the Adviser, to assist the Adviser in providing, or to provide under the Adviser’s control and supervision, Advice and Management to each Partnership at the expense of the Adviser and to amend, modify or terminate or grant waivers in respect of these services;

(9)            (A) to commit all or part of each Partnership’s assets to the discretionary management of one or more Subadvisers, the selection of which will be subject to the approval of a majority of each Partnership’s outstanding voting securities (as defined in the 1940 Act), unless each Partnership receives an exemption from the provisions of the 1940 Act requiring such approval, (B) to negotiate and enter into agreements with the Subadvisers that provide for, among other things, the indemnification by each Partnership of the Subadvisers to the same or different extent as provided for with respect to the Adviser, and to amend, modify, terminate or grant waivers in respect of those agreements (subject to the requirements of the 1940 Act and applicable and (C) to authorize the payment of fees, reimbursement of expenses and allocations of profits to Subadvisers in accordance with their respective governing documents; and

(10)            subject to applicable law, to take all such other actions that the Adviser considers necessary or advisable in furtherance of its duties and powers under the applicable Investment Advisory Agreement.

(b)            The Adviser, to the extent of its powers set out in this Agreement or otherwise vested in it by action of the Directors not inconsistent with this Agreement, is an agent of each Partnership, and the actions of the Adviser taken or refrained from being taken in accordance with such powers will bind each Partnership.

3.6 CUSTODY OF ASSETS OF EACH PARTNERSHIP

(a)            Notwithstanding anything to the contrary in this Agreement, the General Partner will not have any authority to hold or have possession or custody of any funds, Securities or other property of a Partnership. The physical possession of all funds, Securities or other property of each Partnership will at all times be held, controlled and administered by one or more custodians retained by each Partnership. The General Partner will have no

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responsibility, other than that associated with the oversight and supervision of custodians retained by each Partnership, with respect to the collection of income or the physical acquisition or safekeeping of the funds, Securities or other property of each Partnership, all duties of collection, physical acquisition or safekeeping being the sole obligation of such custodians.

(b)            With respect to any Investment Fund securities held by a Partnership as of the date on which such Partnership becomes registered with the U.S. Securities and Exchange Commission as an investment company under the 1940 Act, and during any period of time in which such Partnership remains so registered, such securities shall be under the control of one or more of such Partnership’s custodian(s), as may be engaged from time to time, pursuant to Section 17(f) of the 1940 Act and the rules thereunder, and no person shall be authorized or permitted to have access to such securities except in accordance with Section 17(f) of the 1940 Act and the rules thereunder, and consistent with the terms of such Partnership’s agreement with the relevant Partnership custodian.

3.7 BROKERAGE

In the course of selecting brokers, dealers and other financial intermediaries for the execution, clearance and settlement of transactions for each Partnership under Sections 3.5(b)(5) and (6) of this Agreement, the Adviser may, subject to policies adopted by each Partnership and to the provisions of applicable law, agree to commissions, fees and other charges on behalf of each Partnership as the Adviser deems reasonable in the circumstances, taking into account all such factors as it deems relevant, including the reliability of the broker, financial responsibility of the broker, strength of the broker, ability of the broker to efficiently execute transactions, the broker’s facilities, and the broker’s provision or payment of the costs of research and other services that are of benefit to each Partnership, the Adviser and other clients of and accounts managed by the Adviser, even if the cost of these services does not represent the lowest cost available. The Adviser will be under no obligation to combine or arrange orders so as to obtain reduced charges unless otherwise required under the U.S. Federal securities laws. The Adviser, subject to procedures adopted by the Directors, may use Affiliates of the Adviser and the General Partner as brokers to effect each Partnership’s Securities transactions and each Partnership may pay commissions to these brokers in amounts as are permissible under applicable law.

3.8 OTHER ACTIVITIES

(a)            None of the General Partner, the Adviser and their principals, Partners, directors, officers, members, employees and beneficial owners nor the Directors will be required to devote full time to the affairs of each Partnership, but each will devote such time as each may reasonably be required to perform its obligations under this Agreement and under the 1940 Act.

(b)            The Adviser, the Directors, any Partner, and any Affiliate of any Partner may engage in or possess an interest in other business ventures or commercial dealings of every kind and description, independently or with others, including, but not limited to, acquisition and disposition of Securities, provision of investment advisory or brokerage services, serving as directors, officers, employees, advisors or agents of other companies, Partners of any Partnership, members of any limited liability company, or trustees of any trust, or entering into any other commercial arrangements. No Partner will have any rights in or to such activities of any other Partner, the Adviser, the Directors or any Affiliate of any Partner or any profits derived from these activities.

(c)            The General Partner, the Adviser and their principals, Partners, directors, officers, members, employees and beneficial owners and the Directors, from time to time may acquire, possess, manage, hypothecate and dispose of Securities or other investment assets, and engage in any other investment transaction for any account over which they exercise discretionary authority, including their own accounts, the accounts of their families, the account of any entity in which they have a beneficial interest or the accounts of others for whom or which they may provide investment advisory or other services.

(d)            To the extent that at law or in equity the Directors, the Adviser or the General Partner has duties (including fiduciary duties) and liabilities relating to those duties to a Partnership or to any other Partner or other Person bound by this Agreement, any such Person acting under this Agreement will not be liable to a Partnership or to any other

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Partner or other Person bound by this Agreement for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of the General Partner, the Adviser or the Directors otherwise existing at law or in equity, are agreed by the Partners to replace the other duties and liabilities of the General Partner, the Adviser or the Directors.

3.9 DUTY OF CARE

(a)            The Directors, the Adviser and the General Partner, including any officer, director, Partner, member, principal, employee or agent of any of them, will not be liable to a Partnership or to any of its Partners for any loss or damage occasioned by any act or omission in the performance of the Person’s services under this Agreement, in the absence of a final judicial or arbitral decision on the merits from which no further right to appeal may be taken that the loss is due to an act or omission of the Person constituting willful misfeasance, bad faith, gross negligence or reckless disregard of the Person’s duties under this Agreement.

(b)            No Director who has been designated an “audit committee financial expert” (for purposes of Section 407 of the Sarbanes-Oxley Act of 2002 or any successor provision thereto, and any rules issued thereunder by the Commission) in each Partnership’s registration statement or other reports required to be filed with the Commission shall be subject to any greater duty of care in discharging such Director’s duties and responsibilities by virtue of such designation than is any Director who has not been so designated.

(c)            Limited Partners not in breach of any obligation under this Agreement or under any agreement pursuant to which the Limited Partner subscribed for Shares will be liable to the relevant Partnership, any Partner or third parties only as required by this Agreement or applicable law.

3.10 INDEMNIFICATION

(a)            To the fullest extent permitted by law, each Partnership will, subject to Section 3.10(c) of this Agreement, indemnify each General Partner and Adviser (including for this purpose each officer, director, member, Partner, principal, employee or agent of, or any Person who controls, is controlled by or is under common control with, a General Partner or Adviser or Partner of a General Partner or Adviser, and their executors, heirs, assigns, successors or other legal representatives) and each Director (and his employer, executors, heirs, assigns, successors or other legal representatives) (each such Person being referred to as an “indemnitee”) against all losses, claims, damages, liabilities, costs and expenses arising by reason of being or having been a General Partner, Adviser or Director of each Partnership, or the past or present performance of services to each Partnership by the indemnitee, except to the extent that the loss, claim, damage, liability, cost or expense has been finally determined in a judicial or arbitral decision on the merits from which no further right to appeal may be taken in any such action, suit, investigation or other proceeding to have been incurred or suffered by the indemnitee by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office. These losses, claims, damages, liabilities, costs and expenses include, but are not limited to, amounts paid in satisfaction of judgments, in compromise, or as fines or penalties, and counsel fees and expenses incurred in connection with the defense or disposition of any action, suit, investigation or other proceeding, whether civil or criminal, before any judicial, arbitral, administrative or legislative body, in which the indemnitee may be or may have been involved as a party or otherwise, or with which such indemnitee may be or may have been threatened, while in office or thereafter. The rights of indemnification provided under this Section 3.10 are not to be construed so as to provide for indemnification of an indemnitee for any liability (including liability under U.S. Federal securities laws which, under certain circumstances, impose liability even on Persons that act in good faith) to the extent (but only to the extent) that indemnification would be in violation of applicable law, but will be construed so as to effectuate the applicable provisions of this Section 3.10. Notwithstanding the foregoing, claims, actions, suits and proceedings relating to or arising out of the internal affairs of the General Partner or the Adviser (including any claim solely involving the owners, directors or employees of such Persons) shall not be covered by the indemnification provisions of this Section 3.10.

(b)            Expenses, including counsel fees and expenses, incurred by any indemnitee (but excluding amounts paid in satisfaction of judgments, in compromise, or as fines or penalties) may be paid from time to time by each

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Partnership in advance of the final disposition of any action, suit, investigation or other proceeding upon receipt of an undertaking by or on behalf of the indemnitee to repay to each Partnership amounts paid if a determination is made that indemnification of the expenses is not authorized under Section 3.10(a) of this Agreement, so long as (1) the indemnitee provides security for the undertaking, (2) each Partnership is insured by or on behalf of the indemnitee against losses arising by reason of the indemnitee’s failure to fulfill his, her or its undertaking, or (3) a majority of the Independent Directors (excluding any Director who is either seeking advancement of expenses under this Agreement or is or has been a party to any other action, suit, investigation or other proceeding involving claims similar to those involved in the action, suit, investigation or proceeding giving rise to a claim for advancement of expenses under this Agreement) or independent legal counsel in a written opinion determines, based on a review of readily available facts (as opposed to a full trial-type inquiry), that reason exists to believe that the indemnitee ultimately will be entitled to indemnification.

(c)            As to the disposition of any action, suit, investigation or other proceeding (whether by a compromise payment, pursuant to a consent decree or otherwise) without an adjudication or a decision on the merits by a court, or by any other body before which the proceeding has been brought, that an indemnitee is liable to each Partnership or its Partners by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office, indemnification will be provided in accordance with Section 3.10(a) of this Agreement if (1) approved as in the best interests of each Partnership by a majority of the Independent Directors (excluding any Director who is either seeking indemnification under this Agreement or is or has been a party to any other action, suit, investigation or proceeding involving claims similar to those involved in the action, suit, investigation or proceeding giving rise to a claim for indemnification under this Agreement) upon a determination, based upon a review of readily available facts (as opposed to a full trial-type inquiry), that the indemnitee acted in good faith and in the reasonable belief that the actions were in the best interests of each Partnership and that the indemnitee is not liable to each Partnership or its Partners by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office, or (2) the Directors secure a written opinion of independent legal counsel, based upon a review of readily available facts (as opposed to a full trial-type inquiry), to the effect that providing indemnification hereunder to such indemnitee would not result in protecting the indemnitee against any liability to each Partnership or its Partners to which the indemnitee would otherwise be subject by reason of the indemnitee’s willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office.

(d)            Any indemnification or advancement of expenses made in accordance with this Section 3.10 will not prevent the recovery from any indemnitee of any amount if the indemnitee subsequently is determined in a final judicial or arbitral decision on the merits in any action, suit, investigation or proceeding involving the liability or expense that gave rise to the indemnification or advancement of expenses to be liable to a Partnership or its Partners by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office. In any suit brought by an indemnitee to enforce a right to indemnification under this Section 3.10, it will be a defense that the indemnitee has not met the applicable standard of conduct described in this Section 3.10. In any suit in the name of a Partnership to recover any indemnification or advancement of expenses made in accordance with this Section 3.10, such Partnership will be entitled to recover the expenses upon a final adjudication from which no further right of appeal may be taken. In any suit brought to enforce a right to indemnification or to recover any indemnification or advancement of expenses made in accordance with this Section 3.10, the burden of proving that the indemnitee is not entitled to be indemnified, or to any indemnification or advancement of expenses, under this Section 3.10 will be on each Partnership (or any Partner acting derivatively or otherwise on behalf of each Partnership or its Partners).

(e)            An indemnitee may not satisfy any right of indemnification or advancement of expenses granted in this Section 3.10 or to which he, she or it may otherwise be entitled except out of the assets of a Partnership, and no Partner will be personally liable with respect to any such claim for indemnification or advancement of expenses.

(f)            The rights of indemnification provided in this Section 3.10 will not be exclusive of or affect any other rights to which any Person may be entitled by contract or otherwise under law. Nothing contained in this

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Section 3.10 will affect the power of each Partnership to purchase and maintain liability insurance on behalf of any General Partner, any Director, the Adviser or other Person.

(g)            The Partnership may, with consent of the Directors, enter into agreements indemnifying Persons providing services to each Partnership to the same, lesser or greater extent as set out in this Section 3.10.

3.11 FEES, EXPENSES AND REIMBURSEMENT

(a)            Each Partnership will compensate each Independent Director for his or her services rendered in connection with each Partnership as may be agreed to by the Directors and the General Partner, and as described in the Memorandum. In addition, each Partnership will reimburse the Directors for reasonable out-of-pocket expenses incurred by them in performing their duties with respect to each Partnership.

(b)            Each Partnership will bear all expenses incurred in connection with its business other than those specifically required to be borne by the Adviser under this Agreement or an Investment Advisory Agreement. Expenses to be borne by each Partnership include, but are not limited to, the following:

(1)            all investment-related expenses, including, but not limited to, fees paid and expenses reimbursed, directly or indirectly, to Investment Managers (including management fees, performance or incentive fees or allocations and redemption or withdrawal fees, however titled or structured), all costs and expenses directly related to portfolio transactions and positions for each Partnership’s account, such as direct and indirect expenses associated with each Partnership’s investments, including its investments in Investment Funds or with Subadvisers (whether or not consummated), and enforcing each Partnership’s rights in respect of such investments, transfer taxes and premiums, taxes withheld on non-U.S. dividends, fees for data and software providers, research expenses, professional fees (including, without limitation, the fees and expenses of consultants, attorneys and experts) and, if applicable in the event each Partnership utilizes a Subadviser (or in connection with each Partnership’s temporary or cash management investments), brokerage commissions, interest and commitment fees on loans and debit balances, borrowing charges on Securities sold short, dividends on Securities sold but not yet purchased and margin fees;

(2)            all costs and expenses associated with the establishment of Investment Funds (whether or not consummated) managed by Subadvisers and with the establishment of any subsidiaries formed for the purposes of conducting all or a portion of the Partnership’s business;

(3)            any non-investment-related interest expense;

(4)            attorneys’ fees and disbursements associated with preparing and updating any Offering Materials and with reviewing subscription materials in connection with qualifying prospective investors or prospective holders of Transferred Shares;

(5)            fees and disbursements of any accountants engaged by each Partnership, and expenses related to the annual audit of each Partnership and compliance with any applicable U.S. Federal or state laws;

(6)            fees paid and out-of-pocket expenses reimbursed to each Partnership’s administrator;

(7)            recordkeeping, custody and escrow fees and expenses;

(8)            the costs of an errors and omissions/directors’ and officers’ liability insurance policy and a fidelity bond;

(9)            the costs of preparing and mailing reports and other communications, including proxy, tender offer correspondence or similar materials, to Limited Partners;

(10)            fees of Independent Directors and travel expenses of Directors relating to meetings of the Board of Directors and committees thereof;

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(11)            all costs and charges for equipment or services used in preparing or communicating information regarding each Partnership’s transactions or the valuation of its assets among the Adviser and any custodian, administrator or other agent engaged by each Partnership;

(12)            any extraordinary expenses, including indemnification expenses as provided for in Section 3.10 of this Agreement;

(13)            any other expenses as may be approved from time to time by the Directors, other than those required to be borne by the Adviser or the General Partner; and

(14)            the organizational and offering expenses of each Partnership will be borne by its Predecessor Partnership.

(c)            Each of the Adviser and the General Partner will be entitled to reimbursement from each Partnership for any of the above expenses that it pays on behalf of each Partnership, other than as provided in Section 3.11(b)(14) above.

ARTICLE IV.

TERMINATION OF STATUS OF GENERAL PARTNER REMOVAL OF GENERAL PARTNER; TRANSFERS AND REPURCHASES

4.1 TERMINATION OF STATUS OF GENERAL PARTNER

A General Partner will cease to be a General Partner of a Partnership if the General Partner (a) is dissolved or otherwise terminates its existence; (b) voluntarily withdraws as General Partner (which it may do at any time in its sole discretion); (c) is removed; (d) Transfers its entire Interest as General Partner as permitted under Section 4.3 of this Agreement and the Person to which the Interest is Transferred is admitted as a substituted General Partner under Section 2.6(a) of this Agreement; or (e) otherwise ceases to be a General Partner under the Delaware Act.

4.2 REMOVAL OF GENERAL PARTNER

Any General Partner may be removed by the vote of Limited Partners holding not less than 80% of the total number of votes eligible to be cast by all Limited Partners.

4.3 TRANSFER OF INTEREST OF GENERAL PARTNER

A General Partner may not Transfer all or any portion of its Interest as the General Partner except to Persons who have agreed to be bound by all of the terms of this Agreement and applicable law. If a General Partner Transfers its entire Interest as General Partner, it will not cease to be a General Partner unless and until the transferee is admitted to each Partnership as a substituted General Partner pursuant to Section 2.6(a) of this Agreement. In executing this Agreement, each Partner is deemed to have consented to any Transfer contemplated by this Section 4.3.

4.4 TRANSFER OF SHARES OF LIMITED PARTNERS

(a)            Any Shares held by a Limited Partner may be Transferred only (1) by operation of law pursuant to the death, bankruptcy, insolvency, adjudicated incompetence, or dissolution of the Limited Partner; or (2) with the written consent of the General Partner. Unless the relevant Partnership consults with legal counsel to such Partnership and counsel confirms that the Transfer will not cause such Partnership to be treated as a “publicly traded Partnership” taxable as a corporation, however, the General Partner may not consent to a Transfer unless the following conditions are met: (i) the proposed Transfer is to be made on the effective date of an offer by such Partnership to repurchase Shares; and (ii) the Transfer is (A) one in which the tax basis of the Shares in the hands of the transferee is determined, in whole or in part, by reference to its tax basis in the hands of the Transferring Limited Partner (e.g., certain Transfers to affiliates, gifts and contributions to family entities), (B) to members of the Transferring Limited Partner’s immediate family (siblings, spouse, parents and children), or (C) a distribution from a qualified retirement plan or an individual retirement account. In addition, the General Partner may not consent to a Transfer unless the Person to whom or which Shares are Transferred (or each of the Person’s equity owners if the

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Person is a “private investment company” as defined in Rule 205-3(d)(3) under the Advisers Act, an investment company registered under the 1940 Act, or a business development company as defined under the Advisers Act) is a Person whom or which the General Partner believes is an “accredited investor” as defined in Regulation D under the 1933 Act and meets the requirements of paragraph (d)(1) of Rule 205-3 under the Advisers Act or successor provision of any of those rules, or is otherwise exempt from the requirements of those rules. In the event that other investor eligibility requirements are established by a Partnership, the Person to whom or which Shares are Transferred must satisfy these other requirements. If any transferee does not meet the investor eligibility requirements described in this Section 4.4(a), the General Partner may not consent to the Transfer. Any permitted transferee will be entitled to the allocations and distributions allocable to the Shares so acquired and to Transfer the Shares in accordance with the terms of this Agreement, but will not be entitled to the other rights of a Limited Partner unless and until the transferee becomes a substituted Limited Partner. If a Limited Partner Transfers Shares with the approval of the General Partner, the General Partner will promptly take all necessary actions so that each transferee or successor to whom or to which the Shares are Transferred is admitted to a Partnership as a Limited Partner. The admission of any transferee as a substituted Limited Partner will be effective upon the execution and delivery by, or on behalf of, the substituted Limited Partner of this Agreement or an instrument that constitutes the execution and delivery of this Agreement. Each Limited Partner and transferee agrees to pay all expenses, including attorneys’ and accountants’ fees, incurred by the relevant Partnership in connection with any Transfer. In connection with any request to Transfer Shares, a Partnership may require the Limited Partner requesting the Transfer to obtain, at the Limited Partner’s expense, an opinion of counsel selected by the General Partner as to such matters as the General Partner may reasonably request. If a Limited Partner Transfers all of its Shares, it will not cease to be a Limited Partner unless and until the transferee is admitted to the relevant Partnership as a substituted Limited Partner in accordance with this Section 4.4(a).

(b)            Each Limited Partner will indemnify and hold harmless the relevant Partnership, the General Partner, the Adviser, the Directors, each other Limited Partner and any Affiliate of the relevant Partnership, the General Partner, the Adviser, the Director and each of the other Limited Partners against all losses, claims, damages, liabilities, costs and expenses (including legal or other expenses incurred in investigating or defending against any losses, claims, damages, liabilities, costs and expenses or any judgments, fines and amounts paid in settlement), joint or several, to which these Persons may become subject by reason of or arising from (1) any Transfer made by the Limited Partner in violation of this Section 4.4 and (2) any misrepresentation by the Transferring Limited Partner or substituted Limited Partner in connection with the Transfer. A Limited Partner Transferring Shares may be charged reasonable expenses, including attorneys’ and accountants’ fees, incurred by the relevant Partnership in connection with the Transfer.

4.5 REPURCHASE OF SHARES

(a)            Except as otherwise provided in this Agreement, no Partner or other Person holding Shares will have the right to withdraw or tender Shares to a Partnership for repurchase. The Directors may, from time to time, in their complete and exclusive discretion and on terms and conditions as they may determine, cause each Partnership to repurchase Shares in accordance with written tenders. Each Partnership will not offer, however, to repurchase Shares on more than four occasions during any one Fiscal Year, unless each Partnership has been advised by its legal counsel that more frequent offers would not cause any adverse tax consequences to each Partnership or the Partners. In determining whether to cause each Partnership to repurchase Shares, pursuant to written tenders, the Directors will consider the following factors, among others:

(1)            whether any Partners have requested to tender Shares;

(2)            the liquidity of a Partnership’s assets (including fees and costs associated with withdrawing from Investment Funds, if withdrawal is permitted, and/or disposing of assets managed by Subadvisers);

(3)            the investment plans and working capital and reserve requirements of a Partnership;

(4)            the relative economies of scale with respect to the size of a Partnership;

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(5)            the history of a Partnership in repurchasing Shares;

(6)            the availability of information as to the value of a Partnership’s interests in the Investment Funds;

(7)            existing conditions of the securities markets and the economy generally, as well as political, national or international developments or current affairs;

(8)            the anticipated tax consequences to a Partnership of any proposed repurchases of Shares; and

(9)            the recommendations of the General Partner and/or the Adviser.

The Directors may cause each Partnership to repurchase Shares in accordance with written tenders at values less than the then Net Asset Values of such Shares.

(b)            Except as provided in Section 4.5(c) of this Agreement, a General Partner may tender its Interest or portion of an Interest under Section 4.5(a) of this Agreement only if and to the extent that (1) the repurchase would not cause the value of the Capital Account of the General Partner to be less than the value required to be maintained under Section 5.1(c) of this Agreement or (2) in the view of legal counsel to each Partnership, the repurchase would not jeopardize the classification of each Partnership as a Partnership for U.S. Federal income tax purposes.

(c)            If a General Partner ceases to serve in that capacity under Section 4.1 of this Agreement (other than pursuant to Section 4.1(d)) and the business of each Partnership is continued in accordance with Section 6.1(a)(2)(B) of this Agreement, the former General Partner (or its trustee or other legal representative) may, by written notice to the Directors within 60 days of the action resulting in the continuation of a Partnership under Section 6.1(a)(2)(B), tender to a Partnership all or any portion of its Interest. Within 30 days after the receipt of notice, the Directors will cause the Interest or portion of an Interest to be repurchased by such Partnership for cash in an amount equal to the balance of the former General Partner’s Capital Account or applicable portion of the Capital Account. If the former General Partner does not tender to such Partnership all of its Interest as permitted by this Section 4.5(c), the Interest will automatically convert to and will be treated in all respects as the Interest of a Limited Partner. If the General Partner ceases to serve in this capacity under Section 4.1 of this Agreement (other than pursuant Section 4.1(d)) and a Partnership is not continued under Section 6.1(a)(2)(B) of this Agreement, the liquidation and distribution provisions of Article VI of this Agreement will apply to the General Partner’s Interest.

(d)            The General Partner, upon the direction of the Directors, may cause each Partnership to repurchase Shares of a Limited Partner or any Person acquiring Shares from or through a Limited Partner, on terms fair to each Partnership and to the Limited Partner or Person acquiring Shares from or through such Limited Partner, in the event that the General Partner, in its sole discretion, determines or has reason to believe that:

(1)            the Shares have been Transferred in violation of Section 4.4 of this Agreement, or the Shares have vested in any Person other than by operation of law as the result of the death, dissolution, bankruptcy, insolvency or adjudicated incompetence of the Limited Partner;

(2)            ownership of the Shares by a Partner or other Person is likely to (A) cause a Partnership to be in violation of, or (B) (x) require registration of any Shares under, or (y) subject a Partnership to additional registration or regulation under, the securities, commodities or other laws of the United States or any other relevant jurisdiction;

(3)            continued ownership of the Shares may be harmful or injurious to the business or reputation of a Partnership, the Directors, the General Partner or the Adviser or any of their Affiliates, or may subject a Partnership or any of the Partners to an undue risk of adverse tax or other fiscal or regulatory consequences;

(4)            any of the representations and warranties made by a Partner or other Person in connection with the acquisition of the Shares was not true when made or has ceased to be true;

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(5)            with respect to a Limited Partner subject to special regulatory or compliance requirements, such as those imposed by ERISA, the Bank Holding Company Act or certain Federal Communication Commission regulations (collectively, “Special Laws or Regulations”), such Limited Partner will likely be subject to additional regulatory or compliance requirements under these Special Laws or Regulations by virtue of continuing to hold Shares; or

(6)            it would be in the best interests of a Partnership, as determined by the General Partner or the Directors, for a Partnership to repurchase the Shares.

(e)            Repurchases of Shares by a Partnership will be payable promptly after the date of each repurchase or, in the case of an offer by a Partnership to repurchase Shares, promptly after the expiration date of the repurchase offer in accordance with the terms of the repurchase offer. Payment of the purchase price for Shares will consist of: (1) cash or a promissory note, which will be non-transferable and need not bear interest, in an amount equal to the percentage, as may be determined by the Directors, of the purchase price of the Shares repurchased by the Partnership (the “Initial Payment”); and (2) if determined to be appropriate by the Directors or if the Initial Payment is less than 100% of the purchase price, a promissory note, which may or may not be incorporated into the note applicable to the Initial Payment entitling its holder to a contingent payment (the “Final Payment”) equal to the excess, if any, of (A) the purchase price, over (B) the Initial Payment. Notwithstanding anything to the contrary in this Section 4.5(e), the Directors, in their discretion, may cause a Partnership to pay all or any portion of the repurchase price in Securities (or any combination of Securities and cash) having a value, determined as of the date of repurchase, equal to the purchase price. All repurchases of Shares will be subject to any and all conditions as the Directors may impose in their sole discretion. If all of a Limited Partner’s Shares are repurchased, that Limited Partner will cease to be a Limited Partner.

(f)            The General Partner may, in its discretion, cause a Partnership to repurchase all of a Limited Partner’s Shares, if the Limited Partner’s Capital Account balance in the Partnership, as a result of repurchase or Transfer requests by the Limited Partner, is less than such minimum amount established by the General Partner from time to time at the direction of the Directors. Subject to the procedures of Section 4.5(e), the amount due to any Partner whose Shares repurchased pursuant to this Section 4.5(f) will be equal to the value of the Partner’s Capital Account or portion of such Capital Account, as of the effective date of repurchase, after giving effect to all allocation to be made to the Partner’s Capital Account as of that date. If all of a Limited Partner’s Shares are repurchased, that Limited Partner will cease to be a Limited Partner.

ARTICLE V.

CAPITAL

5.1 CONTRIBUTIONS TO CAPITAL

(a)            The initial Capital Contribution of each Partner in a Partnership will be that portion of the assets contributed to the Partnership in the Partnership Division corresponding to such Partner’s interest in the applicable Predecessor Partnership immediately prior to the Partnership Division.

(b)            A General Partner may be required to make additional Capital Contributions from time to time to the extent necessary to maintain the balance of its Capital Account at an amount, if any, necessary to ensure that each Partnership will be treated as a Partnership for U.S. Federal income tax purposes. Except as provided in this Section 5.1 or in the Delaware Act, no General Partner will be required or obligated to make any additional contributions to the capital of a Partnership.

(c)            Subject to the provisions of the 1940 Act, other than the initial Capital Contribution, Capital Contributions by any Partner will be payable in cash in readily available funds at the date of the proposed acceptance of the contribution.

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(d)            An Adviser may own Shares in a Partnership and, in so doing, will become a Limited Partner with respect to such Shares.

5.2 RIGHTS OF PARTNERS TO CAPITAL

No Partner will be entitled to interest on the Partner’s Capital Contribution, nor will any Partner be entitled to the return of any capital of a Partnership except (a) upon the repurchase by such Partnership of all or a portion of the Partner’s Shares in accordance with Section 4.5 of this Agreement, (b) in accordance with the provisions of Section 5.6(b) or Section 5.7 of this Agreement or (c) upon the liquidation of such Partnership’s assets in accordance with Section 6.2 of this Agreement. Except as specified in the Delaware Act, or with respect to distributions or similar disbursements made in error, no Partner will be liable for the return of any such amounts.

To the fullest extent permitted by applicable law, no Partner will have the right to require partition of a Partnership’s property or to compel any sale or appraisal of a Partnership’s assets.

5.3 CAPITAL ACCOUNTS

(a)            Each Partnership will maintain a separate Capital Account for each Partner. The aggregate Net Asset Value of each Limited Partner’s Shares shall reflect the value of such Limited Partner’s Capital Account.

(b)            Each Partner’s Capital Account will have an initial balance equal to the amount of cash and the value of any Securities (determined in accordance with Section 7.3 of this Agreement) constituting the Partner’s initial Capital Contribution.

(c)            Each Partner’s Capital Account will be increased by the sum of (1) the amount of cash and the value of any Securities (determined in accordance with Section 7.3 of this Agreement) constituting additional Capital Contributions by the Partner permitted under Section 5.1 of this Agreement, plus (2) any amount credited to the Partner’s Capital Account under Sections 5.4 through 5.7 of this Agreement.

(d)            Each Partner’s Capital Account will be reduced by the sum of (1) the amount of any repurchase of the Partner’s Shares or distributions to the Partner under Section 4.5, 5.9 or 6.2 of this Agreement that are not reinvested, plus (2) any amounts debited against the Partner’s Capital Account under Sections 5.4 through 5.7 of this Agreement.

(e)            In the event a Partner’s Shares are Transferred in accordance with the terms of this Agreement, the transferee will succeed to the Capital Account of the transferor to the extent of the Transferred Shares.

(f)            Subject to Section 5.6(b) and Section 5.7 of this Agreement, no Partner will be required to pay to a Partnership or any other Partner any deficit in such Partner’s Capital Account upon dissolution of a Partnership or otherwise.

5.4 ALLOCATION OF NET PROFIT AND LOSS

Subject to Section 5.8 of this Agreement, as of the last day of each Fiscal Period, any Net Profit or Net Loss for the Fiscal Period will be allocated among and credited to or debited against the Capital Accounts of the Partners in accordance with their respective Investment Percentages for the Fiscal Period.

5.5 ALLOCATION OF CERTAIN WITHHOLDING TAXES AND OTHER EXPENDITURES

(a)            If a Partnership incurs a withholding tax or other tax obligation with respect to the share of Partnership income allocable to any Partner, then the General Partner, without limitation of any other rights of such Partnership or the General Partner, will cause the amount of the obligation to be debited against the Capital Account of the Partner when such Partnership pays the obligation, and any amounts then or in the future distributable to the Partner will be reduced by the amount of the taxes. If the amount of the taxes is greater than any distributable amounts, then the Partner and any successor to the Partner’s Shares (or portion of the Partner’s Shares) will pay to a Partnership as a Capital Contribution, upon demand by the General Partner, the amount of the excess. Neither the General Partner

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nor the Directors will be obligated to apply for or obtain a reduction of or exemption from withholding tax on behalf of any Partner that may be eligible for the reduction or exemption, except that, in the event that the General Partner determines that a Partner is eligible for a refund of any withholding tax, the General Partner may, at the request and expense of the Partner, assist the Partner in applying for such refund. For purposes of this Agreement, any taxes so withheld by a Partnership with respect to any amount distributed by such Partnership to any Partner will be deemed to be a distribution or payment to the Partner, reducing the amount otherwise distributable to the Partner under this Agreement and reducing the Capital Account of the Partner. Neither the General Partner nor the Directors will be obligated to apply for or obtain a reduction of or exemption from withholding tax on behalf of any Partner that may be eligible for reduction or exemption. To the extent that a Partner claims to be entitled to a reduced rate of, or exemption from, a withholding tax pursuant to an applicable income tax treaty, or otherwise, the Partner will furnish the relevant Partnership with any information and forms that the Partner may be required to complete if necessary to comply with any and all laws and regulations governing the obligations of withholding tax agents. Each Partner represents and warrants that any information and forms furnished by the Partner will be true and accurate and agrees to indemnify the relevant Partnership and each of the Partners from any and all losses, claims, damages, liabilities costs and expenses resulting from the filing of inaccurate or incomplete information or forms relating to the withholding taxes (including legal or other expenses incurred in investigating or defending against any such losses, claims, damages, liabilities, costs and expenses).

(b)            Except as otherwise provided for in this Agreement and unless prohibited by the 1940 Act, any expenditures payable by a Partnership, to the extent determined by the General Partner to have been paid or withheld on behalf of, or by reason of particular circumstances applicable to, one or more but fewer than all of the Partners, will be charged to only those Partners on whose behalf the payments are made or whose particular circumstances gave rise to such payments. The charges will be debited from the Capital Accounts of the Partners as of the close of the Fiscal Period during which the items were paid or accrued by such Partnership.

5.6 RESERVES

(a)            The General Partner may cause appropriate reserves to be created, accrued and charged by a Partnership against Net Assets and proportionately against the Capital Accounts of the Partners for contingent liabilities, if any, as of the date any contingent liability becomes known to the General Partner, the reserves to be in the amounts that the General Partner in its sole discretion deems necessary or appropriate. The General Partner may increase or reduce any reserves from time to time by amounts as it in its sole discretion deems necessary or appropriate. The amount of any reserve, or any increase or decrease in a reserve, will be proportionately charged or credited to the Capital Accounts of those Persons who or that are Partners at the time the reserve is created, or increased or decreased, except that if any individual reserve item, adjusted by any increase in the item, exceeds the lesser of $500,000 or 1% of the aggregate value of the Capital Accounts of all of those Partners, then the amount of the reserve, increase or decrease may instead, at the discretion of the General Partner, be charged or credited to those Persons who or that were Partners at the time, as determined by the General Partner in its sole discretion, of the act or omission giving rise to the contingent liability for which the reserve was established, increased or decreased in proportion to their Capital Accounts.

(b)            If any amount is required by Section 5.6(a) of this Agreement to be charged or credited to a Person who or that is no longer a Partner, the amount will be paid by or to the party, in cash, with interest from the date on which the General Partner determines that the charge or credit is required. In the case of a charge, the former Partner will be obligated to pay as a Capital Contribution the amount of the charge, plus interest as provided in this Section 5.6(b), to the relevant Partnership on demand, except that (1) in no event will a former Partner be obligated to make a payment exceeding the amount of the Partner’s Capital Account at the time to which the charge relates and (2) no demand will be made after the expiration of three years from the date on which the Person ceased to be a Partner. To the extent that a former Partner fails to pay to a Partnership, in full, any amount required to be charged to the former Partner under Section 5.6(a) of this Agreement, the deficiency will be charged proportionately to the Capital Accounts of the Partners at the time of the act or omission giving rise to the charge to the extent feasible, and otherwise proportionately to the Capital Accounts of the current Partners.

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5.7 ALLOCATION TO AVOID CAPITAL ACCOUNT DEFICITS

To the extent that any debits under Sections 5.4 through 5.6 of this Agreement would reduce the balance of the Capital Account of any Limited Partner below zero, that portion of any such debits will be allocated instead to the Capital Account of the General Partner. Any credits in any subsequent Fiscal Period that otherwise would be allocable under Sections 5.4 through 5.6 of this Agreement to the Capital Account of any Limited Partner previously affected by the application of this Section 5.8 will instead be allocated to the Capital Account of the General Partner in amounts necessary to offset all previous debits attributable to the Limited Partner, made in accordance with this Section 5.8, that have not been recovered.

5.8 TAX ALLOCATIONS

For each taxable year of each Partnership, items of income, deduction, gain, loss or credit will be allocated for income tax purposes among the Partners in a manner so as to reflect equitably amounts credited or debited to each Partner’s Capital Account for the current and prior taxable years (or relevant portions of those years). Allocations under this Section 5.8 will be made in accordance with the principles of Sections 704(b) and 704(c) of the Code, and in conformity with Treasury Regulations promulgated under these Sections, or the successor provisions to such Sections and Regulations. Notwithstanding anything to the contrary in this Agreement, each Partnership will allocate to the Partners those gains or income necessary to satisfy the “qualified income offset” requirement of Treasury Regulations Section 1.704-1(b)(2)(ii)(d). If a Partnership realizes net capital gains for U.S. Federal income tax purposes for any taxable year during or as of the end of which one or more Positive Basis Partners (as defined in this Section 5.8) withdraw from such Partnership under Article IV or VI of this Agreement, the General Partner may elect to allocate net gains as follows: (a) to allocate net gains among Positive Basis Partners, in proportion to the Positive Basis (as defined in this Section 5.8) of each Positive Basis Partner, until either the full amount of the net gains has been so allocated or the Positive Basis of each Positive Basis Partner has been eliminated, and (b) to allocate any net gains not so allocated to Positive Basis Partners to the other Partners in a manner that reflects equitably the amounts credited to the Partners’ Capital Accounts. If a Partnership realizes capital losses for U.S. federal income tax purposes for any fiscal year during or as of the end of which one or more Negative Basis Partners (as defined in this Section 5.8) withdraw from such Partnership under Article IV or VI of this Agreement, the General Partner may elect to allocate net losses as follows: (i) to allocate net losses among Negative Basis Partners, in proportion to the Negative Basis (as defined in this Section 5.8) of each Negative Basis Partner, until either the full amount of net losses will have been so allocated or the Negative Basis of each Negative Basis Partner has been eliminated, and (ii) to allocate any net losses not so allocated to Negative Basis Partners, to the other Partners in a manner that reflects equitably the amounts credited to the Partners’ Capital Accounts. As used in this Section 5.8, the term “Positive Basis” means, with respect to any Partner and as of any time of calculation, the amount by which the total of the Partners’ Capital Accounts as of that time exceeds the Partner’s “adjusted tax basis,” for U.S. Federal income tax purposes, in the Partner’s Shares as of that time (determined without regard to any adjustments made to the “adjusted tax basis” by reason of any Transfer or assignment of Shares, including by reason of death). As used in this Section 5.8, the term “Positive Basis Partner” means any Partner who or that withdraws from a Partnership and who or that has a Positive Basis as of the effective date of the Partner’s withdrawal. As used in this Section 5.8, the term “Negative Basis” means, with respect to any Partner and as of any time of calculation, the amount by which the Partner’s “adjusted tax basis,” for U.S. federal income tax purposes, in the Partner’s Shares as of that time (determined without regard to any adjustments made to the “adjusted tax basis” by reason of any Transfer or assignment of Shares, including by reason of death, and without regard to such Partner’s share of the liabilities of such Partnership under section 752 of the Code) exceeds the Partner’s Capital Account as of such time. As used in this Section 5.8, the term

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“Negative Basis Partner” means any Partner who or that withdraws from such Partnership and who or that has a Negative Basis as of the effective date of the Partner’s withdrawal.

5.9 DISTRIBUTIONS

(a)            The General Partner may cause each Partnership to make distributions in cash or in kind at any time to all of the Partners on a proportionate basis in accordance with the Partners’ Investment Percentages. The Directors may cause the Partnership to make distributions in cash at the end of any quarter from the Partnership’s Distributable Cash, in such amount as the Directors may determine. Such distributions shall be made to all of the Partners on a proportionate basis in accordance with the Partners’ Investment Percentages.

(b)            As provided in Section 5.5, the General Partner may withhold taxes from any distribution to any Partner to the extent required by the Code or any other applicable law.

(c)            Notwithstanding any provision to the contrary contained in this Agreement, each Partnership and the General Partner on behalf of each Partnership will not repurchase any Shares or make a distribution to any Partner on account of the Partner’s Shares, if such repurchase or distribution would violate the Delaware Act or other applicable law.

ARTICLE VI.

DISSOLUTION AND LIQUIDATION

6.1 DISSOLUTION

(a)            Each Partnership will be dissolved if at any time it has no Limited Partners or upon the occurrence of any of the following events:

(1)            upon the dissolution of the Master Partnership;

(2)            upon a General Partner’s ceasing to be a General Partner in accordance with Section 4.1 of this Agreement (other than in conjunction with a Transfer of the Interest of a General Partner in accordance with Section 4.3 of this Agreement to a Person who or that is admitted as a substituted General Partner under Section 2.6(a) of this Agreement), unless (i) the Partnership has at least one other General Partner who or that is authorized to and does carry on the business of the Partnership, or (ii) both the Directors and Partners holding not less than two-thirds of the total number of votes eligible to be cast by all Partners elect within 60 days after the event to continue the business of the Partnership and a Person to be admitted to the Partnership, effective as of the date of the event, as an additional General Partner who has agreed to make the contributions to the capital of the Partnership required to be made under Section 5.1(c) of this Agreement;

(3)            upon the failure of Partners to approve successor Directors at a meeting called by the General Partner in accordance with Section 2.10(c) of this Agreement when no Director remains to continue the business of such Partnership; or as otherwise required by operation of law.

(4)            Dissolution of such Partnership will be effective on the later of the day on which the event giving rise to the dissolution occurs or, to the extent permitted by the Delaware Act, the conclusion of any applicable 60-day period during which the Directors and Partners elect to continue the business of such Partnership as provided in Section 6.1(a)(2), but such Partnership will not terminate until the assets of such Partnership have been liquidated in accordance with Section 6.2 of this Agreement and the Certificate has been canceled.

(b)            Except as provided in Section 6.1(a) of this Agreement or in the Delaware Act, the death, adjudicated incompetence, dissolution, termination, liquidation, bankruptcy, reorganization, merger, sale of substantially all of the stock or assets of, or other change in the ownership or nature of a Partner, the admission to such Partnership of a new Partner, the withdrawal of a Partner from such Partnership, or the Transfer by a Partner of all or a portion of the Partner’s Shares to a third party will not cause such Partnership to dissolve.

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6.2 LIQUIDATION OF ASSETS

(a)            Upon the dissolution of a Partnership as provided in Section 6.1 of this Agreement, the General Partner will promptly liquidate the business and administrative affairs of such Partnership, except that if the General Partner is unable to perform this function, a liquidator appointed by Board of Directors and whose fees and expenses will be paid by such Partnership will promptly liquidate the business and administrative affairs of such Partnership. Net Profit and Net Loss during the period of liquidation will be allocated in accordance with Article V of this Agreement. Subject to the Delaware Act, the proceeds from liquidation (after establishment of appropriate reserves for all claims and obligations, including all contingent, conditional or unmatured claims and obligations, as well as amounts expected to be needed to satisfy capital calls with respect to a Partnership’s private equity investments, in an amount that the General Partner or liquidator deems appropriate in its sole discretion as applicable) will be distributed in the following manner:

(1)            the debts of a Partnership, other than debts, liabilities or obligations to Limited Partners, and the expenses of liquidation (including legal and accounting fees and expenses incurred in connection with the liquidation), up to and including the date on which distribution of a Partnership’s assets to the Partners has been completed, will first be paid on a proportionate basis;

(2)            any debts, liabilities or obligations owing to the Limited Partners will be paid next in their order of seniority and on a proportionate basis; and

(3)            the Partners are paid next on a proportionate basis the positive balances of their Capital Accounts after giving effect to all allocations to be made to the Partners’ Capital Accounts for the Fiscal Period ending on the date of the distributions under this Section 6.2(a)(3).

(b)            Notwithstanding the provisions of this Section 6.2, upon dissolution of a Partnership, subject to the Delaware Act and the priorities set out in Section 6.2(a) of this Agreement, the General Partner or liquidator may distribute ratably in kind any assets of such Partnership. If any in-kind distribution is to be made under this Section 6.2(b), (1) the assets distributed in kind will be valued in accordance with Section 7.3 of this Agreement as of the actual date of their distribution and charged as so valued and distributed against amounts to be paid under Section 6.2(a) of this Agreement, and (2) any profit or loss attributable to property distributed in kind will be included in the Net Profit or Net Loss for the Fiscal Period ending on the date of the distribution. Notwithstanding any provision of this Agreement to the contrary, the General Partner may compel a Partner to accept a distribution of any asset in kind from such Partnership even if the percentage of the asset distributed to the Partner exceeds a percentage of the asset that is equal to the percentage in which the Partner shares in distributions from such Partnership.

ARTICLE VII.

ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS

7.1 ACCOUNTING AND REPORTS

(a)            Each Partnership will adopt for tax accounting purposes any accounting method that the General Partner decides in its sole discretion is in the best interests of each Partnership. Each Partnership’s accounts will be maintained in U.S. currency.

(b)            After the end of each taxable year of each Partnership, each Partnership will furnish to Partners information regarding the operation of each Partnership and the Partners’ Shares as is necessary for Partners to complete U.S. Federal and state income tax or information returns and any other tax information required by U.S. Federal or state law.

(c)            Except as otherwise required by the 1940 Act, or as may otherwise be permissible under other applicable law, within 60 days after the close of the period for which a report required under this Section 7.1 is being made, a

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Partnership will furnish to each Limited Partner a semiannual report and an annual report containing the information required by the 1940 Act, as well as quarterly reports containing similar information. Each Partnership will cause financial statements contained in each annual report furnished under this Section 7.1 to be accompanied by a certificate of independent public accountants based upon an audit performed in accordance with generally accepted accounting principles. A Partnership may furnish to each Partner any other periodic reports the General Partner deems necessary or appropriate in its discretion.

(d)            The General Partner will notify the Directors of any change in the holders of interests of the General Partner within a reasonable time after the change.

7.2 DETERMINATIONS BY GENERAL PARTNER

(a)            All matters concerning the determination and allocation among the Partners of the amounts to be determined and allocated pursuant to Article V of this Agreement, including any taxes on those amounts and accounting procedures applicable with respect to those amounts, will be determined by the General Partner unless specifically and expressly otherwise provided for by the provisions of this Agreement or as required by law. Any such determinations and allocations will be final and binding on all of the Partners.

(b)            The General Partner may make any adjustments to the computation of Net Profit and/or Net Loss, or any components (withholding any items of income, gain, loss or deduction) constituting Net Profit and/or Net Loss as the General Partner deems appropriate to reflect fairly and accurately the financial results of each Partnership and the intended allocation of Net Profit and/or Net Loss among the Partners.

7.3 VALUATION OF ASSETS

(a)            Except as may be required by the 1940 Act, the Directors will value or cause to have valued any Securities or other assets and liabilities of each Partnership as of the close of business on the last day of each Fiscal Period and at such other times as the Directors may determine, in their discretion, in accordance with valuation procedures as established from time to time by the Directors. Assets of each Partnership that are invested in an Investment Fund managed by a Subadviser will be valued in accordance with the terms and conditions of the agreement or other document governing the operation of the Investment Fund. Assets of each Partnership invested in an Investment Fund not managed by a Subadviser will be valued at fair value, which ordinarily will be the net redemption value determined by the Investment Fund’s Investment Manager in accordance with the policies established by the Investment Manager. In determining the value of the assets of each Partnership, no value will be placed on the goodwill or name of such Partnership, or the office records, files, statistical data or any similar intangible assets of such Partnership not normally reflected in such Partnership’s accounting records. Any items of income earned but not received, expenses incurred but not yet paid, liabilities fixed or contingent, and any other prepaid expenses to the extent not otherwise reflected in the books of account, and the value of options or commitments to purchase or sell Securities or commodities pursuant to agreements entered into prior to the valuation date will, however, be taken into account in determining the value of each Partnership’s assets.

(b)            Subject to the provisions of the 1940 Act, the value of Securities and other assets of each Partnership and the net asset value of each Partnership as a whole determined pursuant to this Section 7.3 will be conclusive and binding on all of the Partners and all Persons claiming through or under them.

ARTICLE VIII.

MISCELLANEOUS PROVISIONS

8.1 AMENDMENT OF PARTNERSHIP AGREEMENT

(a)            Except as otherwise provided in this Section 8.1, this Agreement may be amended, in whole or in part, with respect to either or both Partnerships, with the approval of a majority of the Directors (including the vote of a majority of the Independent Directors, but only if such vote is required by the 1940 Act), except that any amendment also must be approved by a majority (as defined in the 1940 Act) of the outstanding voting securities of the relevant Partnership if such vote is required by the 1940 Act.

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(b)            Any amendment that would:

(1)            establish an obligation for a Partner to make any Capital Contribution,

(2)            reduce the Capital Account of a Partner other than in accordance with Article V of this Agreement, or

(3)            modify the events causing the dissolution of a Partnership, may be made only if the written consent of each Partner adversely affected by the proposed action is obtained prior to the effectiveness of the action. Notwithstanding the preceding sentence or the provisions of Subsection 8.1(c), any amendment that would alter the provisions of Section 8.1 relating to the material amendment of this Agreement or the provisions of Section 3.10 of this Agreement relating to indemnification may be made only with the unanimous consent of the Partners and, to the extent required by the 1940 Act, approval of a majority of the Directors (and, if so required, a majority of the Independent Directors).

(c)            Notwithstanding the provisions of Sections 8.1(a) and 8.1(b) of this Agreement, the General Partner, at any time without the consent of any other Partner, may:

(1)            restate this Agreement, together with any amendments to this Agreement that have been duly adopted in accordance with the provisions of this Agreement to incorporate the amendments in a single, integrated document;

(2)            amend this Agreement (other than with respect to the matters described in Section 8.1(b) of this Agreement) to change the name of a Partnership in accordance with Section 2.2 hereof or to effect compliance with any applicable law or regulation, including, but not limited to, to satisfy the requirements of applicable U.S. banking law or regulation, or to cure any ambiguity or to correct or supplement any provision of this Agreement that may be inconsistent with any other provision of this Agreement, so long as the action does not adversely affect the rights of any Partner in any material respect; and

(3)            amend this Agreement to make any changes necessary or desirable, based on advice of legal counsel to a Partnership, to assure such Partnership’s continuing eligibility to be classified for U.S. Federal income tax purposes as a Partnership that is not treated as a corporation for tax purposes under the Code; subject, however, to the limitation that any material amendment to this Agreement under Section 8.1(c)(2) or (3) of this Agreement will be valid only if approved by a majority of the Directors (including the vote of a majority of the Independent Directors, if required by the 1940 Act).

(d)            The General Partner will give prior written notice of any proposed amendment to this Agreement (other than any amendment of the type contemplated by Section 8.1(c) (1) of this Agreement) to each Partner, which notice sets out (1) the text of the proposed amendment or (2) a summary of the amendment and a statement that the text of the amendment will be furnished to any Partner upon request.

8.2 SPECIAL POWER OF ATTORNEY

(a)            Each Partner irrevocably makes, constitutes and appoints the General Partner and each of the Directors, acting severally, and any liquidator of each Partnership’s assets appointed pursuant to Section 6.2 of this Agreement with full power of substitution, the true and lawful representatives and attorneys-in-fact of, and in the name, place and stead of, the Partner, with the power from time to time to make, execute, sign, acknowledge, swear to, verify, deliver, record, file and/or publish:

(1)            any amendment to this Agreement;

(2)            any amendment to the Certificate, including, without limitation, any such amendment required to reflect any amendments to this Agreement, and including, without limitation, an amendment to effectuate any change in the membership of each Partnership; and

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(3)            all other such instruments, documents and certificates that, in the view of legal counsel to each Partnership, from time to time may be required by the laws of the United States of America, the State of Delaware or any other jurisdiction in which the General Partner determines that each Partnership should do business, or any political subdivision or agency of any such jurisdiction, or that legal counsel may deem necessary or appropriate to effectuate, implement and continue the valid existence and business of each Partnership as a limited partnership under the Delaware Act.

(b)            Each Partner is aware that the terms of this Agreement permit certain amendments to this Agreement to be effected and certain other actions to be taken or omitted by or with respect to each Partnership without the Partner’s consent. Each Partner agrees that if an amendment to the Certificate or this Agreement or any action by or with respect to the relevant Partnership is taken in the manner contemplated by this Agreement, notwithstanding any objection that the Partner may assert with respect to the action, the attorneys-in-fact appointed under this Agreement are authorized and empowered, with full power of substitution, to exercise the authority granted in this Section 8.2 in any manner that may be necessary or appropriate to permit the amendment to be made or action lawfully taken or omitted. Each Partner is fully aware that each Partner will rely on the effectiveness of this special power of attorney with a view to the orderly administration of the affairs of the relevant Partnership.

(c)            The power of attorney contemplated by this Section 8.2 is a special power of attorney and is coupled with an interest in favor of the General Partner and each of the Directors, acting severally, and any liquidator of a Partnership’s assets appointed under Section 6.2 of this Agreement, and as such the power of attorney:

(1)            will be irrevocable and continue in full force and effect notwithstanding the subsequent death or incapacity of any Person granting the power of attorney, regardless of whether a Partnership, the General Partner, the Directors or any liquidator has had notice of the death or incapacity; and

(2)            will survive the delivery of a Transfer by a Partner of all or any portion of the Partner’s Shares, except that, when the transferee of Shares has been approved by the General Partner for admission to a Partnership as a substituted Partner, the power of attorney given by the transferor will survive the delivery of the assignment for the sole purpose of enabling the General Partner, the Directors or any liquidator to execute, acknowledge and file any instrument necessary to effect the substitution.

8.3 NOTICES

Notices that may or are required to be provided under this Agreement will be made to a Partner by hand delivery, regular mail (registered or certified mail return receipt requested in the case of notice to the General Partner), commercial courier service, telecopier, or electronic mail (with a confirmation copy by registered or certified mail in the case of notices to the General Partner by telecopier or electronic mail), and will be addressed to the Partner at his, her or its address as set out in the books and records of a Partnership (or to any other address as may be designated by any Partner by notice addressed to the General Partner in the case of notice given to any Partner, and to each of the Partners in the case of notice given to the General Partner). Notices will be deemed to have been provided when delivered by hand, on the date indicated as the date of receipt on a return receipt or when received if sent by regular mail, commercial courier service, telecopier or by electronic mail. A document that is not a notice and that is required to be provided under this Agreement by any party to another party may be delivered by any reasonable means.

8.4 AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS

This Agreement will be binding upon and inure to the benefit of the Partners and their respective heirs, successors, assigns, executors, trustees or other legal representatives, but the rights and obligations of the Partners may not be Transferred or delegated except as provided in this Agreement, and any attempted Transfer or delegation of those rights and obligations that is not made in accordance with the terms of this Agreement will be void.

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8.5 CHOICE OF LAW; ARBITRATION

(a)            Notwithstanding the location at which this Agreement is executed by any of the Partners, the Partners expressly agree that all the terms and provisions of this Agreement are governed by and will be construed under the laws of the State of Delaware, including the Delaware Act, without regard to the conflict of law principles of the State of Delaware.

(b)            To the extent such action is consistent with the provisions of the 1940 Act and other applicable law, any dispute, controversy, or claim arising out of, relating to, or in connection with this Agreement, or the breach, termination, or validity thereof, or any dispute, controversy, or claim arising out of, relating to, or in connection with a Partnership, including any claims of arbitrability, shall be finally settled by arbitration. The arbitration shall be conducted in accordance with the American Arbitration Association (“AAA”) Commercial Arbitration Rules (the “Rules”) in effect at the time of the arbitration, except as they may be modified herein or by mutual agreement of the Partners. The seat of the arbitration shall be Houston, Texas. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. The Partners submit to the non-exclusive jurisdiction of the State or Federal courts located in the Southern District of New York or the Southern District of Texas for the limited purpose of enforcing this agreement to arbitrate.

(c)            The arbitration shall be conducted by three arbitrators. The Partner or Partners, initiating the arbitration, who shall be treated for purposes of this section as a single party, shall appoint one arbitrator in their demand for arbitration. The Partner or Partners named as respondents in the Demand for Arbitration, who shall be treated for purposes of this section as a single party, shall appoint one arbitrator within 30 Business Days after notice of the filing of the Demand for Arbitration is sent by the AAA. The arbitrators appointed by the parties shall, within 30 Business Days of the second appointed arbitrator, select the third arbitrator, and who shall chair the Tribunal. If any of the three arbitrators is not appointed within the time prescribed above, then the AAA shall appoint that arbitrator.

(d)            The arbitration award shall be final and binding on the parties to the arbitration, and there shall be no appeal from the arbitrators’ decision except as provided by applicable law. All statutes of limitation that would otherwise be applicable shall apply to any arbitration proceeding. The right to arbitrate shall survive the termination of this Agreement. Judgment upon the award may be entered by any court having jurisdiction thereof or having jurisdiction over the relevant party or its assets. The Partners submit to the non-exclusive jurisdiction of the State or Federal courts located in the Southern District of New York or the Southern District of Texas for purposes of enforcing the arbitration award.

(e)            Without prejudice to any right to obtain emergency measures of protection as provided under the Rules, a request by a party to a court of competent jurisdiction for interim measures necessary to preserve the party’s rights, including pre-arbitration attachments or injunctions, shall not be deemed incompatible with, or a waiver of, this agreement to arbitrate.

(f)            In order to facilitate the comprehensive resolution of related disputes, and upon request of any part to the arbitration proceeding, the arbitration tribunal may consolidate the arbitration proceeding with any other arbitration proceeding involving any of the parties hereto relating to this Agreement or a Partnership. The arbitration tribunal shall not consolidate such arbitrations unless it determines that (i) there are issues of fact or law common to the two proceedings so that a consolidated proceeding would be more efficient than separate proceedings, and (ii) no party would be prejudiced as a result of such consolidation through undue delay or otherwise. In the event of different rulings on this question by the arbitration tribunal constituted hereunder and the tribunal constituted under any related agreement or another arbitration tribunal constituted under this Agreement, the ruling of the earliest constituted panel under this Agreement shall control.

(g)            EACH PARTNER UNDERSTANDS THAT ARBITRATION IS FINAL AND BINDING ON THE PARTNERS AND THAT THE PARTNERS IN EXECUTING THIS AGREEMENT ARE WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO JURY TRIAL.

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8.6 NOT FOR BENEFIT OF CREDITORS

The provisions of this Agreement are intended only for the regulation of relations among past, existing and future Partners, their assignees and each Partnership. This Agreement is not intended for the benefit of non-Partner creditors and, except to the extent provided in Section 3.10 of this Agreement, no rights are granted to non-Partner creditors under this Agreement.

8.7 CONSENTS

Any and all consents, agreements or approvals provided for or permitted by this Agreement (including minutes of any meeting) must be in writing and a signed copy of any such consent, agreement or approval will be filed and kept with the books of each Partnership.

8.8 PRONOUNS

All pronouns used in this Agreement will be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Person or Persons, firm or entity may require in the context in which they are used.

8.9 CONFIDENTIALITY

(a)            A Limited Partner may obtain from the General Partner, upon reasonable demand for any purpose reasonably related to the Limited Partner’s Shares in the relevant Partnership, information regarding the affairs of such Partnership as is just and reasonable under the Delaware Act, subject to reasonable standards (including standards governing the information and documents to be furnished, at what time and location and at whose expense) established by the General Partner in its sole discretion.

(b)            Each Limited Partner agrees in executing this Agreement that, except as required by applicable law or any regulatory body, the Limited Partner will not divulge, furnish or make accessible to any other Person the name or address (whether business, residence or mailing) of any Limited Partner (collectively, “Confidential Information”) without the prior written consent of the General Partner, which consent may be withheld in its sole discretion.

(c)            Each Partner recognizes that in the event that this Section 8.10 is breached by any Partner or any of its principals, Partners, members, directors, officers, employees or agents or any of the Partner’s Affiliates, including any of the Affiliate’s principals, Partners, members, directors, officers, employees or agents, irreparable injury may result to the non-breaching Partners and each Partnership. In recognition of that irreparable injury, any non-breaching Partner may have, in addition to any and all other remedies at law or in equity to which the non-breaching Partner and a Partnership may be entitled, the right to obtain equitable relief, including, without limitation, injunctive relief, to prevent any disclosure of Confidential Information, plus reasonable attorneys’ fees and other litigation expenses incurred in connection with obtaining the equitable relief. If any non-breaching Partner or a Partnership (“Initiating Non-Breaching Party”) determines that any other Partner or any of that Partner’s principals, Partners, members, directors, officers, employees or agents or any of the Partner’s Affiliates, including any of the Affiliates’ principals, Partners, members, directors, officers, employees or agents, should be enjoined from or required to take any action to prevent the disclosure of Confidential Information, each of the other non-breaching Partners agrees to join the non-breaching Initiating Non-Breaching Party in pursuing injunctive relief in a court of appropriate jurisdiction.

(d)            The General Partner will have the right to keep confidential from the Limited Partners, for any period of time as the General Partner deems reasonable in its sole discretion, any information that the General Partner reasonably believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interest of a Partnership or could damage a Partnership or its business or that a Partnership is required by law or by agreement with a third party to keep confidential.

8.10 CERTIFICATION OF NON-FOREIGN STATUS

Each Limited Partner or transferee of Shares from a Limited Partner who or that is admitted to each Partnership in accordance with this Agreement will certify, upon admission to a Partnership and at any other time as the General Partner may request, whether the Limited Partner or transferee is a “United States Person” within the meaning of the

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Code on forms to be provided by each Partnership, and will notify each Partnership within 30 days of any change in the status of the Limited Partner or transferee. Any Limited Partner or transferee who or that fails to provide certification when requested to do so by the General Partner may be treated as a non-United States Person for purposes of U.S. Federal tax withholding.

8.11 SEVERABILITY

Each Partner agrees that the Partner intends that, if any provision of this Agreement is determined by a court of competent jurisdiction or regulatory authority with jurisdiction over each Partnership, the General Partner or the Adviser not to be enforceable in the manner set out in this Agreement, then the provision should be enforceable to the maximum extent possible under applicable law. If any provision of this Agreement is held to be invalid or unenforceable, the invalidation or unenforceability will not affect the validity or enforceability of any other provision of this Agreement (or portion of the provision).

8.12 ENTIRE AGREEMENT

This Agreement constitutes the entire agreement among the Partners pertaining to the subject matter of this Agreement and supersedes all prior agreements and understandings pertaining to that subject matter.

Notwithstanding any other provision of this Agreement, including Section 8.1, each Partner, in executing this Agreement, acknowledges and agrees that the General Partner, on its own behalf or on behalf of the relevant Partnership, without the approval of the Limited Partners or any other Person, may enter into a written agreement or agreements with any other Partner, executed contemporaneously with the admission of the other Partner to the relevant Partnership, affecting or modifying the terms of, or establishing rights under, this Agreement or any subscription agreement. Each Partner agrees that any terms contained in any such other agreement with another Partner will govern with respect to the other Partner notwithstanding the provisions of this Agreement or any subscription agreement, and that the Partner will have no rights in respect of those granted in favor of such other Partner.

8.13 DISCRETION

To the fullest extent permitted by law, whenever in this Agreement a Person is permitted or required to make a decision (a) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, the Person will be entitled to consider only those interests and factors as he, she or it desires, including his, her or its own interests, and, to the fullest extent permitted by law, will have no duty or obligation to give any consideration to any interest of or factors affecting a Partnership or the Limited Partners, or (b) in its “good faith” or under another express standard, then the Person will act under the express standard and will not be subject to any other or different standards imposed by this Agreement or any other agreement contemplated by this Agreement or by relevant provisions of law or in equity or otherwise.

8.14 CONFLICTS

The Partners acknowledge and agree that the General Partner and its Affiliates may engage in activities in which their respective interests or the interests of their clients may conflict with the interests of each Partnership or the Limited Partners, and that the resolution of such conflicts may not always be resolved by the General Partner or its Affiliates in favor of a Partnership or the Limited Partners.

8.15 COUNTERPARTS

This Agreement may be executed in several counterparts, all of which together will constitute one agreement binding on all Partners, notwithstanding that all the Partners have not signed the same counterpart.

8.16 HEADINGS

The headings in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions of this Agreement or otherwise affect their construction or effect.

[Remainder of Page Intentionally Left Blank]

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IN EXECUTING THIS AGREEMENT, EACH PARTNER ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS ENTIRETY BEFORE SIGNING, INCLUDING THE PRE-DISPUTE ARBITRATION CLAUSES SET OUT IN SECTION 8.5 AND THE CONFIDENTIALITY CLAUSES SET OUT IN SECTION 8.10.

The Partners have executed this Agreement as of the day and year first above written.

GENERAL PARTNER:
THE ENDOWMENT FUND GP, L.P.
By:	THE ENDOWMENT FUND MANAGEMENT, LLC, as its General Partner
By:
	Jeremy L. Radcliffe, Secretary
LIMITED PARTNERS:

Each Person who or that has signed, or has had signed on the Person’s behalf, a Limited Partner Signature Page, which will constitute a counterpart of this Agreement.

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EX-99.6

Exhibit 99.6

THIS CHART IS ONLY A SUMMARY OF CERTAIN TERMS AND IS PROVIDED FOR REFERENCE ONLY. THE INFORMATION INCLUDED IN THE CHART IS QUALIFIED IN ITS ENTIRETY BY EACH FUND’S REGISTRATION STATEMENT OR PRIVATE PLACEMENT MEMORANDUM (AS THE CASE MAY BE) AND LIMITED PARTNERSHIP AGREEMENT.

	The Endowment Institutional Fund, L.P.	PMF Fund, L.P.
General	Registered, closed-end non-diversified management investment company.	Registered, closed-end non-diversified management investment company.
Active/Passive Management	Active.	Passive.
Investment Objective	To preserve capital and to generate consistent long-term appreciation and returns across a market cycle (which is estimated to be five to seven years). Investment objective is not a fundamental policy of the Fund or Master Fund.	To manage a portfolio of Investment Funds and cash to preserve value while prioritizing liquidity to investors over active management, until such time as the PMF Master Fund’s portfolio has been liquidated. Investment objective is a fundamental policy of the PMF Master Fund.
New Investments	Yes.	No. Master Fund fundamental policy not to make new investments except for satisfying capital commitments, cash and liquidity management.
Distributions	None. Distributions received from investments are reinvested.	Master Fund fundamental policy to distribute to investors Excess Cash on a quarterly basis so long as Excess Cash is equal to or greater than $10 million as of quarter end. If Excess Cash of $25 million held by fund as of 45th day of calendar quarter, such cash will also be distributed. No minimum Excess Cash requirement for distributions upon dissolution of the Master Fund.
Term	Continuous	PMF Master Fund will enter formal dissolution period after tenth year of operations.
Fund Management	Investment Adviser - Endowment Advisers, L.P. General Partner - The Endowment Fund GP, L.P.	Investment Adviser - Endowment Advisers, L.P. General Partner - The Endowment Fund GP, L.P.
Master Fund Management Fee	1.00%	0.70% for the first six quarters of operations, reducing to 0.40% through the end of the tenth year of operations (no fee on any remaining hedge fund interests after the fifth year of operations). No management fee after tenth year of operations.

Servicing Fee	0.35%	0.50% for the first six quarters of operations, reducing to 0.40% through the end of the tenth year of operations .
Expense Cap	None	PMF Master Fund expenses capped at 1.25% for each fiscal year, excluding fees and expenses directly charged by underlying investment funds and underlying investment fund managers, borrowing and other trading and execution costs and fees, taxes, litigation and indemnification expenses, judgments and other extraordinary expenses not incurred in the ordinary course of the PMF Master Fund’s business.
Repurchases and Liquidity	Quarterly, in the discretion of the Board. It is not anticipated that the Board will consider a repurchase of Interests until the fourth quarter of 2014 at the earliest. Any future repurchase offers will likely offer to purchase a substantially smaller percentage of the Fund’s NAV than that which the Fund has offered to purchase historically.	No repurchase offers anticipated with the exception of offers to repurchase shares at a discount to net asset value. Please refer to the PMF Fund repurchase offer for more information.
Transferability	Restricted.	Restricted.
Borrowing	Master Fund limited by fundamental policy to no more 25% of NAV.	PMF Master Fund limited by fundamental policy to no more than 5% of NAV.
Tax Treatment	Partnership (K-1)	Partnership (K-1)
Fiscal Year	December 31	December 31
Changes to Master Fund Fundamental Policies	(1) 67% of the Shares (by value) present at a meeting at which holders of more than 50% of the Shares (by value) are present in person or by proxy; or (2) more than 50% of outstanding Shares (by value).	(1) The greater of: (i) 67% of the Shares (by value) present at a meeting at which holders of more than 50% of the Shares (by value) are present in person or by proxy; or (B) more than 50% of outstanding Shares (by value) or (ii) Minimum Limited Partner Approval (as defined in the PPM) and (2) Unanimous consent of the Board of Directors.

Master Fund Board of Directors John A. Blaisdell* Andrew B. Linbeck* A. Haag Sherman* Karin B. Bonding Jonathan P. Carroll Dr. Bernard A. Harris Richard C. Johnson G. Edward Powell Scott E. Schwinger John A. Blaisdell* Jonathan P. Carroll Richard C. Johnson G. Edward Powell Scott E. Schwinger

* - denotes an “interested” director as defined in the 1940 Act.