Strategy And Objective

The Fairholme Fund s investment objective is long-term growth of capital. Fairholme Capital Management, L.L.C. (the Manager ), the investment adviser to The Fairholme Fund, attempts, under normal circumstances, to achieve The Fairholme Fund s investment objective by investing in a focused portfolio of equity and fixed-income securities. The proportion of The Fairholme Fund s assets invested in each type of asset class will vary from time to time based upon the Manager s assessment of general market and economic conditions. The Fairholme Fund may invest in, and may shift frequently among, asset classes and market sectors. The equity securities in which The Fairholme Fund may invest include common and preferred stock (including convertible preferred stock), partnership interests, business trust shares, depository receipts, rights and warrants to subscribe for the purchase of equity securities, and interests in real estate investment trusts ( REITs ).