First Principles conducts business in an open architecture framework and fully embraces client dialogue. The best solutions are the result of understanding investor objectives and providing clients with transparency into the investment process. Our consultative process applies to more than customized separate accounts. This process also allows us to design commingled investor funds that better address the needs of a specific group of investors.

Investment strategies are rigorously engineered by a team with extensive experience in analyzing, trading, and risk managing the breadth of fixed income assets and financing strategies. Importantly, senior professionals not only design the strategies, but are also actively involved in day to day investment, operations, and risk management.

In the years leading up to the formation of First Principles Capital Management, the founders observed the changing landscape of institutional asset management, wherein many managers abandoned the holistic approach to client services and merely responded to requests for proposal. Dissatisfied with this approach, FPCM was established to offer an alternative for those investors who appreciate the value of a strong personal relationship with their investment manager. This value proposition is safeguarded by our decision to limit the number of clients and initiatives that we undertake and by restricting the types of clients that we work with to sophisticated institutional investors whose fixed income needs make them major participants in this asset class.

The lack of a holistic approach, however, affects investors other than the largest institutions and has increasingly become an issue for family offices and high net worth individuals. The professionals at FPCM have observed that many of the fixed income offerings available to these types of investors do not properly address investment objectives. Beyond generally lacking an appropriate level of customization, the format in which fixed income is frequently offered to high net worth investors is incompatible with investment needs. FPCM seeks to address these issues and will engage a limited number of sophisticated clients whose fixed income needs would benefit from our approach.

Often, the form of the investment is as important as the strategy when taking into account the unique objectives of the investor. Therefore, FPCM's investment strategies are crafted to meet the needs of our clients, and can be delivered through a variety of forms:

• - Commingled investor funds
• - Customized separate accounts
• - Securitized structures

FPCM believes that superior investment returns can be achieved by capturing inefficiencies linked to structural and/or technical pricing dislocations across the capital markets. Asset allocation paradigms are not always optimally executed - producing inefficiencies often caused by investment guidelines, structural rigidities, and/or government regulations. As an investment manager with a strong fundamental bias and long-term investment horizon, FPCM seeks to capitalize on these inefficiencies.

Value is not just a matter of finding inefficiencies. It is also contingent upon the manager's ability to implement the most effective trading strategy. Due to our team members' expertise within and across markets, we can identify the benefits and risks of comparable instruments, including cash securities and derivatives. This results in the selection of the most efficient strategy to express a particular market view.

Our experience in risk and liquidity management enables us to take advantage of new opportunities as they emerge and to maintain sound positions during market turmoil. Through our professionals' experience in managing trading activities at FPCM and previously at major investment banks, we understand that liquidity can make the difference between being able to execute your investment thesis and being pushed out of a promising position.