MBA Student Managed Fund

Presentation to the

University of Connecticut Foundation

April 24, 2003

April 24, 2003

Today’s Agenda

• SMF Performance vs. S&P 500

• Investment Philosophy

• Portfolio Strategy

• Lessons Learned

• Market Outlook

• Questions

April 24, 2003

MBA Portfolio Managers

• Ventzislav Adamov • Amitabh Basak• Eliza Biedziak• Lily Ding • Radu Popescu• Xin Shi • Monica Simsek • Vasim Vasgare• Wiebke Wanner-Borchardt

April 24, 2003

SMF vs. S&P 500

S&P 500 SMF

Sep. 30, 2002 $815.28 $199,675.86

Apr. 11, 2003 $868.30 $214,194.48

Return 6.50% 7.27%

SMF has outperformed S&P 500

•SMF Fund’s overall return is 7.27%

April 24, 2003

Investment Philosophy

• InitiallyUncertain outlook led to conservative approachStrong confidence in Health Care and Consumer

StaplesLow confidence with IT and Financials

• Now Remain confident in Consumer Staples Guarded optimism for economic turnaround

April 24, 2003

Stock Selection Criteria

We look for: – Solid financials– Strong management – Consistent earnings growth – Attractive valuation relative to the index– Higher Return/Risk relative to market

Buy Criteria

• Steady growth rates• Intrinsic value >market value • Above average yield• Upside-downside ratio of at least 2

Sell Criteria

• Stock reaches its price objective• Industry-sector weighting exceeds predetermined limits• Risk/reward profile deteriorates• Earnings figures lower than estimates

In total, we have analyzed 53 stocks.

April 24, 2003

Stocks Presented

Armor Holdings International Flavors & Fragrances Pfizer First Data Corporation

Cognizant Exxon New York Times Johnson Outdoors Wrigley Washington Mutual

General Dynamics Group 1 Automotive WellPoint Health Diebold, Inc. American Express Bally Total Fitness

Petro-Canada Spartan Motors Inc. Abbott Laboratories Sysco Corporation Metlife British Petroleum

Alliant Techsystems TJX Companies PepsiCo MacDermid

purchased sold not purchased

April 24, 2003

Stock Selection Process

Search for stocks in respective sectors that match our investment philosophy and selection criteria

Do you think this will outperform the market

in the long run ?

Prepare Stock Valuation Report and submit it to the group for VOTING

Does the group think that this stock will outperform

the market ?

Recommend this stock for a BUY

Yes

No

Yes

No

April 24, 2003

Methodology

Financial Analysis:

• News and recommendations: Yahoo! Finance, MSN Money Central, Quicken, Value Line, Reuters, Multex Investor, Wall Street Journal

• Value Line: Safety Rank and Beta• Models: DDM,FCFE, Zero Growth, SSG • Relative Valuations: P/E• Benchmarking• Stop-loss: 15% depreciation from buy price• Upside review price between: 15% and 30% appreciation

April 24, 2003

Equity, 28.22%

Vanguard 500 Index Fund,

64.41%

Cash, 7.37%

SMF Holdings (as of 04/11/03)

April 24, 2003

SMF Holdings

• Why ~65% invested in S&P 500 Index Fund?

Inability to find individual stocks satisfying our strict buying criteria due to high volatility and continuously changing market, economic, and political situation

Adopted a conservative approach at the beginning

Could not utilize the funds in the short term after converting them to S&P Fund from Bonds

April 24, 2003

Best Performers

Current Price ($)

As of 04/11/03 Stock S&P500

Abbott Laboratories 02/25/03 34.16 39.12 14.52 3.55 10.97

Wrigley WM Jr Co. 10/22/03 53.16 57.16 7.52 (2.46) 9.98

TJX Companies 04/01/03 17.20 18.91 9.94 1.14 8.80

Exxon Mobil 11/20/02 34.93 34.33 (1.72) (5.02) 3.30

Metlife Inc. 03/04/03 25.58 27.62 7.97 5.63 2.34

WellPoint Health 11/13/02 76.65 76.80 0.20 (1.61) 1.81

Overperform (% points)

StockDate

boughtPurchase price ($)

Holding Period Return (%)

April 24, 2003

Worst Performers

Stock S&P500

Armor Holdings 1 10/22/02 16.36 12.96 (20.78) (0.32) (20.46)

General Dynamics 1 11/13/02 79.71 63.70 (20.09) 0.55 (20.64)

Group 1 Automotive Inc. 2 01/28/03 24.85 21.20 (14.69) (4.26) (10.43)

Spartan Motors Inc. 02/19/03 10.41 8.20 (21.23) 2.74 (23.97)

Cognizant Technology 3 03/10/03 22.67 4 19.30 (14.87) 7.94 (22.81)

1 Sold on 01/23/2002.2 Sold on 03/04/2003.3 Sold on 04/10/2003.4 On 04/02/03 Cognizant Technology had a 3 to 1 stock split.

Underperform (% points)

StockDate

boughtPurchase price ($)

Holding Period Return (%)Current

Price ($)

April 24, 2003

Analyst Report: Abbott Labs

• Business Model Analysis• Financial Data Benchmark• Valuation Models:

Is this a good company? Is the stock a good value? Is the stock a buy?

• Risk Factors• Recent News• SWOT Analysis

(Strengths – Weaknesses – Opportunities – Threats)

April 24, 2003

Analyst Report: Abbott Labs

• Report

• Value Line Investment Survey

• SSG

Abbott Report

April 24, 2003

Analyst Report: Abbott Labs

April 24, 2003

Managerial Performance- % of Pretax Profit Sales

- % Earned on Invested Capital

Risk vs. Reward Analysis:Is the stock in a buy zone?

Total Return:5-year potential

April 24, 2003

Lessons Learned

• Stock selection processHolistic approach with emphasis on company’s

business risks

• Identify right stock that matches our value growth investing strategyFocus on fundamental analysis and on stocks with

growth potential and low volatility

• Upside review and Sell disciplineAct in timely manner

April 24, 2003

Lessons Learned

• Analyze impact of geopolitical issues on market behavior

• Look at macroeconomic trends

• Understand investor’s reactions to economic indicators

• Look for management shenanigans

• Analyze 10k reports and pay particular attention to footnotes

April 24, 2003

Going Forward

Opportunities:

• Military victory in Iraq raises prospects for economic turnaround

Administration’s fiscal stimulus program promoting growth – Possible elimination of double taxation on dividends

Improved GDP growth

April 24, 2003

Going Forward (cont.)

Risks and Threats:

• Geopolitical concerns still prey on the minds of business executives

• Issues concerning Post-war Iraq and negative economic data making businesses cautious on spending

• Ballooning Federal budget deficit raises concerns

April 24, 2003

Suggestions:

• Maintain Risk Control as volatility is high because investors are looking at weekly economic indicators

• Invest in Consumer Staples

Going Forward (cont.)

April 24, 2003

Thank you to:

• University of Connecticut Alumni Foundation• Investment Advisory Board• Dr. Chinmoy Ghosh• Mr. Pat Terrion• Karthik Krishnan

Questions?