Theorema Europe Fund, Ltd.


Fund Investment Objectives

The Fund's investment approach is based on value plus catalyst investing, a discipline that the managers believe should be able to deliver superior returns over time. This approach is based on the extensive use of security analysis to carefully select stocks with the following characteristics: (1) their intrinsic value, based on the Investment Advisor's estimate of current asset value and future growth and earnings power, is significantly different from their value as implied by the public market; and (2) there is a catalyst in place to surface the perceived misvaluation on the public market. The Investment Advisor's aim is to replicate the value investing discipline first promoted by Graham and Dodd and then successfully adopted by the Investment Advisor's principal decision makers. Appraising a business's present status and potential for success represents the core of the investment approach, drawing on the research experience of the Managers. Following Graham and Dodd's framework, in making valuation judgments about securities, the managers strive to apply consistently a process that should achieve the following: (i) a true picture of a company as a going concern over a representative time span; (ii) a carefully prepared estimate of current earnings power; (iii) a projection of future profitability and growth with an informed judgment as to the reliability of such expectations; (iv) a translation of these conclusions into a valuation of the company and its securities which on average should prove to be more reliable than that of the marketplace; and (v) the identification of a catalyst or an event potentially capable of adjusting any difference between the above valuation and that of the marketplace. The Managers use the same investing discipline for both purchases and short sale of equities, generally purchasing securities whose market price is significantly below their assessed valuation and short selling securities whose market price is significantly above their assessed valuation. In all these cases a significant amount of time is devoted to the search for a catalyst or event capable of filling the perceived valuation gap in the public market. The Managers believe that this approach should be able to provide returns that are generally independent and uncorrelated with the general market trends thanks to the strong emphasis on events that could be generally assumed to take place independently from short-term trends in the stock markets. The portfolio is constructed completely bottom-up through the stock-picking skills of the Managers in various European industries. The Managers are firm believers that stocks in Europe move following industry or sector considerations rather than country trends. Their own experience and background is based on pan-European sector stock-picking and they believe they can do a superior job in leveraging on that. The stock selection takes place individually based on the opportunities that the individual manager finds in his own sectors. Giovanni Govi focuses on the financials, consumers and technology sectors, Emanuele Antonaci on telecoms, media and industrials. The two continuously perform together a top-down check of the portfolio exposure by sector and by country. The aim is to control that the portfolio does not end up being overexposed to a single sector or country. AUM combines all share classes