1. Student Investment Fund Mark Petrone Michael Colabella 10/11/2011

2. ProShares (ETF) Short 20+ Year (TBF) Close $33.16 10/10/2011 The investment seeks daily investment results that correspond to the inverse (opposite) of the daily performance of the Barclays Capital 20+ Year U.S. Treasury Bond Index. Strategy: capitalize on anticipation of rising interest rates and falling bond prices

3. Interest rate recap The Fed has kept rates exceptionally low and the US government has taken advantage of this by issuing significant amounts of debt since 2008 The US government has continued to believe that keeping rates low will spur economic growth This has led rates to be kept artificially low as the nation’s debt has grown astronomically to almost 15 trillion

4. Interest rate recap Bond yields (interest rates) have fallen for most of last 3 decades, treasury prices have surged 9.3% alone this year (as of July)

5. Interest rate recap Treasury yields have since plunged back down to 2.5%, how much further can they fall?

6. Interest rate speculation Investors concerned with the US’s ability to pay debt obligations will want to be compensated with higher yields Foreign investors, some of the biggest buyers of US debt, are starting to diversify assets outside the US dollar

7. Interest rate speculation As more debt is issued by US government, investors will demand a higher yield (demand < supply) Investors concerned with inflation due to the significant increase in the money supply will only buy debt with higher yields

8. ProShares Short 20+ Year (TBF) The investment seeks daily investment results that correspond to the inverse (opposite) of the daily performance of the Barclays Capital 20+ Year U.S. Treasury Bond Index.

9. ProShares Short 20+ Year (TBF)

11. Difficult to anticipate future value since hard to estimate when interest rates will rise; nevertheless, some analysts predict end of 2011/beginning 2012 We believe we can likely see higher interest rates during 2012, increasing the value of TBF to at least 2011 summer levels where it trading $10 higher Propose to buy 100 shares at $32 – one of the only investments in SIF to capitalize on rising interest rates

12. Things to keep in mind… Tracking error 0.29% Use derivatives to gain inverse exposure - risk Future price hard to analyze with single day NAV calculation and potential for compounding risk