Quality
  Higher quality companies outperform lower quality companies

  Revenue & Earnings Growth
  Faster growing companies outperform slower growing companies

  Valuation
  Relative to a company's growth rate, less expensive stocks outperform more expensive stocks

  Strong Fundamentals
  Companies with accelerating fundamental and stock price momentum outperform companies with   decelerating fundamental and stock price momentum

  Risk Management:
  Minimizing losses and managing exposure (risk management) are crucial components of positive returns

We believe that an arbitrage profit opportunity exists between purchasing a basket of stocks that exhibit the above characteristics and shorting a basket of stocks that possess the opposite characteristics

• Our strategy combines a systematic stock selection process with fundamental research to create a long/short domestic equity portfolio that is variable biased and style agnostic. The universe primarily consists of U.S. traded companies with market capitalizations of $1 billion and larger. The majority of positions are companies that are included in the Russell 1000® Index.
• Companies that meet the market cap and liquidity requirements are analyzed on the following investment criteria: quality, growth, valuation, improving fundamentals, and stock price performance. Proprietary systematic algorithms are utilized to rank the securities, each producing a bell-curve type ranking. The strategy only buys companies that fall in the attractive tail of the bell curve and only shorts companies that fall in the unattractive tail of the bell curve.
• We then apply fundamental analysis to assess investment candidates which are produced by the models. The long and short portfolios are expected to consist of between 30 and 100 positions each. Individual stock selection, net and gross investment position, sector, industry, and individual stock positioning are all actively determined. A team of seven investment professionals provide fundamental research. All investment decisions are made by the strategy’s portfolio manager.

• The strategy limits individual position sizes and sector weights. Individual position sizes generally range between 1% and 3% with an upper limit of 5%.
• The strategy also generally limits net sector positions to -20% to +20%.
• A stop loss strategy on both the long and short positions is employed.
• The strategy limits the magnitude of leverage in the portfolio as well. The gross invested position will generally not exceed 200%, and net equity exposure is generally kept within a range of -50% to +100%.
• This is a highly liquid strategy. Holdings, which are highly liquid securities listed on U.S. exchanges, are generally Russell 1000® Index members or equivalent ADRs.

• Administrator: Deutsche Bank’s Alternative Fund Services (AFS)
• Prime Broker: J. P. Morgan Clearing Corp.
• Legal Counsel: Paul, Hastings, Janofsky & Walker, LLP
• Auditor: Deloitte & Touche, LLP

The blend of a quantitative and qualitative process gives this strategy a unique and differentiated approach. We believe that the quantitative underpinnings provide greater long-term consistency and downside risk protection by producing individual stock candidates which embody quality and growth metrics which have historically led to outperformance.

Fundamental research is equally important. The strategy utilizes a seven-person research team to provide fundamental analysis. In our view, fundamental research and active portfolio construction offer the potential for additional alpha generation by utilizing an experienced team to take advantage of sector, industry, and individual stock opportunities.

We believe that our ability to produce positive alpha through the strategy’s short positions differentiates this long/short equity strategy from many competitors. We believe short selling requires a disciplined risk management system:

• Tighter stop losses are placed on the short positions relative to the long positions
• We execute trades more frequently on the short positions
• The short portfolio consists of individual stock positions, not ETFs, indices or futures
• Individual short positions allow us to tailor the portfolio to changing market environments

The portfolio manager has extensive experience short selling stocks, which in our view produces the confidence to create a net short portfolio – a valuable tool in 2008 and future equity market environment.

Since inception the strategy has produced low correlation statistics relative to the Russell 1000® Index as well as the HFRX Equity Hedge Index.