INVESTMENT MANAGEMENT COMPANY Records compiled specifically and exclusively for consideration in...

INVESTMENT MANAGEMENT COMPANY

Records compiled specifically and exclusively for consideration in closed session. Further distribution prohibited.

Presentation to the

Japan CFA Society

“Endowment Fund Investing in the United States”

June 2011


June 2011 2

Outline

Governance at UVIMCO

Investment Philosophy

Investment Strategy

Asset Allocation

Themes

Manager Selection

Risk Management

Current /Future Issues

Japan CFA Society

INVESTMENT MANAGEMENT COMPANYGovernance at UVIMCO

Investment Decision Making Process

Communication

Seasoned Board of Directors and senior investment staff Board of Directors

10 members led by John Macfarlane as Chair; 3 BOV appointees and a President’s

appointee Average of over 20 years of investment experience

Staff 25 members led by Larry Kochard as CEO/CIO Investment team comprised of a CEO/CIO, 3 Managing Directors, an Associate,

and 5 Analysts Average of 21 years of investment experience among senior staff

June 2011 Japan CFA Society 3



Investment Philosophy

Long-Term Focus

Good Governance

Disciplined Process

People

Diversification

INVESTMENT MANAGEMENT COMPANYInvestment Strategy


Asset Allocation

ThemesManager Selection

Risk Management

INVESTMENT MANAGEMENT COMPANYAsset Allocation


60%

10%

30%

Fixed Income

Real Assets Equity



Asset Allocation

As of December 31, 2010 Long-Term Past Past

History(1) 20 Years 10 Years

Real Return of Equities 6.7% 5.3% 1.4%

Real Return of Reits 7.6% 5.5%

Real Return of Bonds 2.7% 4.3% 4.5%

Policy Portfolio(2) 5.5% 5.2% 2.7%

Inflation 2.1% 2.5% 2.3%

Nominal Market Return 7.5% 7.7% 5.0%

Value Added 4.9% 2.9%

Total UVIMCO Return 12.6% 7.9%(1) Long-term history consists of past 130 years. Source: Shiller data.(2) UVIMCO's policy portfolio compositon of 60% equities/10% Reits/30% bonds reasonably represents the investable universe.



Current Themes

Investment environment compared to 10, 20, or 30 years ago

Increasing inflation and interest rates

Quality bias in equities

Emerging markets

Frontier markets

Natural resources and other real assets



Manager Selection

Possess competitive edge and expertise

Employ an independent, fundamental-driven research process

Pursue a transparent and understandable strategy

Are properly motivated and rewarded

Have unquestioned ethics and integrity

UVIMCO develops long-term relationships with world-class managers

who:


June 2011 10Japan CFA Society

Manager Risk

Liquidity Risk

Market Risk

Risk Management

Understand Risks

Measure Risks

o Quantitatively

o Qualitatively

Manage Risks

Risk Framework

UVIMCO only takes risk if it is properly compensated

INVESTMENT MANAGEMENT COMPANYCurrent/Future Issues

Tail Hedging

Direct Investing

New Approach to Investing in Privates

Tactical vs. Strategic Asset Allocation

Liquidity


INVESTMENT MANAGEMENT COMPANY Records compiled specifically and exclusively for consideration in...

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