Student Managed Fund MBA Performance Report December 1, 2006

MBA Managers Mike Amodeo Devika Chirayilparambu Matt Cordeiro Vasilios Diakogeorgiou Samara Hollander Daniela Ionescu Adam Macko Puru Patnekar John Salemi Amanda Wallace

Agenda Investment Philosophy Investment Process Economic Outlook Portfolio Strategy Portfolio Summary Portfolio Performance Future Considerations Q & A

Investment Philosophy Fundamental bottom-up approach Companies with a market cap of at least $1 Billion Invest across a diversified group of sectors Trade at a minimum 15% perceived discount to intrinsic value Exhibit strong growth potential within industry Benchmark – outperform the S&P 500 index by 5% annualized

Investing Process Stock Selection FundamentalAnalysis Valuation Sell Discipline

Stock Selection Screeners: Yahoo! Finance MSN Money Reuters MagicFormulaInvesting.com Screen inputs: High Sales/Earnings Growth High Gross/Operating/Net Margins High ROE, ROA, ROIC Low P/E, PEG

Fundamental Analysis Goal: To identify high quality firms Value drivers Gross and operating margins Revenue and earnings ramp-up Capital spending efficiency R&D intensity Free cash flow growth Industry metrics Retailers – same store sales Banks – net interest margin

Valuation Analysis Projecting future free cash flow –Method A – use analyst estimates (S&P, Value Line or Yahoo! Finance) –Method B – historic growth rate of cash flows Discount Rate – WACC –Cost of Debt – Weighted average yield to maturity –Cost of Equity – CAPM Risk free rate – 10 year treasury bond Average Return – 10.4% (Ibbotson’s Yearbook 2005) Beta – based on analyst estimates or regression models (or both)

Sell Discipline Stop loss –15% stop loss on all positions –Prevent market volatility from stopping out positions –Protect down-side risk Re-evaluation of positions –More than 15% gain –More than 10% loss –Change in business model or expectations

Macroeconomic Overview NEUTRAL ComponentSMF Outlook Monetary Policy –Discount Rate stable at 5.25% Fiscal Policy –Likely tax rate increases –Increased possibility of trade barriers Economic Growth –Slowing GDP Corporate Earnings –Decelerating into 2007 Inflation –Unemployment increasing slightly –Core CPI at 2.5% over next 6-12 months Market Valuation –Current S&P 500 P/E of approximately 17 ________________________________________________________________________________________________________________________________________________________________________ Overall SMF Macroeconomic Outlook NEUTRAL NEGATIVE POSITIVE NEUTRAL/NEGATIVE NEGATIVE

Asset Allocation Strategy Top-Down Sector Analysis (25%) SMF Portfolio (75%) Bottom-Up Fundamental Analysis

Sector Overview Consumer – Staples –Pepsi (PEP) –Altria Group (MO) –Hormel Foods (HRL) Consumer – Discretionary –American Eagle Outfitters (AEOS) Energy –Occidental Petroleum (OXY) –Peabody Energy (BTU) Financials –Bank of America (BAC) Healthcare –Laboratory Holdings (LH) Industrials –General Dynamics (GD) Information Technology –Oracle Corp (ORCL) Materials –Sherwin-Williams (SHW) Telecommunications –Harris Corp (HRS) Utilities

SMF Current Allocation

Holdings Allocation & Management Total Invested in Equities$556, % Cash$62, % Spyder$450, % Value of Portfolio * As of 11/25/2006 $1,069,503

Portfolio Statistics Positions – 12 Average Holding – $46,392 S&P 500 MBA Portfolio September 25, 20061,326.37$ 998,634 November 11, 20061, ,069,503 Portfolio Beta Holding Period Return (HPR)5.62%7.10% Standard Deviation (weekly)2.07% Sharpe Ratio.3647 Jensen Alpha.66% M-Squared1.84%

Portfolio Performance

Sector Performance Return S&P % MBA SMF7.10% Excess Return1.48% Sector PerformanceReturn Consumer Discretionary4.58% Consumer Staples2.68% Energy2.97% Financials2.54% Healthcare1.72% Industrials2.97% Materials5.95% Technology8.05% Telecom1.48%

Individual Holding Performance

Future Considerations Consumer staples sector will be reexamined due to its current weight in our portfolio Energy prices are volatile and will move upwards based on OPEC’s production cuts; current investments will be reevaluated in 2007 Current investments in Telecommunications and Industrials are well-positioned to take advantage of industry trends

Future Considerations Investment in Utilities Portfolio beta to approach 1.00 Investment in CT based companies

Acknowledgements The University of Connecticut Foundation, Inc. Investment Advisory Board Dr. Chinmoy Ghosh

Questions