Student Managed Fund

2005-2006

Undergraduates

“Allocation, Selection, Performance”

2005 – 2006 Managers

• Rasha Ayoub

• Diksha Gagrani

• Suzanne Galasso

• Frederick Karrat

• Anna Kawa

• Ryan Krueger– Lead Manager

• Yegor Makhiboroda– Lead Manager

• Sarin Mathur

• Steven McCarthy

• Ryan Pape

• Gregory Rozolsky

• Michael Russell

• Nathan Speicher

To use techniques learned in the classroom and apply them to real world investments in order to achieve superior returns

Mission Statement

• Outperform the S&P 500 Index

• Develop a well-diversified portfolio

• Select companies with proven track records

• Invest in companies with greater than 10% annual required rate of return over a 5-10 year period

• Invest assets quickly, prudently, and efficiently

Portfolio Objectives

Investment Process: “Focused” Approach

Industry Overview

Company Analysis

Quantitative & Qualitative Analysis

70% Majority Vote

1. Select Industries that meet our investment criteria – ROIC, consistency and growth

2. Follow Industry trends

3. Identify “best of breed” companies that we believe will outperform peers

4. Perform analysis of “best of breed” to determine which securities are financially sound investments

5. Identify companies that will provide growth that can be purchased at a reasonable price

Equity Selection Criteria

• Review financial statements Annual Reports, 10k, Press Releases• Financial Strength

Cash flowStrong credit ratingSafe leverage ratios

• Probability of companies successProven track recordConsistent cash flow and ROEStrong management

• Accounting PracticesConsistent auditorsEarnings released on time

• Company’s Past

• Future - Trends, Earnings

• Risks - Industry, Macro, Company

• Fundamental Analysis

• Ratio Analysis - D/E, Profit

• Value - Yield, P/E

• Efficiency - ROE, Margins

Equity Analysis

Financial Models

• Capital Growth Model

Calculates FV of capital in 10 years; discounts using required rate of return to obtain buy price with a

greater than 10% return

• Discounted Cash Flow

Analyzes growth using projected future cash flows to obtain a current purchase price

• FCF Yield per Share

Calculates free cash flow yield per share with a target of return greater than the Risk Free Rate

Portfolio Return

September 30, 2005 February 17, 2006

Total Portfolio $929,882.74 $966,920.49

Equity $928,336.80 $862,312.75

Money Market $1,545.00 $104,607.74

Period Return on SMF Return on S&P

(09/30/05-02/17/06) 3.98% 4.83%

Industry Allocation

0%

5%

10%

15%

20%

25%

Energ

y

Mat

eria

ls

Indu

stria

l

Consu

mer

Dis

cret

iona

ryCon

sum

er S

tapl

es

Health

Car

e

Fina

ncia

ls

Info

Tec

h

Tele

com

Utiliti

es

SMF

S&P 500

*Portfolio allocation includes SPY

*returns adjusted to include dividends **includes closed positions

Individual Stock Performance

ABX

AMGN

BRK-B

BUDCBS

CDWC

CMCSA

CVX

DD

HD

INTC KO

MSFT

MYL

NWS-A

STZ

SYK

TYC

VIA-B

ZMH

WFMI

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

Returns 5.76 0.50 0.52 1.97 0.98 2.86 0.23 -1.12 -4.88 -1.69 0.00 0.38 10.03 13.71 10.80 7.83 1.79 0.25 10.75 3.87 -6.11

ABXAMG

NBRK-

BBUD CBS

CDWC

CMCSA

CVX DD HD INTC KOMSF

TMYL

NWS-A

STZ SYK TYCVIA-

BZMH

WFMI

Current Holdings

SPY, 13.32%MSFT, 2.84%

STZ, 3.41%

MYL, 3.50%

TYC, 5.28%

CBS, 1.20%

VIA-B, 2.00%

HD, 4.07%

CMCSA, 3.09%

NWS-A, 3.44%

ABX, 4.36%

CVX, 4.14%DD, 4.98%

KO, 4.21%

CDWC, 4.26%

AMGN, 4.14%

ZMH, 3.25%

SYK, 3.15%

BUD, 5.30%

INTC, 4.14%

BRKB, 5.10%

CASH, 10.82%

Portfolio Value (2/17/06): $966,920.49

Company Name (Ticker) Shrs.Purchase

PriceCurrent

Price Div.Total

Return Gain/Loss Current Value

BARRICK GOLD CORP. (ABX) 1470 27.09 28.65 $0.00 5.76% $2,293.20 $42,115.50

AMGEN INC. (AMGN) 535 74.52 74.89 $0.00 0.50% $197.95 $40,066.15

BERKSHIRE HATH HLD B (BRK-B) 17 2885 2900.00 $0.00 0.52% $255.00 $49,300.00

ANHEUSER-BUSCH COMPANIES INC. (BUD) 1235 40.7 41.50 $0.00 1.97% $988.00 $51,252.50

CBS CORP CL B (CBS) 450 25.6 25.85 $0.00 0.98% $112.50 $11,632.50

CDW CORP. (CDWC) 720 55.5685 57.16 $0.00 2.86% $1,145.88 $41,155.20

COMCAST CORP. (CMCSA) 1135 26.25 26.31 $0.00 0.23% $68.10 $29,861.85

CHEVRON CORP. (CVX) 700 57.82 57.17 $0.00 -1.12% ($455.00) $40,019.00

EL DUPONT DE NEMOURS & CO. (DD) 1160 43.6399 41.51 $0.00 -4.88% ($2,470.68) $48,151.60

HOME DEPOT INC. (HD) 940 42.58 41.86 $0.00 -1.69% ($676.80) $39,348.40

INTEL CORP. (INTC) 1940 20.61 20.61 $0.00 0.00% $0.00 $39,983.40

COCA-COLA CO. (KO) 975 41.63 41.79 $0.00 0.38% $156.00 $40,745.25

MICROSOFT CORP. (MSFT) 1030 24.339 26.70 $82.40 10.03% $2,514.23 $27,501.00

MYLAN LABORATORIES INC. (MYL) 1500 19.91 22.58 $90.00 13.71% $4,095.00 $33,870.00

NEWS CORP. (NWS-A) 2080 14.45 16.01 $0.00 10.80% $3,244.80 $33,300.80

CONSTELLATION BRANDS INC. (STZ) 1300 23.5 25.34 $0.00 7.83% $2,392.00 $32,942.00

STRYKER CORP (SYK) 630 47.57 48.42 $0.00 1.79% $535.50 $30,504.60

TYCO INTERNATIONAL LTD (TYC) 1985 25.845 25.85 $120.00 0.25% $129.93 $51,312.25

VIACOM INC. (VIA-B) 450 38.88 42.92 $63.00 10.75% $1,881.00 $19,314.00

ZIMMER HOLDINGS INC. (ZMH) 450 67.2 69.80   3.87% $1,170.00 $31,410.00

              $733,786.00

Current Holdings

2.04%

0.40%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Performance Value vs. Growth

Value Growth

Performance: Value vs. Growth

*Does not include SPY

Current Allocation: Value vs. Growth

Growth27.50%

Value72.50%

*Does not include SPY

Value Positions Ticker

% of Equity Positions Growth Positions Ticker

% of Equity Positions

BARRICK GOLD CORP. ABX 5.55% AMGEN INC. AMGN 5.28%

BERKSHIRE HATH HLD B BRK-B 6.49% CDW CORP. CDWC 5.42%

ANHEUSER-BUSCH BUD 6.75% HOME DEPOT INC. HD 5.18%

CBS CORP CL B CBS 1.53% STRYKER CORP SYK 4.02%

COMCAST CORP. CMCSA 3.93% VIACOM INC. VIA-B 2.54%

CHEVRON CORP. CVX 5.27% ZIMMER HOLDINGS INC. ZMH 4.14%

EL DUPONT DE NEMOURS & CO. DD 6.34%

INTEL CORP. INTC 5.27%      

COCA-COLA CO. KO 5.37%      

MICROSOFT CORP. MSFT 3.62%      

MYLAN LABORATORIES INC. MYL 4.46%      

NEWS CORP. NWS-A 4.39%      

CONSTELLATION BRANDS INC. STZ 4.34%      

TYCO INTERNATIONAL TYC 6.76%      

Current Allocation: Value vs. Growth

Risk Adjusted Performance

Return on Portfolio (Rp) Return on S&P (Rsp)

Risk Free Rate (Rfr)

Annualized Return 10.61% 12.87% 4.34%10-yr T-Bond

(09/30/05)Excess Return (Rp-Rfr)

6.27% 8.53%

Risk (Weighted Average Beta)

0.71 1.00

Treynor IndexT=[(Rp-Rfr)/B]

0.088 0.085

SharpeS=[(Rp-Rfr)/Std Dev

0.59 0.79

Portfolio Attribution

Portfolio Excess Return

Allocation Effect Selection Effect

-0.717% -0.128% -0.589%

Performers

• Whole Foods Market Inc. (-6.11%)

• El DuPont de Nemours & Co. (-4.88%)

• Mylan Laboratories Inc. (13.71%)

• News Corp. Inc. (10.80%)

Recent News

• Sale of WFMI • Trailing Stop Loss order triggered on February 9th at $66.00• Stop Loss prevented further losses, WFMI closed at $63.60

on February 17, 2006

• Currently Researching:– United Health Group– Deutsche Bank– Cameco Corporation– Lawson Products

Economic Outlook

• Cautious outlook due to the current economic environment

• High energy prices, slowing housing market and rising interest rates

• Moderate growth in the economy• Continue disciplined investment approach• Companies with a margin of safety

Conclusions

• Continue disciplined approach

• Track emerging commodity and interest rate trends

• Continue to invest in blend of value and growth

• Monitor portfolio

• Confident that portfolio will perform over 5-10 years investment horizon

Thank You

• The Foundation

• The Advisory Board

• Steering Committee

• Professor Ghosh

• Patrick Terrion

Questions?