In addition to our traditional equity product (Antenor Fund), Prospero Capital offers two managed risk funds, Beaumont Fund and Curan Fund, which utilize sophisticated hedging techniques to ensure that our investors are always offered a portfolio that corresponds with their individual risk tolerance levels. Prospero's hedge funds strive to generate consistent returns and preserve capital, providing our investors with the ability to benefit from our stock picking capabilities without direct exposure to the direction of the market. Prospero employs a number of financial instruments to reduce risk and enhance returns, while simultaneously lowering correlation with the equity markets. To mitigate market risk, Prospero primarily sells individual equities short, but will also employ market index shorts during periods of excessive valuation in the broader S&P 500 and NASDAQ markets. What do we mean by selling a security short? Short selling is a widely used technique whereby the party entering the trade sells a stock without actually owning it (shares are borrowed from brokerage firms), hoping to buy it back at lower prices in the expectation that the share price will drop. Used in isolation, short selling can be a risky proposition, since evaluating the overvaluation of a security, the market, or an anticipated earnings disappointment can be difficult to time correctly. However, when used in conjunction with traditional long investments in similar industries, short selling mitigates risk and provides terrific protection against excessive portfolio volatility. Why have a hedge fund product at all? Prospero's hedge fund strategies provide our investors with the ability to generate positive returns in both rising and falling equity markets and interest rate environments. Academic research demonstrates that including hedge funds in a balanced portfolio reduces overall portfolio risk and increases returns. Exposure to a hedge fund product in an investment portfolio provides diversification not otherwise available through traditional investment vehicles. A popular misconception is that all hedge funds are extremely volatile - that they all use global strategies and place large directional bets on stocks, currencies, bonds, and commodities, while simultaneously using excessive leverage to enhance returns (and increase risk). In reality, less than 5% of hedge funds are global macro players. Furthermore, many only use derivatives for hedging or not at all, and many don't use leverage, including Prospero. Prospero Capital offers its investors a wide range of hedging options, from completely market neutral strategies (Curan Fund) to partial hedges (Beaumont Fund) to protect against broad market declines. Please contact us for a broader description of available hedging techniques and Prospero's managed risk product offerings.