EXPANDING INVESTMENT OPPORTUNITIES THROUGH DIVERSITY

Presented by Henry Cisneros CalPERS and CalSTRS Conference San Jose, California April 25, 2006

Life at Hyperspeed Interconnected by Computers and Multi-media Tools Biotechnology Marvels Aging of Traditional Population Globalization

Year

Total

White / Non-Latino

Latino

African American

American Indian

AsianAmerican

1995

262,820

193,566

26,936

31,598

1,931

8,788

2000

281,422

194,553

35,306

34,658

2,476

10,243

2020 E

324,926

207,145

55,156

44,735

3,207

19,589

2050 E

403,686

212,990

98,228

59,239

4,405

37,589

Source: U.S. 2000 Census & U.S. Census Bureau Population Division, Population Projections of the U.S., Total Population by Race, Hispanic Origin, & Nativity

34.65 million 1990-2000: 16% growth

Fashion Trends Language and Culture Music Religion & Philosophy Sports

National Icons:

Oprah Winfrey

Bill Cosby

Shaquille ONeil

Cultural Pacesetters:

Toni Morrison

Denzel Washington

Halle Berry

Athletic Heroes:

Tim Duncan

Ken Griffey

Michael Vick

Tiger Woods

Classical Grace:

James Earl Jones

Wynton Marsalis

Leontyne Price

Jessye Norman

Moral Philosophy:

e
Martin Luther King Andrew Young Cornel West

Public Leadership:

Jesse Jackson

Condoleezza Rice

Colin Powell

Barack Obama

10.2 million 1990-2000: 41% growth

Highest Median Household Income

Cuisine Architecture Design Aesthetics Pacific Rim Commerce Literature, Religion and Philosophy Fashion

Arts and Literature:

I.M. Pei

Maya Lin

Amy Tan

Deepak Chopra

Entertainment and Fashion:

Yo Yo Ma

Vera Wang

Bruce Lee

Jackie Chan

Media and Business

Connie Chung

Ann Curry

Charles Wang

Sports:

Michelle Kwan

Michael Chang

Kristi Yamaguchi

35.3 million 1990-2000: 58% growth

Source: April 1998, Standard & Poors DRI

Increasing Influence on U.S. Culture

Music:

Ricky Martin

Gloria Estefan

Enrique Iglesias

Christina Aguilera

Marc Anthony

Movies:

Jimmy Smits

Cameron Diaz

Andy Garcia

Salma Hayek

Sports:

Alex Rodriguez

Sergio Garcia

Arantxa Sanchez-Vicario

Oscar de la Hoya

Literature:

Isabel Allende

Gabriel Garcia Marquez

Carlos Fuentes

Sandra Cisneros

Fashion:

Paloma Picasso

Carolina Herrera

Oscar de la Renta

Public Leadership:

Mel Martinez

Bill Richardson

Ken Salazar

Carlos Gutierrez

1995
Latino 28%
Latino 41%

DOF, 2025

White 54% Asian & Pacific Islander 10%

Asian & Pacific Islander 15% White 37%

African American 7%

American Indian 1%

African American 6%

American Indian 1%

Source: Public Policy Institute of California

Anglo
100 + years 95 to 99 years 90 to 94 years 85 to 89 years 80 to 84 years 75 to 79 years 70 to 74 years 65 to 69 years 60 to 64 years 55 to 59 years 50 to 54 years 45 to 49 years 40 to 44 years 35 to 39 years 30 to 34 years 25 to 29 years 20 to 24 years 15 to 19 years 10 to 14 years 5 to 9 years < 5 years

Hispanic

Male

Female

Male

Female

% of population under 20

38.7% 32.1% 25.7% 35.0%

White Non-Latino

Asian-American

African-American

Latino

Source: Market Segment Research; Population Report, Middle Series, 1996

Whites Household Size

Blacks

Hispanics

2.58

2.75

3.54

Source: 1998 Current Population Survey

Country of birth Mexico Philippines China Vietnam India Cuba Dominican Republic El Salvador Jamaica Russia Ukraine Haiti Korea Columbia Pakistan Poland Canada Peru United Kingdon Iran Total

1997 Percent Number 146,865 18.4% 49,117 6.2% 41,147 5.2% 38,519 4.8% 38,071 4.8% 33,587 4.2% 27,053 3.4% 17,969 2.3% 17,840 2.2% 16,632 2.1% 15,696 2.0% 15,057 2.0% 14,239 1.8% 13,004 1.6% 12,967 1.6% 12,038 1.5% 11,609 1.5% 10,853 1.4% 10,651 1.3% 9,642 1.2% 798,378 100.0%

Over 249,000 --31%-come from Spanishspeaking countries

Source: U.S. Dept of Justice, Immigration and Naturalization Service, Annual Report, Jan 99

Country of birth Mexico Philippines China Vietnam India Cuba Dominican Republic El Salvador Jamaica Russia Ukraine Haiti Korea Columbia Pakistan Poland Canada Peru United Kingdon Iran Total

1997 Percent Number 146,865 18.4% 49,117 6.2% 41,147 5.2% 38,519 4.8% 38,071 4.8% 33,587 4.2% 27,053 3.4% 17,969 2.3% 17,840 2.2% 16,632 2.1% 15,696 2.0% 15,057 2.0% 14,239 1.8% 13,004 1.6% 12,967 1.6% 12,038 1.5% 11,609 1.5% 10,853 1.4% 10,651 1.3% 9,642 1.2% 798,378 100.0%

Over 194,000 --24%-come from Asian countries

Source: U.S. Dept of Justice, Immigration and Naturalization Service, Annual Report, Jan 99

States

1997 Number Percent Entire nation 798,378 1 California 203,305 25.5% 2 New York 123,716 15.5% 3 Florida 82,318 10.3% 4 Texas 57,897 7.3% 5 New Jersey 41,184 5.2% 6 Illinois 38,128 4.8% 7 Virginia 19,277 2.4% 8 Maryland 19,090 2.4% 9 Washington 18,656 2.3% 10 Massachuestts 17,317 2.2%

11 Michigan 12 Pennsylvania 13 Georgia 14 Conecticut 15 Arizona 16 Minnesota 17 Ohio 18 Oregon 19 Colorado 20 Hawaii Total top 20 states

1997 Number Percent 14,727 1.8% 14,553 1.8% 12,623 1.6% 9,528 1.2% 8,632 1.1% 8,233 1.0% 8,189 1.0% 7,699 1.0% 7,506 0.9% 6,867 0.9% 719,445 90.2%

Source: U.S. Dept of Justice, Immigration and Naturalization Service, Annual Report, Jan 99

1 2 3 4 5 6 7 8 9 10 11 12

All Metropolitan Areas 798,378 New York, NY 107,434 13.5% Los Angeles-Long Beac 62,314 7.8% Miami, FL 45,707 5.7% Chicago, IL 35,386 4.4% Washington, DC-MD-VA 31,444 3.9% Orange County, CA 18,190 2.3% Houston, TX 17,439 2.2% San Jose, CA 17,374 2.2% San Francisco, CA 16,892 2.1% Oakland, CA 15,723 2.0% San Diego, CA 14,758 1.8% Boston-Lawrence, MA 13,937 1.7%

13 14 15 16 17 18 19 20 21 22 23 24 25

Dallas, TX Philadelphia, PA-NJ Newark, NJ Seattle-Bellevue-Everett, WA Fort Lauderdale, FL Detroit, MI Atlanta, GA Bergan-Passaic, NJ Riverside-San Bernadino, CA Nassau-Suffolk, NY Sacramento, CA Jersey City, NJ Minneapolis-St. Paul, MN-WI

11,061 10,858 10,801 10,692 10,646 10,019 9,823 9,788 9,518 9,167 7,654 7,529 6,859

1.4% 1.4% 1.4% 1.3% 1.3% 1.3% 1.2% 1.2% 1.2% 1.1% 1.0% 0.9% 0.9%

Source: U.S. Dept of Justice, Immigration and Naturalization Service, Annual Report, Jan 99

Home Ownership Rate:

74.4%

48.7%

48.8%

White

Black

Hispanic

Source:

Department of Housing and Urban Development Office of Policy Development & Research, US Housing Market Conditions, 4th Quarter 2001

Total 10.9 m.

African American 1.8 m.

Hispanic 2.2 m.

Asian/ Other 1.0 m.

Total Minority 5.0 m.

Source: 1998 Current Population Survey

Increase in Homeownership Percent Distribution by Group (6.2 million new homeowners)

White 59%

Ethnic 41%

Source: Department of Housing and Urban Development

Garcia Smith Lopez Rodriguez Hernandez

Martinez Lee Johnson Gonzales Williams

Source: American Demographics, June 1998

Total Households

African American Households

Hispanic Households

Asian Households

72.3%

64.6%

29.5%

32.3%

Middle Class Defined:

1989: $23,663 - $36,201 1999: $33,001 - $52,174 Source: U.S. Census Bureau

Households with Three or More Workers, The Middle Class - 5 County Area

52.5%

25.6% 19.4% 13.5% 14.0% 15.3%

27.2%

U.S. Born Latino

ForeignBorn Latino

U.S. Born White

ForeignBorn White

AfricanAmerican

U.S. Born Asian

ForeignBorn Asian

Source: Pepperdine University Institute for Public Policy The Emerging Latino Middle Class 1997

 Market Opportunities Minority driven Growth Key Industry Impacts

Consumer Goods: food clothing children needs family staples

 Transportation:

automotive sector airlines

Health Care and Personal Services: pharmaceuticals medical services senior care

Housing and Accessories: real estate homebuilding rentals furniture household appliances

Information and Entertainment: telecommunications electronic products radio and television broadcasting live entertainment

Financial Services: banking services investment products remittances

Major Companies are Deciding as Policy and Practice That They Will Creatively Address Diversity
It is a Growth Imperative Organizational Attitudes Must Reflect That Recognition Practices & Procedures Must Support It

Companies are Developing Appropriate Products and Accessible Services

Calibrate Products to the Market Refine the Message Locations: Community Accessibility

Companies are Staffing and Training for Diversity

Bilingual Staffing Training and Orientation on Attitudes and Procedures Efforts at Cultural Understanding Entrepreneurial Outreach

Companies are Communicating With Phases of Life in Mind

Refine and Target the Message Choose the Most Appropriate Communication Mediums Address Language Emphasize Aspirational Content

Companies are Investing in Financial Education to Create Economic Opportunity for the Long Run
Educate Minorities About Financial Prerequisites Stress Credit Record Preparation Teach, Persuade, Explain

Companies are Addressing the Special Needs of Immigrants

Basic Explanatory Materials Contrast to Systems in Home Countries

Companies Recognize that the Time Frame Is Immediate

Performance Objectives Trends are Accelerating

II. The Investment Sector Must Prepare the Infrastructure of the Investment Business

1. Direct rigorous analysis of trends, industry sectors, and positioning

2.

Staffing
Pipeline from higher education

3. Stable of Managers
- Experience - based knowledge - Differentiated market penetration - New networks

4. Institutional Transactions
Support firms

5. Industry Alliances
- Economic research and documentation - National networks for action

Financial Education Education and Training - Access to Higher Education

Support Public Policies to Expand the Middle Class

- Job Generation - Incomes - Healthcare

Support Asset Accumulation Strategies

- Homeownership - Investment initiatives - Entrepreneurship

Alternative Long Term Views of the Investment Sectors Interests

Pay Now or Pay Later

Invest Now and Build on that Platform Indefinitely

- Enhanced Tax Returns - Reduced Costs of Dependence - Expanded Wealth Base - Powered by Breakthrough Industries - Driven by the Human and Economic Capital of Emerging Populations