Irving H. Picard v. Saul B. Katz et al

Filing 168

DECLARATION of Regina Griffin Continued With Exhibits 16 to 30 in Support re: 162 FIFTH MOTION in Limine To Deem Statements By Sterling Stamos Employees In The Course Of And In Connection With Their Employment By Sterling Stamos As Admissions of The Sterling Defendants.. Document filed by Irving H. Picard. (Attachments: # 1 Exhibit 16, # 2 Exhibit 17, # 3 Exhibit 18, # 4 Exhibit 19, # 5 Exhibit 20, # 6 Exhibit 21, # 7 Exhibit 22, # 8 Exhibit 23, # 9 Exhibit 24, # 10 Exhibit 25, # 11 Exhibit 26 - 1, # 12 Exhibit 26 - 2, # 13 Exhibit 27, # 14 Exhibit 28, # 15 Exhibit 29, # 16 Exhibit 30)(Sheehan, David)

Exhibit 26
Part 1 of 2

From:
Sent:
To:
Subject:

Attachments:

Abigail Sugahara
Tuesday, September 06,20055:14:31 PM
Georgette Wong
Meeting Notes Report: Advantus Capital Management

_Finii Summary CODE 02-05.pdf; 2004-2005 YTD Net Performance Page
02-05.pdf; Consistent Stable Performance Page 03-05-05.pdf; Investment Universe
Page 2004-2005.pdf; Security Fund CODE 02-05.pdf; Security Fund Flip Book
Presentation (02-05).pdf

Note by: (AS&) OW
Subject: Meeting in NYC office with Advantus Capital
Attendees: Drew Smith (Advantus); Sean Duff (Merrill Lynch); Peter Stamos, Kevin Olcimoto, Chris
Stamos, Ashoic Chachra, Georgette Wong, Kevin Barcelona

Notes: The documents attached may not be the versions shown in the meeting.
Items Linked to Note:

CONTACrS/CO;S:
Advantus Capital Management, [phone]
R. Duff, Merrill Lynch, (212) «9-3858
Merrill Lynch
Drew Smith, Advantus Capital Management, [phone]
[phone]
[phone]

AflACHMENTS:
Firm Summary CODE 02-05.pdf
2004-2005 YTD Net Performance Page 02-05.pdf
Consistent Stable Performance Page O3-O5-O5.pdf
Investment Universe Page 2004-2005.pdf
Security Fund CODE 02-05.pdf
Security Fund Flip Book Presentation (02-05).pdf

9/6/2005 4:58:18 PM

CONFIDENTIAL

S8MT00025935

SSMSAAOO25935

COMPANY
OVERVIEW

February 2005

Confidential Presentation

ci

CONFIDENTIAL

SSMT00025936

SSMSAAOO25936

Contents

Partnership
»

Principles
People

°'

Producis

Security

Growth
Acceleration
°

Process

o

Infrastructure
Postscript

This document does notconstltule an offer in sell, or a soliritation of an offer o buy the limited pertheoship interests desaibed herein. No ouch offer or
oollrltetimwill be sonde prior ro thedeliveoy nfa definItive offering memorandum and olhermatertats relating to the nisosersheretn Before making an
investment desloo with respect to the partnership, potentiel investors ore advised to rend otreholly the nffering memorandum, Ilse limited partnership
agreement, and therelated subsaiption d000xoerots, and In cno'ault weh tbeorta; legal, and ifisaondel advisors,
ThIs document contains a prel'rmixatry summary of the purpose and prtocipalbuo'toees terms of the perineeship; this summary does noi purport lo be complete
and is qualified in ita enlisesy by reference to the more detailed dtscuesoczt coatained lote privale nffortngmemorandum and the actual text of the limited
partnership agreesient. Theoenerel Partner hes Issa abilibe in its sole diso'eliDn to change the efretegy desatbedherein,

This document tsbe'esg provided to you one confidential basissolely to eIsio'you tx decldingwhetheror not to proceed s'rita further investigation ofen
investment in Sterling Stemm. Accordingly, this document maynot be reproduced lxx whole or 'us part, and may notbe delivered toeny personsvithout prior
written crxnsentof Sterling Starnos, 575 Fifth Avenue .4ith floor, Newyorlo, Icy lOti?, (212)485,4370.

fl'rì:rt.

CONFIDENTIAL

fll so tHfliQÇ

PÂRTN'RSì'iiP

I

SSMT00025937

SSMSAAOO25937

Sterling Equities

Acquired or developed more than:

17 million square feet of office property

8.5 million square feet of retail property
41,000 residential units in 43 states
»

Purchased more than 2,000 mortgages and noies

»

Developed over 4.1 million square feet of Class "A" office space

ciPARThER$JHU'

CONFIDENTIAL

S6MT00025938

SSMSAAOO25938

The Sterling Partnership

»

Sterling Equities

Real Estate Development
Principal Investments - (Pathogenesis, CWT)
Sterling American Properties

Rea] Estate Funds
American Securities Capital Partners

Private Equity Funds
Sterling Sports and Enterlainthent

New York Mets and Brooklyn Cyclones
Sterling Slamos

Integrated investment firm which grew from the investment partnership of the Katz, Wilpon,
and Stamos families.

ci

CONFIDENTIAL

PARTNER5HP

I

S3MT00025939

SSMSAA0025939

The Value al Partnership

Trust-based relationships built on full transparency
»

Access and capacity in emerging and closed rund managers

A unique network a "collective intelligence"

CONFIDENTIAL

SSMT00025940

SSMSMOO2594O

Lessons from the Partnership

Always help your partners succeed
Ensure staying power in the market

Prolect capital and strive for consistent, positive returns

RESULT:

40 years of never losing a partnership, never losing a building, and never
having a dawn year

çi.

CONFIDENTIAL

PARThERSÌfiP

S3MT00025941

SSMSAAOO2594I

Principles

Fivtnerh!p
We treat our investors as partners and always put their interests first

We build trust-based relationships, demand transparency, and deliver it to our
investors

We live by the charge of our founders; "Do well by doing good"

PRINCIPLES

CONFIDENTIAL

I

SSMT00025942

SSMSAAOO25942

Advantages

» 40 years of experience developing, managing, owning, and investing in real estate
20 years of experience investing in hedge lunds

Over $600 million of Principals' capital invested
12 years of experience in private equity

10 years of the Principals working together
6 years of the Principals investing together
Long-term relationships with leading investment managers in public and private investment
vehicles

Core relationships with ail leading investment banks and major financial institutions
Approximately $200 million invested by Sterling Stamos Principals across all Sterling Stanios
funds
Internai capital commitments from Principals of between 20-33 percent of total assets under
management across all Sterling Stamos funds

ci!

CONFIDENTIAL

PRlr1cIPLaS

3SMT00025943

SSMSAAOO25943

Milestones

1972 Fred Wilpon and Saul Katz found Sterling Equities

1980 Sterling acquires an ownership stake in a Major League baseball learn,
the New York Mets

1984 Sterling Principals begin investing in hedge funds
1986 Sterling acquires 50 percent ownership of the New York Mots
1992 Sterling launches Sterling American Properties (SAP) Fund I - IRR 22%

1993 Sterling seeds the financing of Pathogenesis
1994 Stamos Associates, Inc. (SAI) facilitates hospital mergers throughouL
the United States

1996 Sterling launches SAP Fund Il - IRR 27%

1996Sterling Principals and SAI facilitate North Shore and LU merger
1997 SAI acquired by Perot Systems, Inc.

1998 Sterling and SAI Principals begin to jointly invest
1999 Sterling launches SAP Fund III - IRR 29%
2002 Sterling acquires full ownership of the New York Mets
2002 Sterling launches SAP Fund IV
2002 Sterling and SAI Principals form Sterling Stamos

I

CONFIDENTIAL

PPJÎ4CIPLE

C

S3MT00025944

SSMSAAOO25944

Origins of Sterling Stamos

Katz, Wflpon, and Stamos families jointly invest in hedge funds, pubhc equities, and private
equity
Form Sterling Stamos to diversify assets across hedge fund strategies in order to preserve
existing wealth

Replicate 40 years of investment success for Limited Partners through a diversified allocalion
of hedge fund managers

ANNUALIZED RETURN

STANDARD DEVIATION

SUARPE RATIO

41%

0.5%

34

1.9%

SS

2.0%

3-s

4.1%

4,0

Liquidity Fund
Securily Fund
Growth Fund

Acceleration Fund

9_3%

IS

Saurera Sterling Saeteas analysis.

1. Sbaeperaerolabasadontog9odukleee,ste.
t Armuatirad rasimle cairalated based on the pro (orma performante nao of msderlyng manager lees and gross of Seerung Seamos lees mod the actual
perfrannanre nel of uoderlytng manager lees arid estimated Seeriteg Stamm fees.

ci

CONFIDENTIAL

RIWCl2S I

S3MT00025945

SSMSAAOO25945

Investment Principles

Sterling Stamos utilizes its access to
economic, geopolitical, and financial
information to identify market discontinuities
and highlight investment opportunities

With this macro perspective, we hedge our
investments by diversifying across asset
classes and strategies. In this way, we
capture a significant portion of the upside
and minimize exposure to the downside

Matto Paspective
4

£çnonf ç

Geopolitical
-; Pinancal

[
-t

PORTFOLIO ALLOCATION

j
Micro Perspective
Asset cissperfoxmance
Sfratgy performance
t

Manar performance

ci

CONFIDENTIAL

SSMT00025946

SSMSAAOO25946

Sterling Stamos People

TiTLE

EXPERIENCE

EDUCATION

ÇhPt Ex&tzhve QEBcee

Snc&Aseútetes, ta
US &ntorDglTha4Jey
MdCsev&Compay

Ss,eif,,rd Untct&4 BA

BççzÀlt& Harmtj*

$tods Sdw4#

PoMoQraup

INVESTMENT

Tru,an Scholar

PROFESSIONAL
S, Slasao

'WralaPnber

OtdUniyersity DIM
Hecvard Urnvrrslty, fD

FleevaBd Uthcusity DeEst o Economic,
Saul B. Katz

President of Starling Equities
Cenerai Farther

End Wlpod

CKtrnInae15InfrZtRqLUtItt

Sterling Equities
New York Mete and Brooklyn Cyclones

Brooklyn College, US
CPA

Chaoan of the Board, NS-LO

Cex,eass

ror

rinBqmhs
Now '4xk

Wuveftily eThcMsan,BS

aroeAtyn Cydonet

etesisCe òsta

EòeW5 PpuretlM'Bo
Spire Stamis

David M Katz

ri a

CONFIDENTIAL

Chief Administhttive Officer
Cenerai Farther

StansosAssodates rat (SAO
Whitaker Corporation
AUanticRithÍield
Hughes Aircraft

McC1U Univerai

txteuUveVPotSMe1sosifftn
eretVethet

Sier1usqteis

folta tlieveestky, A

*thgWØe1d
NewY&, Mets

,cotea

BA

PEOPLE

Iii

6SMT00025947
SSMSAAOO25947

Sterling Stamos People

INVESTMENT
PROFESSIONAL

TITLE

EXPERIENCE

EDUCATION

Ch$tmq

ÇfOpinatin&Officer

SaSi1o&ialiiti

PisntOthUnWrsstt BA

Penner

$teic C,ebue

Qxfrfl Uervçr,ty MA
,e»aL eroversltyoflaporL MA

U ZAvgoouwtL Protecbton Agency

NewtmtTaks, Schniarr

Mr'q*isbo Stholv
Kevin

arceIona

Chief Financial Officer
Fariner

RK Consulting
Dreyfua Corporation

Seton Hall University. MS

Hofsa University, BBA
OEA

Elkn T I1finu

tei*orPolsoAdviot'

hal2 Partners

CuWnibetJrthststy, MA

Çaeth 6çÇo» fist

CthlsStstdo UroveftryR$

Wn;s4 ('cok & Oree,

Perinef

tnthspjrjrod oEZconeo*t

Mnrtll r4tck & Cc,
Asbok Chachra

Senior Portfdlio Manager
Fariner

McKinaey & Company

Osroegie Mellon University, BS

Morgeth Scaziley

Chase Securifiar
Kevin Okinwth

PrtGfltceMene&er

1tthntsi$tep)n&

$azsarCtaa 1Jmvert B9

tt1th4l4

ci 3ternA$tmnws

CONFIDENTIAL

PEOPLE 12

SSMT00025948

SSMSAAOO25948

SterUng Stamos People

INVESTMENT

TITLE

EXPERIENCE

EDUCATION

tawtesoeRslsebuns

IÇG ÑaMstset

VLAsAndrs.ùhSdtÓø1 e? Masethait,MBA

PROFESSIONAL

oqrft Wang

Manager
Portfolio Team
Manager

Cathy The

Merrill Lynch & Co.

NYU. Leonard Stem School of Business, BS

Goldman Sache fc Co.

The Wharton SchooL MBA

Arthur Andersen

Roidi Kurnar

I'rvetv Ecaib

Stedosue QepiteLMgoics tEL

HactamdCxetdua&e &hWJI ,tßuetaess

Mwrer

CalhgrîrwLfl

$çCenpairq
fletta AkLwes
ooz 4lleii sod HamIttm

Adosmratr$ism MW'
Mesacluiseets lnsfttcte ofledlaoIogyfrMS

Associate

Brilliantsoftware Solu&ns, ¡nc.
Alphasofl Services, Cc.
Icici Bank, Limited
Ernst & Ynun Privat, Limited

AligaDa

aWfözd

John Lee

Assodate

Associate

.klinsey&Company
Vise USA

Urveesi'of1(aiisaç US
Indian Institute of Technology, US
Xevier Institute of Management, MS
NYU. Leorsrd Stern School of Bus'mess, MBA

Harvard UnhvnthydA
Umrzscy oECi4bndg4 M5
Stanford University, BA

Charles Schwab
Gum.corn
Cithorigs Liti

SSorAnsI>'s

Mondi Lrck&

thnpn Qn&verelty SS
tdnmia UAs'vetstky, MS

uaA

ci

CONFIDENTIAL

.AMeison5theolofMsor9uiens, MS

PEOPLE Ils

SSMT00025949
SSMSAAOO2594B

Sterling Stamos Products

Seoiñty

Lereted.

Fund

Fund

Fand

to

S-10%

7

24%

Target Returns,

Volatility

t,

Capital Appredation

Capital Opportunity

Growth Acceleration
Fand
Fune

Legacy

Find

t'tate

1245%

Capital Preservation
liquidity

20t%

'V

.l0%

't

5-7%

-

{rrt

Ventare
Capital

Private

Real

to ai Cv
t

k

20+%

2'
b

N/A

Hurdle

5%

7%

10%

10%

ManagementFee

1%

1%

1%

1%

10%

10%

Performance Pee

10%

r

Investment
Horizon

10

tSYears

Oct-02

Launch
Status

r

S7\'ears

Oct-03

Apr-OS

Operi

Li:mitec!

"tt

,r

t

ti

Open

?-i0eurs

t'

JanOS

t

rtb»tr h Mt04

ci

CONFIDENTIAL

PRODUCT$ 14

.

SSMT00025950
SSMSAAOO2595O

Security Fund - Investment Obiective

Serve as an alternative ta fixed income investments by:

Achieving nioderate absolute returns

8-10 percent

Maintaining low volatility

2-4 percent

PRQoUCT - ECURi

CONFIDENTIAL

SSMT00025951

SSMSAAOO2595I

Security Fund - Allocation

SUB STRATEGY ALLOCATION

STRATEGY ALLOCATION

Options Arbitrage
Cash
5%

Cash
5%

US Multi
20%
Event
6%

Equity Hedged
20%

Merger Arbitrage
1%

Event Drfren
19%

US Credit
2%

Dislreraed Debt

Market Neutral
56%

la%

6%

Convertible Arbitrage
3%

Asset Backed Securities
7%

Loan Origination
13%

Fixed Income Arbitrage
2%
MBS Arbitrage
1%

Slatidical Arbitrage
7%

Capital Strnrdure
3%

Mulli Stralegy
10%

Equity Market Neutral
4%

Sourcra Sinning Liornas analysis.

ci

CONFIDENTIAL

PRCìtX3CTSS2CURITY IS

SSMT00025952

SSMSAAOO25952

Security Fund - Managers

SECURITY FUND MONTHLY ALLOCATION
STRATEGY

SUB-STRATEGY

Market Neutral

FUND IILANADER

Options Aib

Convert At

FUND STATUS

INCEPTION DATE

ClosedS93
A

ANNUALIZED RETURN I

13.5%

STANDARD DEVIATiON

SHARPS RAllO'

0.jl3%

2.5

e9$D

102%

'5a

1.0

.Ñ9a

19.9%

t%

3.6

Limited

Ç927

12.9%

3t%

4.1

Open

Asset Backed

Open

Casad

11203

16.0%

4%

2.6

NIA

O

OsE 6

A

Closed

11.7%

aOu

2.9

Closed

200Z

13.5%

I5%

10.5

ç

FlAt

4.0%

B

Loan Originaban

Open

Limited

OP1

12.2%

2 82e

2.6

A

Closed

20li2

7.6%

1.3

12.1%

Closed

.1.2'3e

32

MES Aeb

A.

Open

-ASti

10.6%

4.%

0.6

Sbttistiral Arb

A

Cosed

1003

18.6%

5,5%

2.0

Multi-S InI Irgy

A

Open

996

9.6%

25%

1.6

17.2%

6-6.3'

1.8

1.0%

2e25a

N/A

E
C

Cosed

D

Cosed

Equity M/N

A

Lirniled

Cap Strutti Arb

A

Closed

ZØÖ

2.9

16.1%
2957

17.5%

tI t'O

1.1

19.9%

7fl

2.0

Saurem SaerlingStatnss analysis
L Areruallead return tiere Iaeepioot oíusderlyias6 Eased martagas.

a Sharpe ratio ltbssed oru5% 'luk lire rats.

Ç-_j ttQrv'P
¿ itcr j.t5W

CONFIDENTIAL

FIO1JCTS-SECURIfl 117

SSMT00025953

SSMSAAOO25953

Security Fund - Managers

SECURITY FUND MONTHLY ALLOCArION
SEIARPE RATIO t

Event Drivel

Distressed

LUND STATUS

INCEVT1t311 DATE

¿I

Limited

393

10.2%

S2L

1.0

t894

123%

83%

1.7

Limited

SUB-STRATEGY

rUND MMAGER

Closed

STMTEGY

13589

14.8%

&#

.iMNUALIZED AEIU8N'

STM1DMD DEVIATION

15
52

D

Closed

1989

18.4%

3.S'

3.8

Closed

8.92

15.0%

99%

2.8

Closed

2Q12

19.6%

fr%

2.2

Closed

2Q04

9.6%

2.2%

3.9

Open

1998

8.3%

9.5%

1.0

A

Open

2Q08

i92%

95%

13

E

Closed

1983

16.4%

%

1.9

A

Limited

2t01

14.4%

8455t

23

E

Limited

2089

9.3%

D%

2.1

C

LIS Credit

Limited

S

Limited

2Q04

18.6%

41%

13

A

Limited

p094

4.1%

0.511e

WA

A

-Merger Arb
Event

ERI1IY Iled1ed

USMJU

Cash

Cssh

16.4%

SE$

Ssstm Stetting Stasnos antlysis.
Arsstoll2ad return otum lnmp8on efirndortythgtso'drnanagen

-

SIse oeotoiobasodoe.5%dskseeerate.

ci ¡ThPHflgthNNN

CONFIDENTIAL

PRODUCTS SECURITY 18

SSMT00025954

SSMSAAOO25954

Security Fund - Performance

SECURITY FUND MONTHLY PERFORMANCE

(Net of All Fees & Expenses)
Unaudilau nel Mums
21103

2004

January

0.70%

1. 29%

february

0.59%

0 97%

March

0.46%

0

April

1.19%

41%

May

1.28%

029%

June

0.52%

July

-0.44%

0a4%

August

0.46%

Qc9%

September

1.27%

0 S%

2002

October

071

1.23%

104%

0.75%

i 71%

December

-Qj9%

0.88%

L2716

110

15%

9.79%

0.48

b 46%

November

2005

a 51%

Soarrc SIcrli.og Stasnos analysis.

October200zniaokslhaoifidaelrnonthto the public.
eased on esllma

as

2/10/25.

FRODUCTS-8ECUR1fl 18

CONFIDENTIAL

SSMT00025955

SSMSAAOO25955

Security Fund - Terms and Conditions

Legal Structure:

Domestic 3(c)(7) Limited Partnership

Investor Eligibility:

Qualified Purchasers

Minimum Investment:

US$5,000,000

Management Fee:

1% per annum

Performance Fee:

5%

Hurdle Rate:

5%

High Water Mark:

Yes

Lock-up:

1-Year

Redemptions:

Quarterly

Notice Period:

90 days prior written norice

General Partner:

53F Associates CF, LIC

Management Company:

Sterling Stamos Capital Management, LP

PRODUCTS SCURfTY

CONFIDENTIAL

I

65MT00025956
SSMSAAOO25956

Growth Fund - Investment Objective

»

An alternative to equity investments

Achieve high absolute returns

Maintain moderate volatility

ci

CONFIDENTIAL

12-15 percent

5 7 percent

PRODUCTS -GROWtH 121

SSMT00025957

SSMSAAOO25957

Growth Fund Allocation

STRATEGY ALLOCATION

SUB STRATEGY ALLOCATION

Convertible Arbitm9e
6%

Cash
12%

Market Neutral
22%

n

Macro
5%

Canil
12%

US Global
5%

Global
5%

LiS Growth
8%

Equity Hedged
53%

US Garp
9%

Event Driven
8%

US Multi
12%

Loan Origination
5%

Slalistical Arbtrage
3%

Equity Mnrket Neutra(
4%

Capital Structure Arbitrage
4%

US Credit
8%
US W/Celatynt
7%

US Value
12%

Snsrce1 Sterling Snainss snslysis.

0

CONFIDENTIAL

pRcnoucmogo'rd 22

SSMT00025958

SSMSAAOO2595B

Growth Fund - Managers
GROWTH FUND ry1ONTHLYALLOCAIION
STRATEGY

SUBSTRATEGY

Market t4etltil

Convert ATh

FUND STATuS

FUND MANAGER

INCEPTION CATE

NINUALIZEO REIIJRN I

AClosed- 1492

19.9%

Loen Origination

Closed

11.7%

Statistical Arb

Closed

15.6%

Cap Sinact Azb

13'4

fl

2.9

2.0

17.5%

an

Closed

19.9%

74

Closed

Equity M/N

Event Orties

ETANOARD DEVIATION SNARPE RATIO 2

19.6%

68i

21.6%

NO47

1.6

193%

I fi

2.0

s

limited

A

L/S Credit

5997

Closed

9584

2.0

22

Event

Open

145 WI Catalyst

A

Closed

5899

19.4%

12.2%

13

5

Closed

2992

17.1%

799

15

Ç

EquIty hedged

A

Closed

1.999

fl%

LS

A

Closed

18913

233%

u%

2.7

113%

4%

1.5

18.6%

fl4i

33
1.5

US Value

1.4

18.7%

Closed

C

Closed

L/S Multi

A

Limited

US CARP

A

Closed

.999

26.0%

1fl

2

Open

19194

18.4%

44%

A

closed

'iiÙt

9.5%

.ti

Closed

1395

24.7%

±'I%

1.8

Closed

lOOt

22.1%

t%

2.1

21.6%

12.59

13

US Growth

2
C

US Global

A

-. -

Closed

POOL

._

1.993

...

¿s

Source: Sterling SIunnsou analysis.
L Aae.ss.lieod Leisem stase ieeupuees ofuedeclyisg (seid sesanger.

r4 ws./*,lww.
1Uli9 'X-i

2. Shauperudoisbcnedoes%ttskltreruu.

CONFIDENTIAL

pRCsCiüCTS-GRCWIH 122

SSMT00025959
SSMSAAOO25O59

Growth Fund

Managers

GROWTH FUND MONTHLY ALLOCATION
SUB-STRATEGY

ANNUALIZED RETURN I

Macro

Globo!

RrnD MAIIAGEB

FUND STAThS

INCEPTION DATE

A

arsod

2002

Open

24G2

il-4%

Gisti

Cash

STANCAnO EOEVIAIION SHARPE RATIO

ió4%

n

STRATEGY

United

Source; Seer51 sg Stances ssoaIyoIs.

.Asetuulioed return 'thee ÙXeptiO, or undertyht0 houd ovxngre

eroho1sbosedc5%riskEoceraIL

ci

CONFIDENTIAL

FCsDt3CTZGROWTH 124

SSMT00025960

SSMSAAOO2596O

Growth Fund - Performance

GROWTH FUND MONTHLY PERFORMANCE

(Net nl All Fees & Expenses)
Ynavilfiad net rn/aims

2003

2004

Junuary

132%

February

1.14%

March

0.56%

AprIl

0.18%

May

-0.48%

Jun e

0.97%

July

028%

August

0.45%

September

073%

October

0.59%

November

20B5

1.80%

December

086%

1.47%

VTO

Z5%

9.37%

0 44%

Sasrrc Sterling Seamos analysis.
1. October2003 marks the offidel laueith Io be pubIc.
Z Based os estimsa as et 2/10/2005.

PRODUCTSGROWTH 125

CONFIDENTIAL

S6MT00025961

SSMSAAOO2596I

Growth Fund - Terms and Conditions

Legal Structure:

Domestic 3(c)(7) Limited I'arthership

Investor Eligibility:

Qualified Purchasers

Minimum Investment:

US$5,000,000

Management Fee:

1% per annum

Pertormance Fee:

10%

Hurdle Rate:

7%

High Water Mark:

Yes

Look-up:

NA

Redemptions:

Semi-annual

Notice Period:

90 days prior written notice

Generai Partner:

SS? Associates GP, LLC

Management Company:

Sterling Stamos Capital Management, LP

FROOUCTS -GROWTh

CONFIDENTIAL

S6MT00025962
SSMSAAOO25962

Acceleration Fund - Investment Objective

As an alternative to long-only equity investments, the Acceleration Fund seeks to achieve superior
longlerm returns with moderate lo high volatility:

Superior long-term returns
Moderate to high volatility

CONFIDENTIAL

7-10%

Long-term investment horizon

ci

15% +

3 5 years

PRODUCTS -

CURI'ÎY 127

SSMT00025963

S3MSAA0025963

Acceleration Fund - Allocation

STRATEGY ALLOCATION

SUB STRATEGY ALLOCATION

Cash
5%

Cash

5%

Distressed Debt
16%

L/S Growth
16%

Event Driven
16%

Lis Value
L/S Multi

47%

16%

Equity
Hedged
79%

Souz-c

Sterling Sneezes analysis.

PRODUCtS SECURlV 125

CONFIDENTIAL

SSMT00025964
SSMSAAOO25O64

Accelerallon Fund - Managers

ACCELERATION FUND MONTHLY ALLOCATION
SUB-STRATEGY

FUND MANAGER

FUND STATUS

INCEPTION GATE

leed Driven

Dtstronsrd

4

Limited

2Q02

Equity Hedged

LIS Veinte

A

Closed

STRATEGY

Closed

ANNUALIZED RETURN I

STANDARD DEVIAI1ON

SHARPS RATIO

25.2%

2.6

29.1%

urn

2.1

28.8%

U.A%s

2.1

N/A

02J.

7-6%

N/A

N/A

C

Cosed

D

Limited

l59

205%

134%

1.1

E

Closed

2004

N/A

NtA

N/A

1002

22.9%

PrIt

is

Closed

LIS Growth

4

Closed

Cash

4

Limitad

LISMuIti

Cash

21%

4.1%

2.0

2.1

22.1%

AS%

N/A

Source: Sterling Sbtnsssannslysis.
Arusetaliurd return stow Incepists nf enderlyhig fend avantager.
Sharpe rado is based on 5% risk erre rate.

cit

CONFIDENTIAL

PROOUCTS2CURiTY I2

.

SSMT00025965

SSMSAAOO25965

Accifieration Fund - Pro Forma Performance

ACCELERATION FUMO MONTHLY PERFORMANCE1

(Net of All Fees & Expenses)
Unaud//adast re/urns
199g

2000

2001

202%

065%

222%

0.73%

555%.

44%

2.07%

-1 99%

-2.18%

t %3%

"005%

0.84%

2a09%

1997

1998

January
February
March

031%

4.40%

April

079%

2.81%

May

970%

:1.40%

June

2004

1.64%

238%

2.90%

-0.94%

-Q Q8°4

1.93%

3.25%

238%

0.81%

372%

-0.17%

5439%

0.26%

a4

3.03%

6t%

133%

ts

3.7%

I75%

054%

$.t51S

0.68%

2005

212%

-221%

4 05%

4.37%

270%

-2.07%

2

-035%

752%

July
August

2003

2002

2$4%

0.65%

Iflt

-2.72%

140%

-0.50%

-7.40%

1 1%

2.84%

-Q Ù%

0.61%

2 1%

0.19%

10-44%

1.99%

024%

0.27%

-44Ma

-0.48%

244%

2.34%

I 60%

-0.09%

014%

1.08%

4.211

1.04%

136%

0.88%

November

- 320%

4.65%

488%

-0.92%

182%

3.44%

S*%

2.87%

December

060%

7.87%

ú88%

3.50%

428%

156%

140%

1.82%

6371%

12.63%

IS 42%

13.66%

21S7%

9.97%

56 41%

17.54%

September

Oltober

ro

0 16%

Soasen S±rs-üssg Slairwnastatynss.

L Monthly perfatmanmes gonerated santiag pro forma data basad on the endaisted pualfolio allorauen etrcledtragcanh altoctien. Pro fntamaathly
pirdoemanon tu nat of ail undeely4ngmoeoager tans and gross of rit Sterling Seaman demand espumes.

October 2004 mnrko rho ottidal offering to die pubien Perfounanor after October 2004 is the actual pertornoanor net of all usiderlying manager feos
and estimated Seeding Slamotfees and espumes.
Based mi esilniate as at 2)10120tu.

FRO0iJCT2-SECüRl1Y 2-C

CONFIDENTIAL

3SMT00025966

SSMSAAOO25966

Acceleration Fund - Terms and Conditions

Legal Structure

Investor Eligibility

US $1,000,000

Management Fee

1% per annum

Performance Fee

10%

Hurdle Rate

8%

High Water Mark

Yes

Louk-up

3 Years

Redemptions

Rolling3Years

Notice Period

180 days prior written notice

General Partner

53F Associates GP, LLC

Management Company

CONFIDENTIAL

Qualified Purchasers

minimum Investment

ci

Domestic 3(c)(?) Limited Partnership

Sterling Stamos Capital Management, LP.

PROOtJCTS - GROWTH 131

SSMT00025967

SSMSAAOO25967

Risk Management Overview

ANALYSIS

RISK TOOLS

Mean-Variance optimization model by strategy and Fund Manager utilizing
historical monthly performance data

Portfolio Optimization
Time Series Analysis

Covariance/correlation analysis by Fund Manager-to-Fund Manager, tostrategy, arid to-the-market
Distribution Curve mapping (i.e., Skewness and Kurtosis)
Drawdown attribution and downside deviation/recovery analysis

Portiolio Value-at-Risk

Allocation range limits set by strategy and Fund Manager given a 2-3
standard deviation adverse move (assuming normai market conditions)
Probability of loss determined through historical simulation as well as
parametric methods such as Monte Carlo simulation

Stress/Scenario Testing

Wurst cese scenario analysis developed through straining the covariance
matrix and analysis of histori ca] returns and factor observations outliers
Qualitative case studies of high volatility periods and adverse moves in key
asset classes (e.g., Russian default, Worldcom) to build "what if" scenario
testing capabilities

-

Style Analysis

çjí

CONFIDENTIAL

Style drift and asset allocation analysis to quantify Fund Manager's
performance attribution to the stated strategy and asset dass
Factor sensitivities and factor tilt analysis to determine underlying drivers of
a specific fund manager's performance at different points

FROCEE% 32

S6MT00025968
SSMSAAQO259GB

Sterling Stamos Investment Process

Distinctive forward-looking approach - informed by Sterling Stanios' globi
macroeconomic perspeclive - to allocate investments across allernalive
investment stralegies

Unique and extensive network of strategic relationships to source and gain
capacity with best-in-glass hedge fund managers

Thorough due diligence and comprehensive risk analysis in order to achieve
superior portfolio construction and results

Transparency from underlying fund managers for enhanced monitoring of
investnients - underlying position, performance, and risk metrics are
communicated on a weekly and/or monthly basis

PROCESS

CONFIDENTiAL

SSM100025969
SSIV1SAAOO259B9

Our Investment Process

\)
/'
!Ongothg
(Monhtodcia

4

Step 1: Develop Distinctive Macroecononiic Perspective

'N\
Style

"\,_i

on Both US and Global Markets
Track and analyze domestic and international economic

¡t'

£L_,/
'

?ortfulsoflhtsk
Management

indicators to develop our perspective on future trends in
global financial markets

Leverage distinctive relationships throughout the global
I

'--'-j

\

Manasser

Sourcing

economic intellectual comansanity
J

Complement marro- and microeconomic analysis with
demographic, social, and politirat factors

Determine potential mvestment opportonities and risk
factors across;

- Asset classes

- Geographies

IN VES TMEN

CONFIDENTIAL

SSMT00025970
SSMSAAOO25STO

Our Investment Process cont'd

Step 2: Translate IViacroeconornic Perspective to

Macroeconomic Perspective

Rest PositiOn our Portfolio
e

/
longoing

strategies based upon:
- Identified macroeconomic opportunity set

PortfoUofiíaIc

Monitoring

Management

//

/__

'\
'L--'A\
'i

\.I1xecution

CONFIDENTIAL

n'r >a
tD

C

7/

/,/

flue
DiIigenct

----._:\

a 9r

-. Risk austria

Manng

Sourdng j
'K
lnvebthent

\

Çj

Deteamine portfolio exposure Io specific hedge fund

_--

_,'

'I

t,' Er

SSMT00025971

SSMSAAOO2597I

Our Investment Process coutil

Macroeconomic Perspectivo

\/Y
y

_ /

i

¡Ongoing

Style
Analysis

\)

s Leverage relationships with Investment Banks, Third-Party
Marketers, Consultants, and Research Firms

K/ /t_

i (I%CSIflI eut

- Utilize inâustay-specific databases, newspapers, magazines,

j/

\peeutlnn ¿.,/

investment stmtegies

Obtain capacity with exceptional closed managers

Managemen'

-----4

Source beet-in-class hedge fund manageas within targeted

Leverage Sterlingstamor' extensive network of relationships

Portfolio/Risk

Monitoring j
\

/r

//

Step 3: Source Best-in-Class Hedge Fund Managers

and other media

Due

Dhligence/
----__&\

"j-----

cM.

CONFIDENTIAL

-'

PROCESS

I

SSMT00025972

SSMSAAOO25972

Our Investment Process cont'd

.- ---------------

\\

Macroeconomic Perspective
-4

j

\ ,/"
¡Ongoin
r-ionitoring

\

//

/7

5-lyle

._.

Analysis

Step 4. Conduct Due Diligence on Selected Fund Managers

\4

/

' Contact fund manager to obtain detailed infonnation on
investment strategy, monthly returns, performance attribution,

/ji
/

--

and exposure analysis prior to an initial meeting

Conduct thorough interviews

P(srtfolioîRi,ilc

\

\xecsation

asid

on-site visita to gain

complete understanding oft

Managrnent

J

M

\

-Ç'
mue bnent

N

'N

- Investment strategy

Soercing J

/

- Portfolio composition and management

/

-

K

k management process
Ope rationsJCompliance

- Orgnnizatlon

Conduct quantitative analyses to evaluate key risk factors
associated with the hand, quality of returns, liquidity, and fit
with existing portfolio
4

DilIgently analyze correlations between prospective fund
manager and existing fund managers
Conduct detailed background and reference checks

1NVESTMENT PROCESS 127

CONFIDENTIAL

SSMT00025973

S5MSAA0025973

Our Investment Process cont'd

Step 5-6: thvestment Execution and Monitoring

Macroeconomic Perspective
___1

//
C.

StyLe

Negotiate terms and capacity

Analysis
Monitor portinlio returns, volatility, correlations and exposure

¿I
Portfolio/Risk
M4nagement

Conduct stress-test scenario analyses

Monitor each asset class and strategy associated with
Manager

underlying fund managers to determine market opportonities

Sourcing I

and risk

1%

'1

flue

\

Duliencc_/'

Facilitate monthly/quarterly conference calla

with each

underlying fund manager to review market conditions and
fund performance

s Develop a position-level perspective on the fund through
analysis of transparency reports and fund manager discussions

s Udlise information collected from fund investments and our

extensive proprietary network of relationships to develop a
comprehensive macroeconomic perspective

çIr

CONFIDENTIAL

SSMT00025974

SSMSAAOO25974

Our hvestnient Process cont'd

Steps 1-6: Portfolio and Risk Management
Monitor key risk metri

at fund and portfolio levels

Maintain portfolio exposure limita by:

- Strategy
- Fund manager

s?jan4r

kt

- Geognphy
Compare monthly returns from fund managers with the
performance of respective market/asset class
Rebalance portfolio in line with changes in Sterling SIsmos
macroeconomic perspective

e Review portfolio hedgftsg strategies se deemed appropriate

ci

CONFIDENTIAL

lNVESTMEiTPiWCESS

SSMT00025975

SS M SAM 025975

Infrastructure

rvats
t.)cuT3cfle

cstiqrcupj
private bank

)Wt1s.BQtik £kSifl HP

Q4I/fty.n..gveI:Iythig We Po

Cons ailing

.pv,q 4ot[NJS TRAT/aN SERViCES

cil stgrAnIhinio

CONFIDENTIAL

)

JFRÀ&TRUCTUR2 4:

SSMT00025976

SSMSA.A0025976

T nf rastru chi re

2

,b

Commercial bank and investment counlerparty

The Citrou Pr Wate Bank
Private banking

t & Young
Auditing and tax services

"Big 4" accounting firm

Shfflte Roth & Zab& LIP
Legal counsel

Premier global law firm for alternativo investments

FIK Conndthig, LIC
Accounting and fund administration

Administering over $100 billion in assois

Pragmatìxlff3M
Consulting and technology services company
IBM business partner since 1992

irpRÀsTRucrurE 41

CONFIDENTIAL

SSMT00025977

SSMSAAOO25977

Selected Biographies

Mr. Peter S. Stanuos is the ChiefExecurive Oflicerof the Mansgemenr Company and the managingmemberofthe Genel

Partner, and is ultimately responsible For the investment decisions of Sterling Stamos. Mr. Sismos was the Chief Executive
Officer ofStamos Associates, Inc. (SAI), s healthcare and cechnologr company that was acquired by PerotSystenss, Inc., where
he seeded che rnergçr and acquisitions practice. In addition, lie was the Senior Vice President of Chennelpoint, Inc.
Prior io founding SAI, Mr. Stamoe was the Chief of Staff and Chief Economist for U.S. Senator Bill Bradley. He was also a
Principal with Boos Allers & Hamilton, a Senior Manageaient Consultant with Mcicinsey & Company, and the Managing Partner
of the Doblin Group.

In addition to his private and public sector work, Mr. Stamos taughreconomics st Hacverd University - where he received the
Allen Young Awed for Teaching Excellence - end st Stanford University, where he was an occesionsi guest lecturer at the
Graduate School ofBusiness. Mc. Stamos serves on caveraI bosade and sdvisoey boards, including the Board of Stanford
Univerairy Hospitals end Clinics, where he ice member of she Finance end Audit Committees and is Chairman of the Investment
Committee.
Mr. Sismos earned e BA in economics snd political science Frost Stanford University, where he was s Tcurnan Scholar, received
the StedingAwsrd, and graduated Phi Beta Kappa with Honori and Distinction. Mr. Sismos received aJD from Harvard Law
School with Honors ends doctorate from Oxford University, where he was s Rhodes Scholar.
Mr. Christopher Sternes is the ChitfOperacing Officer ofSterling Sismos and is responsible for all orgsnizstionsl and
operational aspects of the Firm. Mr. Sismos spent tise last ten years in Asia, studying and working in Chins and Japan, and most
recently working For Scacchi & Ssotchi doing branding, developing new business, and consultingon strategic planning in Taiwan.

Mr. Ssaersos earned aBA iii Philosophy from StanFord University where he was awarded a Stanford Golden Grant and e Newton
Taturn scholarahip (offeced to Rhodes Scholarship finalists) sowards an leLA in Politics, Philosophy, and Economics from Oxford
University, graduating with honors. After attaining fluency in Mandarin at tht Cultural University of Beijing, Mr. Scarnos cece&ed
a Mombusho scholarship towards an MA in East Asian International Relations from the International University ofjapan,
gtedueting valedictorian with the Dean's Citation and with Disticction.

POSTSCRIPT

CONFIDENTIAL

.

I

SSMT0002597S

SSMSAAOO2597B

Selected Biographies

Mr. Kevin M. Barcelona is the ChiefFinancial Officer at Sterling Seamos. Mr. Barcelona is cesponsible for Rind operations, Enance,
accounting, and compliance. Prior to joining Sterling Stanos, Mr. Barcelona was a Partner with Roehatein ¡Casa and RK Consulting,
where he provided accounting, tax, and consulting aervices to inveatrnent partnerships including Rind of Rinds, private equity Rinds,

and offshore funds.

-

Mr. Barcelona eeceived an MS in taxatioti from Scion Hall University and a BBA from Hofstra University. He is a Certified Public
Accountant (CPA) arad is memberof the NewjeneySoeiety of CPA5
SCPA) and the American Instituta of CPAs (AtCPA).
Mrs. Ellen Horing k the SersiorPortfelio Advisor ofSterlingStamos. She ia elan a principal of ETTI Corp/Highgate Partners, a

Rind of funda which invests in portfolio menagen that employverious investment strategies. Mrs. Horing served as Vice President
and as Director of Research for Gabelli & Co., Inc., a money management and brokerage fluai. She also served as an Equity
Research Analyst at Waist, Pack & Creer, L.L.C. and was an EqaityBloek Trader at Mactill Lynch & Co., Inc.
Mrs. Horing eamed a BA in Economies from the University of Colorado and received an l'e3A in Finance and Accounting from
Columbia Business School.
Mr. Asliok Cliashra is the Senior Portfolio Manager ofsserlingScamos and is responsible for Portfolio Manager sourcing, due
diligence, risk management, and on-going portfolio monitoring. Prior to joioingSterling Sesmo,, he was a Senior Business Analyse
with MeKinsey & Company, focusing on assignments in the Financial Services and Heslthesre indusrey sectors.

Mr. Chaehrs earned aBS in Business Adminiaeraeion with University Honors from Carnegie Mellon University.
Mr. Kevin Okimoto is the Front Office lvknagerof SterlingStarnos, responsible fordeveloping and msnagingshe farm's
relationships with all ofita investors. Before joining Sterling Seamos, he was a financial professional te Robertson Stephens, an
investment bank, where his responsibiliries included facilitating stock distributions on behalf ofvenosre cspicsl Rinds to general and

limieed partners. Prior to joining Robertson Stephens, Mr. Okimnoto Wast Business Analyst and Mansger aeIvista, an internet
healthesce company.
-

Mr. Okimoto earned e BS in M keaing from Ssnte Clara Unversity and holds a General Securities Registered Representative
license.

ri
PL-A

CONFIDENTIAL

imW

ai4hf:lafly

POSTSCRiPT

SSMT00025979

SSMSAAOO25979

Estimated Net Performance

STERLING STAMOS YEAR-TO-DATE 2005 NET PERFORMANCE RESULTS'
Unuuditr.4 Net .Rp,hirno

Feb

2000

Liquidity Fund

0,23%

Mur

Ql

M.1,

lun

02

¿tI

AlIO

03

00v

$ 7%

Od

040v

Ono

04

fl

Inondino

'MOIS

Apr

ltd-04

40055

'00%

Uquidily iQIluhorni rund

0,30%

«15%

340%

Jan-00

Friends A Fu In uy Fund

0,30%

470%

6.74%

Oct-02

(4W

Scanty Fund

0.40%

«48%

040%

Oct.00

073%

Ocuiwicy l001nhurnI Fund

0,43%

Mm

Ont-04

I$*W

i_nvnrnd Ciruhnin) Fund

0.37%

0_OFt.

037%

Jul-03

17-44%.

Growth Fund

0.14%

0_44%

0.44%

Oct-02

dl%

Growth (Oclnhnin) Fund

0,51%

804,%

Jan-04

fl4°8

Accoinralion Found

0.51%

8*045

Oct-04

*5455

Auu.lnrotlnn i0010innunI Fund

0.04%

004%

0.0-04

F:

1-445%.

-

n

çba.c, indiuiâci in nil rpvfinnaoxpnranta4nt wi/i ou dçnciin cn/bo da/e jioun./nrec; Stoni
* Pcfanona ruait; w, basd nc una dbtdpnnTunbia, cr4ioaio;pou&d by confond manacn adorn :44ta
un/bou ./5o/uen p. lnnnana.
¿ con Y r4ndctepnftnndtfl it hacndonatcwo/'nnoncrixnbng 2005. Pa )no7nvcuinca ir not
e/4n000/auv n f llundnfris4 managa and Scwii«o S'

¡

CONFIDENTIAL

SSMT00025980

SSMSAIAOO2598O

Estimated Net Perionnartce

STERLING STAMOS -. YEAR-TO--DATE 2004 NET PERFORMANCE RESULTS*
LThaHufite.4 Nei. Ret,4 Tn o'

Jun

02

404

0cl

Fnb

Mur

Apr

01

Muy

Liquidity Fund

04

0,20%

0,30%'

4ot%

0.20%

3.05%

3.30%'

l//

0.60%

0,00%

4 64%

0.47%

1.54%

0.24%-

3 135e

0.46%

1.71%

1,27%

AOO

sep'

03

Nu,

flD-04

Ont

0,10%

Jun

Liquidity 000,5,003 Fund
Founds & Futn,]y Fimd

snoorityFund

0.00%

0.07%

051%

tISiS

0.60%

-0,10%

030%

SM%

0.31%

0.41%

-0.29%

072%

0045e

0,24%

0,40%

0.07%

139"

649%

Oct02

4ß%

FI%

Oct.02

0710%

1.29%

0,07%

0.3 %

tFS%

0.54%

1.20%

0.03%

1'

tfl1

00904

't010414

Luverud {0(Ouhnret Fund

1.53%

114%

0,35%

,', 2i0$5

0,00%

-1.14%

120%

0 tdSu,

0.04%

0.32%

0,61%

1 16%

0.02%

2,41%

0.75%

dA5t

ItOSlu

Jul-03

'5G 40%

Grnwth Fund

1,32%

1,14%

0.00%

3114%

0.10%

-0.40%

0.07%

0471*

0,20%

0,45%

0.73%

1*7%

0.56%

1.00%

0,41%

1 *6'

'530%

Oui.O'i

419%

Oruwlii 0000nhureI Fund

0.00%

0.00%

0,32%

037%

0,64%

.040%

111%

'0115e

-0.10%

0.26%

044%

'477%

0,75%

P1.72%

0.00%

941%

103%

Jun-04

714%

0.00%

2.07%

1.02%-

434

$ 67%

Oct.04

6

1.73%

'51055e

07%

Dec'04

11 11

Oncurity iOIFshnrnI Fund

Aeenln,uoun Fund

Anneltrudun 000nhnrc3 Fund

-

-.

34194

buid un unau&dpnAmiaa athnatnp&dd &lrue/nnnd 'ndun4'cr undue? uubjed cc cAkngc Iudinlduu/i :urpe'uemo,eupunentan will n.0 4444n4 un ii, ¿ole fìntcctene'4 R:irnuted
fl'oneuunef03cr! de, net ¿ all undoeà manqgerandStn*n SJu,rc:fee and uucexs. Ywrwdatepeerarco ir bead nc ar/nut pafarn unir 4e4n 2004, PaltpafnnnanornutãdraJoon nfftharpeilonoara

* P,o?o,,n,n,, 'nbc

[1

CONFIDENTIAL

3SMT00025981

SSMSAAOO2598I

Sterling Stamos Fund Performance
Consistent and Stable Returns

Capital Preservation
Liquidily
Fund i

Capital Appreciation

Security
Fund2

Levered

Annualized Return

8Ji%

at'

Standard Deviation

L8%

2.0%

3.2

3.3

Sharpe Ratio

% Positive Months

J

Growth
Fund4

Acceleration
Fund .0

9.6%

90%

% Positive Quarters

Fund3

100%

Performance since inception through Februauy 2005. Current as of Marth 9,2005.

i.

Liquidity Fund Isunthed in July 2004.
Security Fund launched in October2002.
Levered Fund laurthed in July 2003.
Growth Fund launched in October2003.
Acoeleusdon Fund launched In Oclober2004.
Assumes dujo free rate of 2.25%

s

CONFIDENTIAL

3SMT00025982

SSMSAAOO25982

fl
-

Sterling S (amos Investment Universe

Capital Preservation Capital Appreciation
Liquidity
Fund

Target Returns

8-10%

_

Volatility

24%

i

Hurdle

Security
Fund

:

Management Fee
Performance Fee

Investment
Horizon

1%

i

»

5%

-m

Launch

Oct-02

Status

Ope:u

Capital Opportunity

Levered
Fund

Growth
Fund

Acceleration
Fund

Estate

L-

12-15%

--

1546%

25%

N/A

N/A

1%

J'
'

10%

lii'c

Private
Equity

Real

Venture
Capita]

y0

1%

:1%

10%

'

.10%

3Yens 3-'r- 5-7 Years :4

t

Oct-03
Clisad

'

N/A

Skith b Lk d?&ñ'ád Z

CONFIDENTIAL

S6MT00025983
SSMSAAOO259B3

j

SECURITY FUND
OVERVIEW

February 2005
Confidential Presentation

cl
CONFIDENTIAL

3SMT00025984
SSMSAAOO25O84

Contents

Investment Objéctive

Portfolio Review

Allocation
Performance

Summary Statistics
Terms and Partners

Market Neutral Managers
Event Driven Managers
e

Equity fledged Managers

a

Global Managers

a

Cash Managers

This document does not constitute an offer to sell, or a solicitation of an offer to buy the limited parbership interests described
herein. No such offer or solicitation will be made prior to the delivery of a definitive offering memorandum and other materiali
relating to the matters herein. Before making an investment decision with respect to the parinership, potential investors are
advised to read carefully the offering memorandum, the limited parinership agreement and the related subscription documents,
and to consult with their tax, legal, and financial advisors.

This document contains a preliminary summary of the purpose and principal business terms of the parthership; this summary
does not purport to be complete and is qualified in its entirety by reference to the more detailed discussion contained in the
private offering memorandum and the actual text of the limited parinership agreement. The General Fariner has the ability in
its sole discretion to change the strategy described herein.
This document is being provided to you on a confidential basis solely to assist you in deciding shether or not to proceed with a
further investigation of an investment in Sterling Stamos. Accordingly, this document may not be reproduced in whole or in
part, and may not be delivered to any person without prior written consent of Sterling Stamos, 575 Fifth Avenue - 40 EL, New
York, NY 10017, [phone].

CONFIDENTIAL

SS MT00025985

S5MSAA0025985

kivestment Objective

As an alternative to fixed income, the Security Fund is a multi-manager
portfolio of hedue funds that seeks to achieve the following objectives:

Moderate absolute returns

8 - 10%

Low volatility

2-4 %

cl
CONFIDENTIAL

NVESTMENT OBJECTVE 2

SSMT00025986

SSMSAAOO259B6

Security Fund - Portfolio Review

PUlID MANA6ER

FUND STATUS i

INCEPTION DATE

ANNUAUZED
RETURN 2

STANDARD

SHARPE
RATIO

STRATEBY

SUBSTRATEGY

Market Neuiral

Options Ab

A

Closed

19Q3

13.5%

30%

..8

Convert Arb

A

Open

1988

10.2%

5SSt.

1.0

B

Closed

19.9%

4%

3.6

.4

Limited

1997

12.9%

1S%

4.1

D

Open

OOI

16.0%

43%

2.6

C

Open

04

4.0%

0.8%

N/A

A

Closed

1996

11.7%

2 a%

2.9

B

Closed

2002

13.5%

0.8%

10.5

t

Limited

200.2

12,2%

2 a%

2.6

A

Closed

2001

7.6%

24l

1.3

B

Closed

199g

12.1%

12%

3.2

MES Aib

A

Open

1998

10.6%

9210

0.6

Statistical Arb

A

Closed

2001

18.6%

68%

2.0

Multi-Simtegy

A

Open

1993

9.6°A

2$%

1.6

Open

j94

17.2%

1Ç

1.8

1.0%

5.7%

N/A

Asset Backed

Loan Origination

FI Arb

DEVIATION

C

Closed

20

D

Closed

1990

16.1%

S%

2.9

EquityM/N

A

Limited

1997

17.5%

1h2%

1.1

Cap Sftuct Arb

A

Closed

2Q92

19.9%

7,414.

2.0

Source: Sterling Stansos analysis.

-

Fund status may be different from one page summaries dus to the updated information.

Annualized return since inception of underlying fund manager.

-

Sharpe restio is based on 5% risk free rate.

ç-i
CONFIDENTIAL

PORTFOUO REVIEW 3

S3MT00025987

SSMSAAOC25987

I, Security Fund

STRATEGY

SUB-STRATEGY

Eveni Driven

- Portfolio Review
FUND MANAGER

FUND STATUS I INCEPTION DATE

Distressed

Limited

ANNUALIZED
RETURN

STANDARD

SHARFE

DEVIATION

RATIO Z

10.2%

53%

LO

B

199g

12.5%

4rxs

1.7

C

Limited

1999

14.8%

6%

1.5

O

Limited

2004

16.4%

22%

5.2

E

Closed

i

18.4%

3.5%

3.8

B

Closed

I 992

15.0%

34%

2.8

A

Closed

2002

19.6%

66%

2.2

Closed

L/S Credit

Closed

20C

9.6°,<

12%

3.9

8.3%

35%

1.0

Merger Arb

3995

A

Open

2O0

19.3%

fl%

1.5

O

Closed

198&

16.4%

39%

1.9

A

Limited

2002

14.4%

4o%

2.3

B

Limited

2003

93°,<

2%

2.1

C

Limited

2004

18.6%

41%

3.3

A

Limited

2004

4.1%

0.5%

N/A

N/A

Cash

Open

Event

Equily Hedged

A

N/A.

1.4%

01%

N/A

L/SMutti

Cash

Source: Sterling Stamos analysis.
Fund statut may be different from one page summaries due te the updated information.
Asmualised return since inception of underlying fund manager.
Sharpe ratio is based on 5% risk free rate.

PORTFOLKJ REVIEW

CONFIDENTIAL

SSMT00025988
SSMSAAOO25SB8

Security Fund

- Allocation

STRATEGY ALLOCATION

Cash
5%

Equity Hedged
20%

Event Driven
19%

Market Neutral
56%

SUB STRATEGY ALLOCATWN

Options Arbitrage
6%

Cash
5%

Convertible Arbitrage

L/S Multi
20%

Asset Backed Securies

Event

7%

6%

Merger Arbitrage

Loan Origination

-

-\

1%

LIS Credit
2%

1%

-

10%

Equity Market Neutral
4%

Fixed Income Arbitrage
2%

MSS Arbitrage

Distressed Debt

Capital Structure
3%

13%

.

-7

7/

7'

Statisfical Arbitrage
7%

Multi Strategy
10%

Source: Sterling Stan,os analysis.

a
CONFIDENTIAL

ALLOCATION I

SSMT00025989

SSMSAAOO25989

Security Fund

Performance

MONTHLY PERFORMANCE SINCE INCEPTION

(Net of All Fees & Expenses)
Unaudiloilaei,vlurns

2003

2004

2005

January

0.70%

1 29%

0.48%2

February

0.59%

0.97%

March

0.46%

031%

April

1.19%

0.41%

May

1.28%

.029%

June

0.52%

0.72%

July

-0.44%

024%

August

0.46%

0,4%

September

1.77%

0.63%

2002

October

0.71%'

1.23%

0.46%

November

104%

0.75%

1 71%

December

0i9%

0.88%

L27%

YTD

1.56%

9. 79%

8,51%

0.48%

Source: Sterling Stamos analysis.
October 2002 marks the ofuidal lauztch to the public.
Based ort estimate as of 2/10t2005.

PERFORMANCE

CONFIDENTIAL

.

18

SSMT00025990

SSMSAAOO259SO

Summary Statistics

SUMMARY STATISTICS

Fund Inception:

October 20021

Firm Assets Under Management:

$1,217 MM

Fund Assets Under Management

$358 MIA

Average Annualized Return:

5.7%

Standard Deviation:

1.9%

Sharpe Ratio:

352

Number of Managers:

34

Number of Positive Months:

25

Number of Negative Months:

3

Source: Sierhng Slasnos analysis.
October 2002 marks the officiai laun& to the public.
Sherpa ratio is based on 2.25% risk free rate.

SUMMARY STATS1ICS 7

CONFIDENTIAL

SSMT00025991

SSMSAAOC2599I

Terms and Partners

TERMS

Legal Structure

Domestic 3(c)(7) Limited Parthership

Investor Eligibility

Qualified Purchasers

Minimum Investment

US $5,000,000

Management Fee

1% per annum

Pertormance Fee

5%

Hurdle Rate

5%

High Water Mark

Yes

Lack-up

1-Year

Redemptions

Quarterly

Notice Period

90 days prior written notice

General Partner

SSP Associates GP, LLC

Management Company

Sterling Stamos Capital Management, LP

PARTNERS

Legal Counsel

Schulte Roth & Zabel LLP

Fund Administrator

RK Consulting, LLC

Auditor

Ernst & Young LLP

TERMS AND PARTNERS S

CONFIDENTIAL

SSMT00025992

SSMSAAOO25992

Options Arbitrage Manager A

The Manager engages primarily in the practice of options arbtrage with e focus
on LEAPS. The Manager executes numerous options strategies including
hedged direcliDnal strategies, such as bull spreads and bear spreads and long
volatility strategies Including staddles and strangles.

The Managing Director vas torrnerlythe Managing and General Partner of
Ariel Captai fromlgeg through 1001, Prior to that he served as Managing
Partner of Gotham Captai, an investment parinership from 1985 to 1988. The
Managing Dìrectorwaa associated with Halcyon Inveatnentafrom 1982 to
1985, and villa the law firm of Milbank Tweed, Hadley & Mcaoyfrom 1979 to
1982,

Assets Under Management
Fund Status
Minimum Investment
Fees

$1 Billion
Closed
$500,000

Lockup
High Waler Mark
Redemption Frequency

l,5%+0%

Redemlon Notice Period
'u

No ne

No incentive Fee
Annual Dec 31
45 Days

4'O

E

Sep

Øfl

Nov

I4

1181%

058%

50514

085%

000%

*1% -a4

*4114

827%
900%

351%

911%

032%

901%

OOlto

11 07%

04014

036%

110%

110%

80%

140% O%

140%

110%

066%

185810

020%

nO00

040%

050%

2,20%

250%

066%

050%

060%

110%

100%

&sess

0140%

00%

I 100,

e06%

-1,40%

200%

&'u4

160%

Q1%

080%

130%

60%

¶8000

106%

g 80W

250%

040%

180%

040%

170%

flOtt

70%

00494

216%

S-0394

leo's

edatl

100%

0*0'uA

oea','

120%

120%

00%

060%

126%

220%

100%

076%

550%

1209%
1332%
1408%
1565%
1742%
1640%
1639%

2,2015

'000%

160%

Z30%

60%

0110%

2 26%

9-60105

110%

010%

0%%

110%

2014

a4aso

200%

Q40'0

60%

190%

046%

170%

020%

010%

030%

Jan

)

Mar

Apr

May

00%

%5a5

008%

Öct'%

073%

-00s%

%74'S

253%

PQ%

alet,

*10%

080%

100%

2,50%

419a1

130%

9CC)

2,40%

ht',t

199

70%

19$
1997
1906
igOS

10%
2,00%

00

eat,

0ta04

14

60%

1993

Year
2C(3

Jut

Juin
ladS,

004%

093%

17314

162%

220%

0i70%

180%

020%

230%

A$5*

30%

270%

1P%

270%

115%

0001,4

YTD

05000

14 17%
14 10%

DISTREOUI1ON OF MONTHLY RORN6

GROWTH OF A UNIT FROM INCEPI1ON
m.a

70

no.55

e

'woo
00

Ross

42

Roes 1

me
esco
Cr60
RS 05

$0.50

R-!
OK-92

0K-a'

Den-sn

en-ne

DR,AWOOWN GRH

OK-Os

Don-52

Dews,

'4 41es .35e-2 .uee-1 'lles

cIsl

lles

29e R

cl
CONFIDENTIAL

Annuaflzed Average Geometric
Rolling 12m Average
Monthly Average Geomefric
Standard Deviation
Average Positive Return Monthly
Average Negative Return Monthly

-1.40% # Positive Months
1 #Nagative Months
-0.84% 80 Positive Months

lles

ese

13.48%
13.62%
1.06%
3.03%
1.16%
-0.50%

Largest Drawdown
Longest Recovery Period
Average of 5 Largest Drawdowns

-r

2th4

134
10
93.06%

MARKET NEUTRi

3SMT00025993

S5MSAA0025993

¿ Convertible Arbitrage Manager A

The Fund manages over $1 bn in convertible securities and focuses on
posillonstois, low premiums and high hedge rallas, which provides prctection
froni interest rate tuctuaton. The Fund invests in four sectors of convertibles:
domestic bonds, foreign bonds, convertible preferred stock, and RegDlprivate
placements. With regards to leverage, the focus remains on the relationship
between hie premium in the pertiche and tie equity in tire portfolio.

Asaete Under Management
Fund Status Minimum Investment
Fees

'ihe CEO was asatated with LF. Rothschild & Co. for 18 years, haing to
Senior Managing Director, teed ct theArbilrage Oepaitmenr, and member or
tre Ecard of Directora, The CEO co-founded the Fund and manages Une
diverse investment idees within each dieoiine. He began his career es e
research ansiyst for LF. Rothschild in 1970.

Loclojp
High Water Mark
Redemption Frequency
Redemption Notice Period

$1.35 Sillion
Open
si ,000,o
1% + 20%
e

Jan

Year
20Cl
2003

b

e

Mar

43Ç

May

'030%

017%

1 ft'C

272%

OtI*

042%

fFll'S

I 05%

153%

143%

012%

105%

2,72%

055%

345%

rh9%

213%

584%

1 15%

147%

sow
20cl

0*1%

Annual June 30
60 Days

e

Jul
430%. '030% '*tU%'
4lire

I 37%

None
Yea

Sep

Qc

Nov

'032's

04O4

YTD

Q

-113%
1273%

0d%

070%

.058%.

2 16%

Ø4*%
I 48%

1 O%

&S%

175',

n°2%

24e74

1-CoilS

053%

315%

2-43%

012%

2,635241%

I 21%

I 15%

172%

02315

2047%
2753%

24tt-

Z90%

120%

1.t1,

300%

74414

270k

Z%

Z33'A

QI%

1 4s%

p14%

1959
i 988

r 02%

IOh%

180%

552%

I 25%

041%

1 50%

044%

eons

028%

e3s%

02604

il 04%

205'.

III%

257%

&24V5

133%

9'0oA

152%

45%

117% 'MS '099%

2,8111

18G?

136%

f054

146%

notwi

030% 01%

054%

15t

1596

065%

1 6314

381%

2.75% 0% ares 141%

&(E1.

014%

1 28

143%

0h4

207%

164%

1551k

704%

015,

14%

403%

1994
1993
I 99

234%

098%

107%

0-14%

'327%

814%

104%

_00004

024%

00804

1t%

151%

04a'

i onv

t75%'

168%

17*04

112%
t 14%

itY

1 4514

14804

095%

i9Gi

9075.

145%

3'6%

115%

193%

112%

061%

1$?0
198$
i 868

0.27%

*371k

'044%

414%

041%

f2558

030%

74214

24% 14% 355%

107%

073%

031%

1350%
813%
1842%

67%

132%

1&7%

240-4%

2,03v

Gl%

.060%

119%

1*4%

lIsa'

t%I

107%

-671%
054%

2,0%

103%

107%

013%

47&5.

156%

0.16%

020% 060%

117% ems

137%

111%

1.21% ¿4%

721%

474%

1477%
991%
1609%
1914%
1522%

154%

147%

094M.

24 05%

047%

4V%

087%

% 066%

079%,

0zi

DI6'rRISU'nON OF MONTHLY Rn'nJRNS

GROWTH OF AO7IIT FROM INCEP11ON

nra

uni
77 I
00

on!
en
12

lo
701

es-ns

Oeil

Odin

osen

od-Co

0e-a

Ca-Co

l'no 'O'ei '41u'3-31,'2 '2ml 'icen sur

Annualized Average Geometric
Rolling 12m Average
Monthly Average Geomefric
Stendard Deviation
Average Positive Return Monthly
Average Negative Return Monthly

Largest Drawdown
Longest Recovery Period
Average of 5 Lergeat Drswdowns

ci
CONFIDENTIAL

SIen

2E,

10.23%
10.87%
0.81 %

5.45%
1.35%
-1.55%

-17.82% # Positve Months
14 # Negative Months
'8.52% % Positive Months

159
35
81,96%

MARKET NEUTRAL W

SSMT00025QQ4

SSMSAAOO25994

Convertible Arbitrage Manager B
i:_i,M Sn

The General Partners entered the seculties buaiaieas as General Potier of
Glaser it Compsny, a registered broker-dealer, which acted as a market-maker
en ehe oions floor of the Pacific and Amaritsr Stock Exchange. He formed
arnd became General Psrkner of the Manager ir 1992. Prior to entering the
securities business, tha Gereral Psrtnervras an adomey associated with the
firm of
'man, Beutzer, Rothman, Kuohel & Siberl in Loa Angeles.

The Manager fradas convertible banda to generata conaistest returns with low
volatility. The Managertypicallytakes long positons in convertible bands.
while also holding short posttions in the underlying equity to mitigate downside

risk, iba bord positions yield consistent cash tow and the short positions
pro4tde rebate payments in the event that equity value decreases. The Fund
has attained consistent high returns for II years end remains a best-in-class
convertible enibitrege fund.

Assets Under Management
Fund Status
Minimum Investment
Fees

Lockup
High Water Mark
Redemption Frequency
Redemption Notice Period

$1.8 Billion
Closed

$1 ,o,coo
2% + 25%

Quattrly
60 Days

-

ì.&ìa.."

asno

24 Months
Yes

Year

_Jan

Peb

Mar

May

Jito

Jul

Atn

Sep

Oct

Nov

004

1t5'

ala

Av

150%

040%

120%

-025%

097%

O4O4

-020V

it2c%

1 40%

Dec

YTD

8 55'.4

680%
1675%

324%

15 55%

320'/

1f

122%

74'I't4

I 48%

4%

155%

'0-5895

3 22',

2O2

225%

t'7%

110%

%eO%

002%

,444%

162%

1W4

z 18%

200i

550%

41414

Iel%

1f14%

070%

GZI%

1 97%

2 08%

302"

1

?t*

355%

3!2it

251%

2.14%

203%

a 7894,

a so,

I -5QI

1999

2,80%

l$%

138%

11%

305%

t94%

I 21%

I 50%

122%

-C 75%

241%

t%B

2,37,4

10st4

180%

hIAtt

143%

457%

1 27%

147%

1 7204

202,

5,35%

133%

178%

224%

187%

306%

285%

I 35%

'$96

2 54%

L'4%

2 31%

'91%

316%

ZtP%

1 55%

1 '28*4

1995
1994

I0l'4

159%

170%

4.42%

112%

189%

2.07%

ee3

44S%

141%

OShht

117%

4t9%

1 32%

11#4

2 1q54

2 oelo

07.44

IZ4

007%

111%

215%

2.6"%

323%

228%

2 0%

1 57%

L'In

0e9%

056%

131%

002%

I 45%

2 4t%

278v

1892

102%

tse,í

2917%
27 08%
20 89%

I 70%

t48%

5,3586

933n4

176%

766%
2547%

t 25",

162%

1 35%

it 54%

24 42%

I 55%

199%

I 44%

2224%
16 43%
29 32%
12 38%

DlsTRtelrnoN Or MONTHLY REI1JRNS

GROWTH OF A UNIT FROM INCEPIJON
ms

anon n

ns

n,

4

ix

I,,

t-

r
a-

¿'.52

w,'

av-as

ORAWOOWN GRAPH

fte'.on

tça.es

-rrprr

ç,.52

-4

-as-441e-3 '310'! '215_1 'lise

emsI

11,2

2153

CONFIDENTIAL

-3.87% # Positive Months
4 # Negative Months
-2.64% °h Positive Months

4155

5%

19.88%
20.70%
1.52%
4.10%

Largest Drawdown
Longest Recovery Period
Average of 5 Largest Drawdowns

ci

Annualized Average Geometric
Rolling 12m Average
Monthly Average Geometric
Standerd Deviation
Average Poaitive Return Monehly
Average Negative Return Monthly

3154

1 .77%

-1.27%

140
12

92.11%

MAFIIOET NEUTRAL I-i-i

SSMT00025995

SSN1SAA0025995

Asset Backed Manager A

Prior to founding the Fund, the Founder vas a Managing Director at Nomutra
Seoirities from 1990 to 1995. where he oversaw the $40 bn Government
9usineas Unit, which included U.S. Treasury and Agency trading, Repo, and
Money Markets, as well ax the Canadian Fixed Income Operations. Prior to
joining Noniura. the Founder was a Partner arid Senior Vice President at
Kidder Peabody, where he managed and traded fixed income securities

The Manager invests in odd-lot or orphaned asset-backed celtaterailzed bond
offerings. The Fund aleo inveate in bridgevearehouse loans secured by
mortgages or consumer loanatwhote loans and structured notes. The porifolio
has an average life of between one to three years and an average credit quality
of batwoen 999 to A.

Assets Under Management
Fund Status
Minimum Investment
Fees

Lockup
High Water Mark
Redemption Frequency
Redemption Notice Period

$350 Million
Open
$1,000,000
1% + 20%
a_4

O

Year

Jan

204

I e6%

2C0S

049%

eb

Q

1 Year

Yes
Quarterly
90 Days

-

May

¡qn

Jul

Aug

Sep

003% In o 93%

944%

O 68%

Q4fi1.

060%

o 69%

4h

0761,

1Ml,

O 75%

O 97t4

078%

01014

9 24%

0 73%

057%

O 60%

05714

050%

o 05%

.008,.

e 75%

121%

1Ik

-012%

01711,

1 05%

Ion

I 21%

O&4°4

e7s%

o bOle

0 89%

O

OTw4

0731,

l0t694

093%

101%

O 07%

440%

689%
1332%
1414%
1342%
1691%

1 41%

j 79V

20 29%

Mar
038%

pr
bavn.

043%

a49%

o aow

2QD

I e4%

95l'

089%

I tfl

2000

112%

lst%

1 50%

o fl%

I 02%

t4%

¶ 999

214%

2 55%

1 00%

1 '0590.

023%

O

1 85%

11%

1 39%

I 73%

101%

o 52%

967%

4h flS%

003%

2 47%

2*7%

2.47%

941%

Ott'.

1 35%

Nov

YTD

ec

954%

0 80%

0854

003%

Oct

I 19'A

DlsTRIauIloN OF MONTHLY RETuRNS

OROWTH OF A UNIT FROM INCEPTION
ea

er

4e

30

25

n co
lu

0e-00

0.,-II

r.:.On

coo-CO

0.sm

0e-41

0,o2

0e-43

coGe

Annualized Average Geometric
Rolling 12m Average
Monthly Average Geometric
Standard Deviation
Average Positive Return Monthly
Average Negative Return Monthly

Largest Drawdown
Longest Recovery Period
Average of 5 Largest Drawdowns

ci
CONFIDENTIAL

r2 3b5 554 4S015%

12.67%
12 .9 1%

1.01%
1.91%
1.04%
-0.10%

.012% # Positive Months
I # Negative Monthe
-0.10% % Poskive Months

94
2

97.92%

MARKET NEUTRAL 112

SS MT00025996

SSMSAAOO25996

j Asset Backed Manager B

Prior to founding the Fund, lie Fouriderwaa a Managing Director at Nomula
Seounitea from 199° to 1995, where he ovnrsaw tbt $40 bn Government
Business Unit which included U.S. Treasury and Agencytrading, Rapo arid
Money Msrkele, as well as tile canadian Fised Income Operatione. Prior to
joining Nomura, the Founder was a Penner and Seniorvice President at
Kidder Peabody, where he managed and Traded teed income secuftas.

The Manager seeks to identify opportunities in distressed assets arising from
the reduced willingness of investnent banks and traditional portfolio managers
ta atoaste aspitsi to sections that have fallen out of Favor. Because these
assets are often avoided rar non-economic reasons, the Manager believes that
they offer relative value on a rteldrnward tesis. The Manag& generally
acquires distressed fixed income securities and/or loans hulcli range in size
between $500000 and $15,OX,CCO.

Assets Under Management
Fund Status
Minimum Investment
Fees

": :: :1::
Lockup

5100 MillIon
Open
$1 .000.000
i .5% + 2 0%

Hi9h Water Mark
Redemption Frequency
Redemption Notice Period

dcl

1 Year
Yes
Annual Jun30
90 Days

bec

Jan

Mar

Apr

May

Jun

Jul

Atcg

Sep

tlDtt

1 90%

flY

150%

100%

116%

RG2%

I 00%

1 0714

100%

e el% fl%

111%

1.4114

1 88%

I e"t

064%

1$,

assIs

Z0%
0.14

155%

a to"

2

z00

Feb

I 53M

Year

1.50%

Ö3dh4

o ta'.'

859%

11%

&4$%

219%

121%

05714

20,%

991V-

I714

161%

1721,

S51[94

'i

2001

1*7%

Nov

VTO

125% I%
201%

2365%
1763%
312%
2086%

tI4

clsTPJBuIloN 0F MONThLY ReTuRNS

GROWTH 0F A uvaT FROM INCEPTION

ne

ORAWDOWN GRAPH

CONFIDENTIAL

16 .03%

Largest Drawdown
Longest Recovery Period
Average of 5 Largest Drawdowns

cl

Annualtaed Average Geometric
Rolling 12m Average
Monthly Average Geometric
Standard Deviution
Average Positive Return Monthly
Average Negativo Return Monthly

-2.61% # Positive Months
4 # Negative Months
-2.17% % Positive Months

13 .99%

1.25%
4.25%
1.47%

-1.09%

44
4
91.67%

MARKET NEU

SSMT00025997

SSMSAAOO25O97

Asset Backed Manager C

The inveetmarrt objective of the Fund is to achieve above-average returns by
investing primarity in portfolios oF secured linenS], real estate, operating
assets, loans and fixed Income securities, where such tnvestmants have strong
cash flow and risk-adjusted yield characteristics, Investments are expected to
range in size between $50a,O and 530 million. The average duration of the
Funds perifollo will not exceed three years.

The CO-CEO bes over 20 years of experience in all espects of commercial resi
estate finance, induding direct investments, loan securilizations, and mortgage
banking. Most recenty, he was a consuitant to Old Hill Psrtners, Inc. focusing
on the underwriting of rommercisl real esiste. He previouslywas e director of
ORIX Roel Estate Capilei Markets, where he negotiated, structured, end
closed loans on projects es Rockefeller Center, the Sands Convention Carter.
and tha Wyndbam Hotei in Chicago. The other Co-cEOjoined the Firm rrcm
Greenwich Capital Markets mc, where ss Senior VP and Heed of Principei
Transactions he was responsible for propdeesry asset beding end priscipal
finance for the Firm. During his 12 year tenure, he was insirumenial la the
development of the Finn's asset securitization end principal finance
busineesee, with particular emphasis on credit arbitrage and distressed asset
Investing and lending,

Assets Under Management
Fund Status
Minimum Investment
Fees

Lockup
High Weter Merk
Redemption Frequency
Redemption Notice Period

Yr

$200 Million
Open
$1 .000.000

1.5%+20%

Apt

May

Jul

2 Years
Yes
Oua rterly
160 Days

Feb

Mar

J

AtIp

Sep

Oct

Nov

ae4

YTD

e2s%

Jan

t*t%

025%

ritetS

131%

DlSTRlau'noN OF MONTHLY RETuRNS
43

'3
23

ra

II

ea

'5%

DRAY/DowN GRAPH

Annualized Average Geometric
Rolling 12m Average
Monthly Average Geometric
Standard Deviation
Average Positive Return Monthly
Average Nagative Return Monthly

Largest Drawdown
Longest Recovery Peried
Average of 5 Largest Pawdowns

cl
CONFIDENTIAL

554 Iran 4e,2 -2e-r -lisa ser

rra2

255

a4

4tan

.5%

3-97%
N/A

032%
0.34%
0.32%
NIA

U$E

tes

NL/A # Positive Months
NL/A # Negative Months
NIA % Positive Months

4
o

co a 0%

MARKET NEUTRAL 114

SSMT00025998

SSMSAAOO25998

I: Loan Origination Manager A

The Manager originates loans lo mid-sized oornpanies, The Manageralso
purchases recently-originated newdebt and invests in debt obligations in
companies which are not distressed, but which have either lost the support of
theirfinanclal lenders or have been unable to find new rapltal to fund their operalions. The Manager holds the eajority of its loans for nine months lo
three years.

The Managing Member ofthe Fund is aleo the General Partner of tv,o
investment management companies, both of which were organized in
November 1992. From September1955 until the organization ofthe Manager,

Assets Under Management
Fund Status
Minimum Investment
Fees

$300 Million
Closed

Lockup
High Weter Mark

$5,000.000

Redemption Frequency
Redemption Notice Period

he managed separate pls of capitaL From igs2 lo 1955, he was employed
in various capacities, including the management offirm capital by Drexel
Burrtham Lambert, Inc.

1%+20%

O'i e"

3 Years
Yes
Rolling 3 Anniversary
180 Days

,

-

Nov

0et

VTO

12e%

disoss

egII, e% 102%

0t%
12%

882%
897%
1237%
1236%

e 12%

OtE%

11 79%

161%

tta

68244

169%

.0454A

1040%
1107%

237%

591%

0405,

b55t

14 54%

136%

954%

066%

189%

1472%

Ott

Mar
esa',

Apr
tse'h

May

Jora

103%

öS4%

Jul
05%

065'S

848t4

134%

01h41

057%

Oars
1 Mtl

I 61%

044%

080%

'455%

121%

0,54»

040%

151%

3,04%

954%.

060%

115%

242%

ttu%

156%

t4tsy

-004%

flI%

egels

196%

136%

amIs

2 25%

128%

112%

I 47%

073%

0Z2%

'tIlls

067%

UII%

17e',-

p35%

110%

PZ4

044%

006'S

008%

982¼

2.09%

105%

100%

1,25%

068%

OtSls

022%

I 59%

1 SIs,

001'S

1 4t1'.4

088%

O64

08384

252%

1 8014

3,9%

j4t%
*4O'

I 0q%

eOt'4

130%

1 258,

Year

24

Jan
esa',

2CO

e t-4t,

2002

e87',

2001

061T
i34%
-030%

1998
1997
1998

Feb
955y.
I,,2%
E5%

1fl

, Ana

0361,

el

DISTRIEUIION OF MONThLY RETURNS

GROWTH OF A UNIT FR0111 ENcEEnON

<'0%

DRAWDOWN GRPH

Sep

-nw-a 4l,'s'n,,t -21er -lien

n'orlI,?

2a3

CONFIDENTIAL

-1.55% # Positive Months
2 # Negative Months
-0.62% % Positive Months

't'a

01%

11.65%
11.77%
0.92%
2.30%
1.00%
-0.42%

Largest Drawdown
Longest Recovary Period
Average of 5 Largest Drawdcwna

cl

Annualized Average Geometric
Rolling 12m Average
Monthly Average Geometric
Standard Deviation
Average Positive Return Monthly
Average Negative Return Monthty

nbc

102
6

94.4.4%

MARKET NEUTRAL JI

SSMT00025999
SS M SAAOO 25999

Loan Origination Manager B

The Funds investirent objective is to generate superior rtsk-edjusted returns
and occasionally curent income by acquiring a well-diversited portfolio or
undervalued end distressed lnvsstniente in the U.S., Western Europe, and
Japan. The Funds investment obiectve Is Implemented serosa a three-.
pronged program that includes corporate eecurities, loan originations, and
asset-backed transactions,

Phor to Joining tn March of 2002, the CEO spent 15 yeers at Goldman Sechs.
where he became a Partner in 1906, Ove- the course of hie career et
Goldman Sechs, he held the positions of Cc-head cf Otobal Whole Loan Sales
and Trading Business, Co-head or the Fixed-Income Principal Investments
Group, and Cc-head cf the Asiar Real Esiste Private Equity business. The
CEO received a B.A. fiore Princeton University and an M.B.A from Wharton.

Assets Under Management
Fund Status
Minimum Investment
Fees

Lockup
High Water Mark
Redemption Frequency
Redempdon Notice Period

-

$1.2 Billion
Closed
$2.000.000

1.5%+20%

(a

'fa

None
No

Annual Dec 31
90 Deys

s

Jan

Mar

Apr

May

Jtii1

Jul

Aug

Sep

Ott

t2%
fl2%

140%

9.tlQ%

Q io%

590%

1t0%

e gs

o at-

1 40v

asese

hn%

081%

9$t°4
ttie'A

leale

hate

119%

tlt%

103%

e 67%

O&%

t 745

et

Nov

145%

Z004
2003

Feb

137%

V-rD

1367%
13 52%

«s

532%

DISTRIBtJTION OF MONTHLY RETURNS

GROWTH OF A uralT FROM INcEPI1ON

IS

rs
e.

.u-ns

55.52 Jfl

a,-a

DRAWDOWN GRAPH

Ossu

Jan-54

fr-o4

osan

'-n% -ais-4 4ta-O -eta-n .5k_I -nias

Annualized Average Geometric
Rolling 12m Average
Monthly Average Geometric
Standard DevIation
Average Positive Return Monthly
Average Negative Return Monthly

Largest Drewdown
Longest Recovery Peried
Average of 5 Largest Drawdowns

Stet

lieu

oraoula4'l,eon%

13.53%
13.86%
1.06%
0,81%
1.06%
0.00%

0.00% t' Positive Months
O t' Negative Months
0.00% % Positive Months

29
o
100.00%

MARKET NEUTRAL 1

CONFIDENTIAL

SSMT0002S000

SSMSAAOO26000

Loan Origination Manager C

Prior to founding the fund, the Portfolio Manager served as Founder/Portfdto
Manager of the Special Opportunritìea Group of MSD capitel, the private
Investment firm of Michael Dull. From 1997 through early 2x0, the Portfolio
Manager vea employed at Davidson Kerrnpner Partners, wtere he initiated that
firms focus on direct debt investments and intematonal merger arbitrage, for
which he was given e mandate to open the firms London office. Prior to
attending Harvard Gualneas School. where he received hie M.B.A in 199e. ha
served as an analyst in media and communications mergers and private equity
investments ut Lazard und Madison Dearborn Partiels.

hie Fund seeks net returns of 10% over Treasury securities of e comparable
maturity to that of the Funds portfolio. The Fund currently bouses on four
Investment strategien: secondary tharket credit investments, direct debt
investments. spedal assets, end speciel situation equities. The Manager seeks
to achieve the Furds obìectva through a corribinaton d a muwple substrategy approach, disciplined investment selection, exhaustive due diligence.
end vigilant risk management with a foous on capitel preservation, end
attertion to business development.

Assets Under Management
Fund Status
Minimum Investment
Fees

Lockup
High Water Mark
Redemption Frequency
Redemption Nobce Period

$2.2 Billion
Closed
$5,000,0
2% + 20%

2 Years
Yes
Rolling 2 Years Quarter-End
120 Days

.4j
Jan

Feb

Mar

pr

May

Jsth

2O3

tootS

t 2004

t.tl%

050%

115%

147%

Year
20b4

Ot2W

e1%

77%

10514

1Z1%

Q02 .....................ct% *14%

Jul
i.3i%

Ataa

Sep

Oe

123%

0551

luen

I 08%

1.7t%
-0.81%

YTD
1531%
1544%
201%

Nov

f 10%

'2$%

I5

oat%

*t$%

0000%

t 350/

f%

55%

%5T%

DfSTRlButoN OF MONTHLY RETURNS

GROWTH OF A uNIT FROM lNcePinoN

ste

20

Ir

CIAO

rs

ro

re

vi su

-

e
5X500

0/riffi

a.0%

.r,eu

aseo

vasai

DRAWDOWN GRAPH

'f

culAi

Ao(ul4

CONFIDENTIAL

ras arre

ç

rei

ian

urea

res

ea-ea

Annualized Average Geometric
Rolling 12m Average
Monthly Average Geometric
Standard Deviation
Average Positive Return Monthly
Average Negative Return Monthly

Largest Drawdown
Longest Recovery Period
Average of 5 Largest Drawdowns

ci

av.4 -lei aea.0 .xa.r

'

12.16%
14.35%
0.96%
2.80%
1.18%
-1.13%

-3.36% # Positive Months
4 # Negative Months
.3.36% % Positive Months

29
3
90.63%

MARKET NEUTRAL Ill

SSMT00026001
SS MSAAOO2600 1