Board of Regents, State of Iowa

1

Board of Regents, State of IowaExecutive Summary of Investment Performance

Quarter Ending March 31, 2007

2

Market Observations US Stock Market

Market Review (Periods Ending March 31, 2007)

The Federal Reserve continued to keep rates constant at 5.25% during the 1st quarter of 2007. The yield on the 10-year Treasury dropped narrowly from 4.71% to 4.65% despite hitting a high of 4.91% and low of 4.51% during the quarter.

Real GDP growth rebounded to 2.5% in the 4th quarter of 2006, up from 2.0% during the 3rd quarter. GDP grew at an annual rate of 3.3% in 2006 (vs. 3.2% in 2005, 3.9% in 2004, and 2.5% in 2003).

Since peaking at 2.9% in Sept. 2006, core CPI has stabilized at a more moderate 2.6% to 2.7% level from Oct. 2006 through Feb. 2007. Energy prices realized renewed volatility as a barrel of crude oil traded below $53 in mid Jan. before spiking to the high $60’s in late March, closing the quarter at $65.7.

Job growth slowed a bit in the first two months of 2006, with an estimated 146,000 and 97,000 jobs created in Jan. and Feb respectively.

Data signals received from the housing market have beenmixed. Existing home sales for Feb. hit their highestseasonally-adjusted level since April 2006. However, sales of new homes in Feb. declined for a second consecutive month, suggesting that a bottom in housing may not yet have been reached.

Despite experiencing its worst single day sell-off in nearly four years in late February, the U.S. stock market, as measured by the DJ Wilshire 5000, returned 1.40% during the first quarter of 2007. The -3.40% drop on February 27th served as a stark reminder of market risk and contributed to a -1.58% return in February, which marked only the second down month since July 2006 and the first since May to exceed a -0.12% decline.

Small capitalization stocks out-paced large stocks by a wide margin during the quarter with the DJW Small Cap index up 3.81% versus 1.07% for the DJW Large Cap index. Micro Cap stocks held up surprisingly well during February’s turbulence, as they posted a 0.20% return for the month and finished the quarter up 1.59%. Growth stocks showed impressive strength for the quarter, especially in the small cap segment, chipping away at some of the relative performance it had surrendered to value stocks in recent years. For the quarter, the DJW Large and Small Growth indexes were up 1.26% and 4.68%, respectively, versus 0.93% and 2.96% for the DJW Large and Small Value indexes, respectively. Looking back over the past year however, value still dominates growth by a wide margin across both size universes.

A growing level of defaults in the sub-prime loan market fueled concerns regarding a potential tightening of liquidity, helping to pressure the Financials industry lower by - 2.42%.

3

T-BILL

Citigroup Non-US Govt

Lehman Aggregate

MSCI EAFE Index MSCI EMF IndexS&P 500

Wil. Real Estate Sec.

0

5

10

15

0 5 10 15 20 25 30

Risk

Tot

al R

etur

n

Major Asset Class Returns (%)

Risk versus Return (3/31/97 - 3/31/07) Risk versus Return (3/31/87 – 3/31/97)

Capital Markets Review (Periods Ending March 31, 2007)

QTR 1 yr 3 yr 5 yr 10yrEquity Dow Jones - Wilshire 5000 1.4 11.3 11.0 7.7 8.7 Standard and Poor's 500 0.7 11.9 10.1 6.3 8.2 International Stock (MSCI EAFE)(USD) 4.1 20.2 19.8 15.8 8.3 Emerging Markets (MSCI EMF)(USD) 2.4 21.0 28.0 24.8 8.8 Dow Jones - Wilshire Real Estate Securities 3.7 22.0 24.4 22.8 15.2

Fixed Income Lehman Aggregate Bond 1.5 6.6 3.3 5.4 6.5 First Boston High Yield 3.0 11.9 8.7 11.2 7.3 International Bonds (Citigroup Non-US) 1.1 8.3 2.7 10.2 5.4 Treasury Bills (91 Day) 1.2 5.1 3.4 2.6 3.8

Consumer Price Index 1.8 2.8 3.1 2.8 2.5

T-BILL

Citigroup Non-US GovtLehman Aggregate

MSCI EAFE Index

S&P 500

Wil. Real Estate Sec.

0

5

10

15

20

0 2 4 6 8 10 12 14 16 18

Risk

Tot

al R

etur

n

4

-45.0

-25.0

-5.0

15.0

35.0

55.0

3/97 9/97 3/98 9/98 3/99 9/99 3/00 9/00 3/01 9/01 3/02 9/02 3/03 9/03 3/04 9/04 3/05 9/05 3/06 9/06 3/07

10.1

9.2

5.9

3.4

2.6

2.3

0.0

-2.4

0.8

1.3

Materials

Utilities

TelecommunicationServices

Energy

Consumer Staples

Industrials

Health Care

ConsumerDiscretionary

InformationTechnology

Finance

QTR 1 yr 3 yr 5 yr 10yr

DJ Wilshire 4500 4.1 9.6 13.8 12.6 10.5DJ Wilshire 5000 1.4 11.3 11.0 7.7 8.7DJ Wilshire Real Est. Secs 3.7 22.0 24.4 22.8 15.2DJ Wilshire Large Cap 1.1 12.1 10.8 7.0 8.5DJ Wilshire Mid Cap 5.1 9.8 14.1 11.9 11.9DJ Wilshire Small Cap 3.8 7.8 13.6 12.8 11.8DJ Wilshire Micro Cap 1.6 2.5 8.8 17.3 14.8

DJ Wilshire Large Growth 1.3 6.8 8.3 4.7 6.2DJ Wilshire Large Value 0.9 17.2 13.1 9.3 10.3DJ Wilshire Mid Growth 5.1 7.1 15.4 12.1 8.8DJ Wilshire Mid Value 5.2 12.9 12.8 11.4 13.4DJ Wilshire Small Growth 4.7 4.5 13.5 11.4 8.7DJ Wilshire Small Value 3.0 10.9 13.6 14.0 13.9

-40.0

-20.0

0.0

20.0

40.0

60.0

3/97 9/97 3/98 9/98 3/99 9/99 3/00 9/00 3/01 9/01 3/02 9/02 3/03 9/03 3/04 9/04 3/05 9/05 3/06 9/06 3/07

US Equity Returns (%) Large Cap Vs. Small Cap

DJ Wilshire 5000 Sector Returns (%)Growth Stocks Vs. Value Stocks

Domestic Equity Markets (Periods Ending March 31, 2007)

Growth Stocks

Value Stocks

Large Cap

Small Cap

Represents DJ Wilshire 5000 Quarterly Return

5

US Fixed Income Returns (%) Treasury Yield Curve

Historical Yield Spread Comparison to Treasuries

Domestic Fixed Income Markets (Periods Ending March 31, 2007)

0.00

2.00

4.00

6.00

8.00

10.00

12.00

Leh Mortgage Leh Long Agencies Leh AAA Long

Leh BAA Long FB High Y ield

The Federal Open Market Committee (FOMC) continued to leave short

term interest rates unchanged at the end of the first quarter as it kept

the federal funds rate at 5.25% while the yield on the 10-year Note

continued to experience some notable volatility but finished the quarter

at 4.65, six basis points lower than where it ended last quarter. While

the spread between the 10-year Note and the 91-day T-Bill widened by

8 basis points to 39 basis points from last quarter, the sub-prime

turmoil had a large impact on the spreads of mortgage backed

securities as investors flocked away from the sector towards higher

rated bonds. The FOMC noted in their March statement that core

inflation remains somewhat elevated and the high level of resource

utilization has the potential to sustain those inflationary pressures.

QTR YTD 1 yr 3 yr 5 yr 10yr

Lehman Aggregate 1.5 1.5 6.6 3.3 5.4 6.5

Lehman ABS 1.4 1.4 5.9 3.0 4.7 6.1

Lehman Credit 1.5 1.5 7.1 3.2 6.3 6.8

Lehman Gov't 1.5 1.5 5.9 2.7 5.1 6.2

Lehman Gov / Credit 1.5 1.5 6.4 2.9 5.6 6.5

Lehman Long Treasury 1.1 1.1 6.8 3.9 7.5 8.1

Lehman Mortgage 1.6 1.6 6.9 4.1 5.0 6.3

Lehman Agency 1.4 1.4 6.1 2.9 5.0 6.3

First Boston High Yield 3.0 3.0 11.9 8.7 11.2 7.3

Salomon Bros World Gov't Bond 1.2 1.2 7.8 2.7 9.0 5.8

Salomon Bros Non-US Bond 1.1 1.1 8.3 2.7 10.2 5.4Lehman US TIPS 2.5 2.5 5.3 3.0 7.4

Market Commentary

N U G G E T T A G :u s e rN a me = n u ll& p lo tN a me = n u ll

4.6

4.8

5

YIELD

0 5Y 10Y 15Y 20Y 25Y 30Y

Source: LehmanLive.com

One Year Ago [31Mar2006:31Mar2006]

Previous Quarter [29Dec2006:29Dec2006]Current Quarter [30Mar2007:30Mar2007]

6

5.8

4.0

8.0

10.4

2.8

5.6

-0.9

0.9

7.6

7.1

4.6

4.4

4.0

2.5

3.0

3.9

9.2

0.5

3.5

1.0

10.3

4.6

6.8

Austria

Belgium

Denmark

Finland

France

Germany

Greece

Ireland

Italy

Netherlands

Norway

Portugal

Spain

Sweden

Switzerland

UK

Total Europe

Australia

Hong Kong

Japan

New Zealand

Singapore

Total Pacific

International Index Returns (%)

Market Commentary

MSCI EAFE IndexQuarterly Returns in USD

International Equity Markets (Periods Ending March 31, 2007)

Equity (in U.S. $) QTR 1 yr 3 yr 5 yr 10yr

Non U.S. (ACWI X U.S) 3.8 20.3 21.4 17.4 9.0

Developed (EAFE) 4.1 20.2 19.8 15.8 8.3

Emerging (EMF) 2.4 21.0 28.0 24.8 8.8

Europe 3.9 25.4 22.1 15.8 10.4

Pacific 4.6 10.0 14.9 16.0 4.8

France 2.8 22.1 21.8 14.9 11.1

Germany 6.8 27.6 24.8 14.8 8.4

Japan 3.5 3.0 11.6 14.0 3.8

United Kingdom 3.0 24.2 19.3 14.2 9.0

Currencies (% change)

Euro vs Dollar 1.0 10.0 2.7 8.8 --

Yen vs Dollar 0.9 -0.1 -4.1 2.3 0.5

Pound vs Dollar 0.2 13.1 2.2 6.6 1.8

Country Weight

Austria 0.6

Belgium 1.3

Denmark 0.9

Finland 1.5

France 9.5

Germany 7.6

Greece 0.7

Ireland 0.9

Italy 3.8

Netherlands 4.1

Norway 0.9

Portugal 0.4

Spain 4.0

Sweden 2.6

Switzerland 6.7

UK 23.2

Total Europe 68.6

Australia 5.9

Hong Kong 1.6

Japan 22.5

New Zealand 0.2

Singapore 1.0

Total Pacific 31.2

Other Countries 0.2

Similar to the U.S. equity market, the non-U.S. equity market experienced some notable

volatility during the first quarter of 2007. The non-U.S. equity market ended the first

quarter with a 3.75% advance as the availability of abundant liquidity came into question

during the quarter. Until the late-February sell-off, the availability of abundant liquidity

combined with the low volatility environment, allowed many market participants to keep

their “yen-carry trade” going. In this trade, yield hungry participants borrow a low

yielding currency, in this case the Japanese yen, convert it into a higher yielding

currency, in this case the U.S. dollar, and buy a bond for the equivalent amount. As long

as the exchange rate does not change between the two countries, the “yen-carry” trader

stands to make a profit of approximately 4.5% (US bond yield: ~4.5% - Japanese bond

yield: ~0.0%). It was estimated that as much as $1 trillion may be staked on the “yen-

carry trade.” The return of volatility in late February was also the result of some

unwinding of this trade and thus caused a 0.94% windfall for unhedged U.S. investors as

traders sold dollars and bought back their borrowed yen positions. Although emerging

markets bounced back from the February sell-off and led the way in March with a 3.98%

USD based advance, it lagged the field during the quarter.

7

Total Fund Results University of Iowa

1.6

10.2 9.5 7.3 10.111.5 9.7 8.1 10.4

1.9

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

1 Quarter 1 Year 3 Years 5 Years Inception3/31/89

Ret

urn

(%)

Endow ment Policy Index

263,665

260,019

4,467

-821

Beginning Value

Cash Flow

Gains/Losses

Ending Value

28.3

16.1

5.10.0

30.0

15.0

50.5

0.05.0

50.0

0.0

20.0

40.0

60.0

U.S. Equity Fixed Income Intl Equity Real Estate Cash

Pe

rce

nta

ge

Actual Policy

Asset Allocation vs. Policy

Investment Performance

Quarter Results

($’000)

• The University of Iowa Endowment assets totaled $263.7 million at the close of the first quarter

• During the quarter, investment gains totaled $4.5 million

• Contributions totaled $0.6 million

• Distributions and fees totaled $1.5 million.

• The Endowment fund returned 1.56% for the first quarter, underperforming the benchmark by 0.38%.

(Periods Ending March 31, 2007)

Note: At the direction of the Board of Regents, slight adjustments have been made to composite market values to account for rounding.

$'000s Actual P olicy

U.S. Equity 133,153 131,832

Fixed Income 74,609 79,100

Intl Equity 42,338 39,550

Real Estate 13,565 13,183

Cash 0 0

Total 263,665 263,665

8

-862

3,034

173,031

175,203

Beginning Value

Cash Flow

Gains/Losses

Ending Value

Total Fund Results Iowa State University

1.6

9.9 9.6 8.0 10.211.5 9.7 8.1 10.4

1.9

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

1 Quarter 1 Year 3 Years 5 Years Inception3/31/89

Ret

urn

(%)

Total Fund Composite Policy Index

29.1

16.5

5.4

0.0

30.0

15.0

5.00

49.1 50.0

0.0

20.0

40.0

60.0

U.S. Equity Fixed Income Intl Equity Real Estate Cash

Pe

rce

nta

ge

Actual Policy


U.S. Equity 85,999 87,601


Intl Equity 28,824 26,280

Real Estate 9,436 8,760

Cash 0 0

Total 175,203 175,202



Quarter Results

($’000)

• The Iowa State Endowment assets totaled $175.2 million at the close of the first quarter

• During the quarter, investment gains totaled $3.0 million

• Total contributions were $0.6 million

• Total fees and distributions were $1.5 million

• The Endowment fund returned 1.59% for the first quarter, underperforming the benchmark by 0.35%



9

Total Fund Results

$'000 Qtr 1 Yr 3 Yrs 5 Yrs Inception% % % % %

Domestic Equity Composite (3/31/89) 131,578 0.7 8.4 10.3 5.7 11.5Dow Jones Wilshire 5000 1.4 11.3 11.0 7.7 11.5

Fixed Income Composite (3/31/89) 74,609 1.7 7.4 3.7 5.2 7.5 Custom Policy* 1.5 6.6 3.3 5.4 7.6

Int'l Equity Composite (9/30/94) 42,338 3.8 19.7 20.3 19.0 8.8 MSCI EAFE (N) 4.1 20.2 19.8 15.8 7.8

Real Estate Composite (12/31/05) 13,565 2.8 15.9 -- -- 18.8 NCREIF Property Index 3.6 16.6 -- -- 16.3

Private Equity Composite (12/31/06) 1,575 -2.8 -- -- -- -2.8Dow Jones Wilshire 5000 1.4 -- -- -- 1.4

Total Endowment (3/31/89) 263,665 1.6 10.2 9.5 7.3 10.1 Policy Index* 1.9 11.5 9.7 8.1 10.4

Iowa State

University of Iowa

$'000 Qtr 1 Yr 3 Yrs 5 Yrs Inception% % % % %

Domestic Equity Composite (3/31/89) 85,015 0.7 7.9 10.2 5.5 11.2 Wilshire 5000 1.4 11.3 11.0 7.7 11.5

Fixed Composite (3/31/89) 50,944 1.7 7.3 3.8 5.3 6.9 Custom Policy* 1.5 6.6 3.3 5.4 7.6

Int'l Equity Composite (9/30/94) 28,824 3.8 19.7 20.3 18.3 8.6 MSCI EAFE (N) 4.1 20.2 19.8 15.8 7.8

Real Estate Composite (12/31/05) 9,436 2.8 15.9 -- -- 18.8 NCREIF Property Index 3.6 16.6 -- -- 16.3

Private Equity Composite (12/31/06) 984 -2.8 -- -- -- -2.8Dow Jones Wilshire 5000 1.4 -- -- -- 1.4

Total Endowment (3/31/89) 175,203 1.6 9.9 9.6 8.0 10.2 Policy Index* 1.9 11.5 9.7 8.1 10.4



*Please see Glossary for policy specifications.

10

-1,213

1,462

93,637

93,388Beginning Value

Cash Flow

Gains/Losses

Ending Value

Total Fund Results University of Iowa Quasi

**Quasi Composite vs .Custom Policy

6.9

3.55.1 5.36.6

3.35.4 5.7

1.5 1.5

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

1 Quarter 1 Year 3 Years 5 Years Inception 6/30/98

Ret

urn

(%)

Quasi Composite Custom Policy

100.0

0

100.0

00.0 0.00.0

20.0

40.0

60.0

80.0

100.0

U.S. Equity Fixed Income Cash

Pe

rce

nta

ge

Actual Policy


U.S. Equity 0 0


Cash 0 0

Total 93,637 93,637

• The Quasi Endowment portfolio returned 1.48% during the first quarter, underperforming the benchmark by 0.02%

• The Quasi total fund has total assets of $93.6 million

• There were no contributions this quarter

• Total distributions and fees totaled $1.21 million

• The Quasi fund had investment gain of $1.5 million



Quarter Results

($’000)



11

Quasi Endowment Review

$'000 Investment Comp Qtr 1 Yr 3 Yrs 5 Yrs InceptionFee $'000 % % % % % %

Dodge & Cox (3/31/04) 47,986 54 51.2%Gross of Fee Return 1.6 7.2 3.9 -- 3.9Net of Fee Return 1.4 6.7 3.5 -- 3.5 Lehman Aggregate 1.5 6.6 3.3 -- 3.3

Reams Asset Management Quasi (9/30/01) 45,651 28 48.8%Gross of Fee Return 1.6 7.4 3.8 5.2 4.8Net of Fee Return 1.5 7.1 3.5 4.9 4.6 Lehman Aggregate 1.5 6.6 3.3 5.4 4.9

Quasi Composite (6/30/98) 93,637 82 100% 1.5 6.9 3.5 5.1 5.3 Custom Policy* 1.5 6.6 3.3 5.4 5.7




12

Domestic Equity Composite ReviewUniversity of Iowa $'000 Investment Comp Qtr 1 Year 3 Years 5 Years Inception

Fee $'000 % % % % % %

Goldman Sachs Large Cap (3/31/05) 52,840 50 40.2%Gross of Fee Return 0.1 10.2 -- -- 13.3Net of Fee Return 0.0 9.8 -- -- 12.8 S&P 500 0.7 11.9 -- -- 11.8

Lotsoff Large Cap Equity (3/31/05) 52,811 47 40.1%Gross of Fee Return 0.6 10.3 -- -- 12.0Net of Fee Return 0.5 9.9 -- -- 11.6 S&P 500 0.7 11.9 -- -- 11.8

LSV Asset Mgm't (6/30/02) 13,563 23 10.3%Gross of Fee Return 4.8 11.4 13.8 -- 13.7Net of Fee Return 4.6 10.6 13.0 -- 13.0 Russell 2500 Value 3.1 12.2 15.2 -- 16.0

Artisan Small Cap Growth (3/31/05) 12,364 35 9.4%Gross of Fee Return 0.7 -3.7 -- -- 11.0Net of Fee Return 0.4 -4.7 -- -- 9.9 Russell 2000 Growth 2.5 1.6 -- -- 13.9

Domestic Equity Composite (3/31/89) 131,578 155 100.0% 0.7 8.4 10.3 5.7 11.5 Wilshire 5000 1.4 11.3 11.0 7.7 11.5

Manager Returns – Iowa State University

Manager Returns – University of Iowa

Iowa State University $'000 Investment Comp Qtr 1 Year 3 Years 5 Years InceptionFee $'000 % % % % % %

Goldman Sachs Large Cap (3/31/05) 32,846 34 38.6%Gross of Fee Return 0.0 9.3 -- -- 12.3Net of Fee Return -0.1 8.9 -- -- 11.9 S&P 500 0.7 11.9 -- -- 11.8

Lotsoff Large Cap Equity (3/31/05) 32,987 29 38.8%Gross of Fee Return 0.6 10.2 -- -- 12.0Net of Fee Return 0.5 9.9 -- -- 11.7 S&P 500 0.7 11.9 -- -- 11.8

LSV Asset Mgm't (6/30/02) 9,736 17 11.5%Gross of Fee Return 5.0 11.6 14.4 -- 14.1Net of Fee Return 4.8 10.8 13.6 -- 13.4 Russell 2500 Value 3.1 12.2 15.2 -- 16.0

Artisan Small Cap Growth (3/31/05) 9,446 27 11%Gross of Fee Return 0.7 -3.7 -- -- 10.9Net of Fee Return 0.4 -4.7 -- -- 9.9 Russell 2000 Growth 2.5 1.6 -- -- 13.9

Domestic Equity Composite (3/31/89) 85,015 107 100.0% 0.7 7.9 10.2 5.5 11.2 Wilshire 5000 1.4 11.3 11.0 7.7 11.5



13

Domestic Equity Composite Review

-170

-145

-120

-95

-70

-45

-20

5

30

55

80

105

130

155

-150 -125 -100 -75 -50 -25 0 25 50 75 100 125 150

Value/Growth

Siz

e

Domestic Equity Comp

Goldman

Lotsoff

LSV

S&P 500

Russell 2000 Growth

Russell 2500 Value

Wilshire 5000

Artisan


14

Domestic Equity Review – Goldman Sachs

11.812.8

0.0

9.8

0.7

11.9

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

Last Quarter One Year Inception

Per

cent

age

Goldman Sachs S&P 500

University of Iowa -- Value Added (Vs. S&P 500)

Iowa State University -- Value Added (Vs. S&P 500)

Attribution

• Stock selection within the Health Care, Consumer Discretionary, and Information Technology sectors detracted from the value of portfolio during the first quarter

• Stock selection within the Energy and Industrial sectors added value to the portfolio

• An underweight to Utilities relative to the benchmark also diminished the return

Manager Overview

• Style: Large Capitalization Core Equity

• Construction Process: Optimization

• Investment Philosophy: Enhanced Index

• Selection Method: Quantitative valuation

11.8

8.9

0.1-

11.911.9

0.7

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0


Per

cent

age

Goldman Sachs S&P 500


15

Domestic Equity Review – Lotsoff

11.89.9

0.5

11.611.9

0.7

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0


Per

cent

age

Lotsoff S&P 500

University of Iowa -- Value Added (Vs. S&P 500)

Iowa State University -- Value Added (Vs. S&P 500)

Attribution

• Stock selection within the Industrials and Energy sectors added value to the portfolio

• An underweighting to both the Utilities and Telecommunications sectors relative to the benchmark were causes of underperformance

• Poor stock selection within the Financials and Consumer Discretionary sectors were primary drivers of underperformance.

Manager Overview

• Style: Large Capitalization Core Equity


• Investment Philosophy: Active Bottom Up


11.89.9

0.5

11.711.9

0.7

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0


Per

cent

age

Lotsoff S&P 500


16

Domestic Equity Review – LSV Asset Mgmt.

15.210.6 13.0

4.6

13.012.216.0

3.1

-25.0

-15.0

-5.0

5.0

15.0

25.0

35.0

45.0

55.0

65.0

Last Quarter One Year Three Years Inception

Per

cen

tage

LSV Russell 2500 Value

University of Iowa -- Value Added (Vs. Russell 2500 Value)

Iowa State University -- Value Added (Vs. Russell 2500 Value)

Attribution

• Stock selection was the primary driver of LSV’s out performance this quarter

• Stock selection within the Consumer Staples and Consumer Discretionary sectors added value to the portfolio

• An underweight to Financials and an overweight to Consumer Staples were sources of LSV’s out performance

Manager Overview

• Style: Mid Capitalization Value Equity


• Investment Philosophy: Active - Bottom up


15.210.8 13.4

4.8

13.612.216.0

3.1

-25.0

-15.0

-5.0

5.0

15.0

25.0

35.0

45.0

55.0

65.0


Per

cent

age

LSV Russell 2500 Value


17

Domestic Equity Review – Artisan

13.9

4.7-

0.4

9.9

1.62.5

-35.0

-25.0

-15.0

-5.0

5.0

15.0

25.0

35.0


Per

cent

age

Artisan Russell 2000 Growth

University of Iowa -- Value Added (Vs. Russell 2000 Growth)

Iowa State University -- Value Added (Vs. Russell 2000 Growth)

Attribution

• Poor stock selection within the Information Technology, and Consumer Discretionary sectors were the main contributors to Artisan’s underperformance for the quarter

• Stock selection within the Healthcare sector had a positive impact on performance

Manager Overview

• Style: Small Capitalization Growth Equity



• Selection Method: Fundamental valuation

13.9

4.7-

0.4

9.9

1.62.5

-35.0

-25.0

-15.0

-5.0

5.0

15.0

25.0

35.0


Per

cent

age

Artisan Russell 2000 Growth


18

International Equity Composite Review

University of Iowa $'000 Investment Qtr 1 Yr 3 Yrs 5 Yrs Inception

Fee $'000 % % % % %

Grantham, Mayo, Van Otterloo Foreign Fund (3/31/04) 42,338 87Gross of Fee Return 4.0 20.7 21.2 -- 21.2Net of Fee Return 3.8 19.7 20.3 -- 20.3 MSCI EAFE Index (N) 4.1 20.2 19.8 -- 19.8

Int'l Equity Composite (9/30/94) 42,338 87 3.8 19.7 20.3 19.0 8.8 MSCI EAFE Index (N) 4.1 20.2 19.8 15.8 7.8

Iowa State University $'000 Investment Qtr 1 Yr 3 Yrs 5 Yrs Inception

Fee $'000 % % % % %

Grantham, Mayo, Van Otterloo Foreign Fund (3/31/04) 28,824 59Gross of Fee Return 4.0 20.7 21.2 -- 21.2Net of Fee Return 3.8 19.7 20.3 -- 20.3 MSCI EAFE Index (N) 4.1 20.2 19.8 -- 19.8

Int'l Equity Composite (9/30/94) 28,824 59 3.8 19.7 20.3 18.3 8.6 MSCI EAFE Index (N) 4.1 20.2 19.8 15.8 7.8

19.820.3

8.83.8

19.019.7

7.84.1

15.820.2

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

Last Quarter One Year Three Years Five Years Inception 9/30/94

Per

cent

age

Int'l Equity Comp MSCI EAFE (N)

University of Iowa -- Manager Returns Iowa State University -- Manager Returns

University of Iowa -- Value Added (Vs. MSCI EAFE (N))

Iowa State University -- Value Added (Vs. MSCI EAFE (N))

19.819.7 18.3

3.88.6

20.320.215.8

4.17.8

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

Last Quarter One Year Three Years Five Years Inception 9/30/94

Per

cent

age

Int'l Equity Comp MSCI EAFE (N)


Note: At the direction of the Board of Regents, slight adjustments have been made to composite market values to account for rounding

19

International Equity Review – Grantham, Mayo, Van Otterloo

19.820.3

3.8

19.7

4.1

20.2

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0


Per

cen

tage

GMO MSCI EAFE (N)

University of Iowa -- Value Added (Vs. MSCI EAFE Index)

Iowa State University -- Value Added (Vs. MSCI EAFE Index)

Attribution

• GMO underperformed the benchmark in the first quarter

• Stock selection within Germany was a primary driver of underperformance for the quarter

• An underweighting to the Australian markets detracted from overall performance

Manager Overview

• Style: International Value Equity

• Construction Process: Valuation measures


• Selection Method: Fundamental Earnings Forecast

19.819.7

3.8

20.320.2

4.1

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0


Per

cen

tage

GMO MSCI EAFE (N)


20

Fixed Income Composite Review

Iowa State University $'000 Investment Comp Qtr 1 Yr 3 Yrs 5 Yrs InceptionFee $'000 % % % % % %

Dodge & Cox Income Fund (3/31/04) 20,686 23 40.6%Gross of Fee Return 1.6 7.2 3.9 -- 3.9Net of Fee Return 1.4 6.7 3.5 -- 3.5 Lehman Aggregate 1.5 6.6 3.3 -- 3.3

Reams Asset Mgm't (9/30/02) 21,106 16 41.4%Gross of Fee Return 1.6 6.9 3.8 -- 4.5Net of Fee Return 1.5 6.5 3.4 -- 4.2 Lehman Aggregate 1.5 6.6 3.3 -- 4.1

Post Advisory (3/31/06) 9,152 13 18.0%Gross of Fee Return 3.1 10.8 -- -- 10.8Net of Fee Return 2.9 10.5 -- -- 10.5 Merrill Lynch High Yield Master II 2.7 11.6 -- -- 11.6

Fixed Income Composite (3/31/89) 50,944 52 100% 1.7 7.3 3.8 5.3 6.9 Custom Policy* 1.5 6.6 3.3 5.4 7.6

University of Iowa $'000 Investment Comp Qtr 1 Yr 3 Yrs 5 Yrs Inception

Fee $'000 % % % % % %

Dodge & Cox Income Fund (3/31/04) 30,871 35 41.4%Gross of Fee Return 1.6 7.2 3.9 -- 3.9Net of Fee Return 1.4 6.7 3.5 -- 3.5 Lehman Aggregate 1.5 6.6 3.3 -- 3.3

Reams Asset Mgm't (6/30/02) 29,880 19 40.0%Gross of Fee Return 1.6 6.9 3.7 -- 4.4Net of Fee Return 1.5 6.7 3.4 -- 4.1 Lehman Aggregate 1.5 6.6 3.3 -- 4.1

Post Advisory (3/31/06) 13,858 21 18.6%Gross of Fee Return 3.1 10.9 -- -- 10.9Net of Fee Return 2.9 10.5 -- -- 10.5 Merrill Lynch High Yield Master II 2.7 11.6 -- -- 11.6

Fixed Income Composite (3/31/89) 74,609 75 100% 1.7 7.4 3.7 5.2 7.5 Custom Policy* 1.5 6.6 3.3 5.4 7.6


Note: At the direction of the Board of Regents, slight adjustments have been made to composite market values to account for rounding


21

Fixed Income Review – Dodge and Cox

3.3

6.7

1.4

3.5

6.6

1.5

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0


Per

cent

age

Dodge & Cox Custom Policy

Attribution

University of Iowa -- Value Added (Vs. Lehman Aggregate)

• Dodge & Cox underperformed the benchmark by 0.07% in the first quarter

• The average quality of bonds within the portfolio is AA, compared to Lehman Aggregate’s AAA rating

• The portfolio has a duration of 3.82 years, versus the Lehman Aggregate’s duration of 4.50 years

• Style: Market Core

• Construction Process: Build Portfolios with Higher Yield than Market Portfolio


• Selection Method: Quantitative and Qualitative valuation

Manager Overview

Iowa State University -- Value Added (Vs. Lehman Aggregate)

3.3

6.7

1.4

3.5

6.6

1.5

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0


Per

cen

tage

Dodge & Cox Custom Policy


22

Fixed Income Review - Reams

3.3

6.7

4.1

1.5

3.4

6.6

4.1

1.5

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0


Per

cent

age

Reams Asset Mgmt Custom Policy

Attribution

University of Iowa -- Value Added (Vs. Lehman Aggregate)

• Reams’ return was slightly greater than the benchmark by 0.02% in the first quarter.

• The average quality of bonds within the portfolio is AA, compared to Lehman Aggregate’s AAA rating

• The portfolio has a duration of 3.71 years, versus the Lehman Aggregate’s duration of 4.50 years.

• Style: Market Core



• Selection Method: Quantitative and Qualitative valuation

Manager Overview

Iowa State University -- Value Added (Vs. Lehman Aggregate)

3.3

6.5

4.2

1.5

3.4

6.6

4.1

1.5

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0


Per

cen

tage

Reams Asset Mgmt Custom Policy


23

Fixed Income Review – Post Advisory

Attribution

University of Iowa -- Value Added (Vs. ML High Yield Master II)

• Post Advisory out performed its benchmark by 0.20% in the first quarter

• The average quality of bonds within the portfolio is B, a slightly lower rating than the Merrill Lynch High Yield Master II’s rating of BB

• The portfolio has a duration of 3.73 years, versus the benchmark duration of 4.67 years.

• Style: High Yield

• Construction Process: Subjective


• Selection Method: Scoring model based on quantitative and quantitative inputs

Manager Overview

Iowa State University -- Value Added (Vs. ML High Yield Master II)

10.5

2.9

11.6

2.7

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0

11.0

Last Quarter One Year

Per

cent

age

Post High Yield ML High Yield Master II

10.5

2.9

11.6

2.7

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0

11.0

Last Quarter One Year

Per

cent

age

Post High Yield ML High Yield Master II


24

Real Estate Composite Review

Note: At the direction of the Board of Regents, adjustments have been made to composite market values to account for rounding



Fee $'000 % % % % %

Principal Global Investors Enhanced Property Fund (12/31/05) 13,565 -- 2.8 15.9 -- -- 18.8 NCREIF Property Index 3.6 16.6 -- -- 16.3

Real Estate Composite (12/31/05) 13,565 -- 2.8 15.9 -- -- 18.8 NCREIF Property Index 3.6 16.6 -- -- 16.3


Fee $'000 % % % % %

Principal Global Investors Enhanced Property Fund (12/31/05) 9,436 -- 2.8 15.9 -- -- 18.8 NCREIF Property Index 3.6 16.6 -- -- 16.3

Real Estate Composite (12/31/05) 9,436 -- 2.8 15.9 -- -- 18.8 NCREIF Property Index 3.6 16.6 -- -- 16.3

25

Private Equity Composite Review

Note: At the direction of the Board of Regents, adjustments have been made to composite market values to account for rounding



Fee $'000 % % % % %

Lehman Brothers Crossroads Fund XVIII (12/31/06) 984 33 -2.8 -- -- -- -2.8 Dow Jones Wilshire 5000 1.4 -- -- -- 1.4

Private Equity Composite (12/31/06) 984 33 -2.8 -- -- -- -2.8 Dow Jones Wilshire 5000 1.4 -- -- -- 1.4


Fee $'000 % % % % %

Lehman Brothers Crossroads Fund XVIII (12/31/06) 1,575 53 -2.8 -- -- -- -2.8 Dow Jones Wilshire 5000 1.4 -- -- -- 1.4

Private Equity Composite (12/31/06) 1,575 53 -2.8 -- -- -- -2.8 Dow Jones Wilshire 5000 1.4 -- -- -- 1.4

Appendix

27

Domestic Equity Manager Detail – Goldman Sachs


-5

0

5

10

15

Quarter One Year Tw o Years

An

nu

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Qu

arte

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Ret

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s)

Universe AnalysisUniverse AnalysisPeriods as of March 31, 2007Periods as of March 31, 2007

-0.59

0.31

1.21

1.84

2.74

5.07

7.13

9.89

11.57

13.30

8.06

10.25

11.89

13.02

14.63

Universe: Wilshire Large CorePercentiles: 10, 25, 50, 75, 90

Quarter One Year Two Years Goldman Sachs - Iowa -0.12 (83) 8.87 (61) 11.87 (50)Goldman Sachs - Univ 0.00 (81) 9.76 (51) 12.83 (29)S&P500 Official 0.64 (63) 11.84 (23) 11.78 (52)# of Products 259 259 259

28

Domestic Equity Manager Detail – Lotsoff


-5

0

5

10

15


An

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Qu

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Ret

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s)

Universe AnalysisUniverse AnalysisPeriods as of March 31, 2007Periods as of March 31, 2007

-0.59

0.31

1.21

1.84

2.74

5.07

7.13

9.89

11.57

13.30

8.06

10.25

11.89

13.02

14.63

Universe: Wilshire Large CorePercentiles: 10, 25, 50, 75, 90

Quarter One Year Two Years Lotsoff Capital - Io 0.52 (67) 9.86 (50) 11.66 (54)Lotsoff Capital - Un 0.49 (69) 9.91 (50) 11.63 (54)S&P500 Official 0.64 (63) 11.84 (23) 11.78 (52)# of Products 259 259 259

29

Domestic Equity Manager Detail – LSV


2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

21.00

22.00

23.00

Quarter One Year Three Years 06/2002-03/2007

An

nu

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Qu

arte

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Ret

urn

s)Universe AnalysisUniverse Analysis

Periods as of March 31, 2007Periods as of March 31, 2007

2.73

3.03

3.60

4.30

5.00

12.63

13.93

15.50

17.57

20.12

9.38

13.73

14.85

18.34

19.81

11.14

11.81

15.32

17.17

19.52

Universe: Wilshire Mid ValuePercentiles: 10, 25, 50, 75, 90

Quarter One Year Three Years 06/02-03/07 Lsv Asset Management 4.83 (16) 10.83 (94) 13.59 (78) 13.40 (64)Lsv Asset Management 4.57 (20) 10.58 (94) 12.97 (80) 12.98 (66)Russell 2500 Val 3.09 (70) 12.17 (92) 15.19 (48) 16.00 (48)# of Products 15 15 15 12

30

Domestic Equity Manager Detail – Artisan


-10

-5

0

5

10

15

20

25


An

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Qu

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Ret

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0.97

2.36

3.92

5.21

6.38

-4.54

-1.08

1.51

4.49

9.29 9.44

12.61

14.65

17.45

20.72

Universe: Wilshire Small Grow thPercentiles: 10, 25, 50, 75, 90

Quarter One Year Two Years Artisan Partners - I 0.44 (92) -4.74 (91) 9.87 (88)Artisan Partners - U 0.44 (92) -4.73 (91) 9.89 (88)Russell 2000 Gro 2.47 (74) 1.56 (49) 13.94 (57)# of Products 212 212 212

31

International Equity Manager Detail – Grantham, Mayo, Van Otterloo


1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

21.00

22.00

23.00

24.00

25.00

26.00

27.00

28.00

29.00

30.00

31.00

Quarter One Year Three Years

An

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Qu

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Ret

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2.05

2.95

3.86

4.85

6.79

12.59

16.04

19.22

21.98

25.46

17.15

18.87

20.74

23.42

27.00

Universe: Wilshire EAFEPercentiles: 10, 25, 50, 75, 90

Quarter One Year Three Years Gmo - Iowa State 3.76 (54) 19.71 (46) 20.28 (57)Gmo - University Of 3.76 (54) 19.71 (46) 20.29 (57)Msci Eafe $n 4.07 (42) 20.19 (42) 19.82 (64)# of Products 312 312 302

32

Fixed Income Manager Detail – Dodge & Cox


1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Quarter One Year Three Years

An

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Qu

arte

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Ret

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1.43

1.52

1.59

1.68

1.78

6.28

6.49

6.74

7.08

7.49

2.95

3.29

3.60

3.92

4.32

Universe: Wilshire CorePercentiles: 10, 25, 50, 75, 90

Quarter One Year Three Years Dodge And Cox (Q) - 1.44 (89) 6.73 (52) 3.49 (61)Dodge And Cox - Univ 1.43 (89) 6.69 (55) 3.48 (61)Lb Aggregate 1.50 (81) 6.59 (66) 3.31 (73)# of Products 343 343 340

33

Fixed Income Manager Detail – Reams


1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Quarter One Year 09/2002-03/2007

An

nu

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Qu

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Ret

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1.43

1.52

1.59

1.68

1.78

6.28

6.49

6.74

7.08

7.49

3.74

4.08

4.50

5.19

6.03

Universe: Wilshire CorePercentiles: 10, 25, 50, 75, 90

Quarter One Year 09/02-03/07 Reams Asset Manageme 1.48 (84) 6.55 (71) 4.21 (66)Reams Asset Mgmt - U 1.52 (76) 6.67 (58) 4.14 (70)Lb Aggregate 1.50 (81) 6.59 (66) 4.07 (75)# of Products 343 343 333

34

Fixed Income Manager Detail – Post Advisory


2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

15.00

Quarter One Year

An

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2.172.45

2.77

3.10

3.38

8.81

9.48

10.71

11.84

12.98

Universe: Wilshire High YieldPercentiles: 10, 25, 50, 75, 90

Quarter One Year Post High Yield - Is 2.92 (38) 10.44 (58)Post High Yield - U 2.92 (38) 10.44 (58)Ml Hy Master Ii 2.74 (53) 11.58 (30)# of Products 88 88

35

Glossary

Total Endowment Policy % Description

6/89 -6/99 60.00 S&P 50030.00 Lehman Gov't/Credit10.00 MSCI EAFE Index (N)

9/99 -6/01 63.00 S&P 50030.00 Lehman Gov't/Credit7.00 MSCI EAFE Index (N)

9/01 -3/02 63.00 S&P 50030.00 Lehman Aggregate7.00 MSCI EAFE Index (N)

6/02 -3/06 63.00 Wilshire 500030.00 Lehman Aggregate7.00 MSCI EAFE Index (N)

6/06 - Present 50.00 Wilshire 500030.00 Lehman Aggregate15.00 MSCI EAFE (N)5.00 NCREIF Property Index

Fixed Income/ Quasi Policy % Description

9/98 -6/01 100.00 Lehman Gov't/Credit

9/01 - Present 100.00 Lehman Aggregate

Board of Regents, State of Iowa

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