cal poly pomona foundation, inc. california … · endowment investment policy #130 annual review...

CAL POLY POMONA FOUNDATION, INC.

CALIFORNIA STATE POLYTECHNIC UNIVERSITY, POMONA

INVESTMENT COMMITTEE MEETING

Friday, February 06, 2015 08:30 am – 09:30 am

Building #55 – Executive Conference Room

AGENDA

CONSENSUS ACTION ITEMS PAGE Consensus Action Items: Items in this section are considered to be routine and acted on by the committee in one motion. Each item of the Consent agenda approved by the committee shall be deemed to have been considered in full and adopted as recommended. Any committee member may request that a consent item be removed from the consent agenda to be considered as a separate action item. If no additional information is requested, the approval vote will be taken without discussion. 1. Minutes of 11/17/2014 Meeting Tom Goff 1 ACTION: Approval ACTION ITEMS 2. Investment Report 2nd Quarter 2014-15 David Prenovost 2 - 58

ACTION: Approval 3. Endowment Investment Policy #130 Annual Review David Prenovost 59 - 65

ACTION: Approval

DISCUSSION ITEMS

None Presented

INFORMATION ITEMS The following items provide information and reports by management staff to the committee. Staff and committee may engage in discussion on any item if requested by committee member or staff member. 4. CalPERS Valuation Reports for Foundation Pension Plan G. Paul Storey 66 5. Executive Director’s Report G. Paul Storey

OPEN FORUM

Memorandum

Date: January 28, 2015

To: Investment Committee

Cal Poly Pomona Foundation, Inc.

From: David F. Prenovost Senior Managing Director/CFO

Subject: INVESTMENT HIGHLIGHTS – Second Quarter 2014-15

GENERAL INVESTMENT PORTFOLIO

The General Investment Portfolio (Portfolio) has a current market value of $43.9 million at December 31, 2014 and is slightly over weighted in the equities and fixed income and under weighted in alternative investments. Please see Asset Class ranges and policy target vs portfolio allocation as well as Graystone’s and the Common Fund’s reports for further information.

Per the Foundation’s Policy # 133, only the quarterly yield is distributed; for the 1st quarter the yield was 0.34% or 34 basis points and the scholarship programs received $10,988 and the Foundation programs received $95,407; for the 2nd quarter the yield was 1.16% or one hundred and sixteen basis points (net of Foundation quarterly fee of 0.12% or twelve basis points) and the scholarship programs received $41,250 and the Foundation programs received $349,930. The significant increase in the quarterly yield is due to the “special cash dividend” of twenty-one cents per share or $227,299 from the PIMCO Low Duration.

The Foundation has received capital call notices and has contributed $211,875 against its commitment of $250,000 to Capital Partners IV and $598,875 against its commitment of $750,000 to Capital Private Equity Partners VII. The value of the Non-Marketable Investments is $856,793 at December 31, 2014 please see Common Fund Summary Investment Report for further details.

The Alternative Investment in Innovation Way infrastructure is $2.0 million and for the year-to-date fiscal year 2014-15 was charged $34,869 per the terms of the investment. This alternative investment repaid $300,000 in the first quarter of fiscal year 2014-15.

ENDOWMENT INVESTMENT PORTFOLIO

The Endowment Investment Portfolio (Portfolio) has a market value of $88.2 million at December 31, 2014 and is slightly under or over weighted by no more than 170 basis points; please see Graystone’s report, peer group investment analysis and capital market overview for further information.

The Foundation’s Endowment and General Investment Policies 130 and 131 requires a comprehensive quarterly report of the investment portfolios performance be provided to the Investment Committee and Board of Directors at each regularly scheduled meeting. Recommended Action: The members of the Investment Committee approve that the quarterly investment reports are in compliance with the investment policies and recommends the quarterly investment reports be presented at the next regularly scheduled Board of Directors meeting.

PASSED AND ADOPTED THIS 6th DAY OF FEBRUARY 2015. By:

Thomas M. Goff, Chair Investment Committee 2

Capital Markets Overview

January 7, 2015

© 2014 Investments and services offered through Morgan Stanley. Member SIPC. Graystone Consulting is a business of Morgan Stanley. 3

The information contained herein has been taken from sources deemed reliable, but there is no guarantee of its complete accuracy.

Capital Markets Observations: Q4-2014 Recap Factors driving the capital markets and influencing asset values in the recent quarter…

Global investors continued to show a strong preference for US assets as 2014 drew to a close.

Global growth concerns caused a sharp decline in risk assets at the start of Q4, but US assets fully recovered to post solid gains for Q4. Deteriorating growth indicators in Europe, Japan and across the Emerging Markets explained the volatility spike. By mid-October, losses ranged from -5% for the S&P 500 to -7% for Developed Markets (EAFE) with cyclical sectors showing double-digit losses. Investors took action by rotating into US equities, US fixed income, and the US dollar – and all showed gains for Q4, while non-US assets were mostly lower. Despite elevated valuations, US assets remain a source of relative stability and steady growth.

Deflation fears persisted in foreign markets, especially Europe and Japan. The ECB and BoJ expanded asset purchase programs aimed at keeping rates low. Indeed, the Euro and Yen currencies weakened and bond yields continued to fall. China joined the monetary stimulus effort by cutting rates, and relaxing reserve requirements. However, markets might be concluding that access to credit is not so much the issue. A growing chorus is now calling for structural reforms – tax cuts and less regulations – to stimulate demand.

Global supply/demand imbalances caused a severe drop in energy prices in Q4 with higher price volatility across multiple asset classes. Hydraulic fracturing has allowed the US to raise production.

Weak global demand collided with increased energy supplies in Q4 and crude prices plunged 41%. Cyclical assets underperformed, especially equities and high-yield bonds in the Energy/Materials sectors, especially highly-leveraged small-cap securities. Notably, energy consumers tended to outperform energy producers across regions, markets and economic sectors.

Top Q4 performers were mostly defensive-oriented sectors and rate-sensitive assets: Utilities, REITs, Healthcare, and Consumer Staples/Discretionary along with high-quality long-duration bonds. Active managers tended to underperform in 2014 precisely due underweights in defensive/rate-sensitive equities and long bonds.

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Capital Markets Performance Summary: Q4-2014 Global investors favored US assets in Q4, mostly defensive growth sectors and rate-sensitive assets…

Sources: FactSet, Graystone Consulting 12/31/2014

Global Asset Class Returns QTD YTD1 Year Return

1 Year Risk

Russell 2000 Index 9.73% 4.89% 4.89% 14.86%BC 20+ Year UST 9.35% 27.48% 27.48% 7.13%S&P 500 Index 4.93% 13.69% 13.69% 7.91%BC 7-10 Year UST 3.12% 9.00% 9.00% 3.85%BC Aggregate Bond 1.79% 5.97% 5.97% 2.21%BC Mortgage Securities 0.68% 3.31% 3.31% 2.32%BC EM Debt (USD) -0.69% 7.12% 7.12% 5.56%BC Corporate High Yield -1.00% 2.45% 2.45% 4.33%Gold (Bloomberg) -2.34% -1.78% -1.78% 13.04%MSCI EAFE (Developed) -3.57% -4.90% -4.90% 9.28%MSCI Emerging Markets -4.50% -2.19% -2.19% 13.01%Bloomberg Commodity -12.10% -17.04% -17.04% 12.95%

Global Equity Sectors (ACWI) QTD YTD1 Year Return

1 Year Risk

Consumer Disc 5.64% 3.47% 3.47% 10.86%Info Tech 3.93% 15.20% 15.20% 8.50%Utilities 3.29% 13.78% 13.78% 9.18%Consumer Staples 2.98% 6.15% 6.15% 10.55%Healthcare 2.95% 18.13% 18.13% 8.66%Financials 1.47% 3.43% 3.43% 8.19%Industrials 1.00% 0.19% 0.19% 8.02%MSCI ACWI (Net) 0.41% 4.16% 4.16% 8.41%Telecomm -3.01% -1.83% -1.83% 9.01%Materials -5.70% -7.49% -7.49% 10.73%Energy -15.46% -13.47% -13.47% 17.53%Note: 1-year risk reflects standard deviation of monthly returns.

-20%-15%-10%

-5%0%5%

10%15%20%25%30%

Prominent Asset Classes: Q4 & YTD 2014 Returns

QTD

YTD

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Global Equity Sectors: Q4 & YTD 2014 Returns

QTD

YTD

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Capital Markets Highlights: Q4-2014 US & Global Equities

In the US, defensive sectors outperformed as Utilities and Healthcare gained 13.2% and 7.5%, respectively. Consumer sectors gained 8-9% as consumers benefit from lower energy prices. Meanwhile, small-cap equities outpaced large in Q4, in part due to short-covering, but underperformed for the full year due to various factors.

Europe and Japan declined 4.4% and 2.4%, respectively, as growth metrics stalled and central bank stimulus failed to invigorate demand. Currency hedges mitigated losses as the USD gained 4% vs. the Euro and 8% vs. the Yen.

Emerging Markets declined 4.5% with resources-oriented economies falling the most . China – an energy consumer – initiated monetary stimulus and gained 7.2%.

Global & Specialty Fixed Income

Deflation concerns bubbled over in Europe and Japan. Yields for 10-year German Bunds and JGBs dropped to 0.53% and 0.32%, respectively. The UST 10-year closed at a 2.17% yield, falling 32 bps as the US curve flattened.

The BC Aggregate Bond Index gained 1.8% and returns were mostly driven by duration. Short-term USTs were flat, but long-duration UST bonds rallied 9.4%. Citi WGBI declined 1.5% (as currency losses offset bond gains).

Investment-grade corporates and MBS both gained 1.8%, but high-yield bonds declined 1.0% as spreads widened to +498 and Energy bonds traded to distressed levels of +1000 or more. Emerging Markets debt gained 2.9% in local currencies, but declined 0.7% in USD.

Commodities & Real Assets

Bloomberg Commodity Index declined 12.1% due to weaker growth, supply/demand imbalances, and a strong US Dollar. Energy – one-third of the index – declined 37% with Crude Oil down 41%. MSCI ACWI Commodity Producers (Energy/Materials equities) declined 14.7%.

S&P Global infrastructure gained 1.2% in Q4. Defensive- oriented cash flows offset energy-related exposures.

Rate-sensitive real estate securities gained as a yield alternative. FTSE Nareit All REITs gained 12.1%.

Hedge Funds & Alternative Strategies

The HFRX Global Hedge Fund Index declined 1.7% in Q4. Equity Hedge strategies were flat. Relative Value declined 3.1% mostly due to wider credit spreads and lower interest rates. Event Driven declined 5.5% due mostly to struggling CCC-rated distressed credits.

Macro/CTA strategies were the top performer, advancing 2.6%. Gains were largely due to trends in currencies (i.e. Euro and Yen weakness, USD strength), global bonds (declining interest rates), and energy commodities (falling crude prices). M/CTA had its best returns in six years.

Sources: Russell Investments, FactSet, MSCI Barra, Barclays Capital, S&P Capital IQ, Bespoke Investment Group, HFRI

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Graystone Perspectives & Positioning Current market views that shape our portfolio positioning and performance expectations:

Perspectives:

US economic growth accelerated in Q3 and is showing further stability with positive trends in employment, consumer spending, corporate capital expenditures (CAPEX), and even government spending. A strong USD is taming US inflation, and lower energy prices are boosting discretionary cash flow for consumers. US strength is obvious and well embraced.

Recoveries in Europe and Japan stalled in the second half of 2014. Beyond the ongoing monetary stimulus, fundamental structural reforms are probably needed to support demand going forward (i.e. corporate tax cuts, regulatory reform, etc.).

Emerging Markets faded in Q4 due to (1) a negative feedback loop of slowing global growth and declining commodities prices, and (2) a looming Fed Policy shift to higher rates, which is leading to weaker foreign currencies and higher inflation.

Positioning:

In equities, US-leaning portfolios make sense, but non-US Developed Markets should not be neglected. US assets offer a favorable mix of growth/stability – reflected in higher valuations – but investor risk aversion is systematically keeping multiples from excessive levels. Japan and Europe face challenges, but expectations are low and a positive growth surprise could unfold in 2015. Time horizon matters for Emerging Markets: Long-term potential, but near-term challenges.

For real assets, we tend to favor cash flow – in global infrastructure, real estate securities, and inflation-protected fixed income. Meanwhile, challenges could persist for commodities & related securities due to increased capacity/production.

In fixed income, we favor credit risk over interest-rate risk with a preference for specialty fixed income opportunities and hedged credit strategies. Interest rates appear biased to moving higher on the short end-due to a Fed Policy shift, but rate increases for long-duration bonds could be muted due to various global factors. High-quality still serves as a hedge.

Corporate activity remains elevated (spin-offs, M&A, restructurings, etc.) and could expand globally. We favor active management strategies where risk/return is largely dependent on company-specific factors, including event driven equity/credit strategies. In some cases, however, risk/return opportunities could be more muted, especially in credit.

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Graystone House Views – January 2015 US assets remain in favor and for good reason, but non-US opportunities should not be neglected...

“In meetings with our clients and Financial Advisors, both express their concerns about the markets, and these discussions inevitably give rise to at least one big question… Now, sluggish global growth is the issue, which leads to the question, ‘Why own anything except the S&P 500 in my equity portfolio?’ One thing we have learned over the past few decades is that when popular opinion gets this strong on any one topic, the trend is close to having run its course.”

- Michael Wilson, CIO, Morgan Stanley Wealth Management, December 2014

Topic Current Outlook Other Considerations

US Expansion Economic growth has rebounded with positive trends in employment, consumer spending, and CAPEX

Equity valuations modestly above average, but risk aversion is keeping multiples from excessive levels

Inflation is lower due to strong USD and lower energy prices, giving Fed more flexibility regarding rate hikes

Limits to market-wide gains in an extended expansion that should persist; US already widely embraced

European Recovery ECB monetary stimulus failing to boost demand as growth data continues to disappoint

Draghi pushing for structural reforms

Weaker Euro should benefit European-based export companies

Expectations now quite low; positive growth surprise possible in 2015

Japan Recovery Domestic recovery stalled after increases to consumption tax; plans for 2015 tax hikes being deferred

BoJ remains supportive, but investors still waiting for growth-oriented structural reforms

Deflationary challenges persist (i.e. aging population, savings culture)

Signs of a potential shift to more shareholder-friendly environment (e.g. increased stock buy-backs)

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Graystone House Views – January 2015

Topic Current Outlook Other Considerations

Emerging Markets Opportunities bifurcated based on growth potential, inflation, currency factors, fiscal/monetary policies

Commodity price declines disruptive; energy consumers to benefit, while energy producers could struggle

China trimmed growth estimates, but PBOC offered monetary support via interest rate cuts, lower reserve requirements, and capital injections

Overall index valuations remain inexpensive, but attractive growth assets are more fully valued

Near-term EM performance could be pressured by a Fed Policy shift (rate hikes) and a stronger USD

Structural reforms in China & India point to long-term productivity gains and capital markets efficiencies

High-Quality Fixed Income Fed Policy shift (short-term rate

hikes) expected by Q3-2015; strong USD and deflation in Europe/ Japan keeping a lid long-term rates

Favor complex and less efficient segments (i.e. MBS, ABS, CLOs)

QE from ECB/BoJ to offset Fed shift

Credit Spread Strategies Favor credit risk over interest rate risk, but selectively, as economic expansion continues with below-average default rates in US

HY credit spreads wider in Q4 due to Energy sell-off and HY outflows; favor off-the-run securities, hedged strategies & relative value trades

Event Driven & Other Hedge Fund Strategies

Prefer catalyst-driven strategies tied to company-specific actions/events

Continued corporate activity in US (i.e. M&A, spin-offs) could extend to Europe/Japan in 2015

Return opportunities in event driven credit could be muted near-term; distressed situations could force changes in over-leveraged Energy

Pay-the-shareholder environment supported by activist investors

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Capital Markets Scorecard & Indicators: 12/31/2014


Global Economic Metrics GDP RQ As of Date GDP T12 CPI UE Rate Key Economic Indicators Latest As of Date 3Mo Avg 12Mo Avg 36Mo AvgUSA 5.0% 9/30 2.7% 1.3% 5.8% USA - Non-Farm Payrolls 321,000 11/28 278 228 206Europe (EMU) 0.6% 9/30 0.8% 0.3% 11.5% USA - Jobless Claims 4-Wk 290,750 12/19 290,117 308,633 342,086United Kingdom 3.0% 9/30 3.0% 1.0% 6.0% USA - ISM Manufacturing 55.5 12/31 57.7 55.8 53.8Japan -1.9% 9/30 0.5% 2.4% 3.6% USA - ISM Services 56.2 12/31 57.5 53.0 55.2Australia 1.4% 9/30 3.1% 2.3% 6.2% USA - C&I Loans ($ trillions) 96,528 12/31 96,528 97,696 86,646Canada 2.8% 9/30 2.3% 2.0% 6.8% USA - Citi Economic Surprise 34.7 12/31 19.3 5.9 10.5China 7.8% 9/30 2.3% 1.4% 4.1% German ZEW Sentiment 34.9 12/31 14.3 29.6 23.1India 0.2% 9/30 6.0% 4.4% 8.8% China PMI Index 50.1 12/31 50.4 50.7 50.7Russia N/A 9/30 0.6% 9.1% 5.2%Brazil 0.3% 9/30 0.2% 6.6% 4.9%Mexico 2.0% 9/30 2.1% 4.2% 4.7%

Notes: GDP RQ is the most recent quarter data at an annualized rate. GDP T12 is the growth rate for the Notes: Latest is the most recently available monthly data. 3Mo Avg, 6Mo Avg and 12Mo Avg are the trailing 12 months. CPI is the inflation rate and UE Rate is the unemployment rate (most recent mo. data). averages for the respective periods. These are referenced to assess the direction of recent trends.

Monetary Policy, Rates, Int. Rates 1Yr Ago 10-Year Yld 1Yr Ago Global Bond Metrics Yield 3Mo Ago 6Mo Ago 1Yr Ago DurationUSA FRB/USTs 0.25% 0.25% 2.17% 3.04% BC Aggregate Bond 2.25% 2.36% 2.22% 2.48% 5.5ECB/German Bunds 0.05% 0.25% 0.53% 1.94% BC UST 7-10 Year 2.10% 2.40% 2.35% 2.77% 7.9BoE/UK Gilts 0.50% 0.50% 1.75% 3.02% BC UST 20+ Year 2.70% 3.16% 3.28% 3.90% 18.4BoJ/JGBs 0.10% 0.10% 0.32% 0.73% BC MBS Index 2.60% 2.88% 2.79% 3.26% 4.3

Notes: Int. Rates refer to targeted short-term lending rates set by the FRB (Fed Funds) and other central banks. BC Municipal Bond 2.09% 2.19% 2.36% 3.15% 6.010-Year Yld refers to the yield-to-maturity for each market's current 10-year government bond issue. BofAML High Yield Master II 6.65% 6.14% 5.01% 5.67% 4.9

Citigroup WGBI USD 1.08% 1.25% 1.30% 1.60% 7.1Currencies Spot PX 3Mo 3Mo Δ 12Mo 12Mo Δ Citigroup WGBI USD (Hedged 0.93% 1.15% 1.29% 1.69% 7.8

USD Trade-Weighted Index 90.80 87.56 3.70% 85.56 6.13% BC Emerging Markets USD 5.66% 5.02% 4.61% 5.25% 5.9Euro (Euro/USD) 1.21 1.26 -4.22% 1.37 -11.97% BC Emerging Markets Local 12.87% 13.79% 9.55% 9.09% 6.1Yen (USD/JPY) 119.69 109.63 -8.40% 105.29 -12.03%Pound (GBP/USD) 1.56 1.62 -3.93% 1.66 -5.93%

Notes: Spot PX is the most recently quoted price. 3Mo Δ and 12 Mo Δ are percentage price changes for the Notes: Yield represents yield-to-worst. 3Mo Ago, 6Mo Ago and 12Mo Ago are historical yields. These arestated period. referenced to assess the direction of recent trends. Duration is a measure of interest rate sensitivity.

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Capital Markets Scorecard & Indicators: 12/31/2014


Global Equity Metrics PE T12 1Yr Ago 10Yr Avg PE F12 1Yr Ago Global Equity Sectors PE T12 1Yr Ago 10Yr Avg PE F12 1Yr AgoS&P 500 (USA) 17.2 16.8 15.8 16.2 15.4 Consumer Staples 18.6 17.3 16.2 18.7 16.9Russell 2000 (USA) 36.0 38.9 31.2 21.6 21.7 Consumer Discretionary 17.9 15.8 17.9 16.4 16.7MSCI EAFE (Developed) 16.6 15.9 13.6 14.1 13.7 Energy 13.0 13.1 12.3 15.6 12.7

Germany 14.9 13.5 13.3 12.9 13.2 Financials 14.3 14.5 22.6 12.6 12.6United Kingdom 16.3 12.8 12.5 13.8 13.2 Health Care 22.8 20.3 17.2 17.5 16.4Japan 15.7 16.9 N/A 14.3 14.9 Industrials 16.8 19.1 16.4 15.6 15.9

MSCI Emerging Markets 12.0 11.9 12.7 11.0 10.5 Information Technology 19.2 19.5 19.9 16.3 16.2China 9.3 9.3 10.5 9.4 8.9 Materials 13.9 16.0 13.3 14.7 14.5India 18.6 17.7 19.1 16.7 14.7 Telecommunications 17.6 16.1 17.7 15.5 16.2Russia 3.5 5.0 6.4 3.8 5.5 Utilities 15.9 16.5 15.5 16.4 14.4Brazil 14.4 12.7 12.7 10.2 9.9Mexico 19.0 17.8 13.4 18.3 18.3Notes: PE T12 is the PE ratio for the trailing 12 months; PE F12 is the forward PE based on earnings estimates Notes: Please reference notes on the table to the left (Global Equity Metrics). All data above is based on the(next 12 months). 1Yr Ago references PE data from a year ago. 10Yr Avg is the average of the trailing PE data. MSCI All-Country World Index (ACWI).

Other Key Indicators I Latest As of Date 3Mo Avg 12Mo Avg 10Yr Avg Commodities & Currencies Spot PX 3Mo Ago 3Mo Δ 12Mo Ago 12Mo ΔConsumer Confidence (UM) 93.60 12/31 89.77 84.13 77.05 Crude Oil (Brent) 57.33 94.67 -39.44% 110.80 -48.26%AAII Bullish Sentiment 44.34 12/31 48.74 39.28 38.72 Crude Oil (WTI) 53.27 91.16 -41.56% 98.42 -45.87%AAII Bearish Sentiment 23.51 12/31 21.56 26.07 34.84 Natural Gas 2.89 4.12 -29.90% 4.23 -31.70%CBOE Volatility Index (VIX) 19.20 12/31 14.87 14.15 20.09 Gold 1,206.00 1,216.50 -0.86% 1,204.50 0.12%CBOE Put/Call Ratio 0.94 12/31 0.93 0.91 0.94 Silver 15.97 17.11 -6.66% 19.50 -18.10%

Notes: Latest is the most recently available monthly data. 3Mo Avg, 12Mo Avg and 10Yr Avg represent the Copper 6,359.00 6,736.00 -5.60% 7,394.50 -14.00%averages scores for the respective trailing periods. Aluminum 1,805.00 2,090.00 -13.64% 1,820.00 -0.82%

Other Key Indicators II Latest 3Mo Ago 3Mo Δ 12Mo Ago 12Mo Δ Soybeans 10.22 8.93 14.39% 13.17 -22.39%Corporate HY Credit Spreads 449 400 12.25% 365 23.01% Corn 3.91 2.96 32.21% 4.27 -8.43%New Home Sales (USA) 438 445 -1.57% 457 -4.16% Livestock 439.59 473.64 -7.19% 416.13 5.64%S&P/Case-Shiller Index (20) 173.36 173.58 -0.13% 165.63 4.67%PCE Price Index (2% Target) 109.02 109.07 -0.05% 107.76 1.17%

Notes: Latest is the most recently available data (daily or monthly). 3Mo Ago and 12Mo Ago are historical Notes: Spot PX is the most recently quoted price. 3Mo Ago and 12Mo Ago are historical prices, while 3Mo Δlevels, while 3Mo Δ and 12Mo Δ are percentage price changes for the stated period. and 12Mo Δ are percentage price changes for the stated period.

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To the extent the investments depicted herein represent international securities, you should be aware that there may be additional risks associated with international investing, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes, and differences in financial and accounting standards. These risks may be magnified in emerging markets. International investing may not be for everyone. Small capitalization companies may lack the financial resources, product diversification and competitive strengths of larger companies. In addition, the securities of small capitalization companies may not trade as readily as, and be subject to higher volatility than, those of larger, more established companies. All mutual fund products and exchange traded funds are sold by prospectus, which contains more complete information about the fund. Please contact your Financial Advisor for copies. Please read the prospectus and consider the fund's objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund. Bonds are subject to interest rate risk. When interest rates rise bond prices fall; generally the longer a bond's maturity, the more sensitive it is to this risk. Bonds may also be subject to call risk, which allows the issuer to retain the right to redeem the debt, fully or partially, before the scheduled maturity date. Proceeds from sales prior to maturity may be more or less than originally invested due to changes in market conditions or changes in the credit quality of the issuer. Investing in alternative investments is speculative, not suitable for all clients, and intended for experienced and sophisticated investors who are willing to bear the high economic risks of the investment, which can include:

• loss of all or a substantial portion of the investment due to leveraging, short-selling or other speculative investment practices; • lack of liquidity in that there may be no secondary market for the fund and none expected to develop; • volatility of returns; • restrictions on transferring interests in the fund; • potential lack of diversification and resulting higher risk due to concentration of trading authority with a single advisor; • absence of information regarding valuations and pricing; • delays in tax reporting; • less regulation and higher fees than mutual funds; and • advisor risk.

Although the statements and data in this report have been obtained from, and are based upon, sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the presenters judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results.

Actual returns would be reduced by expenses that may include management fees and costs of transactions. Expected return and risk (standard deviation) calculations are based on historical data for periods indicated.

The views expressed herein are those of the author and do not necessarily reflect the views of Morgan Stanley Wealth Management or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.

© 2015 Graystone Consulting is a business of Morgan Stanley.

Important Disclosures

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CAL POLY POMONA FOUNDATION, INC.INVESTMENT SUMMARY AS OF DECEMBER 31, 2014

Policy Range Policy Range Total Graystone Common Fund FoundationAsset Class Minimum Maximum Policy Target Portfolio Allocation Portfolio Amount Portfolio Amount Portfolio Amount Portfolio Amount

Equities Domestic & Int'l (Dev & Emerging 10% 65% 23% 24% 10,524,277 10,524,277 Fixed Income 40% 85% 65% 67% 29,243,948 29,243,948 Cash Equivalents 0% 20% 0% 1% 398,814 398,814 Real Assets 0% 10% 2% 2% 912,571 912,571 Real Estate 0% 10% 0% 0% - Alternative Investments 0% 25% 10% 6% Private Equity & Capital Partners 856,793 856,793 Innovation Way Infrastructure 1,989,088 1,989,088

100% 100% 43,925,491 41,079,610 856,793 1,989,088

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Cal Poly Pomona Foundation General Investment Portfolio

Investment Results as of December 31, 2014

Graystone Consulting Andrew Price, CIMA® Executive Director Institutional Consulting Director Todd Au, CIMA®

Second Vice President

Senior Investment Management Consultant Tim Skelly, CIMA® Senior Vice President Institutional Consulting Director David J. Weinberg Institutional Consulting Analyst

Address:

1999 Avenue of the Stars Suite 2400 Los Angeles, CA 90067 Phones: Main Line 310-788-2043 Toll-Free 800-786-0048 Fax 310-961-3180 E-Mail: [email protected]

[email protected]

[email protected]

[email protected] 14

Total Fund ($) (%)

Domestic Equities $3,557,955 8.7%

Touchstone Westfield All Cap Growth $1,493,564 3.6%Aristotle Large Cap Value $1,442,624 3.5%Apex SMID Cap Growth $309,819 0.8%Keeley SMID Cap Value $311,948 0.8%

International and EM Equities $3,701,007 9.0%

Harbor International Value $1,558,155 3.8%William Blair International Growth $1,587,658 3.9%iShares MSCI Emerging Markets Index $555,194 1.4% Market Value Allocation

($) (%)

Global Equities $3,265,316 7.9% Public Equities $10,524,277 25.6%First Eagle Global $1,607,096 3.9% Fixed Income $29,243,948 71.2%Delaware Focused Global Growth $1,658,220 4.0% Real Assets $912,571 2.2%

Cash & Equivalents $398,814 1.0%Public Equities $10,524,277 25.6%

December 31, 2014

Fixed Income $29,243,948 71.2%

Doubleline Total Return $2,366,021 5.8%JP Morgan Strategic Income $1,764,820 4.3%Brandywine Global Opportunistic $1,187,204 2.9%Nuveen Symphony Credit Opportunity $572,877 1.4%PIMCO Low Duration $11,562,864 28.1%MetWest Low Duration $11,790,163 28.7%

Real Assets* $912,571 2.2%

Powershares DB Comm Index ETF $142,323 0.3%REMS Real Estate Value Opportunity $187,301 0.5%Nuveen Symphony Credit Opportunity $253,709 0.6% Allocation DifferencesPIMCO All Asset All Authority $185,875 0.5% December 31, 2014

RS Natural Global Resources $143,363 0.3% Market Value Allocation Target($) (%) (%)

Cash and Equivalents $398,814 1.0% Public Equities $10,524,277 25.6% 26.0%Cash and Equivalents $398,814 1.0% Fixed Income $29,243,948 71.2% 72.0%

Real Assets $912,571 2.2% 2.0%General Investment Portfolio $41,079,610 100.0% Cash & Equivalents $398,814 1.0% 0.0%*Value invludes purchases made on 12/31/2014

Cal Poly Pomona Foundation - General Investment Portfolio

Balances and Asset Allocation

as of December 31, 2014

1.0%

0.2%

-0.8%

-0.4%

-1.0% -0.5% 0.0% 0.5% 1.0% 1.5%

1

2

3

4

December 31, 2014 : $41,079,610

The information contained herein was prepared by the undersigned for informational purposes only and does not represent an official statement of your account at the Firm. Please refer to your monthly statements for a complete record of your transactions, holdings and balances. Graystone Consulting is a business of Morgan Stanley Smith Barney.

Cash & Equivalents

Real Assets

Fixed Income

Public Equities

15

AllocationMarketValue

($)

Performance(%)Quarter

ToDate

FiscalYTD

1Year

3Years

5Years

SinceInception

InceptionDate

General Investment Portfolio 41,079,610 0.07 -1.23 1.30 N/A N/A 0.95 03/01/2013

Cal Poly Pomona Blended Benchmark* 0.74 0.06 3.58 N/A N/A 1.39Difference -0.67 -1.29 -2.28 N/A N/A -0.44

Public Equities 10,524,277 0.57 -3.13 N/A N/A N/A 0.69 04/01/2014

MSCI AC Wld Nt 0.41 -1.90 N/A N/A N/A 3.04Difference 0.16 -1.23 N/A N/A N/A -2.35

Domestic Equities 3,557,955 4.56 2.66 N/A N/A N/A 7.26 04/01/2014

Russell 3000 5.24 5.26 N/A N/A N/A 10.39Difference -0.68 -2.60 N/A N/A N/A -3.13

Touchstone Westfield All Cap Growth 1,493,564 6.84 5.82 N/A N/A N/A 10.55 04/01/2014Russell 3000 Gr 5.18 6.11 N/A N/A N/A 11.26Difference 1.66 -0.29 N/A N/A N/A -0.71

Aristotle Large Cap Value 1,442,624 2.95 0.88 N/A N/A N/A 5.81 04/01/2014Russell 1000 Vl 4.99 4.79 N/A N/A N/A 10.14Difference -2.04 -3.91 N/A N/A N/A -4.33

Apex SMID Cap Growth 309,819 2.54 1.97 N/A N/A N/A 6.08 04/01/2014Russell 2500 Gr 7.48 2.95 N/A N/A N/A 5.93Difference -4.94 -0.98 N/A N/A N/A 0.15

Keeley SMID Cap Value 311,948 3.50 -2.96 N/A N/A N/A 0.03 04/01/2014Russell 2500 Vl 6.09 -0.69 N/A N/A N/A 3.47Difference -2.59 -2.27 N/A N/A N/A -3.44

International and EM Equities 3,701,007 -3.82 -9.10 N/A N/A N/A -5.84 04/01/2014

MSCI AC Wld xUS Nt -3.88 -8.94 N/A N/A N/A -4.36Difference 0.06 -0.16 N/A N/A N/A -1.48

Harbor International Value 1,558,155 -4.10 -10.86 N/A N/A N/A -7.90 04/01/2014MSCI AC Wld xUS Nt -3.88 -8.94 N/A N/A N/A -4.36Difference -0.22 -1.92 N/A N/A N/A -3.54


Asset Allocation & Performance

As of December 31, 2014

*Inception to 2/28/2014 100% Barclays Int. Gov't Credit. 3/31/2014 to Present 72% Barclays Int. Gov't Credit, 26% MSCI ACWI, 2% Real Assets Benchmark**65% ACWI / 35% WGBI (Subject to change)

16



As of December 31, 2014Allocation

MarketValue

($)


ToDate

FiscalYTD

1Year

3Years

5Years

SinceInception

InceptionDate

William Blair International Growth 1,587,658 -1.67 -5.94 N/A N/A N/A -2.27 04/01/2014MSCI EAFE Net -3.57 -9.23 N/A N/A N/A -5.53Difference 1.90 3.29 N/A N/A N/A 3.26

iShares MSCI Emerging Markets Index 555,194 N/A N/A N/A N/A N/A -2.18 12/17/2014MSCI EM Net N/A N/A N/A N/A N/A -2.08Difference N/A N/A N/A N/A N/A -0.10

Global Equities 3,265,316 1.55 -2.05 N/A N/A N/A 1.65 04/01/2014

MSCI AC Wld Nt 0.41 -1.90 N/A N/A N/A 3.04Difference 1.14 -0.15 N/A N/A N/A -1.39

First Eagle Global 1,607,096 -0.14 -3.36 N/A N/A N/A -0.11 04/01/2014MSCI AC Wld Nt 0.41 -1.90 N/A N/A N/A 3.04Difference -0.55 -1.46 N/A N/A N/A -3.15

Delaware Focused Global Growth 1,658,220 3.27 -0.74 N/A N/A N/A 3.44 04/01/2014MSCI AC Wld Nt 0.41 -1.90 N/A N/A N/A 3.04Difference 2.86 1.16 N/A N/A N/A 0.40

Fixed Income 29,777,463 -0.06 -0.41 1.28 N/A N/A 0.93 03/01/2013

BC Gov/Cr Intm 0.89 0.85 3.12 N/A N/A 1.15Difference -0.95 -1.26 -1.84 N/A N/A -0.22

Short-Term Portfolio Strategy 29,777,463 -0.06 -0.41 1.28 N/A N/A 0.93 03/01/2013BC Gov/Cr Intm 0.89 0.85 3.12 N/A N/A 1.15Difference -0.95 -1.26 -1.84 N/A N/A -0.22

Real Assets 777,870 -6.05 -11.72 N/A N/A N/A -8.07 04/01/2014

Real Assets Blended Benchmark** -0.25 -3.06 N/A N/A N/A 0.88Difference -5.80 -8.66 N/A N/A N/A -8.95

Real Assets Portfolio 777,870 -6.05 -11.72 N/A N/A N/A -8.07 04/01/2014Real Assets Blended Benchmark** -0.25 -3.06 N/A N/A N/A 0.88Difference -5.80 -8.66 N/A N/A N/A -8.95

*Inception to 2/28/2014 100% Barclays Int. Gov't Credit. 3/31/2014 to Present 72% Barclays Int. Gov't Credit, 26% MSCI ACWI, 2% Real Assets Benchmark**65% ACWI / 35% WGBI (Subject to change)

17

Asset Allocation Over Time

CurrentQuarter

FiscalYTD

SinceInception

InceptionDate

General Investment Portfolio 03/01/2013

Beginning Market Value 39,684,895 39,178,257 24,301,287 Net Contributions 1,355,229 2,350,276 16,322,922 Fees/Expenses -22,464 -43,827 -123,337 Income 760,237 903,356 1,752,210 Gain/Loss -698,288 -1,308,451 -1,173,472 Ending Market Value 41,079,610 41,079,610 41,079,610

CurrentQuarter

FiscalYTD

SinceInception

InceptionDate

General Investment Portfolio 0.07 -1.23 0.95 03/01/2013

Cal Poly Pomona Blended Benchmark 0.74 0.06 1.39 03/01/2013

US Equity International Equity Global Equity

International-Emerging Equity US Fixed Income Global Mixed Assets

0.0

25.0

50.0

75.0

100.0

All

oc

ati

on

(%)

2/13 5/13 8/13 11/13 2/14 5/14 8/14 11/14 12/14

Cal Poly Pomona Foundation - General Investment PortfolioPerformance and Asset Allocation History

December 31, 2014

*Inception to 2/28/2014 100% Barclays Int. Gov't Credit. 3/31/2014 to Present 72% Barclays Int. Gov't Credit, 26% MSCI ACWI, 2% Real Assets Benchmark

18

Disclosures

19


20

Important Disclosures To the extent the investments depicted herein represent international securities, you should be aware that there may be additional risks associated with international investing, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes, and differences in financial and accounting standards. These risks may be magnified in emerging markets. International investing may not be for everyone. Small capitalization companies may lack the financial resources, product diversification and competitive strengths of larger companies. In addition, the securities of small capitalization companies may not trade as readily as, and be subject to higher volatility than, those of larger, more established companies. Bonds are subject to interest rate risk. When interest rates rise bond prices fall; generally the longer a bond's maturity, the more sensitive it is to this risk. Bonds may also be subject to call risk, which allows the issuer to retain the right to redeem the debt, fully or partially, before the scheduled maturity date. Proceeds from sales prior to maturity may be more or less than originally invested due to changes in market conditions or changes in the credit quality of the issuer. Investing in alternative investments is speculative, not suitable for all clients, and intended for experienced and sophisticated investors who are willing to bear the high economic risks of the investment, which can include: • loss of all or a substantial portion of the investment due to leveraging, short-selling or other speculative investment practices; • lack of liquidity in that there may be no secondary market for the fund and none expected to develop; • volatility of returns; • restrictions on transferring interests in the fund; • potential lack of diversification and resulting higher risk due to concentration of trading authority with a single advisor; • absence of information regarding valuations and pricing; • delays in tax reporting; • less regulation and higher fees than mutual funds; and • advisor risk. Although the statements of fact and data in this report have been obtained from, and are based upon, sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the Firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results. Actual returns would be reduced by expenses that may include management fees and costs of transactions. Expected return and risk (standard deviation) calculations are based on historical data for periods indicated. International investing may not be suitable for every investor and is subject to additional risks, including currency fluctuations, political factors, withholding, lack of liquidity, the absence of adequate financial information, and exchange control restrictions impacting foreign issuers. These risks may be magnified in emerging markets. Mutual fund investments are subject to market risk, including the possible loss of principal. They are sold by prospectus only. The prospectus contains the investment objectives, risks, fees, charges and expenses, and other information regarding the mutual fund and variable annuity contract and its underlying investments, which should be carefully considered before investing. Prospectuses are available through your Financial Advisor or at www.smithbarney.com. Read the prospectus carefully before you invest. © 2014 Graystone Consulting is a business of Morgan Stanley Smith Barney LLC.

21

Analysis Disclosure

The analysis is based on published investment manager rate of return data, capital market indices, custom (benchmarks, indices and universes), as well as software developed by Zephyr Associates. Investment manager rate of return data includes: Effron Plan Sponsor Network Database. Capital markets index data includes: Capital market indices (supplied by Zephyr), Canadian indices (supplied by Zephyr), Salomon Brothers Fixed Income indices, Morgan Stanley Capital International indices, and Dow Jones Global indices. Zephyr StyleADVISOR uses principles of William Sharpe's theory of returns-based style analysis. Returns-based style analysis assists in identifying investment style without examining the individual security holdings of a portfolio. StyleADVISOR regresses the historical returns of the individual manager(s) against different style indices to identify the pattern of returns that the fund is most closely correlated to. SSB does not recommend the use of returns-based style analysis without the supporting fundamental research of the fund (research attribution reports). The underlying data is believed to be reliable but accuracy and completeness cannot be assured. While the historical rates of return described in this report are believed to accurately reflect the overall nature of the portfolio, the constituent securities have not been reviewed. This evaluation is for informational purposes only and is not intended to be an offer, solicitation or recommendation with respect to the purchase or sale of any security or a recommendation of the services provided by any money management organization. Past results are not necessarily indicative of future performance. Investors should consider the investment objectives, risks, charges, fees and expenses of the mutual fund carefully before investing. The prospectus contains more complete information about these factors and other information about the investment company. Read the prospectus carefully before you invest.

22

Summary Investment Report Cal Poly Pomona Foundation

All Accounts

September 30, 2014 - December 31, 2014

23

All Accounts

Past performance is no assurance of future returns

1 1/28/2015 4:32:39 PM Cal Poly Pomona Foundation

Total Portfolio Market Value as of 12/31/2014

Investment CategoryAdjusted Market

Value Allocation %

Portfolio Total Core Funds $810,501.00 100.00%

Portfolio Total Private Real Estate $0.00 0.00%

Portfolio Total $810,501.00 100.00%

24

All Accounts



Non-Marketable Investments Since Inception to Value Date

Non-Marketable Fund Incep. Date Commitment Capital Calls DistributionsNet Income/

(Loss) Value Date Market Value IRR Multiple

Private Equity Partners VII 9/30/2007 $750,000.00 $598,875.00 ($210,827.00) $237,047.00 9/30/2014 $625,095.00 11.27% 1.40

Capital Partners IV 9/30/2007 $250,000.00 $211,875.00 ($69,854.00) $89,677.00 9/30/2014 $231,698.00 9.66% 1.42

Total Core Funds $1,000,000.00 $810,750.00 ($280,681.00) $326,724.00 $856,793.00 10.20% 1.40

Realty Investors 2004-12(Tranche)

12/31/2004 $1,500,000.00 $1,500,000.00 ($283,095.74) ($1,216,904.26) 12/31/2014 $0.00 -26.23% 0.19

Total Private Real Estate $1,500,000.00 $1,500,000.00 ($283,095.74) ($1,216,904.26) $0.00 -26.23% 0.19

Non-Marketable Total $2,500,000.00 $2,310,750.00 ($563,776.74) ($890,180.26) $856,793.00 0.61

Non-Marketable Investments Roll Forward From Value Date to 12/31/2014

Non-Marketable Fund Incep. Date Commitment Valuation DateMost Recent

Valuation

Capital Callssince Valuation

Date

Distributionssince Valuation

DateAdjusted Market

Value

Private Equity Partners VII 9/30/2007 $750,000.00 9/30/2014 $625,095.00 $16,875.00 ($50,136.00) $591,834.00

Capital Partners IV 9/30/2007 $250,000.00 9/30/2014 $231,698.00 $3,125.00 ($16,156.00) $218,667.00

Total Core Funds $1,000,000.00 $856,793.00 $20,000.00 ($66,292.00) $810,501.00

Realty Investors 2004-12(Tranche)

12/31/2004 $1,500,000.00 12/31/2014 $0.00 $0.00 $0.00 $0.00

Total Private Real Estate $1,500,000.00 $0.00 $0.00 $0.00 $0.00

Non-Marketable Total $2,500,000.00 $856,793.00 $20,000.00 ($66,292.00) $810,501.00

* Note: Month-end adjusted balances for marketable cash funds reflect the impact of pending cash subscriptions. Adjusted Balances for non-marketable securities reflect the impact of allcash transactions that have posted since the last valuation date.1) IRR and multiple performance calculations are net of all fees and carried interest2) IRR, or internal rate of return, represents the annualized implied discount rate calculated from the cash flows to/from the partnerships since inception of the respective partnershipthrough the value date3) Multiple represents a cash-on-cash return calculated by adding distributions to the ending market value and dividing the total value by capital called – ((Distributions to date +Adjusted ending market value)/$ called to date)

25

All Accounts



Portfolio Performance as of 12/31/2014

Assets Investment Performance

Investment Market Value ($)Average

Allocation

MTD QTD FYTD CYTD 3 Years 5 Years 10 YearsAccount

InceptionAccount Inception

Date

Total Core Funds 810,501 100.0% 0.00 1.67 7.32 19.97 15.40 13.87 1.45 12/31/2007

Total Private Real Estate 0 0.0%

26

All Accounts



Portfolio Performance as of 12/31/2014

Assets Investment Performance

Investment Market Value ($)Average

Allocation

MTD QTD FYTD CYTD 3 Years 5 Years 10 YearsAccount

InceptionAccount Inception

Date

Private Equity Partners VII 591,834 73.0% 0.00 2.61 8.34 21.09 15.87 14.31 1.91 12/31/2007

US Private Equity 591,834 73.0% 0.00 2.61 8.34 21.09 15.87 14.31 1.91 12/31/2007

Capital Partners IV 218,667 27.0% 0.00 -0.70 4.77 17.15 14.22 12.84 0.59 12/31/2007

Multi-Asset 218,667 27.0% 0.00 -0.70 4.77 17.15 14.22 12.84 0.59 12/31/2007

Realty Investors 2004-12 (Tranche) 0 0.0%

Commonfund Real Estate 0 0.0%

Total Non-Marketable 810,501 100.0% 0.00 1.67 7.32 19.97 15.40 1.83 -5.89 9/30/2005

Total Portfolio 810,501 100.0% 0.00 1.67 7.32 21.58 21.17 7.63 -0.53 1.72 9/30/2003

27

All Accounts



Important Notes | Marketable Performance• The information included in this report is presented solely for the recipient named on the cover page of this report and its authorized representatives. The information provided

may not be reproduced or otherwise disseminated in whole or in part without our prior written consent. Neither the information nor any opinion contained in this reportconstitutes a solicitation or offer by Commonfund Asset Management Company, Inc., Commonfund Capital, Inc., or its affiliates (together “Commonfund”) to buy or sell anysecurities or securities derivatives products of any kind or provide any investment advice or service.

• Returns include closed account history in group composites, if applicable.• All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals may materially alter the performance, strategy and

results of your portfolio.• Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s

investment portfolio.• Unless otherwise indicated, any performance shown is unaudited, net of applicable underlying fund management, performance and other fees, and expenses. Performance shown

presumes reinvestment of earnings and excludes investor specific sales and other charges. Fees may be modified or waived for certain investors. Please refer to the specific fundsoffering documents for more information regarding the fund’s fees, charges and expenses, which will offset its gains. If returns are indicated as gross, such returns do not reflectthe deduction of any fees or expenses. Fees and expenses, including management and performance fees, will reduce gross returns. Performance may vary substantially from yearto year or even from month to month. An investor’s actual performance and actual fees may differ from the performance information shown due to, among other factors, capitalcontributions and withdrawals/redemptions, different share classes and eligibility to participate in “new issues.” The value of investments can go down as well as up. Pastperformance is not indicative of future results.

• Benchmarks, financial indices, and composite indices are shown for illustrative purposes only and are provided for the purpose of making general market data available as a pointof reference only. Such benchmarks and financial indices may not be available for direct investment, may be unmanaged, assume reinvestment of income, do not reflect theimpact of any trading commissions and costs, management or performance fees, and have limitations when used for comparison or other purposes because they, among otherreasons, may have different trading strategy, volatility, credit, or other material characteristics (such as limitations on the number and types of securities or instruments).Commonfund fund’s investment objective is not restricted to the securities and instruments comprising any one index. No representation is made that any benchmark or index isan appropriate measure for comparison. The information is gathered from sources we believe are reliable but we cannot ensure accuracy. Commonfund does not guarantee theaccuracy, completeness or timeliness of such information and such information is subject to change, either expressly or impliedly, for any particular purpose.

• Performance is calculated monthly. Therefore, returns for any investments in any fund for less than a full month are not included in these performance figures.

Important Notes | Non-Marketable Performance• Investments in Programs for Commonfund Capital and Commonfund Realty are carried as of the most recent valuation date, which may not correspond to the marketable

securities valuation dates.• All performance data set forth herein is net of all fees and carried interest. Internal Rates of Return (IRR) should be evaluated in light of information on the investment program of

the partnership, the risks associated therewith, and performance of the partnership as disclosed in the Offering Memorandum for the partnership, the Audited Annual Reports ofthe partnership and the Quarterly Reports of the partnership. Return information is presented for these partnerships on a dollar-weighted (e.g. internal rate of return) basis, whichis standard for the private capital industry, rather than the time-weighted (i.e., annual or other period rate of return) basis, which is used principally to report performance ofpublicly-traded securities. The IRR since inception is the most commonly used calculation methodology for presentation of performance in the private capital business.Comparison of returns calculated on an IRR basis with returns on a time-weighted basis is not appropriate. For a description of the two return calculation methods, see MeasuringInvestment returns, Time vs. Dollar-Weighted – What’s the Difference? A copy is available from Commonfund.

• Distressed Debt programs are reported with a one quarter lag. For example, if the report 'As of' date is 9/30/YY then Distressed Debt programs are represented using 6/30/YY, orprevious quarter values.

• Private Capital and Real Estate programs are reported with a one quarter lag. For example, if the report 'As of' date is 9/30/YY then Private Capital and Real Estate programs arerepresented using 6/30/YY, or previous quarter values.

• Private Capital and Commonfund Realty Partners I, L.P. returns are normally reported as an Internal Rate of Return (IRR). All other Commonfund investment returns are reportedas Time Weighted Rates of Return (TWR). For Consolidated Performance reporting purposes, TWRs are used for all individual and composite returns.

28

All Accounts



Important Notes | Description of Indices

The HFRI Monthly Indices (HFRI) are equally weighted performance indexes, utilized by numerous hedge fund managers as a benchmark for their own hedge funds. The HFRI arebroken down into 4 main strategies, each with multiple sub-strategies. All single-manager HFRI Index constituents are included in the HFRI Fund Weighted Composite, which accountsfor over 2000 funds listed on the internal HFR Database. Due to mutual agreements with the hedge fund managers listed in the HFR Database, we are not at liberty to disclose theparticular funds behind any index to non-database subscribers. Funds included in the HFRI Monthly Indices must: Report monthly returns, Report Net of All Fees Returns, Report assetsin USD, Have at least $50 Million under management or have been actively trading for at least twelve (12) months. Funds are eligible for inclusion in the HFRI the month after theiraddition to HFR Database. For instance, a fund that is added to HFR Database in June is eligible for inclusion in the indices upon reporting their July performance. The HFRI are updatedthree times a month: Flash Update (5th business day of the month), Mid Update (15th of the month), and End Update (1st business day of following month). The current month and theprior three months are left as estimates and are subject to change. All performance prior to that is locked and is no longer subject to change. If a fund liquidates/closes, that fund'sperformance will be included in the HFRI as of that fund's last reported performance update. The HFRI Fund of Funds Index is not included in the HFRI Fund Weighted CompositeIndex. Both domestic and offshore funds are included in the HFRI. In cases where a manager lists mirrored-performance funds, only the fund with the larger asset size is included in theHFRI.See https://www.hedgefundresearch.com/index.php?fuse=indices-faq&1319810221

The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developedmarkets, excluding the US & Canada. The MSCI EAFE Index consists of the following 21 developed market country indexes: Australia, Austria, Belgium, Denmark, Finland, France,Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom (List as of June2014).

The MSCI US REIT Index is a free float�adjusted market capitalization weighted index that is comprised of Equity REIT securities. The MSCI US REIT Index includes securities withexposure to core real estate (e.g. residential and retail properties) as well as securities with exposure to other types of real estate (e.g. casinos, theaters).

The MSCI ACWI Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.The MSCI ACWI consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes. The developed market country indexes included are: Australia,Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,Switzerland, the United Kingdom and the United States. The emerging market country indexes included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary,India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and United Arab Emirates. (List as of June 2014).

The CSFB Leveraged Loan Index is an index designed to mirror the investable universe of the $US-denominated leveraged loan market. The index inception is January 1992. Theindex frequency is monthly. New loans are added to the index on their effective date if they qualify according to the following criteria: Loans must be rated “5B” or lower; only fully-funded term loans are included; the tenor must be at least one year; and the Issuers must be domiciled in developed countries (Issuers from developing countries are excluded). Fallenangels are added to the index subject to the new loan criteria. Loans are removed from the index when they are upgraded to investment grade, or when they exit the market (for example,at maturity, refinancing or bankruptcy workout). Note that issuers remain in the index following default. Total return of the index is the sum of three components: principal, interest, andreinvestment return. The cumulative return assumes that coupon payments are reinvested into the index at the beginning of each period.

The MSCI ACWI ex USA Index captures large and mid-cap representation across 22 of 23 Developed Markets (DM) countries*--excluding the United States. With 1,003 constituents,the index covers approximately 85% of the free float-adjusted market capitalization in each country.

The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCIEmerging Markets Index consists of the following 23 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia,Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates (List as of June 2014).

The Dow Jones U.S. Select Real Estate Securities Index (RESI) represents equity real estate investment trusts (REITs) and real estate operating companies (REOCs) traded in the U.S.The Dow Jones U.S. Select REIT Index is a subset of the Dow Jones Americas Select RESISM and includes only REITs and REIT-like securities.

29

https://www.hedgefundresearch.com/index.php?fuse=indices-faq&1319810221

All Accounts



The S&P Global Natural Resources Index includes 90 of the largest publicly-traded companies in natural resources and commodities businesses that meet specific investabilityrequirements, offering investors diversified and investable equity exposure across 3 primary commodity-related sectors: agribusiness, energy, and metals & mining.

The Bloomberg Commodity Index (BCOM) is calculated on an excess return basis and reflects commodity futures price movements. The index rebalances annually weighted 2/3 bytrading volume and 1/3 by world production and weight-caps are applied at the commodity, sector and group level for diversification. Roll period typically occurs from 6th-10th businessday based on the roll schedule.

The Barclays Capital U.S. Aggregate Bond Index measures the performance of the U.S. investment grade bond market. The index invests in a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States - including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backedsecurities, all with maturities of more than 1 year.

The Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index includes all publicly issued, U.S. Treasury inflation-protected securities that have at least one yearremaining to maturity, are rated investment grade, and have $250 million or more of outstanding face value.

The Citigroup World Government Bond Index (WGBI) measures the performance of fixed-rate, local currency, investment grade sovereign bonds. The WGBI is a widely usedbenchmark that currently comprises sovereign debt from over 20 countries, denominated in a variety of currencies, and has more than 25 years of history available. The WGBI provides abroad benchmark for the global sovereign fixed income market. Sub-indices are available in any combination of currency, maturity, or rating.

The BofA Merrill Lynch 1-3 US Year Treasury Index is an unmanaged index that tracks the performance of the direct sovereign debt of the U.S. Government having a maturity of atleast one year and less than three years. It is not possible to invest directly in an unmanaged index.

The S&P 500 Index is a widely recognized gauge of the U.S. equities market. This index is an unmanaged capitalization-weighted index consisting of 500 of the largest capitalizationU.S. common stocks. The returns of the S&P 500 include the reinvestment of dividends.

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000 Index representingapproximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current indexmembership. The Russell 2000 is constructed to provide a comprehensive and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do notdistort the performance and characteristics of the true small-cap opportunity set.

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index isconstructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

30

Cal Poly Pomona Foundation Investment Results

as of December 31, 2014

Graystone Consulting Andrew Price, CIMA® Executive Director Institutional Consulting Director Todd Au, CIMA®

Second Vice President

Senior Investment Management Consultant Tim Skelly, CIMA® Senior Vice President Institutional Consulting Director David J. Weinberg Institutional Consulting Analyst

Address:

1999 Avenue of the Stars Suite 2400 Los Angeles, CA 90067 Phones: Main Line 310-788-2043 Toll-Free 800-786-0048 Fax 310-961-3180 E-Mail: [email protected]

[email protected]

[email protected]

[email protected] 31

Cal Poly Pomona Foundation Executive Summary

Type of Fund Endowment Time Horizon Perpetuity Investment Horizon Over 10 Years Target Return Greater Los Angeles Area CPI + 5% Normal Policy Allocation 40% S&P 500 / 30% EAFE / 30% BC Aggregate Asset Allocation Guidelines

Asset Class Allocation

Total Equities 60.0%Domestic Equity 30.0%International Equity 30.0%

Fixed Income includes MBS 30.0%Domestic and International 30.0%

Real Assets 10.0%Cash Equivalents 0.0%

32

December 31, 2014 : $88,229,156

Market Value($)

Allocation(%)

Domestic Equities 19,310,175 21.89¢£

Global Equities 16,113,364 18.26¢£

International and EM Equities 17,443,840 19.77¢£

Fixed Income 26,278,067 29.78¢£

Real Assets 7,609,559 8.62¢£

Cash & Equivalents 1,474,152 1.67¢£

Total Fund

($) %

All/Large Cap Equities 15,720,757 17.82

Touchstone All Cap Growth 7,997,525 9.06Aristotle Large Cap Value 7,723,232 8.75

Small/Mid Cap Equities 3,589,418 4.07

Keeley SMID Value* 1,796,006 2.04Apex SMID Cap Growth* 1,793,412 2.03

International and EM Equities 17,443,840 19.77

William Blair International Growth 6,446,420 7.31Harbor International Equity 6,251,744 7.09iShares MSCI Emerging Markets Index 4,745,676 5.38

Global Equities 16,113,364 18.26

First Eagle 7,905,151 8.96Delaware Focus Global Growth 8,208,213 9.30

Total Public Equities 52,867,378 59.92

Domestic Fixed Income 19,757,719 22.39

PIMCO Total Return 979 0.00Met West Total Return 8,039,954 9.11JP Morgan Strategic Income 7,454,260 8.45Nuveen Symphony Credit Opportunities 4,262,526 4.83

Global Fixed Income 6,520,348 7.39

Brandywine Global Fixed Income 3,278,447 3.72Templeton Global Bond Fund 3,241,902 3.67

Total Fixed Income 26,278,067 29.78

Real Assets 7,609,559 8.62

PIMCO AAAA 4,164,902 4.72RS Global Natural Resources 3,444,656 3.90

Cash & Equivalents 1,474,152 1.67

Cash Holding Account 1,474,152 1.67

Cal Poly Pomona Foundation Total Fund 88,229,156 100.00

December 31, 2014

Allocation Differences

0.0% 0.7% 1.4% 2.1% 2.8%-0.7 %-1.4 %-2.1 %

Cash & Equivalents

Real Assets

Fixed Income

Global Equities

International Equities

Domestic Equities

1.7%

-1.4 %

-0.2 %

0.3%

-1.2 %

0.9%

December 31, 2014Market Value

($)Allocation

(%)Target

(%)

Domestic Equities 19,310,175 21.89 21.00International Equities 17,443,840 19.77 21.00Global Equities 16,113,364 18.26 18.00Fixed Income 26,278,067 29.78 30.00Real Assets 7,609,559 8.62 10.00Cash & Equivalents 1,474,152 1.67 0.00Total Fund 88,229,156 100.00 100.00

Cal Poly Pomona FoundationBalances and Asset Allocation

December 31, 2014

33

AllocationMarketValue

($)%


ToDate

FiscalYTD

1Year

3Years

5Years

SinceInception

Fiscal Year2013

Fiscal Year2012

Fiscal Year2011

Fiscal Year2010

InceptionDate

Cal Poly Pomona Foundation Total Fund 88,229,156 100.00 -0.93 -3.80 0.84 9.22 8.21 7.29 10.95 -1.38 23.96 15.63 10/01/2008

40% S&P 500/30% EAFE/30% BC Aggregate 1.44 0.16 5.63 12.29 9.46 8.37 13.42 0.15 22.26 11.75Difference -2.37 -3.96 -4.79 -3.07 -1.25 -1.08 -2.47 -1.53 1.70 3.88

70% ACWI / 30% WGBI -0.16 -2.90 2.80 9.49 7.08 7.35 9.90 -3.39 24.11 9.41 01/01/1988

Public Equities 52,867,378 59.92 0.67 -2.80 1.88 12.91 10.04 8.23 15.49 -5.35 33.64 14.65 10/01/2008

MSCI AC Wld Nt 0.41 -1.90 4.15 14.11 9.17 8.03 16.58 -6.49 30.13 11.77Difference 0.26 -0.90 -2.27 -1.20 0.87 0.20 -1.09 1.14 3.51 2.88

Domestic Equities 19,310,175 21.89 4.91 3.10 10.14 19.45 15.08 11.55 20.83 -0.09 34.77 13.27 10/01/2008

Russell 3000 5.24 5.26 12.56 20.52 15.64 12.16 21.49 3.84 32.37 15.72Difference -0.33 -2.16 -2.42 -1.07 -0.56 -0.61 -0.66 -3.93 2.40 -2.45

Touchstone Westfield All Cap Growth 7,997,525 9.06 6.98 6.05 12.08 23.64 N/A 16.74 24.92 N/A N/A N/A 08/01/2011

Russell 3000 Gr 5.18 6.11 12.44 20.26 N/A 16.44 17.58 N/A N/A N/ADifference 1.80 -0.06 -0.36 3.38 N/A 0.30 7.34 N/A N/A N/A

Aristotle Large Cap Value 7,723,232 8.75 3.70 1.76 10.79 N/A N/A 16.63 N/A N/A N/A N/A 06/01/2013

Russell 1000 Vl 4.99 4.79 13.46 N/A N/A 17.22 N/A N/A N/A N/ADifference -1.29 -3.03 -2.67 N/A N/A -0.59 N/A N/A N/A N/A

Keeley SMID Value 1,796,006 2.04 3.57 -2.83 0.60 21.74 N/A 15.41 36.08 N/A N/A N/A 08/01/2011

Russell 2500 Vl 6.09 -0.69 7.11 19.41 N/A 14.98 26.87 N/A N/A N/ADifference -2.52 -2.14 -6.51 2.33 N/A 0.43 9.21 N/A N/A N/A

Apex SMID Cap Growth 1,793,412 2.03 2.58 2.13 8.66 22.78 N/A 16.99 25.33 N/A N/A N/A 08/01/2011

Russell 2500 Gr 7.48 2.95 7.04 20.47 N/A 15.24 24.02 N/A N/A N/ADifference -4.90 -0.82 1.62 2.31 N/A 1.75 1.31 N/A N/A N/A

Global Equities 16,113,364 18.26 1.75 -1.80 2.68 10.38 N/A 7.55 12.09 N/A N/A N/A 08/01/2011

MSCI AC Wld Nt 0.41 -1.90 4.15 14.11 N/A 8.87 16.58 N/A N/A N/ADifference 1.34 0.10 -1.47 -3.73 N/A -1.32 -4.49 N/A N/A N/A

First Eagle 7,905,151 8.96 0.13 -3.07 3.11 10.38 N/A 7.55 12.08 N/A N/A N/A 08/01/2011

MSCI AC Wld Nt 0.41 -1.90 4.15 14.11 N/A 8.87 16.58 N/A N/A N/ADifference -0.28 -1.17 -1.04 -3.73 N/A -1.32 -4.50 N/A N/A N/A

Cal Poly Pomona Foundation



34




MarketValue

($)%


ToDate

FiscalYTD

1Year

3Years

5Years

SinceInception

Fiscal Year2013

Fiscal Year2012

Fiscal Year2011

Fiscal Year2010

InceptionDate

Delaware Focus Global Growth 8,208,213 9.30 3.37 -0.57 2.24 N/A N/A 7.95 N/A N/A N/A N/A 10/01/2013

MSCI AC Wld Nt 0.41 -1.90 4.15 N/A N/A 9.32 N/A N/A N/A N/ADifference 2.96 1.33 -1.91 N/A N/A -1.37 N/A N/A N/A N/A

International and EM Equities 17,443,840 19.77 -4.53 -9.56 -6.94 7.27 4.42 5.06 10.83 -13.73 30.71 17.59 10/01/2008

MSCI AC Wld xUS Nt -3.88 -8.94 -3.87 9.00 4.43 5.10 13.65 -14.56 29.73 10.42Difference -0.65 -0.62 -3.07 -1.73 -0.01 -0.04 -2.82 0.83 0.98 7.17

William Blair International Growth 6,446,420 7.31 -1.66 -5.90 -2.98 12.75 8.09 7.35 17.33 -9.26 27.92 16.64 10/01/2008

MSCI EAFE Net -3.57 -9.23 -4.90 11.06 5.34 5.14 18.63 -13.83 30.36 5.92Difference 1.91 3.33 1.92 1.69 2.75 2.21 -1.30 4.57 -2.44 10.72

Harbor International 6,251,744 7.09 -4.12 -10.83 -6.92 9.60 5.49 5.73 14.10 -11.69 35.68 13.50 10/01/2008

MSCI EAFE Net -3.57 -9.23 -4.90 11.06 5.34 5.14 18.63 -13.83 30.36 5.92Difference -0.55 -1.60 -2.02 -1.46 0.15 0.59 -4.53 2.14 5.32 7.58

iShares MSCI Emerging Markets Index 4,745,676 5.38 N/A N/A N/A N/A N/A -2.19 N/A N/A N/A N/A 12/09/2014

MSCI EM Net N/A N/A N/A N/A N/A -3.27 N/A N/A N/A N/ADifference N/A N/A N/A N/A N/A 1.08 N/A N/A N/A N/A

Fixed Income 26,278,067 29.78 -0.32 -1.07 2.60 4.20 5.20 6.76 3.43 5.60 5.49 14.98 10/01/2008

BC Aggregate 1.78 1.95 5.96 2.66 4.45 5.25 -0.69 7.47 3.90 9.50Difference -2.10 -3.02 -3.36 1.54 0.75 1.51 4.12 -1.87 1.59 5.48

PIMCO Total Return 979 0.00 1.44 0.97 4.82 2.89 4.20 6.14 -1.19 6.04 5.38 13.59 10/01/2008

BC Aggregate 1.78 1.95 5.96 2.66 4.45 5.25 -0.69 7.47 3.90 9.50Difference -0.34 -0.98 -1.14 0.23 -0.25 0.89 -0.50 -1.43 1.48 4.09

Met West Total Return 8,039,954 9.11 1.66 1.96 5.95 5.83 N/A 5.47 4.76 N/A N/A N/A 08/01/2011

BC Aggregate 1.78 1.95 5.96 2.66 N/A 3.32 -0.69 N/A N/A N/ADifference -0.12 0.01 -0.01 3.17 N/A 2.15 5.45 N/A N/A N/A

JP Morgan Strategic Income 7,454,260 8.45 -0.40 -0.63 0.25 3.61 N/A 2.80 5.68 N/A N/A N/A 08/01/2011

BC Aggregate 1.78 1.95 5.96 2.66 N/A 3.32 -0.69 N/A N/A N/ADifference -2.18 -2.58 -5.71 0.95 N/A -0.52 6.37 N/A N/A N/A

35




MarketValue

($)%


ToDate

FiscalYTD

1Year

3Years

5Years

SinceInception

Fiscal Year2013

Fiscal Year2012

Fiscal Year2011

Fiscal Year2010

InceptionDate

Brandywine Global Fixed Income 3,278,447 3.72 -0.16 -2.22 6.33 4.71 N/A 4.30 3.80 N/A N/A N/A 08/01/2011

Citi WGBI UnH -1.49 -5.21 -0.48 -0.97 N/A -0.86 -4.50 N/A N/A N/ADifference 1.33 2.99 6.81 5.68 N/A 5.16 8.30 N/A N/A N/A

Templeton Global Bond Fund 3,241,902 3.67 -1.66 -1.62 1.74 6.55 N/A 3.23 7.84 N/A N/A N/A 08/01/2011

Citi WGBI UnH -1.49 -5.21 -0.48 -0.97 N/A -0.86 -4.50 N/A N/A N/ADifference -0.17 3.59 2.22 7.52 N/A 4.09 12.34 N/A N/A N/A

Nuveen Symphony Credit Opportunities 4,262,526 4.83 -2.21 -4.52 -0.06 N/A N/A 2.45 N/A N/A N/A N/A 10/01/2013

CS Leveraged Loan VL 0.74 0.41 3.20 N/A N/A 4.04 N/A N/A N/A N/ADifference -2.95 -4.93 -3.26 N/A N/A -1.59 N/A N/A N/A N/A

Real Assets 7,609,559 8.62 -12.64 -19.46 -12.67 -1.94 N/A -2.64 3.29 N/A N/A N/A 08/01/2011

RS Global Natural Resources 3,444,656 3.90 -20.87 -29.96 -22.55 N/A N/A -20.35 N/A N/A N/A N/A 10/01/2013

S&P NAM Natural Resources -13.86 -22.50 -9.77 N/A N/A -4.04 N/A N/A N/A N/ADifference -7.01 -7.46 -12.78 N/A N/A -16.31 N/A N/A N/A N/A

PIMCO AAAA 4,164,902 4.72 -4.42 -8.27 -2.48 2.69 N/A 1.46 3.29 N/A N/A N/A 08/01/2011

BC TIPS -0.03 -2.07 3.64 0.44 N/A 1.34 -4.77 N/A N/A N/ADifference -4.39 -6.20 -6.12 2.25 N/A 0.12 8.06 N/A N/A N/A

36

Asset Allocation Over Time

CurrentQuarter

FiscalYTD

Fiscal Year2013

Fiscal Year2012

Oct 2008To

Dec 2008

SinceInception

InceptionDate

Cal Poly Pomona Foundation Total Fund 10/01/2008 Beginning Market Value 87,563,190 86,657,511 55,579,506 49,983,520 31,161,294 31,161,294 Net Contributions 1,495,424 5,095,394 7,024,252 6,269,492 -475,941 32,918,406 Fees/Expenses -36,014 -72,835 -119,298 -120,966 -51,340 -846,749 Income 2,711,016 2,938,106 2,423,285 1,213,128 630,728 12,361,534 Gain/Loss -3,504,460 -6,389,020 4,382,362 -1,765,668 -5,921,902 12,634,670 Ending Market Value 88,229,156 88,229,156 69,290,107 55,579,506 25,342,839 88,229,156

CurrentQuarter

FiscalYTD

Fiscal Year2013

Fiscal Year2012

Oct 2008To

Dec 2008

SinceInception

InceptionDate

Cal Poly Pomona Foundation Total Fund -0.93 -3.80 10.95 -1.38 -17.44 7.29 10/01/200840% S&P 500/30% EAFE/30% BC Aggregate 1.44 0.16 13.42 0.15 -13.59 8.37 10/01/200870% ACWI / 30% WGBI -0.16 -2.90 9.90 -3.39 -13.62 7.35 01/01/1988

US Equity International Equity Global Equity International-Emerging Equity

US Fixed Income Global Fixed Income US REIT (Real-Estate Funds) US Real Return

Global Real Return US Mixed Assets Global Mixed Assets Cash

Hedge Fund

0.0

25.0

50.0

75.0

100.0

All

oc

ati

on

(%)

9/08 3/09 9/09 3/10 9/10 3/11 9/11 3/12 9/12 3/13 9/13 3/14 9/14 12/14

Cal Poly Pomona FoundationPerformance and Asset Allocation History

December 31, 2014

37

Rolling 36 Month Standard Deviation Rolling 36 Month Beta vs. Global Equities

Rolling 36 Month Alpha vs. Global Equities

Alpha

Cal Poly Pomona Foundation Total Fund

70% ACWI/30% WGBI

-1.0

1.0

3.0

4.6

9/11 3/12 9/12 3/13 9/13 3/14 9/14 12/14

3Years

5Years

SinceInception

InceptionDate

Return 9.22 8.21 7.29 10/01/2008Standard Deviation 7.86 10.33 13.31

vs. 70% ACWI/30% WGBIAlpha -0.40 1.14 0.43Beta 0.98 0.94 0.94R-Squared 0.97 0.95 0.95

Standard Deviation


70% ACWI/30% WGBI

MSCI AC Wld Nt

9.0

13.0

17.0

21.0

24.0

9/11 3/12 9/12 3/13 9/13 3/14 12/14

Beta


70% ACWI/30% WGBI

MSCI AC Wld Nt

0.6

0.8

1.0

1.1

9/11 3/12 9/12 3/13 9/13 3/14 9/14 12/14

Cal Poly Pomona Foundation Total FundRisk Analytics


38

Disclosures

39


40

Important Disclosures To the extent the investments depicted herein represent international securities, you should be aware that there may be additional risks associated with international investing, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes, and differences in financial and accounting standards. These risks may be magnified in emerging markets. International investing may not be for everyone. Small capitalization companies may lack the financial resources, product diversification and competitive strengths of larger companies. In addition, the securities of small capitalization companies may not trade as readily as, and be subject to higher volatility than, those of larger, more established companies. Bonds are subject to interest rate risk. When interest rates rise bond prices fall; generally the longer a bond's maturity, the more sensitive it is to this risk. Bonds may also be subject to call risk, which allows the issuer to retain the right to redeem the debt, fully or partially, before the scheduled maturity date. Proceeds from sales prior to maturity may be more or less than originally invested due to changes in market conditions or changes in the credit quality of the issuer. Investing in alternative investments is speculative, not suitable for all clients, and intended for experienced and sophisticated investors who are willing to bear the high economic risks of the investment, which can include: • loss of all or a substantial portion of the investment due to leveraging, short-selling or other speculative investment practices; • lack of liquidity in that there may be no secondary market for the fund and none expected to develop; • volatility of returns; • restrictions on transferring interests in the fund; • potential lack of diversification and resulting higher risk due to concentration of trading authority with a single advisor; • absence of information regarding valuations and pricing; • delays in tax reporting; • less regulation and higher fees than mutual funds; and • advisor risk. Although the statements of fact and data in this report have been obtained from, and are based upon, sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the Firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results. Actual returns would be reduced by expenses that may include management fees and costs of transactions. Expected return and risk (standard deviation) calculations are based on historical data for periods indicated. International investing may not be suitable for every investor and is subject to additional risks, including currency fluctuations, political factors, withholding, lack of liquidity, the absence of adequate financial information, and exchange control restrictions impacting foreign issuers. These risks may be magnified in emerging markets. Mutual fund investments are subject to market risk, including the possible loss of principal. They are sold by prospectus only. The prospectus contains the investment objectives, risks, fees, charges and expenses, and other information regarding the mutual fund and variable annuity contract and its underlying investments, which should be carefully considered before investing. Prospectuses are available through your Financial Advisor or at www.smithbarney.com. Read the prospectus carefully before you invest. © 2014 Graystone Consulting is a business of Morgan Stanley Smith Barney LLC.

41

Analysis Disclosure

The analysis is based on published investment manager rate of return data, capital market indices, custom (benchmarks, indices and universes), as well as software developed by Zephyr Associates. Investment manager rate of return data includes: Effron Plan Sponsor Network Database. Capital markets index data includes: Capital market indices (supplied by Zephyr), Canadian indices (supplied by Zephyr), Salomon Brothers Fixed Income indices, Morgan Stanley Capital International indices, and Dow Jones Global indices. Zephyr StyleADVISOR uses principles of William Sharpe's theory of returns-based style analysis. Returns-based style analysis assists in identifying investment style without examining the individual security holdings of a portfolio. StyleADVISOR regresses the historical returns of the individual manager(s) against different style indices to identify the pattern of returns that the fund is most closely correlated to. SSB does not recommend the use of returns-based style analysis without the supporting fundamental research of the fund (research attribution reports). The underlying data is believed to be reliable but accuracy and completeness cannot be assured. While the historical rates of return described in this report are believed to accurately reflect the overall nature of the portfolio, the constituent securities have not been reviewed. This evaluation is for informational purposes only and is not intended to be an offer, solicitation or recommendation with respect to the purchase or sale of any security or a recommendation of the services provided by any money management organization. Past results are not necessarily indicative of future performance. Investors should consider the investment objectives, risks, charges, fees and expenses of the mutual fund carefully before investing. The prospectus contains more complete information about these factors and other information about the investment company. Read the prospectus carefully before you invest.

42


Peer Group Investment Analysis

© 2014 Investments and services offered through Morgan Stanley. Member SIPC. Graystone Consulting is a business of Morgan Stanley. 43

Cal Poly Pomona Foundation - Peer Group AnalysisManager vs Universe: Return through September 2014

(not annualized if less than 1 year)Large Growth Universe

Ret

urn

0

5

10

15

20

25

3 years 5 years 7 years 10 years 1 year

Touchstone - All Cap Growth (Gross)Russell 3000 Growth5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile

Annualized Returns(not annualized if less than 1 year)

Morningstar Large Growth

Touchstone - All Cap Growth (Gross)

Russell 3000 Growth

1 year

1770 mng

3 years

1665 mng

5 years

1550 mng

7 years

1479 mng

10 years

1354 mng

18.00% 25.67% 17.05% 8.29% 11.36%

17.87% 22.41% 16.43% 7.52% 8.95%

Peer Group Rankings(not annualized if less than 1 year)

Morningstar Large Growth

3 years

1665 mng

5 years

1550 mng

7 years

1479 mng

10 years

1354 mng

1.76% 9.07% 8.60% 2.97%

32.80% 15.23% 20.10% 31.15%

44


(not annualized if less than 1 year)Large Value Universe

Ret

urn

0

5

10

15

20

25


Aristotle - Large Cap Value (Gross)Russell 1000 Value5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile


Morningstar Large Value

Aristotle - Large Cap Value (Gross)

Russell 1000 Value

1 year

1321 mng

3 years

1207 mng

5 years

1159 mng

7 years

1111 mng

10 years

980 mng

16.79% 23.63% 15.97% 7.63% 11.22%

18.89% 23.93% 15.26% 4.81% 7.84%


Morningstar Large Value

3 years

1207 mng

5 years

1159 mng

7 years

1111 mng

10 years

980 mng

20.67% 7.25% 1.67% 0.12%

17.20% 15.41% 46.48% 38.47%

45

Cal Poly Pomona Foundation - Peer Group AnalysisManager vs Universe: Return through December 2014

(not annualized if less than 1 year)Small-Mid Cap Value Universe

Ret

urn

0

5

10

15

20

25


Keeley - SMID ValueRussell 2500 Value5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile


Small-Mid Cap Value Universe

Keeley - SMID Value

Russell 2500 Value

1 year

752 mng

3 years

738 mng

5 years

655 mng

7 years

626 mng

10 years

549 mng

0.62% 21.78% 16.27% 7.59% 11.20%

7.11% 19.40% 15.48% 8.61% 7.91%


Small-Mid Cap Value Universe

3 years

738 mng

5 years

655 mng

7 years

626 mng

10 years

549 mng

12.66% 19.92% 64.74% 1.23%

46.02% 35.69% 40.14% 55.94%

46


(not annualized if less than 1 year)Small-Mid Cap Growth Universe

Ret

urn

0

5

10

15

20

25

30

3 years 5 years 7 years 10 years

Apex - SMID Cap Growth (Gross)Russell 2500 Growth5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile


Small-Mid Cap Growth Universe

Apex - SMID Cap Growth (Gross)

Russell 2500 Growth

1 year

797 mng

3 years

796 mng

5 years

773 mng

7 years

735 mng

10 years

604 mng

17.54% 27.31% 20.55% 10.82% 15.22%

8.05% 22.68% 16.85% 7.64% 10.10%


Small-Mid Cap Growth Universe

3 years

796 mng

5 years

773 mng

7 years

735 mng

10 years

604 mng

2.20% 1.94% 2.47% 0.29%

24.62% 29.88% 30.70% 36.62%

47


(not annualized if less than 1 year)International Equity Universe

Ret

urn

-4

-2

0

2

4

6

8

10

12

14


William Blair - Int'l EquityMSCI EAFE Index5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile


International Equity Universe

William Blair - Int'l Equity

MSCI EAFE Index

1 year

315 mng

3 years

315 mng

5 years

295 mng

7 years

252 mng

10 years

191 mng

-2.86% 12.72% 8.16% 0.14% 6.06%

-4.48% 11.56% 5.81% 0.00% 4.91%



3 years

315 mng

5 years

295 mng

7 years

252 mng

10 years

191 mng

11.18% 5.87% 12.22% 9.32%

18.55% 17.22% 14.43% 18.00%

48


(not annualized if less than 1 year)International Equity Universe

Ret

urn

-4

-2

0

2

4

6

8

10

12

14


Harbor - Int'l EquityMSCI EAFE Index5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile



Harbor - Int'l Equity

MSCI EAFE Index

1 year

315 mng

3 years

315 mng

5 years

295 mng

7 years

252 mng

10 years

191 mng

-6.81% 9.59% 5.54% 0.57% 7.35%

-4.48% 11.56% 5.81% 0.00% 4.91%



3 years

315 mng

5 years

295 mng

7 years

252 mng

10 years

191 mng

55.07% 21.99% 7.85% 3.41%

18.55% 17.22% 14.43% 18.00%

49


(not annualized if less than 1 year)Global Equity Universe

Ret

urn

0

5

10

15

20


First Eagle - Global EquityMSCI ACWI (Net)5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile


Global Equity Universe

First Eagle - Global Equity

MSCI ACWI (Net)

1 year

878 mng

3 years

826 mng

5 years

687 mng

7 years

590 mng

10 years

438 mng

3.19% 10.44% 9.70% 6.45% 9.04%

4.16% 14.10% 9.17% 2.72% 6.09%



3 years

826 mng

5 years

687 mng

7 years

590 mng

10 years

438 mng

88.82% 50.17% 5.22% 3.89%

54.62% 59.55% 58.12% 58.33%

50


(not annualized if less than 1 year)Global Equity Universe

Ret

urn

0

5

10

15

20

3 years 5 years

Delaware Focus - Global Growth MSCI ACWI (Net)5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile



Delaware Focus - Global Growth

MSCI ACWI (Net)

1 year

878 mng

3 years

826 mng

5 years

687 mng

2.21% 14.23% 12.30

4.16% 14.10% 9.17



3 years

826 mng

5 years

687 mng

53.09% 9.91%

54.62% 59.55%

51


(not annualized if less than 1 year)Fixed Income Universe

Ret

urn

0

1

2

3

4

5

6

7


Met West - Total ReturnBarclays Capital U.S. Aggregate5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile


Fixed Income Universe

Met West - Total Return

BC U.S. Aggregate

1 year

76 mng

3 years

76 mng

5 years

76 mng

7 years

73 mng

10 years

71 mng

5.99% 5.91% 6.96% 7.14% 6.69%

5.97% 2.66% 4.45% 4.77% 4.71



3 years

76 mng

5 years

76 mng

7 years

73 mng

10 years

71 mng

10.67% 12.00% 6.94% 4.29%

83.09% 83.90% 62.37% 58.19%

52



Ret

urn

0

1

2

3

4

5

6

7

3 years 5 years

JPMorgan - Strategic Income Barclays Capital U.S. Aggregate5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile



JPMorgan - Strategic Income

BC U.S. Aggregate

1 year

76 mng

3 years

76 mng

5 years

76 mng

-0.14% 3.43% 3.00%

5.97% 2.66% 4.45



3 years

76 mng

5 years

76 mng

67.25% 97.47%

83.09% 83.90%

53



Ret

urn

0

1

2

3

4

5

6

7

8

9

3 years

Nuveen Symphony - Credit Opps Credit Suisse Leveraged Loan Index5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile



Nuveen Symphony - Credit Opps

Credit Suisse Leveraged Loan Index

1 year

76 mng

3 years

76 mng

0.11% 8.44%

2.06% 5.84%



3 years

76 mng

0.00%

13.63%

54


(not annualized if less than 1 year)Global Fixed Income Universe

Ret

urn

-2

0

2

4

6

8


Brandywine - Global Fixed IncomeCitigroup World Government Bond Index5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile


Global Fixed Income Universe

Brandywine - Global Fixed Income

Citigroup World Government Bond Index

1 year

231 mng

3 years

213 mng

5 years

169 mng

7 years

146 mng

10 years

118 mng

6.13% 4.84% 7.02% 6.43% 5.72%

-0.48% -0.97% 1.67% 3.07% 3.08%



3 years

213 mng

5 years

169 mng

7 years

146 mng

10 years

118 mng

30.66% 9.52% 14.48% 31.24%

94.00% 91.89% 83.91% 83.99%

55


(not annualized if less than 1 year)Global Fixed Income Universe

Ret

urn

-2

0

2

4

6

8


Templeton - Global BondCitigroup World Government Bond Index5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile



Templeton - Global Bond

Citigroup World Government Bond Index

1 year

231 mng

3 years

213 mng

5 years

169 mng

7 years

146 mng

10 years

118 mng

1.84% 6.60% 6.01% 7.87% 7.64%

-0.48% -0.97% 1.67% 3.07% 3.08%



3 years

213 mng

5 years

169 mng

7 years

146 mng

10 years

118 mng

11.32% 26.79% 0.00% 0.00%

94.00% 91.89% 83.91% 83.99%

56


(not annualized if less than 1 year)All Index Universe

Ret

urn

-10

-5

0

5

10

15

20

25


PIMCO - All Asset All AuthorityBarclays U.S. Treasury: U.S. TIPS5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile


Zephyr All Indexes

PIMCO - All Asset All Authority

Barclays U.S. Treasury: U.S. TIPS

1 year

30894 mng

3 years

30806 mng

5 years

30356 mng

7 years

27674 mng

8 years

25855 mng

-2.35% 2.71% 4.26% 4.56% 5.21%

3.64% 0.44% 4.11% 4.17% 5.07%


Zephyr All Indexes

3 years

30806 mng

5 years

30356 mng

7 years

27674 mng

8 years

25855 mng

78.31% 66.08% 41.17% 42.77%

86.61% 67.09% 44.88% 44.51%

57


(not annualized if less than 1 year)Natural Resources Universe

Ret

urn

-15

-10

-5

0

5

10

15


RS Global Natural Resources S&P North American Natural Resources Sector Index5th to 25th Percentile25th Percentile to MedianMedian to 75th Percentile75th to 95th Percentile


Morningstar Natural Resources

RS Global Natural Resources

S&P NAM Natural Resources

1 year

172 mng

3 years

157 mng

5 years

129 mng

7 years

111 mng

10 years

98 mng

-22.84% -6.64% -1.09% -3.98% 4.33%

-9.77% 2.42% 4.28% -0.37% 7.65%


Morningstar Natural Resources

3 years

157 mng

5 years

129 mng

7 years

111 mng

10 years

98 mng

86.54% 66.80% 59.55% 81.96%

26.36% 21.32% 14.61% 16.23%

58


Memorandum Date: January 14, 2015 To: Investment Committee Cal Poly Pomona Foundation, Inc. From: David F. Prenovost

Chief Financial Officer Subject: FOUNDATION ENDOWMENT INVESTMENT POLICY 130 The Endowment Investment Policy Statement must be reviewed annually to ensure the Policy reflects the current investment objectives of the Foundation’s endowment funds. The Endowment Investment Policy governs the actions of Graystone Consulting in the selection and monitoring of investment managers for the endowment funds of the Foundation. Foundation management is requesting the Investment Committee’s consideration and review of the Foundation’s Endowment Investment Policy. Policy 130 – Foundation Endowment Investment Policy Recommended Action: The members of the Investment Committee have reviewed the Endowment Investment Policy # 130 and request the following resolution be presented at the next regularly scheduled Board of Directors meeting. Now therefore be it resolved that the Board of Directors approves the Foundation Endowment Investment Policy # 130. PASSED AND ADOPTED THIS 6th DAY OF FEBUARY 2015. By: Thomas M. Goff, Chair Investment Committee

Cal Poly Pomona Foundation, Inc.

59


POLICIES AND PROCEDURES

Subject: Endowment Investment Policy No. 130 Policy Old No.: 1991-1 Date: 04/25/91 Reference: 229-III-A; 230-II-C; 275-II-D Revision: 05/29/96; 09/04/96;

277-IV-C; 300-II-D; 348-III-E; 12/19/00, 09/27/11 350-III-B; 357-III-D 02/13/12, 11/13/13

PURPOSE AND INTENTION The purpose of this statement is to establish a clear understanding between the Cal Poly Pomona Foundation (Foundation) and their Investment Managers regarding investment objectives and policy guidelines.

OBJECTIVE The Foundation monitors and forecasts expenditures and revenues, thus enabling the Foundation to invest funds to the fullest extent possible. The Foundation attempts to obtain the highest return available, while investments meet the criteria established for safety (preservation of capital), return and liquidity.

A. SAFETY Safety of principal within the context of positioning the portfolio to have a reasonable probability of achieving the targeted returns noted in this policy is the foremost objective of the Foundation. Management of the portfolio shall be undertaken with the objective of minimizing the opportunity for loss of capital with the understanding that a degree of risk must be accepted for the portfolio to achieve the return objectives in both absolute and relative terms. The achievement of a positive risk-adjusted return is dependent upon proper design and execution of the investment strategy. In managing the portfolio, the Foundation shall be cognizant of two types of risk: credit risk and market risk.

1. Credit Risk or the risk of loss due to failure of the issuer, is managed by proper due diligence prior to investing and on an ongoing basis, and diversifying the investment portfolio so the failure of any one issuer would not materially affect the performance of the portfolio.

2. Market Risk is the risk of investment value fluctuation due to changes in the general level of interest rates or the issuer’s individual or industry sector performance. This risk shall be managed by limiting the average duration of the fixed income portion of the Foundation’s investment portfolio to five years and the maximum duration of any one security to ten years, with the exception of Mortgage-Backed Securities (MBS), the maximum maturity of which shall be limited to 30 years. Market risk shall also be mitigated by structuring the portfolio so fixed income securities maturing match cash outflows, eliminating the need to sell securities prior to their maturity. With respect to the equity portion of the portfolio, market risk is managed by due diligence in selecting and monitoring investees as well as diversification by company and by industry sector. It is recognized that within a diversified portfolio, occasional measured losses are inevitable and must be considered within the context of the overall return on the investment.

B. RETURN ON INVESTMENT The Foundation’s endowment investment portfolio shall be designed to attain or exceed a target rate of return throughout economic cycles consistent with risk limitations and prudent investment principles. The target rate of return shall be measured in “absolute”, “relative” and “comparative” terms as determined from time-to-time, by the Investment Committee. See Section IX of this Endowment Investment Policy.

C. LIQUIDITY The Foundation’s endowment investment portfolio will remain satisfactorily liquid to enable the Foundation to meet anticipated operating and cash flow requirements. Historical and cash flow needs are to be analyzed continuously.

60

SCOPE The funds identified in this section and entrusted to the Foundation will be pooled in an actively managed portfolio. The Foundation shall oversee management of the portfolio within the content of the "Uniform Prudent Management Investment Funds Act of 2008" which states:

“. . .each person responsible for managing and investing an institutional fund shall manage and invest the fund in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. “

DELEGATION & GRANTS OF AUTHORITY Responsibility for the investment program has been delegated by the Foundation Board of Directors to the Investment Committee. It is the responsibility of the Investment Committee, in concert with the authorized investment manager and/or advisor, to monitor and adjust from time to time, the target weighting within the asset allocation ranges allowed per the Target Asset Mix Table, (see section VIII – Performance Evaluation). Any changes to the target weighting within the asset allocation ranges will be reported to the full Foundation Board at its next regularly scheduled meeting. A report on portfolio performance will be provided to the full Foundation Board at each regularly scheduled Board meeting.

ETHICS AND CONFLICT OF INTEREST All Foundation Board members and investment personnel including family members shall refrain from personal business activity which could create a conflict in fact or in appearance with proper execution of the investment program, or which could impair their ability to execute impartial investment decisions. All such personnel shall disclose to the Executive Director any material financial interests in financial institutions which conduct business within the jurisdiction and shall disclose any material financial investment positions which could be related in a conflicting manner to the performance of the FOUNDATION's endowment investment portfolio. The Executive Director shall report in writing to the full Board at least annually all issues, which could influence the performance of the Foundation's endowment investments.

CRITERIA FOR SELECTION OF INVESTMENT MANAGERS In order to retain investment management organizations that have demonstrated competence in executing one or more investment strategies consistent with the established policy, the following criteria will be applied in retaining existing firms and selecting new investment managers:

A. Demonstrated performance in one or more of the asset categories defined in section VIIIC. B. A sound research program; C. A disciplined consistent and measurable approach to the construction and monitoring of portfolios; D. Established investment control procedures with operating management information to assure regular review of the portfolio manager’s decisions; E. Ability to trade at the lowest competitive rates and consistently secure best price execution; F. Primary business purpose will be investment management and will have sufficient experience with educational endowment assets; G. Demonstrated ability to manage its affairs in a businesslike manner and with a high degree of financial stability; H. An experienced, highly competent professional staff, recognized as such within the industry. Continuity of such personnel will be considered; I. No conflict of interest with the policy, objectives, or organization of the investment portfolio nor any conflict which would interfere with prudent management of the portfolio’s assets; J. Capability to report accounting and performance data in a timely manner; K. Competitive fee structure.

61

AUTHORIZED INVESTMENT ADVISORS All custodians, investment advisors and brokers who perform investment transactions for the FOUNDATION must supply the Executive Director with the following:

A. Annual audited financial statements* B. Proof of National Association of Security Dealers certification** C. Proof of registration with the SEC and a copy of their ADVII*** D. Completed broker/dealer questionnaires E. Certificate of reviewing and understanding the FOUNDATION's Endowment Investment Policy F. Certificate of understanding the delivery versus payment instructions for custody G. Conflict of interest certification/statement

* Custodians and brokers only ** Brokers only *** Investment advisors only

VIII. PERFORMANCE EVALUATION Performance will be reviewed for purposes of determining adherence to appropriate risk levels, and for comparison of returns to the established objectives and specific goals.

It is recognized that investment results can fluctuate through market cycles. Achievement of total rate of return within the risk levels identified will be the primary basis upon which to evaluate manager performance. Each manager’s portfolio will be monitored quarterly by the Investment Committee. A comprehensive annual report from the Committee will be presented to the full Board of Directors. Update reports will be made to the Board of Directors by the Committee Chair quarterly.

ENDOWMENT FUND

A. RETURN OBJECTIVE The purpose of the Endowment Fund is to support the University and its mission over the long term. Accordingly, the purpose of this statement is to establish a written procedure for the investment of the Endowment’s assets, and to ensure that the future growth of the Endowment is sufficient to offset normal inflation plus reasonable spending, thereby preserving the constant dollar value and purchasing power of the Endowment. This statement will establish appropriate risk and return objectives in light of the fund’s risk tolerance and investment time horizon. These objectives, as well as asset allocation guidelines and suitable investments are outlined below.

The return objectives of the Endowment Fund shall be viewed from three perspectives as follows: Absolute - Real (i.e., net of inflation) rate-of-return Relative - Time-weighted rates of return versus capital market indices; and Comparative - Performance of the Investment Manager(s) as compared to a universe of similar investment funds.

1. The Absolute Objective of the Endowment Fund is to seek an average total annual return of 5.0% plus the percentage change in the greater Los Angeles area CPI. This objective shall be measured over rolling one, three, five and ten year time periods; The intent of this objective is to measure, over time, the return on the portfolio as measured in, inflation adjusted terms.

2. The Relative Objective of the Endowment Fund is to seek competitive investment performance versus appropriate capital market benchmarks or indices. This objective shall be measured primarily by comparing investment results over an annualized year-to-date, one, three, five and ten year time periods, to:

a) The Russell 3000 Index as a benchmark for the Domestic Equity component; b) The MSCI EAFE Index (in US dollars) for the International Equity component; c) The Barclays Aggregate Bond Index as a benchmark for the Fixed Income component; d) The 90-Day Treasury Bill Index as the benchmark for the Cash and Equivalent component. e) A comparable Index for the Real Assets component. f) A comparable REIT Index for Real Estate component.

62

3. The Comparative performance objective of the Endowment Fund is to achieve a total rate of return that is above the median performance of universe of similar endowments.

The endowment and quasi-endowment assets have a long-term, indefinite time horizon that runs concurrent with the endurance of the institution, in perpetuity. As such, these funds can assume a time horizon that extends well beyond a normal market cycle, and can assume an above-average level of return volatility (as measured by the standard deviation of annual returns) in exchange for an expected higher level of returns over the longer time horizon. It is expected, however, that both professional management and sufficient portfolio diversification will smooth volatility and help to assure a reasonable consistency of return.

B. TARGET ASSET ALLOCATION To achieve its return objectives, the Endowment Fund shall be allocated among a number of asset classes. These asset classes may include: domestic equity, domestic fixed income, international (developed and emerging) equity, international fixed income, real estate, real assets, hedge funds and cash. These asset classes may also include global funds where the manager is allowed to choose the weighting between domestic and international securities. The purpose of allocating among asset classes is to ensure the proper level of diversification within the Endowment Fund. It is understood that endowments may temporarily be placed in a cash equivalent account prior to investing in longer term instruments.

The following Target Asset Mix Table defines the Endowment Fund’s target asset allocation.

Target Asset Mix Table

Asset Class Equities

Range Target Wt. Representative Index

Domestic 20 – 50% 30% Russell 3000 International 15 – 35% 30%

Developed MSCI EAFE Emerging MSCI Emerging

Fixed Income incl. MBS (Domestic and International) 20-50% 30% Barclay Aggregate

Cash Equivalents 0-20% 0% 90-Day Treasury Rate Real Estate 0–10% 0% Comparable Index Real Assets 0-10% 10% Comparable Index Hedge Funds 0-20% 0% Comparable Index

No more than 5 percent of the asset class may be invested in any single equity or fixed income issuer, with the exception of U.S. Treasury and Agency securities.

Exposure to any industry sector shall generally be limited to 20 percent of the asset class. This sector limitation is applicable to both debt and equity.

* All limitations expressed on a market value basis.

The general policy shall be to diversify investments among both equity and fixed income securities so as to provide a balance that will enhance total return while avoiding undue risk concentration in any single asset class or investment category.

Investments (both debt and equity) in international (developed/emerging) issues shall be U.S. dollar denominated or appropriately hedged so as to eliminate fluctuations in value attributable to changes in currency exchange rates.

63

C. ACCEPTABLE INSTRUMENTS 1. Money Market Funds 2. Certificates of Deposit 3. Common and Preferred Stocks 4. U.S. Government or Government Agency Obligations, 5. Mortgage Backed Securities 6. Corporate Debt 7. Repurchase Agreements 8. Mutual Funds (Debt or Equity) 9. Real Estate Investment Trusts 10. Real Assets 11. Hedge Funds

With respect to the above listed investments, the following limitations will apply:

• Money Market Funds including the Local Agency Investment Fund (LAIF). No more than 5% of the market value of the total portfolio may be invested in any fund. All funds utilized must be pre-approved by the Investment Committee.

• Certificates of Deposit. Investments in certificates of deposit in any insured bank or savings institution shall be limited to the FDIC insurance maximum.

• Common and Preferred Stocks. No more than 5% of the total market value of the asset class may be invested in any single stock.

• No more than 20% of the market value of the asset class may be invested in the obligations of any U.S. Government Agency.

• U.S. Government or U.S. Government Agency Obligations. There is no limitation within the asset class as to the percentage of the portfolio, which can be invested in U.S. Government obligations.

• Mortgage Backed Securities. All investments in MBS shall be U.S. Agency guaranteed (e.g. GNMA, FNMA, FHLMC). No more than 5% of the total market value of the asset class may be invested in any single security and no more than 20% of the total market value of the asset class may be invested in MBS issued by any U.S. Agency.

• Corporate Debt, including Commercial Paper. No more than 5% of the market value of the asset class may be invested in debt issued by any domestic or international corporation. Corporate debt must carry an investment grade rating by at least two of three rating agencies (i.e. Moody, S&P and Fitch) at time of purchase. Rating downgrades subsequent to purchase shall be managed on a case-by-case basis. This policy authorizes investment of up to 10% of the market value of the asset class in non- investment grade debt provided that all such investments shall be made through mutual funds so as to diversify risk. The average credit rating of the total asset class shall be maintained at AA or above.

• Repurchase Agreements. The Foundation may invest in repurchase agreements with banks and Primary Dealers in U.S. Government Securities with which the Foundation has entered into a Public Securities Association (PSA) repurchase contract, which specifies terms and conditions of repurchase agreements. The maturity of repurchase agreements shall not exceed 30 days. The market value of securities used as collateral for repurchase agreements shall be monitored daily by the Foundation's staff and will not be allowed to fall below 102% of the value of the repurchase agreement. Repurchase agreements cannot exceed 20 percent of the total market value of the asset class.

• Mutual Funds. For purposes of this Policy, mutual funds shall be considered and treated as investments in common and preferred stocks and bonds and therefore subject to the same limitations.

• Real Estate. Investments in real estate shall be limited to securities (e.g. REITs) for which there is a ready and active market.

64

• Real Assets. Investments in public/private real estate, natural resources, commodities, infrastructure, timber and inflation linked securities (TIPS).

• Hedge Funds. Investments in hedge funds shall be limited to funds approved by the investment advisor.

• The Foundation will not directly invest in stocks of the top 200 fossil fuel companies, by carbon in proven oil, gas and coal reserves. Although it may hold some fossil fuel stocks in commingled funds or mutual funds.

D. REBALANCING The Investment Committee, and its investment advisors, on an ongoing basis and in accordance with market fluctuations, shall rebalance the investment portfolio so it remains within 5 percentage points of the ranges of targeted asset allocations, and the planned distribution among investment managers.

Formal asset allocation studies will be conducted at least every two years, with annual evaluations of the validity of the adopted asset allocation. The asset allocation study is contained in Appendix A of this policy.

X. QUASI-ENDOWMENT FUND The purpose of the Quasi-Endowment Fund is to support the University and its mission over the term of the quasi-endowment. This fund is to be managed in accordance with the investment parameters, acceptable instruments, and guidelines set forth in Section IX, of this Policy.

XI. ENDOWMENT INVESTMENT POLICY REVIEW This Statement of Endowment Investment Policy shall be reviewed by the Investment Committee at least annually to ensure consistency with the overall objectives of the portfolio. The Statement of Endowment Investment Policy shall also be reviewed annually to ensure its compliance and relevance to the current law, financial and economic trends, and to meet the cash flow requirements of the Foundation. Investment operations are reviewed monthly by the Foundation staff during the reconciliation process of investment transactions to the third party statements and the proof of cash process. The investment portfolio is audited annually by the Foundation’s independent accountants.

65


Memorandum

Date: January 27, 2015

To: Investment Committee

From: G. Paul Storey Executive Director

Subject: CalPERS Public Agency Valuation Reports for the Cal Poly Pomona Foundation Pension Plan

The California Public Employee Retirement System (CalPERS) released new financial reports on January 13th 2015 that detail the finances of CalPERS pension and the plans of contracting public agencies as of June 30, 2014. Specific information related to the Cal Poly Pomona Foundation pension can be located on the CalPERS website under the Public Agency Valuation Report section at http://www.calpers.ca.gov/index.jsp?bc=/about/forms-pubs/calpers-reports/actuarial-reports/home.xml

There are detail reports of the investment performance for each of the three Cal Poly Pomona Foundation pension plan tiers with 2015-16 fiscal year employer contribution rates.

• Miscellaneous First Tier Plan (2% at 55) is funded at 87.4%, a positive growth of 3.1% over June 30, 2013. The projected employer contribution rate for FY 2015-16 is 10.03%.

• Miscellaneous Second Tier Plan (2% at 60) is funded at 84.3%, a positive growth of 4.5% over June 30, 2013. The projected employer contribution rate for FY 2015-16 is 6.709%

• A Newly established Miscellaneous Tier (2% at 62) did not report the funded portion. The projected employer contribution rate for FY 2015-16 6.237%

The Cal Poly Pomona Foundation continues to maintain a higher percentage of estimated funding levels as compared to the Public Employees’ Retirement Fund (PERF), the state pension trust fund.

66

http://www.calpers.ca.gov/index.jsp?bc=/about/forms-pubs/calpers-reports/actuarial-reports/home.xml

http://www.calpers.ca.gov/index.jsp?bc=/about/forms-pubs/calpers-reports/actuarial-reports/home.xml

cal poly pomona foundation, inc. california … · endowment investment policy #130 annual review...

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