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Student Managed Fund

Student Managed Fund. MBA Performance Report March 8, 2007. Mike Amodeo Devika Chirayilparambu Matt Cordeiro Vasilios Diakogeorgiou Samara Hollander. Daniela Ionescu Adam Macko Puru Patnekar John Salemi Amanda Wallace. MBA Managers. Agenda. Investment Philosophy Investment Process

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Student Managed Fund

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  1. Student Managed Fund MBA Performance Report March 8, 2007

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

  3. Agenda • Investment Philosophy • Investment Process • Portfolio Performance • Firm Activity • Forward Expectations • Q & A

  4. Investment Philosophy • Follow a fundamental bottom-up approach • Focus on companies with a market cap of at least $1Billion • Target stocks that trade at a minimum 15% perceived discount to their intrinsic value • Benchmark is to outperform the S&P 500 Index by 5% annually • Invest across a diversified group of sectors to emulate the S&P 500 Index

  5. M $ F Investment Process Stock Selection Sell Discipline Fundamental Analysis

  6. Seek high quality US Equities that exhibit strong growth potential within their industry Screeners: Yahoo! Finance MSN Money Central Reuters MagicFormulaInvesting.com Rank stocks based on: Earnings/Sales growth Net/Operating margins ROE, ROA P/E, PEG Stock Selection

  7. Fundamental Analysis • Narrow down the range by emphasizing on the following value drivers • Operating Margins • Revenue and Earnings ramp-up • Capital Expenditure • R&D Intensity • Free Cash Flow Growth • Discounted Cash Flow Analysis • Relative P/E analysis • EVA analysis

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

  9. Performance Highlights S&P 500 SMF Beginning value (9/01/2006) $ 1,303.82 $ 990,089.88 Ending Value (2/16/2007) $ 1,455.53 $ 1,127,975.27 Returns 11.636% 13.927% Allocation and Management Total equity positions $ 1,127,166.34 Total cash position $ 808.93 Value (2/16/2007) $ 1,127,975.27 Portfolio Performance Performance Highlights

  10. Ticker Company Returns 23.35% ANF Abercrombie and Fitch 18.14% LH Laboratory Corp. 16.87% HRS Harris Corp. 16.45% SHW Sherwin Williams 14.52% JEC Jacobs Engineering 12.20% SCSS Select Comfort 12.09% ADTN Adtran Inc. 10.79% GD General Dynamics 9.66% FPL Florida Power and Light 9.59% MO Altria 6.22% HRL Hormel Foods 4.39% AEOS American Eagle Outfitters 3.67% TXN Texas Instruments 2.48% AXP American Express 1.82% OXY Occidental Petroleum 1.79% NVS Novartis 1.58% BAC Bank of America 0.27% VRGY Verigy Ltd. -0.70% BTU Peabody Energy Corp. -0.87% PEP Pepsi Co. -1.35% NFX Newfield Exploration -2.37% ARJ Arch Chemicals -3.94% BER Berkeley -7.94% ORCL Oracle Individual Holding Performance

  11. 14.000% 12.000% 10.000% 8.000% SMF 6.000% S&P 500 4.000% 2.000% 0.000% 1/5/2007 2/2/2007 12/8/2006 1/19/2007 2/16/2007 9/29/2006 11/24/2006 12/22/2006 11/10/2006 10/13/2006 10/27/2006 Comparison with S&P 500

  12. SMF Sector Allocation (2/16/2007) Utilities Energy 4% Telecom 12% Materials 5% IT 8% 16% Industrials 8% Financials 12% Consumer Health Care Discretionary Consumer 9% 13% Staples 13% Sector Allocation

  13. SMF Sharpe Ratio S&P 500 Sharpe Ratio S(X) = Rp - Rf / σp Rp 0.53% Rp 0.44% Rf 0.09% Rf 0.09% σp 1.65% σp 0.96% Sharpe 0.267 Sharpe 0.365 Portfolio Efficiency Statistics • Beta : 0.872 • Alpha : 0.014 • M2 : 1.85% • Modified Dietz Return (Bi-weekly) • SMF: 0.67% • S&P 500: 0.5%

  14. Portfolio Excess Return 2.291% Contribution from stock selection 1.423% Contribution from sector allocation 0.867% Contribution from cash allocation -0.008% Contribution from SPYDR 0.010% Performance Attribution Analysis

  15. Firm Activity • Verigy (VRGY) • Guidance Adjusted Upwards • Jacobs Engineering (JEC) • Guidance Adjusted Upwards • Altria (MO) • Kraft spin-off • Novartis (NVS) • FDA approval for Exforge • FDA delay for Galvus • Oracle (ORCL) • Analyst Downgrade and License Sales • Hyperion Acquisition POSITIVE POSITIVE POSITIVE CAUTION CAUTION

  16. Forward Expectations • Interest rates remain stable • Earnings growth slows towards historical average • Stocks currently are fairly valued • Expect 2007 returns to mirror long-run average (8%-12%)

  17. Forward Expectations NEUTRAL • Monetary Policy • Fiscal Policy • Economic Growth • Corporate Earnings Growth • Inflation • Market Valuation NEUTRAL NEUTRAL NEUTRAL/POSITIVE NEUTRAL NEUTRAL

  18. Learning Experience • Strength in Numbers • 10 Managers – 10 Different Styles to Learn From • Expertise Across Different Industries • Stand Up to the Scrutiny of Peers • Look for Compelling Business Stories • What is the Company’s Competitive Advantage? • Why Will Your Stock Outperform the Market? • Add Value Through Event-Driven Returns • Look for Opportunities that Will Unlock Value

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

  20. Questions

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