1.

0 Executive Summary

The purpose of this business plan is to raise $10,000,000 for the development of a hedge fund while
showcasing the expected financials and operations over the next three years. The Hedge Fund Inc. (“the
Company”) is a New York based corporation that will provide investment management for its investors
in its targeted market. The Company was founded in 2008 by John Doe.

1.1 Products and Services

The Hedge Fund will solicit capital from accredited investors (defined later) with the intent to use this
capital to make investments marketable securities and other hedge funds. The Company expects to
generate compounded annual returns of 25% to 35% per year on capital invested into the Hedge Fund’s
portfolio holdings. The Management of the Hedge Fund will retain a 20% ownership interest in the firm.
Details of the fee arrangements for the Hedge Fund can be found in the Company’s private placement
memorandum. The third section of the business plan will further describe the investment management
services offered by the Hedge Fund.

1.2 The Financing

At this time, the Company is seeking to raise $10,000,000 for the development of the Hedge Fund’s
operations. Mr. Doe is seeking to sell an 80% ownership interest in the business in exchange for this
capital. 85% of the invested capital will be used for direct investments into the firm’s investments.

1.3 Mission Statement

Management’s mission is to develop the Hedge Fund into a large scale investment firm that that will
provide dividend income, capital appreciation, and interest income to the Company’s investors and
senior directors.

1.4 Mangement Team

The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the
investment management industry. Through his expertise, he will be able to bring the operations of the
business to profitability within its first year of operations.

1.5 Sales Forecasts

Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials
over the next three years.

1.6 Expansion Plan

The Company will to undergo an aggressive expansion after the successful completion of the initial
capital raising period. As the Hedge Fund is a multifaceted investment firm, Management will expand
each segment of the business by developing limited partnerships that will attract additional capital for
the Company’s marketable securities and fund of funds portfolios.

2.0 Company and Financing Summary

2.1 Registered Name and Corporate Structure

Hedge Fund, Inc. The Company is registered as a corporation in the State of New York.

2.2 Required Funds

At this time, the Hedge Fund requires $10,000,000 of equity funds. Below is a breakdown of how these
funds will be used:
2.3 Investor Equity

At this time, Mr. Doe is seeking to sell an 80% interest in the Hedge Fund in exchange for the capital
sought in this business plan. Please reference the Company’s private placement memorandum regarding
more information regarding the Company’s fee and ownership structure.

2.4 Management Equity

John Doe currently owns 100% of the Hedge Fund, Inc.

2.5 Exit Strategy

The Management has planned for three possible exit strategies. The first strategy would be to sell the
Company to a larger entity at a significant premium. Since, the financial management and hedge fund
industry maintains a very low risk profile once the business is established; the Management feels that
the Company could be sold for ten to fifteen times earnings. The second exit scenario would entail
selling a portion of the Company via an initial public offering (or “IPO”). After a detailed analysis, it was
found that the Company could sell for twenty to thirty times earnings on the open market depending on
the business’s annual growth rate and strength of earnings. However, taking a company public involves
significant legal red tape. Hedge Fund, Inc. would be bound by the significant legal framework of the
Sarbanes-Oxley Act in addition to the legal requirements set forth in form S1 of the Securities and
Exchange Commission. The Company would also have to comply with the Securities Act of 1933 and the
Exchange Act of 1934.

3.0 Products and Services

Below is a description of the investment management services offered by the Hedge Fund.
3.1 Marketable Securities

Management will investments directly into marketable securities and other hedge funds that specialize
in specific areas of trading. The Company intends to develop a number of trading strategies including
options trading, LEAPs trading, long position/short position trading, and other methods of trading that
will produce small but consistent gains on a weekly and monthly basis. The Hedge Fund may also engage
a covered call strategy that would allow the fund to amply it return on investment for securities that are
held for an extended period of time. In regards to investing in other hedge funds, outsourcing trading
activities is expensive as hedge funds charge large AUM fees and performance fees on their aggregate
capital pools.

4.0 Strategic and Market Analysis

4.1 Economic Outlook

This section of the analysis will detail the economic climate, the investment management industry, the
customer profile, and the competition that the business will face as it progresses through its business
operations. Currently, the economic market condition in the United States is in recession. This slowdown
in the economy has also greatly impacted real estate sales, which has halted to historical lows. Many
economists expect that this recession will continue until mid-2009, at which point the economy will
begin a prolonged recovery period.

4.2 Industry Analysis

The financial services sector has become one of the fastest growing business segments in the U.S.
economy. Computerized technologies allow financial firms to operate advisory and brokerage services
anywhere in the country. In previous decades, most financial firms needed to be within a close proximity
to Wall Street in order to provide their clients the highest level of service. This is no longer the case as a
firm can access almost every facet of the financial markets through Internet connections and specialized
trading and investment management software. With these advances, several new firms have been
created to address the needs of people in rural and suburban areas. The Bureau of Labor Statistics
estimates that there are approximately 94,000 investment advisors currently employed throughout the
United States. The average annual income for an investment advisor is $62,700. Salaries are expected to
increase at a rate of 2.1% a year as inflation increases.

4.3 Customer Profile

Unfortunately, this business (for its investors) caters only to high net worth individuals that have an
aggregate income of over $200,000 (if single) or $300,000 (if the client is married) or a net worth of at
least one million dollars. Strict regulatory oversights prevent the Company from marketing the hedge
fund to anyone that is not considered an accredited investor. These regulations may become more
stringent as the Securities and Exchange Commission moves to have greater regulatory oversight over
the hedge fund industry.

4.4 Competitive Analysis

As the investment advisory and hedge fund industries have grown, so has the level of competition. One
of the drawbacks to the industry is that there are very low barriers to entry. Any individual or business
may register itself as an investment advisor after completing the proper examinations and filings. The
expected costs to build an investment advisory are low as it is a service oriented business. There are
more than 8,000 other private investment groups that operate in a similar capacity.

5.0 Marketing Plan

The Hedge Fund intends to maintain an extensive marketing campaign that will ensure maximum
visibility for the business in its targeted market. Below is an overview of the marketing strategies and
objectives of the Hedge Fund.

5.1 Marketing Objectives

• Develop an online presence by developing a website and placing the Company’s name and
contact information with online directories.

• Establish relationships with other investment advisories within the United States.

5.2 Marketing Strategies

As the Company cannot directly market its services to the general public, the Hedge Fund will hire a
capital introduction firm to showcase the operations of the business to potential investors. These firms,
for a commission, will introduce potential investors and investment groups to Management. These
companies maintain extensive lists of accredited investors and institutions that frequently make
investments into private investment companies. The Hedge Fund will also develop a website specifically
for investors that have registered or have become clients with the Company. This website will showcase
the strategies that the Company uses, relevant contact information, and for registered inventors –
information specifically related to their account. Mr. Doe will also make presentations at popular hedge
fund conventions while concurrently obtaining speaking engagements among other investment
meetings so that his visibility and that of the firm increase over time.

5.3 Pricing

In this section, describe the pricing of your services and products. You should provide as much
information as possible about your pricing as possible in this section. However, if you have hundreds of
items, condense your product list categorically. This section of the business plan should not span more
than 1 page.

6.0 Organizational Plan and Personnel Summary

6.1 Corporate Organization

6.2 Organizational Budget

6.3 Management Biographies

In this section of the business plan, you should write a two to four paragraph biography about your work
experience, your education, and your skill set. For each owner or key employee, you should provide a
brief biography in this section.

7.0 Financial Plan

7.1 Underlying Assumptions

• The Owner will acquire $10,000,000 of equity funds to develop the business.

• The Company will earn a compounded annual return of 30% on its investment portfolio.

• The Hedge Fund will have an annual revenue growth rate of 16% per year.

7.2 Sensitivity Analysis

It is the goal of the Company to make investments in economically viable companies that will produce
dividend income, interest income, and capital appreciation. During times of economic recession, the
Company’s portfolio may have issues with profit generation, which in turn, could lead to lower ROI’s on
the Hedge Fund’s portfolio. However, the Company intends to use a number of investment strategies
that will ensure that the firm will produce profits regardless of the general economic climate.

7.3 Source of Funds

7.4 General Assumptions

7.5 Profit and Loss Statements

7.6 Cash Flow Analysis

7.7 Balance Sheet

7.8 General Assumptions

7.9 Business Ratios

Expanded Profit and Loss Statements

Expanded Cash Flow Analysis