18 th National Pension and Institutional Investor Summit

18 th National Pension and Institutional Investor Summit Tuesday, November 27, 2012 Panel: Risk Management Does it hinder meeting obligations? Moderator: Charles Ballard, Kimberly-Clark Corporation Panelists: Jack Hansen, CFA, The Clifton Group Cheryl Maliwanag, Pathway Capital Management, LLC Greg Samorajski, CFA, Mc. Kinley Capital Management, LLC “Enhancing Returns, Managing Risk” Combining Risk, Governance, and Return

Risk Management National Pension and Institutional Investor Summit November 27, 2012 Jack Hansen, CFA Chief Investment officer & Principal

Disclosures Information provided in this presentation is the view of The Clifton Group and is subject to change based on market and other conditions. The use of Traditional Overlay (PIOS®) may differ from client to client based on different investment philosophies and restrictions. The use of PIOS® may be precluded by investment policies and restrictions. The information provided is general information, even as it pertains to you, and does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. Derivatives such as futures, swaps, and other investment strategies have certain disadvantages and risks. Futures require the posting of initial and variation margin. Therefore, a portion of risk capital must be preserved for this purpose rather than being allocated to a manager. Benchmarks may be comprised of published benchmarks for which there are no liquid futures contracts resulting in tracking error. Also, some intra-period mispricing may occur. Swaps require periodic payments, are less liquid than futures, and have counterparty/credit risk. Some investment strategies require a cash investment equal to the desired amount of exposure. We encourage you to consult with your legal and tax advisors regarding PIOS® and its possible legal and tax issues. All material has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on this information. Past performance is no guarantee of future results. Risk Management - PIOS® 3

Performance Enhancement and Risk Control OVERLAY VALUE ADDED POLICY SHORTFALL Cu Man rrency age men t s tio n nsi Tra ed Ne ity uid Liq ng nci te Ra st ent ere m Int nage Ma ala Reb sh a al C idu Client Target Policy Mix Res s Expected: . 10% -. 20% O V ER L A Y Client Target Policy Mix Each Client selects one, a combination, or all of the overlay components to best satisfy their specific needs Risk Management - PIOS® 4

Portfolio Monitoring Technology Commingled Vehicles Main Custodial Relationship Other Sources Overlay Manager OTHER Risk Management - PIOS® CLIENT CONSULTANT 5 • Overlay manager downloads available data from one or more sources and creates daily tracking report • Overlay manager adjusts positions, if needed, based on Client overlay guideline instructions • Daily report posted to web site for Client/Mercer viewing

Sample Report Index Overlay Exposure Remaining Fund Level Cash Exposure Illiquids Set Equal to Current Value For illustrative purposes only Risk Management - PIOS® 6 Asset Imbalances and Bands

Sample Report Residual Manager Cash Fund Liquidity Daily Performance Snapshot Clifton Margin Cash Total Fund Cash Exposure For illustrative purposes only Risk Management - PIOS® 7 Proxy Movement of “Stale Values”

Synthetic Indices The most often used index benchmarks are as follows: Domestic Equity Fixed Income S&P 500 Index S&P 400 Mid Cap Index MSCI USA IMI Index MSCI USA Small Cap Index Russell 1000 Index Russell 2000 Index Russell 3000 Index Wilshire 5000 Index International Equity Barclays Capital Aggregate Index Barclays Capital Gov’t/Credit Index Barclays Capital Intermediate Gov’t/Credit Index Barclays Capital Long Treasury Index Barclays Capital Universal Index Citigroup BIG Index Merrill 1 -3 Index Various Constant Duration Benchmarks Global Equity MSCI ACWI IMI MSCI World Commodities Goldman Sachs Commodity Index Dow Jones – UBS Commodity Index Custom Commodity Baskets International Fixed Income Citigroup WGBI (ex. US) Barclays Capital Global Aggregate Index (ex. US) Currency Please note that only broad market (e. g. versus style) futures are available and/or liquid enough for use. Risk Management - PIOS® 8 MSCI EAFE Index MSCI ACWI ex. US IMI MSCI Emerging Markets Index MSCI World ex. US Indexes Individual Currency Exposure

Best Practice Approach to Overlay Management Implementation What to expect from Overlay Management Program? . 10% -. 20% higher return on total investment portfolio Lower performance risk versus policy target Near instantaneous ability to deal with most exposure management needs Daily fund-wide exposure information along with increased “on demand” liquidity Risk Management - PIOS® 9

Risks Risk Management - PIOS® 10

Overlay Services: What are the Risks? Risk Description How Clifton Mitigates Market performs in a way that was not anticipated. For example, cash outperforms capital markets. Systematic market risk is an inherent part of the PIOS ® program and can neither be diversified away nor mitigated. Client specific policy guidelines are established to clearly define desired market risk based on client asset allocation targets. Communication/ Information Overlay index exposures are maintained based on underlying investment values provided by one or more third parties. There are often delays in the receipt of updated information which can lead to exposure imbalance risks. Inadequate communication regarding cash flow moves into and out of fund and manager changes can lead to unwanted asset class exposures and loss. Clifton establishes communication links with custodial, manager, and other sources to obtain and verify positions and cash flow data as soon as it is available. Suspect data may be researched and staff notified. Leverage Creation of market exposure in excess of underlying collateral value may lead to significant capital losses and result in position liquidation. Clifton obtains daily collateral pool values and adjusts beta overlay positions to maintain the ratio of total exposure to collateral within a pre-defined client determined band. Potential that the market moves in a manner adverse to the overlay position causing a mark-to-market loss of capital to the fund a resulting need to raise liquidity or to close positions; this situation could happen at a time when underlying fund or positions are also declining in value. Clifton strives to keep staff aware of potential collateral and cash requirements to reduce the risk of needing to remove positions. Additional margin requirements are communicated via electronic mail and margin adequacy is available to the client daily. Market Margin/Liquidity Risk Management - PIOS® 11

Overlay Services: What are the Risks? Risk Tracking Error Counterparty Collateral Risk Management - PIOS® Description How Clifton Mitigates Futures (synthetic) index returns do not perfectly track benchmark index returns. This divergence between the price behavior of a position or portfolio and the price behavior of a benchmark is tracking error and impacts performance. Clifton seeks to minimize tracking error by utilizing liquid futures contracts with sufficient daily trading volume and open interest. All derivative contracts will have some tracking error that cannot be mitigated by an overlay manager. Counterparty credit risk on OTC trading. Clifton can facilitate the negotiation of ISDA documentation that seeks to reduce the potential credit risk associated with OTC counterparties. Clifton monitors credit ratings and credit default swap spreads for all counterparties used and will inform staff of developments which may negatively impact credit risk. The program may experience losses on the underlying designated assets in addition to potential losses on the index market exposure overlaying these assets. This risk cannot be mitigated by an overlay manager. Clifton discusses the potential for negative performance in the collateral used for the overlay prior to alpha transport applications with client. 12

18 th National Pension and Institutional Investor Summit Tuesday, November 27, 2012 Panel: Risk Management Does it hinder meeting obligations? Moderator: Charles Ballard, Kimberly-Clark Corporation Panelists: Jack Hansen, CFA, The Clifton Group Cheryl Maliwanag, Pathway Capital Management, LLC Greg Samorajski, CFA, Mc. Kinley Capital Management, LLC “Enhancing Returns, Managing Risk” Combining Risk, Governance, and Return

Can PE Investors Have It All— Attractive Returns & Lower Risk? Risk Management—Does It Hinder Meeting Obligations? National Pension and Institutional Investor Summit Confidential and Proprietary/Trade Secret November 2012 14

SMART PE APPROACH How Can Investors Meet Their Obligations? § Private equity is one of the top-performing asset classes for LPs. § Attractive returns, but what about the risks? NOTES: As of March 31, 2012. Please see slide 8, notes a, b, and c. Confidential and Proprietary/Trade Secret 15

SMART PE APPROACH A SMART PE investment approach can improve performance and reduce risk in the portfolio. § Selectivity—Our experience and research show that manager selection is the most significant determinant of performance and the best way to mitigate investment risk. § Measured Commitment Pace—Implement an “always active” investment strategy, focusing on the highest-quality managers to immunize against capital market cyclicality. § Adherence to Rigorous Due Diligence—Establish a disciplined process to avoid unproven and unsuccessful managers and strategies, including investment fads that come and go over time. § Responsible and Rational Portfolio Construction—Establish and consistently apply reasonable investment guidelines that reduce risk, improve performance, and prevent common mistakes like overdiversification and arbitrary sector allocations. § Take Stock of Your Organization—Consider the PE program structure that is appropriate for your organization. Private equity investing is easy to do but hard to do well. Confidential and Proprietary/Trade Secret 16

SMART PE APPROACH Selectivity: Manager Selection is the Biggest Risk in PE Our experience and research shows that no other factor is as important in creating a strong-performing private equity portfolio. NOTES: As of March 31, 2012. Please see slide 8, notes d and e. Confidential and Proprietary/Trade Secret 17

SMART PE APPROACH Can PE Investors Have It All—Attractive Returns & Lower Risk? A SMART PE approach generated returns superior to other asset classes and improved the overall performance of a portfolio. NOTES: Past performance is not indicative of future results. There can be no assurance that Pathway or the general partner will achieve the performance results stated, and there is no guarantee against the loss of an investor’s entire investment. Please see additional notes, f, g, and i, on slide 8. Confidential and Proprietary/Trade Secret 18

SMART PE APPROACH Even in More-Recent Portfolios? Regardless of the starting time period, by using a SMART PE approach, private equity can significantly outperform benchmarks and other asset classes. NOTES: Past performance is not indicative of future results. There can be no assurance that Pathway or the general partner will achieve the performance results stated, and there is no guarantee against the loss of an investor’s entire investment. Please see additional notes, g, h, and i, on slide 8. Confidential and Proprietary/Trade Secret 19

SMART PE APPROACH Private Equity Fund Investing is Easy to do but Hard to do Well DILBERT © 2008 Scott Adams. Used By permission of UNIVERSAL UCLICK. All rights reserved. Confidential and Proprietary/Trade Secret 20

APPENDIX Notes a Represents horizon returns from 1, 924 funds tracked by Thomson Reuters, except for the 1 -year return, which represents 722 funds. Represents horizon returns from 3, 745 funds tracked by Thomson Reuters, except for the 1 -year return, which represents 1, 231 funds. c Represents horizon returns from 2, 705 funds tracked by Thomson Reuters, except the for 1 -year return, which represents 809 funds. b d SOURCE: Thomson Reuters. Based on since-inception IRRs as of March 31, 2012, for funds raised from 1993 through 2011. SOURCE: Bloomberg. Based on annualized returns for U. S. all-public-equity managers from 1993 through March 31, 2012. e f Represents a long-term institutional investor’s private equity portfolio dating back to 1986. This account, which was managed by Pathway’s cofounders prior to the formation of Pathway, represents Pathway’s cofounders’ longest discretionary investment advisory relationship. Portfolio performance is presented net of fees, expenses, and profit participation of the single client’s underlying investment funds. As of June 30, 2012, the total commitments were $1. 9 billion, representing 166 partnership investments made since the fourth quarter of 1986. This client’s investment averaged $76 million per year (excluding 1989 when no commitments were made), with a low of $3 million in 1986 and a high of $232 million in 2008. g S&P 500 index return is obtained from Bloomberg and is dollar-weighted (PME or PME+) according to the cash flows of the total portfolio through June 30, 2012. The index returns presented have been provided to compare the private equity investments included in the portfolio with the performance achieved by public equity investments for this period. Accordingly, certain factors exist that may affect the comparability of the returns presented, including, among others, (i) the indices do not charge fees and expenses or require the payment of a carried interest, which are deducted from the returns of the portfolio; (ii) the indices are not separately managed investment vehicles, and investors may not invest directly in the indices; and (iii) the market volatility of the indices is materially different from that of the private equity fund portfolio; and (iv) indices assume reinvestment of income. h Represents Pathway’s first and most mature multi-investor fund of funds, which was formed in 2000. Portfolio performance is presented net of fees, expenses, and profit participation of the fund’s underlying investment funds, as well as Pathway’s management fees and expenses. As of June 30, 2012, the total commitments were $540 million, representing 25 partnership investments made since third quarter of 2000. No new investments have been made since the fourth quarter of 2003, when the fund became fully committed. This fund’s investment averaged $135. 1 million per year, with a low of $52. 0 million in 2000 and a high of $231. 6 million in 2003. i The returns presented are based on investments in investment funds that are not managed by Pathway. Valuations are computed, and performance results are reported, in U. S. dollars. Valuations are based on the information provided by the investment funds, which may be unaudited. Such information will not be independently verified by Pathway but will be adjusted by Pathway at its discretion as it deems appropriate to take into account certain assumptions, inputs, and market conditions that it becomes aware of (e. g. , where reported values are not stated at fair value). The return comprises actual realized returns and valuations of unrealized investments provided by the investment funds. Because actual realized returns on unrealized investments will depend on various factors, the actual realized return on unrealized investments may differ materially from the return indicated. Additional information regarding Pathway’s performance data, and its valuation policies and procedures, is available upon request to qualified prospective fund investors. Confidential and Proprietary/Trade Secret 21

Thank You Cheryl Maliwanag cherylmaliwanag@pathwaycapital. com Tel: 949 -622 -1000 Confidential and Proprietary/Trade Secret Linda Chaffin lindachaffin@pathwaycapital. com Tel: 949 -622 -1000 22

18 th National Pension and Institutional Investor Summit Tuesday, November 27, 2012 Panel: Risk Management Does it hinder meeting obligations? Moderator: Charles Ballard, Kimberly-Clark Corporation Panelists: Jack Hansen, CFA, The Clifton Group Cheryl Maliwanag, Pathway Capital Management, LLC Greg Samorajski, CFA, Mc. Kinley Capital Management, LLC “Enhancing Returns, Managing Risk” Combining Risk, Governance, and Return

Presentation For National Pension & Institutional Investor Summit Gregory S. Samorajski, CFA Portfolio Manager Mc. Kinley Capital Management, LLC November 27, 2012 For more information contact: Jeff Patterson, Director of Institutional Marketing jpatterson@mckinleycapital. com 817 -850 -9966 Global Growth Specialist

Single Stock Dividend Trading – Introduction Dividend Swap Buyer Maturity payoff = # of shares * dividend futures strike Maturity payoff = # of shares* realized dividends Dividend Swap Seller 1 Global Growth Specialist

Buy or Sell Dividends to Express Our View on Dividend Expectations and/or Realized Dividends Trade Example Historical Implied & Forecasted L'Oreal SA Dividends for 2011 € 2. 40 € 2. 20 € 2. 00 Company announced 1. 80 € 1. 80 Bought at 1. 63 € 1. 60 2011 Consensus Analyst Forecast - High € 1. 40 2011 Consensus Analyst Forecast - Low 02/28/11 02/26/11 02/24/11 02/22/11 02/20/11 02/18/11 02/16/11 02/14/11 02/12/11 02/10/11 02/08/11 02/06/11 02/04/11 01/31/11 01/29/11 01/27/11 01/25/11 01/23/11 01/21/11 01/19/11 01/17/11 01/15/11 01/13/11 01/11/11 01/09/11 01/07/11 01/05/11 01/03/11 01/01/11 12/30/10 02/02/11 2011 Dividend Futures Price € 1. 20 Source: Bloomberg and Fact. Set, 5/24/12 2 Global Growth Specialist

3 Source: Eurex Dividend Derivatives, October 2012. Global Growth Specialist

Snapshot of the Dividend Market: What Caught Our Interest Annual Dividend Strips, Euro Stoxx 50 Index, 2012 - 2020 (data as of 5/21/12) 180 Current Implied Dividends Forecasted Dividends 160 Avg. annualized return if forecasts realized, 2012 -2020: +11. 5% 120 100 80 60 40 20 2019 2018 2017 2016 2015 2014 2013 0 2012 Dividend Points 140 Notes: Forecasted dividends based on analyst estimates from Bloomberg for 2012 to 2014, and on an assumed 3% growth rate thereafter. Source: Bloomberg, BNP Paribas, JPMorgan, Barclays Capital, Goldman Sachs, 5/21/12 4 Global Growth Specialist

5 Source: Eurex Dividend Derivatives, October 2012. Global Growth Specialist

Disclosure Mc. Kinley Capital Management, LLC Disclaimer Mc. Kinley Capital Management, LLC (“Mc. Kinley Capital”) is a registered investment adviser under the Securities and Exchange Commission Investment Advisers Act of 1940. All information contained herein is believed to be acquired from reliable sources but accuracy cannot be guaranteed. This presentation is intended for institutional and high-net worth financially sophisticated investors for informational purposes only and is not intended to represent specific financial services or recommendations for any targeted investment purposes. This material may contain confidential and/or proprietary information and may only be relied upon for this report. Certain data may not correspond to calculated performance for any specific client or investor in referenced disciplines. Mc. Kinley Capital, and its employees, make no representations or warranties as to the appropriateness or merit of this analysis for individual use. Investors must seek individualized professional financial advice regarding suitability before investing. Investments and commentary were based on information available at the time and are subject to change without notice. Any references to specific indexes or securities are for informational purposes only, may or may not have been owned by Mc. Kinley Capital in the past, may or may not be owned by Mc. Kinley Capital in the future and may or may not be profitable. No single security, discipline, or process is profitable all of the time and there is always the potential for loss. Past performance is not indicative of future returns. All Index returns are gross of investment management fees, broker commissions, taxes, and all other fees, costs and expenses associated with client account trading and custodial services, and therefore individual returns may be materially negatively affected. Net of fee returns include broker commissions and related fees and investment management fees. Returns also include the reinvestment of gains, dividends and other income. Global market investing (including developed, emerging and frontier markets) carries additional risks and/or costs including but not limited to: political, economic, financial market, currency exchange, liquidity, accounting, and trading capability risks. Shorting and the use of derivatives may materially increase investment risk and potential returns. These risks may include but are not limited to: margin/mark-to-market cash calls, currency exchange, liquidity, unlimited asset exposure, and counterparty risk. Mc. Kinley Capital’s proprietary investment process considers accompanying factors such as additional guidelines, restrictions, weightings, allocations, and market conditions. Thus, returns may at times materially differ from the stated benchmark. Future investments may be made under different economic conditions, in different securities and using different investment strategies. Because Mc. Kinley Capital’s investment process is proprietary, composite returns and individual client returns may at various times materially differ from the stated benchmarks. Deviations to the process may include but are not limited to factors such as the purchase of higher risk securities, over/under weighting specific sectors and countries, limitations in market capitalization, company revenue sources, and/or client restrictions. Charts, graphs and other visual presentations and text information are, provided for illustrative purposes, derived from internal, proprietary, and/or service vendor technology sources and/or may have been extracted from other firm data bases. As a result, the tabulation of certain reports may not precisely match other published data. Certain data may have originated from various third-party, and/or sources including but not limited to Bloomberg, Fact. Set, Clari. FI, MSCI/Barra, Russell, FTSE, broker research, and/or other systems and programs. The authors and/or their employers may use and/or rely on specific index names, other financial data and certain analysis without the infringement of copyright materials. However, recipients of this information may not assume those same rights are transferrable. FTSE International Limited (“FTSE”) ©FTSE [year]. FTSE™ is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data. ” With regard to any materials accredited to MSCI/Barra: Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent. Please refer to the specific service provider’s website for complete details on all indices. Mc. Kinley Capital makes no representation or endorsement concerning the accuracy or proprietary of information received from any other third party. Copies of specific research materials used to produce the results contained herein are available upon request. Investment management fees are specific to each discipline and may vary for individual client relationships depending on the product, services provided and asset levels invested. Fees are generally collected quarterly which produce a compounding effect on the total rate of return. Therefore, investors must consider total costs when arriving at a suggested rate of return. As an example, the effect of investment management fees on the total value of a client’s portfolio assuming (a) $1, 000 investment, (b) portfolio return of 8% a year, and (c) 1. 00% annual investment advisory fee would be $10, 416 in year one, cumulative effects of $59, 816 over five years and $143, 430 over ten years. Actual fees vary for clients. The fee schedule is described in Form ADV Part 2 A. To receive a copy of the Mc. Kinley Capital Form ADV Part 2 A or additional information on composites and investment processes, please contact the firm at 3301 C Street, Suite 500, Anchorage, Alaska 99503, 1. 907. 563. 4488 or visit the firm’s website www. mckinleycapital. com. 6 Global Growth Specialist

18 th National Pension and Institutional Investor Summit Tuesday, November 27, 2012 Panel: Risk Management Does it hinder meeting obligations? Moderator: Charles Ballard, Kimberly-Clark Corporation Panelists: Jack Hansen, CFA, The Clifton Group Cheryl Maliwanag, Pathway Capital Management, LLC Greg Samorajski, CFA, Mc. Kinley Capital Management, LLC “Enhancing Returns, Managing Risk” Combining Risk, Governance, and Return