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HomeMy WebLinkAbout2009 07 28 Regular 600 All Cap Value Presentation by Dalton, Greiner, Hartman, Maher & Co., LLC�ahe er g a e�� 811C alp N'alue f \e''' A Presentation To The: 565 Fifth AVenue, S 210 100 -Sew York, I c _2445 July 28,2009 Je Baker, CPA Chief Investment Officer 212- 5 57 -2595 jba aghm.COm 3001 `ras-ni aii Tcau1 S°ith, Suite 206 103 S F' 239-2 ivivEdgiosom Sion and vi �HM .Mxs D --'s e ent investing across the a ging value �n goal is t© be a le century record of products a quar ter c Our overriding g° of s pecialty P returns �I� L LC has capitalization. ap Z ation a lineup r isk-adj usted D 1VI, market hall constructing competitive r isk cial to culture spectrum of fi�ndamental a nalysis c ome o ra practitioner of at achieVe highly' team _ori a ris core employee for o orientation that ownership centric, and provides every with a long h an own i dedicated, P nd make wit c li e nts. W h 1 of employeo 2nteraWe employ de nce an d make for our thrives upon a high level deVelopment• outstanding performance erfo a er consionents that vi for g rowth a to a chieve °u en ts and of opportunities •vized Our c lients °t elevated level o ignifi is who are ions t i he team's efforts. through an e1e our t1es titu individuals contributions tot f our ac tivities ele a m ember s. significant c o te am naem al standards. remain well informed a ll and professional ro. All n rem transparency, and access to will l trawith degree of 1ntegritY res ponsiv eness, the highest w111b e con ducted with t ,Results: un -.j: s Inve e Winter Springs f i Sine Incep tion 01 10 /09 s* City of Winter Spring Russe 30Q0 Value Russell 3000 DG HM AllCap Value Comp osite* Russe 3p40 Value Russe 3000 Please see Explanation of Performance. 8.9% 8.2 09 11 3,4% 1S. 4 16.8% -3.1 4.2% 16.81/4 3— Dalton, Greiner, Hartman, Maher Co., LLC Mier Significant t Buys 2Q `09 rmmarlo+r manufactures and sells specialty metals worldwide o int atio l). he High Inc. mane Me man segment produces nickel, cobalt and titanium Joe s; ce Metals segm P are fabricated into ingots, exoti metals such Nigh zirconium, um and nickel- titanium. They s and defense, chemical process industries, oil and gas, exotic metals such as zirconium, bars rod and wire. End markets Its include aerospace r oduces s tainless steel, nickel -based alloys and electrical energy and medical. Its Flat Rolled division p titanium. ahonented e lectrical steel. End market include auto and are fabricated into plate, sheet engineered strip and gr ofca technology d consumer. ATI is a ''best of class" company with a high P component, high value added product mix and low cost facilities. Opportunities include: Reflation play New low cost facilities coming on that is profitable and g enerating FCF; Strong financially 0 net de N -1. o);Recent i erbuying. stream; Decent valuation P/S 0.64 (1.65 -0.58) and P/B D TV o perates satellite pay television i .teens i Stae in the Latin mectTV Group Inc. (s) a sshare y the strength of its prang d an US. America. It the leading satellite bo D er and the second 1 its p networks and (incl uding cable e in, which and tee further has been gaining spots programming, whicc h will be further er enhanced by the a cquisition of the regional sports in the merger wth g Liberty Entertainment. They also have a strong balance sheet and free cash flow history and reasonable versus peers. As satellites are high operational leverage from growth. liberty Media, generation but valuation is attractive company has p dy owns 54 °la of be L though fixed coc bat low vocable post y called Liberty Entertainment, currently retrial announced a through g is are stock subsidiary ent and VIti Y a voting rights are contractually limited s utst Liberty 30 milli debt by 12 billion, and give on, ir^^° one, merger. The net result will lower networks, the Game Show Network, and a few other assets. John Mal DTV three regional sports netwodts, shares after the transaction, but will have 24% of Liberty to D will control about 18% sh of D DTV shares is dosing the t to simplify its it would fit well strategically with a telco own ownership the votes due to m akeii tinny to sell the company wit nicely, such as AT&T). structure and make possible DTV is reasonably priced, growing such as A H even if a takeout doesithappen, of rash flow. well positioned competitively, and generates ago g Exelon (EXC): EXC e ngages in Aeration' transmission, distribution, and sale of electaciry to industrial and wholesale customers in boorth to Illinois. The i pony p purchases and sells and natural gas on a retail facilities. purchases and sells rte el through nuclear, fossil, and hydroelectric of on roe Ast December 31, It generates e t° Y d to net rapacity December 31, 2008, EXC owned generation assets with an aggregate roximately 3.8 million customers i to n rt h n Illinois customers 1.6 The company customers distributed southeastern to app as well as natural gas 1.) and is based in Chicago, Illinois. Positives include is: V)lt High million customers in southeastern Pennsylvania, record of shareholder value creation, 2.) quality management EXC was founded xc in 1887 term track rev .ration, 4 n> ry ma nagement with excellent long sustainable FCF generation, n uclear assets located in tight power markets (91\4 East), 3.) Huge, potential NRG acquisition fading, 5.) Margin boost in 2011 on transition of to market based Overhang ri ngf for eastern and 6.) Low -risk play on eventual recovery based prong Eor eastern P]M grin prices. Inc. (OW): OMC is the premier global advertising holding company that q4% (10 -15 l0 of this segment is media buying), CRM (38 Otnnicatn Group Inc. OMC's specializes a Traditional and rernati rates Public Relations (9%), and Speaaltp Communications (9%). 44 °,'0 of sales are interne D AS• an OMG. OMC has enjoyed higher o team. Its than most networks are its co mpetition. DDB, The is led by a tenured and strong manger t te ve new age m of its g the in the company reputations. These r eputation_ ag encies are among the best >n the world and have very strong rep business. OMC also has one of the highest returns in the industry and has been able to flex down cost to grown its marketing services (57% of sales) business which has a services have grown es preserve margins. OMC has growth traditional advertising. Mark ting dieegr organic g rowth rates than rortiationali event, in-store, experienced stronger V, rn digital (web email, p mobile it the shift from his radio rk and print to d yi le and often more effective. OMC has also e This marketing v targeted, measurable erne markets. Thesis: Best -in -class mobile mark pos dung et ltTheis: ad rti -cla is grown its firm tore in near valuation ows due s including emerging advertising firm trading neat valuation lows d to the weak advertising n+adc include: S FCF a third of their end-markets are relatively stable. Other positives t scncl a ct Strong t ron generation; dividend and share buybacks; Will conduct Returns cash through S fl r (SU): SU is the original oil sands play. They own massive reserves of oil and have the ability to o production is Q3. &v looking out decades. in the process of merging with Petro Canada. Expected dosing ing is Q3. The merger will serve to diversify production and improve the balance sheet. will re his be used to fund oil sands growth. Sl, s current cu rrent PG mature properties will se ll off over debt concerns and th e[ ate rend p r ot ects d r construction during the commodity o P r SU should be able to gen growth w hil e generating FCF. Unhooked potential oil sands reserves still offer projects under construction would be uneconomic. Post merge peers. Previously, it has traded at a single upside. S pis trading upside. SU is trading at a discount to its historical range premium to peers. err with a good global TRH is a pure reinsurance company presence c eantdc 23 y hi Inc. ryy. H originally created to be one of AIGs captive reinsurers. The year history. din the AIG style Company and a 23 p (only d has been manage Company went public in as y)old 20% to the public) and Over the past 19 years TRH has actively diversified d its revenue sow overhead, a point ,Paw darns as you re last year. TRH has a go o history stream to a p where ROE only represented /grown book l value nicely. In an effort to pay down its ge nerating a mid -teens ROE and has protected/ groom what a is now just under down its debt to the Government AIG is looking to sell its ownership position from w are now valued of TRH to just under 20% (13.5 °!o aswrtnng greenshoe is e xercised) T Valuation is attractive shares has been able to protect their book and we believe this r r e n bo ok removes a major overhang on the stock. trade at 80° /0 of current book value and 6x 09E numbers. TRH value in tough years (i.e. 2005 with hurricane Katrina or 2008) and grow its book value nicely in the with 50 /50 US /International; more of a ve good international mix Ian ti ones are seeing a casu years. Business mix is attracts g° tail lines) than a property with 70F' /o /30° -o split between lines (which are considered long the strongest player ht now, however, casualty the to o positive in prang Continue to show positive development (which should help book value growth ESC capture a more We rep l a ced the Position with N gtar (N re w ard' We the position because it fa vole nsk� sold Petroleum Corp (OX� O s in o model. by 1•31_3E, was a sell We sold the P osition to be replaced PPG Industries (PPG): rasikin became it was a sell which had a1� sold the potion Ine. We S Jude Medical model rated stock in o ur because the company sold the position b of its stake in Tstr► We s pinning on be a mote :he cflk Time Warner Inc, (MX): �e acting Dice d replaced the Pos ition realized the catalyst we ctiv oppt►on t e position due a ttractive We sold upside aura an e l Inc. O m which o valuation Waste d replaced it a more co mpelling model score clical recovery D AllCap Value As of June 30, 2009 Dalton, Grainer, Hartman, Maher dr Co., I T C IMM Risk Management Through Diverslficatlon Economic Sector Weighting Comparison Top Ten Holdings 8.5% Utilities 13.4% 7.3% 23.2% Financial 23.9% 14.7% 17.3% Non- Cyclicals 14.1% 22.0% 5.8% Technology 5.1% 17.7% 10.2% Consumer Cyclicals 9.8% 11.8% 33.2% Industrial Cyclicals 33.8% 26.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% City of Winter Springs Russell 3000 Value GI Russell 3000 MMM 3M Co. IVZ IINVESCO Ltd. TDC ITeradata Corp. DGX !Quest Diagnostics Inc. SU ISuncor Energy Inc. ECA lEnCana Corp. PXP IPlains Exploration Production Co. WLL IWhiting Petroleum Corp. ESRX 'Express Scripts Inc. EXC Exelon Co 3.8% 3.7% 3.6% 3.5% 3.5 %1 3.3 %I 3.3 3.2% 3.1% 3.1 /o As of June 30, 2009 6 Y Canitalization Valuation Enterprise Value /EBITDA 7.2 Enterprise Value /Sales 1.7x 2010 Estimated P/E 12.6x As of June 30, 2009 Dalton, Grainer, Hartman, Maher Co., LLC Attractive Valuation /Quality Tradeoff 7.1x 1.7x 11.9x 8.2x 2.2x 12.6x Profitability Growth 2009 Estimated ROE 15.0% 11.0% 16.4% 5 -Year EBITDA ROA (excluding cash) 18.4% 16.5% 20.6% 5 -Year CAGR EBITDA /SHR 11.4% 10.9% 12.6% Financial Strentrth EBITDA /Interest Expense 10.6x 11.9x 14.7x Russell Russell AllCap Value 3000 Value 3000 Weighted Average Market Cap $19,054MM $58,146MM $59,257MM F 7 4 City of Winter Springs Portfolio: June 30, 2009 Dalton, Greiner, Hartman, Maher Co., LLC. PORTFOLIO APPRAISAL WINTER SPRINGS City of Winter Springs 30-Jun-09 Unit Total Market Pct. Cur. Security Quantity Cost Cost Price Value Assets Yield COMMON STOCK Industrial Cyclical 3M CO COM 1,905 53.50 101,909 60.10 114,491 3.8 3.4 ALLEGHENY TECHNOLOGIES COM 2,290 38.01 87,040 34.93 79,990 2.7 2.1 BAKER HUGHES INC COM 2,340 30.96 72,448 36.44 85,270 2.9 1.6 DOVER CORP COM 2,425 32.25 78,206 33.09 80,243 2.7 3.0 ENCANA CORP COM 1,985 45.47 90,257 49.47 98,198 3.3 3.2 GENERAL DYNAMICS CORP COM 1,435 45.18 64,833 55.39 79,485 2.7 2.7 NUCOR CORP COM 1,930 42.58 82,176 44.43 85,750 2.9 1.4 OMNICOM GROUP INC COM 2,195 31.89 69,996 31.58 69,318 2.3 1.9 PLAINS EXPL PRODTN COM 3,550 19.94 70,804 27.36 97,128 3.3 0.0 SUNCOR ENERGY INC COM 3,420 30.45 104,146 30.34 103,763 3.5 0.6 WHITING PETE CORP NEW COM 2,750 32.92 90,538 35.16 96,690 3.2 0.0 912,353 990,324 33.2 1.8 Consumer Cyclical DIRECTV GROUP INC COM 3,575 24.73 88,416 24.71 88,338 3.0 0.0 DOLLAR TREE INC COM 1,565 44.21 69,188 42.10 65,887 2.2 0.0 EBAY INC COM 4,680 14.98 70,106 17.13 80,168 2.7 0.0 GAP INC DEL COM 4,275 14.54 62,178 16.40 70,110 2.3 2.1 289,888 304,503 10.2 0.5 Dalton, Groner, Hartman, Maher Co., LLC 8 Dalton, Greiner, Hartman, Maher Co., LLC. PORTFOLIO APPRAISAL WINTER SPRINGS City of Winter Springs 30-Jun-09 Security COMMON STOCK City of Winter Springs Portfolio: June 30, 2009 Quantity Unit Total Market Pct. Cur. Cost Cost Price Value Assets Yield Technology INTERNATIONAL BUS MACH COM 625 101.42 63,388 104.42 65,263 2.2 2.1 TERADATA CORP DEL COM 4,610 16.33 75,261 23.43 108,012 3.6 0.0 138,649 173,275 5.8 0.8 Non Cyclical EXPRESS SCRIPTS INC COM 1,365 50.34 68,720 68.75 93,844 3.1 0.0 HEINZ H J CO COM 2,030 33.96 68,944 35.70 72,471 2.4 4.7 KELLOGG CO COM 1,875 39.51 74,075 46.57 87,319 2.9 2.9 KROGER CO COM 3,320 20.23 67,172 22.05 73,206 2.5 1.6 QUEST DIAGNOSTICS INC COM 1,865 48.56 90,555 56.43 105,242 3.5 0.7 TELEFLEX INC COM 1,900 39.56 75,163 44.83 85,177 2.9 3.0 444,629 517,258 17.3 2.0 Dalton, Greiner, Hartman, Maher Co., LLC 9 City of Winter Springs Portfolio: June 30, 2009 Dalton, Greiner, Hartman, Maher Co., LLC. PORTFOLIO APPRAISAL WINTER SPRINGS City of Winter Springs 30- Jun -09 Security COMMON STOCK Unit Total Market Pct. Cur. Quantity Cost Cost Price Value Assets Yield Financial CITY NATL CORP COM 1,955 35.53 69,457 36.83 72,003 2.4 1.1 INVESCO LTD COM 6,265 15.85 99,301 17.82 111,642 3.7 2.3 JPMORGAN CHASE CO COM 2,095 28.58 59,873 34.11 71,460 2.4 0.6 OLD NATL BANCP IND COM 5,630 13.71 77,162 9.82 55,287 1.9 2.9 PEOPLES UTD FINL INC COM 5,065 17.24 87,297 15.07 76,330 2.6 4.0 REINSURANCE GROUP AMER COM 2,040 33.94 69,247 34.91 71,216 2.4 1.0 TRANSATLANTIC HLDGS COM 1,870 41.86 78,274 43.33 81,027 2.7 1.8 TRAVELERS COMPANIES COM 1,805 41.98 75,765 41.04 74,077 2.5 2.9 VORNADO RLTY TR SH BEN INT 1,746 40.92 71,443 45.03 78,622 2.6 8.4 687,820 691,665 23.2 2.8 Utilities EXELON CORP COM 1,790 49.54 88,672 51.21 91,666 3.1 4.1 PUBLIC SVC ENTERPRISE COM 2,255 30.03 67,729 32.63 73,581 2.5 4.1 TELEPHONE DATA SYS COM 3,175 28.87 91,648 28.30 89,853 3.0 1.5 248,049 255,099 8.5 3.2 COMMON STOCK Total 2,721,388 2,932,125 98.2 2.0 I Dalton, Greiner, Hartman, Maher Co., LLC C 10 Dalton, Greiner, Hartman, Maher Co., LLC. PORTFOLIO APPRAISAL WINTER SPRINGS City of Winter Springs 30-Jun-09 Security CASH AND EQUIVALENTS TOTAL PORTFOLIO Dalton, Greiner, Hartman, Maher Co., LLC City of Winter Springs Portfolio: June 30, 2009 Unit Total Market Pct. Cur. Quantity Cost Cost Price Value Assets Yield CASH 51,550 51,550 1.7 0.0 Dividend Accrual 2,384 2,384 0.1 0.0 CASH AND EQUIVALENTS Total 53,933 53,933 1.8 0.0 2,775,321 2,986,058 100.0 2.0 11 1" 0% -10% -20% -30% -40% -47.9% -50% -60% -70% -80% -90% Source: dshort.com Crash of 19J.; Four Bad Bear Markets Four Bad Bear Markets Dow in S&P 500 in 1973-74 2000-02 2007-09 nominal price excluding dividends -48.296 Dow Crsh of 19)': 9/3/1929 7/8/1932 (34.2 months) 1973 Oil Crisis: 1/11/1973 10/3/1974 (20.7 months) Tech Crash: 3/24/2000 -10/9/2002 (30.5 months) Current Bear: 10/9/2007 (17 months if the low holds) 56.8% Currently 42.1% Up 33.9% from low 1973 Oil Crisis Tech Crash dshort.com -100% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 4-- Months Dalton, Greiner, Hartman, Maher Co., LLC 12 DC, Financial Crises Have Led To Deep Recessions. 0 Cumulative Loss in Output During Recessions Depending on the Financial State of Affairs As a Percent of GOP 1980 Through 2006 Preceded by Financial Crisis Not Preceded by Financial Crisis Source' Lail, S., CardareUi, R. and Seim Eiekdag, 2008. "Financial Stress and Economic Downturns," IMF World Economic Outlook (October); Empirical Research Partners Analysis. Median Loss; countries included in this study are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden. Switzerland, U.K., and the U.S Dalton, Greiner, Hartman, Maher Co., LLC 13 I) Cs And the Crises Go On for 2 Years Years 2.7 2.6 2.5 2.4 2.3 2.2 2.1 Banking Crises Average Duration in Years 1 880 Through 1997 None 1880.1913 1919 -1939 InterWar 1945 -1971 Bretton 1973 -1997 Modern Era Woods I Era Source: 8ordo, M, Eichengreen, 8., Klingebiel, D. and Maria Martinez Perez, 2001. "Is the Crisis Problem Growing More Severe Economic Policy, Vol. 16, No. 32, pp. 51.82. Dalton, Greiner, Hartman, Maher Co., LLC 14 Although Stocks Bottom After a Y $1.70 1.50 130 1.10 0 90 0.70 0.50 0 s Six Developed Market Financial Cr i Growth of A Dollar invested in Eq Two Fears Following the Onset of a Financial Crisis 1989 Through 1990 2 4 6 8 10 12 14 16 18 20 22 24 Months (Financial Crisis starts at Norway Sweden U.S. a x•ovaFiniand ..U.K. japan 2. P. Empiricl Research Pawners 191t989) and 'Financial Stress and Economic Downturns; the U. Carda:efu d and Self notnit4. 008 Sweden (9/i9911• Empirical R ill/19 arch P Source' ial crisis 5.• rued. World (9 /18 1 Ou wk (ao /b94: erg flnland (91i091). NwrwaV iniereational JSOnetarY `Financial g} nset dates: the U.S. (9/ 148 c0 Modest Inflation is Best Detab0n Of 2.5% Or tAore Source: Leuthold Group x a A r CO., 1-LC Relative Stability In Consumer Prices III la Zero gp T�oo �22.�4% 0.1% To 2 O' Inflation 2.1%To3,0% 3.1% To5.1's: Inflation Pitatio^ Average 12 Month S&P 500 inflation Returns Environmen Segmented BY �atat 1926 To Date iCatetrtelly or Markets The Leuthoid Croup 2000 1 51 To "1% 7.1%To12.0% Inflation Of {^.tlation Inflation 12.1%DrSots The ran_eof zero to. Z.4° o deflation ap pears to be a v-erz positive stork market environmen It appears that only periods of higher de- flation (2.5% or more) Penods are strong stock mar ket negatives. D G Source: Leuthold Ciroup Dalton, Greiner, Hartman, Maher dr Co., LLC Hlstoly Suggests a Better Decade Ahead Measured to March 6th, 2009, the ten year total return performance of the S &P 500 is -4.41% per year. This is the worst ten year performance in U.S. stock market history, including the great depression. When ten year annual total returns fall to I% or less, the next ten years produce an average cumulative return of +183%. The worst subsequent ten year return was +101% (Q41938 Q4 1948), with the best being +325% (Q3 1974 Q3 1984). Prior Annual 10 Year Compound Total ACR Return Return -3.65% 02193, to 021949 8.62% 129% -2.79 011939 to 011949 9.12 139 -2.74 031939 to 031949 7.74 111 -2.54 011938 to 011948 11.76 204 -1.42 011940 to 011950 9.65 151 -1.42 021940 to 021950 12.19 216 0.65 041938 to 04 1948 7.21 101 WORST -0.10 031938 to 031948 8.12 118 0.18 03 1940 to 03 1950 12.57 227 0.20 041937 to 041947 9.61 150 0 _3 04 1939 to 04 1949 9.09 139 0.44 021938 to 021948 9.52 148 0.49 031974 to 031984 15.58 325 BEST 0.71 011941 to 011951 14.47 286 1.24 041974 to 041984 14.76 296 Average 10.67% 183% 17 Fear Indicators Have Receded Last Year Marked An Unprecedented Period of Economic and Market Uncertainty fig 4 U. S. Subprime! 3.5 58 Global Credit Crisis Asia Financial Crisis 3.0 48 Russia default U.S. recession I Tech collapse 2.5 1990 recession 1 38 1st Gulf War 2.0 1.5 28- 1.0 18- 0.5 8 SJitTr.T 0.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 —VOX Index t U.S. GDP Estivate Uncertainty (6m Avg, Coefficient of Variation of NABE Economists' Forecasts) Source: ISI Portfolio Strategy JUNK BOND YIELDS (Merrill Lynchy Jun 9 13.35% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: ISI Group A Dalton, Greiner, Hartman, Maher dr Co., LLC 18 17- Dalton, Greiner, Hartman, Maher v' Co., LW Book Value /Price Earnings /Price Return-on- Equity Free Cash Flow /Sales 5 Year EPS Growth 5 Year Free Cash Flow Growth Market Capitalization Past 6 Month Price Leadership Recent Market Rally Has Been Concentrated in "Lower Quality" Equities Market Rally: 3 /6/09 6/30/09 Best -Worst Ouintile Return +59% +32% -13% -21% -4% 12% 35% -88% Cheapest Stocks Outperformed Cheapest Stocks Outperformed Least Profitable Stocks Outperformed Least Profitable Stocks Outperformed Slowest Growers Outperformed Slowest Growers Outperformed Small Caps Outperformed Large Caps Post Market Leaders Were Laggards in Market Recovery 19 IN6TI2NTIONAb CASE INDIA d Funds Savin Mn 9 c 25 t g6.8$ MIA div by VII,SHiR 68 20 80 82 g9 86 4 96 g 8 00 02 04 06 0809 98 g0 9 9 cSource:ISI Group EXPOSURE. ig LOW 1NST1TUVOt45 End EX u l IX ot t 4s 48 so 4a M ss 78 'Sr osr► _i '�`71M 40000 fond ewMPri 10000,(0010 c /00$ 00004 48M �ys,8M asse Source: BGA Research V. S. FEOE 1. FINANCES-. OUT OF CONTROL A Cb9 111 FEDERA FEDERA .,0 -refill RISK Lone onomm 995 Woo 2000 N t N 2003 SCA Research 2000 2010 AO Quarter Century ofIn v� eSt�ent Success Fu ndament a l value-driven s Proven tyle since 1982 with $922 ability in findin Million AUM* z' quality, undiscovered co product line with limited 'nPanies Diverse mited Acton assets accepted in omous ea subsidiary of Boston Product 20% Private Financial Holdings (BPFH) owned i nternally by active e mployees Signifi es' I nnovativ e e y invested alongside our equity recycling clients MidC $34MM Al tern a tive s $G7MM Dalton, Greiner, tT /elides aportio of assets he D Griner, �jatpman, Maher ors a consist ofmodel r alto,,, Ghweer, HametaN„ Co„ LL,C ao hO relationshOs with third Maher Co., does not p Ail randitianalarithorr� �,Platf°rms and totaled d23 mi!lio at 6/3009, 22 Pco,�'' j in Blocks• nt 1 Building Fund over twenty y ews experience de a�ments Pew averag extends to p ec ialists s ector p and ex perience rs Eleven e base Extensive knowledge dive aeff att pr ofitabil it y Buy very g tradeoff between 'Target ideal fundai'°ental an al y sis cture Intensive ecialists wi thin team stru Empower sector sp product line acr oss p Intent.. 1 ..-v� d to alpha generation to ou uct l rate c mre Compensation tie critical Goinp ownership is cr roa distribution. of •ob satisfaction B n aii ority enhances 1 Decision making P Bruce Geller, CFA Jeff Baker, CFA Tim Dalton, CFA 4 Ken Greiner, CFA Peter Gulli, CFA- b, Adrian Alm eida, C Dave DuSe nbury, CFA Joshua �altuch is R andall ek, CFA Dona P rter, CFA Donald CFA C E T C Harry LeV ay Barbara Kirby A Kate Schwartz Tom Gibson CF CPA Shareholder committee Shanchalder, Management ar m r" consultant Invest en Yrs. tat Yrs. ....experi 17/ 19/ 46 26 40/ 16/ 9/ 17/ 13/ 13/ 5/ 40/18 50/ 2 0/20 13/ 21/ pro fesslo s Posit ton Sector Specialist, CEO Sector Specialist, CIO ecialist, Chairman Sector Sp Vice Cha irman Sector Specialist, Sector Specialist Sector Specialist Sector S Sector Specialist Sector Spe cialist Sector Specialist Sector Specialist Ana l y st Senior Trader T rader liance� CFO, CCO (Comp ton, dreiner, Ilartman, Mier Co., LLC I YTD I Year Year 1 Year 1 pnear ear priear 1 AIICap Value* Russell 3000 Value Russell 1000 Value Lipper Multicap Value S&P 500 Peer Grou Rank (as of 3/31/09) Russell Midcap Value Lipper Midcap Value Peer Group Rank (as of 3/31/09) V2(100 Small Cap Value* Russell 2000 Value Lipper Smallcap Value Peer Group Rank (as of 3/31/09) MicroCap* Russell Microcap Value Russell 2000 Value Lipper Smallcap Value Peer Group Rank (as of 3/31/09) Enhanced Value (Net of Fees) S&P 500 HRFX Equity Hedge Index Dalton, Greiner, Hartman, Maher dr Co., LLC Comparative Product Performance: June 30, 2009 DGIIM 130/30 Fund (Net of Fees) -3.1% 2.9% 3.2% 3.2% 3.2% 9.8% -5.2% 4.6% 0.2" 4.3% 5.2% 4.6% 3.2% 6.0% 4.2% 3.2% 2.9% 21.1" -28.7% 29.0% 26.3% 26.2% 6 %tile 29.2 30.5% 28.4% 28 %tile 25.2% 23.4% 10 %tile 26.1" -27.2% 25.2% 23.4% 36 %tile -18.1" 26.2% 20.0% -25.7" Russell 3000 S&P 500 DGHM Allcap Value (Net of Fees) Peer Group Rank (as of 3/31/09) As ofJuse 30, 2009 Return data* Enbanad Value and 130 /30 are net offers. All other return data is gross effete unless otherwise noted Rankings are based on relevant peergivrep in Zsphyr managed account universe. Zephyr does not have a long/ short category. DGHM Ah ap and 130 /30 are compared to Large Cap Value universe DGHM MinoCap is compared to Small Cap Value universe. Please see Explanation of Perfinnunra 26.6% 26.2% 22.0% 2 %tile 11.2% 11.1% 10.6% 8.2% 9 %tile -12.1% -10.0% 8 %tile -11. 15.6% 12.1% 10.0% 43 %tile 0.9" 8.2% -4.4% N/A N/A N/A N/A N/A .3.6" -2.1% 2.1% 2.7% -2.2% 3 %tile 0.4% 0.9% 19 %tile (1.2 -5.3% -2.3% -1.1% 21 %tile 3.9" 2.3% 1.4% N/A N/A N/A N/A N/A `?.0 0.2% 0.2% 0.4% 2.2% 1 %tile 7.7' 4.0% 4.1% 30 %tile 5.0% 5.8% 13 %tile l N/A 5.0% 5.8% 12 %tile N N/A N/A N/A N/A N/A N/A N/A 1! 8.2% 8.1% 7.2% 7.8% 4 %tile 9.4% 8.1% 16 %tile N N/A N/A N/A N A N/A N/A N/A N/A N N/A N/A N :1 N/A N/A N/A N/A 1 10.5% 10.6% 9.2% 10.1% 0 %tile N A N/A N/A N/A N N/A N/A N/A N N/A N/A N/A N/A N N/A N/A N -:1 N/A N/A N/A N/A 25 100 90 so 70 60 50 a $7s0 Million management Active capitalization manag Rang versified by sector l -run rtfolio di returns over the 36-40 stock po eve superior risk-adjusted Investment objective is to acbt Consistent value style of investing Time-tested valuation approach Product capacity of $23 Billion five Capitalization Management Ac 30 20 10 0 ti a' �ti� mo aMidS213'S BN L rSmall<S 2.oB'S All Gap Yal u e atDGHM SLargr S gHti Annualized Returns 26.6% -30% s Year lYear 11.t Since 2 0 Y 25 Yeas InCeption 10 Years 13 Yeats 1/$3.6/09 5 Years e Russell 3000 DG 'Russell +3000 Value H1K NiCap Standard Deviation Since Inception: e17.0 1116.8 Notes: Performance through June 30, 2 009. Please see Explanation of Performance. we believe our r ch As a firm, we weights in a th fundamental research. is in-depth We Place our active 1S 1cking. making large s ector process osed to re empowered to The heart of o ur P individual stOCkP selection, as opposed a Z" co mpeten c y stock g ele Specialis IS core comp •ve a lpha from sto team of Secto P mann to derive t timing bets. Our tion�rnarke dec isions' rota final stock selection make their 1tsh this... How we a ccornp Disciplined Process Y ield s G. 17~ Universe 1,600+ ;Sell Disci-Ong 'Portfolio Construction `,i t'.l1 Every a n a l y s t product and sto is inextricably linked by one cam factor fundamental res OCt Mu ISIS-" 15135134-911 dea C51 of I ve Tea geview Research Idea Model ht sto Valuation ogpick�ng the g Proprietary y Enhance probability r Model «M1 M purpose multi- g a cto Factors: M F Valuation 4% Capital Ef ficle 34 0 Profitability 24 Composite Score (Quartile) Underva 1 Criteria F m leader with strong p in its business Stabl e to improving industry fundamentals fitability and asset utilization characteristics a shareholder value Above a verage pTO Empowers managem to e nhance Free cash fl ©w generation Strong balanCe sheet t team acting in shareholder's best interests Proven managemen H i h insider ownership Insiders buying g Searching for Value SEC Filings Company Visits Management Interviews Internal Models Upside /Downside Analysis Analyst Report Potential Catalysts to Drive Value Earnings Acceleration Restructurings/ Spin -offs Management Change Acquisition /T° Candidate Hidden Asset Value 30 Yeller, CFA B{ a pe 1 Goods, liet,01 'Tim Dalton C Basic Materials Greiner, CFA Consumer Services �lh 3 oshua altuc .f ec hrtoto: Ed "f urvill C sea t J eff B CFA l eti ttbC.a re i l,nerr.■ Peter Gum CFA l inaneilA Oneida CF Adriano ..nsP °nation DUr i�.blcs Dave Dusenbury, CFA inancia W atsek, CFA Ran tim Se r vices,'M A: p e is Team Strict ur De �n "M��prn ��e�4�. of i ndUstrY of e,�Perience depth' d breadth Y D ves an ope p erspecti ves rs diversity of 1� decision making responsibility y F o f y p inc entive curainates key Pe risk of Key Review: beam Formal report on stock idea Foy' tat committee meeting p resen b team ecialist V y b sector sp Final decision y g tnvestme1't decision? naldnK the final Who is responsible for entire portfolio? yo o versees t sector allocation? rE battles over How do you prevent to compensated? How are the Sector Specialists comp D Dam, Gnaer, Hormart, Maher LLC Portfolio Construction And Tr adlr .Port-folio Construction 35 -40 names; initial position 2.5 max Remain within weight 6% 75 -125% band of benchmark sector Seek to remain full Y weights invested (cash 3 All clients receive the same stocks min Moderate turnover reduces t dispersion between accounts ransaction costs Trading- Hi ghly experienced trading d g staff Specific expertise in sourcing liquidity smaller cap securities 32 Layers of �ver Sell Discipline: ,Multiple Risk C t p erm results t Long -Term yields Conslsten �1 1. Diversification by stock sector person risk) 2. Diversification by specialist (eliminates key p Diversification by Sector 3. w Qeff Baker) 4 DAY o versight by Team Monthly review by entire team 5. D GI IM valuation model the DGI -�N� monitors G fundamentals Policy Guidelines: forrnartce of es�ery d trailing uid eli e price quartile ne 7. Deteriorating security. Any stock in the lowest (4) feu Disciph 3 months is automatically sol�t. 8. Eliminate value traps for more t pan S Play' 0 e .DGX� Diagnostics, Inc. t Ques D a u tals_ CO rnpanY'n the U S Fu.a� e the largest diagnostic testing DGT s th is 'd stele digits. re volume and pace I g rowth o (eSOtetic) tests a New' non-traditional ener ates goo return drivers sheet g down debt ante k and pay X has an exceto buy b ack s toc DG us es its fa to and uses is at the lower end ua� at X ea rnings t 1T G tomes of its historical range. S6° S35 S5O QU0TAIAGNps'IICINC (I)GV S55 S45 S4O q b \ry d` ryti e�� o� ^\ry for $1a 11�i��ng Suncor Energy Inc. (S nnental the 0 sands 'r' Can a of oil out of life with zero eplOra'ti °n Leading producer p+ Years production reserves drive a ltl- deca I3uge e that can drive mu risk• re acreag t o develop n'O h flow from �tji11 conti1lue their cas production growth• 'cz) to obtain Merging with PetCanada, >1 sands growth nature assets to Value to o f its historical Enterprise V a ed a t the lower end W e purchased 'Reserves trading range. S1 S6O S45 S3 S15 �b SUNCORIKSERG Y Ils1C. (SU) ti B 51 DG z IGI INI All(;. p Value* Russell 3000 Value Rwsell 3000 1YR 3YR 5YR 10YR 15YR 3YR 25YR Inception $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 Annualized Returns (1/83 6/09) 21.1% -2.5% 3.6% 8.0% 11.1% 10.9% 12.7% 12.7% 4 �A Value of a -28.7% -11.2% -2.1% 0.2% 7.5% 8.2% 10.5% 10.8% 4? •DGHM AllCap Value ..."■Russel13000 Value As of June 30, 2009 Dalton, Greiner, Hartman, Maher Co., LLC Al1Cap Value Performance ti -26.6% -8.3% -1.8% -1.5% 7.0% 7.8% 10.0% 9.9% Russell 3000 V ears DG INI All(;ap Value* Russell 3000 Value Russell 3000 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 -23.6% 5.5% 16.7% 7.7% 21.6% 38.8% -22.1% 16.9% 22.1% 18.6% 9.5% 26.6% 17.8% 26.9% 2.3% 16.2% 12.4% 30.3% 7.0% 19.3% 19.9% 9.7% 18.6% 26.8% 13.5% 19.9% Annual Returns See the provided Explanation of Performance. 36.3% -1.0% 22.3% 6.9 %o 16.9% 31.1% 15.2% -4.3% 8.0%o 6.7% 13.5% 34.8% 21.6% 37.0% -2.0% 18.7% 14.9% 25.4% -8.9% 24.3% 23.6% -0.1% 18.8% 31.5% 9.3% 29.2% -37.3% 5.2% 15.7% 6.1% 12.0% 31.1% 21.5% -11.5% -7.5% 20.9% 24.2% 31.8% 21.8% 36.8% 0.2% 10.9% 9.6% 33.7% -5.1% 29.3% 17.8% 1.9% 16.7% 32.2% 3.4% 22.7% Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company. 36 A lCap Value Historical Returns o++ 1.'11 \1 111 1, 11i1 II .1000 do. I. i n 1. du, Russell 311110 1Q 9.5% 11.4% 10.8% 2Q 14.6% 11.8% 12.9% 3Q -2.9% 2.3% -0.9 40 -1.6% 1.4% -09% 1983 19.9% 29.2% 22.7% 1Q -0.7% -0.5% -4.3% 2Q 1.0% -3.6% -23% 3Q 6.4% 11.4% 9.3% 4Q 6.4% 2.3% 1.4% 1984 13.5% 9.3% 3.4% 1Q 8.7% 9.7% 10.1% 2Q 5.4% 8.7% 7.5% 3Q -4.5% -4.1% -4.5% 40 15.9% 15.0% 17.0% 1985 26.8% 31.5% 32.2% 1Q 17.3% 13.9% 14.7% 2Q 4.7% 3.7% 5.9% 3Q -5.8% -2.8% 7.7% 4Q 2.6% 3.5% 4.1% 1986 18.6% 18.8% 16.7% 1Q 182% 16.8% 20.6% 2Q 2.0% 33% 3.4% 3Q 4.1% 5.8% 6.1% 40 -12.6% 21.9% -23.0% 1987 9.7% -0.1% 1.94'0 IQ 8.9% 112% 7.7% 2Q 4.3% 7.7% 6.6% 3Q 2.9% 12% 0.3% 40 2.6% 2.0% 2.3% 1988 19.9% 23.6% 17.8% 1Q 4.8% 7.5% 72% 2Q 6.5% 7.7% 8.8% 3Q 82% 8.1% 10.1% 40 -1.3% -0.7% 0.7% 1989 19.3% 24.3% 29.3% 1Q -0.3% -2.8% -3.3% 2Q 3.3% 1.7% 5.8% 3Q -16.0% -14.5% -15.2% 40 7.6% 7.8% 9.3% 1990 -7.0% -8.9% -5.1% IQ 15.5% 13.9% 162% 2Q 1.1% 0.1% -0.5% 3Q 7.3% 5.3% 6.3% 40 4.0% 4.4% 8.8% 1991 30.3% 25.4% 33.7% See the provided Explanation of Performance. I)I,II,AI 1IICup Russell 3000 Quarter :due I IaI* Value** Russell 3000 IQ 2Q 3Q 40 1992 1Q 2 Q 3 Q 40 1993 IQ 2 Q 3 Q 40 1994 1Q 2 Q 3Q 40 1995 IQ 2 Q 3 Q 40 19% 1Q 2 Q 3Q 40 1997 1Q 2 Q 3Q 4Q 19% 1Q 2 Q 3Q 40 1999 1Q 2 Q 3Q 40 2000 3.7% 22% 6.4% 14.9% 9.7% 2.8% 52% 0.0% 18.7% -3.3% 0.4% 3.7% 2.8/a -32% -1.7% -23% -2.0 6.1% 8.9% 63% 8.9% 8.4% 8.7% 3.6% 6.3% 26.9% 37.0% 5.4% 55% 2.0% 1.9% 2.2% 2.8% 7.3% 10.0% 17.8% 21.6% 1.3% 2.3% 11.3% 14.8% 14.0% 10.3% -15% 4.2% 26.6% 34.8% 11.1% 11.3% -4.1% 0.1% -12.5% -122% 17.5% 16.0% 95% 13.5% -10.0% 0.6% 19.9% 11.7% -7.4% -9.7% 18.6% 5.1% 18.6 6.7% 5.9 0.7% -3.3% -4.2% 82% 7.8% 10.1% 3.9% 22.1% 8.0% 0.5% 2.6% 7.1% 12.4/0 6.3% 0.5% 4.1% 4.5% 16.2% -1.3% -1.3% 1.6% 0.9% 32% 7.0% 9.6% 42% 0.8% 3.7% 1.8% 10.9% -3.8% -0.5% 5.3% -0.5% 0.2% 9.0% 9.4% 9.0% 52% 36.8% 5.5% 42% 3.0% 7.7% 21.8% 0.9% 16.8% 9.3% 2.4% 31.8 13.1% 1.8% -112% 21.4% 24.2% 3.4% 7.7% -6.6% 162% 20.9% 4.6% -3.5% 0.7% -9.0% -7.5% Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company. Dalton, Greiner, Hartman, Maher Co., LLC DG IN, AIICap Russell 31011 Quarter Value Total* Value** Russell 3110■** 1<< 2Q 3Q 4Q 2001 1Q 2Q 3Q 40 2002 1Q 2Q 3Q 40 2003 1Q 2Q 3Q 4Q 2004 1Q 2Q 3Q 40 2005 1Q 2Q 3Q 40 2006 1Q 2Q 3Q 40 2007 IQ 2Q 3Q 4Q 2008 1Q09 2Q09 7.6% 5.4 -12.0% -11.1% 20.4% 8.0% 16.9% -43/ 7.8% 4.5% -14.8/ -8.0% -22.7% -19.0% 9.7% 8.9% -22.1% -152% -7.4% -4.9% 19.5% 17.7% 7.9'/0 2.5% 162% 14.4% 38.8% 31.1% 4.1% 3.3% 2.5% 0.9% -0.2% 1.4% 142% 10.6% 21.6% 16.9% -0.3% -0.3% 1.1% 2.0% 5.5% 3.8% 1.3% 12% 7.7°/ 6.9 7.3% 6.6% -2.3% 0.3% 3.5% 5.9% 7.5% 8.1% 16.7% 22.3% 0.8% 1.3% 6.6% 4.7% 2.7% -0.8% -4.3% -5.9% 5.5% -1.0% -3.9% -8.6% 42% -52% -5.4% -5.3% -19.4% -22.4% -23.6% -363% -12.5% 17,0% 182% 16.8% 12.2% 6.9% -15.6% 11.8% -115% 1.0% -13.1% -172% 8.0% -215% -3.0% 16.2% 3.4% 12.4% 31.1% 2.2% 1.3% -1.9% 102% 12.0% -22/a 2.2% 4.0% 2.0% 6.1% 5.3% -2.0% 4.6% 7.1% 15.7% 1.3% 5.8% 1.6% -3.3% 5.2% -9.5% -1.7% -8.7% -22.8% -37.3% 10.8% 16.8% 37 Cap Value 's' Be11C u I 40 °/0 30 20 1eo 0 -40 y 8����ti� c ti Value Russell N C)C)ee °'t' --r'. --r --N Nc,\--)--.7Qc) S ^.,4\ ti.)q: ^,472 Pe ti )cbA) �'�ti8 ^tip ti �„SSell tG�4 polCap value* e. a are tradema by prank Russell Company. 112� Explanation of Pe ttosmanc See the provided Exp the Russell 2000 and Ruse please note all references to Dalton, Greiner, Hartman, Maher Co., LLC Performance Statistics: Since Inception (1/1983) DGHM AllCap Value Russell 3000 Value Annualized Return Since Inception (1/83) ALPHA BETA Standard Deviation Information Ratio Sharpe Ratio Upside Capture Downside Capture Correlation to Benchmark (R2) Average Turnover Tracking Error Please note all references to the Russell 3000 Sharpe Ratio is calculated using Citibank 3 Month T -Bill As of June 30, 2009 12.7% 2.4 0.96 16.8% 0.27 0.46 101 83% 81% 61 %1 and Russell 3000 Value are trademarked by Frank Russell Company. 10.8 15.8% 0.37 39 DGHM Professionals Bruce H. Geller, CFA Mr. Geller joined DGHM in 1992 and is Chief Executive Officer and a Shareholder. He is also a Member of the firm's Management Committee and t Albany, t wher Preciously, he received he his B.S. worked as an Analyst in the Public Finance Department at Bear, Steams Co., Inc. He is a Summa Cum Laude graduate from the State University of New Bork a in Business Administration in 1991. Mr. Geller is currently Chaimtan of the Advisory Board for the Center for Institutional I nvestment Man any, Jeffrey C. Baker, CFA agement (CIIM based in Alban Mr. Baker joined DGHM in 2000 y' NI'. is Chief Investment Officer and a Shareholder. He is also a Member of the as an y in 1988 and received his MBA in 1994 from New York University. firm's Management Committee e Analyst at Merrill Lynch Asset Managemen[ He graduated graduated from Directors. From 1998 to July 2000, he was a Vice President and Equity Analyst at Prudential Investments. Previously he worked Timothy G. Dalton, Jr., CFA Princeton University Dalton alton has been DGHM's Chairman since 1990, Mr. a to ns Chief Investment Officer, and is a Shareholder. He is also a Member of the firm's Management Co Capital Inc. a rom Investment s m il October ,an hewas hief Executive Officer from April 1990 to December 2000, Committee and Board he was President From Capital I substantial From pension Senior Vice President of O From ts par 1982 p to enh 1 er he was President and CEO�ofhe October P [assets and also served as Director of Research and Co-Chairman and a partner of its anent O Dillon, Read President and Director a The Robinson assets and Company e sad as Man parent, Oppenheimer C men Co. At O M.A. degree a e in Economics of h em Princeton University in 1962. Mr. Dalton is a former Director Franklin it ork a ,_•firm's Investment Polic Co PP® hemmer Capital, i Personally aging Partner ec or oftCapital Investors. He graduated Anfrosts Northwestern University y1oualy served as Senior Vice Kenneth J. Greiner, CFA ry of Security Analysts. in 1960, and received an Mr. Greiner is DGHM's Vice Chairman. He was Chief F'�° ^••rive Officer from 2001 -2006, Mr. wa a Senior Vice President a Dillon, Reads Chief Inc. Previously, O and is a eti re ant E From May 1f 90 l eve January 2005 years, a was President. was S a Senior From June 1983 to April Analyst and Member of the Investment Committee. From 1968 to 1972, he was associated with C'- with the College Retirement Equities Fund for eleven years, where he was a Senior Portfolio Man er, and received his M.B.A. from Baruch Co de in From 1 Bank as an Analyst and Portfolio Manager. He graduated from Analyst Peter A. Guth, CFA BuclmeQ University in 1967, n G Mr. ul1i joined DGHM in 1999 9 and is a Senior Vice President and Shareholder. From 1994 to 1999 he was a Vice president and Equity Mt. G as a n DGHM Analyst Vice Management group at Chase. Mr. Gulp received a B.B.A. in Finance from the University of Notre Dame ark. Previously, fie Dame in 1992 Adrian F. Almeida, CFA and a M.H.A. from Mr. Almeida joined DGHM in 2004 and is a Senior Vice President and Shareholder. From 1999 to 2 004 he was an Equity Analyst at The Dreyfus Corporation, where he covered the Autos, Transportation, Telecom Services, and Utilities sectors. Previously, he worked at Physical Acoustics Corporation as a Research Engineer. He received a MS in Aerospace Engineering fro Embry Riddle Aeronautical University in 199 4, and an MBA from Columbia University in 1999. David S. Duaenbun-, CFA u D Mr. de n bury DGHM joined D in 2005 and is a Vice President and Shareholder. From 2002_ con Mr. Du Previously, worked in equity- 2002-2005 he was an Equity Analyst at Dionis Manac.� 4 research at Credit Suisse First Boston (1994 -2002) and Salomon Brothers where he was responsible s F 1e88 to 1991 David worked in the investment conaultin t, a f focused solely on financial rehires finance a tor F N9 York University g group of Vii Joshua A. VW'altuch llianm Mercer. He graduated from The University of Massacsetts in 1988 my in the mortgage and received his MBA in Mr. 'aluch joined DGHM in 2007 and is e president and Shareholder. tn a Vic From 2 005 -2007 he was a Mr. It The Dreyfus Corporation from 1999-2005. Vic 05. From 1994-1997 reworked From as an investment 5 -2007 banking ad tad from Senior Research Analyst with The e n d the Company. Donaldson dlo, he worked e an equity gx om Yeshiva University Sy Syms School of Business in 1994 and received an Columbia B analyst first for PaineWebber and then for Donaldson Lufkin J MBA from Columbia H School in 1999. Dalton, Greiner, Hariman Maher Co LLC Jenrette. He 40 A DGJJ MProfessi o nals Randall F. Dl ataek III, CFA Mr. Associate for TQA Investors; Bra Watsek first joined DGHM in 2002 he was a Research Analyst at DG and is a Vice President and S President k fi stfo i Man HM. From 2001 io 2002 hareholder, From 2006 to Business with ��,,..o alter in the high-yield he was a Research 2007, he was a consul ra at Analytical 01 to loans Analyst at Kubv.Gottheb consultant to DGHM, focus' Finance sand A ted t o ns it group at City National Bank. Mr. Watsek receive a dM B .A. from mi the U on ivvnd ty o C 1996 i a From 2 002 to 2005 Donald S. Porter, CFA and a B.A. from m to Mr. Porter joined m C "nt M an M.B.A. from the 2000 he was a Vice Ioined DG College with a dual major in L'mversity of Chicago Graduate School strategy hedge fund. Hel 2005 as an Investment Analyst 1 n Ecoao of Bucknell University g his career Y and is a Shareholder, mtc and History in 1996 oied in 2002. as a Legislative Correa Prior to oinin j Correspondent for U.S. Congressman DGHM, ada Porter Barbara M. Kirby George Radanovich of was art California. Mr, Porter received a B Stamford based multi Ms Kirby is a Senior Vice President, Head of A. in Economics from 1989 Tradi a a Shareholder. S February bec am e a membe of the trading She is responsible for the Jinn's Kate B. Schwartz and in Febru g de Pa+tment. Sh is a membe of Trader Forum, an industry tradi Ma trading activities. Ms. Schwartz m, us Kirby joined Dillon Read Capital artz joined DGHM try or$ ,.,•ioa. P in Nov HM in 2000 and is a Vice President ember 1988 graduate of Lafayette College, where she Ted der, and a Shareholder. Thomas F. received a B.A. in Economics Previously, she worked on the Gibson, CFA, CPA Schwartz is a and Spanish in 1995. High Yield trading Mr. Gibson joined DGHM in 2005 desk at Bear, Steams Co. Inc. Ms. to 2003 and is he was the Chief Compliance Chief I "al Officer, Chief Compliance Officer, and a Shareholder. Mr. G ibs 05 and is Officer Chiand Chief F4-----'-' cer, Mr. Gibson received a B.S.B.A from Suffolk r Officer of Bingham [,egg Advisers He is s a M ember of the firm's Management Committee. From 1999 Ile Lniversity in 1986, an M.B.A LLC. Dolores A. Mr. Gibson from Suffolk an lk L'ttiversit Previously he worked as a Finance Ms. Casaletto has been y in 1990, and an °a nCe Manager with Investors with DG M S F in Finance er wi and January 1981 to November HM since 1990 and is currently artce fi'om Bentley College in Bank Trust J nuary 1 tuber I y a Shareholde g m 1999. Mort in the DGH she worked in Marketing at Shareholder and Senior Vi Mortgage Consultant Vice P resident in char Financial Services Read Capital and O charge of 1 Erika B. Do Dtviaion of Chase Manhatt PPenheime Capital res and Human Resources, From nalda, CpA Bank. PeCtn'efy From July 1971 to December m December 1984 to Ms. Donalds joined DGHM in 1980, she was a S April 1990 DGHM. Ms. Donalde m 2002 and is currt7ttl •the r and a Share Senior Atlantic University graduated Magna Cum Laude Company's Controller y and is a Certified Public fro the Florida State a University, holder' She P uaty held the Positions of Senior Acco Accountant. ret$° Edward W. where she received a B.S. Turrille, CFA m Accounting. She also tart and Portfolio Ad Mr. Turvtlle is an Indust holds a Masters of Accountin [tarot at securities firms n' Consultant to DGHM h'om Florida rms in Dallas, New Yo and has been associated with the firm since 1990. was Vice President n dust and Atlanta. From I research at the Robinson Atl tattm 1984 to 1989, Mr. Turville was Mr. Ttt^ ille's background includes 19 arc phrey Compare} Mr. Turville is Senior Vice President of Harry Vice Lr rid a graduate of Research at Jot' years experienc in Mr. LeVa Rice University with Lane, Space, Smiths investme a` Mr. Tnrti esearch with Y has been a Consultant to an advanced de Co. C Prior to positions with Cowen DGHM since 1998, degree in Accounting. lle Aµen He be Economics Gant New York Co., and Laird, He retired from began his career as University m Paine the y. Analyst in the research offices of Hdu yid 1 Inc. nc. after re Webber in 1994 at which time Dalton serving four years in the U.S. Nary. me he was an °a Trust Co, of New Greiner, Hartman Maher Co LLC President. has held a an Assistant Vice York and Mr. LeVay received senior analyst his B.S. in Finance and 41 1 D tla"s� tics Sta tis returns market rn o r the portfolio not explained by the the benc annualized return. the covariance of the manager and excess return portfolio bus th (beta) r isk adju of the i It 's defined as w eigt►ng I ts: is the (1' annualized return of the portfolio t that of the virtual security, mu Rem"'' annual :ens the beta of each incU rr can an a to dad Rera due geitivity of It i derived by taking b s of b accordingly to determine individual alga product nn the benchm eta at►c (market) red in term measures systematic va riance exposure m easured is diem utilized returns of the P divided by dollar exp portfolio and weigh �enchmatk di is the total i the P a nus ed Market t hat exposure. ri of each security' ark is negative; periods. m (active return) tth ap propriat el y lord io w hen the benchma those same P utilized excess Leto t hem pP calculates the stare chniark's returns captured of the benchmark annualized f the portfolio. a mount °f due b the ann ualized benchmark. It is defined as the price Sl"ft: divided which the benc Le ti period. value of deviation represents the am negaaVe, ch the manager beats sub-period of the entire n et asset e benchma whi nsk sub P annual sales by the a verage eriods when deviation Cacti incurred during any. duriuig P ores the consistency (active r everc'u annual purchases or an aced. It star the m anage coefficient s quared. Information orti Ratio: u Zed excesreturn's (compounded) that du the lesser of the wed is the correlation divided by the tine Ln uml °ss turnover is measured by dividing of the benchmark R" lord deviation. °a s standard inYi Dra turn° and that benchmark. o rtfolio l iiT 'rile average annual once of the ben rate d by the P deviation (star t urnover: t he portfolio's returns p risk-free d portfolio ed by return and the nsk- lace with the fund. measure of correlation between can be explain the portfolio except the stanch deviation is rep mess po rtfolio's difference of P rd tiro a a on es the return by taking the R" what portion us to the Sharpe Ratio, me asures usted retu rri• measures risk-adl It is analogous from their mean• n of excess return. in duct dunii die R meal side risk o f returns standard deviation of the P h ersion defined as the annualized returns Ratio: man: downside measures the disp Ln It is he Leto It m Leto sta i.e., the ri o f all negative ure of risk. benchma ark is positive; e mods. ms and takes the return at t deviation u sed as a mess er tracks the when the benchma those same P n: is manager captured wh bc h m ark during daily Leto D Q closely the m c ranks all historical 5% of the time. Standard D returns aP Ln rr r: is a measure i how o f the b return of th historical method, which e future on periods. P represents is positive, divided y We use the histo e cted daily loss Side benchmarkP ore portfolio risk. um expected P °d' e used as a measure used to determine the minimum mr EXPLANATION OF PERFORMANCE The DGHM AllCap Value Composite is an actively managed, diversified portfolio of the equity securities of primarily U.S based value companies spanning all capitalization ranges. The AllCap Value composite was created in January 1983. Dalton, Greiner, Hartman, Maher Co., LLC ("DGFM' has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPSH). The omrency used to express performance is U.S. dollars. H. GIPS COMPLIANCE REQUIREMENTS I. DGHM is an autonomous investment advisory Porn organized as a limited Lability Company (LLC). DGHM is 80% owned by Breton Private Financial Holdings, Inc., a bank holding company focusing on wealth management through private banking and investment services, and 20% owned by the following DGFM professional; Tim Dalton, Ken Greiner, Bone Geller, Jeffrey Baker, Peter Guilt Adrian Akneida, David senbury, Joshua Waltuch, Randall Watsek, Donald Porter, Barbara Kirby. Thomas Gibson, Dolores Casaletto, Kate Schwartz, and Erika Donald. The Firm is regstered with the Securities and Esrchange Commission, which oversees its investment management activities. 2. Portfolio valuations are based on market values. 3. Performance is calculated using total return. Performance includes the reinvestment of dividends and other earnings 4. DGHM uses accrual accounting. 5. Pates of Return are hme-weighted, with valuation on a daily basis with geometric linking of period returns. 6. All cash and cash equivalents, and teed income securities, if any, are included in the total return of the composite. 7. All fee-paying, discretionary portfolios are included in at least one composite. Performance is actual performance and does not include simulated or model portfolios. 9. Individual portfolios are valued on a daily bass. Composite returns are calculated by asset weighting individual portfolio returns using beginning-of -day values. The daily composite returns are then geometrically linked. 10. Cn,HM adds new fully discretionary portfolios to the composite at the fast full month under management ii. DGHM excludes terminated portfolios horn the composite after the last full month they were under management 12. DGHM does not restate the performance results of a composite following any changes to the firm's organization. 13. Performance is not portable. 14. DGFIM's gross and net performance is reported after the deduction of brokerage and other transactions fees. Net per£ ance is reported after the deduction of the highest management fee charged by DGHM for this product. Custodial fees are not deducted Management fees are more fully described in Par II of Form ADV which is available upon request 15. DGHM presents performance from inception, which sin excess of the required 10 years. MANDATORY DISCLOSURES 1. A complete list and description of the DGHt.Ps composites are available upon request. 2. The amount of assets in a composite (in $MM), the number of portfolios, the percentage of the firm's total assets the composite represents, and LGHM's composite dispersion For the respective periods, expressed Si terms of standard deviation. Dalton, Greiner, Hartman, Maher ore Co., LLC Explanation of Performance: AllCap Value AllCap Assets Under Gross Russell 3000 Net Management of %of Taal Composite Period Return Value Index Return (Smml Portfolios Assets Dispersion 2Q09 1 18.16% I 16.81% 1 17.91% LSI 72 I 10 I 19% I 1Q09 I. 12.50% I -17.00% 1- 12.73% 3142 1 7 I 18% I N/A 2008 1. 23.58% 1 -36.25% I. 24.37% 1 3167 1 7 I 18% I 0.40% 2007 I 5.50% I -1.01% 1 4.50% I 3264 1 8 I 17% 1 0.47% 2006 1 16.70% I 22.30% 1 15.7076 1 3343 I 12 I 15% 1 0.23% 2005 1 7.60% 1 6.90% 1 6.60% I 3330 I 11 I 10% I 0.07% 2004 1 21.60% I 16.90% 1 20.40% 1 3242 I 5 1 7% 1 0.22% 2003 1 38.80% I 31.10% 1 37.504 1 3176 1 4 I 6% I N/A 2002 1. 22.10% I -15.20% 1. 22.90% 1 3174 I 6 1 8% 1 0.55% 2001 1 16.90% I -4.30% 1 15.70% 1 5191 1 5 1 9% I 0.11% 2000 1 22.10% 1 8.00% 1 20.90% I 5166 1 4 1 13% 1 N/A 1999 1 18.6076 I 6.70% I 17.40% I $143 1 4 I 19% 1 NIA I998 I 9.50% I 13.50% I 8.40% 1 3138 1 4 I 14% I NIA 1997 1 26.60% 1 34.80% 1 25.50% 1,5249 I 7 1 19% I 1.15% 1996 I 17.80% I 21.60% I 16.60% 3757 I I1 1 49% 1 0.41% 1995 1 26.90% I 37.00% 1 25.70% 31,723 I 22 1 68% 1 0.42% 1994 I -2.30% I -2.00% I -3.30% 51,999 1 33 I 77% I 0.34% 1993 1 16.20% 1 18.70% 1 15.10% 1 51.824 I 32 I 77% 1 0.58% 3. DGHM's composite does not include balanced portfolio segments. 4. DGHM has chosen to present performance gross of management fees. UGHM's standard fee schedule for this product is 0.7584. For more information on fee schedules, please see DGHM's Fern ADV, Part II. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account The collection of fees produces a compounding effect on the total rate of rdurn net of management fees. As an example, the effect of investment management fees on the total value of a client's portfolio assuming (a) quarterly fee assessment (b) $1000.090 investment, (c) portfolio return of 8% a year, and (d) 1.00% annual investment advisory fee would be 110,455 in the first year, and cumulative effects of $60,034 over five years and $143,937 oven ten years. 5. There is no minimum asset size for inclusion in the composite. 6. DGHM uses trade date valuation. 7. Performance does not include accounts that permit the use of leverage. 8. Performance does not include any non -fee paying portfolio. 9. Performance results are pre -tax 10. DGHM is an investment manager that invests prunarily in U.S band equities III. MANDATORY HISTORICAL DISCLOSURES: I. All periods through June 30, 2009, since DGHM began managing assets in this style, are in compliance. IV. PERFORMANCE DISCLOSURES: 1. Past performance is no guarantee of future results. No assurance can be gven that an investor will not lose invested capital The performance data presented in the report represent the quarter- to-quarter and annual Total Return of an investment in the applicable DGHM portfolio and describe results for the indicated portfolio ONLY for the full period reported; results for specific separately managed accounts may vary due to the cash flows and timing of (a( investment crud• as withdrawn by the respective account and (b) fees paid to DGHM in accordance with applicable fee agreements between said investor(s) and DGHM. 2. DGHM -Gross returns do not reflect the payment of invermmt management fees. 3. DGHM composite returns do not reflect deduction ofes for custodial fees. 4. This report is for informational purposes only and does not constitute an offering of securities unless accompanied by the DGHM Form ADV and /or Investment Management Agreement as the case may be for Separate Accounts. These documents may be amended from time to time. 5. The summary of performance stated herein is internally prepared and results are inauided. 6. An investment in this product is suitable only for qualified individuals that fully widerstand the risks of such a portfolio. An investor should review thoroughly the Investment Management Agreement 7. Additional information regarding policies for calculating and repottingreturrs is avertable upon request V. INDEX DESCRI PTION& The Russell 3000 All.Cap Index is composed of the 3,000 largest comncanies based on tom! market capitalization. The Russell 3000 All-Cap Value Index measures the performance of those P.rasell 3000 All -Cap companies with low et price -to -book ratios and lower forecasted growth value. The Capper Multicap Value Index consists of the 30 largest funds tracked by Lippe, Inc, that are ..t^^- with %aloe stocks. These indices are non managed and do not accrue advisory or transachonat a res's', Index performance data is sourced from Interactive Data Corporation and the Wail Street Journal, respectively. 7 43