April 5, 2010

Dear Fellow Partners,

During the first quarter of 2010, the Savio Fund I and Savio Fund II posted -10.79% and +0.24%,
respectively. Over the same period, the S&P 500 gained +3.22% . Although we employ an absolute-
return strategy, we benchmark our performance against S&P500. We believe that an alternative vehicle to
invest for a time-strapped investor is to invest in an index like the S&P500. The excess returns over index
is proportional to the time spent selecting individual stocks. Despite our decision to benchmark against an
index, we do not intend to beat the index consistently. We would be happy if we can achieve a 10%
annual returns, net of fee regardless of index performance.

While we were disappointed with the results, assessing our performance over a short period of time is
incoherent with our investing philosophy. We believe that there is much randomness on the prices of
individual stocks on a shorter time frame. Our advantage is time arbitrage. We take a longer view over the
average investor, whose time frame is in real time (i.e., measured in days, weeks, months).

At Savio Capital, our investing philosophy is grounded on the principles pioneered by Ben Graham. The
investing mantra is simple: Buy assets worth a dollar for 50 cents. Over time, the prices of these asset
eventually catch up with their real worth. Although the approach appears to be simplistic, the difficult part
is implementation. Every day, the market quotes the prices of these assets without regard to its business
fundamentals. Thus, our investing philosophy encourages periods of underperformance in exchange for
long-term outperformance.

Our advice for investors is to focus on process rather than proceeds. We believe that if we have the
correct process, the results will eventually follow. We are reminded of Philippines’ boxing great, Manny
Pacquiao. When asked if he’ll win by knockout, his response would be something like, “I can’t guarantee
a knockout, but I have practiced hard and will try my best to make the Filipinos happy.” This works well
for Pacquiao, having bagged 7-division world titles. Our promise isn’t a KO performance against the
index, but we believe that consistency with our approach will lead us to long-term gains.

Last March 12, we have issued a report regarding the status of the Fund. You may have noticed that the
the returns we have had declined further despite the recent-up in the US markets. The reason is that our
biggest position – Jackson Hewitt Tax Service (JTX) have traded on new 52-week lows. While there
haven’t any filings yet, traders are betting that this stock will file Chapter 11 (bankruptcy) anytime soon.
Our hunch is that as soon as the debt covenants are resolved (which is due April 30) and the company can
survive this year, we would be seeing tremendous gains on this issue alone.

It also important to note that the broader US market indices have risen to an almost 18-month high. The
improved sentiment of the market has evaporated bargain stocks. In fact, we have had our share of
troubles finding cheaper bargain issues. However, we continue to be on the lookout everyday for cheaper
issues. Our default strategy, though is to sit on cash until we can uncover cheap stocks.
We are humbled with the trust you have given us. Your assurance is that we have substantially placed our
own money in the Fund and will continue to do so in the future. While we cannot guarantee you results,
we assure you that increase in our net worth is proportional to yours.

Warren Buffett once mentioned how he tapdance to work. Our version is that we break-dance to work and
do the back stand everytime we uncover bargains to buy. And we hope to be doing this for the next 50
years of our lives.

Our next quarterly contribution will be mid-June. Please email us if you have specific questions about the
Fund.

Sincerely,

Jan Michael B. Acebo Dexter B. Rama

Managing Partner Managing Partner