HomeMy WebLinkAbout2011 05 10 Other - Presentation from Dalton, Greiner, Hartman, Maher & Co., LLC AllCap Value Board of Trustees
Regular Meeting
May 10, 2011
The document attached entitled, "Dalton, Greiner,
Hartman, Maher & Co., LLC," AllCap Value was
presented by Mr. Joshua A. Waltuch, Vice President
Portfolio Manager, and Mr. Michael S. Dunn, Vice
President, Director of Sales and Marketing of Dalton,
Greiner, Hartman, Maher & Co., LLC and reviewed with
the Board Members at their Regular Meeting on
May 10, 2011.
IP
Dalton, Greiner, Hartman, Maher & Co., LLC
AIICap Value
A Presentation To The:
May 10, 2011
Joshua Waltuch
Vice President
212-557-2304
j)))altlicl)@d,al)m.com
565 Fifth venue, Suite 2101
New York, NY 10017
212- 557 -2445
. dgl)m. coyyz
3001 Tamiami Trail North, Suite 206
Naples, FL 34103
239 -261 -3555
xnm> dabm. com
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DGHM Mission and Values
DGHM, LLC has a quarter - century record of value investing across the entire
spectrum of market capitalization. Our overriding goal is to be a leading
practitioner of fundamental analysis, constructing a lineup of specialty products
with a long -term orientation that achieve highly competitive risk - adjusted returns
for our clients. We have an ownership- centric, team - oriented corporate culture that
thrives upon a high level of employee interaction and provides every employee
opportunities for growth and development. We employ dedicated, passionate
individuals who are incentivized to achieve outstanding performance and make
significant contributions to the team's efforts. Our clients and other constituents
will remain well informed of our activities through an elevated level of
responsiveness, transparency, and access to all team members. All of our activities
will be conducted with the highest degree ofintegrity and professional standards.
Dalton, Greiner, Hartman, Maher & Co., L.L.0
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City of Winter Springs Investment Results: April 30, 2011
Since
Inception
YTD 1 -Yr 4 10 09
City of Winter Springs*
10.4%
17.0%
32.0%
Russell 3000 Value
9.2%
13.0%
28.7%
Russell 3000
9.6%
16.3%
29.7%
As ofApril30, 2011
* See the provided Explanation of Performance.
** Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Dalton, Greiner, Hartman, Maber & Co., L.L.0 3
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City of Winter Springs Performance Attribution: YTD
Performance Attribution
WINTER SPRINGS vs. Russell 3000 Value
12/31/2010 to 4/29/2011
U.S. Dollar
As ofApril30, 2011
This is supplemental information. See the enclosed fully- compliantpresentation for more details.
** Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Dalton, Greiner, Hartman, Maher & Co., L.L.0
4
Allocation Analysis
Selection Analysis
Portfolio
Benchmark
Relative
Portfolio
Benchmark
Relative
Contrib from
Average
Average
Average
Allocation
Total
Total
Total
Security
Total
Group Name New
Weight
Weight
Weight
Effect
Return
Return
Return
Selection
Effect
1.INDUCYCLICAL
30.8
27.3
3.5
0.22
11.18
14.67
-3.48
-1.05
-0.83
2. CONSCYCLICAL
9.9
8.8
1.1
0.06
17.68
12.15
5.53
0.51
0.57
3. TECHNOLOGY
5.2
5.4
-0.2
0.00
26.07
6.40
19.66
0.94
0.94
4. NONCYCLICAL
18.1
19.1
-0.9
0.03
8.20
11.54
-3.34
-0.57
-0.54
5. FINANCIAL
23.4
28.3
-5.0
0.32
4.97
3.05
1.92
0.43
0.75
6. UTILITIES
10.1
11.1
-1.0
0.04
12.36
7.35
5.02
0.48
0.52
[Cash]
2.5
--
2.5
-0.24
0.03
--
0.03
--
-0.24
Total
100.0
100.0
--
0.43
10.38
9.21
0.74
1.17
As ofApril30, 2011
This is supplemental information. See the enclosed fully- compliantpresentation for more details.
** Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Dalton, Greiner, Hartman, Maher & Co., L.L.0
4
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Significant Buys and Sells: YTD
BUYS:
Baxter International Inc. (BAX): BAX is a diversified medtech /pharma
company with three main operating segments (bioscience accounts for 44% of
sales, medication delivery 38 %, and renal 18 %). International represents 58%
of sales. The stock has been impacted over the last several years by declining
utilization, pricing pressure in biosciences (plasma based drugs), and a large
recall in infusion pumps. The simple investment thesis is that increased
utilization will drive faster sales and earnings growth and thus multiple
expansion. Longer term, BAX should be able to generate mid - single digit top
line growth and low double -digit bottom line growth. FCF is used to pay a
dividend and buy back shares.
Gap Inc. (GPS: GPS is the operator of over 3,100 specialty apparel stores as:
Gap, GapKids, babyGap, GapBody, Gap Outlet (over 1,500 total), Old Navy
(over 1,000), and Banana Republic (over 600). These include close to 400
stores in Europe and Asia under the Gap and Banana Republic nameplates.
Internet sales, which include the Piperlime and Athleta websites, account for
approximately 10 %. Domestic square footage growth is limited, but strong
international and internet growth opportunities exist. An improving economy
and lower unemployment should help drive positive SSS. GPS has managed
margins very well through a challenging environment. ROAs are at the high
end of retail peers. High FCF yield (near 10 %) is used to fund significant share
repurchases (SOS down 9% in LTI'I) and pay a growing dividend (5 -yr CAGR
in dividend is 27 %). The balance sheet is in great shape with over $3 /share net
cash. ESL (Eddie Lampert), an activist investor, has acquired a 6% stake. We
believe this could be a catalyst to more aggressively unlock value through:
expanded share repos and dividends, outright LBO, or breakup of the
company. We believe any of these scenarios would result in trading multiple
expansion from the current low level of 5x EBITDA.
Tidewater Petroleum Corp. (TDW: TDW is the leading provider of marine
support services to the offshore E &P industry. It operates worldwide with a
fleet of anchor handling, supply, crew, and tug boats. It is reasonable to
compare TDW to a trucking company. The business is a commodity and very
capital- intensive. Earnings are very cyclical. Current business conditions are
difficult. Offshore rig operations have not recovered from the moratorium in
the Gulf of Mexico and the 2008 collapse in oil prices. New supply hit during
the downturn. TDW has spent the last decade modernizing its fleet. FCF will
be negative for several more years as TDW completes its new
build/ acquisition cycle. In theory this younger, more capable fleet will lead to
higher margins this cycle. The basic investment thesis is that demand will
improve for offshore drilling and new supply and fleet retirements will
improve utilization and thus pricing.
Visteon Corp. (VC): VC is a Tier 1 auto supplier with three divisions: (1)
Climate Control; (2) Electronics; and (3) Interiors. VC was Ford's components
and systems business and was spun out in 2000. Valuation is extremely
attractive — shares (net of Halla, VC's Korean climate company) are trading
under 4.Ox 2011E EBITDA and should trade closer to peers at 5.5x. Other
positives include: (1) Good Exposure to Asia Asia represented 40% of total
consolidated sales in 2010; (2) Good Exposure to Growing OEi`ls— Hyundai
and Ford represented 29% and 25% of total sales for Visteon, respectively, in
2010. These two OEMs have been the big beneficiaries of Toyota's lost share;
(3) Strong Balance Sheet —The company maintains a net cash position for the
first time since the spin; and (4) Growing Backlog— Visteon's year -end
backlog was $0.7 billion, over 70% of which is projected to come from Asia.
SELLS:
Wal -Mart Stores, Inc. (WMT): The stock was sold due to concern over
some domestic market share loss to dollar stores. We replaced it with GPS.
As ofApril30, 2091
Whiting Petroleum Corp. (WLL): We sold the position as the stock is now
trading at the higher end of its valuation range.
Dalton, Greiner, Hartman, Maher & Co., L.L.0
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Risk Management Through Diversification
AllCap Value
Top Ten Holdings
Utilities
Financial
Non - Cyclicals
Technology
Consumer Cyclicals
Industrial Cyclicals
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
• City of Winter Springs
• Russell 3000 Value**
❑ Russell 3000**
As ofApril30, 2011
This is supplemental information. See the enclosed fully- compliantpresentation for more details.
** Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
T
AT &T Inc.
3.8%
JPM
JPMorgan Chase & Co.
3.7%
VIA.B
Viacom Inc. (Cl B)
3.4%
ARE
Alexandria Real Estate Equities Inc.
3.4%
BEN
Franklin Resources Inc.
3.4%
PNY
Piedmont Natural Gas Co.
3.3%
PXD
Pioneer Natural Resources Co.
3.2%
DTV
DIRECTV
3.2%
ACE
ACE Ltd.
3.2%
VVC
Total
Vectren Corp.
3.2%
33.8%
Dalton, Greiner, Hartman, Maber & Co., L.L.0 6
Economic Sector Weighting Comparison
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Attractive Valuation /Quality Tradeoff
cap&gjization
Weighted Average Market Cap
Valuation
Enterprise Value /EBITDA
FCF Yield
Enterprise Value /Sales
Prof tability & Growth
2011 Estimated ROE
5 -Year EBITDA ROA (excluding cash)
5 -Year CAGR EBITDA /SHR
Financial Strength
Net Debt (Cash) /Cap%
EBITDA /Interest Expense
Al1Cap Value
$35,264MM
10.Ox
5.4'%.
2.3x
13.4%
20.9%
6.8%
41.4%
13.3x
Russell
3000 Value **
$69,607MM
9.1x
5.6'%,
2.5x
12.4%
15.7%
6.4%
39.0 °!,
10.3x
Russell
3000 **
$78,336MM
10.5x
5.3%
2.5x
17.2%
21.0%
8.8%
30.2%
14.8x
As ofApril30, 2011
This is supplemental information. See the enclosed fully- compliantpresentation for more details.
** Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Dalton, Greiner, Hartman, Maher & Co., L.L.0
II
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Quarter Century oflnvestment Success
➢ Fundamental, value - driven style since 1982 with $1.6 billion AUM*
➢ Proven ability in finding quality, undiscovered companies
➢ Diverse product line with limited assets accepted in each product
➢ Autonomous subsidiary of Boston Private Financial Holdings (BPFH)
➢ 20% owned internally by 14 active employees; Innovative equity recycling
➢ Significantly invested alongside our clients
MidCap Value
$43MM MicroCap Value
Alteivatives
$74MM
*DGHM AUM and Product Breakdown Chart above include third party platform assets for which DGHM does not have frill conr&tional authority, and which have been excluded from the definition of the firm for GIPS purposes. The assets consist of
l3ect rry ap relationships of $204 milkorr and modelportfolo relationships of $145 million as of 3131111. This is supplemental information. See the enclosed fully- comphantpresentationfor more details.
Dalton, Greiner, Hartman, Maher & Co., L.L.0 8
DG
Fundamental Building Blocks of Success
➢ Peo�vle
Ten sector specialists averaging over 20 years experience.
Extensive knowledge base and experience extends to all departments.
➢ Philosopft and Process
Target ideal tradeoff between valuation, profitability, and capital efficiency.
No significant market timing or sector bets; The focus is on DGHM's core competencystockpicking.
Intensive fundamental due diligence —the heart of DGHM's process.
➢ Incentives
Sector specialist decision - making authority is a key attraction to working at DGHM.
Bonus compensation is driven by sector specialists' generation of alpha within their sectors.
Sector specialists own equity in DGHM and are invested in our products.
➢ Client Service
• Superior responsiveness, transparency, and access to the investment team.
Dalton, Greiner, Hartman, Maher & Co., L.L.0 9
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Investment Professionals
Years Years
0 Shareholder, Management Committee
0 Shareholder
As of April 2011 C Colasultant
Dalton, Greiner, Hartman, Maher & Co., LLC
10
Professional
Experience
at DGHM
Position
0
Bruce Geller, CFA
19
18
Sector Specialist, CEO
0
Jeff Baker, CFA
21
10
Sector Specialist, CIO
0
Tim Dalton, CFA
49
29
Sector Specialist, Chairman
0
Peter Gulli, CFA
18
11
Sector Specialist
0
Dave Dusenbury, CFA
19
5
Sector Specialist
0
Joshua Waltuch
15
4
Sector Specialist
0
Randall Watsek, CFA
15
7
Sector Specialist
0
Donald Porter, CFA
8
5
Sector Specialist
Douglas Chudy, CFA
10
0
Sector Specialist
C
Ed Turville, CFA
44
21
Sector Specialist
0
Ken Greiner, CFA
43
28
Sector Specialist, Vice - Chairman
C
Harry LeVay
54
16
Analyst
0
Barbara Kirby
22
22
Senior Trader
0
Kate O'Brien
16
11
Trader
0
Tom Gibson, CFA, CPA
23
5
CFO, CCO (Compliance)
A VERAGE.•
25
13
0 Shareholder, Management Committee
0 Shareholder
As of April 2011 C Colasultant
Dalton, Greiner, Hartman, Maher & Co., LLC
10
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Diversified Client Base
Breakdown of Client Base
Representative Clients
*Ameriprise
ArcelorAlittal
*California Institute of Technology
*City of Boynton Beach Firefighters Pension
*City of Ocala Firefighters Retirement
Emerson
*Empire State Carpenters
*Hilton Foundation
*Hostess Brands
New York City Police
*Northern Trust
Pepco Holdings Retirement Trust
Providence College
Sacramento County ERS
Texas A &M University
*University of Central Florida
*DGHM Employees
*A11Cap Value Clients
'DGHM professionals
have a significant
portion of their net
worth invested
alongside our clients.
Client Breakdown Chart above includes thh dpary pla form assets for which DGHM does not have full conditional authority, and which have been excluded from the definition of the firm for GIPS purposes. The assets consist of direct wrap relationships of
$204 million and modelportfolio relationshps of $145 million as of 3131111. This is supplemental itfotruation. Seethe enclosed fully- compliantpresentation for more details.
Clients listed here were chosen as generally representative of the types of clients that comptise the anstitntional client based of Dalton, Greiner, Hartman, Maher & Co., LLC and mere not chosen based on performance -based criteria. It is not known whether
these clients approve or disapprove of the adviser or the advisog servicesprovirled
Dalton, Greiner, Hartman, Maber & Co., L.I C 11
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A11Cap Value at DGHM
➢ Active capitalization management (Range: $750 Million +)
➢ 35 -40 stock portfolio diversified by sector
➢ Investment objective is to achieve superior risk - adjusted returns over the long run
➢ Consistent value style of investing
➢ Time - tested valuation approach
➢ Product capacity of $2.5 billion
Annualized Returns
25
20%
19.0
17.4
1 /
13.7%
15%
12.3% 12.7% 12.4%
11.8%
92% 10.0%
11.0%
10%
9.0%
9.5 %
% .6
7.4%
3.4 °,0
4 .9
J7./10
5%
3.0 %
1.1 °0
4.1%
0%
-5
-10
1 Year 3 Years 5 Years
10 Years
15 Years 20 Years 25 Years
Since
Inception
1/83 -3/11
'DGHM ARC ap*
1RusseU3000Value-
eRusseI13000—
As of March 31, 2011
* See the provided Explanation of Performance.
** Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Dalton, Greiner, Hartman, Maher & Co., L.L.0
0
w
0
w
0
0
Active Capitalization ManaLyetnent
12
■Small <$2.OBN mMid$2BN -$lOBN ■ Large >$lOBN
DG
Performance Statistics: 10 Years
As of March 31, 2011
See the provided Explanation of Performance.
Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Shar Ratio is calculated using Citibank 3 Month T-Bill
Dalton, Greiner, Hartman, Maber & Co., LLC 13
AllCap Y�lye,*
Russell 3000 Value
... .. .... . . .... ... .... ....... .... ... ..... ... . .
.. ....... A. u.aI .I..z..e..d R.elu.r.i] 1 0 -Fear ........................ ................
............ . ................... .
................................................................. 9.5%
4.9%
............................................................................................
-VLPHA ............................................................ . ................................................................................
P .................................................................................................................................
4.6%
P ...........................................................................................
BETA ........ ............................................................ . . . ............... . ................... . ...................
ii
. ................. . ............................................................................................................................
ii
. . ................ . ................... . .................................................................................
Standard Deviatio
.................................................................. .........................................................................................................
j i! .................................................................................................................................
20.3%
19.V/0
........................................................................................................................
Information Ratio
.......................................................................................................................................................................................................
B ......................................
0.68
. . . ..........................................................
.............................................................................................................
Sharpe Ratio""I
............ . ......... ........ . .............. . . . . .............................................................................................................................................
........................................
0.36
. . . .......... . ................... . ...................................
. 0.14
..................................... —
-F ..... ... .....
U2side Capture
. .. ... . . . .................... ............. ................................................................................................................... ................
IF
P .................................................................................................................................
118%
P ........................................................................................................................
Downside
- - - - - .......................................
ii
..........................................
90%
. . . ...... . ................... . ...........................................
ii
..................................... . ................... . ................... . ................... . ........ . .
Benchmark . ( R2
Correlation to Bench
........................................................................................................................... ..... .............. .....................................................
. )
F
P ........... ...............................
89 %
. . . ..................................................
I
B ........................................................................................................................
Overage Turnover .................................................................................................................
....... ..... ... ..... .. . ..... ...... ..... ... .. ..... ..... .... ...
ii
75%
ii
R ..................................... . ................... . ................... . ................... . ..................
1 Tracking Error
6.8%
As of March 31, 2011
See the provided Explanation of Performance.
Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Shar Ratio is calculated using Citibank 3 Month T-Bill
Dalton, Greiner, Hartman, Maber & Co., LLC 13
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The Importance ofDoumside Protection
As of March 31, 2011
* Russell 3000 Value started to decline in 3Q07
* Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company; the S&P 500 is a registered trademark of Standard and Poors.
Dalton, Greiner, Hartman, Maber & Co., LI C 14
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Key Takea ways
The heart ofour pro cess is in -depth fundamental research. As a firm, we believe our
core competency is individual stock picking. We place our active weights in a
manner to derive alpha from stock selection, as opposed to making large sector
rotation /market timing bets. Our team of Sector Specialists is empowered to make
their final stock selection decisions.
How we accomplish this...
Dalton, Greiner, Hartman, Maher & Co., L.L.0 1
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Disciplined Process Yields Results
Universe
1,700+
Sell Discipline
Monitor Portfolio — Risk Control
I
I I
f
{ r f
Portfolio Construction
& Trading
Idea Generation
1Ldti- factor Model
Every analyst, product, and
stock is inextricaby linked
by one common factor:
fun dam en tal research
Investinent Team Review
Step 1 COnl�lanleS
It
425+
Fundamental Research
Step 2
Dalton, Greiner, Hartman, Maber & Co., LL.0 16
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Factors:
■ Vahiation — :i0 " %o
• Capital Efficiency — 30 °%
• Profitability- — 20 " %0
Proprietary valuation Model Drives Idea Generation
Multifactor Model (MFM) purpose: Enhance probability of picking the right stock
Outperform
a
U
G�C
Underperform 4
Dalton, Greiner, Hartynan Maher Co., LL G
r
17
Undervalued Overvalued
1 Composite Score (Quartile) 4
DG
➢ Market leader with strong position in its business
➢ Stable to improving industry fundamentals
➢ Above average profitability and asset utilization characteristics
➢ Free cash flow genera tion Empowers management to enhance shareholder value
➢ Strong balance sheet
➢ Proven management team acting in shareholder's best interests
➢ High insider ownership / Insiders buying
Searching for Value
SEC Filings
Company Visits
Management Interviews
Internal Models
Upside /Downside Analysis
Analyst Reports
Fundamental Criteria
Potential Catalysts to Drive Value
Earnings Acceleration
Restructurings /Spin -offs
Management Change
Acquisition /LBO Candidate
Hidden Asset Value
Step 2
Dalton, Greiner, Hartman, Maher & Co., LL.0 18
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Team Structure Is Our Key Strength
Step 3
Investment Team Review:
Benefits ofDectsion- Making Process:
➢ Develops in -depth industry knowledge
➢ Fosters diversity of perspectives and breadth of experience
➢ Provides incentive of decision - making responsibility
➢ Eliminates key person risk
➢ Enhances client responsiveness
Dalton, Greifaer, Hartman, Maher c�- Co., LLC
* Formal report on stock idea
* Present at committee meeting
• Vetted by team
* Final decision by sector specialist
Key Questions:
Who is responsible for making the final investment decisions
➢ NNbo oversees the entire portfolios
How do you prevent turf battles over sector allocations
➢ How are the Sector Specialists compensated;
19
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Portfolio Construction And Trading
Portfolio Construction
35 -40 names; initial position 2.5 %; max weight = 6%
Remain within 75 -125% band of benchmark sector weights
Seek to remain fully invested (cash < 3 %)
All clients receive the same stocks (minimal dispersion between accounts)
Moderate turnover reduces transaction costs
Trading
Highly experienced trading staff
Specific expertise in sourcing liquidity in smaller cap securities
Dalton, Greiner, Hartman, Maher & Co., LL.0 20
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Risk Control &Sell Discipline: Multiple Layers of Oversight
Step 5
1. Diversification by stock
2. Diversification by sector
3. Diversification by sector specialist (eliminates key person risk)
4. Daily oversight by Team Leader (Jeff Baker)
5. Monthly review by entire team
6. DGHM valuation model
Sell Discipline 17. Deteriorating fizndamentals
8. Eliminate value traps ==>
Policy Guidelines: DGHM monitors the
trailing 6 -month price performance of every
security. Any stock in the lowest (4 quartile
for more than 3 months is automaticalj sold.
Yields Consistent Long -Term Results
Dalton, Greiner, Hartman, Maher & Co., LL.0 21
DG
Knowledge = Power
Teradata Corp. (TDC)
Fundamentals
TDC is the largest dedicated data warehouse provider with the gold
standard product. This product allows companies to make more
informed and timely decisions. It should also lower costs over time.
We purchased the parent company to take advantage of the spin -off of
TDC. At the time TDC became an under - covered and undiscovered
S &P 500 company.
Company has a strong balance sheet with net cash.
Company has a strong free cash flow with prudent management. It has
returned capital to investors through a buyback program.
Strong return profile with ROEs in the 25 %+ range since the spin.
Valuation
TDC trades at an approximately equal EV /EBITDA multiple relative
to its competitors* despite its superior return characteristics.
* Peer Group: BIRT, IBM, INFA, MSTR, ORCL, EMC
Dalton, Greiner, Hartman, Maher & Co., L.L.0 22
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City of Winter Springs Portfolio: Apri130, 2011
DGHM
PORTFOLIO APPRAISAL
WINTER SPRINGS
CITY OF WINTER SPRINGS
29- Apr -11
Dalton, Greiner, Hartman, Maher & Co., L.L.0 23
Security
Unit
Total
Market
Pct.
Cur.
Cusip
Symbol
Security
Quantity
Cost
Cost
Price
Value
Assets
Yield
COMMON
STOCK
INDUSTRIAL CYCLICAL
88579Y101
\I \I \I
3M CO CO \I
2,050
64.17
131,540.71
97.21
199,280.50
3.0
2.3
136385101
CNQ
CANADIAN NAT RES LTD CO \I
3,670
39.42
144,679.03
46.96
172,343.20
2.6
0.8
18538R103
CLW
CLEARWATER PAPER CORP CO \I
2,420
50.07
121,179.11
78.48
189,921.60
2.9
0.0
25179 \1103
DVN
DEVON ENERGY CORP NEW COM
2,020
70.60
142,612.88
91.00
183,820.00
2.8
0.7
369550108
GD
GENERAL DYNA \II CS CORP CO \I
2,205
51.41
113,352.85
72.82
160,568.10
2.4
2.6
624756102
\ILI
MUELLER INDS INC COM
4,720
24.92
117,607.00
39.12
184,646.40
2.8
1.0
681919106
O \IC
0\INICO \1 GROUP INC CO \I
3,415
33.84
115,560.02
49.19
167,983.85
2.5
2.0
723787107
PhD
PIONEER NAT RES CO CO \I
2,100
53.87
113,135.36
102.23
214,683.00
3.2
0.1
827048109
SLGN
SILGAN HOLDINGS INC COXI
4,440
27.70
122,978.72
45.86
203,618.40
3.1
1.0
886423102
TDW
TIDEWATER INC COM
3,110
58.24
181,117.92
59.51
185,076.10
2.8
1.7
911312106
UPS
UNITED PARCEL SERVICE INC
2,010
58.22
117,029.36
74.97
150,689.70
2.3
2.8
1,420,792.95
2,012,630.85
30.4
1.3
CONSUMER CYCLICAL
25490A101
DTV
DIRECTV CO \I CLA
4,315
26.77
115,498.76
48.59
209,665.85
3.2
0.0
364760108
GPS
GAP INC DEL COM
7,460
22.82
170,243.28
23.24
173,370.40
2.6
1.9
92553P201
VIA.B
VIACO \IINCNEWCLB
4,440
30.34
134,713.81
51.16
227,150.40
3.4
1.2
92839U206
VC
VISTEON CORP CO1VI NEW
2,390
63.97
152,894.52
67.43
161,157.70
2.4
0.0
573,350.37
771,344.35
11.7
0.8
Dalton, Greiner, Hartman, Maher & Co., L.L.0 23
Dc
City of Winter Springs Portfolio: Apri130, 2011
DGHM
PORTFOLIO APPRAISAL
WINTER SPRINGS
CITY OF WINTER SPRINGS
29- Apr -11
FINANCIAL
H0023R105 ACE
015271109 ARE
316773100 FITB
354613101 BEN
46625H100 JPM
Dalton, Greiner, Hartman, Maher & C
ACE LTD SHS
ALEXANDRIA REAL ESTATE EQ
FIFTH THIRD BANCORP COM
FRANKLIN RES INC COM
JPi\fORGAN CHASE & CO COM
o., L.L.0
3,130
Security
156,069.39
67.25
Unit
Total
2.0
Market
Pct.
Cur.
Cusip
Symbol
Security
Quantity
Cost
Cost
Price
Value
Assets
Yield
COMMON
STOCK
102.42
176,168.97
129.12
222,086.40
3.4
0.8
5,425
35.07
TECHNOLOGY
45.63
247,542.75
3.7
22
459200101
IBM
INTERNATIONAL BUSINESS :NIA
1,015
112.49
114,182.15
170.58
173,138.70
2.6
1.8
88076W103
TDC
TERADATA CORP DEL COM
3,180
20.27
64,452.83
55.92
177,825.60
2.7
0.0
178,634.98
350,964.30
5.3
0.9
NON CYCLICAL
071813109
BAX
BAXTER INTL INC COM
3,220
53.81
173,265.27
56.90
183,218.00
2.8
2.2
075887109
BDX
BECTON DICKINSON & CO COM
2,100
77.05
161,809.37
85.94
180,474.00
2.7
1.9
302182100
ESRX
EXPRESS SCRIPTS INC COM
3,010
33.76
101,619.11
56.74
170,787.40
2.6
0.0
423074103
HNZ
HEINZ H J CO COM
3,310
38.18
126,388.09
51.23
169,571.30
2.6
3.5
717124101
PPDI
PHAR, \IACEUTICAL PROD DEVI
6,050
22.10
133,704.47
30.85
186,642.50
2.8
1.9
786514208
SWY
SAFEWAY INC COM NEW
7,480
23.13
172,984.76
24.31
181,838.80
2.7
2.0
863667101
SYK
STRYKER CORP COM
2,685
50.72
136,177.44
59.00
158,415.00
2.4
1.2
1,005,948.51
1,230,947.00
18.6
1.8
FINANCIAL
H0023R105 ACE
015271109 ARE
316773100 FITB
354613101 BEN
46625H100 JPM
Dalton, Greiner, Hartman, Maher & C
ACE LTD SHS
ALEXANDRIA REAL ESTATE EQ
FIFTH THIRD BANCORP COM
FRANKLIN RES INC COM
JPi\fORGAN CHASE & CO COM
o., L.L.0
3,130
49.86
156,069.39
67.25
210,492.50
3.2
2.0
2,750
64.03
176,096.09
82.15
225,912.50
3.4
2.2
12,240
14.57
178,314.21
13.27
162,424.80
2.5
1.8
1,720
102.42
176,168.97
129.12
222,086.40
3.4
0.8
5,425
35.07
190,262.50
45.63
247,542.75
3.7
22
24
Dc
City of Winter Springs Portfolio: Apri130, 2011
DGHM
PORTFOLIO APPRAISAL
WINTER SPRINGS
CITY OF WINTER SPRINGS
29- Apr -11
Security
Cusip Symbol
COMMON STOCK
FINANCIAL (cont)
743674103 PL
867914103 STI
Security
PROTECTIVE LIFE CORP COM
SUNTRUST BKS INC COM
Unit Total
Quantity Cost Cost
7,180 23.90 171,600.24
6,860 21.80 149,542.88
Market
Pct.
Cur.
Price Value
Assets
Yield
26.91 193,213.80
2.9
2.1
28.19 193,383.40
2.9
0.1
TOTAL PORTFOLIO 5,075,615.68 6,615,855.40 100.0 1.7
Dalton, Greiner, Harman, Maher & Co., LL,C 25
1,198,054.28
1,455,056.15
22.0
1.6
UTILITIES
00206R102 T
720186105 PNY
92240G101 VVC
AT &T INC COM
PIEDMONT NAT GAS INC COM
VECTREN CORP COM
8,020 26.66 213,842.98
6,850 27.36 187,401.23
7,440 24.51 182,382.72
31.12 249,582.40
31.75 217,487.50
28.58 212,635.20
3.8
3.3
3.2
5.5
3.7
4.8
583,626.93
679,705.10
10.3
4.7
4,960,408.03
6,500,647.75
98.3
1.7
CASH AND EQUIVALENTS
CASH CASH
DIVACC Dividend Accrual
109,366.45
5,841.20
109,366.45
5,841.20
1.7
0.1
0.0
0.0
115,207.65
115,207.65
1.7
0.0
TOTAL PORTFOLIO 5,075,615.68 6,615,855.40 100.0 1.7
Dalton, Greiner, Harman, Maher & Co., LL,C 25
Dc
Capital Spending is Turning up Sharply off a Loin Base
The U.S. Consumer and Corporate America
Year - Over -Year Changes in Quarterly Capital Spending
1953 Through 2010
20
15
10
5
0
(5)
(10)
(1 5)
(20)
Source: Federal Reserve Board, Corporate Reports, Empirical Research Partners Analysis.
I Public company data is largest 1,500 stocks. Growth rates smoothed on a trailing six -month basis.
Source: Etnpincail Resezmch Pmtners
Dalton, G7eifaer, Hai man, Maki- & Co., LLC 20
l . � ? t ■ 1 . � . �� . S' _: 3 t.' �. ? t: 1 . �: �t : � : if �� ? it . � /�L . � ? f E ? � ? E 3 . � ? r� ? �' � I j t . � ? t :1 . � jt :I: = I j t I � ? t I I . � I ft I Z �' �
Dc
While Employment Growth Has Been Lackluster...
Percent Job Losses in Post WWII Recessions
��I�= ��I- ���'1�� =��'I� ���I�' ��' yi��' k3���'I- #��'1'I��►��I�I����I�y/
1.09
0.0%
-1.0%
I&X+Y1.!
-3.0%
-4.0%
-5.0%
-6.0%
- 7.0`9fi
Source: Calculated Risk Finance and Economics
Dalton, Greiner, Hartman, Maher & Co., L.L.0 27
0 1 2 3 4 5 6 7 8 9 10 1112 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 3132 33 34 35 36 37 38 39 40 4142 43 44 45 46 47
Number of Months After Pear Employment http : / /www.calculatedris€cbiog.com/
Dc
The Turn In Spending Bodes Somewhat Better for Employment
4
3
2
1
� 0
t
V
E
o (1)
E
2)
(3)
(4)
(5)
47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09
Private Employment Equipment Outlays
Source: Empirical Research Partners Analysis.
' Detrended using an unobserved components model
6
4
2
0
(2)
m
Q
V
(4)
(6)
(8)
(10)
Dalton, Greiner, Hartman, Maher & Co., L.L.0 28
Cyclical Changes in Private Employment
and Domestic Equipment Outlays'
1947 Through Q4 2010
Dc
Consumer Credit Cycle is Winding Down
$ Billion
450
400
350
300
0 250
°> 200
3
Z
150
100
5o
0
02 03 04 05 06 07 08 09 10
� Mortgage � Home Equity Lines of Credit � Credit Cards -Auto � Student ®All Other Credit Card Delinquency Rates
Source: Federal Reserve Bank of New York Consumer Credit Panel, Bloomberg LP.
1 Credit card delinquencies are a composite of Amex (Revolving), Bank of America, Capital One, Citibank, J.P. Morgan Chase and Discover.
Source: Empirical Research Partners
6.0
5.5
5.0
4.5
m
4.0
0
`ro
U
3.5
3.0
2.5
2.0
Dalton, Greiner, Hartman, Maher & Co., L.L.0 29
All Consumer Debt
Newly Delinquent Balances by Loan Type
and Credit Card Deliquency Rates
2002 Through 2010
Dc
I.
CyclicalsI Operating Leverage Has Been Exceptional
45
40
35
30
25
20
15
10
5
0
S &P 500 Constituents 1
Incremental and Base Pre -Tax Margins
2010 Through 2011E
Q12010 Q22010 Q32010 Q42010E 2011E Q12010
All (ex- Energy, Financials and Utilities)
■Incremental ❑Base
Source: Corporate Reports, Empirical Research Partners Analysis.
Excludes energy, financials and utilities.
z Econonically- sensitive sectors are industrial commodities, capital goods, consumer cyclicals and technology.
Source: Empiricol Research Partners
Dalton, Greiner, Hartman, Maher & Co., L.L.0
Q22010 Q32010 Q42010E 2011E
Economically- Sensitive Sectors z
30
Dc
Support for Operating Margins
Productivity Gains Are Robust and ...
Source: ISI Group
Dalton, Greiner, Hartman, Maher & Co., L.L.0
Nonfarm Dusiness
6- Productivity
-1 -4--
1990
6
5
4
3
2
1
0
-1
-2
-3
-4
Are Pushing Unit Labor Costs Lower.
31
1995 2000 2005 2010
Alnni�rm F2r icinncc
90 92 94 96 98 00 02 04 06 08 10
Input Cost Pressures Mounting
Source: Ned Davis Research
@Copyright 2011 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved.
See NDR Disclaimer at www.ndr.com /copyright.html . For data vendor disclaimers refer to www.ndr.com /vendorinfo/ .
:
NDR Commodities G
Weekly Data 4/0411975
- 4/15/2011 (Log Scale)
* Above 6.6 -
-10. 2 1
NDR Commodities Composite
2075
Barclays Capital Long -Term Treasury Bond Price Index
14.9
2075
1946
1946
1825
1825
1712
1712
1606
1606
1506
1506
1413
1413
1325
1325
1243
1243
1166
—
L-T Tsy Bond Price
Idx Gain /Annum When
1166
1093
1093
1025
13 -Week % Change Is:
Annum of Time
1025
962
962
902
Between -4.7 and 6.6
0.9 68.5
902
846
846
Source: Commodity Research Bureau, www.crbtradercom
800
NDR Commodities Composite =
800
Dow Jones UBS Commodities +
700
700
Reuters Continuous Commodity Index (CCI)
600
600
500
500
400
400
300
300
20
Strong Inflationary Pressures
20
NDR Commodities Composite
15
13 -Week Momentum
15
10
10
5
5
0
0
-5
-5
-10
10
-15
-15
-20
Weak Inflationary Pressures
-20
-25
-25
-30
-30
4/15/2011
= 7.4%
(B770)
cv cv cv cv cv
cv cv cv cv cv cv cv
Source: Ned Davis Research
@Copyright 2011 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved.
See NDR Disclaimer at www.ndr.com /copyright.html . For data vendor disclaimers refer to www.ndr.com /vendorinfo/ .
:
NDR Commodities G
Gain/
* Above 6.6 -
-10. 2 1
16. 6
-4.7 and Below 1
13. 3 1
14.9
32
Dc
15%
Perads
Average 12 Month
S &P 500 Total Returns
Segmented By Inflation Environment
1926 Through 2009 (Quarterly CLita)
• The range of zero to 2.4 1 !/,,
deflation appears to be a very
positive stock market environment.
10%
5
0%
-6%
Relative Stability
In Consumer Prices
flfl Awe otal =—%m:12.1'.
Periods
=rr::s =eriods
Perods
fierExr. 'DThe Leuthold Group Z01D
deflation Of ZeraTo2.4% 0.1% To 2.0% 2.195 To 3.0% Jj%r To 5-M 5.1%LTo 7_D 7.195 To 12.095 Inflation Of
2.5%OrMore deflation Inflation Inflation Inflation Inflation Inflation 12.1%QrMore
Source: Leuthold Group
Dalton, Greiner, Hartman, Maher & Co., LL.0
M odest Infl i s B est F M a rk ets
25
20
3
Perio-is =-
• It appears that only periods of
higher deflation (2.5% or more)
are strong stock market negatives.
33
Dc
Four Bad Bear Markets
Four Bad Bear Markets dshort.com
Dow in 1929 -193,; S &P 500 in 1973 -74, 2000 -02) 2007 -09 3/4/2011
nominulprig excluding dividends
0
-109G -
-20%
-ao
IF
�;.
-50%
-50%
-56.8%
-7
-80%
D o w Crash of 1929: 9/311929 - 7/811932 (34.2 months) Currently
- 1973 Oil Crisis: 1/11/1973 - 10/3/1974 (20.7 months)
Tech Crash: 3/24/2000 - 10/9/2002 (30.5 months) Up 95.3%
Financial Crisis: 1019/2007 - a (17 months if the low holds) from low
- 100%
0 1 2 3 4 5 6 7 8 '9 10 1112 13 14 15 16 17 18 19 20 2122 23 24 25 26 27 28 29 30 3132 33 34 35 36 37 38 39 40 4142 43 44 45
< - -- Months - - ->
Source: dshort.com
Dalton, Greiner, Hartman, Maher & Co., LL.0
34
Dc
Equities Cheap vs. Fixed Income
Equity Free Cash Flow Yields as a Ratio to Baa Corporate Bond Yields'
1953 Through March 2011
X
1.4 -
WA
UN
0.8
0.6
0.4
[$VIA
1
53 56 59 62 65 68 71 74 77 80 83 86 89 92 95 98 01
Recessions
Source: Federal Reserve Board, Corporate Reports, Empirical Research Partners Analysis.
1 Large- cap italization stocks; capitalization- weighted data.
Source: Empirical Research Partners
Dalton, Greiner, Hartman, Maher & Co., L _C
04 07 10
35
Equity Valuation By Capitalization Range
Median Valuations...
Market Current
Gap No. Of Mkt, Cap
Decile Companies Flange
Largest 3000 Companies
Current Percent
Mkt. Gap of Total
(Bil,) Mkt. Gap
2011 E
PJE
Dec 99
PIE'
Jury 83
P1Ekk
Large Gaps 1 300 >$10AB
$11.645 70,4%
14.5x
28,2x
12.9x
Mid Gaps 2 300 $4.5- 10,4E
$2,080 12.6%
15.5x
21,7x
13,Ox
3 300 $2.7 -4.58
$1 6.3%
16.4x
18.8x.
13,3x
4 300 $1.7 -2.78
$640 3.9%
16.5x
18.4x
12,9x
Small Gaps 5 300 $1.1 -1.78
$410 2.5%
17.Ox
17.5x
13,4x
6 300 $740 -1,18
$270 1.6%
17.Ox
17,Ox
13,9x
7 300 $500 -740M
$185 1.1%
17.1x
171x
14,5x
8 300 $335 -500M
$120 0.7%
16.9x
15,9x
15,Ox
Micro Caps 9 300 $225 -335M
$81 0.5%
17.9x
15.2x
16,5x
10 300 $150 -225M
$55 0,3%
18.3x
14,5x
17,Ox
TOTALS 3000 (B= Bi11.M =Mill)
$16.536 100.0%
Not es ,
SUMMARY
PIE calculations use operating earnings, which exclude
2011 E
Dec 99
Jun 83
extraordinary items 8, discontinued operations.
P } E
PIER
PIE "
'December 1999 represents the extreme Small Cap relative
Mega Gaps (Top 50)
14.0x.
35,Ox
13.2x
PIE discount of 0% seen at the end of the 1994 -1999 Small
Bottom 2000
17.2x
16,5x.
15.4x
Cap underperformance period.
Large Cap (Top 300)
14.5x
28,2x
12,9x
"June 1983 represents the peak of the 1973 -1983 Small Cap
Mid Gap (Next 900)
1'6.1x.
10.6x.
13,1x.
leadership run. when Small Caps achieved a relative PIE
premium of 10%. Small Caps recorded an even higher PIE
Smal I Gap (Next 1200)
17.Ox
16.9x
1 4.2x
premium of 14% at the end of their 1999 -2006 leadership run.
Micro Cap (Bottom 600)
18,1x.
14.9x
16Ax.
Small CapiLarge Gap
PIE Premium�Discount
17%
(40 %)
+10%
The Leuthold Group Copyright O 2011
Source: Leuthold Group
Dalton, Greiner, Hartman, Maher & Co., LLC 30
Dc
Quality is Cheap
• Quality Outperforms Over the Long -Term, But Has Underperformed During the Recent Rally
Quality Ranking High versus Low Performance Relative Strength (log scale)
2.50
The Leuthdu Crcup
Copyright= 2011 High
OR j
2.40 If/
High OR
2.30 1� Low
OR
Low
OR
2.20 High 4R Cyclical Low
High 4R
Outperform
2.70
I
Low Q R
Low OR Dlltpy rform Cyclical Low
2.00
Cyclical Low
Cycical Low
7. go
88 87 88 89 90 91 92 93 9!. 95 99 97 98 99 cc 01 02 03 04 05 98 0 08 09 10 11
• High Quality Cheaper than Low Based on Normalized P/E (High Quality P/E Divided By Low Quality P /E)
Ratio of Normalized PE Ratio (High Quality)Low Quality)
The Leuthnld Group
Capy ri ght C� 2711
1.4 flfgh Qual ils Stu rL Plum
e. Zvi
ys
1.0 - -- ----- - - - - -- -- - --------------- - - - - -- - - -- - - ---------------- - - - - -- -- - - - - --
0.9 rtwiad: a ai;
ae
G.4 t.1,. Qualil. Sluak Pluru
r•-.p •11x1.
o.2
88 87 ee 89 90 91 92 99 94 95 98 97 98 99 00 01 02 09 04 C5 cc m 08 09 40 11
source: Leutho)d G>oup (High Quality stocks are now selling at an 18% discount based on Normalized P/E ratios)
Dalton, Greiner, Hartman, Maher & Co., L.L.0 37
IP
Long Term Negative
Source: Ned Davis Research
@Copyright 2011 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved.
See NDR Disclaimer at www.ndr.com /copyright.html . For data vendor disclaimers refer to www.ndr.com /vendorinfo/ .
Dalton, Greiner, Hartman, Maher & Co., LL.0 38
Monthly Data 1213111965 - 313112011 (Log Scale)
The Economy (The Index of Coincident Economic Indicators)
103
103
96
96
89
89
82
82
76
76
70
70
65
65
60
60
56
56
52
52
48
48
44
Shaded areas represent National Bureau
44
41
Source: The Conference Board of Economic Research recessions
41
200
(12 -Month Total - Billions of Dollars) Federal Government Budget
200
Budget Surplus
0
0
-200
Budget Deficit
-200
-400
-400
-600
-600
-800
800
-1000
1000
-1200
-1200
-1400
3/31/2011 = - 1406.6
-1400
3
Federal Budget Deficit /Surplus 2.$ 3/31/2011 = -9.6 °�
3
2
as a % of Nominal GDP Budget Surplus
2
1
1
0
0
-1
-1
_2
_2
-3
-3
--4 g
Budget Deficit -4.0
_4
-6
-s.a
-6
_7
_7
_9
_9
-10
-10
(E350)
1970 1975 1980 1985 1990 1995 2000 2005 2010
Source: Ned Davis Research
@Copyright 2011 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved.
See NDR Disclaimer at www.ndr.com /copyright.html . For data vendor disclaimers refer to www.ndr.com /vendorinfo/ .
Dalton, Greiner, Hartman, Maher & Co., LL.0 38
DG
The Mo un tain of U. S. Debt
$14 --Tjn1honal
$
$5:
$6
The Mountain of U.S. Debt
'W
I it- L,-W I I'- I J Cruup 2011
$2
=PUL DeLt
I—R:L GDP
F-1 l I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
1910 1-930 1970 199
I j 2309 201 1 L-' t.
CBO Es tima i, -'f j I 1- 2014
Source: Leuthold Group
Dalton, Greiner, Hartman, Maher & Co., LLC
4 1
"I
39
Dc
The Expanding U. S. Interest Burden
SK 1..
SM.
f
We
S52.1
s<uu
r3,
S2=
r1:v
• f e may reach im rrrr f rvor able "ti point. " >« -here the
bifddget deficit renuritis wide rrn4, because the interest bur'dett
is ovenvhellrlirrq.
Source: Leuthold Group
• More than one -half of the U.S.
government's additional $9 trillion
in debt expected over the neat ten
years is projected to be interest.
This is a frightening proposition.
+� According to the !Concord Coalition,
a deficit watchdog group, the esti-
mated 2015 U.S. government interest
expense will be $533 billion. which
is over 30% of the projected income
tax receipts in that gear?
• Annual interest expense is projected
to rise by about `400 billion over the
next decade (from X383 billion in
'20 to $775 billio in 2020). To pLIt
this in perspective, consider that total .
individual and corporate tax receipts
in U.S. fiscal 2009 totaled about S 1.0
trillion.
Dalton, Greiner, Hartman, Maher & Co., LL.0 40
193813 13YJ 1932 1'n4 133 1:1:1' 2-DD-3 20•:12 2004 2.00 2'.]'3!3 2YJ9 2012E Z3141= 2315E 2i11BE 2L DE
DG
14r+�o-
6%
4%
2%
4o-
TrIE L3utno ] GrC -L". A IC
14. °. -_
Dow Janes I rid ustrial Av i'age
Avg. Annual .stock Market ReWrns
(191' -2009)
sewenty-
Ten e Eleven
'1e8ra iear^s Yeare
'M1 g he n cap. G ains Tax When !d ap G ains Tai 'Aten Cap. G Tax
Rate Is ILawred Rate Is Unchanged Rate Is Raised
Source: Leudhold Group
Market Performance w Changing Tax Rates
Dalton, Greiner, Hartman, Maher & Co., LL.0 41
Dc
AIICap Value Performance
Annual Returns
Years
DGHM AllCap Value*
Russell 3000 Value**
Russell 000
2010
18.0%
16.2%
16.9%
2009
28.9%
19.8
28.4
2008
-23.6%
-36.3%
-37.3° o
2007
5.5%
-1.0%
5.2%
2006
16.7%
22.3
15.7
2005
7.7%
6.9%
6.1%
2004
21.6%
16.9%
12.0%
2003
38.8%
31.1%
31.1%
2002
-22.1%
-15.2%
-21.5%
2001
16.9%
-4.3%
-11.5%
2000
22.1%
8.0%
-7.5%
1999
18.6%
6.7%
20.9%
1998
9.5%
13.5%
24.2%
1997
26.6%
34.8
31.8
1996
17.8%
21.6%
21.8%
1995
26.9%
37.0%
36.8%
1994
-2.3%
-2.0%
0.2
1993
16.2%
18.7%
10.9%
1992
12.4%
14.9%
9.6%
1991
30.3%
25.4%
33.7%
1990
-7.0%
-8.9%
-5.1%
1989
19.3%
24.3%
29.3%
1988
19.9%
23.6%
17.8
1987
9.7%
-0.1%
1.9
1986
18.6%
18.8%
16.7%
1985
26.8%
31.5%
32.2%
1984
13.5%
9.3%
3.4%
1983
19.9%
29.2%
22.7
Annualized Returns (1/83 - 3/11)
Value of a $
$45.00
$40.00
$35 .00
$30.00
$25 .00
$20.00
$15.00
$10.00
$5.00
$0.00
o�" J q`I % ";p �
, ti p' ti p' ,tip- tid y p ti p tip y0 tip ti a ti p y 0 ti p ti p
$37.68
$23.11
$18.86
As of March 31, 2011
-DGHMA11Cap Value* -Russell 3000 Value ** Russe113000 **
* See the provided Explanation of Performance.
** Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Dalton, Greiner, Hartman, Maher & Co., L.L.0 42
1YR
DGHM AllCap Value*
19.0%
Russell 000 - *
15.6%
Russell 3000**
17.4%
3YR
9.0%
1.1%
3.4%
5YR
7.4%
1.4%
3.0%
10YR
9.5%
4.9%
4.1%
15YR
1 12.3%
7.8%
7.1%
20YR
12.7%
9.2%
9.0%
25YR
12.4%
10.0%
9.6%
Inoe tion
13.7%
11.8%
11.0%
Value of a $
$45.00
$40.00
$35 .00
$30.00
$25 .00
$20.00
$15.00
$10.00
$5.00
$0.00
o�" J q`I % ";p �
, ti p' ti p' ,tip- tid y p ti p tip y0 tip ti a ti p y 0 ti p ti p
$37.68
$23.11
$18.86
As of March 31, 2011
-DGHMA11Cap Value* -Russell 3000 Value ** Russe113000 **
* See the provided Explanation of Performance.
** Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Dalton, Greiner, Hartman, Maher & Co., L.L.0 42
DG
Performance Statistics: Since Inception (111983)
As of March 31, 2011
See the provided Explanation of Performance.
Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Shar Ratio is calculated using Citibank 3 Month T-Bill
Dalton, Greiner, Hartman, Maber & Co., LLC 43
AllCap Y�lye,* Russell 3000 Value
..A. .aI .I.z..e..d Return S..illc.e I.n..c.e.Pli..2.12 (1/83
....... ... .. .... . .. .... ... .... ....... .... ... ..... ... .. .. ... .. . .. .... .... ............... .....
............ . ................... . .......................................... ..... .....................
13.7% ................................................................................................
F
-VLPHA .............................................................................................................................................. h .................................................................................................................................
2.6 P ........................................................................................................................
ii
BETA
........................................................................................ . . . ............... . ................... . ...................................... ..............................................................................................................................
ii
0.95 . . ................ . ................... . .................................................................................
Standard ' Dev'at
.................................................................. ......................................................................................................... 1 � .........................................................................
16.7 16.V"o
........................................................ i! ........................................................................................................................
j
Information Ratio
....................................................................................................................................................................................................... B ......................................
0.27
. . . ..... . ..................................................... r ............................................................................ ...............................
Sharpe Ratio""I
............ . ......... ........ . .............. . . . . ............................................................................................................................................. .......................................
0.54 0.44
...................... . ............................. .......... . .........
U2side Capture
. .................... . ........................................................................................................................................... P .................................................................................................................................
.....
1F
101%
P ........................................................................................................................
ii
- Downside Ca lure .............................................................................................................. ...........................................
ii
.......... 8.2.% .......... . ........................................... ..................................... . ................... . ................... . ................... . ........ . .
F
Correlation to Benchmark
................................................................................................... .... (R2
................... ..................... P ...................
...... . .............. ) ...............................
I
82% ........... P ...........................................................................................
ii
Avera�4e . Turnover
............................. .. . ................................................................................................................................................................... .
. ...........................................................................................................................
ii
62% . . ................ . ................... . ................... . ................... . ................... . ..................
Tracking Error
7.1%
As of March 31, 2011
See the provided Explanation of Performance.
Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Shar Ratio is calculated using Citibank 3 Month T-Bill
Dalton, Greiner, Hartman, Maber & Co., LLC 43
Dc
AIICap Value Historical Returns
1Q
9.5 %
11 4 -6
10.8%
2Q
14.6%
11.8"' /0
12.9%
3Q
-2.9%
2.3%
-0.9%
4
-1.6%
1.4%
-0.9%
1983
19.9%
29.2%
22.7%
1Q
-0.7/0
-0.5%
-4.3%
2Q
1.0%
-3.6%
-2.5%
3Q
6.4%
11.4%
9.3%
4
6.4%
2.3%
1.4%
1984
13.5%
93%
3.4%
1Q
8.7/0
9.7/0
10.1%
2Q
5.4%
8.7/0
7.5%
3Q
-4.5%
-4.1%
-4.5%
4
15.9%
15.0%
17.0%
1985
26.8%
31.5%
322%
1Q
17.3%
13.9%
14.7/0
2Q
4.7/0
3.7/0
5.9%
3Q
-5.8%
-2.8%
-7.7/0
4
2.6%
3.5%
4.1%
1986
18.6%
18.8%
16.7%
1Q
18.2%
16.8%
20.6%
2Q
2.0%
3.5%
3.4%
3Q
4.1%
5.8%
6.1%
4
-12.6%
-21.9%
-23.0%
1987
9.7%
-01%
1.9%
1Q
8.9
11.2%
7.7/0
2Q
4.3%
7.7/0
6.6%
3Q
2.9%
1.2%
0.3%
4
2.6%
2.0%
2.3%
1988
19.9%
23.6%
17.8%
1Q
4.8%
7.5%
7.2%
2Q
6.5%
7.7/0
8.8%
3Q
8.2%
8.1%
10.1%
4
-1.3%
-0.7/0
0.7/0
1989
19.3%
243%
293%
1Q
-0.3%
- 2.8 °/a
-3.3%
2Q
3.3%
1.7/0
5.8%
3Q
-16.0%
-14.5%
-15.2%
4
7.6%
7.8%
9.3%
1990
-7.0%
-8.9%
-51%
1Q
15.5%
13.9%
16.2%
2Q
1.1%
0.1%
-0.5%
3Q
7.3%
5.3%
6.3%
4
4.0%
4.4%
8.8%
1991
303%
25.4%
33.7/0
1Q
1.8%
1.9%
-1.6%
2Q 0.5% 3.7/a 0.9%
3Q 2.6% 2.2% 3.2%
As of March 31, 2011 a 7.1% 6.4% 7.0%
1992 12.4% 14.9% 9.6%
* See the provided Explanation of Performance
1Q
-3.2%
4.2%
2Q
_ > _
2.b :"
0.8%
3Q
+ 1' -h
5.2%
3.7/0
4
45%
0.0%
1.8%
1993
162%
18.7%
109%
1Q
-1.3%
-3.3%
-3.8%
2Q
- 1.3 °/a
0.4%
-0.5%
3Q
3.7/0
2.8%
5.3%
4
-3.2%
-1.7%
-0.5%
1994
-23%
-2.0%
02%
1Q
6.1%
8.9%
9.0%
2Q
6.5%
8.9%
9.4%
3Q
8.4%
8.7/0
9.0%
4
3.6%
6.3%
5.2%
1995
26.9%
37.0%
36.8%
1Q
5.4%
5.5%
5.5%
2Q
2.0%
1.9%
4.2%
3Q
2.2%
2.8%
3.0%
4
7.3%
10.0%
7.7/a
1996
17.8%
21.6%
21.8%
1Q
1.3%
2.3%
0.9%
2Q
11.3%
14.8%
16.8%
3Q
14.0%
10.3%
9.3%
4
-1.5%
4.2%
2.4%
1997
26.6%
34.8%
31.8%
1Q
11.1%
11.3%
13.1%
2Q
-4.1%
0.1%
1.8%
3Q
- 12.5%
-12.2%
-11.2%
4
17.5%
16.0%
21.4%
1998
9.5%
13.5%
24.2%
1Q
-10.0%
0.6%
3.4%
2Q
19.9%
11.7/0
7.7/0
3Q
7.4%
-9.7/0
-6.6%
4
18.6%
5.1%
16.2%
1999
18.6%
6.7%
20.9%
1Q
5.9%
0.7/0
4.6%
2Q
-3.3%
-4.2%
-3.5%
3Q
8.2%
7.8%
0.7/0
4
10.1%
3.9%
-9.0%
2000
22.1%
8.0%
-7.5%
1Q
2.5%
-5.4%
-12.2%
2Q
7.6%
5.4%
6.9%
3Q
-12.0%
-11.1%
-15.6%
4
20.4%
8.0%
11.8%
2001
16.9%
-43%
-11.5%
** Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
1Q
-S ".,
4.5%
1''
�Q
-14.S
-8.0%
-13 1"
1Q
- 22.7%
-19.0%
-1 -� "-
4
9.;%
8.9%
1.3%
2002
-22.1%
-15.2%
- 213"° '
1Q
-7.4%
-4.9%
-3.0' 8
2Q
19.5%
17.7/0
16.2%
3Q
7.9%
2.5%
3.4%
4
16.2%
14.4%
12.4%
2003
38.8%
31.1%
31.1%
1Q
4.1%
3.3%
2.2%
2Q
2.5%
0.9%
1.3%
3Q
-0.2%
1.4%
-1.9%
4
14.2%
10.6%
10.2%
2004
21.6%
16.9%
12.0%
1Q
-0.3%
-0.3%
-2.2%
2Q
1.1%
2.0%
2.2%
3Q
5.5%
3.8%
4.0%
4
1.3%
1.2%
2.0%
2005
7.7/0
6.9%
6.1%
1Q
7.3%
6.6%
5.3%
2Q
-2.3%
0.3%
-2.0%
3Q
3.5%
5.9%
4.6%
4
7.5%
8.1%
7.1%
2006
16.7/0
223%
15.7/a
1Q
0.8 °/a
1.3%
1.3%
2Q
6.6%
4.7/0
5.8%
3Q
2.7/0
-0.8%
1.6%
4
-4.3%
-5.9%
-3.3%
2007
5.5%
-1.0%
52%
1Q
-3.9%
-8.6%
-9.5%
2Q
4.2%
-5.2%
-1.7/a
3Q
-5.4%
-5.3%
-8.7%
4
- 19.4%
-22.4%
-22.8%
2008
- 23.6%
- 363%
- 373
1Q
-12.5%
-17.0%
-10.8%
2Q
18.2%
16.8%
16.8%
3Q
16.3%
18.6%
16.3%
4
7.2%
4.2%
5.9%
2009
28.9%
19.8%
283%
1Q
6.1%
7.1%
5.9%
2Q
-8.4%
-11.1%
-11.3%
3Q
11.9%
10.1%
11.5%
4
8.4%
10.9%
11.6%
2010
18.0%
162%
16.9%
1Q11
7.1%
6.5%
6.4%
Dalton, Greiner, Hartman, Maher & Co., LL.0 44
Dc
AIICap Value vs. Benchmarks
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
q '6 6 q�' qC)� q � ��ti q �ti q �O q �� qo�°� qo�'
ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti
■ DGHNI AlCap Value* ■ Russell 3000 Value" O Russell 3000 **
As of December 31, 2010
* See the provided Explanation of Performance.
** Please note all references to the Russell 3000 and Russell 3000 Value are trademarked by Frank Russell Company.
Dalton, Greiner, Hartman, Maher & Co., LL.0 45
Dc
As of March 31, 2011
Source: ZephyrManagedAccounts database
Long -Term Style Analysis
1 Value R
Russell 1000 Growth
Manager Style
Sing e CoWutation
Russell 2000 Growth
January 1983
- March 2011
Large
Russell 000
1
• DGHM AIICap Value
o
♦ Russell 3000 Value
El Russell Generic Corners
-1
Small
Value
-1 0
1 Growth
1 Value R
Russell 1000 Growth
4
Russell 2000 Value R
Russell 2000 Growth
46
1�
AIICap Value Peer Group Rankings
3 Year Rolling Periods
Manager vs Universe: Return Rank
12- Quarter Moving Windows, Computed Quarterly
Zephyr Large Value Universe (Quarterly)
`m
E
1 2W Q42)06 Q42007 Q4 2W8 Q4 2W9 0
0 DGFM All-Cap Value
♦ Russell 3000 Value
■ 5th to 25th Percentile
■ 25th Percentile to Median
■ Median to 75th Percentile
■ 75th to 95th Percentile
January 1, 2006 through March 31, 2011
Source: ZephyrManagedAccounts database
Dalton, Greiner, Hartman, Maher & Co., L.LC
5 Year Rolling Periods
Manager vs Universe: Return Rank
20- Quarter Moving Windows, Computed Quarterly
Zephyr Large Value Universe (Quarterly)
0%
27% MOP 0 DGFM All -Cap Value
♦ ♦ Russell 3000 Value
`m
E M�;a A ❑ 5th to 25th Percentile
■ 25th Percentile to Median
[if ■ Median to 75th Percentile
■ 75th to 95th Percentile
1o0i
D1 zN6 Q42)06 Q42007 Q4 2W8 Q4 2W9 Q12011
E■
A
`m
E
1 2W Q42)06 Q42007 Q4 2W8 Q4 2W9 0
0 DGFM All-Cap Value
♦ Russell 3000 Value
■ 5th to 25th Percentile
■ 25th Percentile to Median
■ Median to 75th Percentile
■ 75th to 95th Percentile
January 1, 2006 through March 31, 2011
Source: ZephyrManagedAccounts database
Dalton, Greiner, Hartman, Maher & Co., L.LC
5 Year Rolling Periods
Manager vs Universe: Return Rank
20- Quarter Moving Windows, Computed Quarterly
Zephyr Large Value Universe (Quarterly)
0%
27% MOP 0 DGFM All -Cap Value
♦ ♦ Russell 3000 Value
`m
E M�;a A ❑ 5th to 25th Percentile
■ 25th Percentile to Median
[if ■ Median to 75th Percentile
■ 75th to 95th Percentile
1o0i
D1 zN6 Q42)06 Q42007 Q4 2W8 Q4 2W9 Q12011
E■
Dc
Active Share: An Important Route to Outperformance
Active Share: The portion of a portfolio's weight that does not overlap with its benchmark.
Exhibit IS: Active U.S. Equity Mutual Fund Managers
Annualized Net -of -Fee Returns Relative to
Their Specified Benchmark
1990 Through 2009
0 -5
0 -U
(0 -5)
X1.0)
(1 -5]
(2-a)
(2 -5)
(3.9)
Stock Pickers Concentrated
fli ighest
Active Sham)
Source: Antti Petajisto, 2010. "Active Share and Mutual Fund
Performance," Working Paper.
Source: Empirical Research Partners
Exhibit 19: U.S. Equity Mutual Francis
Share of Assets With Active Shares Over 80%
1980 Through 2009
Source: Petajisto, Antti, 2010_ "Active Share and Mutual Fund Performance,"
Working Paper.
• The Active Share of DGHM Portfolios:
• AllCap:
93%
• MidCap:
94%
• V2000:
93%
• MicroCap:
98%
Dalton, Greiner, Hartman, Maher & Co., LLC 48
Faetor Bets Moderately Closet All
Active Indexers
0.owest
Active Shave)
❑ 1 B9C -2005 � 2C' }5 -20x9
83 52 54 83 E8 9C 9- 5- 98 23 v] G2 C- 06 ]E
IP
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 Board of Directors. Previously, he worked as an Analyst in
the Public Finance Department at Bear, Stearns & Co., Inc. He is a Summa Cum Laude graduate of the State University of New York at Albany, where he received his BS in Business Administration in 1991.
Mr. Geller is currently Chairman of the Advisory Board for the Center for Institutional Investment Management (CIIM), based in Albany, NY.
Jeffrey C. Baker, CFA
Mr. Baker joined DGHM in 2000 and is Chief Investment Officer and a Shareholder. He is also a Member of the firm's Management Committee and Board of Directors. From 1998 to 2000, he was a Vice
President and Equity Analyst at Prudential Investments. Previously he worked as an Analyst at Merrill Lynch Asset Management. He graduated from Princeton University in 1988 and received his MBA in 1994
from New York University.
Timothy G. Dalton, Jr., CFA
Mr. Dalton has been DGHM's Chairman since 1990, and is a Shareholder. He is also a Member of the firm's Management Committee and Board of Directors. He served as Chief Investment Officer from 1990
until 2006, and as Chief Executive Officer from 1990 to 2000. From 1982 to 1990, he was President and CEO of Dillon, Read Capital Inc. From 1976 until 1982, he was Senior Vice President of Oppenheimer
Capital Corp. and a partner of its parent, Oppenheimer & Co. At Oppenheimer Capital, he personally managed substantial pension account assets and also served as Director of Research and Co- Chairman of
the firm's Investment Policy Committee. He previously served as Senior Vice President and Director of The Robinson Humphrey Company and as Managing Partner of Franklin Capital Investors. He
graduated from Northwestern University in 1960, and received an MA in Economics from Princeton University in 1962. Mr. Dalton is a former Director of the New York Society of Security Analysts.
Kenneth J. Greiner, CFA
Mr. Greiner is DGHM's Vice Chairman and a Shareholder. He was Chief Executive Officer from 2001 to 2006. From 1990 to 2005 he was President. From 1983 to 1990 he was a Senior Vice President of Dillon,
Read Capital Inc. Previously, he was with the College Retirement Equities Fund for 11 years, where he was a Senior Portfolio Manager, Analyst, and Member of the Investment Committee. From 1968 to 1972,
he was associated with Chemical Bank as an Analyst and Portfolio Manager. He graduated from Bucknell University in 1967, and received his MBA from Baruch College in 1969.
Peter A. Gulli, CFA
Mr. Gulli joined DGHM in 1999 and is a Senior Vice President and a Shareholder. From 1994 to 1999 he was a Vice President and Equity Analyst at Chase Manhattan Bank. Previously, he served as a Financial
Analyst in the Private Bank Financial Management group at Chase. Mr. Gulli received a BBA in Finance from the University of Notre Dame in 1992, and an MBA from New York University in 1999.
David S. Dusenbury, CFA
Mr. Dusenbury joined DGHM in 2005 and is a Senior Vice President and a Shareholder. From 2002 to 2005 he was an Equity Analyst at Dionis Management, a fund focused solely on financial services
companies. Previously, Mr. Dusenbury worked in equity research at Credit Suisse First Boston (1994 -2002) and Salomon Brothers (1991 - 1994), where he was responsible for companies in the mortgage finance
sector. From 1988 to 1991 Mr. Dusenbury worked in the investment consulting group at William Mercer. He graduated from the University of Massachusetts in 1988 and received his MBA in Finance in 1994
from New York University.
Joshua A. Waltuch
Mr. Waltuch joined DGHM in 2007 and is a Vice President and a Shareholder. From 2005 to 2007 he was a Senior Research Analyst with The Boston Company. Previously, he worked as an equity analyst at
The Dreyfus Corporation from 1999 to 2005. From 1994 to 1997 he worked as an investment banking financial analyst, first for PaineWebber and then for Donaldson Lufkin & Jenrette. He graduated from
Yeshiva University Sy Syms School of Business in 1994 and received an MBA from Columbia Business School in 1999.
Randall F. Watsek III, CFA
Mr. Watsek first joined DGHM in 2002 and is a Vice President and a Shareholder. From 2006 to 2007 he was a consultant to DGHM, focusing on quantitative analysis. From 2002 to 2005 he was a Research
Analyst at DGHM. From 2001 to 2002 he was a Research Analyst at Kuby - Gottlieb Investments, a deep -value microcap fund. From 1996 to 2000 he was a Vice President and Portfolio Manager in the high -yield
syndicated loans group at City National Bank. Mr. Watsek received an MBA from the University of Chicago Graduate School of Business with concentrations in Analytical Finance and Accounting in 2002 and
a BA from Claremont McKenna College with a dual major in Economics and History in 1996.
Donald S. Porter, CFA
Mr. Porter joined DGHM in 2005 and is a Vice President and a Shareholder. Prior to joining DGHM, Mr. Porter was an Associate for TQA Investors, a Stamford based multi - strategy hedge fund. He began his
career as a Legislative Correspondent for US Congressman George Radanovich of California. Mr. Porter received a BA in Economics from Bucknell University in 2002.
Dalton, Greiner, Hartman, Maher & Co., L.L.0 49
IP
DGHM Professionals
Douglas A. Chudy, CFA
Mr. Chudy joined DGHM in 2011 and is a Vice President. From 2007 to 2011, he worked at KeyBanc Capital Markets Inc. as a Senior Equity Research Analyst. Previously, Mr. Chudy worked in the Media &
Telecom Finance Group at Sumitomo Mitsui Banking Corporation as an Assistant Vice President from 2003 to 2006. From 2001 to 2002, he served as an Analyst in the Investment Banking Division of J.P.
Morgan Chase & Company. Mr. Chudy graduated with a BBA in Finance from Ohio University in 2001.
Barbara M. Kirby
Ms. Kirby is Senior Vice President, Head of Trading and a Shareholder of DGHM. She is responsible for the firm's trading activities. Ms. Kirby joined Dillon Read Capital in 1988 and in 1989 became a member
of the trading department. She is a member of Trader Forum, an industry organization.
Kate B. O'Brien
Ms. O'Brien, a Vice President, Trader, and Shareholder joined DGHM in 2000. Previously, she worked on the high -yield trading desk at Bear, Stearns & Co., Inc. Ms. O'Brien is a graduate of Lafayette College
where she received a BA in Economics and Spanish in 1995.
Thomas F. Gibson, CFA, CPA
Mr. Gibson joined DGHM in 2005 as Chief Financial Officer, and is a Shareholder. He is also a Member of the firm's Management Committee. From 1999 to 2005 he was the Chief Compliance Officer and
Chief Financial Officer of Bingham Legg Advisers LLC. Previously he worked as a Finance Manager with Investors Bank & Trust Company. Mr. Gibson received a BSBA from Suffolk University in 1986, an
MBA from Suffolk University in 1990, and an MSF in Finance from Bentley College in 1999.
Dolores A. Casaletto
Ms. Casaletto has been with DGHM since 1990 and is currently a Shareholder and Senior Vice President in charge of Finance and Human Resources. From 1984 to 1990 and 1981 to 1984, she worked in
Marketing at Dillon, Read Capital and Oppenheimer Capital respectively. From 1971 to 1980, she was a Senior Mortgage Consultant in the Personal Financial Services Division of Chase Manhattan Bank.
Erika B. Donalds, CPA
Ms. Donalds, a Vice President, Controller, and Shareholder, joined DGHM in 2002. She previously held the positions of Senior Accountant and Portfolio Administrator at DGHM. Ms. Donalds graduated
Magna Cum Laude from the Florida State University, where she received a BS in Accounting. She also holds a Masters of Accounting from Florida Atlantic University and is a Certified Public Accountant.
Michael S. Dunn
Michael Dunn joined DGHM in 2010 as Vice President and Director of Sales and Marketing. Mr. Dunn has more than 24 years' experience in marketing and client service. Prior to joining DGHM, Mr. Dunn
was the director of client services at US Global Investors for three and a half years. He was a founder of Elijah Asset Management, and served as the firm's COO and Director of Sales. He also served as a Vice
President for several years with Robertson Stephens & Company. He began his career with Fidelity Investments, then after relocating to San Francisco, he served for seven years with Charles Schwab in their
institutional services division. Mr. Dunn graduated from the University of Massachusetts, Amherst.
Erin A. Gilroy
Ms. Gilroy joined DGHM in March 2011 as a Vice President in Sales and Marketing and is responsible for Marketing and Client Service. Prior to joining DGHM she served as a Managing Director of
Institutional Sales at Third Avenue Management since 2009. Before Third Avenue, she was a Relationship Manager at Mondiale Partners and an Assistant Vice President at Stanfield Capital Partners.
Additionally, Ms. Gilroy spent one year as an Associate at Bear Stearns in the Financial Analytics and Structured Transactions Group. She earned her BS in Business and Economics from Bloomsburg
University and her MBA from the University of Notre Dame.
Edward W. Turville, CFA
Mr. Turville is an Industry Consultant to DGHM and has been associated with the firm since 1990. Mr. Turville's background includes 19 years' experience in investment research with securities firms in
Dallas, New York, and Atlanta. From 1984 to 1989, Mr. Turville was Senior Vice President of Research at Johnson, Lane, Space, Smith & Co. Prior to that Mr. Turville was Vice President of Research at the
Robinson Humphrey Company. Mr. Turville is a graduate of Rice University with an advanced degree in Accounting.
Harry A. LeVay
Mr. LeVay has been a Consultant to DGHM since 1995. He began his career as an Analyst in the research offices of Fiduciary Trust Co. of New York and has held senior analyst positions with Cowen & Co.,
and Laird, Inc. He retired from Paine Webber in 1994, at which time he was an Assistant Vice President. Mr. LeVay received his BS in Finance and Economics from New York University in 1957 after serving
four years in the US Navy.
Dalton, Greiner, Hartman, Maher & Co., L.L.0 50
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Statistical Definitions
➢ Alpha: is the (beta) risk - adjusted excess return or the portfolio returns not explained by the market (nonsystematic).
➢ Annualized Excess Return: annualized return of the portfolio minus the benchmark annualized return.
➢ Annualized Return: is the geometric mean annual return on the portfolio since inception.
➢ Beta: measures systematic (market) risk, or the sensitivity of the manager to that of the benchmark. It is defined as the covariance of the manager and
benchmark divided by the variance of the benchmark.
➢ Beta - adjusted Market Exposure: is the total dollar exposure measured in terms of beta. It is derived by taking the beta of each individual security, weighting
them appropriately, and aggregating that exposure.
➢ Daily Price Shift: calculates the standard deviation of each security in the portfolio and weights them accordingly to determine the aggregate standard
deviation of the portfolio.
➢ Information Ratio: measures the consistency with which the manager beats the benchmark. It is defined as the annualized excess return (active return)
divided by the annualized excess return's standard deviation (active risk).
➢ Maximum Drawdown: The maximum loss (compounded) that the manager ever incurred during any sub - period of the entire time period.
➢ Portfolio Turnover: The average annual turnover is measured by dividing the lesser of the annual purchases or annual sales by the average net asset value of
the fund.
➢ R- Squared: is a measure of correlation between the portfolio's returns and that of the benchmark. R- squared is the correlation coefficient squared. It
measures what portion of the portfolio's return can be explained by the performance of the benchmark.
➢ Sharpe Ratio: measures risk - adjusted return by taking the difference of the portfolio return and the risk -free rate divided by the portfolio's standard deviation.
➢ Sortino Ratio: measures downside risk. It is analogous to the Sharpe Ratio, except the standard deviation is replaced with downside deviation (standard
deviation of all negative returns).
➢ Standard Deviation: is used as a measure of risk. It measures the dispersion of returns from their mean.
➢ Tracking Error: is a measure of how closely the manager tracks the benchmark return. It is defined as the standard deviation of excess return.
➢ Upside Capture /Downside Capture measures the manager's ability to capture positive returns during good markets while controlling risk in bad markets.
Upside capture is the manager's compounded annualized return during years in which the benchmark has a positive return divided by the benchmark's return
in those years. Downside capture is the manager's compounded annualized return during years in which the benchmark has a negative return divided by the
benchmark's return in those years.
➢ Value -at -Risk (N'AR) is used as a measure of portfolio risk. We use the historical method, which ranks all historical daily returns and takes the return at the
95% confidence level. This return is then used to determine the minimum expected daily loss in the future on the portfolio 5% of the time.
Dalton, Greiner, Hartman, Maher & Co., L.L.0 51
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Explanation ofPerformance: AIICap Value
EXPLANATION OF PERFORMANCE
The DGHM All Cap Value Composite is an actively managed, diversified portfolio of the equity securities of primarily U.S. based value
companies spanning all capitalization ranges. The All Cap Value composite was created in January 1983.
Dalton, Greiner, Hartman, Maher & Co., LLC ('`DGHM ") claims compliance with Hie Global Investment Performance Standards (GIPS®)
and has prepared and presented this report in compliance with the GIPS standards. DGHM has been independently verified for the periods
12/31/92 - 17/31/10. Verification assesses whether (1) the fir has complied with all die composite construction requirements of the GIPS
standards on a firm -wide basis and (2) the fir's policies and In ocedwes are designed to calculate and present penfornance in compliance
with the GIPS standards. The DGHM AIICap Value composite has been examined for the periods 12/31/93 - 12/31/10. The verification and
performance examination reports are available upon request.
GIPS COMPLIANCE REQUIREMENTS:
1. DGHM is an autonomous investment advisory Run organized as a Limited Liability Company (LLC). DGHM is
80% led by Boston Private Financial Holdings, Inc., a bank holding company focusing on wealth management
through private banking and investinent services, and 20% owned by die following DGHM professiortals; Tim
Dalton, Ken Greiner, Brnce Geller, Jeffrey Baker, Peter Gulli, David Dusenbury, Joshua Walhtch, Randall
Watsek, Barbara Kirby, Thornas Gibson, Dolores Casaletto, Kate O'Brien, Erika Donalds, and Donald Porter.
The Firm is registered with Hie Securities and Exchange Commission, which oversees its investment managenent
activities. For GIPS purposes, the Fir is defined to exclude SMA (Wrap) and UMA relationships.
2. Portfolio valuations are based on market values and are expressed in U.S. Dollars.
3. Performance is calculated using total return. Performance includes the reinvestment of dividends and other
earnings.
4. DGHM uses actual accounting.
5. Rates ofRehtm are time - weighted, with valuation at a daily basis with geometric linking ofperiod returns.
6. All cash and cash equivalents, and fixed income securities, if any, are included in the total return ofthe composite.
7. All actual, fee - paying & non- fee - paying, discretionary portfolios are included at at least one cornposite.
8. Performance is actual performance and does not include simulated or model portfolios.
9. Individual portfolios are valued on a daily basis. Cornposite returns are calculated moodily with Hie creation of
he perform ance file using the combined transaction history of all tile portfolios in tlhe cornposite. Monthly
composite returns are geometrically lurked to calculate penfomhance for longer periods.
10. DGHM adds new fitly discretionary portfolios to the composite at the first full month under management
11. DGHM excludes terminated portfolios from the composite after Hie last full month Hhey were under management
12. DGHM does not restate Hie performance results of a composite following any changes to the firm's organization.
The founders of DGHM began their work as Hie investment team of Dillon, Read Capital Inc. fro n November
1982 to April 1990. In April 1990, Hie decision makers, investinent team, and staff left Dillon, Read Capital to
form Dalton, Greiner, Hartman, Maher & Co., Inc. In January 1997, the Firm was converted to a General
Partnership er rid the same name, coinciding with a sale of 51% interest to Value Asset Management (VAM). In
Febntary 2004, the Finn was reorganized as a Delaware Limited Liability Company under die name Dalton,
Greater, Hartman, Maher & Co. LLC to facilitate the sale of 80% interest to Boston Private Financial Holdings.
All of die Fin's decision makers, investment team, staff and performance records were carried over through all
entity structure transitions.
13. Due to the team approach to investment management utilized by DGHM, performance is not portable.
14. DGHM's gross and net performance is reported after the deduction of brokerage and otter transactions fees. Net
performance is reported after the deduction of die highest management fee currently charged by DGHM for Hie
particular product (1 9 /6). Custodial fees are not deducted. Management fees are more fully described in Part II of
Form ADV which is available upon request. Withholding taxes are not included as an expense in the calculation of
perform rice.
15. DGHM presents composite performance Ran inception that, in some cases, is in excess of the required 10 years.
MANDATORY DISCLOSURES:
1. A complete list and description ofDGHM's composites is available upon request
2. For each composite, DGHM presents the composite's gross & net reruns annually since inception, comparative
returns for Hie appropriate benchmark, amount of assets in the composite (in $MM), the number of portfolios in
the composite, the percentage of the firm's total assets tie composite represents and DGHM's composite
dispersion for the respective periods, expressed in tents of standard deviation (if applicable).
3. DGHM has chosen to present performance gross of managemet fees. For information on management fees, DGHM's Form
ADV, Part II is available upon request Actual reruns will be reduced by investment advisory fees and other expenses that
may be incurred in die management of the account. Individual composite disclosures display the effect of the composite's
vestinent advisory fee, compounded over a period of years, at the total value of a client's portfolio. For example, die effect
of inveshnent management fees on the total value of a client's portfolio assuming (a) quarterly fee assessment, (b) $1,000,000
vestment, (c) portfolio return of 8% a year, and (d) 1.00% annual investment advisory fee would be $10,455 in the first
year, and cumulative effects of $60,034 over five years and $143,937 over ten years.
4. There is no minimum asset size for inclusion in the composite.
5. DGHM uses trade date valuation.
6. The DGHM AIICap Value composite does not allow Hie use of leverage.
7. Performance includes non -fee paying portfolios. At 3/31/11, bundled fee portfolios excluded from Finn assets totaled $204
Million.
8. Performance results are pre -fax.
9. Composite dispersion is calculated as the equal- weighted standard deviation ofportfolio results.
III. MANDATORY HISTORICAL DISCLOSURES:
1. Performance is presented since January 1, 1993.
2. DGHM has changed the name of the AIICap Value Composite as trends in the indushy have necessitated. Changes in the
e ofthe composite do not indicate a change in the strategy or composition ofthe composite. The timeline of composite
1/83 as follows:
9 2/97 DGHM Equity Composite
3/97-2/0 1 DGHM Core Equity Composite
3/01 -1/0 DGHM MultiCap Composite
7/04 -6/06 DGHM CoreValue Composite
7 /06- present DGHM AIICap Value Composite
3. The DGHM AIICap Value Composite's designated benchmark changed in 2001 from the S &P 500 to the Russell 3000 Value.
The Russell 3000 Value is more inclusive of Hie universe of stocks selected for Hie DGHM AIICap Value product
IV. PERFORMANCE DISCLOSURES:
1. Past perfomance is no guarantee of future results. No assurance can be given that an investor will not lose invested capital.
The perforance data presented in this report represent the quarter -to- quarter and annual Total Return of an inveshnenrt in the
applicable DGHM portfolio and describe results for the indicated portfolio ONLY for Hie Rill period reported; results for
specific separately managed accounts may vary due to the cash flows and timing of (a) investment made or withdrawn by the
respective account and (b) fees paid to DGHM at accordance with and fee agreements between said investors) and
DGHM. These materials include the discussion of certain companies. These case studies are for inforntation purposes m2
and should not be considered as o
vestment recrunendations. There can be no guaranty that the investment adviser
continues to maintain its view of these companies or that the investment adviser contantes to hold positions in the companies
for its client's accounts. Upon request, DGHM will provide you with similar performance information for all of its
vestments held during the periods shown.
2. DGHM- Gross rears do not reflect the payment of investment management fees.
3. DGHM composite returns do not reflect deduction of expenses for custodial fees.
4. This report is for informational purposes only and does not constitute an offering of securities unless accompanied by die
DGHM For ADV and / or Investment Managenent Agreement as Hie case may be for Separate Accounts. These documents
may be amended from time to time.
5. The summary ofperfonnance stated herein is intenhally prepared and results are unaudited.
6. An investment in this product is suitable only for qualified individuals dust fully understand the risks of such a portfolio. An
investor should review thoroughly the Investment Management Agreenent
7. Additional information regarding policies for calculating and reporting reruns is available upon request.
V. STOCK CASE STUDIES
The materials may include the discussion of the performance of certain companies during the periods shown. Cornpanies discussed
herein are for information purposes oily and should not be considered as investment recommendations. There can be no guaranty
die e inveshnent adviser continues to maintain its view of these companies. Upon request, DGHM will provide you witlh a
complete list ofholdings for the quarter and for last year.
VI. INDEX DESCRIPTIONS:
The Russell 3000 All -Cap Index is composed of the 3,000 largest companies based on total market capitalization. The Russell 3000
All -Ca growth p Value Index measures the performance of those Russell 3000 All -Cap companies with lower price -to -book ratios and lower
forecasted grow values. The Lipper Multicap Value Index consists of the 30 largest funds tracked by Lipper, Inc. that are
as dated with `value" stocks. These indices are - aged and do not accnte advisory or transactional expenses. Index
performance data is sourced from Interactive Data Corporation and the Wall Street Journal, respectively.
Dalton, Greiner, Hartman, Maher & U., LLC 52