1. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund W. P. Carey School of Business Undergraduate Maroon & Gold Value Fund Semi-Annual Meeting December 4 th, 2009 INTRODUCTION 1

2. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Today’s Agenda Team introduction & fund objectives Fund performance Economic outlook & market overview Portfolio structure decisions Investment Selection Process Investments to highlight: — American Express Inc (AXP) — CVS Caremark (CVS) Attribution analysis Lessons learned & conclusion INTRODUCTION 2

3. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund FUND PERFORMANCE Fund Performance 3

4. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund FUND PERFORMANCE Fund Performance Two portfolios Purchases Sales Earnings 4

5. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund FUND PERFORMANCE SIM 7.21% IVV 5.39% 5

6. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund FUND PERFORMANCE SIM 7.21% IVV 5.39% BPS 6

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

8. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Economic overview We expect slow-to-modest economic growth over next 1-year time frame. We expect large caps to outperform small-to-mid cap stocks as uncertainty and doubt still exists in the market Our belief is the FED will not raise interest rates in the short term, will have a positive benefit for both Equity and Fixed Income markets ECONOMIC OVERVIEW 8

9. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Economic overview Industrial Production ISM Manufacturing Disposable Income Personal Consumption GDP Growth Housing Indices Labor/Unemployment Current focus is on the consumer Going forward we expect this trend to continue ECONOMIC OVERVIEW Up 2.0% since August Up 1.3% since August Up 0.9% since August Up 0.7% since August Revised 2.8% increase Case Schiller, Existing Home Sales 10.2%, still continues to lag 9

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

11. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund PORTFOLIO STRUCTURE Portfolio Diversified, large-cap fund Large-cap with market capitalization of $7bn+ Global exposure Financially strong & able to take advantage of opportunities More information available 11

12. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund PORTFOLIO STRUCTURE Allocation Diversification Strategy of beating benchmark ─9 sectors, 1 potential fixed income position ─$100,000 ($10,000 per position) ─Sector analyst recommended weighting 12

13. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund PORTFOLIO STRUCTURE Sector Allocation 13

14. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Investment Selection Process INVESTMENT SELECTION Sector reports | investment selection | due diligence | committee 14

15. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund INVESTMENT SELECTION Sector Reports Top-down analysis approach Sub-sector focus Determined view by examining: ─Economic reports, performance charts, industry publications, wall street research reports, etc. 15

16. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund INVESTMENT SELECTION Investment Reports Industry overview ─What is the current position of the sub-sector Fundamental analysis ─P/E ─Price to Book ─Revenue Growth ─Business Margins ─Return on Equity Buy/Sell recommendation 16

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

18. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Stocks to Highlight INVESTMENT HIGHLIGHTS American Express (AXP) | CVS Caremark (CVS) 18

19. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund American Express (AXP) Compared with competitors Visa and Discover Financial Services Reasons for Purchase ─Strong revenue generator ─Global business operations ─Also has world’s largest travel service business ─Closed-loop business model – allows Amex to capitalize on efficiencies that competitors do not have ─Credit markets weak, but Amex has high lending standards, which should mitigate delinquencies ─Ranked highest in 2009 in J.D. Power & Associates Credit Card Satisfaction Survey INVESTMENT HIGHLIGHTS 19

20. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund American Express (AXP) INVESTMENT HIGHLIGHTS $32.76 $40.84 +22.9% 20

21. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund CVS Caremark(CVS) Compared to Walgreens and Wal-Mart Reasons for Purchase ─Implications of Health Care Bill ─Increased sales volume and store traffic ─Possible decreased in PBM margins ─Strong presence in sun belt states ─Most successful customer loyalty program and created savings plus plan targeted at uninsured and underinsured customers Reasons for Sale ─Unexpected $4.8bn loss of contracts in 2010 ─Investigation by SEC into 2007 merger ─Federal Trade Commission investigating business practices ─Appointed new CFO INVESTMENT HIGHLIGHTS 21

22. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund CVS Caremark(CVS) Purchased KO (11/30) at $56.97 to replace CVS in Consumer Staples $30.15 INVESTMENT HIGHLIGHTS (18.9%) 22

23. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Attribution Analysis ATTRIBUTION ANALYSIS 23

24. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Weighted Portfolio Return ATTRIBUTION ANALYSIS To what do we attribute a manager’s performance? - Investing in the right sector? - Stock picking? - A combination? Attribution Analysis as means of evaluating our investment thesis Portfolio Return - Benchmark Return = Total Return Difference 3.1% - 0.89% = 2.21% **Based on holding period of Fifth-Third report 24

25. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Performance Attribution ATTRIBUTION ANALYSIS -Allocation Effect: Investing in the right sector? 2.07% -Selection Effect: Stock picking? 0.59% -Interaction Effect: Combination? - 0.45% Total Effect = 2.21% 25

26. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Allocation Effect & Selection Effect ATTRIBUTION ANALYSIS - Allocation effect as the determining factor - Selection effect on the best and the worst performers - A global perspective contributes to stock selection

27. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Lessons Learned & Conclusion CONCLUSION 27

28. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund CONCLUSION Lessons Learned Unexpected News ─Despite in-depth fundamental analysis, it is impossible to predict future events ─News released Nov. 5 causing stock price of CVS to drop 20% Sell discipline ─Determine if company is still strong fundamentally ─Stop-Loss of 15% on all securities ─Position sold must be replaced to maintain minimal cash position 28

29. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund CONCLUSION Conclusion Fund Structure ─Addressing groupthink Spring 2010 Semester ─Daniel Stone will be the new fund manager ─Fund will be investing in a mutual fund specializing in fixed income ─Accepted five new analysts 29

30. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund Appendices APPENDICES Fund Holdings |Transaction History | Resumes 30

31. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund APPENDICES Fund Holdings International Business Machines (IBM) American Express (AXP) Coach (COH) Teva Pharmaceuticals (TEVA) BHP Billiton (BHP) Exxon (XOM) Verizon Wireless (VZ) Danaher (DHR) Coca-Cola (KO) 31

32. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund APPENDICES Transaction History Buys: ─IBM (10/26): 110 shares @ $120.36, return: ─AXP (10/26): 320 shares @ $34.58, return: ─COH (10/26): 200 shares @ $50.30, return: ─TEVA (10/26): 110 shares @ $120.36, return: ─BHP (10/26): 100 shares @ $73.66, return: ─XOM (10/26): 110 shares @ $73.81, return: ─VZ (10/26): 290 shares @ $29.00, return: ─DHR (10/26): 120 shares @ $70.00, return: ─CVS (10/26): 250 shares @ $37.16, return: ─KO (11/30): 175 shares @ $56.97, return: Sells: ─CVS (11/10): 250 shares @ $30.15, return: -18.9% 32

33. INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES Undergraduate SIM Fund Student Investment Management Fund APPENDICES 33