Arnish Point Lighthouse, Stornoway Harbour, Scotland
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Use of Comparable Indices
Given the idiosyncratic nature of SRFLP’s investment strategy, Stornoway does not believe there is an index that sufficiently resembles SRFLP to the degree it should be considered or used as a “benchmark”. However, Stornoway provides historical performance data for several indices in addition to SRFLP’s results for comparison purposes. Stornoway has chosen indices that it believes are relevant to SRFLP’s investment mandate and / or to capital markets in general. However, while each of these indices overlap to various degrees with aspects of the SRFLP’s mandate, none of them share significant similarities with its investment portfolio:

• The Credit Suisse Distressed Hedge Fund Index (“CSDHFI”) tracks the aggregate performance of investment funds that focus on investing in companies that are subject to financial or operational distress or bankruptcy proceedings. The CSDHFI is a relevant index for comparison purposes as SRFLP’s investment mandate broadly overlaps that of the funds that make up the CSDHFI. However, it is likely that the composition of SRFLP’s investment portfolio is unique from these peers and thus SRFLP’s performance may vary greatly from the CSDHFI.

• The ICE BofAML US High Yield Index (“BAMLHY”) tracks the performance of USD-denominated, sub-investment grade rated corporate debt. BAMLHY is a relevant index for comparison purposes as SRFLP invests in corporate debt securities that are rated below investment grade. However, SRFLP’s investment portfolio also includes defaulted debt and equity securities which are not included in the BAMLHY and thus SRFLP’s performance may vary greatly from BAMLHY.

• The S&P/TSX Composite Total Return Index (“S&P/TSX”) is the principal broad-based measure commonly accepted by investors to measure the performance of Canadian equity markets. The S&P/TSX is a relevant index for comparison purposes as SRFLP’s investment portfolio contains Canadian equity investments and debt investments that are frequently converted into equity securities as part of the restructuring process. However, the performance of the S&P/TSX will vary greatly from SRFLP as its investment portfolio is primarily comprised of securities that are not included in the S&P/TSX.

As Stornoway makes idiosyncratic investments in securities which are overlooked by the capital markets, SRFLP’s investment portfolio contains investments that are not likely included in any of the above indices and thus an SRFLP investment should not be considered a substitute or proxy for the underlying index. For the reasons stated above, these indices should not be considered a benchmark for SRFLP and there can be no assurance that any historical correlation or relationship will continue in the future. As the CSDHFI and BAMLHY indices are reported in US Dollars while SRFLP is reported in Canadian Dollars, Stornoway translates the CSDHFI and BAMLHY into Canadian Dollars using the prevailing foreign exchange rate as of the date of each observation.