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Interim Report

Interim Report. Student Managed Fund MBA class of 2004 March 11, 2004. Anjana Radhakrishnan Christopher Bodnar Ganesh Padmanabhan Geoffrey Munger Heather Utter. MBA Fund Managers. Jessie LeBlanc Michael Appell Saipriya Menon Tanzhuo Liu Wiebke Wanner- Borchardt. Agenda.

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Interim Report

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  1. Interim Report Student Managed FundMBA class of 2004March 11, 2004

  2. Anjana Radhakrishnan Christopher Bodnar Ganesh Padmanabhan Geoffrey Munger Heather Utter MBA Fund Managers • Jessie LeBlanc • Michael Appell • Saipriya Menon • Tanzhuo Liu • Wiebke Wanner- Borchardt

  3. Agenda • Investment Philosophy & Approach • Investment Criteria • Portfolio Performance • Attribution Analysis • Retrospection and Self-Analysis • Economic Outlook

  4. Investment Philosophy • Outperform the S&P500 • Strategic sector allocation • Selection of stocks with strong growth potential • Close monitoring of the portfolio • Fundamental analysis • Historical performance • Business models • Economic outlook for the industry • Valuation • Undervalued stocks • Long-term (3-5 year) investment horizon

  5. Investment Approach Sector Allocation Investment Criteria • Valuation • PEG and P/E Models • Discounted Cash Flow • Economic Profit • Fundamental Analysis • Historical Growth • Free Cash Flow • Profit Margin Constant Portfolio Performance Monitoring

  6. Investment Criteria Quantitative & qualitative factors checked across industries

  7. Qualitative Investment Criteria - Portfolio

  8. Quantitative Investment Criteria - Portfolio

  9. Portfolio Monitoring - Sell Criteria • Stock reaches its price objective • Industry-sector weighting exceeds predetermined limits • Risk/reward profile deteriorates • Earnings figures lower than estimates • Stop loss on all positions

  10. SMF Holdings – 12/26/03 Our sector allocation closely tracks the S&P500 with exceptions based on economic outlook

  11. SMF Holdings – 12/26/03 Our sector allocation closely tracks the S&P500 with exceptions based on economic outlook

  12. SMF Holdings - Adjustments • Sold COGN and ALV • Initiated positions in: • Materials: Newmont Mining (NEM) • IT: Intel (INTC) • Reviewing positions in: JEC, INTU, WSM, EBAY, and OCR • Seeking positions in Energy and Telecom Sectors

  13. SMF Holdings – 02/17/04 * SOLD

  14. SMF Holdings – 02/17/04

  15. SMF Holdings – Performance Period: Sep 4, 2003 – Feb 17, 2004

  16. Attribution Analysis • Analyze determinants of portfolio performance • Sector allocation decisions • Equity selection decisions • Sector Allocation and Equity Selection Effect Determinants • Sector-wise weights and returns of the Portfolio • Sector-wise weights and returns of the S&P 500 index • Overall holding period returns of the S&P500 • Analysis Period: Dec 26, 2003 – Feb 17, 2004 • S&P 500 holding period return: 5.58% • Portfolio holding period return: 3.27% • Total value added: -2.31%

  17. Sector Allocation Effect LEGEND Wai -- MBA Wts As of Dec 26 2003 Wpi -- S&P Wts as of Dec 26 2003 Rpi -- S&P Sector returns {12/26 to 2/17} Rp -- S&P Overall Return {12/26 to 2/17} {(Wai - Wpi)* (Rpi - Rp)} -- Sector Allocation Effect

  18. Equity Selection Effect LEGEND Wai -- MBA Wts As of Dec 26 2003 Rai -- MBA SMF Sector Returns {12/26 to 2/17} Rpi -- S&P Sector returns {12/26 to 2/17} Rp -- S&P Overall Return {12/26 to 2/17} {(Wai - Wpi)* (Rpi - Rp)} -- Sector Allocation Effect Total Value Added = Sector Allocation Effect + Equity Selection Effect = - 2.48%

  19. Attribution Analysis • Observations from Analysis • Impact of allocation effect more favorable than that of the selection effect • Review both allocation & selection strategies • Benefit from future investments in un-invested sectors • Over-weighted Sectors • Consumer Discretionary, Health Care, IT • Under-weighted Sectors • Consumer Staples, Financials, Industrials, Materials • Un-invested Sectors • Utilities, Energy, Telecom

  20. Retrospection and Self-Analysis • Sector Allocation • Use S&P 500 Sector Allocation as a guide • Make adjustments based on Industry Research • Stock Selection • Growth vs. Value Stocks • Cyclical vs. Non-Cyclical Stocks • Benchmark Risk • Underperforming Stocks • Sound Fundamentals vs. Poor Price Momentum • Hold, Add, or Sell

  21. Outlook • Continued economic strength • Growth at a more moderate pace • Continued stock market strength • Modest interest rate increase

  22. Impact • Overweight IT and Healthcare • Be aware of interest rate sensitivity of holdings • Select stocks leveraged to the current economic environment

  23. Activity UpdateAs of Mar 05, 2004 • Received additional $150,000 from the Foundation • Initiated positions in: WAG, NXTL, CTSH • Stock selection process underway

  24. Thank you • University of Connecticut Foundation Inc. • Investment Advisory Board • Dr. Chinmoy Ghosh

  25. Questions?

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