Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS W. P. Carey School of Business Undergraduate Maroon & Gold Value Fund Semi-Annual Meeting April 30 th, 2010 THESIS CONCLUSION APPENDICES 1

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES Today’s Agenda • • • Team introduction & fund objectives Fund performance Economic outlook & market overview Portfolio structure decisions Investment selection process Investments to highlight: — POSCO (PKX) — Brookfield Properties (BPO) • Attribution analysis • Thesis overview • Lessons learned & conclusion 2

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW Fund Performance PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS Spring Semester| Academic Year ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 3

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION Spring Semester (11/20/09 – 4/16/10) FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES SIM Fund IVV Benchmark 6. 78% 10. 07% • Trailed benchmark by 329 basis points • Reasons for underperformance • Certain stock selections that did not meet analyst expectations • Discussed later in investment highlights and attribution analysis 4

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS Aggregate Performance Percent Cumulative Return for the Period of 11/20/2009 -4/16/2010 12, 00% 10, 00% 8, 00% 6, 00% 4, 00% INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS SIM Fund 2, 00% IVV 0, 00% -2, 00% APPENDICES 4. 16 4. 9 4. 2 3. 26 3. 19 3. 12 3. 5 2. 26 2. 19 2. 12 2. 5 1. 29 1. 22 1. 15 1. 8 1. 1 12. 25 12. 18 12. 11 12. 4 -6, 00% 11. 27 CONCLUSION -4, 00% 11. 20 THESIS 5

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION Academic Year (10/26/09 – 4/16/10) FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS SIM Fund IVV Benchmark 9. 66% 11. 51% • Trailed benchmark by 185 basis points • Better aggregate performance than spring semester alone THESIS CONCLUSION APPENDICES 6

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW Economic Overview PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS Report| Sectors ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 7

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION Economic Report FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 8

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION Sector Weightings FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS Equity INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES Fixed Income 9

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW Portfolio Structural Decisions PORTFOLIO STRUCTURE SELECTION PROCESS Portfolio | Allocation INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 10

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS Portfolio • Diversified, large-cap fund • Large-cap with market capitalization of $7 bn+ • Financially strong companies with concentration in those with strong access to U. S. capital markets and other G 7 countries. • Companies able to take advantage of opportunities, especially those opportunities that present themselves in foreign markets THESIS CONCLUSION APPENDICES 11

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS Allocation • Diversification • Strategy ─ 9 sectors, 1 fixed income position ─ Sector analyst recommended weighting ─ Depended on our economic view INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 12

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE Allocation By Market Value ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 13

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS Investment Selection Process Sector reports | Investment reports | Committee ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 14

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS Sector Reports • Implemented top-down analysis • Updated previous reports to include recent data • Determined view by examining: ─ Economic reports, performance charts, industry publications, Wall Street research reports, major companies reported earnings INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 15

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS Investment Reports • Industry overview • Fundamental analysis ─ P/E, P/B, Revenue Growth, ROE • Company changes from last semester ─ Did the fundamentals of the company change? ─ Does it fit with the new economic outlook? ─ Are there better opportunities within the sector? • Buy/Hold/Sell recommendation THESIS CONCLUSION APPENDICES 16

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS Committee, Monitoring • Committee decision ─ Vetting process/due diligence ─ Majority consensus • Monitoring ─ Company briefings & industry updates INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 17

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW Stocks to Highlight PORTFOLIO STRUCTURE SELECTION PROCESS POSCO (PKX) | Brookfield Properties (BPO) INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 18

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION POSCO (PKX) FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS Holding Period Return= -. 82% 6, 0% 4, 0% 2, 0% 02/03 -2, 0% 02/22 03/11 03/30 04/16 -4, 0% THESIS -6, 0% CONCLUSION -8, 0% APPENDICES -10, 0% 19

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS POSCO (PKX) – Reasons for purchase • Exposure to China, India growth projects • Steel attractive over other basic materials • Leader in operational efficiency, room for margin growth INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 20

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS POSCO (PKX) – Holding Period Events • • China steel contract renegotiation Korean Won appreciated 5% against dollar Daewoo acquisition negotiations Economic recovery in BRIC nations sustained high volum sales ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 21

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION POSCO (PKX) – Performance against peers FUND PERFORMANCE 30% ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS 25% 20% 15% 10% 5% 0% -5% 2. 3 2. 15 2. 27 3. 11 3. 23 4. 4 4. 16 -10% THESIS CONCLUSION APPENDICES -15% -20% Posco XME Materials SPDR 22

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION Brookfield Properties (BPO) Holding Period Return: +17. 64% FUND PERFORMANCE ECONOMIC OVERVIEW 25, 0% PORTFOLIO STRUCTURE 20, 0% SELECTION PROCESS 15, 0% INVESTMENT HIGHLIGHTS 10, 0% ATTRIBUTION ANALYSIS 5, 0% THESIS CONCLUSION APPENDICES 0, 0% 2. 24 3. 6 3. 16 3. 26 4. 5 4. 15 -5, 0% 23

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS Brookfield Properties (BPO) Reasons for Commercial Real Estate Exposure • Credit Spreads on CMBS were tightening • Significant headline risk priced into stock • Empire State Manufacturing Survey and Philadelphia Fed manufacturing index showed improvement INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 24

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS Brookfield Properties (BPO) Reasons for BPO Purchase • Premier tenants in high growth industries; financials, energy & professional services • Heavy exposure to downtown cores in supply constrained markets • Average 95% occupancy • Rated BBB (high) by DBRS Credit Rating Agency • Above average market capitalization CONCLUSION APPENDICES 25

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW Attribution Analysis PORTFOLIO STRUCTURE SELECTION PROCESS Weighted Portfolio Return INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 26

Undergraduate SIM Fund Student Investment Management Fund Weighted Portfolio Return 3, 00% FUND PERFORMANCE 2, 50% ECONOMIC OVERVIEW 2, 00% 1, 50% PORTFOLIO STRUCTURE 1, 00% SELECTION PROCESS 0, 50% Te co m Te le ls ria at e at io n M ch no lo tri a du s In lth H ea gy ls e ar C ci na n Fi En er g al s y s ta pl e on su m rm In fo on su m er D is -1, 00% C THESIS cr ATTRIBUTION ANALYSIS er S et io -0, 50% na ry 0, 00% INVESTMENT HIGHLIGHTS C INTRODUCTION Portfolio Return - Benchmark Return = Total Return Difference CONCLUSION 6. 78% - 10. 07% = -3. 29% APPENDICES **Based on holding period of Fifth-Third report (Holding Period 11/20/20094/16/2010) 27

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW Thesis Overview PORTFOLIO STRUCTURE SELECTION PROCESS Earnings Performance and its Correlation with Voting Premiums in Dual-Class Equity Structures INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS Overview| Results THESIS CONCLUSION APPENDICES 28

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES Overview • Approximately 7% of all companies use the dual-class equity structure • Positives of the dual-class equity structure: • Avoid corporate takeovers and encourages entrepreneurial management style • Negatives of the dual-class equity structure: • Poor corporate governance • Founders retain independence and control • Heavy reliance by technology and journalism industry 29

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION Results FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS • Sample spread history exhibits 17. 9% correlation with net income history • Sample spread history exhibits 42% correlation with EBIT history INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 30

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW Lessons Learned & Conclusion PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 31

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS Lessons Learned • Investment Horizon ─ Long-term capital market assumptions ─ Relatively short holding period ─ Fund personnel turnover ─ Maintain consistency • Analyst Expectations ─ Unexpected deviations from projections ─ Market impacts ─ Surprise events THESIS CONCLUSION APPENDICES 32

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS Lessons Learned • Battling Groupthink ─ Continuously addressing – poses greatest risk ─ Potential solutions ─ Risk Analyst ─ Competing analyst reports • Going Forward ─ Portfolio to remain invested ─ Longer period for investments to mature ─ Expanded fund ─ Increased learning opportunities ─ Exciting changes CONCLUSION APPENDICES 33

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW Appendices PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS Fund Holdings | Transaction History Sector Return | Resumes ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES 34

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES Fund’s Current Holdings • • • International Business Machines (IBM) Verizon Wireless (VZ) Exxon Mobile (XOM) Coach (COH) Teva Pharmaceutical (TEVA) The Coca-Cola Company (KO) POSCO (PKX) Brookfield Properties (BPO) ABB Ltd. (ABB) IBoxx Investment Grade Corporate Bonds (LQD) 35

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES Transaction History • Buys (Returns current as of market close 4/27): ─ ─ ─ ─ IBM (10/26): 110 shares @ $120. 36, return: +7. 02% AXP (10/26): 320 shares @ $34. 58, sold VZ (10/26): 290 shares @ $29. 00, return: -0. 86% XOM (10/26): 100 shares @ $73. 81, return: -7. 50% BHP (10/26): 140 shares @ $73. 66, sold COH (10/26): 330 shares @ $34. 22, return: +22. 64% DHR (10/26): 120 shares @ $70. 00, sold TEVA (10/26): 200 shares @ $50. 30, return: +18. 68% CVS (10/26): 250 shares @ $37. 16, sold KO (11/30): 175 shares @ $56. 97, return: -7. 19% PKX (02/03): 90 shares @ $120. 08, return: -4. 03% BPO (02/24): 780 shares @ $13. 15, return: +19. 39% ABB (02/24): 680 shares @ $19. 72, return: -0. 25% 36

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION FUND PERFORMANCE ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS CONCLUSION APPENDICES Transaction History • Buys (Continued): ─ XOM (02/24): 20 shares @ $64. 91, return: +5. 17% ─ PKX (02/24): 30 shares @ $116. 45, return: -1. 04% ─ LQD (02/24): 50 shares @ $104. 65, return: +1. 69% • Sells: ─ ─ ─ ─ CVS (11/10): 250 shares @ $30. 15, return: -18. 86% BHP (02/03): 140 shares @ $72. 95, return: -0. 96% AXP (02/24): 320 shares @ $38. 15, return: +10. 32% DHR (02/24): 120 shares @ $74. 66, return: +6. 65% VZ (02/24): 30 shares @ $28. 81, return: -0. 65% COH (02/24): 50 shares @ $36. 61, return: +6. 98% TEVA (02/24): 30 shares @ $60. 00, return: +19. 28% KO (02/24): 40 shares @ $55. 00, return: -3. 45% 37

Undergraduate SIM Fund Student Investment Management Fund INTRODUCTION 15 10 ECONOMIC OVERVIEW PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS THESIS 5 Return (%) above (below) benchmark 0 -5 -10 CONCLUSION -15 APPENDICES UNDER-PERFORM Industrials Materials Technology Financials Consumer Staples Healthcare Consumer Discretionary Energy Fixed Income Telecom Utilities FUND PERFORMANCE OVER-PERFORM NEUTRA L