Sector Recap

Sector Weighting

Industrials Sector SIM Weight vs S&P 500July 14, 2009

11.57%

9.79%

8.50%

9.00%

9.50%

10.00%

10.50%

11.00%

11.50%

12.00%

S&P 500 Weight SIM Weight

S&P 500 Weight

SIM Weight

The sector was over weighted by 178 bps on 7/14/09. As of 7/31/09, the sector was over weighted by 239 bps.

Industrials Sector SIM Weight vs S&P 500July 31, 2009

9.98%

12.37%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

S&P 500 Weight SIM Weight

S&P 500 Weight

SIM Weight

Sector Recommendation Original Recommendation: Maintain the current overweight of 178

basis points (SIM 11.57% vs. S&P 500 9.79%)

Positives: During the recession most of industrial stocks are undervalued Most of the stocks should have an upside when economy turns

around Increased government spending (i.e. OSK, GE, Shaw) Low interest rates

Risks: Double-dip recession driving prices further down Lag between GDP growth and Industrial growth Companies have divested most of the assets due to the prolonged

recession Excess capacity in the housing market and commercial real estate

Current Holdings/Company Weightings

As of July 31, 2009

Canadian Pacific Railway $288,962.55 1.67%Emerson Electric Co. $184,810.40 1.07%General Electric Co. $235,840.00 1.37%Oshkosh Truck Corp. $849,714.75 4.92%Shaw Group $577,171.20 3.34%Industrials $2,136,498.90 12.37%

Portfolio $17,271,303.43 100.00%

** Oshkosh recently issued 13 million shares, diluting the value from the July 31 value of $849,714 (4.92%) at a share price of $27.45 to approximately $800,000 (4.62%) at a share price of $25.80.

Proposed Holdings/Company Weightings

Canadian Pacific Railway $0.00 0.00%Emerson Electric Co. $184,810.40 1.07%General Electric Co. $409,329.88 2.37%Oshkosh Truck Corp. $677,035.08 3.92%Shaw Group $0.00 0.00% First Solar, Inc. $400,709.28 2.32%UTI Worldwide, Inc. $400,709.28 2.32%Industrials $2,072,593.92 12.00% Portfolio $2,072,593.92 100.00%

Sector Weighting Recommendation

The proposed sales/purchases result in an overweighting of 202 bps.

Industrials Sector SIM Weight vs S&P 500Proposed

9.98%

12.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

S&P 500 Weight SIM Weight

S&P 500 Weight

SIM Weight

Canadian Pacific RailwayCompany Overview

Holding company whose direct and indirect subsidiaries operate railways in North America

Own/leases 15,500 miles of track mostly in western Canada and the US Midwest

Grain, industrial products, and intermodal freight account for 75% of their revenue

Acquired Dakota, Minnesota and Eastern Railroad Corporation in SEP ‘07 which opened them up to the US Midwest region

Canadian Pacific Railway P/E

Canadian Pacific Railway P/S

P/CF

Canadian Pacific Railway Valuation

Firm: Canadian Pacific Railway Ltd.Ticker: CP Price: 46.98$ Relative to Sector High Low Median CurrentP/TE 1.4 0.7 0.9 1.4P/FE 1.1 0.7 0.9 0.9P/B 0.8 0.4 0.6 0.6P/S 2.2 1 1.5 2.2P/CF 1.2 0.6 0.8 1.2

Relative to S&P High Low Median CurrentP/TE 1.3 0.64 1 0.98P/FE 1.1 0.72 0.95 0.88P/B 0.8 0.5 0.7 0.7P/S 1.9 1 1.5 1.9P/CF 1.1 0.6 0.9 1

ABSOLUTE High Low Median Current Target Multiple

Target E, S, B, etc/share Target Price

P/FE 17.9 8.8 14.6 15.7 14.6 2.66 38.84$ P/S 2.9 0.9 2 1.9 1.7 24.39 41.46$ P/B 2.6 0.9 1.8 1.5 1.55 31.32 48.55$ P/EBITDA 8.54 2.75 5.96 6.21 5.5 7.57 41.61$ P/CF 11.5 4.3 9 8.7 8.5 5.40 45.90$

Average Valuation: 43.27$ Current price: 46.98$

Upside/(Downside): -7.9%

Canadian Pacific Railway DCF

DCF Valuation7/14/2009Ticker: CP Terminal Discount Rate = 11.5%Rick Gross Terminal FCF Growth = 4.5%

ForecastYear 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E

Revenue 4,180 4,276 4,500 4,816 5,153 5,462 5,789 6,137 6,505 % Growth 2.29% 5.25% 7.00% 7.00% 6.00% 6.00% 6.00% 6.00%

Operating Income 665 760 800 939 1,005 1,065 1,129 1,166 1,236 Operating Margin 15.90% 17.77% 17.77% 19.50% 19.50% 19.50% 19.50% 19.00% 19.00%

Interest and Other- net (128) (133) (145) (155) (166) (176) (187) (198) (210) Interest % of Sales -3.06% -3.11% -3.23% -3.23% -3.23% -3.23% -3.23% -3.23% -3.23%

Taxes 150 172 181 177 190 201 213 219 232 Tax Rate 22.6% 22.6% 22.6% 22.6% 22.6% 22.6% 22.6% 22.6% 22.6%Minority Interest - - - - - - - - -

Net Income 387 455 473 606 649 688 729 749 794 % Growth 18% 4% 28% 7% 6% 6% 3% 6%

Add Depreciation/Amort 502 513 540 496 541 584 637 706 781 % of Sales 12.00% 12.0% 12.0% 10.3% 10.5% 10.7% 11.0% 11.5% 12.0%Plus/(minus) Changes WC 53 9 20 22 23 25 26 28 29 % of Sales 1.27% 0.20% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45%Subtract Cap Ex (767) (785) (826) (867) (876) (874) (897) (921) (943) Capex % of sales -18.36% -18.4% -18.4% -18.0% -17.0% -16.0% -15.5% -15.0% -14.5%

Free Cash Flow 174 192 207 257 337 423 494 562 660 YOY growth 10% 8% 24% 31% 25% 17% 14% 18%

NPV of free cash flows $2,361.5 35%NPV of terminal value $4,360.3 65%Projected Equity Value 6,721.7 Free Cash Flow Yield 2.58%

Shares Outstanding 168

Current Price 46.98

Implied equity value/share 40.01

Upside/(Downside) to DCF -14.8%

Total Debt 4,208 Total Cash 487

Pros/Cons

Pros Current price = $46.98; Price target = $41.64; 12.8% downside CP restructured their contract with Teck Coal this year to an

unfavorable outcome Growth is limited to M&A US GDP slow to recover will continue to eat away at their revenue Additional government regulation on grain transport rates (grain is 2nd

largest revenue driver)

Cons They are integrating some trip planning software that will decrease

fuel expense by estimated 10% (fuel only makes up ~15% of total operating expenses)

Oshkosh CorporationLatest Developments

SIM ownership of Oshkosh is near 5%. We decided to sell 100 basis points

At $23.69 per share, Oshkosh had about 97% upside In June and July 2009 Oshkosh won $2.8 billion army contract for M-

ATV vehicles with the March 2010 delivery date On August 5th, 2009 Oshkosh announced an offering of 13 million

shares of common stock. The company currently has 74.4 million shares outstanding

The company priced its public offering of new shares at $25 per share. Assuming no overallotment by the underwriters, Oshkosh expects to receive net proceeds from this offering of around $ 311.4 million after deducting the underwriting commissions

Oshkosh plans to use the net proceeds of the offering to repay a portion of the term loan borrowings under its credit agreement

The Shaw GroupCompany Overview

Expertise with engineering, technology, construction, fabrication, environmental, and industrial services.

Fossil and Nuclear segment handles designing, building, and running refineries and nuclear power facilities (plants, subs, etc.)

Environmental and Infrastructure segment has a lot of government contracts.

Owns 20% stake in Westinghouse (nuclear synergies.)

Fabrication and Manufacturing of piping systems.

The Shaw Group Valuation

$23.69

The Shaw Group Valuation

Firm: The Shaw Group

Ticker: SGR Price: $ 31.13 As of 8/10 @ 2:00 p.m.

Relative to Sector High Low Median Current

P/TE 8.4 0.7 1.5 1.2

P/FE 2.6 0.5 1.2 0.8

P/B 1.4 0.2 0.7 0.8

P/S 0.7 0.1 0.4 0.4 <-- Coincidence?

P/CF 6.2 0.4 1.7 1.3

Relative to S&P High Low Median Current

P/TE 9.6 0.57 1.7 0.84

P/FE 3.0 0.48 1.2 0.77

P/B 1.6 0.2 0.8 0.8

P/S 0.7 0.1 0.4 0.4 <-- Coincidence?

P/CF 7.0 0.5 1.8 1.0

ABSOLUTE High Low Median Current Target MultipleTarget E, S, B, etc/share Target Price

P/FE 44.9 5.7 19.1 13.7 15.5 2.39 $ 37.05

P/S 1.1 0.1 0.5 0.4 0.45 84.41 $ 37.98

P/B 4.9 0.6 1.9 1.9 1.9 16.38 $ 31.13

P/EBITDA 82.61 4.33 20.02 6.45 11.0 4.83 $ 53.09

P/CF 78.6 5.2 18.8 9.3 12.5 3.35 $ 41.84

Average Valuation: $ 40.22

Current price: $ 31.13

Upside/(Downside): 29.2%

The Shaw Group Valuation

ABSOLUTE Target Price (7/14) Target Price (8/10)P/FE $ 32.85 $ 37.05 P/S $ 31.54 $ 37.98 P/B $ 27.88 $ 31.13

The Shaw Group DCF

DCF from 7/14

Terminal Discount Rate = 10%Terminal FCF Rate = 4.5%

Current Price (7/14) = $25.46   Implied equity value/share (7/14) = $25.57  

Upside/(Downside) to DCF on 7/14 = 0.4%

Current data

Current Price (8/10 @ 2:00 p.m.) = $31.13  Implied equity value/share (7/14) = $25.57

Upside/(Downside) to DCF on 8/10 = (17.9%)

The Shaw Group Pros/Cons

Pros Current price = $31.13; DCF Price target = $25.57; 17.9% downside Westinghouse is a drain on their bottom line since they bought a 20%

stake.

Cons They have a $22.3 Billion back log of work. $1.3 Billion Cash on hand. First time ever of $1 Billion. Still made a profit during this recession ($7.9 Million) Nuclear power will be a big industry as the US looks into the next

generation of plants (2016.)

GE Company Overview

Industrial Conglomerate Develops manufactures and markets products for generation,

transmission, distribution, control and utilization of electricity. Operating Segments: Infrastructure, Commercial Finance, GE Money,

Healthcare, NBC Universal and Industrial Products range from aircraft engines, power generation, water

processing and security technology to medical imaging, business and consumer financing

Has continued to meet earnings for several quarters, despite a blip in reporting which cost them $50 million

Future of GE looks bright according to analysts who support a buy or hold on this stock due to its high correlation to the S&P 500 performance and the economy as a whole

GE P/E

GE P/S

GE Valuation

DCF Valuation7/17/2009Ticker: GE Terminal Discount Rate = 10.5%  Terminal FCF Growth = 3.0%

   Forecast Terminal

Year 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E Value

Revenue 166,309 164,493 169,289 176,061 183,984 193,183 203,808 213,998 224,698 235,933 245,370 % Growth -1.09% 2.92% 4.00% 4.50% 5.00% 5.50% 5.00% 5.00% 5.00% 4.00%

Operating Income 19,087 19,378 21,142 22,888 23,918 25,114 28,533 29,960 31,458 33,031 34,352 Operating Margin 11.48% 11.78% 12.49% 13.00% 13.00% 13.00% 14.00% 14.00% 14.00% 14.00% 14.00%

Corp items and elimin (2,495) (2,467) (2,116) (2,201) (2,300) (2,415) (2,548) (2,675) (2,809) (2,949) (3,067) % of Sales -1.50% -1.50% -1.25% -1.25% -1.25% -1.25% -1.25% -1.25% -1.25% -1.25% -1.25%Interest/oth finl charges (1,663) (1,645) (1,693) (1,761) (1,840) (1,932) (2,038) (2,140) (2,247) (2,359) (2,454) % of Sales -1.00% -1.00% -1.00% -1.00% -1.00% -1.00% -1.00% -1.00% -1.00% -1.00% -1.00%

Taxes (3,471) (3,511) (3,987) (5,264) (5,501) (5,776) (6,563) (6,891) (7,235) (7,597) (7,901) Tax Rate -23.3% -23.0% -23.0% -23.0% -23.0% -23.0% -23.0% -23.0% -23.0% -23.0% -23.0%

Net Income 11,125 11,426 13,008 13,662 14,277 14,991 17,385 18,254 19,167 20,125 20,930 % Growth 3% 14% 5% 4% 5% 16% 5% 5% 5% 4%

Add Depreciation/Amort 11,316 10,644 10,528 10,949 11,441 12,013 12,674 13,308 13,973 14,672 15,259 % of Sales 6.80% 6.47% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22%Plus/(minus) Changes WC 2,639 2,266 (273) (352) (368) (386) (408) (428) (449) (472) (491) Initial Working Capital 1.6% 1.4% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2%Subtract Cap Ex 15,514 12,473 12,337 13,205 12,879 12,943 13,044 13,696 14,381 15,100 15,704 Capex % of sales 9.33% 7.58% 7.29% 7.50% 7.00% 6.70% 6.40% 6.40% 6.40% 6.40% 6.40%

                     Free Cash Flow 9,567.0 11,861.9 10,925.1 11,054.3 12,471.6 13,674.8 16,607.6 17,438.0 18,309.9 19,225.4 19,994.4 YOY growth 24% -8% 1% 13% 10% 21% 5% 5% 5% 4%

Terminal 274,590.0 P/E 13.1

NPV of free cash flows $85,764.4 46% EV/EBITDA 13.9 NPV of terminal value $101,172.4 54% Free Cash Yield 7.28%Projected Equity Value 186,936.7 Free Cash Flow Yield 5.12%

Shares Outstanding 10,564

Current Price $14.50  

Implied equity value/share $17.70  

Upside/(Downside) to DCF 22.0%

Total Debt 514,100 Total Cash 97,500

GE Pros/Cons

Pros if economic outlook is stable to positive, GE’s returns are highly

correlated to the overall economy and S&P 500 Huge growth potential in energy due to renewable legislation Recent stock rebound

Purchased stock at average price of $34.79/share, currently trading at $14.57/share gaining about $1/share per week for last 3 weeks

Recently signed $115 million deal with Chinese energy company, Fujian Jingjiang Gas Power Co.

Cons Earnings have severely declined 2009 v. 2008 Recent issue of $1.5 billion of global medium-term notes Recent issue of $2 billion in 10-year notes

First SolarCompany Overview

First Solar designs and makes solar modules using proprietary thin film semiconductor technology to convert sunlight into electricity

First Solar was formed in 1999 and launched production of commercial products in 2002. It had IPO in 2006

First Solar is the largest manufacturer of thin film solar modules. It plans to expand its capacity from 735MW in 2008 to more than 1 GW by the end of 2009

In 2008 company generated 94% if revenues from customers in Europe, mainly Germany, which accounted for 74%. The company is also targeting other markets as well, including China, India and Australia

In 2008 First Solar reported $1.2 billion in revenue, an increase of $498 million over 2007

First Solar has achieved the lowest manufacturing cost per watt in the industry - $.87 per watt

First Solar developed the first pre-funded module collection and recycling program in the industry

First Solar P/E

First Solar P/S

P/CF

First Solar Valuation

Firm: First SolarTicker: PCAR Price: 146.47$ Relative to Sector High Low Median CurrentP/TE 42.3 1.8 7.9 1.8P/FE 13.2 1.3 5.8 1.3P/B 6.1 1.7 4 2.2P/S 55.3 0 16.7 8.5P/CF 23.2 2.5 9.3 2.5

Relative to S&P High Low Median CurrentP/TE 46.1 1.3 8.1 1.3P/FE 13.6 1.3 5.4 1.3P/B 7.7 1.9 4.6 2.4P/S 55.6 0 14.9 7.3P/CF 25.2 2 9.5 2

ABSOLUTE High Low Median Current Target MultipleTarget E, S, B, etc/shareTarget PriceP/FE 218.1 16 79.1 22.3 25 7.28 182.00$ P/S 84.4 0 13 7.2 10 23.32 233.18$ P/B 20.2 5.2 11.2 5.4 7 27.12 189.87$ P/EBITDA 683.24 16.17 95.41 16.54 20 8.86 177.11$ P/CF 279.4 18.2 105.4 18.2 40 8.05 321.91$

Average Valuation: 220.81$ Current price: 146.47$ Upside/(Downside): 50.8%

First Solar Pros/ConsCons:

Some investors worry about the competition from China (Yingli Green Energy). Experts do not expect Chinese competitors to match First Solar module manufacturing costs over the next 12-18 months

Difficult financial environment for the companies to invest into the renewable energy development

The storage of renewable electricity (batteries) is underdeveloped

Pros: Carbon legislature is working its way through Congress Pros: Fossil fuel sources are finite Pros: U.S. attempt to decrease its dependency on foreign oil Pros: U.S. green energy movement. Several states require utility

companies to increase the percentage of its renewable assets

UTI Worldwide Inc.Company Overview

International, non-asset-based supply chain services and solutions company air and ocean freight forwarding contract logistics customs brokerage

Provide total logistics solutionsCyclical industryRevenues down 35% in 1st Qtr FY10 and Net Income

was down 27% Attributed to cost cutting efforts

UTI Worldwide Inc. P/E

UTI Worldwide, Inc. P/S

P/CF

UTI Worldwide, Inc. ValuationFirm: Uti Worldwide Inc.Ticker: UTIW Price: 12.55$ Relative to Sector High Low Median CurrentP/TE 2.2 1 1.5 1.1P/FE 2 0.9 1.4 0.9P/B 2 0.7 1.2 0.7P/S 0.9 0.3 0.5 0.4P/CF 2.9 1 1.7 1.2

Relative to S&P High Low Median CurrentP/TE 2.4 0.82 1.7 0.82P/FE 2.2 0.83 1.4 0.83P/B 2.2 0.8 1.3 0.8P/S 0.8 0.3 0.5 0.3P/CF 3.1 0.9 1.9 0.9

ABSOLUTE High Low Median CurrentTarget Multiple

Target E, S, B, etc/share

Target Price

P/FE 32.9 10.1 21.5 14.8 19 0.76 14.44$ P/S 1.3 0.2 0.8 0.3 0.7 35.14 24.60$ P/B 6.4 1.4 4 1.7 3.5 7.38 25.84$ P/EBITDA 26.68 4.98 14.44 15.84 15 0.79 11.88$ P/CF 35.8 6.6 19.7 8.4 15 1.49 22.41$

Average Valuation: 19.83$ Current price: 12.55$

Upside/(Downside): 58.0%

UTI Worldwide, Inc. Pros/Cons

Pros Current price = $12.55; Price target = $19.83; 58% upside Increased global trade and outsourcing of logistics solutions Network of freight forwarding offices and contract logistics and

distribution centers in a total of 62 countries with an additional 79 countries serviced through independent offices Room for growth in these 79 countries

Taken measures to reduce their cost structure saving $50m in expenses in FY2010 (began 1 FEB)

Cons Until demand spikes they will continue to see revenues at lower levels Global recession could last longer than predicted

Summary Recommendation

Sell 167 basis points of Canadian Pacific Railway 7.9% downside Unfavorable restructuring

Sell 334 basis points of Shaw Group 17.9% downside Westinghouse purchase

Buy 232 basis points of First Solar, Inc. 50.8% upside Future Renewable legislation and state requirement

Buy 232 basis points of UTI Worldwide, Inc. 58% upside Revamped cost structure

Summary Recommendation Cont’d

Sell 100 basis points of Oshkosh Truck Corp. Approaching 5% maximum holding cap Still has upside potential

Buy 100 basis points of General Electric 22% upside potential Future looks healthy for many segments, especially energy

Questions?