Investor Update

January 28, 2025

Hi Friends and Investors,

I hope this message finds you well and that you are enjoying a happy and healthy start to 2025! It has been a great pleasure to introduce so many of you to Prospero Spirit Funds, and I am thrilled to continue our conversation.

As you consider whiskey barrels as an investment, I want to remind you of the offerings from Prospero Spirit Funds (PSF) and the benefits of whiskey as a unique and resilient asset class.

Even in more tumultuous market times, whiskey has proven to be a substantial and reliable investment, offering several advantages:

1. Low Correlation to Broader Markets: Whiskey tends to perform independently of traditional asset classes, making it an attractive hedge during periods of equity market volatility.

2. Predictable Value Appreciation: Whiskey’s maturation process offers a tangible, predictable appreciation model (driven by the natural aging process rather than market speculation), which often leads to strong returns with low volatility.

3. Liquidity and Flexibility: Prospero Spirit Funds offers investors five distinct evergreen funds with quarterly liquidity following an initial two-year lock-up period, providing a balance of diversification, long-term growth, and flexible access to capital.

To highlight additional insights into this opportunity, please take a moment to review the updated Prospero Spirit Funds investor deck attached. You will notice several new slides:

1. Whiskey Investment Business 101: A review of the process for purchasing, maturing, and selling whiskey barrels as an investment, from new-fill to aged barrels, including resale in secondary markets, emphasizing the opportunity to leverage value appreciation and market liquidity.

2. Buying and Trading Barrels 101: Prospero Spirit Funds (PSF) holds legal title to a wide range of whiskey barrels at various ages. This robust inventory allows PSF to be a trading partner (buyer or seller) to distilleries, non-distilling producers (NDPs), brokers, and established brands that need more liquid (whiskey). By maintaining a diverse inventory with a range of ages and mash bills (corn, rye, wheat, barley), PSF increases the appeal of our barrels to multiple distilleries and NDPs, enhancing the likelihood of strong returns and long-term value appreciation.

3. Distillery Equity Participation Program: An overview of PSF’s Distillery Equity Participation program, which allows distillers to own up to 19.9% equity in each of their new-fill barrels, with a corresponding discount on the initial barrel price. While PSF retains control, distillers can double their equity in each participating barrel (with the upside capped at 2x), ensuring alignment with PSF and incentivizing high-quality exits.

As we like to say, it’s all about “The Barrel to the Bottom Line”—making profitable investments while enjoying the history, craftsmanship, and story behind every barrel.

I look forward to hearing your thoughts on the attached new deck. If you or someone in your network would like to discuss Prospero Spirit Funds’ strong return potential, low correlation with traditional asset classes, and low volatility (high Sharpe ratios), I will be happy to set up a virtual or in-person meeting.

Cheers,

Ben