Investment Objective

1
Investment Objective

• To maximize the funds total return on capital
  while controlling for TEV through tactical asset
  allocation across the global markets.

2
Investment Strategy

• The investment manager applies a top down macro
  analysis on world markets to identify best
  return/risk profiles.
• Position Weighting will be adjusted based on
  forecasted correlations to control for TEV.

3
Portfolio Holdings

• Current
• AGG 18.53
• IWB 1.14
• IWD 13.35
• IWM 9.84
• IYE 5
• EPP 10.51
• EWJ 4.84
• EEM 21.06
• EWY 4.62
• EWW 5.52
• EWZ - 5.62

• Target
• AGG 20
• IWD 15
• IWM 10
• IYE 5
• EPP 10
• EWJ 5
• EEM 20
• EWY 5
• EWW 5
• EWZ 5

4
TEV Analysis

• Target TEV 2.84
• Current TEV 4.63
• Sources of discrepancy
• Overweight in Asian markets where both vol an
  correlation picked up
• Not properly allocating bonuses and allowing
  weights to deviate from target weights
• Our main control for TEV was through AGG
  allocation, which deviated the most from target
  allocation

5
9 Months in Review

• Yen carry Trade
• Emerging Markets downturn, but recover
• Reassessment of risk
• Private Equity Boom
• Oil markets downturn, but recover
• Housing/Sub-prime

6

• International Equity Emerging Markets
• Initial allocation based on low correlation with
  developed countries and macroeconomic conditions
• Emerging market index with tilted exposure from
  country funds
• Biased exposure contributed to relative
  performance and high appraisal ratio

• Initial Allocation
• 20 MSCI Emerging Markets Index
• 5 MSCI South Korea
• 5 MSCI Mexico
• 5 MSCI Brazil

7

• Emerging Market Index not overweighed, but
  diversification into these country funds helped
  appraisal ratio

• South Korea

• YTD Return 9.34
• Driven by strong economic growth in Asia
• Interest rates slowed
• Won appreciation

8

• Latin American politics and free-market policies
  have helped ETF growth
• Increased international flows
• Mexico
• YTD Return 25.04
• Brazil
• YTD Return27.94

9
Bonds

• Lehman Aggregate seeks to provide results
  reflective of the US investment-grade bond market
  (as defined by Lehman Bros).
• AGG year-to-date return is 1.32
• The AGG is sensitive to shifts in interest rates
  and expected inflation rates.
• The AGG is sensitive to shifts in interest rates
  and expected inflation rates.
• Recently, volatility in the Lehman Aggregate is
  driven by market expectations on inflation and
  possible Fed response.
• Our strategy has been to minimize our exposure
  relative to the benchmark fund. Our choice was
  driven by our belief that interest rates will
  either go up or remain constant over the life of
  our fund.

10
International Equity Developed MarketsInitial
Allocation Review

• Underweight export driven economies that are most
  exposed to a weakening U.S. consumption
• Underweight European markets because we believed
  more attractive opportunities existed in emerging
  markets.
• While avoiding key international risk factors, we
  looked to isolate and exploit sustained growth in
  several key Asian markets.

• 10 MSCI Pacific ex Japan
• 5 MSCI Japan

11
MSCI Pacific ex-Japan (EPP)

• Has gained roughly 17 since February sell-off.
• Less dependent on U.S. economy compared to other
  regions such as Latin America
• Inclusive of Australian and other southern
  Pacific equities.

BHP Billiton Ltd Industrial Materials --- 7.49
Commonwealth Bank of Australia Financial
Services --- 4.83 National Australia Bank Ltd
Financial Services --- 4.83 Australia New
Zealand Banking Grp Financial Services --- 4.19
Westpac Banking Financial Services --- 3.46
12
MSCI Japan Index (EWJ)

• Performance since February sell-off has been a
  symptom of Japanese economys ever-growing FDI
  and export link to China.

13
Broader Asia-Pacific Picture
SeekingAlphaiShares Asia Region ETFs Weekly and
YTD ReturnsMonday April 16, 1014 am ET Steven
Towns
14
Domestic Equity Performance

• Russell 1000 Value IWD vs. Russell 2000 Index
  IWM
• 9.132
  11.769

15
Domestic Equity Performance

• Dow Jones U.S. energy sector index IYE
• 15.436