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Fund Market Letter

December 05, 2008

Dear Fellow Investors:

Global credit markets and stock markets continue to exhibit extreme levels of volatility in response to news, rumour and emotion. While significant steps have been taken and continue to be taken by governments to address the financial situation, markets have responded slowly and tepidly. Ultimately, however, the economic situation will improve, but may languish well into the latter part of next year, or even longer. As a result, we are seeing most business activity and transactions drag out much longer than normal and we expect this environment to prevail for some time. Naturally, you are concerned about how this economic downturn will affect your investment in Romspen.

As we have communicated with our investors earlier, we have been lending defensively for some time and remain vigilant in overseeing our investments. As a result, we have produced exceptional, and consistent returns for our investors, averaging 9.8% over the past 12 months. We believe these results have meaningfully outperformed almost any other investment alternative we are aware of, while preserving investor capital.

Having said this, it is not realistic to assume that we would stand alone in this investment environment and remain unaffected in any way. Therefore, we believe it would be prudent for us in the short-term to modestly lower our investor distributions by approximately $0.01/unit per month in order to increase our loss reserves (please note - reserves are just accounting estimates and not actual cash losses) and have additional capital available to manage any assets that we may need or wish to control.

Modestly lower distributions also means a comparable reduction in income tax payable in the short term. While we presently have no current or expected losses that we anticipate to exceed existing loss reserves, we would rather play-it-safe by keeping distributions steady and dependable and avoid any negative surprises. This helps smooth out monthly returns in the event losses on default realizations increase above normally anticipated levels.

This does not at all mean we will experience more losses, it is simply taking cautious steps in light of what is presently a choppy and unpredictable economic environment. To the extent loss reserves are not utilized, the reserves will be brought back into income and distributed to investors.

Yours truly,

Sheldon Esbin Mark Hilson Arthur Resnick Wesley Roitman

Trustees of the Fund


 
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