1. Adding Value While Managing Risk

2. Profile of Fairlane
Manages traditional & non-traditional bond mandates
Experienced investment professionals
Targets high net worth and institutional investors
80% of our investors have been with us for more than fifteen years

3. Fairlane’s History Fairlane Asset Management was founded in 2003
Merged with Strathy Investments Ltd. in 2005 creating over 25 years of experience
Registration with the Ontario Securities Commission:
Portfolio Manager (PM)
Investment Fund Manager (IFM)

4. Fairlane’s Business Our focus is providing superior absolute returns
We concentrate in “Special Situation Investing” using the following investment strategies:
Long / Short Investing (Credit Arbitrage Fund)
Long Investing (A Plus Bond Fund)

5. Investment Approach
Thorough and detailed company research and analysis
Exploit inefficiencies across security classes
Focus on “out of favour” and “under-researched” securities
Invest in a small number of investments

6. Investment Philosophy/Principles
Protect clients’ wealth
Above average returns
Absolute return orientation
Value
Contrarian
Discipline
A flexible approach allows us to capitalize on opportunities through all stages of the economic cycle.

7. How we Structure our Portfolio
Invest in a focused and thoroughly researched portfolio of investments, primarily A+ rated securities or better
Portfolio typically consists of credits due to the limited number of exceptional opportunities available
Strategy is to maximize returns over the long-term, not provide a stable 1% per month

8. Financial Instruments Utilized
Instruments used include:
Bank debt
Senior debt
Subordinated debt
Other liquid investment grade debt
We are not forced to remain in sectors that no longer offer value

9. Risk Management
Our goal is not to avoid risk, but to understand the risks we are taking and ensure that the portfolio is well compensated for them
Our key lines of defense:
Research
“Scenario analysis” and “stress testing” of portfolio allows us to assess overall risk

10. Fairlane Product Profile
Fairlane Growth Fund
Small to Mid Cap Equity
Credit Arbitrage Fund
Canadian Fixed Income Strategies
Expected Return
Fairlane A Plus Bond Fund
Canadian Midterm Credit Bonds
Risk

11. Fairlane A Plus Bond Fund
OBJECTIVE:
The philosophy of the Fund is to actively invest in under-valued investment grade corporate bonds with an average credit rating of “A” in order to achieve maximum reliable returns. The portfolio will have an average duration of no more than 5 years.
INVESTMENTS:
The investments are sovereign debt issued in Europe, US, Australian, New Zealand and Government of Canada. Currency is priced in US and Canadian dollar. Currency exposures are managed with hedges using options and futures.

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

13. Fairlane A Plus Bond – Monthly Returns4% 0%
Best Month: 4.23% April 2009
Worst Month: (1.16%) December 31, 2009
61 up 75.3%
20 down 24.7%
*Returns measured quarterly from Jan 2001 to Dec 2004 and monthly from Jan 2005 to Sept 2010
January 2001 to April 2011

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

15. Fairlane Credit Arbitrage vs S&P 500

16. Fairlane Credit Arbitrage Fund: Leverage and Shorting
Used to improve return profile of conservative investments
Currently using 2.8 times market value
Can be adjusted to suit client profile
Shorting
Short Canadian Government Bonds on a risk adjusted basis
Risk is monitored daily and adjusted weekly

17. Fee Information Management fees annually cover: office overhead
administrative staff
due diligence travel expenses
Performance fees (with high water mark) cover:
bonus pool for administrative staff
compensation for partners
Minimum account size:
10 million Canadian dollars
*A Plus Bond base fee 50 bps
Credit Arbitrage base fee is 1%, performance fee is 15%

18. Why Invest with Fairlane?
Experienced
Solid track record
Focused on making money in absolute, not relative terms

19. The Ideal Fairlane Investor (Know your client)
Investment Size
investment does not represent more than 20% of net worth
investment does not tax the liquid financial resources of the client
accounts are segregated, therefore they are scaleable as well as transparent
Investment Horizon
minimum one year hold period, but prefer longer horizon
willing to take bad years with the good

20. Fairlane Team Philip Strathy Fixed Income and Small Cap Equities
Vicki Hunter Fixed Income
John Strathy Fixed Income Advisor
Geoff McCrea Equity Arbitrage
Rob Bradeen Equity Advisor

21. www.fairlane-am.com | vcraig@strathy.com
Contact
30 St. Clair Ave West, Suite 1105
Toronto, Ontario M4V 3A1
t (416) f (416) |