January 27, 2009

Dear Investor,

If necessity is the mother of invention, then distress must be the grandmother of

necessity. For it is distress that begets the necessity for action which, in turn, begets an
invention to address that necessity.

As we all know far too well, Grandmama Distress went nuts over the past year, leaving
opportunity in her wake. Issues regarding liquidity, financing, and redemptions forced
many good organizations to suspend fund redemptions and consider strategic options.

In the Tundra sections of the past few monthly commentaries we have alluded to such
situations with increasing specificity. That is because for the past several months we
have been in selective communication with a number of managers with the goal of
determining if some action could be taken, some invention if you will, that could be
mutually beneficial to both their and our investors. In particular, discussions with one
fund took on increased seriousness over time.

As a result of those discussions, analysis and due diligence by both sides, we are pleased
to announce that we have reached an agreement with Deephaven Capital Management.
Although there are certain closing conditions that must be satisfied, we currently expect
that the transaction will close at the end of February.

Pursuant to this agreement, the investors of the Deephaven flagship funds, the Deephaven
Global Multi-Strategy Funds (the “Deephaven Fund”), will be given the option to
become investors in Stark Funds by contributing their proportionate share of the positions
in the Deephaven Fund portfolio. Some of these positions, where appropriate, will go
into the Stark Master Fund portfolio. The remaining positions, based primarily on their
liquidity characteristics, will be put into a side pocket to which the current investors of
Shepherd and Stark Investments LP (“SILP”) will not have exposure.

This information is subject to the current offering memorandum of a Stark Fund and is not intended as an offer to sell
or a solicitation to buy interests in any Stark Fund. Potential investors should refer to the current offering
memorandum of the Fund for important information related to the Fund's and the Investment Manager's / General
Partner's organization and investment strategy, as well as material risks of investing in the Fund. Potential investors
should also review the Form ADV Part II of the Investment Manager or General Partner. The purchase of interests in a
Stark Fund is suitable only for sophisticated investors for whom an investment in the Fund does not constitute a
complete investment program and who fully understand and are willing to assume the risks involved in the Fund’s
investment program.

- Confidential -

3600 SOUTH LAKE DRIVE ■ ST. FRANCIS, WI 53235-3716

TEL. 414.294.7000 ■ FAX. 414.294.7700 ■ WWW.STARKINVESTMENTS.COM
In a sense, we have “purchased” for Shepherd and SILP a part of the Deephaven Fund
portfolio by taking on investors from the Deephaven Fund. The Stark organization will
manage the orderly wind-up of those investments that will be placed into side pockets
and the resulting cash will be transferred to Stark Master Fund as new capital on behalf of
the former Deephaven Fund investors. In addition, Stark has offered to assist with the
management of the wind-down of the remainder of Deephaven’s funds.

For those of you unfamiliar with Deephaven, its background is strikingly similar to our
own in several respects. Like Stark, Deephaven is a global multi-strategy, multi-asset
alternative investment manager. Founded 14 years ago, Deephaven has similar
midwestern roots, headquartered in Minneapolis, Minnesota, and has managed billions
for qualified institutional and individual investors. Also like Stark, Deephaven evolved
from its inception as a single strategy manager in convertible arbitrage, via the gradual
addition of further strategies and geographic exposures, to a diversified multi-strategy
approach. Indeed, it was the substantial degree of overlap, historically, culturally and
strategically, that made this transaction relatively easy to analyze by both parties.

Like all good agreements, we believe that this one is beneficial for both sides. The
primary benefit of the deal for our investors is that it allows Shepherd and SILP to
acquire a portfolio concentrated in areas that are a current focus of investment
opportunity for the Funds. Moreover, this acquisition is being made without having to
deplete the Funds’ existing store of excess liquidity.

Another benefit is the augmentation of the Funds’ NAV during a period of widespread
decline across other funds due to redemptions and performance issues. This is the
clearest possible signal to our financing and counterparty relationships that Stark will be
one of the survivors of the industry consolidation, and we believe will thereby further
significantly strengthen those critical relationships that have been a key source of our
success to date.

Finally, the deal should provide Stark with an opportunity to open the door to additional
opportunities in similar situations to acquire attractive portfolios and, potentially,
investment talent.

For the Deephaven Fund investors, the deal provides them with the opportunity for
continued management of their assets in the context of a stronger entity. In addition, the
similarities between Stark and Deephaven permit them to replicate in many respects the
type of investment profile they had originally sought through Deephaven.

This information is subject to the current offering memorandum of a Stark Fund and is not intended as an offer to sell
or a solicitation to buy interests in any Stark Fund. Potential investors should refer to the current offering
memorandum of the Fund for important information related to the Fund's and the Investment Manager's / General
Partner's organization and investment strategy, as well as material risks of investing in the Fund. Potential investors
should also review the Form ADV Part II of the Investment Manager or General Partner. The purchase of interests in a
Stark Fund is suitable only for sophisticated investors for whom an investment in the Fund does not constitute a
complete investment program and who fully understand and are willing to assume the risks involved in the Fund’s
investment program.

- Confidential -
Page 2
Of course, the Deephaven investors are likely unaware of what’s awaiting them in terms
of the monthly investor commentary. But nobody said this was going to be a free lunch.

The advantages we enjoy as a large, experienced firm have been magnified by the current
consolidation in the industry. Accordingly, we believe we have the tools and the team to
put us into a position to be successful in the current environment, and this deal
demonstrates the potential benefits that may accrue from our positioning. We believe
that the potential for other attractive situations exists, and we will continue to be on the
lookout for opportunities that complement our strategic plan.

Be assured that we have taken this step prudently and with your best interests at the
forefront. If you have any questions, please do not hesitate to contact us.

As always, it is a privilege to manage your capital.

Sincerely,

Brian Stark Mike Roth

This information is subject to the current offering memorandum of a Stark Fund and is not intended as an offer to sell
or a solicitation to buy interests in any Stark Fund. Potential investors should refer to the current offering
memorandum of the Fund for important information related to the Fund's and the Investment Manager's / General
Partner's organization and investment strategy, as well as material risks of investing in the Fund. Potential investors
should also review the Form ADV Part II of the Investment Manager or General Partner. The purchase of interests in a
Stark Fund is suitable only for sophisticated investors for whom an investment in the Fund does not constitute a
complete investment program and who fully understand and are willing to assume the risks involved in the Fund’s
investment program.

- Confidential -
Page 3