The Annual Report that I threw together while trying to crush for my finals...

2. Dear Analysts, Friends, and Supporters,
To most students at Oregon State University, September 29th 2008 was simply the first day of fall term classes. This was the first day I
officially became president of the Oregon State Investment Group, just four months after we were awarded one million dollars in asset
management from the OSU Foundation. September 29th 2008 was also the day the Dow dropped over 777 points ­The biggest single day point
loss in history. According to the Dow Jones Wilshire 5000, 1.2 Trillion dollars in market value was lost. The S&P dropped 8.8% ­ The seventh
worst day on a percentage basis in history and the biggest single day drop since the crash in 1987. This happened in response to the House’s
rejection of the $700 billion bank bailout plan submitted by Henry Paulson.
For the analysts in the Oregon State Investment Group, this was not simply the first day of classes. This drop came less than 48 hours from
when we would be receiving the one million dollars from the OSU Foundation. On the first of October, the beginning of the fourth quarter, we
became an active fund manager on behalf of the OSU Foundation and in charge of one million dollars. On October 14th 2008, Michael Beall, our
Large Cap Portfolio Fund Manager, executed the first trade for the OSIG Large Cap Domestic Fund. Within one hour we were fully invested based
on the sector weights we had discussed at the beginning of our term.
I believe it’s safe to say that you don’t get any closer to real world experience than this. Our group has been a great learning opportunity
for both myself and the rest of the Oregon State Investment Group analysts. We have become active participants in an unprecedented time for
the finance industry.
This year has been a bumpy ride; at the bottom we were down nearly 30%, currently we are less than 800 basis points away from
breaking even and just about even on the year. Despite the lack of M&A activity compared to 2006 and early 2007 we still managed to find
Genetech (DNA) one month before Roche bought it out at a 30% premium.
This group has been an incredible endeavor to be a part of. The experiences it has to offer you and the list of opportunities it gives you is
endless. I am very excited to see the future of this group and to watch it continue to grow, because as our Founder Justin Shanks says, “if you’re
not growing, you’re dying.”
Adam Gulledge
President, OSIG

3. PROSPECTUS: OSIG LARGE CAP DOMESTIC FUND
Oregon State Investment Group Domestic Large Cap Fund Holdings as of April 02, 2009
Company Ticker Date Purchased Shares Purchase Price Current Price Gain/(Loss) Current Balance % of Portfolio
IMEU
Industrial Select Sector SPDR Fund XLI 10/14/2008 1,465 $ 26.00 $ 19.85 -23.65% $ 29,080.25 3.38%
Illinois Tool Works, Inc. ITW 10/14/2008 528 $ 37.59 $ 32.57 -13.35% $ 17,196.96 2.00%
3M Company MMM 1/15/2009 469 $ 54.43 $ 52.13 -4.23% $ 24,448.97 2.84%
Materials Select Sector SPDR Fund XLB 10/14/2008 453 $ 28.54 $ 23.51 -17.62% $ 10,650.03 1.24%
Monsanto Company MON 1/15/2009 165 $ 77.16 $ 81.41 5.51% $ 13,432.65 1.56%
Energy Select Sector SPDR Fund XLE 10/14/2008 2,134 $ 51.53 $ 45.14 -12.40% $ 96,328.76 11.20%
Utilities Select Sector SPDR Fund XLU 10/14/2008 1,039 $ 28.64 $ 25.98 -9.29% $ 26,993.22 3.14%
Exelon Corporation EXC 10/14/2008 367 $ 54.15 $ 46.88 -13.43% $ 17,204.96 2.00%
Consumer Goods & Services
Consumer Discretionary Select Sector SPDR Fund XLY 10/14/2008 1,149 $ 23.08 $ 21.11 -8.54% $ 24,255.39 2.82%
NIKE, Inc. NKE 11/20/2008 548 $ 44.28 $ 50.49 14.02% $ 27,668.52 3.22%
Consumer Staples Select Sector SPDR Fund XLP 10/14/2008 5,898 $ 24.56 $ 21.91 -10.79% $ 129,225.18 15.02%
General Mills, Inc. GIS 11/20/2008 391 $ 62.07 $ 51.02 -17.80% $ 19,948.82 2.32%
Colgate-Palmolive Company CL 1/15/2009 412 $ 61.91 $ 61.23 -1.10% $ 25,226.76 2.93%
Financials
Financial Select Sector SPDR Fund XLF 10/14/2008 333 $ 17.17 $ 9.31 -45.78% $ 3,100.23 0.36%
BB&T Corporation BBT 11/4/2008 830 $ 35.91 $ 17.42 -51.49% $ 14,458.60 1.68%
Bank of New York Mellon BK 2/5/2009 614 $ 27.76 $ 28.41 2.34% $ 17,443.74
Wells Fargo & Company WFC 2/6/2009 591 $ 18.89 $ 15.33 -18.85% $ 9,060.03 1.05%
Technology
Technology Select Sector SPDR Fund XLK 10/14/2008 5,675 $ 17.50 $ 16.48 -5.83% $ 93,524.00 10.87%
Hewlett-Packard Company HPQ 11/4/2008 786 $ 37.89 $ 33.69 -11.08% $ 26,480.34 3.08%
Qualcomm, Inc. QCOM 11/4/2008 776 $ 38.62 $ 41.31 6.97% $ 32,056.56 3.73%
International Business Machines Company IBM 2/27/2009 170 $ 90.27 $ 100.82 11.69% $ 17,139.40 1.99%
Health Care
Health Care Select Sector SPDR Fund XLV 10/14/2008 5,838 $ 27.58 $ 24.30 -11.89% $ 141,863.40 16.49%
Other Holdings
Cash Holdings $ 43,426.75 5.05%
$ 860,213.52 100%
OSIG Large Cap Fund Strategy
Spring 2008 marked an exciting time for the newly‐formed Oregon State Investment Group. Led by a member of the founding management
team, OSIG pitched to manage $1,000,000 for the benefit of the Oregon State University Foundation. The pitch was successful. On October
14, 2008, the very week after the S&P 500 Index fell nearly 20%, the Oregon State Investment Group fully invested the OSU Foundation’s
endowment fund into the stock market. Little did we know that we would be investing, and held truly accountable for, real money through a
period often regarded as one of the worst bear markets since the Great Depression.

4. Holdings some weight in each sector of the economy for allocation
purposes, we decided to only invest eight percent of the fund in
Because this fund is a portion of the OSU Foundation’s assets, we this sector, which was underweight by seven percent compared to
are required to hold only Domestic Large‐Cap companies, and our benchmark. Finally, given the historical safety the health care
virtually no weighting in cash. Within a week of receiving the industry has provided during tough economic times, we decided to
funds, we desired to be fully invested into the market, forcing us to be overweight in the Health Care sector by five percent.
initially invest in Select Sector SPDR ETFs for proper Additionally, the group decided to be one percent underweight in
diversification across sectors. We needed to do this because, as energy, two percent underweight in industrials, market weight in
previously noted, our group only has one meeting per week, with materials, two percent underweight in technology, media, and
two stock presentations per meeting. So, our goal over the year telecom (TMT), and one percent overweight in utilities.
was to replace as much of the ETFs as possible with real equity
holdings. Currently, we hold fifteen stocks, and are successfully
moving out of our nine ETF holdings. As more companies are
pitched and voted as “BUYs,” we will continue to move out of the The following chart shows our asset allocation As of March 31, 2009:
Sector SPDRs. As much as we want to move out of the ETFs, we
contend that it iw important to take our time finding only the best
25.00%
companies to replace them. 20.00%
15.00%
10.00%
Well aware of the fact that the world economy was weak in 2008,
5.00%
and is arguably getting weaker, the members of the Group came
0.00%
together to determine a defensive strategy through proper
diversification across sectors, paring our weightings against our
benchmark, the S&P 500 Index. Based on our economic outlook,
we decided to be most defensive in three sectors: Consumer
Goods, Financials, and Health Care. First, we felt like consumer
OSIG Domestic Large Cap Core Fund S&P 500 Index
discretionary companies would be one of the sectors to get hit the
worst going into the recession. With consumer confidence falling
off a cliff, we felt consumers would be doing everything possible to As you can see, we are still heavily defensive in Consumer Goods,
save, buying only what they needed. For this reason, we started Financials, and Health Care. We feel like our defensive strategy
off the fund underweight in the Consumer Discretionary sector by has been the key factor to our success in beating the market since
two percent and overweight in the Consumer Staples sector by inception, both in absolute returns and risk‐adjusted returns.
eight percent. Second, the major events preceding inception
revealed clear weakness in the financial sector. Wanting to have

5. Individual Asset Allocation Performance Commentary
0 4.90% 2.73%
2.02%
3.11%
3.21% Oregon State Investment Group Fund
1.99%
Performance Since Inception
3.66% 15.07%
3.05% 5.00%
0.00%
2.36%
10.73% 2.94% ‐5.00%
1.66% 10.97% ‐10.00%
1.22%
2.82%
‐15.00%
0.36%
1.97%
1.70% ‐20.00%
3.27%
1.02% 2.10%
17.12%
‐25.00%
‐30.00%
Consumer Discretionary Select Sector SPDR Fund
NIKE, Inc. ‐35.00%
Consumer Staples Select Sector SPDR Fund
General Mills, Inc.
Colgate‐Palmolive Company
Energy Select Sector SPDR Fund
Financial Select Sector SPDR Fund
BB&T Corporation OSIG Large Cap Domestic Fund S&P 500 Index
Bank of New York Mellon
Wells Fargo & Company
As of March 31, 2009, we have outperformed our benchmark, the
Health Care Select Sector SPDR Fund
Industrial Select Sector SPDR Fund S&P 500 Index, by an absolute 2.63%. On a risk‐adjusted basis, the
Illinois Tool Works, Inc.
3M Company
fund has outperformed by 1.23%. As of the end of the first
Materials Select Sector SPDR Fund quarter, 2009, the fund was down 17.42%, versus the S&P 500
Monsanto Company
Index, 20.05%. Due to the fund’s heavy initial investment in S&P
Technology Select Sector SPDR Fund
Hewlett‐Packard Company Sector ETFs, the fund closely tracked the benchmark. Throughout
Qualcomm, Inc.
International Business Machines Company
the year, as more companies were pitched and purchased for the
Utilities Select Sector SPDR Fund fund, we saw separation from our benchmark. When a company is
Exelon Corporation voted a majority “BUY” for the fund, the related sector ETF is
CASH

6. reduced and replaced with the company’s stock, and over time, the sector weights. We plan to still remain underweight in financials
fund will be primarily comprised of equity. Each equity holding is and consumer discretionary, and overweight in consumer staples
initially weighted between two or three percent of the portfolio’s and health care going into the second half of 2009. As 2010
balance, less cash, for proper diversification. approaches, we will analyze the current market and economic
Based on the defensive fund weights, and its average beta of .84, condition and adjust our market weights accordingly.
the fund underperformed intraday market rallies (recently led by
financial companies), and outperformed intraday market declines. As previously noted, we are strongly convicted in the companies
Being defensive in our sector weights and conservative with our we’re invested in and feel they are well positioned to thrive and
stock picks (selecting companies with strong balance sheets that outperform the market as the economy recovers.
have historically survived economic recessions) has been the
As Explained in “Recent Transactions”
driving force behind us outperforming our benchmark. We feel
that the companies we have invested in, while financially sound 2009 Transactions
and safe during bear markets, our well positioned to thrive and Date Type Symbol Quantity Amount Price
beat the market as the economy recovers. 4/14/2009 Buy STJ 673 $ 23,958.53 $ 35.60
4/14/2009 Sell XLE 562 $ 25,301.24 $ 45.02
4/14/2009 Sell XLE 300 $ 13,509.30 $ 45.03
4/14/2009 Sell XLE 200 $ 9,006.40 $ 45.03
Recent Transactions 4/14/2009 Buy KMP 300 $ 14,511.00 $ 48.37
4/14/2009 Buy KMP 195 $ 9,430.59 $ 48.36
The most recent transactions have been the purchases of two 4/14/2009 Sell BK 314 $ 9,728.35 $ 30.98
stocks for the energy sector and one for the health care sector: 4/14/2009 Sell BK 300 $ 9,294.48 $ 30.98
Anadarko Petroleum Corp. (APC), Kinder Morgan Energy Partners, 4/14/2009 Buy APC 543 $ 23,951.51 $ 44.11
3/6/2009 Sell DNA 333 $ 29,970.00 $ 90.00
LLP (KMP), and St. Jude Medical (STJ). So far, in 2009 we sold two
2/27/2009 Sell XLK 1079 $ 15,322.23 $ 14.20
holdings: Genentech, Inc. (DNA) at $90.00 per share for a 22% 2/27/2009 Buy IBM 170 $ 15,345.39 $ 90.27
profit, and Bank of New York Mellon (BK) at $30.98 per share for a 2/6/2009 Buy WFC 591 $ 11,163.93 $ 18.89
12% profit. 2/6/2009 Sell XLF 1149 $ 11,180.92 $ 9.73
2/5/2009 Buy BK 614 $ 17,045.87 $ 27.76
2/3/2009 Sell XLF 1906 $ 17,098.73 $ 8.97
1/15/2009 Buy MMM 469 $ 25,527.29 $ 54.43
Looking Forward 1/15/2009 Sell XLB 591 $ 12,766.78 $ 21.60
1/15/2009 Sell XLP 1140 $ 25,537.14 $ 22.40
Heading into the second half of 2009 and into 2010, the group will 1/15/2009 Sell XLI 1217 $ 25,520.86 $ 20.97
continue to make an effort to get out of the ETFs and into equities. 1/15/2009 Buy MON 165 $ 12,730.61 $ 77.16
While we see market stability going forward, we realize economic 1/15/2009 Buy CL 312 $ 19,315.92 $ 61.91
1/15/2009 Buy CL 100 $ 6,190.00 $ 61.90
weakness is present, leading us to remain defensive with our

7. PROSPECTUS: OSIG GLOBAL FUND
As of April 2, 2009, net of transaction costs
Company
Ticker Date Purchased Shares Purchase Price Current Price Gain/(Loss) Current Balance % of Portfolio
IME
Illinois Tool Works Inc. ITW 11/6/2008 42 $31.80 32.57 2.42% 1367.94 3.20%
3M MMM 12/8/2005 40 $78.24 52.13 ‐33.37% 2085.2 4.88%
Monsanto MON 15‐Jan 17 $77.40 81.41 5.18% 1383.97 3.24%
Sassol, Ltd. SSL 12/4/2006 63 $35.86 31.45 ‐12.30% 1981.35 4.64%
Waste Management Inc. WMI 12/8/2005 100 $30.84 26.17 ‐15.14% 2617 6.12%
Consumer Goods & Services
Colgate Palmolive Co. CL 1/8/2009 27 $65.19 61.23 ‐6.07% 1653.21 3.87%
Nike, Inc. NKE 11/20/2008 40 $43.37 50.49 16.42% 2019.6 4.72%
PepsiCo, Inc. PEP 12/8/2005 35 $59.76 52.86 ‐11.55% 1850.1 4.33%
Yum! Brands YUM 3/13/2007 56 $29.16 30.03 2.98% 1681.68 3.93%
Financials
Goldman Sachs GS 11/20/2007 9 $232.86 114.22 ‐50.95% 1027.98 2.40%
Technology
Ametek Inc. AME 5/6/2008 75 $51.10 33.11 ‐35.21% 2483.25 5.81%
Hewlett Packard HPQ 11/7/2008 39 $34.46 33.69 ‐2.23% 1313.91 3.07%
International Business Machines IBM 2/19/2009 20 $89.10 100.82 13.15% 2016.4 4.72%
Microsoft MSFT 11/9/2005 1 $27.01 19.29 ‐28.58% 19.29 0.05%
Qualcomm QCOM 11/3/2008 55 $36.94 41.31 11.83% 2272.05 5.32%
Health Care
Alcon ACL 3/11/2008 18 $135.25 93.07 ‐31.19% 1675.26 3.92%
Becton Dickinson & Co. BDX 1/29/2008 25 $87.35 66.8 ‐23.53% 1670 3.91%
Novo‐Nordisk NVO 11/20/2007 35 $63.39 47.92 ‐24.40% 1677.2 3.92%
Teva TEVA 3/12/2009 36 $44.30 44.44 0.32% 1599.84 3.74%
Other Holdings
iShares Emerging Markets ETF EEM 1/26/2006 90 $33.62 27.02 ‐19.63% 2431.8 5.69%
Cash Holdings 7916.6 18.52%
Total: 42743.63 100.00%
OSIG Global Fund Strategy:
This year has been a transitional year for the group as a whole. After we received the endowment money, we decided to take a different
approach with initial portfolio. Whereas originally our 50,000 portfolio – which will now be referred to as the OSIG Global Fund – was also a
large cap domestic fund, we have transitioned into a global fund. We define Global as being based outside of the US, aka an American
Depository Receipt (ADR) or having at least 50% of revenue coming from outside of the US. Our goal is to have all of our holdings fit in this
criteria range by the end of the year. Also, as this is our money, we are allowed to hold as much cash as we choose too and have used this to
our advantage during the fiscal yea

8. Asset Allocation Portfolio Breakdown by Holding
Our international holding allocation is as follows: US Stocks ACL, 3.92%
Cash,
55.01%; International Stocks 21.48%, Cash 23.38%; Other .14%. 18.52%
AME, 5.81%
BDX, 3.91%
We have 5 international holdings; ACL, NVO, SSL, TEVA, and our
CL, 3.87%
emerging markets ETF, EEM. The only two stocks that we
currently hold that do not fit our 50% of international revenue YUM,
EEM, 5.69%
3.93%
mark are Waste Management and Goldman Sachs. However, we
GS, 2.41%
plan to continue holding Goldman Sachs due to its strong global WMI,
6.12%
exposure, and its strong positioning relative to other banks. The HPQ, 3.07%
TEVA,
overall asset allocation of the OSIG Global Fund is: 70.74% equity, 3.74%
IBM, 4.72%
5.88% ETF, and 23.38% cash. SSL, 4.64% ITW, 3.20%
QCOM, MMM,
5.32% MON,
PEP, NVO, NKE, 3.24% 4.88%
4.33% 3.92% 4.73%
The following chart shows our asset Performance Commentary:
Allocation as of March 31, 2009:
We have outperformed the S&P 500 and the MSCI EAFE during the
30.00%
08‐09 fiscal year. In fact our the OSIG Global fiscal 08‐09
25.00% performance was ‐28.01% vs. the ‐37.06% and ‐43.06% returns of
20.00% the S&P 500 and the MSCI EAFE respectively. On an absolute basis
15.00% the OSIG Global Fund outperformed the S&P 500 and the MSCI
10.00% EAFE by 9.05% and 15.05%. This is in large part due to us taking a
5.00% S&P 500 very conservative approach and holding a large amount of cash
over the past six months. Our sixth month return vs. the S&P 500
0.00% OSIG
and MSCI EAFE has been ‐18.53% vs. ‐25.12% and ‐23.61%
respectively. This conservative approach has proven very helpful
to our absolute outperformance vs. our benchmarks during fiscal
year 08‐09. It has helped us to minimize our losses during market
crashes, but leaves us vulnerable to underperform the market
during rallies. When we feel that the market conditions have
improved we will reduce our cash position significantly and
purchase equities in its place.

9. Risk Adjustment Methodology Transactions
To calculate our risk adjusted return the beta of each individual Due to our transition from a Large Cap Domestic fund to a Global
has been calculated monthly and weighted to calculate the overall Fund, we have been very active with transactions throughout the
portfolio beta. As of April 2, 2009 the portfolio beta is .7196. The year. The following chart shows our purchases, sales, and partial
beta has ranged from .7156 to 1.061 throughout the year sales that we made throughout the 08‐09 fiscal year. The goal was
depending on the equities that we hold and how much of a to be in all international companies or companies that are based in
position that is being held in cash. We calculate our expected the US or Canada with at least 50% of their revenues coming from
returns based on the return of our benchmark and our weighted international markets. As mentioned previously we have almost
beta on a weekly basis every Thursday. We then annualized the reached our goal. When our goal is reached transactions will slow
weekly surprise and have found that on a risk adjusted basis we down and transactions will be more selective. Over the last year
have underperformed the market by 114 basis points. Although the market volatility has significantly unbalanced our portfolio as
this is not what we would like to see we did significantly have some of our target allocations. As the market recovers we
outperform the market on an absolute basis – 9.05% ‐ and this will make transactions to readjust our target allocations.
year has been a period of transactions as we are in a transitional
period. Next year with the transition out of the way this will not
affect us as much.
Annualized risk adjusted return of +3.64%
20%
10%
0%
‐10% OSIG Global Fund
‐20% S&P 500
‐30% MSCI EAFE
‐40%
‐50%
‐60%
­An Analyst Presents a BUY recommendation to OSIG , 2008

10.
As the graph to the left indicates, in July the commodities bubble
ECONOMIC REVIEWS popped and crude oil and other commodities plummeted in price.
Crude oil fell from a high of $147 to a low of $33 per barrel in less
US Economy than six months.
Starting in December 2007, shortly after US equities peaked on In September the US Treasury department bought $100billion in
October 09, 2007; the world found out that it was in the worst preferred stock and mortgage‐backed securities of Fannie Mae and
recession since World War 2 as the S&P 500 drop 37.5%. Our Freddie Mac, who hold or guarantee more than $5 trillion. This
economy goes through recessions every decade but what make made both Fannie Mae and Freddie Mac government agencies
this one most memorable is the commodities bubble amplified the once again after the private companies could raise the capital that
effects of the financial crisis and housing bubbles. was required for their basic operations. A week later Lehman
Brothers filed for bankruptcy after Treasury Secretary Hank
In March of 2008 the Federal Reserve held its first emergency Paulson said the government would not back Lehman’s $60 billion
weekend meeting in thirty years in an effort to save investment in mortgage assets. Only a few days later the Federal Reserve
bank Bear Stearns, which was in danger of going bankrupt thanks bought shares in insurance giant AIG who insured credit default
to bad investments in mortgage‐backed securities and other swaps that are owned by financial institutions around the world.
collateralized debt obligations. Later Bear Stearns was sold to JP Then at the end of September, banks withdrew $160 billion from
Morgan for $10 a share. That same month the federal reserve ultra‐safe money market accounts. This led to an increase LIBOR
launched the Term Auction Facility that makes short‐term loans rate which affected $360 trillion in loans and credit card assets
available to cash‐strapped banks who would not lend to each and created a credit freeze that making cash shortage for many
other due to lack of trust. businesses, such as Circuit City and the Big 3 auto companies. In
response, the Federal Reserve lowered interest rates to zero,
reducing the LIBOR rate.
On October 3, 2008 Congress passed a $700 billion bill that
created the Trouble Asset Relief Program (TARP), a program that
was initially designed to purchase toxic mortgages from banks, to
free up cash for loans. However it took too long to implement and
the Treasury used $350 billion for the Capital Repurchase
Program that purchased preferred stock in major banks. The
following month in November, Goldman Sachs and Morgan
Stanley, two of the most successful investment banks on Wall

11. Street, became regular commercial banks, ending the era of 10­Yr Commodities Bubble and Decline
deregulation and high risk.
OSIG believes that the markets will go up when things are clear
that things are getting better not when they are better. For this we
want to see the US housing prices stabilize of and the credit freeze
to thaw so businesses can get the capital that is required for
expansion.
Global Economy
The economics of 2008 present a classic example of our new
global economy as the S&P 500 decline 37.5%, the MSCI Europe
Index was down 45% and the MSCI Asia Pacific Index dropped
43%.
In July the commodities bubble popped and crude oil and other
commodities plummeted in price. Crude oil fell went from a high On September 15, 2008 Lehman Brothers filed for Bankruptcy
of $147 to a low of $33 per barrel in less than six months. However after the US government would not back Lehman’s $60 billion in
as you can see from the charts below crude oil’s drastic drop in mortgage assets. As a result global bankers panicked leading to a
price took Corn, Wheat, Soybeans, and Aluminum down with it. worldwide recession. Shortly after several European countries,
particularly England, Ireland, and Spain had their own housing
The commodities bubble dampened Export economies such as
bubbles that burst around the same time as the one in the US. In
Germany, Scandinavia, and France as trade with Eastern Europe
response to the recession the US Federal Reserve lowered its
and China drastically declined. More importantly rice, one of the
interest rate to zero and many central banks around the world
worlds primary staples, doubled in price from November 2007 to
also lowered their rate to zero or 1%.
May 2008 leading to food riots everywhere from Mexico to
Pakistan. In April the Philippines threatened to throw farmers in OSIG believes that the world markets will rebound only after the
jail for the rest of their lives if caught hoarding rice for the crime of US and China starts showing signs of recovery from the recession.
“economic sabotage”. We anticipate growth in South Africa as the 2010 World Cup nears,
similar to that seen in China resulting from the Olympic Games in
Beijing.
­Lars Nielson will go on to be our Account Treasurer

12. SECTOR & HOLDING UPDATES industry exposure comes from Exelon (EXC) engaged in the energy
delivery and generation.
OSIG’s Industrials focus going into the next fiscal year is tailored to
Industrials, Materials, Energy
companies who export goods and can benefit from a weak US
& Utilities Sector (IMEU)
dollar. MMM, ITW, and other Industrial conglomerates should fare
The IMEU sector has not been immune to the recession. well in the export market despite the global economy. The
Industrials suffered from the housing market’s decline which Materials sector should continue to see significant volatility in the
reduced demand for anything that is not essential to every day near future sine the sector has yet to fully recover from the
life. Energy demand dropped due to massive layoffs that have commodities bubble burst during the third quarter of 2008.
people all over the world looking for work. The Materials bubble However, certain areas in this industry are more attractive than
burst as China stopped growing at double digits and emerging others, such as export‐driven producers and suppliers.
markets suffered from the frozen credit markets. Companies that The Energy sector should experience heavy pressure from the oil
operate in the Utility industry dropped due to milder weather that and natural gas markets. Major integrated oil producers should
led to decreased earnings and suffered even more from the benefit once the economy turns around as people will want to go
liquidity crisis that still has the industry in consolidation mode. on vacations. APC has a strong balance sheet and some of the
OSIG’s Industrials exposure comes from the 3M company (MMM), strongest operating margins in its industry. SSL has seen
an industrial conglomerate (whose expertise is product increased adoption of its coal to liquid gas products and should
development, manufacturing, and marketing) and Illinois Tool continue to see strong growth as well. In the Utilities industry EXC
Works (ITW), which operates about 750 small industrial has financially hedged more than 90% of its generating output for
businesses in a highly decentralized structure that places 2009 and 2010.
responsibility on managers at the lowest level possible, in order to
­Lars Nielson
focus each business unit on the needs of particular customers. In
the Materials sector OSIG recently purchase Monsanto (MON) who
operates in the agricultural industry and will benefit from the
world’s growing population. For the energy sector OSIG holds
Sasol Ltd. (SSL), a South African integrated oil and gas supplier,
and recently purchased Anadarko Petroleum Corp. (APC) who
operates in the independent oil and gas industry and Kinder
Morgan Energy Partners (KMP) a large North American pipeline
transportation and energy storage asset company. OSIG’s Utilities

13. Consumer Goods Sector the transition to the Global Fund and Nike was purchased because
we believed it was a financially sound company that was the best
Over the last year, the concerns for consumers have remained in its industry.
markedly the same. We have seen tight credit markets, homes
losing their value, jobless claims rising, and consumer confidence Looking forward, we expect consumer spending and sentiment to
and spending falling. Recently, many of these have eased including slowly recover sometime between the second half of 2009 and
consumer confidence rising and jobless claims slowing. Since May early 2010. This coming year, farmers are expected to cut many
of 2008, we have added the Large Cap Domestic Fund and are in acres of crops, including wheat and cotton, causing inflation to be
the process of transforming the old fun into a Global Fund. For the higher than 2 years prior, but lower than last year’s 5.5% inflation.
last year, we have moved to a defensive weighting for our We are looking to reduce our weighting in consumer staples by
portfolios. We are currently underweight by about 2% versus the 4% and increase our weighting in consumer discretionary by 1%.
S&P 500 in the consumer discretionary sector while we are We are currently in the process of transitioning from ETF’s to
overweight by about 8% versus the S&P 500 in the consumer equities. Since we must wait for stocks to be pitched by members
staples sector. In the future, we are looking to reduce our exposure and not all are purchased, this is a slower process.
to consumer staples, but remain overweight. In consumer
­Brandon Beall will go on to be our Director Of HR
discretionary, we would like to move closer to market weight. In
the consumer staples sector of the Domestic Fund, our holdings
include Colgate‐Palmolive (CL), which is down 0.86% since its
purchase, and General Mills (GIS), which is down 18.71%. We
purchased these for the consumer staples sector because we Technology, Media, and
believed they were solid companies that were recession‐resistant. Telecommunications Sector (TMT)
In the Global Fund, our holdings include Colgate‐Palmolive (GL),
While technology has seen declines across the board over the last
which is down 5.81% since its purchase, and PepsiCo, which is
year, it has managed to outperform the S&P 500. This is greatly
down 16.68% since its purchase. We purchased Colgate for this
due to recent performance in the industry, posting positive growth
portfolio for similar reasons as the Domestic Fund. PepsiCo was
YTD. The sector is currently down 28.83% in our fiscal year. The
purchased before the splitting of the two portfolios.
Oregon State Investment Group is currently slightly underweight
The consumer discretionary sector in our Domestic Fund has only
in TMT, holding about 19% of its portfolio in the sector.
one holding, Nike (NKE). Nike is currently the top performing
equity in our fund and since its purchase is up 19%. In the Global
New additions to the portfolio over the year yielded strong returns
Fund, we currently hold YUM! Brands (YUM), which has increased
compared to the current market conditions, with the majority of
13% since its purchase. We recently sold our only other
our positions greatly outperforming their sector. IBM has
discretionary holding in the Global Fund, Nike at $53 to realize a
returned 9.44%, QCOM moved upwards 5.84%, and HPQ saw
22% profit. YUM was another holding we have had since before
losses of 5.71%. Past holding AME continues to outperform its

14. sector, down 26.26% in the fiscal year, and is to be put under Goldman Sachs and Morgan Stanley had to request to be changed
review by a TMT sector analyst during 2Q 2009. Overall the TMT to traditional bank holding companies, signaling an official move
sector has outperformed its benchmark in the 2008 fiscal year, away from their extremely leveraged profit models. Sub prime
returning ‐1.86%, an outperformance of 385 basis points against lending and collateralized debt instruments took a serious toll on
the sector and 1,332 basis point versus the greater market. financial firms as they were forced to write down serious losses on
what became toxic assets to their balance sheets. The Trouble
The future outlook of the technology industry is strongly Asset Relief Program was installed by the Federal Reserve and
dependent on an improving macro‐economy. Traditionally many of the United States’ largest banks have given some
technology is one of the first sectors to turn leaving a recession ownership to the government in return for TARP funds. When
and OSIG is well positioned, holding a near market weight position 2008 ended the financial sector globally had a negative return of
in TMT. 1Q 2009 earnings among many technology companies 56.27%.
showed promise of resilience and hinted at a turn, though it’s
The stock market hardships have continued into 2009, as the S&P
likely that overall optimism is to blame for the current rally.
500 was down 11.7% in the first quarter of 2009. The financial
­Jordon Plemmons will go on to be our Global Fund PM sector continued its trend as worst performing sector with a
decline of 29.5%. The question constantly being asked is whether
the financial sector has hit its bottom. Rates have been at record
lows and banks can borrow at an extremely cheap price. Most of
Financial Sector
the government actions have been aimed at unfreezing the credit
The last few years have been unprecedented and extremely tough market and getting banks to lend. So far some banks have
for the financial sector. The financial sector underperformed the indicated that their new business lending is improving. Whether
overall stock market in 2007. According to the S&P global new profits can cover write down losses is something to be seen.
financial index the sector declined by 10.55%. In July of 2007 the The mark‐to‐market accounting rule has been relaxed, so some
value of securitized mortgages started to fully drop and financial banks might be able to value depressed assets at higher price.
institutions were facing serious liquidity issues. A crisis was Financial firms focused on Investment Services, Mortgage Finance,
being recognized, but whether we were certainly heading for a Asset Management, and Specialty Finance have seen positive year
recession was unknown. Market volatility was being seen at to date returns. While Insurance Firms and Basic Banks are still
alarming rates at the start of 2008, especially within the financial seeing negative stock price returns year to date.
sector. Bear Sterns collapse in March of 2008 was monumental
In the next year, I project some major banks to start turning
and a shock to the strength of the financial industry. By
profits that exceed any write downs they might have. The
September Lehman Brothers declared bankruptcy and changes to
financial institutions with strong balance sheets will be able to
the make up of the financial industry were happening daily.
capture an influx of business because of the borrowing
Merrill Lynch needed to be purchased by Bank of America and
environment the government has created. This is not to say that

15. the sector as a whole will turn around. There are still a lot of and successful integration of Mellon Financial. The group
banks that have toxic assets and business model adjustments to purchased 614 shares of BK on 02/05/2009 for $27.76. Since the
make. The analyst outlook is pretty dim, so firms that can show purchase the stock went above its determined intrinsic value
some growth in business will be able to surprise analyst and based on its Residual Income Model, so the group sold all the
potentially see some upward stock movement. Our strategy at shares for $30.98 on 4/14/2008. After the sale the group realized
OSIG has been to find financial firms that would weather the a return of 12% on BK.
downturn. A constant theme has been to find banks that didn’t
At the end of winter term, the group purchased Wells Fargo. The
have relaxed lending before the downturn and have the future
group viewed it as a strong large bank based off of its credit
potential to steal business from suffering banks. We also looked
ratings, past earnings, market analyst sentiment, and 2008 4th
for financial firms who can create new products to help other
quarter results. The group purchased 591 shares of WFC on
financial firms through the recession.
02/06/2009 for $18.89 and the stock is currently trading around
Since the inception of our Large‐Cap Domestic Portfolio we have that value as of 4/14/2009.
made three financial purchases: BB&T, Bank of New York Mellon,
and Wells Fargo. Besides the Residual Income Model finding these Ryan Horton is a graduating Senior and CFA Candidate
equities undervalued there were significant reasons why the
group moved forward with their purchase in such a volatile and
uncertain sector. For BBT the group saw promise in its past Healthcare Sector Annual Report
lending practices, dividend strength, capital position and therefore
During the past fiscal year, we have acquired several companies
potential for acquisitions, and its deposits to loans ratio. The
that will strengthen our overall position in the healthcare sector.
group purchased 45 shares of BBT on 10/30/2008 for $33.94 and
These acquisitions include Genentech (DNA), Teva
later purchased 785 shares on 11/4/2008 for $36.02. The price of
Pharmaceuticals (TEVA), and St. Jude Medical (STJ). These three
BBT has since fallen to $20 range, but the group still finds the bank
companies, along with the our other holdings; Alcon (ACL), Becton
attractive and attributes it downward movement to the overall
Dickinson and Co. (BDX), Stryker (SYK), and Nova Nordisk (NVO)
financial fall. BBT does have a very low beta and has avoided
look to be a strong foundation for our growing healthcare sector.
some of the volatile drops the market has seen lately.
The best performer of the healthcare sector this year was
After purchasing a regional bank like BBT, it was the goal of the Genentech. DNA was purchased at $73.04 a share and sold at
sector team to find a financial firm that would diversify the sector $90.00 for an absolute gain of 23.22% for the Large Cap Domestic
for us. Bank of New York was then pitched and it helped diversify Portfolio, and very similar gains in the Global Fund. Nova
the group away from typical banks because it is a custodian bank Nordisk and Becton Dickinson and Co. have both outperformed the
that focuses primarily on institution clients. The group thought S&P 500 and the sector spider. Alcon and Styker have been the
that it was a good purchase because of its vast product offerings, two laggards of the sector, underperforming the S&P 500 as well
distribution channel, fee revenue growth, interest revenue growth, as the health care sector spider.

16. As our positions stand now, The Global fund is in strong position strong performer this year. It has outperformed both the sector
as it holds a diverse group of strong companies; TEVA, ACL, BDX, spider and the S&P 500, down around 14% for the fiscal year.
SYK, and Nova Nordisk (NVO). The Large Cap Domestic Portfolio Nova Nordisk has also been a strong performer, down 15% for the
holds STJ and XLV. Genentech (DNA) was held in both portfolios, fiscal year, but outperforming both benchmarks. Nova Nordisk
and sold in both portfolios prior to the acquisition made by Roche. was purchased for their strong position in global diabetes care, a
Our most recent acquisitions were Teva Pharmaceuticals and St market that continues to grow. Alcon and Stryker have
Jude Medical. These two companies will strengthen and diversify underperformed the market. Alcon took a huge hit in October, hit
the healthcare sector in both portfolios. its low in November, but has been improving since. The company
has a strong position in the eye healthcare business. Stryker was
Looking forward, the Large Cap Domestic Portfolio needs to be
acquired to bolster our position in medical equipment and gain
filled with strong companies that can compete and grow and cope
exposure to orthopedic implants. As discretionary spending has
with the upcoming changes in the healthcare industry. Currently
been cut, hip replacement and other similar procedures have been
this portfolio predominately holds the sector spider (XLV) and St
put on hold for many consumers. Teva Pharmaceuticals is an ADR
Jude Medical. In the next year, our goal is to hold a diverse range
that was recently acquired for the Global Fund. Teva
of strong healthcare companies and remove XLV from our
Pharmaceuticals was purchased for their large exposure into
holdings. This will be the main focus for the future. The
generic drugs. This is a big play going forward, especially due to
healthcare sector is currently and has historically been overweight
the Obama Administration and their push for increased generics.
in our portfolios as it proves to outperform the broader market
St Jude Medical was also just recently acquired. St Jude medical
during bear markets. However, as the market turns around, this
gives the portfolio great exposure to the cardiovascular market,
has the potential to limit our upside. The Obama Administration
and they have steadily increased their profit margins while
brings some uncertainty to the sector. As government takes a
outperforming its competitors.
bigger role in healthcare, they have great influence over which
companies will be successful. With that said, the aging baby ­Rob LaMunyan is continuing his role as Healthcare Sector leader
boomer population will certainly solidify the need for healthcare
going forward. These are probably the two biggest issues in the
healthcare industry right now. When there are strong signs of
economic recovery, we ill probably look to move back to market
weight in the healthcare sector.
The acquisitions we have made this year have done a lot to
strengthen our position in the healthcare sector. Genentech was
acquired in the fall of 2008, and sold in the spring realizing 20%+
gains in both portfolios. The shares were sold when Roche bought
Genentech at $95 per share. Becton Dickinson and Co. has been a

17. PROCESS METHODOLOGY
The Oregon State Investment Group has a four‐tier structure Discounted Cash Flow Analysis (DCF): Utilizes data from
starting with the individual analyst. All decisions are initiated and financial statements that our analysts compile from SEC or
voted on by the analysts. Analysts are supported by the Sector international regulatory agency files. By projecting cash flows 1, 3,
Leaders. Sector Leaders are supported by management that is 5, or 10 years out and then trailing back the value of those cash
comprised of a Portfolio Manager, a Director of External Affairs, a flows to the present as discounted by their respective weighted
Director of Human Resources, and a Director of Operations. This average costs of capital (WACC), analysts are able to determine an
management committee is led by the President. Operations are intrinsic value, or fair value, of the company in question. This is a
conducted through the student board of directors who are also useful model in that it helps our team determine if a company that
analysts. Portfolio Manager is responsible for reporting on weekly we wish to invest in based on other quantitative or qualitative
stock movements of the entire portfolio. Finally a faculty advisor justifications is valued fairly. The DCF model is not perfect,
assists the group and acts as an educational resource. however, and an analyst must familiarize him or herself with the
industry, the company, and the market environment as there are
The group is divided into five specific industries, namely:
many factors and variables that play critically in the end resulting
financials, telecommunications, media & technology (TMT),
valuation.
consumer goods, healthcare, and industrials, materials, energy &
utilities (IMEU). Each member holds the position of "analyst" and Basic DCF Formula
focuses their research on companies in that specific industry.
Analysts formally present in‐depth research reports to the group
for critical review, upon which a majority vote must be reached.
Following this majority vote the stock is purchased. The Portfolio
Manager is responsible for trading these equities in their
respective portfolios.
The OSIG Team stresses that analysts be comfortable with
Microsoft Excel and Power Point, have strong familiarity with Residual Income Model (RIM): We use RIM for finance
common financial ratios, have an informed knowledge of companies because the book value of financial assets is more
economics and accounting, and most importantly, to have a reflective of their actual market value than assets in other
passion for business and investment analysis. industries. When used to value stocks, the residual income model
separates value as the sum of the current book value of equity and
the present value of expected future residual income.

18. Basic RIM Formula Governance: Corporate governance is extremely important to
our organization when valuing companies, as we believe that a
∞
RI t E − rBt −1
∞ company’s management team is the core of its business. In
P0 = B0 + ∑ = B0 + ∑ t addition, the board that directs and strategizes development of a
t =1 (1 + r ) t t =1 (1 + r )
t
company is equally important, and for companies in very
B0 = current book value of equity competitive industries, a board can make or break a company. We
BV = the book value of equity at time t
RIt = the residual income in future periods
like to see that management is heavily invested in their companies,
r = the required rate of return on equity and we explore and consider the history of these teams. If a
Et = net income during period t manager does not leave their previous company on a good note, or
RIt = Et – rBt‐1
if conflicts of interests are likely, analysts will raise this as a
concern that must be justified in order for further consideration of
Relative Valuation Model: Relative valuation models are the purchase of equity stake by our portfolio managers.
used in addition to a DCF or RIM because they are more reflective
of overall market sentiment as it plays into the value of a stock. Corporate Social Responsibility: Because of our affiliation
Analysts will determine which ratios (P/E, P/S, P/BV, etc) are the with a university, and because we believe that any decision made
most appropriate to compare across the industry and the top as a group reflects on not only our investors, but also on our
competitors that a company is in, and will derive from these individual team members, we focus on Corporate Social
comparisons an intrinsic value of a company. Because of the Responsibility for companies being pitched. We endeavor to reject
especially subjective nature of this analysis, which can either be considerations for companies that may be in a controversial
made on a current basis or by using forecasted earnings from the industry, have been involved in many indictments, or are
DCF model, not as much weight is put in the relative valuation otherwise harmful to communities, environments, or other
models as is in other analysis tools. businesses outside of a normal competition. Some investments
have been rejected because of this approach, but although this
somewhat limits our investment opportunities for legitimate
SWOT: Our analysts aim to consider all revenue and equity consideration, we also believe as a group that many of these
generating factors of business and try to determine, abstractly, all considerations are adversely factored into the shares of such
the variables that may play into the success of each of these companies.
factors. by would expect that a transportation stock might devalue.
By compartmentalizing such variables to Strengths, Weaknesses, Current Events: Although Sector Leaders and Portfolio
Opportunities, and Threats (SWOT), subjective analysis can Managers update the group on economic news on a weekly basis,
conclude to more objective reasoning, especially when bellwether analysts are expected to keep up‐to‐date on any news that may
scenarios of other stocks are considered. affect the valuation of the companies that they are researching.

19. THE OSIG FAMILY
For some businesses, equity and enterprise are all that bind the Pictured from left to right: OSIG Analysts and Faculty
working relationships of their ambitious employees, but when the
markets turn and the going gets tough, those are the businesses 1. Jay Levesque – Portfolio Manager: OSIG Large Cap
Domestic (2009 – 2010)
that often fail. Corporations are nothing without the bonds that
2. Sanjai Tripathi – Equity Analyst π
hold them together, and the Oregon State Investment Group is 3. Ian Peters – Equity Analyst
held together by healthy working relationships. We believe that a 4. Rob LaMunyan – Equity Analyst
respectful environment and a supportive team will nourish our 5. Lars Nielson – Account Treasurer
future members and leaders to become more efficient, more 6. Michael Beall – President Elect
productive, and more creative. Diversity and varied perspectives 7. Jordon Heller – Equity Analyst
are encouraged and supported in our organization. No single 8. Brandon Beall – Director of Human Relations
9. Ryan Esping – Equity Analyst
member is treated as better than the next in any regard, and this
10. Jacob Unger – Equity Analyst
notion is essential to the continuation of the ideal of equality and 11. Adam Gulledge – Outgoing President β
diversification that make the OSIG Team so successful. 12. Ian McCormick – Outgoing Vice President
13. Tasha Toole – Director of External Relations
A Promising Outlook in Human Capital for the Finance Community 14. Cory Donahue – Equity Analyst
15. Jordon Plemmons – PM: OSIG Global Fund
16. Lindsay Clark – Equity Analyst β
17. Evan Gremmilion – Equity Analyst β
18. Jenny Aguilar – Equity Analyst
19. Justin Ottman – Equity Analyst
20. Rochelle Groth – Equity Analyst
21. Matt Derr – Equity Analyst β
22. Ryan Horton – Equity Analyst β
23. Burke Lodge – Equity Analyst β π
24. Ryan Good – Outgoing Vice President β
25. Jordon Baird – Equity Analyst
26. Jrming J. Yang, Ph.D – Faculty Adviser
27. Kirsten Mahoney (not pictured) – Equity Analyst β
28. Paul Heim (not pictured) – Equity Analyst
‐ Taken in front of Weatherford Hall, the birthplace of OSIG, 2009 β Beta Denotes Graduating Member
π Pi Denotes MBA Candidacy
Growth Symbol Denotes CFA Candidacy

20. The OSIG Human Capital Structure
Although many apply, only the top candidates are selected to junior analysts on their industry. In addition to the equity analysis
become analysts for the Oregon State Investment Group. report, the sector leaders also present weighting
recommendations for their respective sector to the portfolio
Analysts who are chosen have proven that they have the ability to
managers of the held stock, which is used to help in sector
complete the tasks necessary though a rigorous interview process
allocation decisions. Lastly, the management team, which
that mimics that practiced in the industry. During Fall and Spring
generally consists of five members, is responsible for the overall
recruitment, the OSIG Management Team conducts said interviews
organization and direction of the group.
as a panel, and all selection decisions are majority rule. The OSIG
structure requires that every first‐year member is an analyst, and OSIG has two faculty advisors, finance professors Jrming J. Yang
all members, including management, are required to contribute and Prem Mathew. Both gentlemen are integral to the
equity buy or hold recommendations through due diligence and organization’s success and ensure that formulation of
analysis to ensure that we stay actively invested in our holdings. methodologies is correct. OSIG relies on the knowledge of both
professors in order to maintain accuracy of information and to
Each analyst will report on and present one stock each term
encourage future development.
through a detailed report using various valuation methods. The
time commitment for these reports ranges from 60 to 80 hours
spent on research, writing the report, and preparing the financial
statements and valuation models used in determining the intrinsic
valuation of the company that they finally present to the entire
group for the buy or hold decision. These presentations are
essential for the Portfolio Managers as they allow for criticism of
varied perspectives from all of the analysts, the management, and
the faculty advisors. This process ensures that vital facts are not
miscarried and critical mistakes are not overlooked, and results in
a final Delphi influenced voting method of selection for acquiring,
holding, or selling equity stakes in the companies presented.
Sector Leaders create and report economic updates to the group at
weekly OSIG meetings, which gives all members a chance to start
each week with an equal understanding of market and economic
.
conditions. Analysts are assigned to a sector under the supervision
. ­The Human Capital Structure of OSIG
of a sector leader whose responsibilities include advising the

21. Building Success: OSIG Management Team Management Team Biographies
OSIG maintains a professional setting and attempts to imitate an Adam Gulledge
atmosphere that members will experience after they graduate and Outgoing President and Cofounder
start their careers in the finance industry.
Education
Managers of OSIG encourage friendly debate over any finance‐
OSU College of Business
related topic with the goal of having our members learn to create
B.A. Finance
and support their own opinions. The overall goal of education is to
grow in knowledge, breadth, and understanding of a desired topic
OSU College of Liberal Arts
of study. In the Oregon State Investment Group, continued
Minor. Psychology
education is heavily stressed on the topic of investments. While we
enjoy a competitive atmosphere, we also enjoy a broad range of
Activities
perspectives in investment strategy from our managers. The
Austin Entrepreneurship
varied knowledge and opinion base that we gain from our team
New Enterprise Challenge
helps us to develop the most widely beneficial human relations
policies, the most efficient and productive development strategies,
Adam came to the Oregon State Investment Group in the winter of
and to make the most informed portfolio management decisions.
2005 and is now the outgoing President. An interest in
The OSIG Management Team is a constantly changing, but entrepreneurship led Adam to become involved with the Austin
critically important, group of men and women whose efforts are Entrepreneurship Leadership Team, and his passion for Business
the pillars of our organization. In separate management meetings drove him to participate in the New Enterprise Challenge. Adam
that are held on a weekly basis, managers conclude buying, selling, started an Online Auction Service specializing in high‐end antiques
and weighting recommendations which are tallied from the and vintage collectibles and is now working on developing his own
weekly analyst meetings. Portfolio managers act as inside brokers investment fund, AGE Investments.
to then execute the transactions that are necessary for the
Outside of class Adam enjoys paintball, snowboarding, golf,
recommendations at price and volume. These roles ensure our
racquetball, hiking and an assortment of other outdoor activities.
fund growth and group success.
He is a fan of shows like the office, and enjoys keeping up to date
on recent business news by reading the Wall Street Journal and
the Economist.