Manager Due Diligence and Selection

We believe we conduct a rigorous manager due diligence and selection process, one that differentiates us from our peers and results in portfolios of exceptionally high quality. The process typically begins with information about a potentially interesting manager coming to us through the extensive global network of our investment team and Board of Advisors. The vast majority of our managers come to us this way, and our manager search process is thus highly efficient, as in effect, managers come to us "pre-screened" by fellow investors who understand our strategy, allowing us to avoid expending valuable time and energy screening manager databases or attending often fruitless capital introduction events.

Once introduced to us, if we feel a manager warrants further investigation, we conduct a series of conference calls and/or onsite visits, coupled with an analysis of the manager's holdings and portfolio construction, to understand their particular approach and gauge their level of skill. After completing this initial assessment, a process which can take several months, managers who we believe might be an interesting addition to our portfolios are presented to members of our Board of Advisors for further evaluation. Members of our Board, comprised of veteran professional value investors, then conduct an in-depth interview of the manager, including a detailed review of the manager's portfolio, and subsequently provide feedback to our investment team regarding their appraisal of the manager's abilities. We believe this additional layer of investment due diligence, carried out by a cadre of renowned value investors with many decades of combined investing experience, bestows upon us a unique edge within the marketplace and provides us with a high degree of confidence in the caliber of our underlying managers.

Following the Board review, our investment team conducts further due diligence on each manager to gain additional comfort with the manager's strategy and style, while our operational due diligence team begins an extensive evaluation of the manager's processes, controls, and operational capabilities. This is a crucial component of our overall due diligence process, and one we take very seriously, as we will not invest in a manager whom we find operationally deficient, no matter how talented we believe he or she might be as an investor.

Only after successful completion of our comprehensive investment and operational due diligence processes will a manager be eligible for inclusion in our portfolios. To further limit risk, once we in fact decide to invest with a particular manager, we make a small initial investment and monitor the manager for a period of time. As we grow more comfortable with a manager once we've become a client, we scale up our investment over time as appropriate.

Finally, for as long as we remain invested with a manager, we conduct regular investment and operational reviews on an ongoing basis. From an investment perspective, our ongoing reviews include continued detailed portfolio analysis and evaluation of each manager's key positions. As part of this process, we expect each of our managers to provide us with a significant amount of portfolio transparency on a monthly basis. From an operational perspective, our periodic reviews seek to ensure that we remain comfortable with each manager's processes, controls, and infrastructure.