1. April 5, 2005
Dear Partners:
With several exciting new developments to announce, I wanted to provide the partners of
Western Reserve with an operational update in advance of our normal Quarterly Letter.
First, we are pleased to announce that fifteen year Wall Street veteran, James Davis, has
joined the firm as Chief Operating Officer. James’ industry experience is vast and
includes prop desk trading as well as institutional equity sales and high net worth
consulting. Most recently, he co-opened the institutional equity sales office in Dallas for
Friedman, Billings, Ramsey & Co. and has held institutional posts at Deutsche Bank,
Bank of America Securities and Rauscher Pierce. He holds an MBA from Thunderbird
and advanced degrees in mechanical engineering from UAB and Vanderbilt University.
The addition of James is a key appointment for our growing organization and underscores
our commitment to prudent, sustainable growth. Assets under management now exceed
$100 million, and James will assume the role of managing many of the critical non-
research aspects of our business, including marketing, client service, risk reporting and
communications as well as trading and prime brokerage. He will work closely with our
professional support team, including our Chief Financial Officer Morgan Whatley,
General Counsel Warren Garden, our external auditors at Deloitte & Touche, and outside
counsel Haynes & Boone.
I have known James for eight years and can attest to his familiarity with the Western
Reserve investment program, thereby ensuring a straightforward and effective transition.
He is a tremendous asset for us and will play a key role in keeping the senior research
team focused on the portfolio. We are fortunate to have attracted him and cannot
adequately express how important this addition is to the infrastructure of your
partnership.
Second, Western Reserve is busy this spring configuring the next generation of our
proprietary loss mitigation program (LMP). The LMP has been with me for some time
now and is used as a risk management backstop to our fundamental bottom-up stock
selection strategy. It is used to help identify deteriorating positions at early stages based
upon repeat empirical fundamental, quantitative and technical signals from past stock
picking mistakes. Originally built on proprietary back-tested data from our stock
selection strategy, the program gets better with age and is unique to Western Reserve.

2. In connection with the newest generation LMP, we have created a Risk Analyst position
and filled it with Ryan Dalton, who is completing dual degrees in computer science and
economics at Southern Methodist University. Ryan is working closely with our
information technology partners at Morgan Stanley and Thompson Financial’s Baseline
unit to make the latest version of the LMP both real-time and fully automated at the
desktop level for the entire research staff.
Third, on April 1 we funded the offshore version of Western Reserve Hedged Equity,
LP. with approximately $38 million in capital. As part of this new offering, we are
reorganizing the fund complex into a parallel master partnership a.k.a. “master feeder”.
For onshore partners, this addition is entirely transparent as all of the funds will be
managed para passu. The offshore fund is styled as Western Reserve Hedged Equity
Offshore, Ltd. and functions as a Bermuda exempted entity. Morgan Stanley is the
prime broker.
To summarize, currently available Western Reserve funds are as follows:
Western Reserve Hedged Equity, LP
Western Reserve Hedged Equity (AI), LP
Western Reserve Hedged Equity Offshore, Ltd.
Should you have an interest in receiving subscription documents for any of the
aforementioned funds, please contact:
James Davis
214 871-6735 or
jd@western-reserve.net
We appreciate your continued support of Western Reserve and look forward to updating
you further in a few weeks with our next Quarterly Letter.
Regards,
Michael P. Durante
Managing Partner