Investment Process Presentation

December 8, 2009

• Economic Analysis• Compliance, The Delphi Process• Social Responsibility• Security Analysis• Portfolio Optimization• Portfolio Management• Marketing, Exit Strategy• EAFE Inverse• Fund Performance

Overview

• Haley Large Cap– Domestic

• Coleman ETF– Domestic and International

Our Funds

• Economic Analysis• Compliance Screen• Social Responsibility Screen• Security Analysis• Portfolio Optimization

Top Down Investment Process

Organizational ChartFaculty Advisor

Investment Committee

Advisory Group

Economic Team

Social Responsibility

Team

Optimization Team

Marketing Team

Sector Captains

Security Analysts

Regional Captains

Security Analysts

Portfolio Managers

Exit Strategy Team

Performance Reporting

Team

ECONOMIC ANALYSISAnthony DeAngelis

• Top Down Approach • Business Cycle Analysis• Industry picked off of current analysis• Sectors based off of selected industries• Best of breed individual securities selected• Continual monitoring to economic indicators in

order to track ongoing economic cycle

Ease Off

Plunge

Early RevivalLate Revival

Acceleration

5 Phases of Economic Cycle

• Early Revival• The revitalization of business and consumer activity that

follows a recessionary phase• GNP turns positive after falling sharply in the preceding

recession• Businesses continue to clear unwanted inventory

• Late Revival • GNP increases significantly • Growth puts upward pressure on credit demands and prices• Interest rates and inflation begin to rise (irregularly)• Housing activity picks up speed• Businesses build inventories and spend more on plant and

equipment

• Acceleration Stage– Consumers put off purchases, spend less– Interest rates and inflation begin to rise– Housing and auto sales decline– Businesses continue to build inventories and spend

• Ease-off Stage– Business continue to remain optimistic– Economic indicators turn pessimistic– GNP turns negative– Inflation and interest rates may continue to rise– Housing and big-ticket item sales decline severely

• Plunge– Businesses liquidate inventories– Employment drops sharply – Corporate profits plummet– Interest rates peak

• Final Analysis: Early Revival – GNP – Turning positive– Improving employment picture

• Money Supply– M1– M2– M3 (Shadow Statistics)

• Employment Data– Initial Unemployment– Continuing Claims

• Productivity Figures– Hours Worked

• ISM Data• Fed Funds • Monetary Base • Manufacturing Work Week• GNP• Case Schiller

Selected Indicators

0

0.1

0.2

0.3

0.4

0.5

0.6

0.13

Fed

Fu

nd

s R

ate

One Year Fed Funds Rate

Jan-08

Feb Mar Apr May Jun-09

Jul Aug Sep Oct Nov Dec Jan-09

Feb Mar Apr May Jun-09

Jul Aug Sep Oct Nov0

10

20

30

40

50

60Two Year ISM Data

* Above 50 Indicates Expansion

8-Jan

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 9-Jan

Feb Mar Apr May Jun Jul Aug Sep Oct Nov0

2

4

6

8

10

12

10.2%

10%

Unemployment (Seasonally Adjusted)

% U

nem

plo

yed

Jan-

59

Aug-6

0

Mar

-62

Oct-6

3

May

-65

Dec-6

6

Jul-6

8

Feb-7

0

Sep-7

1

Apr-7

3

Nov-7

4

Jun-

76

Jan-

78

Aug-7

9

Mar

-81

Oct-8

2

May

-84

Dec-8

5

Jul-8

7

Feb-8

9

Sep-9

0

Apr-9

2

Nov-9

3

Jun-

95

Jan-

97

Aug-9

8

Mar

-00

Oct-0

1

May

-03

Dec-0

4

Jul-0

6

Feb-0

8

Sep-0

90

1000

2000

3000

4000

5000

6000

7000

8000

9000M2 Money Supply

(B

illi

on

s o

f D

oll

ars

)

Officially in a Recession

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

-5.4 -4.6-0.7

+2.8

GDP (Quarterly)

2009

• Bill Carter (Qinsight) Conference Call• Lacy Hunt• Jeremy Siegel weekly newsletter• St. Louis Fed• Bloomberg • Wall Street Journal • The Economist• Morningstar• Industry Specific News

Resources

THE DELPHI PROCESSBrendan Kearney

• Maintains objectivity• Increases accuracy of industry forecasts• Process

– 2 rounds– Analysts conduct industry research and rank

top 10 choices– Re-evaluation after 1st round results

Overview

• Round 1– Started with 40 industries– Eliminated 8

• Round 2– Analysts re-evaluated industries– Top 20 industries selected

Results

Internet Software and Services Food and Staples Retailing

Internet and Catalog Retail Road and Rail

Oil, Gas, and Consumable Fuels Metals and Mining

Software Communications Equipment

Personal Products Construction and Engineering

Semiconductors Energy Equipment and Services

Household Products REITs

Water Utilities Food Products

IT Services Household Durables

Containers & Packaging Media

Final Cut

COMPLIANCE

• 50% International• 50% Domestic

George Coleman ETF

Max Initial Investment

Rebalance

Country 25% 30%

Industry 20% 25%

• Market Cap: $5 billion and greater• Minimum average daily volume of 250,000

shares• Minimum share price of $10.00

Haley Group Large Cap

Max Initial Investment

Rebalance

Sector 25% 35%

Industry 12.5% 17.5%

Security 5% 7%

SOCIAL RESPONSIBILITYSumedha Verma

• As an Augustinian University, continue the rich tradition

of Catholic Social Teaching and the guidance it provides

• Avoid companies that ignore social responsibility

• Recognize and incorporate companies that reflect

Catholic stewardship

• Lecture on social responsibility by Dr. Doh

Socially Responsible Investing

1.) Evaluate the Catholic Bishop’s Statement

2.) Choose and rank our criteria based on past

evaluations and our own additions

3.) Run IWFinancial for Social Responsibility

rankings

Steps

• Proprietary research and leading independent third party

services

• Specific data sources vary by product and data element

• A company’s rating based on “Comparative Universe”

• Ratings based on hard data

IW Financial

SRI Profile• High sensitivity on issues such as:

– Bioethics– Environment– Life/Choice– Tobacco– Human Rights– Military– Adult Entertainment

• Passing score: 66

SECURITY ANALYSISMichael Feron

• Financial Health

• DCF Valuation

• Analyst Input and Recommendation

Haley Large-Cap

• Altman Z-Score– Bankruptcy Risk

• DuPont Ratios– ROE, ROA, Profit Margin, Asset Turnover, Equity

Multiplier– Profitability

• Balance Sheet Analysis– Current Ratio, Long Term Debt/Equity– Credit Rating

Financial Health

Altman Z-ScoreTest 1 - Altman Z-Score

  Latest Q Oct08 Oct07 Multiplier

Approximate stock price at above date $35.72 $27.62 $34.94  

Operating Working Capital / Total Assets 0.218 0.182 0.167 0.717

Retained Earnings / Total Assets 0.586 0.553 0.553 0.847

EBIT / Total Assets 0.140 0.141 0.141 3.107

Equity / Liabilities 3.174 2.309 3.142 0.42

Sales / Assets 1.828 1.868 1.825 0.998

   

Altman Z-Score 4.24 3.87 4.17  

Status (normal) PASS  

Status (non-manufacturing) PASS      

S&P Long-Term Issuer Credit Rating: A  

S&P Short-Term Issuer Credit Rating:        

If Z-Score is below cut-off, then the credit rating must be BBB or greater to pass.

Balance Sheet Analysis

Asset Protection Ratio Range ScoreNet tangible assets / Long Term Debt 3.68 A 3Long Term Debt / Equity 0.07 AAA 5

   Financial Resources  

Current Ratio 2.18 Good 5Cash / Current Assets 0.20 Neutral 3Cash / Current Liabilities 0.43 Good 5Quick Ratio 1.08 Neutral 3

   Coverage  

Earnings / Fixed Charges 28.76 AAA 5CF from Operations / Long Term Debt 0.34 BBB 2

Suggested Credit Rating   A 3.875

• 10 Year Growth Projections– Future growth rates based on analyst

research

• Invested Capital-ROIC Calculations• WACC

– Cost of Debt– Operating Lease Commitments

DCF Valuation

WACC

Comps Average Unleveraged Beta   0.4312Beta Leveraged to The Company 0.5063Blume Beta   0.6742

Risk Free Rate 3.19% Market Risk Premium 5.50% Beta 0.67   Cost % Weight%Debt 2.96% 6.49%Preferred Equity 0.00% 0.00%Equity 6.90% 93.51%WACC 6.65% 100.00%

Enterprise ValuationDCF Valuation

Perpetuity Growth      5.00%

Enterprise Value (in millions) $6,559.34

Value of Equity (in dollars) $6,310,038,446

Shares outstanding 134,209,000

Equity fair value per share   $47.02   

Price at time of analysis $37.55Upside return potential        25.21%

• Results of Financial Health Analysis– Altman Z Score & Credit Rating

• Enterprise Value– Upside Return Potential

• S&P Market Insight Reports• Other Independent Research

Analyst Input and Recommendation

• Domestic– Industries similar to Haley– S&P Market Insight

• International– Economist Intelligence Unit (EIU)

• Powershares, iShares, Vanguard and Morningstar

Coleman ETF Analysis

PORTFOLIO OPTIMIZATIONVincent Fea

• PMSP Software• Stein Estimators• Allocation constraints

– Iterative scaling and re-optimizing process

• Haley Fund – 48 35 stocks• Coleman Fund – 26 25 ETFs

Portfolio Optimization

Haley Fund GICS Sector Allocations

Con-sume

r Dis-cre-

tionary;

19.33%

Consumer Staples; 15.68%

En-ergy; 11.07

%

Industrials; 11.10%

In-for-ma-tion

Technol-ogy;

25.00%

Mate-rials; 11.83

%

Utilities6.00%

Coleman Fund Domestic Allocations

Internet Softwareand Services

5.00%Communications Equipment; 5.00%

Oil and Gas; 2.50%

Road and Rail,2.50%

Energy and Equipment2.50%

Software; 5.00%Metals and Mining; 4.00%

Consumer Staples; 5.00%

Water Utilities2.50%

Information Tech; 3.98%

Food Products, 3.00%

Semiconductors; 5.00%

Coleman Fund International Allocations

Germany; 2.79%

Turkey, 2.50%Sweden; 2.50%Singapore;

5.50%

Malaysia; 5.45%

India, 5.00%

SouthAfrica3.00%

Chile; 2.50%Brazil; 4.81%

Australia; 2.95%

China; 5.00%Taiwan; 4.00%

South Korea4.00%

PORTFOLIO MANAGEMENTPaul Iezzi

• Analyst does research• Analyst presents research to Investment

Committee with a recommendation• Investment Committee votes on each

security• A majority vote is required to invest• After optimization, the weights of each

security are voted on

Process of Selecting a Security

• Example: Investment Committee votes a 5% allocation of IBM

• Calculate number of shares • Current Price of $125• Weight of 5%• Portfolio Value of $100,000• 5% * $100,000 = $5,000• $5,000 / $125 = 40 Shares

Orders

Orders Sheet Example

Buy 132 shares of PHO PowerShares Water Resource Last Price $ 16.16

Buy 38 shares of VDC Vanguard Consumer Staples Last Price $ 66.64

Buy 98 shares of IGW iShares S&P GSTI Semiconductor Last Price $ 43.61

Buy 107 shares of EWG iShares MSCI Germany Last Price $ 22.25

Buy 42 shares of TUR iShares MSCI Turkey Last Price $ 50.77

Buy 84 shares of EWD iShares MSCI Sweden Last Price $ 25.25

Thursday, November 12, 2009To: Dr. Nawrocki From: Paul Iezzi and Bob GoslinRe: Coleman ETF Orders

The Haley Group Large Cap Fund

Invested on November 6, 2009

$102,482.82

Haley Allocations as of 12/7/2009

Informa-tion

Technol-ogy;

25.60%

Consumer Discre-tionary; 19.35%

Utilities; 6.19%Consumer

Staples; 15.32%

Materials; 12.28%

Energy; 10.08%

Industrials; 11.04%

Con-sume

r Dis-cre-

tionary;

19.33%

Consumer Staples; 15.68%

En-ergy; 11.07

%

Industrials; 11.10%

In-for-ma-tion Technol-ogy; 25.00

%

Ma-teri-als;

11.83%

Utilities6.00%

The George Coleman FundInvested on November 13, 2009

$88,878.86

45.88% Domestic / 48.29% International

Coleman Allocations as of 12/7/2009

International 48.05%

Domestic46.12%

Cash 5.83%

Foreign Allocations as of 12/7/2009

CHILE 2.39%

AUS-TRALIA,

2.83%

SWEDEN 2.41%GERMANY

2.70%

MALAYSIA 5.27%

SINGA-PORE 5.29%

TAIWAN 3.85%SOUTH KOREA 3.85%

BRAZIL 4.61%

SOUTH AFRICA 2.90%

CHINA 4.84%

INDIA 4.86%

TURKEY 2.42%

Germany; 2.79% Turkey, 2.50%

Sweden; 2.50%Sin-

gapore;

5.50%

Malaysia; 5.45%

India, 5.00%South

Africa3.00%

Chile; 2.50%

Brazil; 4.81%

Aus-tralia; 2.95%

China; 5.00%

Taiwan; 4.00%

South Korea4.00%

NETWORKING TECHNOLOGY 4.83%

SOFTWARE 4.84%

SEMICONDUCTORS 4.82%

MEDICAL DEVICES 1.76%

CONSUMER SERVICES 4.80%

TRANSPORTATION 2.39%

WATER UTILITIES

2.42%

INTERNET 4.81%

CONSUMER STAPLES 2.87%

ENERGY 2.36%

INFORMATION TECHNOLOGY 3.78%

Domestic Allocations as of 12/7/2009

MARKETINGMichael Cavanaugh

SMF Website

www.students.villanova.edu/smf

Example student Bio:

Bob GoslinBob graduated from Rowan University with a Bachelors of Science in Finance. Within the SMF he is a portfolio manager and a sector captain. In the infancy of his career in finance, he would like to be in a position that would enable him to travel and experience various cultures and industries to expand his horizons. Bob would also like to obtain his M.B.A. at Villanova within 5 years of graduation from the MSF program. Ultimately, his objective is to become a valuable and indispensable asset to a firm that he can grow with, while building professional and familiar relationships with those that surround him in his life.

• Fund Performance Results• Student Bios for Undergraduate and MSF• Equity Society Overview• Link to Catholic Bishops Statement

Information Provided by Website:

R.I.S.E. X Global Investment ForumMarketing team is responsible for organizing this 3 day trip to Dayton, Ohio

• Keynote Presentations by a Group of Internationally Renowned Industry Leaders

• Specialized Breakout Sessions• Workshops• Career Strategies Forum• Portfolio Competition

R.I.S.E. Highlights:Redefining Investment Strategy Education

EXIT STRATEGY

• Stop losses set for each security in range of 5%-10% based on implied volatility

• Target prices set for each security based on analysis and projections

• Technical Analysis may be used for strategic buying and selling price points

Exit Strategy

EAFE INVERSERichard Goetze

• Designed as a short of the MSCI EAFE Index

• Implemented to minimize downside risk in case of market downturn

• Key Statistic from Holding Period:• Actual Correlation with the MSCI EAFE: -.1533

• Key Questions: Did the inclusion of the EAFE Inverse accomplish our goals? Can we statistically prove this?

The EAFE Inverse

Coleman Fund Portfolio MetricsFund/

BenchmarkAnnualized

ReturnStandardDeviation

Semivariance Reward toVariance

Reward to Semivariance

ColemanFund

27.9% 1.8591% 1.0232% .2347 .4624

Coleman Fund without

the EFZ

35.63% 2.9554% 1.6542% .1860 .3323

50/50S&P 500 and

EAFE Mix

31.06% 3.4929% 2.2965% .1384 .2105

EFZ – Single Inverse EAFE

-35.1% 3.9357% 3.1327% -.2200 -.2764

Coleman Fund vs. 50/50 S&P 500 and EAFE

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

Coleman YTD Returns 50/50 YTD Returns

1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/4/09

PERFORMANCE REPORTINGColin Waring

Coleman Fund – Since Investment Date

ETF Price Filled Current Price Percentage Returns

S&P N.A. Tech Semiconductors Index Fund 43.75 47.10 7.66%

MSCI South Korea Index 45.01 47.10 4.64%

MSCI Brazil Index 74.49 77.77 4.40%

ETF Price Filled Current Price Percentage Returns

SPDR S&P Oil & Gas Equipment 28.40 26.94 -5.14%

MSCI Australia Index 23.98 23.13 -3.54%

MSCI Sweden Index 25.46 24.62 -3.30%

BIGGEST WINNERS

BIGGEST LOSERS

Latest Weekly Performance Report

As of Friday, December 4 Week Month Quarter YTD Since Inception* Since Investment**

SMF Coleman 2.63% 2.63% 5.12% 25.37% -10.58% 1.02%

S&P 500 1.36% 1.36% 6.34% 25.27% 3.42% 1.29%

EAFE 3.07% 3.07% 4.10% 34.02% 18.98% 0.91%

50/50 EAFE/S&P 2.21% 2.21% 5.22% 29.65% 11.20% 1.10%*Jan. 2005 **Nov. 13, 2009

           

Haley Large Cap Fund 2.95% 2.95% 3.95% 15.96% 7.23% 4.47%

Russell 1000 1.51% 1.51% 6.11% 26.80% -13.76% 3.64%

*Nov. 2006 **Nov. 6, 2009            

Haley Large Cap Portfolio Metrics Year To Date

Fund/Benchmark

Annualized Return

StandardDeviation

Semivariance Reward toVariance

Reward to Semivariance

Haley LargeCap Fund

13.48% 1.995% 1.2083% .1027 .1699

Russell 1000

29.32% 3.6715% 2.2743% .1246 .2012

Haley Large Cap Year to Date Returns

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

Haley Large Cap YTD Re-turns

Russell 1000 YTD Returns

1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/4/09

Haley Large Cap – Since Investment Date (11/6)

Stock Ticker Price Filled Current Price Percentage Returns

Packaging Corp $19.0117 $22.32 17.40%

American Water Wrks $19.6259 $21.76 10.87%

McGraw Hill Cos Inc. $29.38 $32.56 10.82%

Stock Ticker Price Filled Current Price Percentage Returns

CVR Energy $8.675 $7.59 -12.51%

Green Mtn Coffee Roasters $67.17 $60.39 -10.09%

Patterson-UTI Energy $16.2194 $14.72 -9.24%

LOSERS

WINNERS

Questions?

Paper and Forest Products Healthcare Providers, Services Computers, Peripherals

Trading Companies and Distributors

Healthcare Technology Office Electronics

Airlines Biotechnology Wireless Telecom Services

Auto Components Pharmaceuticals Electric Utilities

Textiles, Apparel, Luxury Goods Life Science Tools, Services Gas Utilities

Hotels, Restaurants, Leisure Commercial Banks Multi-Utilities

Diversified Consumer Services Thrifts, Mortgage Finance Independent Power Producers

Beverages Consumer Finance Diversified Financial Services

Tobacco Capital Markets

Healthcare Equipment, Supplies Insurance

Economic Analysis Eliminations

Professional Services Leisure and Equipment Products

Distributors Air Freight and Logistics

Industrial Conglomerates Electrical Equipment

Marine Specialty Retail

Delphi Round 1 Eliminations

Villanova Equity Society

Whipkey Large Cap Fund Patrick O’Connell- CIO

Haley Mid Cap Fund Brad Thoresen- CIO

• Organizational overview• Growth and development• Current initiatives• Investment process• Performance• Questions

Objectives

Organizational overviewOperating Committee

Co-Presidents, Treasurer, Secretary, Marketing Director

Large-Cap Investment Committee

Chief Investment Officer, Portfolio Manager

Sector Teams

Sector Captain, Analysts

Mid-Cap Investment Committee

Chief Investment Officer, Portfolio Manager

Sector Teams

Sector Captain, Analysts

Support Team

Economic Analysis

• Began in the fall of 2005 with simulated funds• Ascertained funding in late 2006 and early

2007 for a large cap and mid cap fund• In late 2007 another donation was made and

MSF class began management of the Haley Large Cap fund

• Participation and awareness has been growing by leaps and bounds

Growth and development

• Training the Street, valuation seminar• Interviewing on Wall Street panel• Following up with spring competitions• Sponsor recruiting events• Evaluate prospective new members• Mentorship program• Summer connection event

Current initiatives

INVESTMENT PROCESSFall 2009

Investment cycleStage

1:Compliance screening

Stage 2:

Social responsibility screen

Stage 3:

Economic analysis

Stage 4:

Sector analysis

Stage 5:

Investment committee review

Stage 6:

Portfolio optimization, approval, and investment

• Similar criteria to the Haley Large Cap Fund

• Minimum average daily volume of 250,000 shares

• Minimum price of $10.00• Initial weightings below 5% for a single

position and 25% for a sector

Compliance

Fund Whipkey Large Cap Haley Mid Cap

Market Cap Greater than 5 billion Between 1 and 7 billion

Whipkey Large Cap• 395 stocks met the

initial compliance requirement

• 268 were eligible after running the SRI test

Haley Mid Cap• 841 stocks met the

initial compliance requirement

• 636 were eligible after running the SRI test

Social Responsibility Screen

• Similar conclusions, Early Revival • Primarily a top-down strategy• Manpower is divided equally into all sectors• Looked at each sector to find the most

important economic data and used that as a basis for sector concentration and security analysis

Economic analysis

Two part process, qualitative and quantitativeQualitative

• Base on the firm’s core competitive advantage and attractiveness of the sub-industry

Quantitative• Financial statement analysis and

comparative ratios

Security Analysis

Bloomberg tear-sheet

• Analysts submit their conclusions and supporting evidence to their sector captains

• Once initially screened, the better picks are sent to the other members of the sector and CIOs

• Discussion within an industry between the large and mid cap analysts

Investment committee review

Whipkey Large Cap• 41 stocks passed

all human tests

• 33 stocks were entered into the optimal portfolio

Haley Mid Cap• 35 stocks passed

all human tests

• 30 stocks were entered into the optimal portfolio

Optimization

• The optimized portfolios were put to an up or down vote before the entire MSF class, including Dr. Nawrocki

• Once approved we entered market buy orders

• Analysts are charged with following their stock, and stop losses will be put in place before the Christmas holiday

Investment!

PERFORMANCEFall 2009

Results

11/06/09 11/13/09 11/20/09 11/27/09 12/04/09-20%

-15%

-10%

-5%

0%

5%

Fund Weekly and Total ReturnsWhipkey Fund S&P 500 Domini 400

Whipkey Total Return S&P Total Return

Wee

kly

% R

etu

rn

To

tal

% R

etu

rn

Whipkey large Cap winners and losers

Stock Price Filled Current Price Returns

Monsanto 69.58 83.44 16.6%

HealthCare REIT 42.17 46.09 8.5%

Nucor 39.63 43.13 8.1%

Stock Price Filled Current Price Returns

TJ Maxx 38.22 36.43 -4.9%

Kohl's 56.00 53.70 -4.3%

McKesson 63.00 60.94 -3.4%

Winners

Losers

Whipkey large Cap performance YTDFund Annualized

ReturnStandard Deviation

Semivariance Reward to Variance

Reward to Semivariance

Whipkey Large Cap

19.61% 2.77 1.78 .1026 .1599

S&P 500

25.76 3.67 2.31 .1048 .1627

Current sector weights

Consumer24%

Energy18%

Financial11%

Healthcare19%

Tech24%

Cash4%

Current sector weights Cash4%

Energy1%

Materials6%

Industrials2%

Consumer Discr10%

Consumer Staples14%

Health Care19%

Financials11%

Info Tech22%

Utilities11%

QUESTIONSThank you