Status and Targets

Our investment decisions are based on our asset allocation strategy, i.e., all SMSIs – with the exception of Program Related Investments – need to fall within our asset allocation targets. This chart illustrates our asset allocation as of January 2008 as compared to our interim 2008 target and strategic policy portfolio.

We have found that there is only partial consensus on asset class terminology. We use well established terms like Cash, US Large Cap Equity, US Small/Mid Cap Equity, International Equity, Private Equity, Real Estate, and Commodities. For the sake of simplicity we have included Emerging Markets in International Equity. Highly Managed Low Beta includes investments in the Low Equity Correlated space and the Absolute Return Strategy space. Highly Managed Beta includes Equity Long/Short as well as Operational Activism investments.

As part of our annual review we assess and validate our interim targets, adjusting as needed, continuing to work to achieve our strategic allocation.

Asset Allocation Targets

Our emphasis going forward will be to reduce current Cash while funding Private Equity and Hedged Equity (i.e., Highly Managed Beta) strategic targets. This approach is influenced by the structure of these types of investments.

The following sections highlight Status and Targets from two perspectives: asset allocation and category allocation. The first section shows SMSIs within each asset class, both relative to the asset class itself, and as a percentage of the overall portfolio. The second section shows SMSI categories as a percentage of the overall portfolio.