Titan Masters International Fund, Ltd.

Performance Update | June 30, 2012

For the second quarter ended June 30, 2012, Titan Masters International Fund,
Ltd. returned an estimated -1.51%, net of all fees and expenses.
3-Year Since Inception Since Inception
Q2 2012 YTD 2012 Annualized Annualized Cumulative

Titan Masters International Fund, Ltd. -1.51% 3.30% 6.88% 6.98% 104.16%

-2.21% 1.09% 2.20% 3.28% 40.68%

HFRI Fund of Funds Comp. Index
-2.75% 9.49% 16.40% 3.73% 47.29%
S&P 500 Total Return

Note: All returns are net of all fees and expenses. The Fund’s inception was December 2001.

PERFORMANCE OVERVIEW
Through the first two months of the second quarter, Titan subsequently found that the industry’s net long exposure at
Masters International Fund, Ltd. had contained its quarterly the end of the quarter was the lowest in years. The result of
decline to 0.76% while the S&P 500 lost 6.60% and global these factors was a disappointing, aberrational month that
equity indexes fell even further. Our expectation for the
Fund to rebound nicely in June was not realized, as it
slipped 0.76% despite the S&P recouping 4.12%. We $1,000 Invested on December 1, 2001
haven’t seen this degree of single-month underperformance Titan Masters International Fund vs.
since the Fund’s start 11 years ago, and we have worked to S&P 500 Total Return
understand why it occurred. Managers with widely varying $2,500
exposures – from our highly net-short, short-biased $2,000
manager to our two highly net-long, long-biased managers –
$1,500
were down on the month. After examining industry data and
$1,000
speaking with our managers, we conclude that June was a
$500
highly negative alpha month on the short side and a
moderately difficult month on the long side. We suspect this $0

was due to high correlations, wider bid-ask spreads in

securities, and weakness in crowded trades. One of our
Titan Masters International Fund, Ltd. S&P 500 TR
long/short equity managers described how the historic beta
of his stocks became a poor predictor of actual beta, with
losses in more cyclical and growth names down three times
their implied betas in May and the first half of June. Also, happens periodically during the lifetime of a successful fund.
the strong stock market advance on the last trading day of We have a very capable group of managers in Titan
June surprised many of our managers who had lowered Masters International Fund who are equipped to be
their net exposure because of the heavy presence of macro successful in ever-changing markets.
events and a dearth of corporate news as earnings season
was approaching. Research from UBS and Credit Suisse

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 Titan Masters International Fund, Ltd.
Performance Update | June 30, 2012
Global Equity Long/Short Net Exposure
75%
65%
55%
45%
35%
25%
15%
5%
Source: UBS Prime Services Hedge Fund Performance
June 2012
No doubt, environmental factors are making this a tough
environment for even previously successful hedge fund
strategies. In response, we are endeavoring to answer
several questions: What is working well, why it is working,
and can it persist? We also are watching how managers
cope with headwinds and how they adjust their process.
One sector that has been a good performer this year and
last is technology equity. Many of our technology managers
have done well both long and short and have done so with
portfolios that have few positions in common. A healthy
level of dispersion might not exist market-wide, but it is
certainly present in the tech sector. The chart below shows
three of the larger capitalization stocks in tech/telecom and
their year-to-date performance: Research In Motion (RIMM),
Nokia (NOK) and Apple (AAPL). The clearly disparate
performance of these large caps is representative of what
managers are seeing across that sector. We continue to
find technology long/short managers attractive at this
juncture and have added incrementally to managers in
whom we have the highest conviction.
We have detailed in recent letters how additive our global
macro strategy has been to the fund, especially over the
past 18 months. The corollary to global macro being
additive is how mediocre the long/short equity space has
been over the same period. Government intervention and
other global macro factors clearly are plaguing fundamental
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stock investing, but we expect our managers to adapt,
remain flexible in their thinking, and move decisively in a
timely fashion. In fact, we regard this adaptability to be a
key component of the hedge fund value proposition. This is
a higher order skill, and it is very informative to see which
managers adapt and do well and which wait for the markets
to reward their strategy when a degree of normalcy returns.
We build our portfolios with managers from both camps, but
we attempt to emphasize exposure to those who are more
adaptable.
Another task we are working on at Titan is scanning more
broadly through the strategies to which we allocate. The
fund invests in long/short equity, global macro/commodity
and event-driven. For the past six months we have dug
deeply into the event-driven and global macro areas,
to get to know as many managers as possible and
to uncover differentiating and distinctive versions of
strategies that could enhance our portfolio. We currently are
seeing some great opportunities in discretionary
commodity trading traditional rates and macro currency
Dispersion of Technology Stocks
January - June 2012
80%
60%
40%
20%
%
-20%
-40%
-60%
-80%
RIMM NOK AAPL
Source: Yahoo! Finance
trading, and smaller situation event-driven credit and equity
investing in the U.S. and Europe. In long/short, we are
finding some mid capitalization stock trading firms and
interesting managers outside of the New York area, which
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 Titan Masters International Fund, Ltd.
Performance Update | June 30, 2012

has meant many trips West by Titan’s research team. We

Strategy Exposure and Attribution
are not yet certain, but we suspect part of these managers’
relative success stems from their being in less crowded and End End
consensus trades. Titan Emerging Managers Fund of of Contri-
Strategy Q2’12 Q1’12 Change bution
continues to be a primary conduit for some of these
strategies coming into Titan Masters International Fund. Long/Short Equity 54% 59% -5% -1.3%
Global Macro 29% 29% 0% 0.2%
INVESTMENT STYLE ATTRIBUTION
Event Driven 17% 12% 5% -0.4%
Two of the three main strategies were unprofitable in the
quarter, led by the long/short group, whose 106 basis point
loss was driven by our four longer-biased managers. Geographic Exposure
Pelham, Pershing Square and Scopus all struggled during
the quarter, while our initial allocation to Carilliam in May Dev Asia Emerging
ex-Japan Markets
proved to have sub-optimal timing. On a positive note,
Japan 3% 2%
Jericho successfully navigated the quarter with very strong 1%
alpha generation on the short side despite a net long
Europe
posture all quarter. Espalier similarly traded the market well,
16%
with its technology and industrials exposure well hedged
and alpha production from the short side.
North
The global macro/commodity group eked out a small gain. America
Our Omni Macro managed account followed a solid first 78%
quarter with a profitable second quarter, increasing our
conviction to the point that we incrementally added to our
investment. Omni’s short Euro currency position and timely
trades in commodities and European equity indexes drove
ALLOCATION CHANGES
performance. While much of the Fund’s global macro
success over the past 18 months has come from our natural As mentioned above, the Fund initiated an investment with
gas traders, during the second quarter they were slightly Carilliam, a long-biased equity manager focused on growth
negative in the aggregate. We think our macro and sectors around the globe. Our investment there is via a
commodity managers are well-suited to the present managed account structure. We also added to our event-
environment, and we likely will strengthen the line-up further driven line-up for the first time in four years. The Fund
over the next quarter. allocated to BHR Capital, led by Michael Thompson in New
York. BHR employs a strategy similar to the Fund’s existing
Event-driven cost the fund 62 basis points. The Fund’s
event managers in that it invests opportunistically across
largest negative contributor was Orange Capital. It lost
equity and liquid credit. Titan Advisors has allocated capital
money in European infrastructure equity investments. Those
from other of our fund of funds to BHR for the past year, and
losses were compounded by ineffective hedging with short
after monitoring closely we decided to add it to Titan
French bonds, which rallied during the quarter. Park West
Masters International Fund. When Michael has high
continues to grind out gains and is the best performer in this
conviction, BHR invests in a concentrated manner. Its most
strategy for Titan Masters International Fund.
profitable position in 2011-2012 has been Six Flags, the

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 Titan Masters International Fund, Ltd.
Performance Update | June 30, 2012

theme park company. We have seen him cycle into several so severely reduce the pool of talented managers who can
interesting new positions in the past three months, such as manage capital on behalf of Titan.
Western Digital and various companies in the energy sector.
Grant Harrell, Titan’s embed in the London hedge fund
With the Fund’s modest capital inflows and proceeds from market the past five years, is returning to our New York
redeeming our investment with Dialectic Antithesis, at the office after successfully transitioning Reid Murphy to lead
beginning of the third quarter we opted to increase exposure our European manager research operation. A seven-year
with certain existing positions rather than add any new Titan veteran, Grant already is adding lots of capacity to our
managers. We added to CCI Technology, GS Gamma, efforts to identify and screen for talented global macro and
Jericho, Omni, Pelham, PFM Healthcare and Scopus. We commodity managers.
were fortunate to have inflows just as some of the Fund’s
best performing and harder-to-access managers decided to As always, do not hesitate to contact us with any questions
take in more capital to invest in great opportunities they about your investment with Titan Advisors.
were seeing. Sincerely,
In the second half of the year, we likely will continue adding
incrementally to our highest conviction allocations in the
portfolio. At the same time, we will continue the redemption
process with Pershing Square and Southpoint Capital. George J. Fox
Managing Member
Titan Fund Advisors, LLC
LOOKING AHEAD
Past performance is not indicative of future results. Performance of each investor
Our greater use of managed accounts has been especially may vary based upon the class or series of investment, time of initial investment,
and other specific terms applicable to such investment. The information contained
helpful this year. While we still mostly allocate capital to fund herein is confidential and circulation or disclosure of all or any part of this material
structures, the managed accounts we maintain with several is prohibited without the written consent of Titan Fund Advisors, LLC.
firms are permitting us to gain a more nuanced
understanding of how our managers navigate volatile
markets. By examining daily performance – with an
occasional peak at intra-day activity – we sometimes are
able to compress the time it takes us to reach the
confidence levels needed to add or reduce our investments.
To be sure, we are not forgetting that some level of volatility
is necessary to generate an attractive return, so we aren’t in
danger of allowing very short-term fluctuations to be
determinative. But the quality of our due diligence effort has
risen along with better transparency of daily profit and loss
drivers that’s conferred by our having managed accounts.
We will continue to invest through these structures when
available and appropriate. Still, we are not interested in
limiting ourselves only to those managers who accept
managed accounts, since many highly successful managers
accept subscriptions only in their commingled funds. We
believe it would not be in the best interest of our investors to

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