STRATEGIC CORE PORTFOLIOS Updated through December 31, 2008 - - PowerPoint PPT Presentation

STRATEGIC CORE PORTFOLIOS

Updated through December 31, 2008 www.etfpm.com This presentation does not constitute an offering of securities. The information contained herein is summary in nature and is not to be relied upon in making an investment.

Multi-Asset Class Diversification

2 In our opinion, David Swensen of Yale University is a key resource for investors.

• Mr. Swensen’s long-term track record is leading Wall Street in many respects and his views on

asset allocation have changed the industry’s perception regarding modern portfolio diversification. Like Swensen, our research concludes that investors should start their portfolios with multi-asset class exchange-traded funds (ETFs). At ETF PM, we monitor three strategic core portfolios for investors: Unconventional, Basic and Advanced. In addition, we compare them to a simple “70/30 Growth” portfolio (70% S&P 500 and 30% Long-Term Treasuries) and to the S&P 500.

Average Annual Returns as of 12/31/08

3

All Strategic Core information reflects hypothetical backtested calculations rather than actual client account

• results. All ETFs above are Barclays iShare ETFs (exchange-traded funds). Past performance is not an

indication of future results and risk of loss always exists. Highlighted data indicates that index performance was used when Fund performance was unavailable. This material is for information purposes only and is not a solicitation for investment. Visit www.ishares.com for Fund Fact Sheets and additional information. See Strategic Core Portfolio disclosures at the end of this report and/or visit www.etfpm.com.

Asset Allocation

4

These portfolios are designed to represent broad core growth portfolios and do not take into account an individual’s investment objectives and financial circumstances. Consult your investment adviser before investing. All Strategic Core information reflects hypothetical backtested calculations rather than actual client account results. All ETFs above are Barclays iShare ETFs (exchange-traded funds). This material is for information purposes only and is not a solicitation for investment. Visit www.ishares.com for Fund Fact Sheets and additional information. See Strategic Core Portfolio disclosures at the end of this report and/or visit www.etfpm.com.

Asset Class 70/30 Growth Unconventional Basic Advanced S&P 500 (IVV) 70% US Equity (IWV) 30% 30% 20% Foreign Developed Equity (EFA) 15% 30% 25% Emerging Markets Equity (EEM) 5% 8% 10% Commodities (GSG) 7% 20% Real Estate (ICF) 20% 10% 10% 7-10 Yr. Treasuries (IEF) 15% 20+ Yr. Treasuries (TLT) 30% 15% 15% Inflation Protected Treasuries (TIP) 15% Totals 100% 100% 100% 100%

Hypothetical Average Annual Returns as of 12/31/08

5

These portfolios are designed to represent broad core growth portfolios and do not take into account an individual’s investment objectives and financial circumstances. Consult your investment adviser before

• investing. All Strategic Core information reflects hypothetical backtested calculations rather than actual client

account results. All ETFs above are Barclays iShare ETFs (exchange-traded funds). Past performance is not an indication of future results and risk of loss always exists. Index performance was used when Fund performance was unavailable. This material is for information purposes only and is not a solicitation for investment. Visit www.ishares.com for Fund Fact Sheets and additional information. See Strategic Core Portfolio disclosures at the end of this report and/or visit www.etfpm.com.

1-Year 3-Year 5-Year 10-Year Unconventional

• 26.0%
• 3.8%

2.1% 4.5% Basic

• 30.5%
• 4.6%

2.7% 4.0% Advanced

• 31.8%
• 5.3%

2.7% 5.1%

• 15.7%
• 0.5%

2.9% 2.8%

• 36.9%
• 8.4%
• 2.2%
• 1.4%

70/30 Growth Strategic Cores S&P 500 (IVV)

Hypothetical 5-Yr. Total Returns as of 12/31/08

6

These portfolios are designed to represent broad core growth portfolios and do not take into account an individual’s investment objectives and financial circumstances. Consult your investment adviser before investing. All Strategic Core information reflects hypothetical backtested calculations rather than actual client account

• results. All ETFs employed are Barclays iShare ETFs (exchange-traded funds). Past performance is not an

indication of future results and risk of loss always exists. Index performance was used when Fund performance was unavailable. This material is for information purposes only and is not a solicitation for investment. Visit www.ishares.com for Fund Fact Sheets and additional information. See Strategic Core Portfolio disclosures at the end of this report and/or visit www.etfpm.com.

7

Annual Expense Ratio & Yield as of 6/30/2009

These portfolios are designed to represent broad core growth portfolios and do not take into account an individual’s investment objectives and financial circumstances. Consult your investment adviser before

• investing. All Strategic Core information reflects hypothetical backtested calculations rather than actual client

account results. All ETFs above are Barclays iShare ETFs (exchange-traded funds). Past performance is not an indication of future results and risk of loss always exists. This material is for information purposes only and is not a solicitation for investment. Visit www.ishares.com for Fund Fact Sheets and additional information. See Strategic Core Portfolio disclosures at the end of this report and/or visit www.etfpm.com.

Strategic Cores Expense Ratio Yield Unconventional 0.27% 4.26% Basic 0.33% 3.29% Advanced 0.41% 2.92% 70/30 Growth 0.11% 3.04% S&P 500 (IVV) 0.09% 2.58%

1) Index funds and/or ETFs are strongly recommended by David Swensen and Warren Buffett. 2) Asset allocation typically drives performance far more than manager and/or security selection. 3) Exchange-traded funds are typically index funds that trade like stocks. 4) The largest ETF providers are also among the largest global asset managers. 5) According to David Swensen, ETFs avoid many of the conflicts of interest inherent in mutual funds and often deliver better performance, lower cost, and/or greater tax efficiency (read his book, “Unconventional Success, A Fundamental Approach To Personal Investment”). 6) Albert Einstein called “compounding” the “8th Wonder of the World!” Every fraction of a percentage point in average annual performance compounds into a large portion of total return long term.

8

Why Use ETFs as Core Holdings?

General Information

All of the performance estimates (the “Performance Estimates”) for our Strategic Cores relate to hypothetical core models (the “Strategic Core Portfolios”), strategies that David Kreinces first backtested in 2008. These portfolios are designed to represent broad growth portfolios and do not take into account an individual’s investment objectives and financial circumstances. Consult your investment adviser before investing. All Strategic Core information reflects hypothetical backtested calculations rather than actual client account results.

• Mr. Kreinces tailored the Unconventional Core according to the core growth portfolio outlined by David Swensen

in his book “Unconventional Success: A Fundamental Approach to Personal Investment.” Mr. Swensen is the chief investment officer of Yale University, and, in our opinion, he is leading our industry in modern portfolio diversification across multiple asset classes. Barclays iShare ETFs were used for the entire portfolio to simplify performance reporting. David Swensen is not affiliated with ETF PM and has not endorsed ETF PM.

• Mr. Kreinces was solely responsible for the development of the Basic and Advanced Core Portfolios, and he had

full discretionary authority over the selection of investments.

• Mr. Kreinces left Merrill Lynch on November 27, 2007 and started ETF Portfolio Management, LLC (“ETF PM”)
• n December 1, 2007. It is expected that high net worth individuals and institutional clients will allocate to the

Strategic Core Portfolios at ETF PM.

Performance Disclosure

9

10

Performance Estimates at ETF PM

The Performance Estimates at ETF PM reflect an estimate of the performance that would have been achieved by a hypothetical Strategic Core account. The Performance Estimates at ETF PM are backtested and have not been

• audited. The Performance Estimates are net of all fees and assume reinvestment of dividends.

The Performance Estimates for the hypothetical backtested Strategic Cores do not reflect an advisory fee and ETF PM does not charge an advisory fee for these account structures. Each ETF PM advisory account is solely responsible for all commissions and other transaction charges, as well as any charge relating to the custody of securities in such account. Backtesting involves simulation of a quantitative investment model by applying all rules, thresholds and strategies to a hypothetical portfolio during a specific market period. The Strategic Core performance estimates do not reflect the returns of actual client accounts invested in the strategies presented. Backtested performance does not represent actual trading in an account and does not reflect the impact that material economic and market factors might have had on ETF PM’s decision-making process if ETF PM were actually managing the assets. Historical performance estimates are not indicative of future performance. The investment return and principal value of an ETF PM Account will fluctuate and may be worth more or less than the original cost when liquidated. The investment environment and market conditions may be markedly different in the future and investment returns will fluctuate in value. There can be no assurance that any ETF PM Account will achieve positive returns in future periods. The Strategic Cores were implemented, and will continue to be implemented, with a view towards low-cost diversification across multiple asset classes. The Performance Estimates presented are for comparison purposes

• nly. All the information in this report was taken from sources we believe to be reliable, but we cannot guarantee

perfect accuracy.

Performance Disclosure (con’t)

Email: info@etfpm.com Phone: 805.480.9785 www.etfpm.com

This presentation does not constitute an offering of securities. The information contained herein is summary in nature and is not to be relied upon in making an investment.