INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS

INVESTMENTHIGHLIGHTS

ATTRIBUTION ANALYSIS

CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate

SIM Fund Student Investment Management Fund

1

W. P. Carey School of Business

Undergraduate Maroon & Gold Value Fund

Semi-Annual MeetingDecember 4th, 2009

INTRODUCTION

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


2

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

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


3

FUND PERFORMANCE

Fund Performance

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


4

FUND PERFORMANCE

Fund Performance

• Two portfolios• Purchases• Sales• Earnings

IVV Benchmark (Cash)

2.81%

Sim Fund IVV Benchmark SIM Fund (Cash)

4.36%5.39%7.21%

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


5

FUND PERFORMANCE

10/5/2009 10/12/2009 10/19/2009 10/26/2009 11/2/2009 11/9/2009 11/16/2009 11/23/2009-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%Cumulative Percent Return

SIM Fund

IVV

Buy/Sell

Earnings

SIM 7.21%IVV

5.39%

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


6

FUND PERFORMANCE

5-O

ct-0

9

12-O

ct-0

9

19-O

ct-0

9

26-O

ct-0

9

2-N

ov-0

9

9-N

ov-0

9

16-N

ov-0

9

23-N

ov-0

9

-75

-50

-25

0

25

50

75

100

125

150

175

200

225

250

Basis Points Above IVV BenchmarkSIM

7.21%IVV

5.39%

BP

S

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


7

Economic OverviewECONOMICOVERVIEW

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


8

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

ECONOMICOVERVIEW

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


9

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

ECONOMICOVERVIEW

Up 2.0% since August




Revised 2.8% increase

Case Schiller, Existing Home Sales

10.2%, still continues to lag

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


10

Portfolio Structural DecisionsPORTFOLIOSTRUCTURE

Portfolio | Allocation

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


11

PORTFOLIOSTRUCTURE

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

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


12

PORTFOLIOSTRUCTURE

Allocation

• Diversification• Strategy of beating benchmark

─ 9 sectors, 1 potential fixed income position─ $100,000 ($10,000 per position)─ Sector analyst recommended weighting

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


13

PORTFOLIOSTRUCTURE

Sector Allocation

Technology13.3%

Discretionary11.4%

Financials11.4%

Materials10.3%Healthcare

10.1%

Cash10.1%

Staples9.3%

Telecom8.4%

Industrials8.4%

Energy7.4%

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


14

Investment Selection Process

INVESTMENT SELECTION

Sector reports | investment selection | due diligence | committee

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


15


Sector Reports

• Top-down analysis approach• Sub-sector focus• Determined view by examining:

─ Economic reports, performance charts, industry publications, wall street research reports, etc.

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


16


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

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


17


Committee, Monitoring

• Committee decision─ Vetting process/due diligence─ Majority consensus

• Monitoring─ Company briefings & industry updates

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


18

Stocks to Highlight


American Express (AXP) | CVS Caremark (CVS)

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


19

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


INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

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20

5-Oct-09 12-Oct-09 19-Oct-09 26-Oct-09 2-Nov-09 9-Nov-09 16-Nov-09 23-Nov-09

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

American Express (AXP) PerformanceOctober 5th - November 27th

Percentage Return

American Express (AXP)


$32.76

$40.84

+22.9%

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


21

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


INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


22

CVS Caremark(CVS)

• Purchased KO (11/30) at $56.97 to replace CVS in Consumer Staples

21-Oct-09 26-Oct-09 31-Oct-09 5-Nov-09 10-Nov-09

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

CVS Caremark PerformanceOctober 21st - November 10th

$37.75

$30.15INVESTMENTHIGHLIGHTS

(18.9%)

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


23

Attribution Analysis

ATTRIBUTIONANALYSIS

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


24

Weighted Portfolio Return

ATTRIBUTIONANALYSIS

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

-0.40% -2.53%

0.24%

2.53%

0.05%

-0.04%

0.77%

-0.07%

0.05%

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

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


25

Performance Attribution

ATTRIBUTIONANALYSIS

Allocation Effect Selection Effect Interaction Effect

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2.07%

0.59%

-0.45%

- Allocation Effect: Investing in the right sector? 2.07%

- Selection Effect: Stock picking? 0.59%

- Interaction Effect: Combination? - 0.45%

Total Effect = 2.21%

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


Allocation Effect & Selection Effect

ATTRIBUTIONANALYSIS

- Allocation effect as the determining factor- Selection effect on the best and the worst performers- A global perspective contributes to stock selection

Consumer

Discreti

onary

Consumer

Staples

Energ

y

Finan

cials

Health

care

Industrial

s

Informati

on Tech

nologies

Materia

ls

Telec

om

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

Selection Effect

Allocation Effect

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


27

Lessons Learned & Conclusion

CONCLUSION

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


28

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

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


29

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

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


30

Appendices

APPENDICES

Fund Holdings |Transaction History | Resumes

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


31APPENDICES

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)

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


32APPENDICES

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%

INTRODUCTION

FUND PERFORMANCE

PORTFOLIOSTRUCTURE

SELECTION PROCESS



CONCLUSION

ECONOMIC OVERVIEW

APPENDICES

Undergraduate


33APPENDICES

Alternative Metric- Assumes IVV or SPY Holdover Funds Instead of Cash Position

Unweighted IVV Given holdver funds Aggregating SIM Fund Performance Relative Performance

Shares BenchmarkSIMF IVV

PurchasedTotal SIMF Shares of

IVV IVV Funds Positions SIM Fund SIM Fund IVV SIM Fund* Benchmark*958 $ 99,967.30 649 649 $ 67,723.15 $ 32,285.40 $ 100,008.55 0.00% 0.00% 0 0958 101,356.40 - 649 68,664.20 32,824.20 101,488.40 1.48% 1.39% 9 0958 101,653.38 - 649 68,865.39 32,902.80 101,768.19 1.76% 1.69% 7.3 0958 102,429.36 - 649 69,391.08 33,101.90 102,492.98 2.48% 2.46% 2.1 0958 103,032.90 (153) 496 53,344.80 49,925.10 103,269.90 3.26% 3.07% 19.4 0958 103,492.74 - 496 53,582.88 50,266.20 103,849.08 3.84% 3.53% 31.4 0958 103,301.14 - 496 53,483.68 50,178.00 103,661.68 3.65% 3.33% 31.8 0958 105,092.60 (181) 315 34,555.50 70,694.30 105,249.80 5.24% 5.13% 11.4 0958 105,447.06 - 315 34,672.05 71,129.00 105,801.05 5.79% 5.48% 31 0958 104,661.50 (93) 222 24,253.50 79,971.90 104,225.40 4.22% 4.70% -47.9 0958 105,542.86 - 222 24,457.74 80,933.70 105,391.44 5.38% 5.58% -19.5 0958 105,025.54 - 222 24,337.86 80,470.70 104,808.56 4.80% 5.06% -26 0958 104,000.48 (87) 135 14,655.60 89,580.30 104,235.90 4.23% 4.03% 19.2 0958 105,035.12 - 135 14,801.40 90,958.90 105,760.30 5.75% 5.07% 68.2 0958 103,904.68 - 135 14,642.10 89,287.10 103,929.20 3.92% 3.94% -1.8 0958 102,688.02 - 135 14,470.65 88,819.20 103,289.85 3.28% 2.72% 55.9 0958 102,285.66 - 135 14,413.95 88,820.10 103,234.05 3.23% 2.32% 90.6 0958 100,360.08 - 135 14,142.60 87,265.90 101,408.50 1.40% 0.39% 100.7 0958 102,467.68 - 135 14,439.60 89,373.70 103,813.30 3.80% 2.50% 130.3 0958 99,603.26 - 135 14,035.95 87,333.90 101,369.85 1.36% -0.36% 172.5 0958 100,235.54 - 135 14,125.05 88,097.70 102,222.75 2.21% 0.27% 194.6 0958 100,561.26 - 135 14,170.95 87,851.00 102,021.95 2.01% 0.59% 141.9 0958 100,685.80 - 135 14,188.50 88,033.50 102,222.00 2.21% 0.72% 149.5 0958 102,659.28 - 135 14,466.60 88,194.60 102,661.20 2.65% 2.69% -4 0958 102,994.58 - 135 14,513.85 88,518.20 103,032.05 3.02% 3.03% -0.5 0958 105,303.36 - 135 14,839.20 91,047.70 105,886.90 5.88% 5.34% 54 0958 105,274.62 - 135 14,835.15 91,022.90 105,858.05 5.85% 5.31% 54 0958 105,839.84 - 135 14,914.80 91,648.00 106,562.80 6.55% 5.87% 67.9 0958 104,776.46 - 135 14,764.95 90,567.90 105,332.85 5.32% 4.81% 51.3 0958 105,399.16 - 135 14,852.70 91,594.70 106,447.40 6.44% 5.43% 100.5 0958 106,864.90 - 135 15,059.25 93,013.80 108,073.05 8.06% 6.90% 116.4 0958 106,960.70 - 135 15,072.75 92,675.90 107,748.65 7.74% 7.00% 74.4 0958 106,931.96 68 203 22,658.86 85,081.30 107,740.16 7.73% 6.97% 76.4 0958 105,504.54 - 203 22,356.39 84,294.40 106,650.79 6.64% 5.54% 110.3 0958 105,274.62 - 203 22,307.67 83,892.60 106,200.27 6.19% 5.31% 88.2 0958 106,567.92 - 203 22,581.72 85,428.70 108,010.42 8.00% 6.60% 139.8 0958 106,615.82 - 203 22,591.87 85,373.50 107,965.37 7.96% 6.65% 130.5 0958 107,018.18 - 203 22,677.13 86,218.60 108,895.73 8.89% 7.05% 183.3 0958 $ 105,351.26 - 203 $ 22,323.91 $ 84,774.20 $ 107,221.11 7.21% 5.39% 182.6 0

*Normalized against benchmark

Documents

INTRODUCTION FUND PERFORMANCE PORTFOLIO STRUCTURE SELECTION PROCESS INVESTMENT HIGHLIGHTS ATTRIBUTION ANALYSIS CONCLUSION ECONOMIC OVERVIEW APPENDICES