HMS's investment objective is significant long-term appreciation in venture capital investments, emphasizing the opportunities originating in the State of Hawaii.

Investment Philosophy:

Global markets are increasingly a major factor in the growth of companies. HMS uses the relationship with the University of Hawaii and other Hawaii sources and the international relationships of the general partners, limited partners and affiliates to provide a flow of investment opportunities and to facilitate the development of portfolio companies through such activities as the transfer of technology and development of joint ventures.

We invest in privately held companies. HMS balances the investments by investing in companies at different stages of development, in different market areas, industry segments and technologies.

Our preference is to invest by participation in an investment syndicate including two or more additional venture capital investment firms and to stage investments to the portfolio company's achievement of predetermined performance objectives

Selection Criteria:

HMS makes investments anticipated to result in exceptional returns. Therefore, investment candidates should demonstrate strengths in a majority of the following areas:

Management: The portfolio company should have a disciplines, aggressive management team with relevant experience and which will benefit financially from the success of the company.

Competitive Advantage
. The portfolio company should have a signnificant price, performance or lead-time advantage over competing technologies and businesses. A competitive advantage allows the operating margins that are necessary for continuing growth. The advantage can arise from a proprietary market position, management expertise, technology or product base.

Market. The portfolio company's targeted market should be of sufficient size and have domestic and international potential to allow for significant growthin sales and earnings

Investment Valuation.
The valuation should reflect the risk of the investment and be consistent with the Partnership's investment objectives of achieving an exceptional long-term return.

Exit Strategy. HMS gives specific consideration to the available choices for realizing the gain in value of the portfolio company.

Portfolio Composition:

Suitable investment opportunities will be sought principally within the State of Hawaii. As part of establishing a "Hawaiian" Fund within the venture capital community, as much as one-third of the capital may be co-invested with other venture capital funds in portfolio companies that are not based in Hawaii. HMS provides balance to the portfolio by investing in companies at different stages of development, different technologies and different market areas.