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Quotient Investors is recognized for its unique intra-industry investment approach. Quotient targets superior risk-adjusted returns across multiple U.S. products. Using a disciplined approach to build its proprietary intra-industry model, Quotient incorporates value, growth, momentum, and custom valuation models to identify the price drivers that are unique to each industry.

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Quotient is committed to delivering innovative research, a disciplined investment process, sophisticated algorithmic trading, strong information ratios, together with personalized client service.  Quotient, an SEC registered investment advisor, was founded in 2007 and is a majority employee-owned firm.

Quotient Investors, a new emerging manager, is the first manager selected by Strategic Investment Group for the CalPERS Manager Development Program II. Quotient's experienced investment team comes from a major global institutional management firm with track records dating back to 2000. Quotient has demonstrated expertise in alpha generation, risk control, algorithmic trading and customized client service.

Market Overview
Second Quarter 2009

The markets had one of the best quarters is a long time in 2Q 2009. The S&P 500 was up +15.9%, the Russell 2000 was up +20.7% and the NASDAQ index was up +20.1%. The financial sector far outpaced all others with a +35.1% performance indicating stabilization of a battered market sector. Further evidence of a settling market came with the steep fall of the VIX volatility index, which started the quarter around 52% in March but finished around 25% at the end of June.

With a feeling that the next Great Depression has been avoided, investors seemed concerned that the US economy is headed for a Great Recession: Housing data remains weak and unemployment near 10% is reaching 25 year highs. But with 10 banks exiting the TARP program, a more positive outlook for GM and Chrysler, and the Fed keeping rates low, talk of a recovery are still valid.

Value themes were rewarded in this rising market as investors differentiated stocks along the lines of fundamental valuation. Earnings / Price and Sales / Price were particularly good indicators of stock performance.

On the other hand, Growth and Momentum themes faltered in a market that quickly reverted trends from a fall in 1Q to a recovery in 2Q 2009. Price momentum was very negative and analyst estimate revisions moved opposite to stock prices.