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Graduate School Advisory Board

Chris BittmanChief Investment Officer

University of Colorado FoundationNovember 14, 2008

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LTIP Asset Allocation as of 9-30-08

Range Target 9-30-08

Global Equity 20% to 70% 40% 41.7%Domestic 22.7%

International 19.0%

Alternatives 25% to 85% 50% 47.0%

Global Private Capital 10% to 30% 20% 22.5%

Hedge Funds 10% to 35% 20% 17.8%

Real Assets 5% to 20% 10% 6.7%

Fixed Inc. & Cash 5% to 20% 10% 11.3%

Total 100%

Source of data: BNY Mellon.

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Long Term Investment Pool Performance as of September 30, 2008

Latest Latest Latest 3rd Qtr. YTD 2 Years 3 Years 5 Years

• Global Equity -13.87% -22.04% -2.86% 2.63% 8.41%

Domestic -8.16% -16.35% -2.99% 1.49% 6.78%

International -20.27% -28.25% -3.17% 3.73% 11.15%

• Fixed Income/ Cash -3.57% 1.57% 6.36% 5.90% 5.54%

•Alternatives -6.08% -5.24% 9.77% 10.82% 12.61%

Global Private Capital -2.00% -1.99% 13.66% 12.73% 16.04%

Hedge Funds -11.70% -12.93% 4.75% 6.77% 8.26%

Real Assets -2.87% 7.11% 11.50% 16.50% 18.67%

•Benchmarks

Russell 3000 -8.73% -18.81% -4.38% 0.26% 5.70%

MSCI EAFE -20.56% -29.26% -6.85% 1.12% 9.69%

LB Aggregate Bond -0.49% 0.63% 4.39% 4.15% 3.78%

Long Term Investment Pool -9.37% -12.58% 3.73% 6.67% 10.14 %

Policy Index -11.99% -18.44% -3.83% 0.58% 5.33%

Notes: Policy Index is 40% Russell 3000, 40% MSCI EAFE, 20% LB Agg. Bond Index. From the funds inception to 6-30-08, the Policy Index was 50% Russell 3000, 20% MSCI EAFE, 30% LB Agg. Bond Index. Source of data: BNY Mellon

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University of Colorado FoundationTotal Return Market Line Comparison

Five Years Ending September 30, 2008

Standard Deviations:LTIP 8.41% Policy Index 9.35%Domestic Equity 10.52% Russell 3000 10.71%International Equity 16.00% MSCI EAFE Net 16.19%Hedge Funds 7.65% LB Aggregate 3.42%Private Capital 8.14% S&P 500 10.45%Real Assets 12.56% 3 Mo T Bills 0.77%Total Bonds 4.13%

Sharpe Ratios:LTIP 0.84 Policy Index 0.24Domestic Equity 0.50 Russell 3000 0.24International Equity 1.28 MSCI EAFE Net 0.41Hedge Funds 0.68 LB Aggregate 0.20Private Capital 1.59 S&P 500 0.20Real Assets 1.24 3 Mo T Bills 0.00Total Bonds 0.59

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

0.00 5.00 10.00 15.00 20.00

Standard Deviation

An

nu

alized

Retu

rn

International Equity

MSCI EAFE

Real Assets

Private Capital

Hedge Funds

LTIP

Total Bonds

Domestic Equity

Policy IndexRussell 3000

S&P 500

LB Aggregate

91 Day T-Bills

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…

Latest Year Latest 3 Years Latest 5 Years

Total Fund (ending 9-30-08) -12.50% 6.67% 10.14%

CU Foundation Policy Index -19.35% 0.58% 5.33%

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

Total Fund CU Foundation Policy Index

Rank47

Rank1

Rank1

Outperformed 99% of Peers over last 3 and 5 years

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Portfolio was repositioned defensively in anticipation of:

• Dramatically slowing economy• Overextended/pessimistic consumer• Mean reversion in emerging markets valuations• Continued deflation in housing while other conditions were inflationary• Volatile credit market • Declining stock market

Specific actions:

• Diluted domestic equity from 53% to 45%. Maintain large cap, high-quality growth tilt.

• International Equity: Reduce emerging markets from approx. 11% down to 6%.

• Increased Fixed Income and Cash from 8% to approx. 13%. Added $10 million to a strategy benefiting from bond market volatility.

• Increased Hedge Fund strategies back up to target of approx. 17%, but shifted mix to managers with larger net short positions and less leverage.

• Increased Real Assets near target weight of 7% with a 2.8% addition in TIPs.

Portfolio was repositioned defensively in early summer of 2007

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• LTIP stocks outperformed index by 1.7% domestically and 3.3% non- domestically in a declining market. High quality large cap bias ($85 million in Russell Top 200 Growth) was down less than 1/3 of the overall market at (3.45%) vs. the S&P 500 of (13.12%).

• Though Emerging Markets continued to race ahead during last summer, they have dropped sharply since then. Our holdings are up 6.7%, while the benchmark is up 4.6%.

• Fixed Income portfolio (including the allocation to strategies benefiting from higher volatility) is up 16.5% vs. a benchmark return of 7.1%. Fixed income has been trimmed back by a $21M call to rebalance the STIP per the new policy.

• Hedged strategies are up 6.8% vs. the S&P 500 decline of (13.1%).

• Real Assets allocation to TIPS is up 15.6% and has been trimmed back.

• Private Capital is up 9.2%.

• Total LTIP was up 1.0% vs. Policy Index down (6.4%) and S&P 500 down (13.1%).

Results of repositioning through 6-30-08:

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LTIP Outperformance in Both Up and Down Markets

3 Year Up Market Capture = 140% 1 Year Down Market Capture = 65%

Performance 9-30-07 to 9-30-08

-12.50%

-19.35%

-21.98%

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

LTIP Policy Index S&P 500

Performance 9-30-04 to 9-30-07

17.65%

12.61% 12.95%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

LTIP Policy Index S&P 500

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Strong Performance Over Trailing Four Years

Performance 9-30-04 to 9-30-08

3.59%

9.24%

3.10%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

LTIP Policy Index S&P 500

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YTD through the decline of 10-31-08:

• S&P 500: (32.9%) • EAFE (Non-US): (42.2%) • Emerging Markets: (48.7%) • CU Foundation Policy Index*: (31.2%)

• Estimated Endowment Perf. (23.7%)

*Policy Index:

• 40% Russell 3000• 40% MSCI EAFE• 20% Barclays Capital Aggregate (formerly Lehman Brothers Agg. Bond Index)

Performance through 10-31-08

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Extraordinary last few months . . .

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• FNM and FRE go into conservatorship.

• Lehman goes under. (Yet Bear was “saved”?). Merrill Lynch sells to Bank of America in a 48 hour shotgun wedding. AIG propped up by $123 billion federal bailout.

• Largest bank failure in US history with Washington Mutual. Goldman and MS become bank holding companies.

• TARP – world’s largest pawn shop. With that $700B and $123B to AIG and $29B to Bear Stearns (and excluding capital investments in GSE’s) we are up to 5.8% of GDP . . . so far . . .

• Wachovia (4th largest US bank) spared FDIC takeover, but sold off to Wells Fargo.

• On 9-29-08, the largest point drop in Dow history and biggest percentage drop since 1987 – followed on 10-13-08 by biggest point/percentage gain in 70+ years.

• Contagion spreads overseas with Fortis getting €11.4B lifeboat from Belgium, the Netherlands and Luxembourg, Dexia getting €5B and Irish government backstopping all deposits, bonds and debt of six biggest banks in the Republic. Iceland to convert to the Ruble? Central Banks flood system.

• $250B purchase of US bank preferred shares by Treasury. 10% div. to Buffet. 5% to Gov’t.?

Extraordinary last few months . . .

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I. Consumer will continue to be hurt due to:

• Housing bust• Credit crunch• Higher fuel/food costs, though abating.• Unemployment rising

. . . and that’s the good news . . . Continue to watch out for:

• Federal deficit rising• “Re-regulation” of financials and energy sector.• Possibility of significantly higher interest rates during the recovery phase.

II. Nationalization of parts of global financial system means economic crisis is not nearly over. Central bankers flood system with money, but financial institutions reluctant to lend. Weekly “one off” strategies unimpressive . . .

• Bailouts help, but not a quick fix.• Politics invade gov’t allocation of capital – US and Eurozone in particular.• Gov’t equity positions in US banks don’t force lending of new capital. Might

give poorest capitalized banks enough to survive, but not thrive.

Outlook . . .

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III. The ripple impact on US housing prices will be protracted with average peak to trough cycle at four years. S&P/Case Shiller data shows national decline of 15.9% in YOY home prices and 20.3% from 7-06 peak:

- Phoenix - (30.7%)- Miami - (28.1%)- Los Angeles - (26.7%)- Denver - (5.1%)

IV. The economy will not recover until home prices stop dropping. We’ve seen

this movie before in Sweden and Norway in early 90’s:

• Sweden – 2 major banks exhaust capital reserves. Housing prices dropped 50% in 18 months after long uptrend. Gov’t recapitalized banks at a cost of 6% of GDP. Gov’t gets equity, shareholders get diluted. Banks rebound. Housing re-inflates slowly.

• Norway – Private solutions used before public. No blanket guarantees by gov’t, but acted quickly. Liquidity provided to illiquid (but solvent) institutions. Share capital written to zero before public monies were committed.

• Both after deregulation, asset bubble in housing and banks in trouble.

Outlook continued . . .

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V. Massive recapitalizations will continue in the financial sector. Consolidations

will be the norm. Assets must move from weak balance sheets to strong

one. Expect continued bank runs and near term evaporation of credit for small/mid sized companies.

VI. Fed is out of bullets. Unemployment is accelerating . . .

VII. Market leaders the last 5 years (especially those depending on cheap capital) won’t repeat.

VIII. Though not optimistic about the “US Peso”, we’ve reduced our significant overweight of non-US equities to a more neutral stance

relative to US equities. Dollar no longer the world’s reference currency.

IX. There are opportunities in this mess . . . (private equity secondaries, farmland, busted credit, funding recapitalizations, global healthcare spending trends, alternative energy unless it’s the next dot com, re-

marked commercial real estate, etc.) . . . Some are just well-hidden . . .

X. Some reasons for optimism – fiscal responses are global/material . . . Add’l

US stimulus targeted toward consumers is coming . . . Spreads contracting

and LIBOR dropping . . . Interbank lending increasing modestly . . .

Outlook - Wrap up . . .

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Best long term strategy? Taking advantage of other people’s panic . . .

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Chris Bittman Biography

Christopher L. Bittman, Chief Investment OfficerUniversity of Colorado FoundationE-mail: chris.bittman@cufund.org

Christopher L. Bittman is the Chief Investment Officer of the University of Colorado Foundation. Established in 1967, the University of Colorado Foundation is a privately governed nonprofit corporation whose mission is to support the University of Colorado. The Foundation has total investment assets in excess of $1 billion.

Prior to being named the first CIO of the Foundation in 2004, he was the President and CEO of Jurika & Voyles – a California investment firm – where he was responsible for the management of over $5 billion for a broad variety of Fortune 500 corporations, public funds, foundations, endowments and individuals.

He began his career on Wall Street as the Western Regional Manager for Merrill Lynch’s Business Financial Services Group - the youngest Regional Manager in the group’s history.

Under his leadership the Foundation was named “Large Foundation of the Year” in 2007 by Institutional Investor’s Foundation & Endowment Money Management magazine based on superior investment performance, innovation and notable asset allocation moves.

Bittman graduated from the University of Colorado in 1985 and has served the institution as a volunteer for over 20 years as President of its Alumni Association as well as Trustee and Director of its Foundation and Chair of the Foundation’s Investment Committee. He sits as a guest lecturer on investment management at the University’s Leeds School of Business as well as serves on the investment committees of Colorado Public Television and the Colorado Health Foundation.