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Home My WebLink About2007 01 31 Document Given To Board Members On 01/25/07 For Regular 302 - Snow Capital Mgmt.Date: January 31, 2007 THE FOLLOWING DOCUMENT WAS GIVEN TO THE BOARD OF TRUSTEE MEMBERS ON JANUARY 25, 2007 REGARDING REGULAR AGENDA ITEM 3 02. ~,,,.,r,,,,,~:.~~: ~wsu S ~ * ~ To: From: Re: DEPARTMENT OF GENERAL SERVICES MEMORANDUM January 25, 2007 Board of Trustees Kevin Smith, General Services Director BOT January 31, 2007 Meeting I. Investment Manger RFP Enclosed please find presentation materials for each firm scheduled for interview for Investment Manager Services to the City's Defined Benefit Pension Plan. Also enclosed is a sample contract for Investment Manager Services as prepared by Bogdahn Consulting. Interview schedule is as follows: Date: Wednesday, January 31, 2007 Time: 5:00 PM Location: East Training Room, City Hall Time Manager 5:15 p.m. DG Capital 5:45 p.rn. Lateef Asset Mgmt. • 6:15 p.m. Renaissance Investment Mgmt. 6:45 p.m. Fifth Third Asset Mgmt. 7:15 p.m. Oppenheimer Capital 7:45 p.m. Snow Capital Mgmt 8:15 p.m. Galliard Capital Mgmt. 8:45 p.m. MBIA Asset Mgmt. Mandate Broad Growth Broad Growth Broad Growth Broad Value Broad Value Broad Value Domestic Fixed Income Domestic Fixed Income • Presentation materials were due to City Hall by 5:00 PM on January 24, 2007. Lateef Asset Mgmt. did not submit materials by this deadline, nor have they been received as of the date of this memo. Staff and Bogdahn Consulting are contacting representatives from Lateef to discuss this issue. We will transmit materials from Lateef as soon as they are received. Each firm has been allotted 20 minutes for their presentation and 10 minutes for questions. II. SunTrust 4~h Quarter 2006 Report Additionally, enclosed please find SunTrust's Fourth Quarter 2006 Report for your review. Due to the full schedule for this meeting, SunTrust was asked not to present their report. cc: City Manager Finance Director U:\docs\word\Memos KLS\BOT Investment Manager IV.doc VALUE EQUITY MANAGEMENT SERVICES Presented to Winter Springs Employees' Pension System Ta11UaIV 3 1 ~ 7~~ / U:ni~l .~. ~lathcws. >lana~,:in:~ llireclur __ C~ ~l_C`1Il)V ~I~I~I~LL: 1'.ACrL 1 O~~l-~ i~~~ 1 II Il~~~stment P~rfi~rm<1n~~ 6 Ill In~~estment Yrc~c~~~s 1 1 I~' ti~lana<~~m~nt I'~~5 1~) ~~ I'r~~f-~ssic~nal Stafi~ f3io~~raphi~~ ~U Overview ORGANIZATION Founded in 1980 by Richard Snow as R.A.S. Capital Management focusing on private wealth management • Registered with SEC in 1992 as an independent investment advisor ^ Established partnership structure in September 2001 • $6 billion in assets under management (December ?006) $5.8 billion in Value Equities ^ Key employees can share in equity ownership Thirty Employees 6 Investment Professionals 4 Marketing/Client Service 1 Compliance 19 Operations/Support Pa~~e 1 Overview Value Equities Fixed Income Portion of Balanced Accounts Snow Capital Investment Partners, LP (Hedge Fund) "hot~i! Assets Under I~~lana~;emcnt ~s~cta t i~~1c~• 11ana:;c~ti~ci-t llcccmhcr ?11110 $5,799 million 100 million ,,,~ •„• ~ifi,(12-I t~~illion Pa~~c Overview ~Ikshenc Cuuntc Retirement I3uard lnschut~ Foundation Asbestos ~ orkers Lu~.~l n'_ -luslin Police Retimment Scslem 13artu~~ General Emplo~ees~ Pension Fund f3artuw Police UfIicers~ Pension fund [3auehman Foundation Bcck~~ ith :~lachinen~ Cumpanc Bois Ilumc I[ndu~~mcnt Fund BSC Insurance. Ltd- tan atfiliatc ofCu~ Enterprises. hu.l Carpenters, South~cesl Ohio Region Cement ~1asons Local x699 Clearlield Cuuntc Retirement Scstem Children~s I Irdthcarc of Atlanta Children~s Ikr;pital of:Austin Colle~!e of ~~~uoster Cro~~ n Lurk ~ Seal Cumpam~ Florentine Opera of ~1il~caukee Food ~~ Commercial ~V'urkers Local »2 Ft. ~tcers Fircliehters Pension Plan Ft. hers (ieneril I.mplo~ces Pension Plan Plumber, K Pipe Fitter,. Local =i9? I larlcc-L~;nidson_ Inc. Ractheun Corporation L13.1:.~C. Local X688 Pension ~~ Retirement Say fines Plans Routers Local N7i Pension Fund Imn ~~~urkcrs. tit' Locals??-~11_?361 ~~?;-}17 St.:~u~~u,tinc I~ircfi~htcrs Pcn,iun Plan pent State l'nicersih St. Pete Beach firelighters Pension Fund liissinume Municipal Pulicc O1licers~ Retirement Plan Samaritan I Iuspital Foundation Lake Citc Firelighters R Police Pension Plans Seattle Cih Emplu~ces IZetiremcnt System Lake Cite General I :mplo~ees~ Pension Plan Sebring Firefighters I'cnsiun Plan Lifc~~~a~ Christian Resources Smithlidd Foods_ Inc_ Lu~ula l'nicersit~ S Pasadena I~ircti~~hten' Pension Plan Tv1ch1aster-Carr Supph Cumpam~ Southern lv9an land Electric Cuuper<rii~~e. Inc. \lelhuumc General Emplo~res~ Pension Plan S~cedish American I Irilth S~stum \loruan State l~niccr,its Titus~illc General Emplu~ce, Pcnsiott Fund Ne~c Enterprise Stone & Lime Cumpam~ l'niversit~~ of h1arcland Medical Scstem tie~~ lurk State Teamsters Council l:ppcr Chesaprake {lcalth System ti~urth Purt Firefiahters~ Pension Fund \V~estem Pennscl~ania Cunsenancs c~ Nnrth Purt Pulicc Officers Pension Fund falling~caler I~:ndo~cment Opertting Engineers Const. Industn ~ \1isc. Pension Fund ~~ estcrn Pennsckania Electrical I:mplu~ees~ Pcnns~i~ania Public School l:mplo~res~ Retirement Scslcm Pension ~ Insurance IYust Funds Pittshurah I Iistorc x Landmark Foundation Pa~~e 3 Overview PROFESSIONAL STAFF IiIC'I IARI3 .~.:~:'lO~~, CHIEF INVESTMENT OFFICER B.S. -Duquesne University M.B.A. -University of Pittsburgh Investment Experience: 26 years '~ .~-T Ii A~ "I~. S ~i 1' D E IZ, C i~ :-~ MANAGING DIRECTOR & RESEARCH ANALYST A.B. -Harvard University M.B.A. - Carnegie-Mellon University Investment Experience: 11 years I)AV[~ T..IAC[t, CFA MANAGING DIRECTOR -PRODUCT SPECIALIST B.S -Pennsylvania State University M.B.A. -University of Pittsburgh Investment Experience: 35 years .I()~€IE ;~ I~. ~(:'II:~~ IIfI~I~:I~< ~'~~-:t PORTFOLIO MANAGER & RESEARCH ANALYST B.S. -Allegheny College M.B.A. -University of Pittsburgh Investment Experience: 7 years .It`~til~`.1 ~~, I3I~II~:IZ, CIa_0 RESEARCH ANALYST B.S. -Georgetown University Investment Experience: 5 years RESEARCH ANALYST B.A. -Davidson College M.B.A. -New York University Investment Experience: 7 years Page 4 Overview PROFESSIONAL STAFF MANAGING DIRECTOR B.A. -Westminster College M.B.A. -University of Pittsburgh Industry Experience: 26 years .1~~:1~titiE: [.1':4I~:1i OPERATIONS MANAGER B.S. -Gannon University M.B.A. -Duquesne University Industry Experience: 15 years Page ~ Investment Performance ... ._ ,,. CHANGE IN % CHANGE IN COMPOSITE RUSSELL 3000 INDEX VALUE ADDED 4th Quarter' 8.19% 7.12% 1.07% 1 Year 16.14% 15.72% 0.42% 2 Year 15.02% 10.81% 4.21% 3 Year 15.77% 11.19% 4.58% 4 Year 22.44% 15.85% 6.59% 5 Year 13.13% 7.17% 5.96% 6 Year 12.25% 3.80% 8.45% 7 Year 14.58% 2.11 % 12.47% 8 Year 15.55% 4.29% 11.26% 9 Year 16.93% 6.33% 10.60% 10 Year 16.68% 8.64% 8.04% Inception to Date 20.44% 10.78% 9.66% 2006 16.14% 15.72% 0.42% 2005 13.89% 6.12% 7.77% 2004 17.30% 11.95% 5.35% 2003 44.87% 31.05% 13.82% 2002 -17.58% -21.54% 3.96% 2001 7.96% -11.43% 19.39% 2000 29.67% -7.48% 37.15% 1999 22.54% 20.89% 1.65% 1998 28.54% 23.95% 4.59% 1997 14.51 % 31.70% -17.19% 1996 33.85% 21.52% 12.33% 1995 50.67% 33.58% 17.09% 1994 5.01 % -2.48% 7.49% 1993 16.98% 8.14% 8.84% 1992 40.43% 6.59% 33.84% "4th quarter composite return is preliminary Performance is gross of fees. Please see Append ix for independent verifier's opinion, s chedules and required AIMR disclosures. Pa~~c 6 Investment Performance All Cap Value Composite For Periods Ending December 31 , 2006 Change in Change in Value Composite Russell 3000 Value Added 4th Quarter` 8.19% 8.10% 0.09% l Year 16.14% 22.34% -620% 2 Year 15.02% 14.33% 0.69% 3 Year 15.77% 15.20% 0.57% 4 Year 22.44% 18.99% 3.45% 5 Year 13.13% 11.20% 1 .93% 6 Year 12.25% 8.44% 3.81 7 Year 14.58% 8.38% 620% 8 Year 15.55% 8.17% 7.38% 9 Year 16.93% 8.75% 8.18% 10 Year 16.68% 11.11 % 5.57% Inception 20.44% 13.16% 7.28% 2006 16.14% 22.34% -6.20% 2005 13.89% 6.85% 7.04% 2004 17.30% 16.95% 0.35% 2003 44.87% 31.13% 13.74% 2002 -17.58% -15.19% -2.39% 2001 7.96% -4.33% 12.29% 2000 29.67% 8.03% 21.64% 1999 22.54% 6.65% 15.89% 1998 28.54% 13.49% 15.05% 1997 14.51 % 34.84% -20.33% 1996 33.85% 21.59% 12.26% 1995 50.67% 37.03% 13.64% 1994 5.01 % -1 .94% 6.95% 1993 16.98% 18.65% -1.67% 1992 40.43% 14.89% 25.54% "Fourth quarter composite return is preliminary Performance is shown gross of fees Please see Appendix for fully compliant AIMR presentations. Change in S8~P 500 Index 6.70% 15.79% 10.23% 10.45% 14.75% 6.19% 2.94% 1.13% 3.42% 5.96% 8.42% 10.64% 15.79% 4.91 10.87% 28.69% -22.10 -11.89% -9.10% 21.04% 28.58% 33.36% 22.96% 37.59% 1 .31 10.00% 7.67% Value Added 1.49% 0.35% 4.79° 5.32% 7.69% 6.94% 9.31 13.45 12.13% 10.97% 8.26% 9.80% 0.35% 8.98% 6.43% 16.18% 4.52% 19.85% 38.77% 1.50% -0.04% -18.85% 10.89% 13.08% 3.70% 6.98% 32.76% Page 7 Investment Performance ,.. 30% ^ 5th to 25th Percentile 25% ^ 50th to 25th Percentile 20% ^ 75th to 50th c Percentile may' 15% ~ ^95th to 75th Percentile c ~ 10% ---------- a ~ ! 5% • Snow Capital All Cap • Value Composite • 5&P 500 TR 0% 4 Russell 3000 Index -5% (DRI) Q 6M YTD 1Y 2Y 3Y - . SY 7Y 10Y Quarter 6 Month YTD 1 Year 2Year 3 Year 5 Year 7 Year SO Year 5th Percentile 6.96% 7.98% 17.OZ% 21.77% 28.82% 28.57% 23.19% 19.97 % 17.45% 25th Percentile 5.50% 5.66% 11.49% 14.03% 17.86% 20.09% 16.68% 15.21% 15.45% 50th Percentile 3.54% 2.89% 9.56% 11.08% 14.86% 17.40% 13.28% 12.52% 13.17% 75th Percentile 1.94% 0.94% 7.58% 8.77% 12.49°/ 14.59% 12.07% 10.81% 11.40% 95th Percentile 4.11% 1.93% 8.68% 11.30% 9.64% 8.35% 9.63% Quarter 6 Month YTD 1 Year 2Year 3 Year 5 Year 7 Year 30 Year Product 3.05% 0.94% 7.34% 11.80% 13.95% 19.82% 14.29% 15.21% 17.45% Percentile Ranking 65 76 77 41 57 28 42 24 4 Benchmark 1 5.67% 4.14% 8.53% 10.79% 11.52% 12.30% 6.97% 2.20% 8.59% Percentile Ranking 24 35 66 51 83 92 99 101 97 Benchmark 2 4.64% 2.57% 8.02°/u 10.22% 12.37% 13.00°/~ 8.08% 3.32°/, 8.70% por - ~ oo n, Page 8 Investment Performance :~L1.-(':~P ~~:1L! 6~: 1~:~)dl~[~l t~O~111'O`~11~I~: ~~ti. IZI~~+~I~:l.[. 3tlUtt ['tii)6-:ti ANNUALIZED RETURNS FROM DECEMBER 1991 TO DECEMBER 200G 22.5 19.5 16.5 a Z ~ 13.5 7 F W Q 10.5 O 7.5 45 15 2 5 8 11 14 17 STANDARD DEVIATION tihl)i~ C :1 N. ~1t~ I . Kl till l_I_ ;flail Annualized Return "?U.q-1°o 10.78°~~ Annualized Std. Uc~~iatio^ 18.60°0 15.31°~~ Annualized I~:~ces Return x).66°b Plea,e gee :lpprndi~ fur fLll~ compliant A1~1K preuuntution. COMPOSITE Total Return_ 20.44 io Std. Deviation. 18 69% RUSSELL 3000 Total Return 10.78io Std- Deviation. 15.31 20 23 26 29 32 Beta: 0.9~ R-Squared: O.G3 Inlurmation Ratio: 0.8-4 Annualized ~~rackine i~:rrur: 11.-46"0 Pa~~e 9 Investment Performance GROWTH OF ~IOMILLION INVESTED ON JANUARY 1, 1992 Total Fund Returns Gross of Advisor Fee 175 no 165 160 155 150 145 140 135 130 125 120 115 110 105 100 ~ 95 0 90 =_ 85 ~ 80 ~^ 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 -~--Snow Capital Mgt. -a-S&P 500 -t- Russell 3000 87.84 81.37 ~, 162. 140.1 123.03 104.89 62.75 72.40 51.21 42.16 39.84 34 84 38.32 34.79 33.76 25.99 27.09 26.30 36.01 14.04 16.43 17.25 6.51 20.31 29.79 33.32 29.51 24.03 23 15 15.02 18.25 r~ :.:.. 11 53 11 24 37.52 39.37 '.3.85 41.71 33.97 36.05 30 34 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Year Ending Please see Appendix for fully compliant AIMR presentation. Page 10 Investment Process ~~ Wall Street is a game of beating expectations .lust as bad things happen to good people_ bad things also happen to good companies The ps~°chological aspect of stock ~~aluation can be pleasured by relati~~e P/E ratios and analyst consensus recommendations I3}~ intensel}~ focusing on absolute performance, relative performance «~ill take care of itself Page 1 1 Investment Process We believe that opportunities are most likely sound in Maces where others arc not looking. If success is defined as beating expectations. then ~~~e look ~~-here expectations are lo~~~. Mane companies who have faded Ii-om the analysts' radal° screens are lull of value-added potential. Our success is driven by identifvin~ those companies ~tiho stand to benefit b~° beating capectations. We believe that early recognition of these situations creates opportunities to capture excess return and provide superior long-term performance. As "outside of the boa" thinkers. ~~ e believe in providing plan sponsors «~ith our best ideas. Each investment is evaluated based on its risk/reward tradeoff and its value-added potential, not on whether or not it conlorms to some narrow set of "height & weight' constraints. We believe that plan sponsors are more interested in receiving a reasonable return on their investments rather than adhering to a rigid notion of investme~lt "style correctness". Page 1? Investment Process EXPANll THE CAPITAL OPPORTUNITY SET APPRECIATION ADDF:U RISK CONTROL Page 13 Investment Process I~:~:6',~!~I)I~:I~ f~6'I'O~t"I~['!~[T1' ~;I~:'I~ All-Cap Strategy - Do not limit value-added opportunities based on a narrow set of "height ~ «ei~ht'" constraints and rigid "st}~le correctness's o C.~I'IT;~(. ~I'I'll[:CI,~~i~lO1~ Seek out undervalued. out-of-favor companies that are likely to elperience a rebound in earnings due to a potential catalytic event leading to P/E e~:pansion and higher stock price valuations: minimum price appreciation target: ~0% Only invest in companies that have sound balance sheets and solid fundamentals Refined. disciplined process yields a portfolio that is amply diversified across a .vide spectrum of economic sectors and market cap ranges Edua1-weighted portfolio guards against negatively skewing performance if a stock deteriorates Pa~e I ~4 Investment Process SNOW VALUE CONCEPT Traditional Value Management Hiuh • We believe the stocks of companies that beat Wall Street expectations produce above-average returns '° • We seek opportunities in good companies that have experienced difficulties - Expectations and relative valuations are low Low • Ignored or disliked by Wall Street analysts - Asymmetrical payoff pattern 1 s • Room for meaningful valuation improvement 1.a • Disappointments no longer punished so severely w 1.2 a d y 1.0 m ~ 0.8 0.6 0.4 Snow Value Concept Pale l S Investment Process ^ Investment ideas arise from - Business news flow - Proprietary screening models ^ Fundamental, independent research to identify the best opportunities ^ Seeking companies trading at a substantial discowlt to ow- estimate of fair value, based on normalized earnings and normalized relative P/E Database screens for relative valuations, Independent anal ~st ea ectations, ~ p 50 to 125 risk Research Potentially Portfolio • Normalized P/E Attractive 35 to ~0 Stocks Earnings news, product •Normalized problems, management Stocks earnings chances, down<7rades, ~ ~ • Target price etc. Page I6 Investment Process b'-,-•bf~u~i~- C`----st-~ucEi-}-- ~~ ~{iw~: ~~«--~rul Yortiolios are well diversified across a .vide spectrum of industry classifications and market capitalization ranges. To mitigate downside risk. only those companies with sound balance sheets and solid fundamentals are purchased. No stock is allowed to exceed l0% of the portfolio and no industry can exceed ?~°%. Having a thorough wlderstanding of compan~~-specific risk enables us to take meaningful positions where our convictions are the strongest. A t}pical portfolio consists of approximatcl}~ 3~-~0 small-cap. mid-cap and large-cap stocks, which are generall~~ equally weighted. Sell Discipline A stock is sold in a client's portfolio under certain conditions. including when: ^ The stock reaches fair valuation and its rclati~ e discounts to financial metrics revert to normalized levels • Normalized EPS ~ Normalized PiL =Target Price It is necessa-~ to maintain the desired portfolio risk profile (e.g. by~ reducing the weighting of a stock that has outperformed) ® Balance sheet deterioration necessitates selling the position ^ A fully im°esfid portfolio must make room for a newly uncovered. compelling investment opportunit}~ • 'I11e value of a stock depreciates 3U% relative to the benchmark. based on our average cost to acquire the position (The IJnron Rule). (Depending on Iurther review of risk assessment, i.c. if the compan}~ has less than 30% debt to assets. the stock might be held.) Wage ~ ~ Investment Process INDUSTRY SECTOR BREAKDOWN AS Oli DECEMBER 31, 2006 Information Technology Oil, Gas & Consumable (consolidated) Fuels 9% 8% Energy Equipment 8 Services 2% Insurance Materials (consolidated) 17% 10% Diversified Financial Services 6% Capital Markets_ 3% Pharmaceuticals 10% Industrials (consolidated) - 12% Consumer Discretionary - (consolidated) 11 °r° Consumer Staples (consolidated) 1 °i° Health Care Equipment 8 1 Supplies Health Care Providiers & 5% Services s°r° Can Weightings Small (< $2 billion) 8% Mid ($2-10 billion) 31% Medium Large ($10-50 billion) 34% Large (>$50 billion) 27% Total 100% Please sce Appendix for fully compliant AIMR presentation. Tod Ten Holdings Company % of Port. Marathon Oil Corp. 3.01 Morgan Stanley 2.90 Agrium Inc. 2.87 AGCO Corp. 2.80 Avnet Inc. 2.77 Deere Co. 2.68 Biomet Inc. 2.64 St. Paul Travelers 2.64 Health Net Inc. 2.64 JP Morgan Chase & Co. 2.54 Total 27.49 Page 18 Management Fees ~F_I'~~I2.-~T[:L1~ 1'1;~~~~1(:t:O POli~I~I~OLIOti(4~~lilli~-nlliuin~~in~) ~5~1~:T-13.aSl~:.I) F1~:1~, ~C'1i~Ut!I,1~: 0.80% on first $10 million 0.70% on nest $10 million 0.60% on balance Page 19 Bios PROFESSIONAL STAFF BIOGRAPHIES RICHARD A. SNOW CHIEF INVESTMENT OFFICER After graduating from Duquesne University, Richard received an MBA in Finance from the University of Pittsburgh in 1980. Shortly thereafter, he formed R.A.S. Capital Management, where he served as principal, managing private family assets. His success in growing these assets became well known in the High Net Worth circles of Western Pennsylvania leading to advisors of wealthy individuals to solicit Richard to manage their clients' assets as well. In 2001, Richard restructured R.A.S. as Snow Capital Management, LP in an effort to attract and retain other quality investment professionals and to grow the firm's account base, with a focus on gaining a larger presence in the tax-exempt institutional marketplace. Richard serves as the firm's chief investment officer applying his 26 years of experience as a research analyst and portfolio manager. Page 20 r ~ .. .~ Bios PROFESSIONAL STAFF BIOGRAPHICS ;~~ JOSHUA !t. SCHACHTCR, CF,1 PORTFOLIO MANAGER & RESEARCH ANALYST Joshua joined Snow Capital Management in 2001 where his duties include security research and selection and quantitative analysis as well as overseeing portfolio trading/operations. Prior to joining Snow Capital, Joshua spent time at RAS Capital, AG Edwards and GV Financial performing investment analysis, asset allocation and portfolio construction. Joshua is a 2000 graduate of Allegheny College where he earned a B.S. degree in Biology as a pre-med student and he received his MBA in Finance from the University of Pittsburgh. Joshua is also a Chartered Financial Analyst. JESSICA W. BCMER, CFA RESEARCH ANALYST Jessica joined the Snow Capital Management investment team )112006 as a research analyst. She brings seven years of experience to Snow. Her most recent position was with Jennison Associates, a large New York institutional asset management firn, where she served as a member of the equity research team. Jessica was responsible for research coverage of the companies in the consumer discretionary and consumer staples sectors. Jessica graduated from Georgetown University. She is a Chartered Financial Analyst and member of the CFA Institute. Page 21 Bios PROFESSIONAL STAFF BIOGRAPHIES NATHAN T. SNYDEI2, CIA MANAGING DIRECTOR & RESEARCH ANALYST Nathan joined Snow Capital Management, LP as Managing Director & Research Analyst in 2005. Nathan shares equity research responsibilities and assists in the investment process. He also oversees the trading department. Previously, Nathan was most recently Director of Equity Investments at Parker/Hunter Asset Management where managed several equity products. Before joining Parker/Hunter, Nathan was the Director of Equity Investments for aPittsburgh-based institutional investment firm. He also held positions as an analyst with Delphi Management in Boston and as Management and Strategy Consultant for William M. Mercer Health Care Consulting in Boston. Nathan received his undergraduate degree from Harvard University and his MBA from Carnegie Mellon University. He is a member of the Pittsburgh Society for Financial Analysts, CFA Institute and the Association for Corporate Growth. ANNE WICKLAND RESEARCH ANALYST Anne became a member of the Snow Capital Management investment team in November 2006, where she will continue her career as a research analyst. Her most recent position was as a senior associate with Prudential Equity Group in New York City, where she followed the specialty hardlines retail sector. Prior to that, Anne spent time at Credit Suisse, following the household and personal care sector, and at JP Morgan. Anne, who is fluent in French and Japanese, brings over seven years of investment research experience to Snow. Anne received her M.B.A. from New York University's Stern School of Business and her B.A. from Davidson College. Page 22 Bios PROFESSIONAL STAFF BIOGRAPHIES DAVID T. JACK, CFA MANAGING DIRECTOR, PORTFOLIO ANALYTICS & CLIENT SERVICE Dave is a seasoned industry veteran with more than 30 years experience as an investment professional, most notably as a consultant to institutional investment funds including corporate and public pension funds, endowments, foundations and insurance portfolios. His stellar career includes stints as a Senior Consultant at Yanni-Bilkey, Vice President and Division Manager in Mellon Bank's Pension Consulting Division, Regional Practice Leader at Towers Perrin and 10 years as Managing Director and Principal at Wilshire Associates. Dave joined Snow Capital Management in 2006 to head the portfolio analytics and institutional client service functions. He received a B.S. from Penn State University and an MBA from the University of Pittsburgh. Dave is a Chartered Financial Analyst, a member of the CFA Institute and the Pittsburgh Society of Financial Analysts. ~~~~, I DAVID A. MATHE~VS '-~e~'~ MANAGING DIRECTOR -INSTITUTIONAL GROUP Dave joined Snow Capital Management in 2003 and is responsible for the sales and marketing of the firm's investment management services to institutions. He has more than 26 years experience as an institutional marketing professional. After spending several years with Federated Investors as an Account Executive, he moved on as Assistant Vice President at Mellon Bank's financial services division where he marketed Mellon's services to institutions in the early 1980's. Then the aura of Wall Street and the New York Stock Exchange persuaded Dave to take on the position of Regional Director of Marketing at the Big Board calling on the Fortune 500. He returned to his Pittsburgh roots in 1989 serving as Vice President at Advanced Investment Management for 14 years. Dave received his BA from Westminster College and his MBA in Finance from the University of Pittsburgh. Page 23 ~~,' Bios PROFESSIONAL STAFF BIOGRAPHIES <JOANNE I. l'AKII~~I MANAGER -TRADING OPERATIONS & ACCOUNT ADMINISTRATION Joanne is a seasoned industry professional, bringing more than 15 years experience to her position as Manager of Trading Operations and Account Administration. Her investment industry career began at Quaker Capital Management where she spent four years managing portfolio operations and client service, performed equity research and monitored portfolio performance. She later accepted a position in Federated Investors' mutual fund marketing division negotiating mutual fund contracts and service fees with outside mutual fund families. Joanne joined Snow Capital Management in 2003 and is responsible for trading operations and account administration and serves as liaison to custodian banks. Joanne earned her BS from Gannon University and an MBA in Finance from Duquesne University. Page 24 i ~ , ASHLAND PARTNERS Independent Verifier's Report Partners Snow Capital 'vlanagcment 2100 Georgetowne Drive, Suite 400 Sewickley, PA 15]43 We have examined the compliance of Snow Capital Management, LP (the "Company") with the rcquiremcnts of the Global Investment Performance Standards (GIPS`) on a firm-wide basis from January l , 1992 through June 30, 2006 and whether the Company's processes and procedures are designed to properly construct composites, calculate performance results and present composite information in compliance with the GIPS standards. We have also examined the performance results in the accompanying disclosures of the Company's Al! Cap 6'ah~e Equity Composite from ,lanuary 1, 1992 through June 30, 2006. The Company's management is responsible for compliance with the GIPS standards, the design of its proccsscs and procedures and for the Quarterly Performance and Annual Disclosure Presentations. Our responsibility is to express an opinion based on our examination. Our examination was conducted in accordance with verification procedures as set forth in the GIPS standards and, accordingly, included examining, on a test basis, evidence about the Company's compliance ~~~ith GIPS, evaluating the design of the Company's proccsscs and procedures referred to above, performing the procedures for a pcrfrmmancc examination, and such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. In our opinion, Snow Capital Management, LP, in all material respects, has complied on a lirm-wide basis with the (TIPS standards as adopted by the CFA Institute. Also, in our opinion, the performance in the accompanying disclosures of the Company's All Cap Vahte Equity Composite for the period stated above rellects results that comply with the calculation rcquiremcnts of the G1PS standards in all material respects. The Quarterly Performance and Annual Disclosure Presentations arc an integral part of this opinion. Ashland Partners & Company LLP August 30, 2006 Experts in the Field AIMR-PPS" / GIPS" Verification & Compliance Consultation SNOW CAPITAL MANAGEMENT, LP ALL CAP VALUE EQUITY COMPOSITE QUARTERLY PERFORMANCE PRESENTATION As.Cef-{~~lj ~ItCtl~ RPt[/ritS ~iROSS Of~11117/Ip~~Q/1tPRt FL'e5 (annuali;,rd fnrperiods~reaterfhnn [one poor) 1 2 uarter Year Years 3Q - 1996 7.03"S, 4Q - 1996 15.51"0 1Q-1997 (231"61 2Q - 1997 3.36°„ z-1.83"b 3Q - 1997 23.4444. 43.97°% 4Q-1997 (8.12"~~) I-1.51°-0 1Q-1998 1205";, 37?I"~ 2Q - 1998 0.53"t~ 33.46`! ~, 29.0796 3Q - 1998 (14.04"..I (7.06"-6) 15.67"~~ 4Q - 1998 27.09"~, 2x.54"'~, 21.339h 1Q-1999 1.9R"6 12.00°-~ 23.97°0 2Q-1999 I-1.61"~ 27.69°~ 30.549b 3Q - 1999 (6.73`Sb) 38.55°%„ 13.47°~, 4Q - 1999 12.40 0 22.54°6 25.50°0 IQ-2000 I~00b 34.93 0 23.93w 2Q - 2000 4.43"6 22 95"/0 25?9" ~, 3Q - 2000 932" ~~ 44. I (I";, -11.30"~~ 4Q-2000 1.14°i, 29.67"0 26.05'50 1Q-2001 (L32"(~) 13.94"-0 x.99"6 2Q - 2001 1 1.33"-u 2 1.47° 0 22'U" ~, 3Q - 2001 (13.67"~~,) (4.0840) 17.57°„ 4Q - 2001 13.83"0 7.96°-o 18.33° 6 IQ-2002 452°h 14.3590 14.14°b 2Q- 2002 U 1.92°4~ (953"/a) 4.8394. 3Q - 2002 420'6°0) L16.-1-1"0) CIO.-17°,0) 4Q - 21102 12?8°4. (17.Sx%) (5.675..) 1Q - 21103 (-1.19"i4 r'_4.4-~°03 [7.05°'0~ 2Q-2003 zz.'yo~~ -1.90°;, (2.58°-i,) 3Q-2003 2.97".. 35.$6°% 6.39'%, 4Q - 2003 20.07° ~i -14.860.0 9?T! o 1 Q - 2004 6.7x° h 61.43°0 I (1.449b 2Q - 2004 2.53"6, 35.35'! 0 19.16'!-ii 3Q - 2004 0.89° ~ 32.62°b 34.03"~~~ 4Q - 2004 6.19'!:, 17.3Y)"~~, 30.35°,'0 1Q-2005 0.79°~ 10.71".6 33.69",~ 2Q-2005 3.66°.. 11.93°-0 23.09".. 3Q - 2005 4.68'!4, 16.14% 24. I 1 "4. 4Q - 2005 -~. I S".. 13.x9° 6 15.590„ 1 Q - 2006 6.34"„ Z0. I x°'o 15.35'!'0 2Q - 2006 (2.05°6) 1356°o 12.74"~~ 3 4 5 6 7 8 9 10 Years fears Years Years Years Years Years Years 28.61 ° ~, 22.x4°~4~ 21.73°~, 27.52°i, 27.9G'~ n 22.88°~, 26.xx46 19.86";, 24.01 " 24.18"'-6 19.70"-~ 20.69°-h 10_~°~, 4.92°'6 4.89'%0 C0 52"6) 4.R5°„ 2.78' ~, 8.83" 6 1 1.73"0 8.70°0 14.50° 0 I I.xx4s, 10.53°„ 16.7(1° b 27.7x4., 24.62°-6 29.03"-~, 19.x3°4, 27.174., 27.84"~, 23.6796, 23.9x96 2630°$ 15.50'% 21.869'0 I x.46°i6 1~.614~0 13.47" b 9.04% 9.114;, 11.84% 13.70" I ?.? x°i0 11.7644, 9.54°-~, 10.89';6, 1 1.474 ~o 9.504.0 14.91% 12.384., 12.8)°„ 15.91 26.01 ° o 20.71 "~~ _°0.35oi~ 21.99" 0 18. I~"-;~ x.26° 0 126946 8.27" 0 12.60"'~, 16.74" ~, Ii.-12o~~ 16.4x90 13.92°-~, I >.72° o I4.419~, 1 1.96°b I I . x0°-i, 10.x344. 11.484;. 13.164.6 10.30°6 19?4"~„ 13.53" 12.99'%° 12.63"6 15.x3" 6 I2 ~K'%, 17.51°~ 15.7294, 16.1044, 19?4°6 7 5.73 `% 15.50°%0 135x"~ 15.799.. 14.33"6 13.29'% 1209",~ 17.08°,~ 16.43"~~ 17.08° 6 18.57°-6 18.4490 15.07° 17.4844. 1-1.99°S, I x.50°6 18.80'%, 15.46"-S~ I (i. 164-i, 13.584„ 19.22°d, 1x.34°;, 17.10"~ 17.5641, 17.60'46 1x.39° 15.21'!„ 18.09'% 17.02"-0 16.7.1°,% 15.6391, 17.x5" 6 IS?5°~;, 17.1544, Past perfornuuicc is not indicative of future results. The Independent Verifier's Report and the Annual Disclosure Presentation arc an integral part of this presentation. 17.x9'!,', Ashland Partners and Co. LLP - 3549 Lear Way, Suite 105 -Medford, OR 97504 - T: 541.857.8800 F: 541.779.5660 SNOW CAPITAL MANAGEMENT, LP ALL CAP VALUE EQUITY COMPOSITE ANNUAL llISCLOSURE PRESENTATION Total Firm Composite Assets Annual Performance Results Year End Assets (millions) USD % of Nun- Number of (millions) Fee-Paying Accounts Composite Composite S&P Composite Gross Net 500 Dispersion 2005 3,325 445 <l% 202 13.89% 13.54°/, 4.9`%, 1.3% 2004 I?95 243 <1°/u 97 17.30`% 16.97`% 10.9`% 2.4`% 2003 310 76 <1°/u 50 44.86% 43.46°/a 28.7% 3.4°/u 2002 155 28 1 % 35 (17.58`%0 (18.41 °%) (22.1'%) 2.6'% 2001 142 18 8°/, 13 7.96`%, 6.90'% (11.9°/u) 5.7`% 2000 130 17 10°/n l0 29.67% 28.46% (9.1%) 14.0% 1999 105 1 I 17% 6 22.54% 21.38` ~~ Z I.0°/~ 14.8% 1998 108 9 17% 6 28.54% 27.32`% 38.6% 13.3°/> 1997 61 7 29`%, 7 14.519i~ 13.40'% 33.4`~~ 12.5°/„ 1996 50 6 33% 6 33.85'% 32.61`% 23.0`% 4.2°/n 1995 Z I * 4 33°,0 6 50.67% 49.31 `%~ 37.6°/u N.A. 1994 22* 2 50% Five or Fewer 5.01% 3.98`% 1.3'%, N.A. 1993 2(,* 2 50% Fivc or Fcwcr 16.98`% 15.86'% 10.1°/, N.A. 1992 18* I 67`% Fivc or Fewer 40.43% 39.14'% 7.6` ~~ N.A. N.A. - In fnrmalinn is not statistically meaningful due to ^n insu f~icieN number of pnrttinlios in the composite firr the entire year. For the period January I, 1992 ~hnmgh December 31, 1995, non-Ice-paying account, may not be included in the dotal jinn assets. All Can Value Equity Composite contains Ju/Iy discreliona»~ yahre equih~ accounts and for comparison pu~7~oses is measured against the S&P 500 Indes-. Beginning July 1, 1005, there is no account mininurm for this composite. Prior !o July 1, ?005, the minimum account sire for phis composite was $200 thousand. Prior to October /, 2002, the minimum account sire i~~as $300 Thousand and prior to January I, ?000, the minimum account sire was $100 Thousand. Snow Capital Management, LP has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS"). Snow Capital Management, LP is a registered investment adviser. The firm maintains a complete list and description of composites, which is available upon request. Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. Past pertormance is not indicative of future results. The U.S. Dollar is the currency used to express performance. Returns are presented gross and net of enanagcment fees and include the reinvestment of all income. Net of fee performance was calculated using actual management fees. Prior to July 1, ?003, net of fee performance was calculated monthly using the highest management fee of 1`% per year which was applied monthly. Beginning July 1, 2003, the All Cap Value Equity Composite includes only non-wrap accounts. On June 30, 2003, the All Cap Value Equity Composite consisted of 31 % wrap assets. Gross returns for the wrap accounts have been reduced by all wrap fees; net returns have been further reduced by 1%. The annual composite dispersion presented is an asset-weighted standard deviation calculated for the accounts in the composite the entire year. Additional information regarding the policies for calculating and reporting returns is available upon request. The investment management fee schedule for the composite is 1.00'% on accounts under $5,000,000; 0.80% on the first $10,00Q000, 0.70°% on the next $10,000,000, 0.60'% on the next ~ 10,000,000, and 0.50`% on assets over $30,OOQ000. Actual investment advisory fees incurred by clients may vary. The All Cap Value Equity Composite was created January 1, 1992. The Independent Verifier's Report and the Quarterly Performance Presentations are an integral part of this presentation. Ashland Partners & Company LLP Ashland Partners and Co. LLP - 3549 Lear Way, Suite 105 -Medford, OR 97504 - T: 541.857.8800 F: 541.779.5660 r I. FIRM BACKGROUND 1. Please provide the following contact information: Name: David A. Mathews Title: Managing Director Address: 2100 Georgetowne Drive, Suite 400, Sewickley, PA 15143 Email Address: dmathews~~snowcm.com Phone Number: 724-934-5815 Facsimile Number: 724-934-5855 Firm's Internet (www) Address: www.snowcapitalmanagement.com 2. Please give a brief history of the firm. Include the date the firm was founded, and how long the current portfolio management team has been together. Include any special expertise or experiences that would be relevant to the board. The firm was founded in 1980 by Richard A. Snow as R.A.S. Capital Management. In 1992, R.A.S. registered with the SEC as an independent investment advisor. In 2001, R.A.S. was restructured as Snow Capital Management, LP to attract new investment professionals and to focus on growing the firm's assets in the tax-exempt institutional market. What we believe is our unique competitive advantage is the fact that approximately 2.5% of our assets under management are the Snow family assets. Any buy or sell decision that we make for any client is also executed for the Snow family portfolio. One has a much different perspective when it is your money that you are managing as opposed to somebody else's. Accordingly, our objective is to add an "absolute" positive return each and every year by buying the right company at the right price at the right time. We are comfortable eating our own cooking. Richard Snow founded the firm in 1980 and has been managing assets using this same approach for more than 26 years. Since inception through December 31, 2006, our composite has annualized alpha of 966 basis points over the Russell 3000 and 980 basis points over the S&P 500. Our competitive advantage has been sustainable for 26 years and we are confident that it will remain sustainable for the foreseeable future. Our philosophy is based on two core principals: Protect the principal first, emphasizing risk control by buying only fundamentally sound companies and secondly, only then focus on growing the assets prudently by exercising well- grounded, research-based investment judgment. 3. State whether the firm is a subsidiary of, or related in any way to a brokerage firm, insurance company, bank or other entity. If applicable, please describe any material relationship (financially or otherwise) with any other entity. Snow Capital Management is an independent investment advisor and is not a subsidiary of, nor affiliate of, any brokerage firm, insurance company, bank or other entity. On January 2, 2007, Snow Capital Management entered into a revenue sharing agreement with Asset Management Finance (AMF). Under the terms of the Revenue Share Interest (RSI) agreement, AMF will provide non-voting capital in exchange for a specified percentage of Snow Capital Management's revenues for a fixed time period. The main purpose of the agreement was to provide the flexibility to transfer equity to key members of the management team and to attract new employees. Snow Capital Management maintains total autonomy over the management of the firm. AMF has no ownership interest or voting equity rights in the firm. The day-to- day operations of the firm, including investment processes and decision-making, will not change. r 4. Explain in detail any potential conflicts of interest that would be created by your firm's serving the Pension Fund. Our firm would not have any conflicts of interest in serving the Pension Fund. 5. Please state the percentage of the firm owned by the employees. List the owners of the firm (from largest to smallest with respect to ownership) and their ownership percentages. Snow Capital Management, LP is structured as a limited partnership, with employees owning 100% of the firm. Richard A. Snow is the general partner and owns a controlling interest in the partnership. Other key employees have, or will have, an option to participate in equity ownership after fulfilling an employment "vesting" period (usually three years). We believe that equity ownership acts as a strong motivational incentive for enterprising, entrepreneurial-minded investment professionals and stimulates their passion and their zest to succeed. Approximately 80°/, of the firm is owned by the principals and approximately ZO% is owned by an outside investor. 6. Please provide an organizational chart of your firm. An organizational chart is attached. 7. List the key management people within the firm, along with the number of years with the Firm and the number of years of investment industry experience. See the attached abbreviated biographies 8. State the number of investment managers employed by the firm. The firm employs six investment professionals. 9. How are the portfolio manager(s) and analyst team compensated? On what basis are bonuses determined? All employees receive a salary and are eligible for an annual bonus based on the firm's profitability. Key employees have, or will have, an option to participate in equity ownership after fulfilling an employment "vesting" period (usually three years). 10. Over the last twelve months, has there been any change in the management team? In December 2006, Carl Vuono was hired as Chief Operating Officer, replacing Nathan Snyder, CFA, who will dedicate 100% of his time to equity research and portfolio management. 11. Are there changes in the ownership of the firm anticipated over the next twelve months? No 12. During the last three years how many professional employees have left the firm? Please state the reason. Antonio Morello, research analyst, left the firm earlier early last year to pursue other opportunities. 13. Please provide the number of institutional accounts lost in the past five years and the reason for the loss. Additionally, how many clients does the firm have as of the most recent quarter-end? No institutional accounts have been lost in the past five years. The firm has approximately 75 institutional clients. 14. Provide the coverage amount of your Errors and Omission (E&O) insurance policy and the name of the insurance carrier. Our coverage is provided by the Chubb Group of Insurance Companies as follows: Errors & Omissions Liability Insurance: $5,000,000 Fiduciary Liability Insurance: $5,000,000 Directors & Officers Liability Insurance: $5,000,000 Fidelity Bonding: $5,000,000 15. Have there been any claims paid against the E&0 policy in the last 18 months? If so, please state the amount paid and the nature of the claim. There have been no claims paid against the E&O policy in the last 18 months. 16. Has your firm ever been cited by any regulatory agency that resulted in a fine, cease & desist order or other disciplinary action? If so, please explain. Neither the firm nor any of its employees has been involved in any legal proceedings or censure throughout the firm's history. 17. List all office locations and the number of individuals working in each office. Specify which office would primarily serve the Pension Board. The firm's sole office location is in Sewickley, Pennsylvania, a northern suburban community of Pittsburgh, Pennsylvania. 18. Please provide by calendar year for the trailing five years the firm's total assets under management (AUM), the total number of accounts and the percentage of assets by strategy and client type (i.e., public, corporate, high net worth)? What is the firm's total AUM as of the most recent quarter-end? 12/31 /2006 12/31 /2005 12/31 /2004 12/31 /2003 12/31 /2002 # Accts ~ Amt. (Mil) # Accts $ Amt. (Mil) # Accts ~ Amt. (Mil) # Accts $ Amt. (Mil) # Accts '~ Amt. (Mil) 'Total Firm Assets Tax-exem t 191 '~'y 86 1.177 ~; ~I; I-l ~)? IO 61 Taxable -~ I _; ~.7~~~ 3 I ?.~6~ I S I 78? S~ ~ l S 7U V-1 Total 60.1 6,024 417 3,-139 236 1,295 96 310 8o ISS Total Assets by Product'('~~ e Conunin<~led/Mutual funds O U U U U 0 U U U 0 Se crate Account 6i)-J 6,U~-1 -117 ~.-l3~) ?,6 I?9~ ~)b ; IU S(1 I ~~ Total 604 6,1124 -117 3,-339 236 1,295 96 31U 80 155 Total Assets b~~ Client Institutional (es-Watt-Flartlcv) 61 ?.07? ~6 I,O9~ ;-t -47? ~) R? d ?6 Private Client'Ketail ~~~> ;8~~ 3~-1 '.~S-4 19S ~iU7 R~ '~~~ 7(~ I I~) ~I~att-f lartle ~ (onl ~) I-t I'7 7 6O ~ 16 ? S U U Total 60-1 6,024 417 3,-139 236 1,29 96 310 KO I5~ Total AUM as of December 31, 2006: $6,024 million II. THE INVESTMENT PRODUCT ~ PROCESS Name of the Investment Product: All Cap Value Equity 1. Provide a brief statement describing the firm's approach to this engagement. The firm's investment style is active all cap value. Our approach is contrarian, fundamental, relative value. We seek low-expectations stocks with high potential for positive surprises. It is our experience that stocks of companies that beat Wall Street expectations produce above-average returns. We seek opportunities in good companies that have experienced difficulties, where expectations and relative valuations are low and the stocks are ignored or disliked by Wall Street analysts. 2. Indicate who will be managing the account and provide the number of years managing the strategy, the number of years with the firm, and the number of years of investment industry experience RICHARD A. SNOW CHIEF INVESTMENT OFFICER B.S. -Duquesne University M.B.A. -University of Pittsburgh Years Managing the Strategy, Years with the Firm, Investment Experience: 26 years 3. State the number of accounts and asset size of the accounts run by the manager(s). The firm currently employs six investment professionals. Richard Snow serves as Chief Investment Officer. Josh Schachter serves as Portfolio Manager and Research Analyst. Nathan Snyder, Jessica Berner and Anne Wickland are Research Analysts. David Jack is a product specialist. As chief investment officer, Richard Snow is the lead portfolio manager. He has specific responsibility for the day-to-day oversight of this product. He is responsible for investment strategy, asset allocation and portfolio construction. He and Josh Schachter perform security selection and equity research. He also has final decision- making authority on all stocks that are purchased for or sold from the portfolio. Analysts are responsible for equity research and screening stocks for possible inclusion into the portfolio. Richard Snow, Josh Schachter, Nathan Snyder, Jessica Bemer and Anne Wickland collaborate on research. Our investment professionals are continually engaged in communication regarding the portfolio. Formal portfolio meetings are held once per week. 4. How would this product be delivered (i.e., separate account or commingled)? In addition, please provide the fee schedule. All accounts are separately managed. The fee schedule is as follows: Asset Based Fee Schedule for Separately Managed Accounts 80 basis points on the first $10 million 70 basis points on the next $10 million 60 basis points on the balance 5. State whether the firm offers a commingled fund for any or all of your products. If yes, please indicate which products have a commingled fund and the fee associated with that product. We do not offer a commingled fund. 6. What index is the best performance benchmark for the strategy and why? We use the Russell 3000 Index as our primary benchmark. The Russell 3000 Value Index is sometimes used; however, since we area "relative value" manager, we sometimes hold "busted" growth stocks that won't be included in the Russell 3000 Value Index. Furthermore, we are indifferent as to which benchmark a client wishes to use for performance measurement purposes. We have clients that benchmark us against the Russell 3000, the Russell 3000 Value and the S&P 500 index. We feel that the Russell 3000 is the best index to gauge our performance. And, because we are an all cap manager, the Russell 3000 covers the broader market. 7. Please provide (in a spreadsheet) the sector allocation for the product by quarter relative to the benchmark index for the trailing three-year period (for a fixed income portfolio use the format outlined below). See attached Sector Allocation spreadsheet. Agency Treasury MBS ' ABS Credit !, AAA AA A BBB Less than BBB Effective Duration 8. Please provide (in a spreadsheet) the market capitalization allocation of the equity portfolio by quarter for the trailing three-year period, using the following breakpoints: < $1 B, $1 B to $5 B, $5 B to $10 B, $10 B to $20 B, $20 B to $50 and > $50. Additionally, please provide the product's weighted-average market capitalization for each period. See attached Market Capitalization spreadsheet. 9. Please describe the investment process for the product. Include specifics, such as how the initial universe of stocks is defined, the screening process (fundamental, top down, quantitative), the buy and sell decision process, whether there is a targeted tracking error to the benchmark, number of holdings, and maximum sector and security positions, the use of leverage, etc. We employ abottom-up approach to stock selection. We focus on stocks that we believe are selling at below their intrinsic value. While all of the stocks that we purchase have been oversold or beaten down for very legitimate reasons, as stated earlier, we are able to look beyond the current negative consensus and make our own evaluation as to the prospects for the company going forward. Approximately 60°,'0 of our new ideas come to us via news flow. Our investment professionals continually keep an eye out for major negative news announcements to determine if a potential new investment opportunity is developing. The majority of this news flow is generated from our Bloomberg service. Once we have identified something as a potential investment, we will begin to perform preliminary research and then continue to follow the situation for further developments. Approximately 40% of our investment opportunities are uncovered through our screening process. Our screening process employs a proprietary model in evaluating measures of value (relative P/E, tangible book value, free cash flow, depressed historical price percentage change), expectations (earnings and sales growth) and risk (leverage, relative debt levels). This quantitative screen filters the universe down to approximately 150 names. Thorough, bottom-up analysis is performed, which uncovers undervalued, out-of-favor companies that have sound balance sheets and solid fundamentals. We then comprise a list of potential "buy" candidates, which includes approximately 80 names. Most important in this process is balance sheet analysis; only companies with sound balance sheets are considered for purchase. Additional research entails the review of 10-K's, 10-Q's and 8-K's as well as participation in company/analyst conference calls. Our firm receives research reports from several brokerage firms with whom we execute trades, primarily Merrill Lynch and Morgan Stanley. We also purchase Multex and several other research publications. Although we consult outside research to broaden our information base, we make our own judgements regarding a stock's value. This has proven to be a successful approach to finding promising investment opportunities. Once we have identified a stock as a possible candidate for our portfolio, it must pass several litmus tests: • First, it must have solid fundamentals: strong balance sheet, low relative debt levels, good cash flow • Second, the issue or problem facing the company must be temporary in nature, i.e. the problem must be fixable and the company must have the financial strength to overcome the problem • Third, the majority of street analysts who cover the stock must have negative ratings on the stock; this is a signal that nearly all of the negative sentiment is factored into the stock's current price, which, to us, means that the majority of the risk has been taken out We believe a stock has two components that are measured to arrive at a stock's price. The first is the fundamental component of earnings and cash flow, which street analysts spend nearly 100% of their time trying to determine. The second component is the PE ratio, which we believe is a measure of the stock's favorability as rated by the street. Not only are we interested in a company's earnings, but we also focus a significant amount of our research on what a normalized PE ratio should be for a particular stock. Our research indicates that stocks not only trade in price ranges, but they also trade in PE ranges. We have been very successful capitalizing on stocks that have experienced PE compression, mostly as a result of low analyst expectations. Our research has shown that a stock's compressed PE will revert to the mean PE over time, provided that the company can overcome the problem that caused the PE compression in the first place. Portfolios are well diversified across a wide spectrum of industry classifications and market capitalization ranges. To mitigate downside risk, only those companies with sound balance sheets and solid fundamentals are purchased. No stock is allowed to exceed 10% of the portfolio and no industry can exceed 25%. Having a thorough understanding of company-specific risk enables us to take meaningful positions where our convictions are the strongest. A typical portfolio consists of approximately 30-40 small-cap, mid-cap and large-cap stocks, which are generally equally weighted (as a means of risk control). As stated earlier, our buy discipline does not impose any capitalization constraints on the stocks that we utilize. However, we are cognizant of the liquidity and volatility considerations of smaller cap issues and, as a means of risk control, micro-cap stocks, if utilized, are limited to one-half of the weight given to other stocks in the portfolio. Since the product is not benchmark sensitive, tracking error is not managed. Equity portfolios are generally fully invested with the cash position typically in the range of 0-6%. A stock is sold in a client's portfolio under certain conditions, including when: • The stock reaches fair valuation and its relative discounts to financial metrics revert to normalized levels Normalized EPS x Normalized P/E =Target Price • It is necessary to maintain the desired portfolio risk profile (e.g. by reducing the weighting of a stock that has outperformed) • Balance sheet deterioration necessitates selling the position • A fully invested portfolio must make room for a newly uncovered, compelling investment opportunity • The value of a stock depreciates 30% relative to the benchmark, based on our average cost to acquire the position (The Enron Rule). (Depending on further review of risk assessment, e.g. if the company has less than 30% debt to assets, the stock might be held.) 10. How long has the investment style stated in the above questions been in place without deviation? We have been managing assets using this same philosophy for 26 years with great success. Our approach takes advantage of investors' overreaction to unexpected bad news and their aversion of companies experiencing difficulties, which we believe is an inherent constant in the stock market and unlikely to change. The process has never changed and it has proven to be effective and successful. We are confident that it will remain sustainable for the foreseeable future. 11. Describe the investment environments in which your approach can be expected to outperform its benchmark/style peers, and under-perform its benchmark/style peers. Our returns have exceeded those of the broad U.S. equity market under almost all conditions and market cycle stages for the past 15 years. We have, of course, lagged the markets for brief periods, but there is no obvious connection to the market cycle in these periods. 12. Are model portfolios incorporated in the management of the strategy? Yes, our portfolios are constructed via model. 13. Describe the use of cash in the investment process. What range of cash is typical? Do you equitize the cash holding to enhance returns? Do you have a policy for staying fully invested? If so, what is your definition of fully invested? If you are not always fully invested, what factors lead you to hold cash? Is there a maximum amount of cash you are likely to hold? All of our portfolios are fully invested, which we define as 94% stock, 6% cash. The maximum amount of cash we will hold is 10%, but only until we can find another stock; the typical cash amount in a portfolio is 3-6%. Excess cash may remain uninvested indefinitely; we will not buy a stock just for the sake of reducing our cash position nor do we equitize cash to enhance returns. 14. Is there a policy regarding industry or sector diversification? What is the maximum concentration allowed in a single industry or sector? To what extent might you have large concentrations in specific industries? Portfolios are well diversified across a wide spectrum of industry classifications and market capitalization ranges. No stock is allowed to exceed 10°/n of the portfolio and no industry can exceed 25%. We do not overweight or underweight sectors or industry groups as a means to add value, nor do we inject bias into the weights given to any particular sector. Since we are bottom-up stock pickers, we are more concerned with each individual stock's risk/reward analysis rather than in which sector or industry the stock may be. Sector weights are a residual of our stock selection process. It is possible that an entire sector might be excluded from our portfolio if no stocks in that sector meet our criteria. 15. Detail the account turnover and trading costs. Does the firm employ a specialized trading procedure? If so please explain. Annual portfolio turnover in each of the last five years has been in the 25-30% range and our average commission is 5 cents per share. All portfolios are managed using the same systematic, equitable process. All portfolios are constructed via a model, i.e. all accounts hold the same 35-40 names, for the most part. Newer accounts may not receive several stocks that are in older accounts because those stocks may not have adequate upside for fresh assets. 16. To what extent are derivatives utilized. Derivatives are not utilized. 17. What methods do you use to insure "best price and execution" in trading? Snow Capital, as a fiduciary to its advisory clients, endeavors to seek best execution for client transactions, seeking to obtain not necessarily the lowest commission cost but the best overall qualitative execution. 18. What criteria does your firm use to determine that there is sufficient liquidity for the firm's total position in a stock? Portfolios are generally equally-weighted. Assuming 40 stocks in a portfolio, each stock would receive 2.5% of the allocation. There are two exceptions to this weighting scheme: 1) if the price of the stock is less than $10 per share, the stock is only allocated half of a normal position, i.e. 1.25%. 2) if the company's market capitalization is less than $800 million, the stock is only allocated half of a normal position, i.e. 1.250. 19. Please provide, by calendar year for the trailing five years, the assets under management and the number of accounts in the investment product. See item #18 in Section I 20. State whether your firm participates in any brokerage wrap programs. State whether the firms proposed product is included. Our firm participates in several brokerage wrap programs. The product had been available to tl~e wrap programs but access was closed to the wrap programs on January 1, 2006. III. RESEARCH 1. How do you obtain your research (in-house or third party)? What percentage of research is generated internally? Approximately 90% of our research is conducted internally, 10% externally. 2. Please describe how your firm obtains and pays for outside research reports. Our policy is that brokerage belongs to the client. The majority of our accounts have directed brokerage, therefore, soft dollar credits are not available. When soft dollars are available, we direct the trades to the lowest cost/best execution firm with whom we trade. This procedure is reviewed on a quarterly basis. Only 2% of trades executed are tied to soft dollar relationships. The amount of soft dollars generated was less than $10,000 in each of the past 3 years. Resources funded by soft dollars include Bloomberg and a small portion of our Advent portfolio/accounting trading system, from wf~ich all accounts benefit. 3. Please name the three primary sources of data and/or analyses upon which your firm relies. Our firm receives research reports from several brokerage firms with whom we execute trades, primarily Merrill Lynch and Morgan Stanley. We also purchase Multex and several other research publications, however, the majority of our research and analysis is provided via our Bloomberg service. Although we consult outside research to broaden our information base, we prefer to rely more on our own instincts, which are time-tested and have proven to be a successful approach to finding promising investment opportunities. IV. MISCELLANEOUS 1. Please state whether you are willing to acknowledge that you are a fiduciary of the fund as defined in the Employee Retirement Income Security Act of 1974 ("FRIBA") and Section 112.656, Florida Statutes. We acknowledge that we are a fiduciary of the fund as defined in the Employee Retirement Income Security Act of 1974 ("FRIBA") and Section 112.656, Florida Statutes. 2. Please state whether you agree that the agreement shall be construed under the laws of the State of Florida and federal law where applicable. We agree that the agreement shall be construed under the laws of the state of Florida and federal law where applicable. 3. Please state whether you agree to venue for any judicial proceeding to be in the county in which the Board sits. We agree to venue for any judicial proceeding to be in the county in which the Board sits. Organizational Chart Chief Investment Officer Chief Operating Officer/ CC U Operations ~ ~ Investments ~ ~ Marketing ~ ~ Adminislrafim~ Chief Investment OTTicer • Richard Sn.~~c Chief Operatin= Officer • Carl V~uuno Investments • Richard Sno~r • Joshua Schaditcr_ CF:~ • Jessica Bemer, CFA • Nathan Snadcr, CFA • Davc Jack. CF;~ • :~nne ~4'ickland Operations • Chuck I loath • Joanne l'akim • Ben Bannon • Nicole Gabriel • Stace~~ Cochran • Kcllp Powell • Scth Sil~cnnan 1larketinL • Da~~ Williams • ~:~,~ nteN~eh~i • Dare !~1athcws • Ed~~~ard Jenkins • Pctc Alitchcll • Gar~° SPicuzza • Jessica Leieht~~ • ;~1aria Matthcsm~s • Joe Anusu administration • Charles Rujik • Carul~n Kemer • Nancy Marnick • Donna l lorn • Ruth Prcik • Chen'I Sieben Overview PttOFE~s10N.aL STAFF CIIIEF INVESTMENT OFFICER B.S. -Duquesne University M.B.A. University of Pittsburgh Investment Experience: ?6 }cars N~.~TI~,~N ~~~. ~~~~nl~.EZ, c~I~.s MANAGING DIRECTOR & RESEARCH ANALYST A.B. - Ilarvard University M.B.A. - Carnegie-Mellon Uni~~ersity Investment Experience: 11 wars MANAGING DIRECTOR -PRODUCT SPECIALIST B.S -Pennsylvania State University M.B.A. -University of Pittsburgh Llvestment Experience: 3 ~ ~~ears POR"hFOLIO MANAGER & RESEARCH ANALYST B.S. - Alleghen}~ College M.B.A. - Univcrsity of Pittsburgh Investment Experience: 7 years RESEARCH ANALYST Q.S. - Georgeto~yn University hnvestment Experience: 5 years RESEARCH ANALYST I3.A. -Davidson College M.B.A. -New York Univcrsity Investment Experience: 7 ti~ears Overview PROFESSIONAL STAFF MANAGING DIRECTOR B.A. -Westminster College M.B.A. -University of Pittsburgh Industry Experience: 26 years OPERATIONS MANAGER B.S. Gannon Universit}~ M.B.A. -Duquesne University Industrv Experience: 15 years Snow Capital All-Cap Value Time Series - Weight Sector Weights Report Created: 31-Dec-2006 Data from 30-Sep-30 to 31-Dec-2006 Index Weight (%) -Quarterly - U.S. Dollar .:~ ~ , Materials Financial Consumer Discretionary Consumer Staples Energy Health Care Industrials Info Technology Telecommunication Services Utilities Other (Non-Sector) y.54 25.67 1U./U 1.41 9.74 21.61 11.86 9.47 0.00 0.00 0.00 100.00 ;~:: °t~° trr'2 ~~ ~'s '~3~a"e ~ ~~, :e :air - 9.50 y.y0 10.2u 12.30 12.00 24.50 22.20 23.60 19.10 16.70 12.5U 14.40 1/.yU 1ti.4U LU.lU 2.70 3.10 3.00 2.60 0.70 6.90 7.90 7.90 7.50 7.20 22.70 22.90 21.40 23.70 25.20 11.30 11.50 7.10 5.40 6.10 9.70 8.00 8.60 8.10 8.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.20 0.10 0.30 2.90 3.40 100.00 100.00 100.00 100.00 100.00 ~'~~ `d 1. ''mi'l i -r ~ i ~ r~ "'~'^ , 1*"7.45'f-~,~,"3'~~' ; ~ +~~ ~ ~.d{ .7__ a~7.~ ~ ~ :~1~~ f~, ~ ~ ~~~ 11.30 12.40 ~~ ~ 17.30 20.40 18.50 21.30 2440 t3.70 17.20 16.00 15.10 13.40 12.80 12.20 12.60 13.50 14.60 17.10 1t5.5U 1/.1U 13.40 11.4U 11.UU 12.tiU y.4U tS.bU 11.4U 0.00 0.00 0.10 1.50 1.90 2.40 3.00 5.40 0.00 6.50 6.20 8.60 10.00 9.10 8.30 8.70 8.90 20.00 29.60 30.70 27.60 22.90 20.10 18.50 17.70 14.30 14.10 6.70 6.80 7.80 7.10 7.70 5.70 3.50 3.50 10.10 7.90 8.10 6.70 7.10 6.80 7.00 5.10 6.50 10.10 0.00 0.00 0.00 0.00 0.00 0.00 2.00 2.00 0.00 0.00 0.00 0.00 1.90 2.20 2.40 2.40 2.70 0.00 3.50 3.60 5.10 4.90 10.50 9.00 10.30 9.90 0.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 ~~ ..20.30 17.30 t3./U 0.00 .;~, 23.00 11.60 °^~ °10.30 .~t~, 8.80 r` 0.00 0.00 a.oo` 100.00 100% 80% 60% 40% 20% 0% Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 DE ~ y Snow Capital All-Cap Value Market Capitalizations Report Created: 31-Dec-2006 Data from 31-Dec-2001 to 31-Dec-2006 Market Capitalizations Mid ($2-10 Billion) Medium Large ($1U-5U kiillion) Large (> $50 Billion) ._;,_ 8.00 12.00 19.UU s5.uu 31.00 34.UU 31.00 29.00 23.00 20.00 22.00 29.00 ;i4.UU 33.UU 34.UU 3U.UU 32.UU "G'L.UU 27.00 26.00 24.00 15.00 15.00 15.00 100.00 100.00 100.00 100.00 100.00 100.00 1~ ~ 34.00 34.00 35.00 ~ 30.UU 3s.u0 35.Ou 35.00 18.UU 1f5.Uu 26.00 26.00 29.00 29.00 32.00 35.00 32.00 36.00 34.00 2b.UU 25.UU 1U.UU 2ti.UU 'LS.UU 1 /.UU 2U.UU ;i4.UU 33.UU 15.00 15.00 16.00 13.00 10.00 13.00 13.00 12.00 15.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 A ~ . : f ~. T.ad9.. 4r~a... .. wd~.r:~.s1 ~.t~ ~' }'0-. y 1 ti.00 17.00 17.00 18.00 17.00 14.00 40.00 33.00 33.00 33.00 32.00 36.00 Ly.UU 34.UU :14.UU ~4.UU 3b.UU :i:i.UU 15.00 16.00 16.00 15.00 16.00 17.00 100.00 100.00 100.00 100.00 100.00 100.00 7