1 Investment Asset Classes A Brief Introduction

2 Traditional Asset Classes US Stocks $11.9T EAFE Stocks $14.4T US Fixed Income $13.9T Intl Fixed Income $17.2T US High Yield $.8T

3 Emerging Markets EM Stocks $6.4T Bonds $.4T

4 Alternatives Real Estate $11.5T/$90T Commodities >$4T Timberland $.06T Hedge funds $1.6T* PE $2T VC.25T * Versus 22.4B worldwide in mutual funds

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6 Real Estate-How Much IS Publicly-Traded?

7 Commodities as Asset Class

8 Commodity Trading Vs Production

9 Timber

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11 Timber Traditionally institutional ETFs CUT and WOOD Asset Class Correlation Bonds 0.03 International Equity 0.76 Domestic Equity 0.69 REITs 0.55 Commodities Month T-Bill 0.08 Source ETFDB.com

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17 Hedge Funds Not mutual funds Not subject to SEC regulation (so far) Organized as limited partnership Small number of sophisticated investors Common feature is use of leverage High returns in 1990s Lack of correlation has not held up recently

18 Hedge Funds Different From Mutual Funds Investment by manager Limited to high net worth investors Concentrated bets Fees – large Little regulatory oversight Lack of liquidity Lack of transparency Asset allocation is slippery High attrition Can hold riskier assets Significant leverage

19 Estimated Growth of Assets / Net Asset Flow Hedge Fund Industry 1990 – Q1 2007

20 Some Hedge Fund Strategies Mutual funds are long-only Long/short equity Statistical arbitrage Market neutral Event Driven Global Macro Arbitrage Convertibles arbitrage Relative value

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22 Hedge Funds Near collapse of Long-Term Capital Management $3.6 billion bailout Precipitated SEC scrutiny of hedge funds

23 Regulation of Hedge Funds Generally unregulated Exemption for less than 100 investors Exemption if accredited Scandals such as Canary Capital Partners Illegal trading with mutual funds Amaranth Advisors, 2006 SEC scrutiny

24 Offshore Hedge Funds Major centers include Cayman Islands, Bermuda, Dublin, Luxembourg. Rules Generally not burdensome Anonymity Tax advantages

25 The following 5 slides* are from: AIMA’s Roadmap To Hedge Funds published November, 2008 Alternative Investment Management Association * Also slide # 29

26 Hedge Fund Fee Justification

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28 Returns According to Industry Group (IAMA)

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31 Example of Quick Summary - Timber