KRS Capital LLCDiscussion Materials

Strictly Confidential

Background

• Graduated from Dartmouth College with an International Relations Major and Economics Minor in 2008

• Joined UBS Investment Bank’s Equity Capital Markets Group in the middle of the 2008 global financial crisis

• UBS’ trading floor at the time was the largest in the world and traded ~1 out of every 7 shares on the NYSE

• Gained inside knowledge of how shares are sold to retail public and supported by trading desks

• Originated and syndicated 50+ initial public offerings (IPOs) and follow-ons for publicly traded companies

• Joined UBS Investment Bank’s Asset Management Investment Banking Division in 2010

• Advised traditional and alternative asset managers on a wide range of equity, debt and M&A transactions

• Gained inside knowledge of investment strategies used by hedge fund clients as part of due diligence

• Recruited by the Head of Asset Management Investment Banking at The Bank of Montreal (BMO) in 2012

• Reported directly to BMO’s Head of Asset Management Investment Banking

• Left BMO in 2013 to form KRS Capital LLC and consult private clients on investment and trading strategies

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Former capital markets and asset management investment banker on Wall Street

Strategy Overview

• Leverages a combination of value, momentum and macroeconomic analysis to outperform exclusive practitioners of the three schools of thought

• Invests across the long-term, intermediate-term and short-term trends to maximize profit opportunities across the varied time horizons of all market participants

• Diversifies investments across asset classes including stocks, bonds, commodities and currencies to reduce portfolio correlation, improve risk-adjusted performance and maximize the available pool of opportunities

• Exclusively invests in the most liquid assets globally with internal risk limits of just 1-2% of capital, ensuring limited exposure to any one market

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Global macro absolute return

Three Key Drivers of Financial Asset Prices

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Value

• Price/ earnings ratios

• Enterprise value / EBITDA ratios

• “Buy low and sell high”

Momentum

• Behavioral economics

• Technical analysis

• “Buy strength and sell weakness”

Macroeconomics

• Asset allocation

• Fiscal and monetary policy

• Stocks vs bonds vs commodities

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Value in Financial Markets

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S&P 500 Shiller Price / Earnings Ratio

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

45

40

35

30

25

20

15

10

5

0

Average: 16.6x

Momentum in Financial Markets

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S&P 500 During the 2008 Financial Crisis

Macroeconomics in Financial Markets

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S&P 500 vs Gold vs Bonds During the 2008 Financial Crisis

Current Market Snapshot: S&P 500

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The S&P 500 continued its march higher within its bullish longer-term trend after reaching a new all-time high in late July. We alerted our clients that the S&P was likely to rally off the bottom of the channel as

it has done numerous times this year. The weekly chart of S&P 500 futures below helps illustrate the manner in which these dips have offered fantastic risk/reward opportunities for buyers willing to step in at

these short-term lows within the longer-term bullish trend. As Putin's "humanitarian convoy" encountered and engaged with (rightfully) hostile Ukrainian troops on Friday, the S&P declined almost 20 handles

off its intraday highs. Nevertheless, the S&P quickly regained most of its intraday losses and closed near its highs for the week. Perhaps most importantly, the S&P 500 penetrated its 50-day moving average on

the upside for the first time since late July. If the S&P is able to hold above this key momentum indicator into next week, we would expect additional momentum buyers to come in and drive the S&P to new all-

time highs sooner rather than later. The top of the channel in the weekly chart of S&P 500 futures below would serve as a reasonable profit target for shorter-term longs.

Current Market Snapshot: 30-Year Bonds

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It's not every week that 30-year bonds return almost as much as the S&P 500, but this was one of them. Despite near-unanimous consensus at the beginning of 2014 on Wall Street that interest rates would rise

this year (causing bonds prices to fall), the precise opposite has occurred over the course of the year. We told our clients repeatedly at the beginning of the year that "the bus was too full" in this regard, and

profited handsomely on our contrarian long bonds positions. With that said, we admittedly did not expect the strength in the bonds to persist for so long. Nevertheless, we alerted our clients to the fact that

bonds were likely to keep pushing higher after this week's decline below the key 139'00 failed to follow-through on the downside. The horizontal trend line in the daily chart of 30-year bond futures below

illustrates how critical this resistance level has been all year. After briefly dipping below this resistance level earlier in the week, the bonds quickly rallied back and closed at 139'18 on Wednesday. At that point it

became clear to us that a breakout was virtually assured and a short squeeze ensued on Thursday and carried over into Friday. This squeeze was aided by Fed Vice-Chair Stanley Fischer's comments earlier in the

week where he referred to the economic recovery as disappointing and spoke of longer-term structural damage to the economy. It was quite clear to bond market participants that Fischer's dovish posture

implied low interest rates for longer, thereby virtually ensuring the bond market's upside breakout later in the week. Given the extent of the recent runup in the bonds, we would not be surprised by a short-term

pull-back next week, which we would view as a buying opportunity.

Current Market Snapshot: US Dollar

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After an incredible bull run over the past few weeks, the US dollar index consolidated near its highs for the year this week. We alerted our clients to the fact that we were very bullish on the US dollar relative to

major currency pairs given the relative economic weakness across the Eurozone and Japan. While the European Central Bank struggles to convince German policymakers of the need for further easing even as

the German DAX stock index slips into a bear market, the Bank of Japan seems to be struggling to manufacture growth despite its publicly stated goal. Though the Bank of Japan has made its 2.0% inflation

target clear, the recent sales tax increase across Japan has likely created a situation where the Bank of Japan may be leading the horse to water, but the BOJ cannot force the horse to drink. In other words, the

Japanese consumer culture is historically one of saving rather than consumption, relatively-speaking, and a sales tax increase is not helping Mr. and Mrs. Watanabe shake off their conservative bias. At a time

when Japanese policymakers look to grow their way out of a deflationary "lost decade", the sales tax increase appears to be weighing hard on the Japanese consumer. The daily chart of the US dollar index below

illustrates the strength shown by the greenback since its May breakout from a "descending triangle" formation. The retest of the downward sloping trend line in late June provided an excellent buying

opportunity as the US dollar quickly resumed rallying in near-parabolic fashion. In light of this powerful upside rally, we are not suprised by some consolidation at current levels and would view any dips as a

longer-term buying opportunity.

Fee Structure

• 1% Management fee

• Typical fund charges a 2% management fee on assets under management

• Higher management fees charged by most managers create conflicts of interest between manager/client as manager receives this higher management fees regardless of performance

• 30% Performance fee

• Typical fund charges a 20% performance fee on profits

• Above-average performance fee charged by KRS Capital in place of a higher management fee rate

• Ensures better alignment of incentives between manager/client as manager only earns this performance fee when clients see a profit on their investment

• Performance-fee-weighted structure most resembles investment “partnership” model

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Performance-fee-weighted structure ensures maximum alignment of manager/client interests

Disclaimer

The risk of loss in trading commodity interests can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. In considering whether to trade or to authorize someone else to trade for you, you should be aware of the following:

If you purchase or sell a commodity futures contract or sell a commodity option or engage in off-exchange foreign currency trading you may sustain a total loss of the initial margin funds or security deposit and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position. If you do not provide the requested funds within the prescribed time, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.

Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a "limit move."

The placement of contingent orders by you or your trading advisor, such as a "stop-loss" or "stop-limit" order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.

A "spread" position may not be less risky than a simple "long" or "short" position.

The high degree of leverage that is often obtainable in commodity interest trading can work against you as well as for you. The use of leverage can lead to large losses as well as gains.

This brief statement cannot disclose all the risks and other significant aspects of the commodity interest markets. You should therefore carefully study this disclosure and commodity interest trading before you trade.

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