Concordia University Nebraska

Portfolio Review

Exceeding Your Expectations

500 West Madison Street, Suite 3855 | Chicago, IL 60661 | 312.853.1000

Portfolio Achievements

January 1, 2010 - December 31, 2013:

• Transitioned portfolio to enhanced, globally diversified portfolio • 3- and 4-year annualized returns outperformed the custom target allocation benchmark • Performance in-line or outperformed in each of the last 4 calendar year periods • Outperformed similar sized endowments over trailing 3- and 5-year periods • Lowered volatility measures by nearly 65% • Investment gain of nearly $12 million

On 12/31/13, DiMeo Schneider & Associates, L.L.C. completed four (4) calendar years as Concordia University Nebraska’s investment consultant and advisor. This service review recaps performance (risk management and returns) on an absolute and relative basis.

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Investment Objective – and Record Isolate a strategy and construct a portfolio specific to CUNE that: • Is the best path for the beneficiaries of the endowment and the university • Helps achieve financial outcomes • Achieves Policy objectives

Annualized Return Cumulative Return Sharpe Alpha Volatility Downside Risk

CUNE 9.3 42.7 0.9 0.6 10.3 6.2

Target Asset Allocation 7.9 35.5 NA NA 9.5 5.8

Spending Rate (5.0% + CPI) 6.9 30.6 NA NA NA NA

Alpha: Non-systematic return, or the return, that can’t be attributed to the market. It can be thought of as how the manager performed if the market’s return was zero. A positive alpha implies the manager added value to the return of the portfolio over that of the market. A negative alpha implies the manager did not contribute any value over the performance of the market. Sharpe: The Sharpe Ratio is the excess return per unit of total risk as measured by standard deviation. Higher ratios are better, indicating more return for the level of risk experienced. The ratio is a fund’s return minus the risk-free rate of return (30 day T-bill) divided by the fund’s standard deviation.

NA: not applicable Target Asset Allocation: Weighted-average return based on the Committee approved asset allocation targets CPI: Seasonally-adjusted CPI-U as reported by the Bureau of Labor Statistics; the above represents an average of the reported year-end CPI-U from 2010-2013

Annualized 4-year performance of the CUNE Endowment as of December 31, 2013

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Enhanced Globally Diversified Portfolio

Emerging Market Debt

Additional Hedge Fund

2011-2013

TIPS

Emerging Market Equity

MLPs

Commodities

Hedge Fund

2010

• Since August 2009, DiMeo Schneider & Associates, L.L.C. has worked with the Committee to introduce new asset classes and enhance CUNE’s approach.

• The benefit to CUNE? A wider opportunity set which has the potential for reduced risk and higher alpha over the longer-term.

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Which is Dynamic

TIPS

10%

US Bonds

6%

Int'l Bonds: 4%

Hgh Yield

8%

US Large Cap

14%

US Mdc Cap 2%

US Small Cap: 4%

Int'l Developed

12%

Emerging Markets

7%

REITS

9%

MLPs

5%

Commodities

10%

Hedge Funds

10%

TIPS

12%

US Bonds

8%

Int'l Bonds: 5%

Hgh Yield: 4%

US Large Cap

13%

US Mdc Cap 2%

US Small Cap

5%

Int'l Developed

12%

Emerging Markets

8%

REITS

6%

MLPs

5%

Commodities

10%

Hedge Funds

10%

TIPS

6%

US Bonds

7%

Int'l Bonds

7%

High Yield

7%

EM Local Debt

5%

US Large Cap

12%

US Mdc Ca:p 3%

US Small Cap: 1%

Int'l Developed

9%

Emerging Markets: 4%

REITS

6%

MLPs

5%

Commodities

8%

Hedge Funds

20%

TIPS: 3%

US Bonds

7%

Int'l Bonds

10%

High Yield

9%

EM Local Debt: 4%

US Large Cap

12%

US Small Cap: 3%

Int'l Developed

8%

Emerging Markets

6%

REITS

7%

MLPs

5%

Commodities

9%

Hedge Funds

20%

2010 2011 2012 2013

• Transition to enhanced globally diversified portfolio

• Introduce 5 new asset classes

• Begin reposition ahead of potential increase in interest rates

• Decrease to US fixed income • Increase asset allocation to

alternatives

• Further decrease to US fixed income

• Slight increase to real assets; long-term purchasing power positioning

• Take advantage of increased equity volatility measures

• Increase to TIPS, core US bonds

5

0

1

2

3

4

5

6

7

8

9

10

0 2 4 6 8 10 12 14 16 18

Do

wn

sid

e R

isk

Standard Deviation

Risk Metrics

2012

Reduced CUNE’s Overall Risk Measures

2009

2010

2011

2013

Since 2009: • Total portfolio volatility (STDEV) has fallen: 67% • Total portfolio Downside Risk has fallen: 65%

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While Achieving Value Against Objectives ...

DSA Value Added: +11.8 -8.3 +5.5 +1.6

CPI = seasonally adjusted CPI-U as of given year-end; as of 12/31/2013

• Objective is to seek excess return above 5.0% spending target + CPI net of fees

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-5%

0%

5%

10%

15%

20%

2010 2011 2012 2013

CUNE 5.0% + CPI

Value Against Custom Targets...

DSA Value Added: +3.0 0.0 +2.5 +0.1

Returns are net of fees; as of 12/31/2013

DSA Value Added: +1.0 +1.4

• Exceeding objective of excess returns over a longer market cycle

• In-line or outperformed in each of the last 4 years

Target Asset Allocation: Weighted-average return based on the Committee approved asset allocation targets

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

3-year 4-year

CUNE Target Asset Allocation

-5.0

0.0

5.0

10.0

15.0

20.0

2010 2011 2012 2013

CUNE Target Asset Allocation

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...and Similar Endowments

Fiscal Year CUNE NACUBO* Excess Return

2010 18.1 12.0 +6.1

2011 24.0 19.4 +4.6

2012 0.9 -0.5 +1.4

2013 8.7 11.4 -2.7

* Endowments between $25-$50 million; as of June 30, 2013

Trailing Periods

CUNE NACUBO* Excess Return

3-year 10.9 10.1 +0.8

5-year 7.1 4.3 +2.8

• Excess return in 3 of the 4 trailing fiscal year periods

• Excess return over the trailing 3- and 5-year periods

Especially in a volatile year.

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Plus Positive Risk-adjusted Returns

2010 2011 2012 2013

Alpha 0.70 0.16 2.14 -0.11

Sharpe 1.29 -0.08 1.81 1.42

3-year 4-year

Alpha 0.6 0.6

Sharpe 0.8 0.9

Alpha: Non-systematic return, or the return, that can’t be attributed to the market. It can be thought of as how the manager performed if the market’s return was zero. A positive alpha implies the manager added value to the return of the portfolio over that of the market. A negative alpha implies the manager did not contribute any value over the performance of the market. Sharpe: The Sharpe Ratio is the excess return per unit of total risk as measured by standard deviation. Higher ratios are better, indicating more return for the level of risk experienced. The ratio is a fund’s return minus the risk-free rate of return (30 day T-bill) divided by the fund’s standard deviation.

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Which Has Led to Meaningful Endowment Growth

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2009 2010 2011 2012 2013

Growth of CUNE Endowment

DiMeo Schneider & Associates inception with CUNE 8/2009: Ending market value: $27,324 m

2013 Ending market value: $40,701 m

• Portfolio investment gain of nearly $12 million since 1/1/10

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On-going Committee Knowledge & Support

• Investment Policy Statement development – 2010

• New custodian: Cost savings with annual fee reduced to $0 – 2010

• Spending Policy review of formulas and approaches – 2011

• Involvement in “governance” discussions – 2012 and 2013

- Retreats

- Board presentation

- Board meeting

• Webcasts/Conferences

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• Cost-Effective

• Coherent Approach

• Timely Action

• Adherence to Investment Policy

• Accountability

• Robust Infrastructure

• Enhanced Performance Potential

• Potentially Improved Risk Control

• DiMeo Schneider Investment Committee Oversight

CIOutsource™

Outsourced Chief Investment Officer Services

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Discretionary Services

•Approximately $2.3 billion in discretionary service assets - $840 million in Endowment & Foundation assets - $902 million in ERISA assets - $516 million in Disciplined Portfolio Advisor (DPATM) services

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Disclosure

VALUATION POLICY DiMeo Schneider does not engage an independent third party pricing service to value securities. Our reports are generated using the security prices provided by custodians used by our clients. Our pricing hierarchy is to first use valuations provided by the custodian that holds assets for the greatest number of clients. If a client holds a security not reported by this custodian, the valuation is generated from the next most prominent custodian, and so forth. Each custodian uses pricing services from outside vendors, where the vendors may generate nominally different prices. Therefore, this report can reflect minor valuation differences from those contained in a custodian’s report. REPORTING POLICY This report is intended for the exclusive use of clients of DiMeo Schneider & Associates, L.L.C. Content and format is privileged and confidential. Any dissemination or distribution of this report is strictly prohibited. The information contained in this report has been obtained from trade and statistical services and other sources which are deemed but not guaranteed to be accurate. Any opinions expressed herein reflect our judgment at this date and are subject to change.

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