Ann: Change in Portfolio Value, page-12

Hi Jeffw - If they buy back their own shares at a discount, the NTA per share will increase, all else being equal, in the same way that it would for a long only fund. For example: say the fund has two shares, one short position (-$1), share holders cash ($1) and borrowings/cash from the short sale ($1). Their net assets (NTA) is $1+$1 -$1 = $1 or 50 cents per share. if those shares are trading at 40cents (20% discount to NTA) they could use 40cents of their cash to repurchase and cancel one share so their net assets would then be $1+$0.60-$1 = 60 cents and since there is only one share the NTA per share is 60c, so the NTA per share for the remaining shareholder has appreciated 20% without the portfolio holdings changing at all. This is not to say the market price will necessarily change. Obviously there is a limit to the effectiveness of the share buyback, but whilst they have a decent amount of cash this seems like a relatively low risk way to add value to remaining shareholders.