2010 - 11 CD #16.1 2010 - 11 ET #6.9 2010 11 EBD #13.3 (2010 11 Annual Conference) Endowment Trustees Report to Executive Board (Long-Term Investment Fund) Dan Bradbury Senior Trustee Sunday June 26, 2011 Exhibit #1 Issues Affecting the Oil prices spiked during the 1 quarter as gas reached $4.50 a Market st gallon now falling Key economic indicators have been faltering since late April but the Fed remains hopeful of a stronger second half Unemployment unexpectedly rose to 9.1% Private sector wage growth today is about the same as in 2001 Retailers reported weak May sales results The disruptive impact of the Japanese disaster on manufacturing now working its way through the system. The stalemate over Greek debt restructuring has resulted in violence and are disrupting European Union and global markets
US rating agencies threatening to downgrade US debt 9 Exhibit #2 Estimated Economic Growth ACTUAL 2010 Forecast 2011 Forecast 2012 Global Growth 5.1% 4.3% 4.5% Advanced economies 3.0% 2.2% 2.6% 2.9% 2.5% 2.7% 1.8% 1.3% 4.0% 7.4% 10.3%
10.4% 4.0% 7.5% $79.03 1.6% 6.1% 2.0% 1.5% -0.7% 6.6% 9.6% 8.2% 4.8% 4.1% $106.30 2.6% 6.9% 1.7% 2.3% 2.9% 6.4% 9.5% 7.8% 4.5% 3.6% $105.25 1.7% 5.6% United States Euro Zone United Kingdom Japan Emerging Economies China India Russia Brazil Crude Oil Price Per Barrel CPI - Advanced CPI - Emerging
Source: International Monetary Fund World Market Performance* Exhibit #3 S&P 500 Shanghai Comp Nikkei 225 DAX NASDAQ Eurostoxx50 Hang Seng Dow Jones FTSE 100 CAC - 40 -8.00% -6.00% *Six months through 6-20-11 -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% Market Value @ 5-31-11 Exhibit #4 10 Endowment Fund Manager Allocation & Style @ 5-31$33,471,467
11 Exhibit #5 11 Performance Gains 5/31/11 (YTD Returns) Managers A lliance - Core IDP - Large Cap Growth IDP - Large Cap Value NFJ - Small Cap Value A riel Capital - SRI IDP - International Invesco - REIT Total Equity Managers Neuberger - Intermediate Lord A bbett - Conv Bonds Global Bond & Real Assets PIMCO - Bonds Total Fixed Income Managers Endowment Fund* - A lternative Total Portfolio Value** Market Value % $ $ $ $ $ $ $ 4,694,604 4,622,066 3,303,162 1,659,474 605,707 2,229,990 1,669,107
14.0% 13.8% 9.9% 5.0% 1.8% 6.7% 5.0% $ 18,784,110 56.1% $ $ $ $ 1,566,959 924,747 4,836,206 3,816,626 4.7% 2.8% 14.4% 11.4% $ 11,144,538 33.3% $ 3,542,819 $ Exhibit #6
Returns Index 6.5% 6.1% 6.4% 10.2% 9.1% 7.4% 13.9% 7.8% 8.4% 8.1% 6.4% 9.5% 6.6% 14.1% 2.4% 3.7% 5.5% 3.5% 2.5% 6.0% 4.3% 3.1% 10.6% 5.0% 4.4% 33,471,467 100.0% 5.9% 6.3% *Returns for the Endowment Fund are reported on a 30 day lag basis. As such this represents their performance through 4-30-11. additionally, it is a fund of funds hedge fund. **The ALA composite index is comprised of the 55% Russell 3000, 35% Merrill Lynch Domestic Master and 10% MSCI EAFE
12 Exhibit #7 Asset Allocation Strategy ASSET ALLOCATION STRATEGY Domestic Large/Medium Cap Stocks Alliance Bernstein - Core IDP - Large Cap Value IDP - Large Cap Growth Ariel - SRI Domestic Small/Medium Cap Stocks POLICY GUIDELINES @ 3-31-11 Min Target Actual Max 30% 40% 39.7% 50% 14.2% 10.0% 13.9% 1.6% 0% 5% 5.0% 5.0% 10.3% 10.3% 10% 0% 10% 5%
10% 6.8% 6.8% 15% 5% 5% 4.9% 4.9% 15% 20% 30% 33.3% 4.6% 14.7% 2.8% 11.2% 50% 0% 0% 0% 100% 5% NFJ - Small Cap Value Alternative Investments Endowment Fund
International Equity IDP - International Real Estate Investment Trust (REIT) Invesco Investment Grade Fixed Income Neuberger Intermediate Global Fixed Lord Abbett PIMCO - Bonds Cash and Cash Equivalents 15% 13 Exhibit #8 Recent Tactical Moves in the Portfolio Actions Reduced US fixed income holdings by 4% ($1.2 million) by trimming Pimco from 15% of the portfolio to 11%. Increased US equity holdings by 4% ($1.2 million) by adding 2% ($600,000) to Alliance, the Large Cap Core manager and 2% ($600,000) to the IDP Large Cap Growth manager. *Real assets added to the portfolio in November Global Bond, Real Assets Rational Market conditions suggest an
overweighting of real assets*. There is an increased expectation by the market and analysts that S&P earnings will grow from $95 per share to $100 per share. Emerging markets are mired in country specific problems related to rising inflation. Debt resolution in Europe and US is an ongoing concern Exhibit #9 Other Actions Taken By the Trustees Actions Rational Recommend revising the spending/payout formula in ALA policy 8.5.1 to a range of 3% - 5% of the five-year trailing calendar quarterly (20) rolling average of each funds net asset balance. After approval to increase the number of Trustees to a maximum of seven (7), the Trustees recommend the addition of one additional Trustee position in the upcoming renewal cycle which concludes at the end of the Annual Conference in Anaheim, CA 2012. This will increase the number of Trustees* from 4 to 5. *Includes the ALA Treasurer.
To provide a more clarity and certainty from a planning and budgeting perspective, and to make available more dollars for awards, scholarships, special projects/initiatives general day to day operations The portfolio has reached a size and sophistication i.e. number of managers, strategies employed, complexity of investment options, that additional expertise is would benefit the management of the portfolio. Endowment Value FY 2001 FY 2010 (8-31-XX) Exhibit #10 Exhibit #11 Cumulative Revenue Sources and Expenses 2001 2010 *Includes scholarships, awards and bank fees.
