Strategy Update Q4 2007

January 2008

The final quarter of 2007 saw more volatility due to the credit and housing problems that are currently bedeviling the economy. Pivot Point's growth and value strategies performed well within expectations, outperforming the relevant benchmarks by a few percentage points for the year.

The two core components of our strategies, a focus on reasonable valuations combined with a trend-following component, helped us avoid some of the worst performing sectors and find a few attractive opportunities to boost returns.

Our strategies are designed to adapt as the situation changes. Of course any stock portfolio is bound to follow the general direction of a suitable benchmark, but our disciplined approach can help mitigate some of the drawdowns. In the past systematic strategies like ours have generated attractive long-term performance to adequately compensate investors for staying the course through the inevitable rough spots that hit our economy from time to time. So far the current economic situation does not appear to be very different from other economic difficulties in the past.

Performance

Please follow the links under 'strategies' on the left to view monthly returns and a comparison to an appropriate benchmark. Click here for important disclosures on how the returns were calculated.

Conservative Value (NEW)

The Conservative Value combines the stock selection principles of Dynamic Value with the ranking technology of Conservative Growth. The track record for this strategy starts in February 2007.

From inception through December this strategy returned 8.85% compared with an almost 12% decline in the Russell 2000 Value index. While such strong outperformance is certainly welcome, especially in these volatile times, we caution readers that we expect this strategy to add one or two percentage points to the benchmark return on average. The current level of outperformance is unsustainable for extended periods of time.

Current Holdings