PALO ALTO INVESTORS LP

PAI is an investment advisory firm that manages funds and provides investment advice to clients. They engage solicitors to whom they pay cash or a portion of the advisory fees and incentive allocation paid by investors referred to them by those solicitors. This practice is disclosed in writing to investors and PAI complies with the other requirements of Rule 206(4)-1 under the Investment Advisers Act of 1940, to the extent required by applicable law. PAI's funds are managed and reviewed on an ongoing basis by their portfolio managers. These reviews consider asset allocation, cash management, market prospects and individual issue prospects and give particular attention to changes in company earnings, industry outlook, market outlook and price levels. PAI's relationships with brokers that provide soft dollar services influence PAI's judgment and create conflicts of interest in allocating brokerage business between firms that provide soft dollar services and firms that do not. PAI has an incentive to select or recommend a broker based on PAI's interest in receiving soft dollar services rather than any Fund's interest in receiving the most favorable execution. These conflicts of interest are particularly influential to the extent that PAI uses soft dollars to pay expenses it would otherwise be required to pay itself.

PAI's investment strategies are general in nature and not exhaustive. There are no limits on the types of securities they may invest in, the concentration of their investments, or the amount of leverage they may use. PAI may use any trading or investment techniques, whether or not contemplated by the expected investment strategies. They may pursue any objectives or use any trading or investment techniques that they consider appropriate and in the Funds' interests. To address potential conflicts, PAI typically allocates all investment opportunities within each strategy pro rata based on each Fund's position size or assets. They also have policies and procedures for reviewing Fund investment allocations on a regular basis.

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