FDIC-Insured Cash Management

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Overview

Structural manages tailored, short-duration portfolios of FDIC-insured deposits for corporations, non-profits, and other institutional clients.

SafetySame “full faith and credit” backing as Treasuries Portfolios of FDIC-insured deposits, purchased in amounts

below insurance limit of $250,000 per bank

FDIC is backed by the full faith of the U.S. government

Assets are held in client name by independent custodian

1 As of July 1, 2011.

LiquidityAbility to meet unanticipated cash needs MMDA deposits provide costless weekly liquidity

Negotiable brokered CDs are traded in a market with >$3B average daily volume

Avoid high transaction costs associated with retail CDs

YieldHigher yields than alternatives 0.6-0.8%+ above Treasuries, net of fees1

Equates to $60,000-$80,000 per $10MM managed Higher net yields than money market funds, agency securities,

or corporate bonds

Higher net yields than self-managed CD portfolios, due to avoidance of retail and wholesale costs

ConvenienceTailored solution managed through a single account One account application, one statement, one 1099

Expanded FDIC-insurance capacity, up to $100MM per entity

Web interface to customize maturities and other parameters

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Government-insured safety

FDIC is backed by the full faith and credit of the U.S. government Congress has repeatedly affirmed this guaranty:

“Deposits up to the statutorily prescribed amount in federally insured depositor institutions are backed by the full faith and credit of the United States”

– Competitive Equality Banking Act of 1987 “Insured deposits are backed by the full faith and credit of the United States Government”

– Federal Deposit Insurance Reform Conforming Amendments Act of 2005

We purchase deposits in amounts below FDIC insurance limits Corporations, partnerships and individuals are insured for $250,000 of principal and accrued

interest per bank. Structural’s technology platform, automated execution, and redundant operational audits

ensure compliance with FDIC insurance limits.

All client assets are held at an independent, third-party custodian Each client establishes a separate custody account in their name to hold deposits. Assets are maintained in the trust department of an FDIC-insured custody bank and

cannot be used by the custodian or its corporate parent for any purpose.

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Sources of higher yields0.6-0.8+% incremental yield net of fees vs. Treasuries1

= $60,000-$80,000+ per $10MM managed Deposits yield more than alternatives Yields are persistently high due to the effort

required to purchase them. This opportunity has long been recognized by

sophisticated investors:“Regular opportunities exist to purchase full faith and credit instruments of the U.S. government at spreads of 40 to 50 basis points above otherwise comparable but more liquid treasury issues... opportunities tend to be small, requiring portfolio managers to ‘fill a bathtub with a teaspoon.’”2

– David Swensen, CIO, Yale University

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“Cherry pick” best yields for clients Structural selects highest yielding deposits from

universe of 1,500+ issuing banks.

3 Wholesale trading relationships Structural eliminates hidden fees, including retail

mark-ups and selling concessions.

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2 Limited institutional competition FDIC insurance limits preclude material purchase

by money market and other mutual funds. Significant investment in technology and sourcing is

a barrier to new providers.

Higher yields

1 Structural yields reflect deposit yields available the week ending July 1, 2011, net of Structural fee of 0.225%. Yields for other instruments do not reflect cost of management.

2 Pioneering Portfolio Management (1998)

Term: 0-1 yearWAM: 6 months

0.10% 0.15%

0.46%0.70%

Treasuries Agencies AA corporate bonds

Structural,net of fees

No fees included

0.22% 0.30%

0.61%

1.00%

Treasuries Agencies AA corporate bonds

Structural,net of fees

No fees included

+0.78%

Term: 0-2 yearsWAM: 1 year

0.22% 0.30%

0.61%

1.00%

+0.60%

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Liquidity

Structural purchases negotiable CDs and weekly-liquidity MMDA deposits Money market deposit accounts (MMDAs) – frequently referred to as savings accounts – permit withdrawals

each Thursday. Negotiable CDs trade and settle like other DTC-eligible fixed income securities. This is in contrast to direct-from-

bank retail CDs, which cannot be traded.

Negotiable CDs can be sold on secondary markets The market for negotiable CDs has significant depth, with average daily trading volume of over $3 billion. Negotiable CDs can be sold without early termination penalties; Structural charges no fee for managing early

liquidation. By contrast, direct-from-bank retail CDs cannot be traded and typically impose significant penalties on early withdrawal.

Structural’s liquidation process minimizes transaction costs for negotiable CDs Crossing – Where possible, Structural crosses CDs between clients requiring early liquidation and clients with

demand for similar maturities and yields. This benefits both parties by avoiding bid-ask cost. Multiple competitive bids – When crossing is not possible, Structural solicits multiple wholesale bids through a

competitive auction process. Low transaction costs – We estimate that clients for whom we sell at wholesale incur round-trip transaction costs

of 0.10-0.15% on a one-day liquidation of instruments with maturities of 9 months or less (and lower costs with more patient liquidation). For clients with reasonable confidence in their liquidity needs, the higher yield that CDs provide should more than offset any transaction cost from unanticipated liquidations.

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Complete on-line application to open an account in 10 minutes

Use the web interface to specify investment parameters Maturity ladder and/or dollar amounts required on specific dates (e.g., tax payment: April 15th) Advanced parameters if desired (e.g., permitted banks, minimum spread to Treasuries)

Structural’s proprietary technology platform and investment processes automate portfolio implementation Aggregate highest yielding inventory across over 40 trading partners Apply client-specific restrictions and investment parameters Purchase CDs and MMDAs Ensure compliance with FDIC insurance limits Roll CDs at maturity Manage recovery process in the event of bank failure Provide daily reports through Structural website and third party custodian Create FAS 115/157 compliant month-end reports and data exports to most accounting platforms

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Web: www.structuralinvest.com/cash ►

Simple account setup

Convenience

Automated portfolio management

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Phone support: (415) 963-4900 ►

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Structural fees

CDs 0.250 %0.200 0.1750.150

No fee

Structural does not accept commissions, soft dollars or other inducements. Client fees are our sole source of revenue.

0.050 %Treasuries

First $10 million$10-100 million $100-500 millionBeyond $500 million

Huntington National Bank 0.010 %Independent custody fees

Pricing

Structural works with other custodians as requested by clients. These custodians may have different fee schedules.

Money market funds

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Corporations – We serve publicly-traded and privately-held companies. We offer the convenience of FASB-compliant accounting in addition to the higher yields and safety provided by FDIC-insured CDs.

Family offices – We manage “permanent” cash and reserves for tax payments, capital calls, and other planned outflows.

Financial advisors – We partner with financial advisors to provide a cash management solution that is differentiated, convenient and provides real safety and yield benefits to clients.

Financial services firms – We offer cash and fixed income management for a range of liability-driven financial services applications (e.g., escrow accounts, reinsurance, and collateral management).

Institutions – We provide cash and fixed income management to foundations, endowments, and other tax-exempt institutions.

Structural was founded in 2005 by leaders in financial markets and technology. Our mission is to build the next generation of passive investment management. We do not attempt to “beat the market”through security selection or market timing. Rather, we use separate accounts, managed to client-specified parameters, to achieve benefits not available through commingled funds. We use technology to ensure that the large number of routine tasks required to obtain these benefits are executed flawlessly and at low cost.

Joel HornsteinFounder, Chief Investment Officer

Aaron KesslerClient Service

Matthew PollockMarketing & Business Development

David SlusarskiTrading & Operations

Ed NicollFounder, Chairman Emeritus

Overview

Principals

Clients

About Structural

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Bank health All CDs that Structural purchases are insured by the FDIC, regardless of the health of the issuing bank. Independent firms such as IDC rate bank health in a manner intended to approximate the FDIC’s confidential CAMEL score. Clients may choose to exclude banks below a certain IDC rating, which may reduce achievable yields.

Appendix: Bank safety and FDIC mechanisms

Bank failures In the event of a bank failure, the FDIC works to facilitate assumption of deposits by another bank, which becomes

responsible for ongoing payment of coupons and principal. Should the acquiring bank subsequently fail, time deposits issued by the first bank are considered separate from those of the acquirer in application of FDIC insurance limits.

If a failed bank’s deposits are not acquired, the FDIC targets payment principal and accrued interest to the depositor within two business days. Structural works with the custodian and the FDIC to ensure speedy recovery of funds.

Term deposits purchased on the secondary market at a premium to par Fluctuations in interest rates may cause CDs to trade at a premium to par value. In the event of bank failure, any premium

paid to par is not insured by the FDIC. To compensate for this risk, Structural’s purchase logic requires higher yields on deposits trading at a premium to par. Structural does not purchase instruments trading at a premium to par from banks rated 1 by IDC. Clients may choose to

exclude all deposits trading at a premium to par, which may reduce achievable yields.

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Appendix: Structural avoids markups embedded in retail yields

Structural sourcing

Yield

Issuing bank Originator Wholesale distributors

1.35%

Retail distributors

1.25%

Negotiate terms Register CUSIP,

DTC eligibility

Distribute to brokers, other sales channels

1.00%

Sell through full service and discount brokers

1.17%

Purchaser

Illustrative supply chain for 12-month new-issue term deposit, 1.00% coupon

Price

99.65 99.75 99.83 100.00

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Situation $25MM in cash held by the

management company of a private equity firm to fund ongoing operations and strategic investment

Was invested in a JP Morgan Federal Money Market fund earning 0.04% and exposed to credit risk

Client specified maturity ladder from 1 to 24 months

Results

Improved safety to achieve “full faith and credit” of U.S. government

Achieved average YTM, net of fee, of 1.11% (1.33% gross), an annualized $277,500 of incremental income

Achieved average spread to Treasuries, net of fee, of 0.67% (0.89% gross)

Appendix: Client case study - initial implementation

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Situation Balance fluctuated between

$25 and $50 million due to client additions/withdrawals

Structural shortened average duration in response to client request

Interest rates declined further, reducing yield on client’s former money market fund to 0.00%

Results

Achieved 2.07% return, net of fee (2.40% gross) over first 18 months, 1.63% ahead of Treasury index benchmark

Recognized $570,270 in incremental return, net of fee, relative to benchmark (without fee)

Recognized $715,870 in incremental return, net of fee, relative to original money market fund

Appendix: Client case study - performance over time

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CDARS®

Safety

CDs purchased at a broker

(e.g., Schwab.com)Structural Treasury money

market funds

Convenience

Liquidity High retail bid-ask and other transaction costs (e.g., Schwab.com charges minimum $35 commission to sell through broker).

Appendix: Structural versus CD/Treasury alternatives

Yield

Funds can invest up to 20% of assets in non-Treasury securities. Holdings need only be disclosed once per quarter.

Bank naming conventions and mergers makes ensuring FDIC insurance compliance difficult.

The highest yielding Treasury money market fund currently yields 0.02%. Higher yields available in other funds reflect credit and/or extension risk.

Sets network rate significantly below what some banks are willing to pay. Network fee further reduces yield. For example: At 12 months, CDARS = 0.32% vs. Structural = 0.70%.1

Yields are lower than Structural (even after Structural fee) due to limited inventory and hidden mark-ups.

Logistically difficult to setup maturity ladders, manage FDIC compliance, and roll CDs at expiration.

Not saleable. Early liquidity entails significant penalty that may result in loss of principal.

1 CDARS and Structural CD yields represent average per maturity for the week ending July 1, 2011. Structural CD yields shown net of Structural fee of 0.225% for a $20MM portfolio.

Disclaimers

Spreads and yields quoted are representative values as of the dates listed. These will change over time with market fluctuations.

Clients may recognize losses if liquidity is required prior to an instrument’s maturity. In defining implementation parameters, we recommend a term structure of instruments that considers the possibility of early sale.

An electronic copy of this document is available at:

www.structuralinvest.com/cash

50 California Street, Suite 3260San Francisco, CA 94111

For further information, please contact:

Matt Pollock, Principalmpollock@structuralinvest.com(415) 963-4917