SVCF 2012 Financial Report Page 8

Equity
Alternatives

Fixed Income
Cash Equivalents

Balanced

Pool

Short-Term

Pool

Capital

Preservation

Pool

Long-Term

Growth Pool

Social

Impact Pool

Investment Options

45%

30%

38%

100%

52%

10%

65%

25%

2012

SVCF FINANCIAL REPORT

PHILOSOPHY

All portfolios benefit from purposeful asset allocation, diversification and
manager selection to achieve the highest returns within an acceptable
level of risk. With each investment portfolio, our philosophy is:

· Establish a strategy for asset allocation that is expected to

achieve return objectives given the level of risk assumed.

· Avoid changing strategy based on current conditions or

near-term outlook.

· Diversify portfolios by asset class and strategy to increase the

likelihood of achieving return objectives under different economic
and market conditions.

· Establish highly disciplined rebalancing strategies among

asset classes.

· Conduct rigorous due diligence of investment managers, retaining

only best-in-class, reasonably priced institutional managers who
are expected to outperform passive investment approaches.

STEWARDSHIP

SVCF's capacity to fulfill its mission is directly tied to prudent stewardship
of the financial assets that have been entrusted to us. Our investment
committee assists the board of directors in carrying out its fiduciary
duty on behalf of our donors and the communities we serve. The
committee recommends policy and provides direction for investment
of the foundation's assets. We are fortunate to have a stellar group of
committee members with diverse backgrounds and deep expertise
across both traditional and alternative investment strategies. (Visit
siliconvalleycf.org for a list of committee members.)

The investment committee periodically reviews the strategic allocation
of each portfolio to ensure appropriate exposure to current and
new asset classes, alternative investment strategies and geographies.
In 2012 the investment committee reduced exposure to long- and
intermediate-term U.S. bonds across most portfolios and added a
5 percent allocation for opportunistic strategies in our Long-Term
Growth and Endowment pools. That new allocation includes distressed
assets and emerging life sciences companies and generated a 22
percent return for 2012.