1. The Montgomery Institute Investment Proposal December 2013

2. History of Investment Policy Changes DateMandate% Equities% Bonds% Cash June 20, 2002Growth & Income60%39%1% Oct. 24, 2004Tactical Equity100%0% July 8, 2009Tactical Allocation50-100%0-70%1-30% October 15, 2013All Cash0% 100%

3. Account History Growth & Income Model. 10/24/2004 Tactical Equity Model 7/9/2009 Tactical Allocation Model 10/15/2013 All Cash Model

4. Annual Returns since inception

5. Fund Return since Inception

6. Creating the TMI Portfolio 1. Define Objectives 2. Identify Constraints 3. Determine Allocations 4. Manage To Policy ObjectivesConstraints AllocationsManage

7. Universal Investment Objective Maximum Return Minimum Risk The goal of any investment portfolio should be to achieve the highest return for an acceptable amount of risk.

8. Identifying Constraints: Personal Risk Tolerance Where is Your Pain Point? How much loss are you willing to accept in any given 12 month period? %

9. Identifying Constraints: Time Horizon Investment returns become less volatile over time. The longer the time horizon, the less short term risk affects the account. The account is an endowment which is considered “long term” however, Drawdown policy of 5% requires a short term focus. Source: Schwab Center for Financial Research Figure 1: Range of S&P 500 returns, 1926-2011

10. Identifying Constraints: Liquidity Requirements Liquid AssetsLess-Liquid Assets Money Market AccountsInvestment Real Estate Bank CD’sOil & Gas properties Listed stocksCorporate and some Government Bonds Mutual FundsPrivate debt and equity funds Life Insurance Cash Value How much of the account should be convertible to cash in a short period of time? The account may be required to liquidate 5% of its holdings each year

11. Identify Constraints: Drawdown Requirements The account must support a 5% annual drawdown. Minimizing the volatility of the account will allow for more predictable income.

12. Step 3: Determine Allocations

13. Determine Allocations Dominant Benefit Asset Allocation Growth %Income %Stability% Choose the percentage that you want to allocate among the Dominant Benefit provided by the investments.

14. Determine Allocations: Asset Class Selections Dominant BenefitLowest Risk to PrincipalMedium Risk to PrincipalHigher Risk to Principal Stability Cash in bank, CD’s, Money Market Funds Treasury Notes; Fixed Annuities; Index Annuities Short Term Bonds/Funds; Floating Rate Notes; Zero- Coupon Bonds Income US Government Bonds US Corporate Bonds; Municipal Bonds; International Bonds Mortgage-Backed Securities; High Yield Bonds, Investment Real Estate, Private Debt Growth US Large Company Stocks; Large Global Stocks US Mid/Small Company Stocks; Foreign Stocks Emerging Market Stocks; Private Equity, Hedge Funds

15. Determine Allocations Expectations of risk and return Source: Morningstar

16. Active Management Reduce Risk Higher Returns Managed VolatilityAbsolute Return Long/Short Equity Strategies Alternative Asset Classes Tax Loss Harvesting Tactical Over/under Weights We select top-tier managers and implement tactical and tax management strategies to the portfolio to capture as much Upside while avoiding the potential Downside of the asset classes.

17. Proposed Portfolio Allocation Allocation %StrategyObjective 40% Main Street Large Cap Blend Portfolio The Large Capitalization Blend Portfolio contains small to large sized companies that have average risk and provide moderate growth. This portfolio has the goal of beating the S&P 500. 20% Vanguard Total Bond Market ETF Vanguard Total Bond Market ETF tracks the Barclays Capital Aggregate Float- Adjusted Bond Index, which is widely used as a proxy for the United States investment-grade bond market. 10% Vanguard Total Intl Stock Index ETF Vanguard Total International Stock is a solid choice for passive cap-weighted exposure to international equities. The fund invests in stocks from 46 developed and emerging markets, which currently account for about 55% of the world's market capitalization. 10% Vanguard FTSE Emerging Markets ETF Vanguard FTSE Emerging Markets provides broad, cap-weighted exposure to emerging-markets equities 10% AQR Long/Short Equity Strategy The Fund seeks to provide higher risk adjusted returns with lower volatility compared to global equity markets. The Fund’s approach seeks to explicitly separate the return of market exposure (“beta”) from the true “alpha” of long and short stock selection. 10% Pinnacle S&P Directional Strategy The S&P Directional Strategy is a tactical investment strategy that seeks to earn profits in both bull markets and bear markets. It utilizes Exchange Traded Funds (ETFs) to replicate the S&P 500 and the inverse of the S&P 500.

18. Portfolio Performance

19. Portfolio Performance vs Benchmark

20. Step 4: Manage to Policy

21. Manage to Policy Rebalance the account quarterly Maintain a consistent policy going forward Resist changes to policy based on performance or economic cycles

22. Product Sheets