Principal Global Investors Named Co-Manager of CUIT International Equity Fund

In May 2007, Principal Global Investors will replace Jarislowsky Fraser as co-manager of the CUIT International Equity Fund.  CBIS believes that this change will better position the Fund to deliver competitive performance over the long term.

While we have seen marked improvement in the performance of the Fund since we retained Causeway Capital Management in February 2005, the investment style favored by Jarislowsky Fraser has limited the extent of this improvement.  The firm’s low turnover and large capitalization sustainable growth approach has resulted in sub-index returns for the past several years for its portion of the portfolio.  Jarislowky Fraser’s sector emphasis and focus on larger capitalization companies in developed markets has been out of sync with international investor sentiment favoring small- and mid-capitalization companies, emerging markets and cyclical issues.  While we believe that Jarislowsky Fraser’s fundamental process remains sound, we believe that Principal Global Investors, identified through our ongoing review of international managers, is better positioned to bolster the strengthening performance of the Fund while limiting volatility.

Based in Des Moines, Iowa, Principal Global Investors offers an international growth equity approach with proven success. The firm uses a quantitative process with tight controls on sector, country, capitalization and individual issue exposures to maximize the contribution of stock selection. This process also incorporates factors of investor sentiment and momentum, which in addition to fundamentals, have increasingly been requirements in successful growth investing over recent years. The firm’s approach complements the Causeway Capital value approach very effectively. A more detailed summary of Principal’s business and investment process is attached.

CBIS remains focused upon improving the investment results of the CUIT International Equity Fund, and this pending change of managers is designed to serve that purpose. International diversification has delivered significant absolute returns over recent years, and we anticipate that allocations to non-U.S. equity exposure will only increase in 2007 and future years. In addition to better controlling portfolio risk vs. the MSCI EAFE benchmark, this change will mark a clear delineation between growth and value style approaches in the Fund. After six years of value style success in global equity markets, better positioning the Fund to benefit from any resurgence in growth type stocks was also an element of our decision.

Over the past year, CBIS has highlighted the following strategies within the CUIT International Equity Fund: larger cap focus; sector overweights in healthcare, consumer staples and telecom; higher dividend yield; a valuation focus; and the increased importance of “enterprise valuation” in considering attractiveness of portfolio holdings.  After the new manager combination, with the exception of the past emphasis upon healthcare and

consumer staples sectors and significant valuation theme, these characteristics will still apply. Large capitalization exposure will now result from tactical manager decisions rather than a structural bias, however, and there will generally be more small company exposure, creating a more diversified portfolio by capitalization.

Principal Global Investors – International Growth Equity

Principal Global Investors is a Registered Investment Advisor, and wholly owned subsidiary of the Principal Financial Group, an insurer and asset management firm located in Des Moines, Iowa. Principal Global Investors manages over $200 billion in assets; $110 billion in fixed income, $39 billion of real estate and $53 billion in equity. The firm currently manages $14.5 billion in international equity assets, of which $3 billion represents the international growth equity product (since December 2000). The co-portfolio managers for the international growth equity product are John Pihlblad and Steve Larson, supported by 13 international equity analysts and four international traders. While most of the staff is located in Des Moines, research analysts and traders are also located in London and Singapore offices.

The international growth portfolio emphasizes stocks combining improving business fundamentals, rising investor expectations and attractive valuations relative to an international equity benchmark. Starting with the S&P/Citigroup BMI World ex U.S. Growth Index as a universe of stock candidates, the quantitative process ranks stocks vs. peers within four regions (Europe, Asia ex Japan, Japan and Commonwealth countries), employing separate models and different factors. These factors ascertain consensus change in EPS estimates, consensus vs. “smart” analyst estimate revisions, and acceleration in cash flow return on investment. Valuation relative to regional, industry peers is based upon discounted cash flow return on investment, as well as current price/earnings, price/ cash flow and price to book metrics. Finally, recent price momentum and price reversal data are considered to evaluate current investor sentiment towards portfolio holdings and potential buys and sells.

Based upon the ranking of stocks from 1 (best) to 100 (worst), research analysts focus each week on the top new potential buys and weaker performing portfolio holdings, qualitatively validating and interpreting data, confirming company trends (by phone, conferences and company visits) and assessing specific event risks. The co-portfolio managers make final buy/sell decisions, and will implement Principled Purchasing screening. The portfolio will contain about 200 names, with country and sector ranges of +/- 3% and active positions in individual issues held within 1% of benchmark weight. Turnover will approach 125% annually.

Should you have further questions about this manager change, please contact your CBIS Investment Advisor.

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