Try using a straight Photoshop file with transparency or PNG.

I personally use as high a resolution as possible and then scale it using scale and aspect to get a smooth mask.

I find with photoshop files that I need to put all colour to black so as to lose the white fringing on masks and drop shadows.

PNG on the other hand has a smooth transition from black to transparent.

I also turn on the black border in Visual FX so I am able to mask outside my created border.

Hope this helps

Cheers

Toby