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Agenda Fire Pension 071315
THE RESOURCE CENTERS , LLC 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 Phone (561) 624-3277 Fax (561) 624-3278 WWW.RESOURCECENTERS.COM PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND Meeting of Monday July 13, 2015 Location: City Hall, Council Chambers Palm Beach Gardens City Hall 10500 North Military Trail Palm Beach Gardens, FL 33410 Time: 1 PM AGENDA 1. Call Meeting to Order 2. Public Comments 3. Investment Manager Report: Dana Investment Advisors (John Hamlin) 4. Investment Monitor Report: The Bogdahn Group (Dan Johnson) • Regions Bank Firm Update/Personnel Changes • R&D Account Balance Discussion/Update 5. Minutes: • Regular Meeting Held on May 6, 2015 6. Attorney Report: Sugarman & Susskind, P.A. (Pedro Herrera) • RGR&D Report: Bobby Robbins – Trinity Industries, Inc. Security Litigation Memo • Discussion Regarding COLA Cap 7. Administrative Report: Resource Centers (Audrey Ross) • Disbursements • Benefit Approvals • Example of Automatic DROP/Retirement Benefit Selection Language 8. Old Business 9. New Business • New Required State Disclosures (Section 112.664 Disclosure & Investment Report Disclosure) 10. Other Business • GHA Brochure & 3/31/2015 Quarterly Report 11. Next Meeting Previously Scheduled for Wednesday August 5, 2015 at 1PM 12. Adjourn 2 PLEASE NOTE: Should any interested party seek to appeal any decision made by the Board with respect to any matter considered at such meeting or hearing, he will need a record of the proceedings, and for such purpose he may need to insure that a verbatim record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based. In accordance with the Americans With Disabilities Act of 1990, persons needing a special accommodation to participate in this meeting should contact The Resource Centers, LLC no later than four days prior to the meeting. Asset Allocation Attributes Sep-2014 Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 ($)%($)%($)%($)%($)%($)% Total Equity 43,663,640 64.76 38,242,127 66.12 30,682,929 62.85 21,345,985 57.55 20,896,403 60.87 16,107,265 59.64 Total Domestic Equity 37,128,509 55.07 32,329,467 55.90 26,294,297 53.86 17,974,548 48.46 15,672,869 45.65 12,927,322 47.86 Total International Equity 6,535,131 9.69 5,912,660 10.22 4,388,632 8.99 3,371,437 9.09 5,223,533 15.21 3,179,943 11.77 Total Fixed Income 16,977,093 25.18 15,025,175 25.98 13,332,999 27.31 12,351,582 33.30 9,425,070 27.45 8,630,836 31.96 Total Domestic Fixed Income 13,503,205 20.03 12,121,597 20.96 11,773,448 24.12 10,974,444 29.59 9,425,070 27.45 8,630,836 31.96 Total Global Fixed Income 3,473,887 5.15 2,903,577 5.02 1,559,551 3.19 1,377,138 3.71 -0.00 -0.00 Total Real Estate 6,482,718 9.62 4,109,274 7.11 3,667,547 7.51 3,175,378 8.56 2,269,135 6.61 756,753 2.80 Total Cash Equivalent 295,392 0.44 458,224 0.79 1,138,258 2.33 216,514 0.58 1,741,395 5.07 1,514,481 5.61 Total Fund Portfolio 67,418,844 100.00 57,834,800 100.00 48,821,733 100.00 37,089,459 100.00 34,332,003 100.00 27,009,334 100.00 Palm Beach Gardens Firefighters' Asset Allocation As of September 30, 2014 Comparative Performance (Net of Fees) Palm Beach Gardens Firefighters' Total Fund (Net of Fees)Actuarial Assumption 0.00 3.00 6.00 9.00 12.00 15.00 18.00 21.00 24.00 -3.00 -6.00 Return 1 Year Ending Sep-2014 1 Year Ending Sep-2013 1 Year Ending Sep-2012 1 Year Ending Sep-2011 1 Year Ending Sep-2010 1 Year Ending Sep-2009 8.05 8.25 8.25 8.25 8.25 8.25 12.01 14.56 18.28 -0.37 8.14 -0.46 Palm Beach Gardens Firefighters' Comparative Performance As of September 30,2014 &,7<2)3$/0%($&+*$5'(16 ),5(),*+7(56 3(16,21)81' SECTION 112.664, FLORIDA STATUTES COMPLIANCE With respect to the reporting standards for defined benefit retirement plans or systems contained in Section 112.664(1), F.S., the actuarial disclosures required under this section were prepared and completed by me or under my direct supervision and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate, and in my opinion, meet the requirements of Section 112.664(1), Florida Statutes, and Rule 60T-1.0035, Florida Administrative Code. By: Date: /2015 Douglas H. Lozen, EA, MAAA Enrolled Actuary #14-7778 &LW\RI3DOP%HDFK*DUGHQV)LUHILJKWHUV 3HQVLRQ)XQG | Foster & Foster When reviewing the following schedules, please note the following: 1)The purpose of producing this report is solely to satisfy the requirements set forth by Section 112.664,Florida Statutes, and is mandatory for every Florida public pension fund, excluding the Florida Retirement System (FRS). 2)None of the schedules shown have any impact on the funding requirements of the Plan. These schedules are for statutory compliance purposes only. 3)In the schedules that follow, the columns labeled “ACTUAL” represent the final recorded GASB 67/68 results. The columns labeled “HYPOTHETICAL” illustrate what the results would have been if different assumptions were used. 4)It is our opinion thatthe Plan’s actual assumptions utilized in the October 1, 2014 Actuarial Valuation Report, as adopted by the Board of Trustees, are reasonable individually and in the aggregate, and represent our best estimate of future Plan experience. 5)The “Number of Years Expected Benefit Payments Sustained” calculated in Section II: Asset Sustainability should not be interpreted as the number of years the Plan has left until it is insolvent.This calculation is required by 112.664, Florida Statutes, but the numeric result is irrelevant, since in its calculation we are to assume there will be no further contributions to the Fund. As long as the Actuarially Determined Contribution is made each year the Plan will never become insolvent. ,1752'8&7,21 Section 112.664, F.S. Requirements SECTION I - GASB 67Section 112.664, F.S. Requirements ACTUAL 7.85%7.85%5.85%9.85% RP-2000RP-2000RP-2000RP-2000 StaticGenerationalGenerationalGenerational 9/30/20149/30/20149/30/20149/30/2014 Total Pension Liability Service Cost 1,741,473 1,748,874 2,845,824 1,118,470 Interest 6,266,708 6,550,183 6,436,445 6,514,373 Change in Excess State Money - - - - Change in Funding Standard Account - - - - Share Plan Allocation 304,698 304,698 304,698 304,698 Changes of Benefit Terms - - - - Differences Between Expected and Actual Experience - - - - Changes of Assumptions 1,772,793 2,061,736 3,155,361 1,404,946 Contributions - Buy Back - - - - Benefit Payments, Including Refunds of Employee Contributions (2,188,768) (2,188,768) (2,188,768) (2,188,768) Net Change in Total Pension Liability 7,896,904 8,476,723 10,553,560 7,153,719 Total Pension Liability - Beginning 77,410,798 80,714,249 104,636,074 64,795,548 Total Pension Liability - Ending (a)85,307,703 89,190,972$ 115,189,634$ 71,949,267$ Plan Fiduciary Net Position Contributions - Employer 2,866,126 2,866,126 2,866,126 2,866,126 Contributions - State 843,533 843,533 843,533 843,533 Contributions - Employee 475,442 475,442 475,442 475,442 Contributions - Buy Back - - - - Net Investment Income6,978,462 6,978,462 6,978,462 6,978,462 Benefit Payments, Including Refunds of Employee Contributions (2,188,768) (2,188,768) (2,188,768) (2,188,768) Administrative Expense (88,142) (88,142) (88,142) (88,142) Other - - - - Net Change in Plan Fiduciary Net Position 8,886,653 8,886,653 8,886,653 8,886,653 Plan Fiduciary Net Position - Beginning 59,994,725 59,994,725 59,994,725 59,994,725 Plan Fiduciary Net Position - Ending (b) $ 68,881,378 $ 68,881,378 $ 68,881,378 $ 68,881,378 Net Pension Liability - Ending (a) - (b)16,426,325$ 20,309,594$ 46,308,256$ 3,067,889$ SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS HYPOTHETICAL City of Palm Beach Gardens Firefighters' Pension Fund 2 | Foster & Foster SECTION II - ASSET SUSTAINABILITYSection 112.664, F.S. Requirements ______________________________________________________________________________________________________________________________________________________ Year Projected Beginning Fiduciary Net Position Projected Total Contributions Projected Benefit Payments* Projected Administrative Expense Projected Investment Earnings Projected Ending Fiduciary Net Position 201468,881,378 - 12,317,390 - 4,923,731 61,487,719 201561,487,719 - 3,007,905 - 4,708,726 63,188,540 201663,188,540 - 3,226,796 - 4,833,649 64,795,393 201764,795,393 - 3,583,666 - 4,945,779 66,157,506 201866,157,506 - 3,793,152 - 5,044,483 67,408,837 201967,408,837 - 4,252,257 - 5,124,693 68,281,273 202068,281,273 - 4,513,608 - 5,182,921 68,950,586 202168,950,586 - 4,749,866 - 5,226,189 69,426,909 202269,426,909 - 4,962,930 - 5,255,217 69,719,196 202369,719,196 - 5,183,115 - 5,269,520 69,805,601 202469,805,601 - 5,311,080 - 5,271,280 69,765,801 202569,765,801 - 5,489,739 - 5,261,143 69,537,205 202669,537,205 - 5,641,539 - 5,237,240 69,132,906 202769,132,906 - 5,815,890 - 5,198,659 68,515,675 202868,515,675 - 5,966,655 - 5,144,289 67,693,309 202967,693,309 - 6,076,462 - 5,075,424 66,692,271 203066,692,271 - 6,183,366 - 4,992,646 65,501,551 203165,501,551 - 6,295,647 - 4,894,768 64,100,672 203264,100,672 - 6,385,567 - 4,781,269 62,496,374 203362,496,374 - 6,472,887 - 4,651,905 60,675,392 203460,675,392 - 6,527,233 - 4,506,824 58,654,983 203558,654,983 - 6,565,998 - 4,346,701 56,435,686 203656,435,686 - 6,591,268 - 4,171,494 54,015,912 203754,015,912 - 6,597,429 - 3,981,300 51,399,783 203851,399,783 - 6,585,126 - 3,776,417 48,591,074 203948,591,074 - 6,551,613 - 3,557,248 45,596,709 204045,596,709 - 6,493,922 - 3,324,455 42,427,242 204142,427,242 - 6,410,137 - 3,078,941 39,096,046 204239,096,046 - 6,298,408 - 2,821,827 35,619,465 204335,619,465 - 6,157,124 - 2,554,461 32,016,802 204432,016,802 - 5,986,527 - 2,278,348 28,308,623 204528,308,623 - 5,784,898 - 1,995,170 24,518,895 204624,518,895 - 5,553,476 - 1,706,759 20,672,178 204720,672,178 - 5,293,216 - 1,415,007 16,793,969 204816,793,969 - 5,006,464 - 1,121,823 12,909,328 204912,909,328 - 4,696,488 - 829,045 9,041,885 20509,041,885 - 4,367,652 - 538,358 5,212,591 20515,212,591 - 4,025,417 - 251,191 1,438,365 20521,438,365 - 3,676,025 - - - *All DROP and Share Balances paid in 2014. Number of Years Expected Benefit Payments Sustained: 38.39 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 7.85% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. Table 1 Plan Assumptions: 7.85% and RP-2000 Static Mortality PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS City of Palm Beach Gardens Firefighters' Pension Fund 3 | Foster & Foster SECTION II - ASSET SUSTAINABILITYSection 112.664, F.S. Requirements ______________________________________________________________________________________________________________________________________________________ Year Projected Beginning Fiduciary Net Position Projected Total Contributions Projected Benefit Payments* Projected Administrative Expense Projected Investment Earnings Projected Ending Fiduciary Net Position 201468,881,378 - 12,317,506 - 4,923,726 61,487,598 201561,487,598 - 3,008,699 - 4,708,685 63,187,584 201663,187,584 - 3,227,935 - 4,833,529 64,793,178 201764,793,178 - 3,586,639 - 4,945,489 66,152,028 201866,152,028 - 3,798,343 - 5,043,849 67,397,534 201967,397,534 - 4,259,811 - 5,123,509 68,261,232 202068,261,232 - 4,523,662 - 5,180,953 68,918,523 202168,918,523 - 4,764,423 - 5,223,100 69,377,200 202269,377,200 - 4,982,184 - 5,250,559 69,645,575 202369,645,575 - 5,207,138 - 5,262,797 69,701,234 202469,701,234 - 5,350,847 - 5,261,526 69,611,913 202569,611,913 - 5,548,132 - 5,246,771 69,310,552 202669,310,552 - 5,715,900 - 5,216,529 68,811,181 202768,811,181 - 5,909,751 - 5,169,720 68,071,150 202868,071,150 - 6,081,811 - 5,104,874 67,094,213 202967,094,213 - 6,221,397 - 5,022,706 65,895,522 203065,895,522 - 6,358,306 - 4,923,235 64,460,451 203164,460,451 - 6,505,724 - 4,804,796 62,759,523 203262,759,523 - 6,635,838 - 4,666,166 60,789,851 203360,789,851 - 6,769,258 - 4,506,310 58,526,903 203458,526,903 - 6,874,840 - 4,324,524 55,976,587 203555,976,587 - 6,972,547 - 4,120,490 53,124,530 203653,124,530 - 7,063,292 - 3,893,041 49,954,279 203749,954,279 - 7,142,628 - 3,641,063 46,452,714 203846,452,714 - 7,209,761 - 3,363,555 42,606,508 203942,606,508 - 7,261,724 - 3,059,588 38,404,372 204038,404,372 - 7,295,186 - 2,728,407 33,837,593 204133,837,593 - 7,306,555 - 2,369,469 28,900,507 204228,900,507 - 7,292,587 - 1,982,456 23,590,376 204323,590,376 - 7,250,367 - 1,567,268 17,907,277 204417,907,277 - 7,177,037 - 1,124,023 11,854,263 204511,854,263 - 7,069,545 - 653,080 5,437,798 20465,437,798 - 6,926,959 - - - *All DROP and Share Balances paid in 2014. Number of Years Expected Benefit Payments Sustained: 32.79 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 7.85% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS Hypothetical Assumptions: 7.85% and RP-2000 Generational Mortality Table 2 City of Palm Beach Gardens Firefighters' Pension Fund 4 | Foster & Foster SECTION II - ASSET SUSTAINABILITYSection 112.664, F.S. Requirements ______________________________________________________________________________________________________________________________________________________ Year Projected Beginning Fiduciary Net Position Projected Total Contributions Projected Benefit Payments* Projected Administrative Expense Projected Investment Earnings Projected Ending Fiduciary Net Position 201468,881,378 - 12,317,506 - 3,669,274 60,233,146 201560,233,146 - 3,008,699 - 3,435,635 60,660,082 201660,660,082 - 3,227,935 - 3,454,198 60,886,345 201760,886,345 - 3,586,639 - 3,456,942 60,756,648 201860,756,648 - 3,798,343 - 3,443,162 60,401,467 201960,401,467 - 4,259,811 - 3,408,886 59,550,542 202059,550,542 - 4,523,662 - 3,351,390 58,378,270 202158,378,270 - 4,764,423 - 3,275,769 56,889,616 202256,889,616 - 4,982,184 - 3,182,314 55,089,746 202355,089,746 - 5,207,138 - 3,070,441 52,953,049 202452,953,049 - 5,350,847 - 2,941,241 50,543,443 202550,543,443 - 5,548,132 - 2,794,509 47,789,820 202647,789,820 - 5,715,900 - 2,628,514 44,702,434 202744,702,434 - 5,909,751 - 2,442,232 41,234,915 202841,234,915 - 6,081,811 - 2,234,350 37,387,454 202937,387,454 - 6,221,397 - 2,005,190 33,171,247 203033,171,247 - 6,358,306 - 1,754,537 28,567,478 203128,567,478 - 6,505,724 - 1,480,905 23,542,659 203223,542,659 - 6,635,838 - 1,183,147 18,089,968 203318,089,968 - 6,769,258 - 860,262 12,180,972 203412,180,972 - 6,874,840 - 511,498 5,817,630 20355,817,630 - 6,972,547 - - - *All DROP and Share Balances paid in 2014. Number of Years Expected Benefit Payments Sustained: 21.83 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 5.85% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS Hypothetical Assumptions: 5.85% and RP-2000 Generational Mortality Table 3 City of Palm Beach Gardens Firefighters' Pension Fund 5 | Foster & Foster SECTION II - ASSET SUSTAINABILITYSection 112.664, F.S. Requirements ______________________________________________________________________________________________________________________________________________________ Year Projected Beginning Fiduciary Net Position Projected Total Contributions Projected Benefit Payments* Projected Administrative Expense Projected Investment Earnings Projected Ending Fiduciary Net Position 201468,881,378 - 12,317,506 - 6,178,179 62,742,051 201562,742,051 - 3,008,699 - 6,031,914 65,765,266 201665,765,266 - 3,227,935 - 6,318,903 68,856,234 201768,856,234 - 3,586,639 - 6,605,697 71,875,292 201871,875,292 - 3,798,343 - 6,892,648 74,969,597 201974,969,597 - 4,259,811 - 7,174,710 77,884,496 202077,884,496 - 4,523,662 - 7,448,833 80,809,667 202180,809,667 - 4,764,423 - 7,725,104 83,770,348 202283,770,348 - 4,982,184 - 8,006,007 86,794,171 202386,794,171 - 5,207,138 - 8,292,774 89,879,807 202489,879,807 - 5,350,847 - 8,589,632 93,118,592 202593,118,592 - 5,548,132 - 8,898,936 96,469,396 202696,469,396 - 5,715,900 - 9,220,727 99,974,223 202799,974,223 - 5,909,751 - 9,556,406 103,620,878 2028103,620,878 - 6,081,811 - 9,907,127 107,446,194 2029107,446,194 - 6,221,397 - 10,277,046 111,501,843 2030111,501,843 - 6,358,306 - 10,669,785 115,813,322 2031115,813,322 - 6,505,724 - 11,087,205 120,394,803 2032120,394,803 - 6,635,838 - 11,532,073 125,291,038 2033125,291,038 - 6,769,258 - 12,007,781 130,529,561 2034130,529,561 - 6,874,840 - 12,518,576 136,173,297 2035136,173,297 - 6,972,547 - 13,069,672 142,270,422 2036142,270,422 - 7,063,292 - 13,665,769 148,872,899 2037148,872,899 - 7,142,628 - 14,312,206 156,042,477 2038156,042,477 - 7,209,761 - 15,015,103 163,847,819 2039163,847,819 - 7,261,724 - 15,781,370 172,367,465 2040172,367,465 - 7,295,186 - 16,618,907 181,691,186 2041181,691,186 - 7,306,555 - 17,536,734 191,921,365 2042191,921,365 - 7,292,587 - 18,545,095 203,173,873 2043203,173,873 - 7,250,367 - 19,655,546 215,579,052 2044215,579,052 - 7,177,037 - 20,881,068 229,283,083 2045229,283,083 - 7,069,545 - 22,236,209 244,449,747 2046244,449,747 - 6,926,959 - 23,737,147 261,259,935 2047261,259,935 - 6,746,192 - 25,401,854 279,915,597 2048279,915,597 - 6,526,073 - 27,250,277 300,639,801 2049300,639,801 - 6,267,157 - 29,304,363 323,677,007 2050323,677,007 - 5,970,303 - 31,588,148 349,294,852 2051349,294,852 - 5,637,485 - 34,127,897 377,785,264 2052377,785,264 - 5,274,745 - 36,952,067 409,462,586 2053409,462,586 - 4,890,129 - 40,091,226 444,663,683 2054444,663,683 - 4,490,591 - 43,578,211 483,751,303 2055483,751,303 - 4,084,647 - 47,448,334 527,114,990 2056527,114,990 - 3,682,276 - 51,739,474 575,172,188 2057575,172,188 - 3,290,788 - 56,492,389 628,373,789 2058628,373,789 - 2,915,528 - 61,751,228 687,209,489 2059687,209,489 - 2,562,712 - 67,563,921 752,210,698 2060752,210,698 - 2,237,412 - 73,982,561 823,955,847 2061823,955,847 - 1,941,984 - 81,064,008 903,077,871 2062903,077,871 - 1,675,463 - 88,870,654 990,273,062 2063990,273,062 - 1,438,500 - 97,471,050 1,086,305,612 20641,086,305,612 - 1,230,298 - 106,940,511 1,192,015,825 20651,192,015,825 - 1,048,147 - 117,361,938 1,308,329,616 20661,308,329,616 - 889,919 - 128,826,639 1,436,266,336 20671,436,266,336 - 753,122 - 141,435,143 1,576,948,357 Table 4 Hypothetical Assumptions: 9.85% and RP-2000 Generational Mortality PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS City of Palm Beach Gardens Firefighters' Pension Fund 6 | Foster & Foster SECTION II - ASSET SUSTAINABILITYSection 112.664, F.S. Requirements ______________________________________________________________________________________________________________________________________________________ Year Projected Beginning Fiduciary Net Position Projected Total Contributions Projected Benefit Payments* Projected Administrative Expense Projected Investment Earnings Projected Ending Fiduciary Net Position Table 4 Hypothetical Assumptions: 9.85% and RP-2000 Generational Mortality PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS 20681,576,948,357 - 634,765 - 155,298,151 1,731,611,743 20691,731,611,743 - 533,044 - 170,537,504 1,901,616,203 20701,901,616,203 - 445,256 - 187,287,267 2,088,458,214 20712,088,458,214 - 369,143 - 205,694,954 2,293,784,025 20722,293,784,025 - 303,866 - 225,922,761 2,519,402,920 20732,519,402,920 - 247,984 - 248,148,974 2,767,303,910 20742,767,303,910 - 200,320 - 272,569,569 3,039,673,159 20753,039,673,159 - 160,038 - 299,399,924 3,338,913,045 20763,338,913,045 - 126,090 - 328,876,725 3,667,663,680 20773,667,663,680 - 98,077 - 361,260,042 4,028,825,645 20784,028,825,645 - 75,269 - 396,835,619 4,425,585,995 20794,425,585,995 - 56,766 - 435,917,425 4,861,446,654 20804,861,446,654 - 42,111 - 478,850,421 5,340,254,964 20815,340,254,964 - 30,703 - 526,013,602 5,866,237,863 20825,866,237,863 - 21,969 - 577,823,348 6,444,039,242 20836,444,039,242 - 15,490 - 634,737,102 7,078,760,854 20847,078,760,854 - 10,725 - 697,257,416 7,776,007,545 20857,776,007,545 - 7,287 - 765,936,384 8,541,936,642 20868,541,936,642 - 4,903 - 841,380,518 9,383,312,257 20879,383,312,257 - 3,272 - 924,256,096 10,307,565,081 208810,307,565,081 - 2,165 - 1,015,295,054 11,322,857,970 208911,322,857,970 - 1,421 - 1,115,301,440 12,438,157,989 209012,438,157,989 - 926 - 1,225,158,516 13,663,315,579 209113,663,315,579 - 598 - 1,345,836,555 15,009,151,536 209215,009,151,536 - 382 - 1,478,401,407 16,487,552,561 209316,487,552,561 - 242 - 1,624,023,915 18,111,576,234 209418,111,576,234 - 151 - 1,783,990,252 19,895,566,335 209519,895,566,335 - 94 - 1,959,713,279 21,855,279,520 209621,855,279,520 - 58 - 2,152,745,030 24,008,024,492 209724,008,024,492 - 35 - 2,364,790,411 26,372,814,868 209826,372,814,868 - 20 - 2,597,722,264 28,970,537,112 209928,970,537,112 - 11 - 2,853,597,905 31,824,135,006 210031,824,135,006 - 7 - 3,134,677,298 34,958,812,297 210134,958,812,297 - 4 - 3,443,443,011 38,402,255,304 210238,402,255,304 - 2 - 3,782,622,147 42,184,877,449 210342,184,877,449 - 1 - 4,155,210,429 46,340,087,877 210446,340,087,877 - - - 4,564,498,656 50,904,586,533 *All DROP and Share Balances paid in 2014. Number of Years Expected Benefit Payments Sustained: 999.99 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 9.85% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. City of Palm Beach Gardens Firefighters' Pension Fund 7 | Foster & Foster SECTION III - FUNDINGSection 112.664, F.S. Requirements ______________________________________________________________________________________________________________________________________________________ ACTUAL 7.85%7.85%5.85%9.85% RP-2000RP-2000RP-2000RP-2000 StaticGenerationalGenerationalGenerational Total Required Contribution $4,217,990$4,614,487$7,141,246$2,609,111 Expected Member Contribution 473,488473,488473,488473,488 Expected State Money 536,620536,620536,620536,620 Expected Sponsor Contribution (Fixed $)$3,207,882$3,604,379$6,131,138$1,599,003 Expected Sponsor Contribution (% of Payroll)40.64%45.68%77.69%20.26% ASSETS Actuarial Value ¹65,148,79365,148,79365,148,79365,148,793 Market Value ¹68,881,37868,881,37868,881,37868,881,378 LIABILITIES Present Value of Benefits Active Members Retirement Benefits 48,794,60751,467,10674,239,92637,442,194 Disability Benefits 389,224418,332557,878325,184 Death Benefits 203,661149,938191,237119,758 Vested Benefits 2,993,7573,165,0875,105,0402,073,031 Refund of Contributions 25,00125,00325,97324,102 Service Retirees 15,530,77116,254,25520,931,52113,108,705 Beneficiaries 30,51630,51630,77630,264 Terminated Vested 853,303902,9761,288,635661,074 Disability Retirees 1,151,9621,231,7451,484,6971,049,785 DROP Retirees ¹ 16,196,19416,815,70321,567,81613,665,948 Share Plan Balances 8,889,2128,889,2128,889,2128,889,212 Total:95,058,20899,349,873134,312,71177,389,257 Present Value of Future Salaries 50,396,10650,454,22655,083,41146,565,723 Total Normal Cost (Projected Unit Credit)2,156,1122,271,6563,320,2121,632,230 Present Value of Future Normal Costs 14,166,57614,958,68823,397,28010,063,563 Total Actuarial Accrued Liability ¹80,891,63284,391,184110,915,43167,325,693 Unfunded Actuarial Accrued 15,742,83919,242,39145,766,6382,176,900 Liability (UAAL) HYPOTHETICAL ACTUAL AND HYPOTHETICAL CONTRIBUTIONS APPLICABLE TO THE FISCAL YEAR Valuation Date: 10/1/2014 ENDING SEPTEMBER 30, 2016 City of Palm Beach Gardens Firefighters' Pension Fund 8 | Foster & Foster SECTION III - FUNDINGSection 112.664, F.S. Requirements ______________________________________________________________________________________________________________________________________________________ ACTUAL 7.85%7.85%5.85%9.85% RP-2000RP-2000RP-2000RP-2000 StaticGenerationalGenerationalGenerational HYPOTHETICAL ACTUAL AND HYPOTHETICAL CONTRIBUTIONS APPLICABLE TO THE FISCAL YEAR Valuation Date: 10/1/2014 ENDING SEPTEMBER 30, 2016 PENSION COST Normal Cost (with interest)2,240,7392,360,8183,417,3281,712,617 Administrative Expenses (with interest)91,60291,60290,72092,483 Payment Required To Amortize UAAL (with interest)1,885,6492,162,0673,633,198804,011 Total Required Contribution $4,217,990$4,614,487$7,141,246$2,609,111 ¹ The asset values and liabilities for DROP Members include accumulated DROP Balances as of 09/30/14. City of Palm Beach Gardens Firefighters' Pension Fund 9 | Foster & Foster PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD MAY 6, 2015 A meeting of the Board of Trustees was called to order at 1:09PM at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Rick Rhodes, Chair Audrey Ross, Administrator Martin Cohen, Vice Chair Dan Johnson, Investment Consultant Tom Murphy, Secretary Pedro Herrera, Attorney Ed Morejon PUBLIC COMMENTS N/A INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (DAN JOHNSON) Mr. Johnson briefly reviewed the market environment during the quarter ending March 31, 2015 and noted that energy, financials, and utilities were the worst performing sectors. The fund is now up to $73.1M in assets and continues to steadily grow. Mr. Johnson stated that during the quarter the Plan transferred out the remaining assets from the Manning & Napier account to the Europacific Fund, and also moved some cash out of the R&D account (cash account) to be invested. He noted that he does not have any recommendations for rebalancing at this time. For the quarter to date return as of March 31, 2015 the Plan was up 3.08% versus the index at 1.84%, and for the fiscal year to date they Plan is up 6.65%. Mr. Johnson briefly reviewed each Managers performance during the quarter and noted that the Real Estate numbers are not final yet. All the Managers outperformed their indexes for the quarter and the timing of the transition from Manning & Napier to Europacific was perfect because Manning & Napier was actually negative for the quarter ending March 31, 2015. Mr. Johnson stated that he would to invite Dana Advisors to the next meeting for an update as it has been a while since the Board has meet with them. The Trustees concurred. Mr. Cohen asked Mr. Johnson if he is comfortable with the allocation between the equities and the fixed income. Mr. Johnson stated that he is comfortable with the equity weighting although it is a little more aggressive and the same for the fixed income even though it is a little less compared to their peers. Although Mr. Johnson commented that this is a conversation that the Board should have again in the near future as interest rates rise. Mr. Johnson reviewed the flash performance report as of April 30, 2015. For the month of April the fund is slightly down at -0.23%, but for the fiscal year they are still up 6.50%. Domestic equity and domestic fixed income slightly took a hit during the month, but it is only the first month of the new quarter. Mr. Johnson briefly reviewed that the ICMA DROP account report as of March 31, 2015. He noted that a majority of the DROP money is in the Vanguard Pus Fund. 2 Lastly Mr. Johnson noted that ICMA sent a letter confirming that the Plan’s DROP accounts that are invested with them are classified as a defined benefit plan and not a defined contribution plan, and therefore this fund is now on ICMA’s special handling list. MINUTES The Board reviewed the minutes of the regular meeting held on March 9, 2015. A motion was made by Marty Cohen to approve the minutes of the March 6, 2015 regular meeting as amended. The motion was seconded by Tom Murphy and carried 4-0. ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA) Mr. Herrera reviewed his memo regarding the IRS issuing a new guidance on applying 415 limits to DROP accounts. He explained that the IRS has made a ruling and they do consider DROP accounts as a defined benefit plan and not a 401K account. Mr. Herrera reviewed 3 Bills that have been passed during this year’s Legislative session that affect Chapter 175/185 Plans and now they are just waiting for the Governor to sign them. He briefly reviewed what changes that SB172, SB2016 & HB1309 propose and commented that once the Bills are signed by the Governor, then his office will issue a memo to the Board explaining what actions they need to take. Mr. Herrera commented that the IRS determination letter is still pending as they have not heard anything back as of yet. Mr. Herrera noted that the Division of Retirement School is coming up in June in Tallahassee and also the FPPTA annual conference is in Boca this year in July. ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS) DISBURSEMENTS The Board reviewed the disbursements presented for approval by the Administrator. A motion was made by Tom Murphy to approve the disbursements as presented by the Administrator. The motion was seconded by Marty Cohen and carried 4-0. BENEFIT APPROVALS The Board reviewed the application for distributions from Share account for Mike Dunaway and the application to enter the DROP for Mark Petruzzi. A motion was made by Ed Morejon to approve the application for distributions from Share accounts for Mike Dunaway and the application to enter the DROP for Mark Petruzzi. The motion was seconded by Marty Cohen and carried 4-0. Ms. Ross stated that the Plan’s Fiduciary Liability Insurance was renewed for 2015/2016 in between meetings per the Chairman’s authorization so that the policy did not expire. Therefore the Board needs to ratify the policy now. 3 A motion was made by Marty Cohen to approve the 2015/2016 Fiduciary Liability Insurance Renewal Policy. The motion was seconded by Tom Murphy and carried 4-0. Ms. Ross reminded the Trustees that their annual Form 1 Disclosure form is due July 1, 2015. NEW BUSINESS N/A OLD BUSINESS N/A OTHER BUSINESS Ms. Ross notified the Board that they need to reschedule their September 7, 2015 meeting because the City Hall is not available. The Trustees discussed and noted that they meet in July and August so they don’t see a need right now to hold the September meeting, unless an urgent matter arises. A motion was made by Ed Morejon to cancel the September 7, 2015 meeting. The motion was seconded by Tom Murphy and carried 3-1. There being no further business, the meeting adjourned at 3:05PM. Respectfully submitted, Tom Murphy, Secretary PO R T F O L I O A N D M A R K E T U P D A T E CI T Y O F P A L M B E A C H G A R D E N S FI R E F I G H T E R S ' R E T I R E M E N T SY S T E M AS O F J U N E 3 0 , 2 0 1 5 ww w . D a n a I n v e s t m e n t . c o m Co n t a c t Ta b l e o f C o n t e n t s 15800 West Bluemound Road, Suite 250 P.O. Box 1067 Brookfield, WI 53008-1067 3P r o f i l e 4 P o r t f o l i o S u m m a r y 5M a r k e t U p d a t e 6 D a n a L a r g e C a p E q u i t y S t r a t e g y U p d a t e 9 D a n a S m a l l C a p E q u i t y S t r a t e g y U p d a t e 12 E c o n o m i c U p d a t e 21 H o l d i n g s 25 D a n a R e c o g n i t i o n 26 D i s c l o s u r e PA L M B E A C H G A R D E N S FI R E F I G H T E R S ‘ RE T I R E M E N T S Y S T E M Jo h n H a m l i n Se n i o r V i c e P r e s i d e n t C l i e n t S e r v i c e s (4 0 7 ) 5 8 0 - 7 6 6 2 Jo h n H @ D a n a I n v e s t m e n t . c o m ww w . D a n a I n v e s t m e n t . c o m PROFILE AND COMMISSIONS Se e I m p o r t a n t D i s c l o s u r e I n f o r m a t i o n PA L M B E A C H G A R D E N S FI R E F I G H T E R S ‘ RE T I R E M E N T S Y S T E M In v e s t m e n t O b j e c t i v e s : Co m p a r a t i v e I n d i c e s : I n v e s t m e n t R e s t r i c t i o n s : Br o k e r N a m e S h a r e s C o m m R a t e N e t A m o u n t C o m m i s s i o n Ca p i t a l I n s t i t u t i o n a l S e r v i c e s 57 , 2 1 0 0 . 0 1 5 $ 2 , 6 7 4 , 0 0 4 . 6 6 $ 8 5 8 . 2 3 In s t i n e t 17 , 6 9 6 0 . 0 1 5 $ 1 , 4 4 1 , 8 0 9 . 1 5 $ 2 6 5 . 4 4 We e d e n 11 , 8 6 0 0 . 0 1 5 $ 1 , 0 2 7 , 5 8 4 . 0 5 $ 1 7 7 . 9 0 86 , 7 6 6 0 . 0 1 5 $ 5 , 1 4 3 , 3 9 7 . 8 6 $ 1 , 3 0 1 . 5 7 Ac c o u n t P r o f i l e Ac h i e v e a t o t a l r a t e o f r e t u r n o v e r t h e l o n g t e r m ( 3 t o 5 y e a r s ) i n e x c e s s o f t h e b e n c h m a r k a n d r a n k i n t h e to p 4 0 % o f r e p r e s e n t a t i v e p o r t f o l i o s . V o l a t i l i t y o f t h e p o r t f o l i o i s e x p e c t e d t o b e s i m i l a r t o t h a t o f t h e be n c h m a r k . S& P 5 0 0 I n d e x / R u s s e l l 2 0 0 0 I n d e x At m i n i m u m , 9 0 % o f t o t a l p o r t f o l i o a t m a r k e t s h a l l b e i n v e s t e d i n e q u i t y s e c u r i t i e s . N o m o r e t h a n 8 % o f po r t f o l i o a t m a r k e t i n a n y s i n g l e c o r p o r a t e i s s u e r . N o s i n g l e i s s u e i n p o r t f o l i o s h a l l r e p r e s e n t m o r e t h a n 5% o f o u t s t a n d i n g c o m m o n s t o c k o f a n y s i n g l e c o r p o r a t e i s s u e r . I n v e s t m e n t s i n c o m p a n i e s t h a t h a v e be e n p u b l i c l y t r a d e d l e s s t h a n o n e y e a r a r e l i m i t e d t o 1 0 % o f m a r k e t v a l u e . F o r e i g n s e c u r i t i e s i n c l u d i n g AD R s a r e p e r m i t t e d u p t o 1 5 % o f t h e p o r t f o l i o v a l u e . Br o k e r C o m m i s s i o n s R e p o r t 4 - 1 t o 6 - 3 0 - 1 5 3 ww w . D a n a I n v e s t m e n t . c o m PORTFOLIO SUMMARY Se e I m p o r t a n t D i s c l o s u r e I n f o r m a t i o n PA L M B E A C H G A R D E N S FI R E F I G H T E R S ‘ RE T I R E M E N T S Y S T E M Cash & Equiv $188,142 1% Da n a L r g Ca p $1 4 , 4 0 0 , 7 2 8 78 % Dana Small Cap $3,875,407 21% Pe r f o r m a n c e G r o s s o f F e e s Un a n n u a l i z e d Av e r a g e An n u a l Th r o u g h 6 / 3 0 / 2 0 1 5 )L V F D O < 7 ' QT D 3y r 71 5 c c - C i t y o f P a l m B e a c h G a r d e n s Fi r e f i g h t e r s ' R e t i r e m e n t S y s t e m - L C 7. 8 4 -0 . 9 0 17 . 8 0 S& P 5 0 0 6. 2 2 0. 2 8 17 . 3 1 71 5 c b - C i t y o f P a l m B e a c h G a r d e n s Fi r e f i g h t e r s ' R e t i r e m e n t S y s t e m - S C 18 . 1 2 1. 3 5 22 . 5 1 Ru s s e l l 2 0 0 0 14 . 9 4 0. 4 2 17 . 8 1 Ac c o u n t A c t i v i t y 3 / 3 1 / 2 0 1 5 t o 6 / 3 0 / 2 0 1 5 Po r t f o l i o V a l u e o n 0 3 / 3 1 / 2 0 1 5 $1 8 , 5 4 5 , 4 1 0 . 5 5 Co n t r i b u t i o n s / W i t h d r a w a l s ($ 1 5 1 . 1 3 ) In v e s t m e n t I n c o m e $8 6 , 8 4 1 . 7 8 Un r e a l i z e d G a i n / L o s s ($ 1 3 6 , 4 8 5 . 6 0 ) Re a l i z e d G a i n / L o s s ($ 2 6 , 6 4 3 . 5 1 ) Ch a n g e i n A c c r u e d I n c o m e ($ 4 , 6 9 5 . 3 4 ) Po r t f o l i o V a l u e o n 0 6 / 3 0 / 2 0 1 5 $1 8 , 4 6 4 , 2 7 6 . 7 5 To t a l G a i n ($ 8 0 , 9 8 2 . 6 7 ) Po r t f o l i o A l l o c a t i o n Su m m a r y a s o f 6 / 3 0 / 2 0 1 5 Ma r k e t V a l u e % AssetsIncomeYield Ca s h E q u i v a l e n t s 16 7 , 1 9 6 .917.01 Co m m o n S t o c k s 18 , 2 9 7 , 0 8 1 99.1345,1801.89 To t a l P o r t f o l i o 18 , 4 6 4 , 2 7 7 100.0345,1961.87 4 ww w . D a n a I n v e s t m e n t . c o m EQ U I T Y M A R K E T : 2 NDQUARTER 2015 Eq u i t y M a r k e t U p d a t e : In a r e v e r s a l f r o m t h e f i r s t q u a r t e r , p e r f o r m a n c e b y s t y l e co n v e r g e d b e t w e e n d o m e s t i c l a r g e c a p i n d i c e s d u r i n g t h e se c o n d q u a r t e r o f 2 0 1 5 Th e R u s s e l l 1 0 0 0 G r o w t h I n d e x re t u r n e d 0 . 1 2 % , w h i l e t h e Ru s s e l l 1 0 0 0 V a l u e I n d e x r e t u r n e d 0 . 1 1 % Si m i l a r i t y i n p e r f o r m a n c e a m o n g t h e s t y l e i n d i c e s r e f l e c t s lo w r e t u r n d i s p e r s i o n a m o n g s e c t o r s , w i t h o n l y t h e Ut i l i t i e s s e c t o r p r o d u c i n g a r e t u r n m o r e t h a n 3 % a b o v e o r be l o w t h e s e c t o r a v e r a g e Do m e s t i c s m a l l c a p s t o c k s p e r f o r m e d i n l i n e w i t h l a r g e c a p pe e r s , a n d f o r e i g n i n d e x r e t u r n s l a r g e l y m a t c h e d d o m e s t i c in d e x r e t u r n s Tw o c o n s e c u t i v e q u a r t e r s o f m o d e s t r e t u r n s i n f l u e n c e tr a i l i n g o n e - y e a r r e t u r n s c l o s e r t o h i s t o r i c a l a v e r a g e s So u r c e : F a c t S e t D a t a S y s t e m s EQ U I T Y MA R K E T S& P 5 0 0 I n d e x S e c t o r P e r f o r m a n c e Fo u r s e c t o r s w i t h i n t h e S & P 50 0 I n d e x g e n e r a t e d a p o s i t i v e re t u r n i n t h e s e c o n d q u a r t e r Fi r s t q u a r t e r s t r e n g t h i n H e a l t h C a r e c o n t i n u e d i n t h e se c o n d q u a r t e r , s u p p o r t e d b y o u t p e r f o r m a n c e f r o m in s u r e r s a n d p r o v i d e r s , w h i l e w e a k n e s s i n U t i l i t i e s re f l e c t e d o n g o i n g i n t e r e s t r a t e u n c e r t a i n t y Fo r t h e t r a i l i n g 1 2 m o n t h s , s t r o n g p e r f o r m a n c e i n t h e He a l t h C a r e , T e c h n o l o g y a n d C o n s u m e r D i s c r e t i o n a r y se c t o r s s u g g e s t s t h a t c o n s u m e r - o r i e n t e d c o m p a n i e s h a v e ou t p e r f o r m e d w h i l e c o m m o d i t y a n d i n f r a s t r u c t u r e - r e l a t e d na m e s h a v e l a g g e d Pe r s i s t e n t l y l o w c r u d e a n d n a t u ral gas prices continue to ne g a t i v e l y a f f e c t E n e r g y s e c t o r r e t u r n s In d e x R e t u r n s T h r o u g h J u n e 3 0 , 2 0 1 5 -0 . 6 1 % 1. 2 3 % 1. 7 1 % 1. 9 4 % 3. 1 2 % 3. 9 6 % 4. 2 0 % 4. 7 5 % 5. 8 8 % 5. 9 0 % 0. 1 1 % 0. 2 8 % 0. 1 1 % 0. 1 4 % 0. 8 2 % 0. 1 2 % -1 . 0 6 % 0. 4 2 % 0. 8 4 % 2. 0 3 % Ru s s e l l 1 0 0 0 V a l u e S& P 5 0 0 Ru s s e l l 1 0 0 0 Ru s s e l l 3 0 0 0 MS C I E M ( E m e r g i n g M a r k e t s ) Ru s s e l l 1 0 0 0 G r o w t h S& P M i d C a p 4 0 0 Ru s s e l l 2 0 0 0 MS C I E A F E NA S D A Q C o m p o s i t e I n d e x Q2 ' 1 5 YT D S& P 5 0 0 I n d e x S e c t o r R e t u r n s T h r o u g h J u n e 3 0 , 2 0 1 5 1.23% -1 0 . 6 7 % -4 . 6 8 % -3 . 0 6 % -0 . 7 7 % -0 . 3 7 % 0.50%0.76%3.15%6.81%9.56%0.28% -5 . 8 0 % -1 . 8 8 % -2 . 2 3 % -1 . 7 4 % 1.72% -0 . 4 8 % 0.19%1.59%1.92%2.84% To t a l S & P 5 0 0 Ut i l i t i e s En e r g y In d u s t r i a l s Co n s S t p l Fi n a n c i a l s Ma t e r i a l s In f o T e c h Te l e c o m Co n s D i s c He a l t h C a r e Q2 ' 1 5 YTD 5 ww w . D a n a I n v e s t m e n t . c o m CO N T R I B U T O R S & D E T R A C T O R S : 2 NDQUARTER 2015 Se c t o r C o n t r i b u t o r s He a l t h C a r e – g r o w t h p r o v i d e d b y t h e A ff o r d a b l e C a r e A c t ( A C A ) i s b e n e f i t i n g th e h e a l t h i n s u r e r s , a n d b e t t e r r e i m b u r s e m en t v i s i b i l i t y i s h e l p i n g p r o v i d e r s ; HC A H o l d i n g s , I n c . ( H C A ) a n d A e t n a , I n c . ( A E T ) l e d t h e S t r a t e g y ’ s H e a l t h C a r e ho l d i n g s ; t h e S t r a t e g y ’ s p h a r m a c e u t i c a l na m e s , G i l e a d S c i e n c e s , I n c . ( G I L D ) , Ab b V i e , I n c . ( A B B V ) a n d M y l a n , N . V . ( M Y L ) a l s o o u t p e r f o r m e d p e e r s Co n s u m e r S t a p l e s – R e y n o l d s A m e r i c a n , I n c. ( R A I ) d r o v e r e l a t i v e p e r f o r m a n c e ba s e d o n F T C a p p r o v a l o f t h e L o r i l l a r d L L C a c q u i s i t i o n ; w e a l s o a v o i d e d s e v e r a l la r g e d e c l i n e s t h a t h a r m e d t h e i n d e x (W a l - M a r t S t o r e s , I n c . ( W M T ) a n d W h o l e Fo o d s M a r k e t , I n c . ( W F M ) ) Te l e c o m m u n i c a t i o n S e r v i c e s – s l i g h t o v e r w e i g h t t o A T & T , I n c . ( T ) a n d av o i d a n c e o f t h e w e a k C o m p e t i t i v e L o c a l E x c h a n g e C a r r i e r s ( C L E C s ) DA N A L A R G E C A P E Q U I T Y ST R A T E G Y Se c t o r D e t r a c t o r s In f o r m a t i o n T e c h n o l o g y – u n d e r w e i g h t t o M i c r o s o f t C o r p o r a t i o n ( M S F T ) w a s th e l a r g e s t i n d i v i d u a l d r a g o n r e l a t i v e p e r f o r m a n c e ; n e g a t i v e r e t u r n s f r o m ho l d i n g s B r o a d r i d g e F i n a n c i a l S o l u t i o n s , In c . ( B R ) , C D W C o r p o r a t i o n ( C D W ) , a n d Se a g a t e T e c h n o l o g y P L C ( S T X ) h u r t In d u s t r i a l s – w e a k n e s s i n t r a n s p o r t a t i o n - r e l a t e d h o l d i n g s U n i o n P a c i f i c Co r p o r a t i o n ( U N P ) , D e l t a A i r L i n e s , I n c . (D A L ) , T r i n i t y I n d u s t r i e s , I n c . ( T R N ) a n d Bo e i n g C o m p a n y ( B A ) Fi n a n c i a l s – n e g a t i v e r e t u r n s f r o m O m e g a H e a l t h c a r e I n v e s t o r s , I n c . ( O H I ) , Al l s t a t e C o r p o r a t i o n ( A L L ) a n d A m e r i p r i s e F i na n c i a l , I n c . ( A M P ) ; l a c k o f e x p o s u r e to s t r o n g p e r f o r m i n g b i g m o n e y c e n t er b a n k s ( J P M o r g a n C h a s e & C o m p a n y (J P M ) , B a n k o f A m e r i c a C o r p o r a t io n ( B A C ) , C i t i g r o u p , I n c . ( C ) In d i v i d u a l C o n t r i b u t o r s HC A H o l d i n g s , I n c . 20.59% Ae t n a , I n c . 19.93% Gi l e a d S c i e n c e s , I n c . 19.75% Ab b V i e , I n c . 15.73% My l a n N . V . 14.34% In d i v i d u a l D e t r a c t o r s Tr i n i t y I n d u s t r i e s , I n c . -25.36% Om e g a H e a l t h c a r e I n v e s t o r s , I n c . - 1 4 . 9 8 % Un i o n P a c i f i c C o r p o r a t i o n -11.48% Br o a d r i d g e F i n a n c i a l S o l u t i o n s I n c . - 8 . 6 1 % Al l s t a t e C o r p o r a t i o n -8.45%6 ww w . D a n a I n v e s t m e n t . c o m AD D I T I O N S & D E L E T I O N S : 2 NDQUARTER 2015 DA N A L A R G E C A P E Q U I T Y ST R A T E G Y Se l e c t A d d i t i o n s De v o n E n e r g y C o r p o r a t i o n ( D V N ) – D V N h a s b e a t e n t h e hi g h e n d o f i t s p r o d u c t i o n g u i d a n ce i n e a c h o f t h e l a s t t h r e e qu a r t e r s ; t h e c o m p a n y e x p e c t s t o g r o w o i l p r o d u c t i o n 3 0 % in F Y 1 5 a s C a n a d i a n o i l s a n d s an d o i l i e r U . S . s h a l e p l a y s ra m p u p w a r d ; t e c h n o l o g i c a l i m p r o v e m e n t s , a l o n g w i t h lo w e r d e m a n d f o r o i l f i e l d s e r v i c e s , c o n t i n u e t o r e d u c e ca p i t a l e x p e n d i t u r e s a n d o p e r a t i n g e x p e n s e s ; a r e s o u r c e ba s e t h a t i n c l u d e s l a r g e a c r e a g e p o s i t i o n s i n t h e D e l a w a r e an d A n a d a r k o b a s i n s s u p p o r t s l o n g - t e r m a s s e t v a l u e Ge n e r a l D y n a m i c s ( G D ) – d i v e r s i f i e d d e f e n s e c o n t r a c t o r h a s be a t e n c o n s e n s u s e a r n i n g s p e r s h a r e ( E P S ) e s t i m a t e s f o r ni n e q u a r t e r s r u n n i n g ; r e v e n u e s a r e e x p e c t e d t o i n f l e c t up w a r d i n F Y 1 5 a n d b e y o n d a s t h e n e g a t i v e e f f e c t s o f t h e se q u e s t e r w a n e ; G D ’ s b a c k l o g ha s i n c r e a s e d s u b s t a n t i a l l y ov e r t h e p a s t y e a r ; F Y 1 5 E P S e s t i m a t e s h a v e t r e n d e d st e a d i l y u p w a r d o v e r t h e l a s t s e v e r a l m o n t h s ; t h e c o m p a n y ha s c o m m i t t e d t o r e t u r n i n g 1 0 0 % o f i t s f r e e c a s h f l o w t o sh a r e h o l d e r s , a n d r a i s e d i t s d i v i d e n d b y m o r e t h a n 1 0 % ea r l i e r t h i s y e a r Th e G o l d m a n S a c h s G r o u p , I n c . ( G S ) – l a r g e b r o k e r a g e ho u s e r e p o r t e d i m p r e s s i v e r e s u l t s i n Q 1 ; c o m p e n s a t i o n ra t i o s w e r e l e s s t h a n e x p e c t e d , d r i v i n g o p e r a t i n g l e v e r a g e hi g h e r ; i n c r e a s e d m e r g e r s a n d a c q u i s i t i o n s a c t i v i t y a c r o s s a va r i e t y o f i n d u s t r i e s , c u r r e n c y an d i n t e r e s t r a t e v o l a t i l i t y , an d h i g h e r e q u i t y p r i c e s c r e a t e p r o f i t a b l e o p p o r t u n i t i e s ac r o s s t h e c o m p a n y ’ s f r a n c h i s e s ; t h e c o m p a n y t r a d e s i n l i n e wi t h p e e r s n o t w i t h s t a n d i n g p e e r - l e a d i n g r e s u l t s ; t h e in d u s t r y i s s h o w i n g s i g n s o f s t a b i l i t y s i x y e a r s i n t o t h e re c o v e r y , a n d G S r e m a i n s a p r e m i e r n a m e w i t h i n t h e s p a c e Se l e c t D e l e t i o n s Co n o c o P h i l l i p s ( C O P ) – t h e l a r g e s t U . S . - b a s e d o i l a n d g a s ex p l o r a t i o n a n d p r o d u c t i o n c o m p a n y i s c h a l l e n g e d t o ma i n t a i n c a s h f l o w a n d g r o w l o n g e r - t e r m p r o d u c t i o n ; t h e ec o n o m i c a t t r a c t i v e n e s s o f l o n g - c y c l e d e v e l o p m e n t pr o j e c t s , a m a t e r i a l p o r t i o n o f C O P ’ s p r o j e c t e d p r o d u c t i o n , ha s w a n e d r e l a t i v e t o s h a l e p l a y s; even a historically strong co m m i t m e n t t o t h e d i v i d e n d m a y n o t b e e n o u g h i n a l o w co m m o d i t y p r i c e e n v i r o n m e n t Di s c o v e r F i n a n c i a l S e r v i c e s ( D F S ) – t h i s c r e d i t c a r d c o m p a n y an d f i n a n c i a l l e n d e r m a t e r i a ll y m i s s e d Q 4 E P S c o n s e n s u s , an d Q 1 r e s u l t s w e r e j u s t i n l i n e ; n e t i n t e r e s t m a r g i n co m p r e s s i o n i s e x p e c t e d i n F Y 1 5 a n d r e w a r d s c o m p e t i t i o n re m a i n s i n t e n s e ; F Y 1 5 e s t i m a t e s h a v e t r e n d e d d o w n w a r d fo r s e v e r a l m o n t h s a n d r e c e n t g u i d a n c e w a s d i s a p p o i n t i n g ; un d e r l y i n g c r e d i t f u n d a m e n t a l s a r e s o l i d , b u t o t h e r n e a r - te r m f u n d a m e n t a l h e a d w i n d s s u g g e s t b e t t e r o p p o r t u n i t i e s el s e w h e r e i n t h e s e c t o r Pa c k a g i n g C o r p o r a t i o n o f A m e r i c a ( P K G ) – a f t e r a s l i g h t m i s s in Q 4 , P K G f o l l o w e d u p w i t h a more substantial EPS miss in Q1 ; p r i c i n g p r e s s u r e i n w h i t e p a p e r s a n d m e d i u m co n t a i n e r b o a r d , a l o n g w i t h c h a l l e n g e s r a m p i n g i t s n e w l y co n v e r t e d m i l l , h u r t t h e t o p l i n e ; perhaps more significantly, op e r a t i n g e x p e n s e s c o n t i n u e to c r e e p u p ; F Y 1 5 e s t i m a t e s ha v e d e c l i n e d m a t e r i a l l y s i n c e t h e b e g i n n i n g o f t h e y e a r ; i n sp i t e o f a r e l a t i v e l y a t t r a c t i v e l o n g - t e r m p r o f i l e , c o m p a n y - sp e c i f i c i s s u e s a n d a l a c k o f n e a r - t e r m p r i c i n g c a t a l y s t s a r e co n c e r n i n g 7 Po r t f o l i o C h a r a c t e r i s t i c s • As o f 6 / 3 0 / 1 5 S T R A T E G Y P R O F I L E / O V E R V I E W DA N A L A R G E C A P E Q U I T Y ST R A T E G Y ww w . D a n a I n v e s t m e n t . c o m Pr i c e t o E a r n i n g s R a t i o Fo r w a r d 1 2 M o n t h s ( H a r m o n i c A v e r a g e ) En t e r p r i s e V a l u e / E B I T D A (H a r m o n i c A v e r a g e ) Sa l e s G r o w t h R a t e Hi s t o r i c a l 3 Y e a r s EPS Growth Rate Estimated 3-5 Years Re t u r n o n E q u i t y ( R O E ) M a r k e t C a p (W e i g h t e d A v g / M e d i a n ) 3 Y e a r D i v i d e n d G r o w t h S h a r e h o l d e r Y i e l d Ac t u a l c o m p o s i t e h o l d i n g s a s o f 6 / 3 0 / 1 5 - C h a r a c t e r i s t i c s a n d d i v i d e n d s r e p r e s e n t w e i g h t e d a v e r a g e s , u n l e s s o t h e r w i s e n o t e d Se e I m p o r t a n t D i s c l o s u r e I n f o r m a t i o n S o u r c e : F a c t S e t R e s e a r c h S y s t e m 22 . 5 1 19 . 9 5 023 Da n a L C E q u i t y S & P 5 0 0 10.8011.00 011 Dana LC EquityS&P 500 90 . 5 6 13 4 . 7 8 33 . 4 0 17 . 9 8 0 13 5 Da n a L C E q u i t y S & P 5 0 0 25 . 3 2 17 . 9 1 026 Da n a L C E q u i t y S & P 5 0 0 4.86 4.27 05 Dana LC EquityS&P 500 6. 7 0 6. 4 0 07 Da n a L C E q u i t y S & P 5 0 0 14 . 0 5 16 . 4 1 017 Da n a L C E q u i t y S & P 5 0 0 9. 4 8 10 . 8 1 011 Da n a L C E q u i t y S & P 5 0 0 8 ww w . D a n a I n v e s t m e n t . c o m CO N S I S T E N T E A R N I N G S E X E C U T I O N : 2 NDQUARTER 2015 Co n s i s t e n t E a r n i n g s E x e c u t i o n Da n a ’ s i n v e s t m e n t p r o c e s s f o c u s e s o n m a n a g e me n t t e a m s t h a t e x e c u t e a t a h i g h l e v e l Da n a L a r g e C a p E q u i t y h o l d i n g s h a v e c o n s i s te n t l y p r o v i d e d q u a r t e r l y e a r n i n g s s u r p r i se s a t a r a t e g r e a t e r t h a n t h e b e n c h m a r k Pe r c e n t a g e o f C o m p a n i e s M e e t i n g o r B e a t i n g E a r n i n g s E s t i m a t e s T h r o u g h J u n e 3 0 , 2 0 1 5 So u r c e : M o r n i n g s t a r DA N A L A R G E C A P E Q U I T Y ST R A T E G Y 88.46 85.19 85.19 83.33 83.02 80.36 88.46 77.78 74.07 83.02 81.13 60.38 76.47 92.98 81.36 86.11 79.31 75.00 72.7382.46 84.75 71.93 63.13 82.17 82.24 76.22 76.53 74.18 75.91 73.61 68.85 70.36 72.15 73.08 73.02 75.61 76.64 77.48 75.05 76.72 76.78 79.88 78.43 75.10 0255075 10 0 Q1 ' 1 0 Q 2 ' 1 0 Q 3 ' 1 0 Q 4 ' 1 0 Q 1 ' 1 1 Q 2 ' 1 1 Q 3 ' 1 1 Q 4 ' 1 1 Q 1 ' 1 2 Q 2 ' 1 2 Q 3 ' 1 2 Q 4 ' 1 2 Q 1 ' 1 3 Q 2 ' 1 3 Q 3 ' 1 3 Q 4 ' 1 3 Q 1 ' 1 4 Q 2 ' 1 4 Q 3 ' 1 4 Q 4 ' 1 4 Q 1 ' 1 5 Q 2 '15 Da n a L a r g e C a p E q u i t y S& P 5 0 0 9 ww w . D a n a I n v e s t m e n t . c o m CO N T R I B U T O R S A N D D E T R A C T O R S : 2 NDQUARTER 2015 Se c t o r C o n t r i b u t o r s In f o r m a t i o n T e c h n o l o g y – a g a i n t h i s q u ar t e r w e s a w r o b u s t p e r f o r m a n c e f r o m Am b a r e l l a , I n c . ( A M B A ) a s A M B A s u r g e d af t e r a n o t h e r s t r o n g e a r n i n g s r e p o r t an d h i g h e r g u i d a n c e f o r Q 2 , i t i s w o r t h no t i n g t h a t A M B A i s h e a v i l y s h o r t e d , a ch a r a c t e r i s t i c w e e n j o y s e e i n g i n g o o d c o m p a n i e s ; Z e b r a T e c h n o l o g i e s Co r p o r a t i o n ( Z B R A ) a l s o s u r g e d a f t e r re p o r t i n g a s e c o n d s t r a i g h t s t r o n g qu a r t e r , s e n d i n g i t s m a r k e t c a p w e l l i n t o t h e m i d c a p r a n g e Co n s u m e r D i s c r e t i o n a r y – S k e c h e r s U . S . A . , In c . ( S K X ) l e d t h e w a y w i t h a n o t h e r gr e a t q u a r t e r ; S t a r z , I n c . (S T R Z A ) , a p a y t e l e v i s i o n m e d i a c o m p a n y , c o n t i n u e d i t s fa n t a s t i c r u n i n 2 0 1 5 , b u o y e d b y a s o l i d qu a r t e r a n d i n c r e a s e d p r o b a b i l i t y o f a M& A t r a n s a c t i o n So u r c e : F a c t S e t D a t a S y s t e m s DA N A S M A L L C A P E Q U I T Y ST R A T E G Y Se c t o r D e t r a c t o r s In d u s t r i a l s – t h e i n d u s t r i a l s e c t o r c o s t 45 b a s i s p o i n t s o f r e l a t i v e p e r f o r m a n c e ; on l y t w o S t r a t e g y h o l d i n g s p o s t e d p o s i t i ve r e t u r n s a s t h e m a r k e t p r i c e d i n a we a k e r e a r n i n g s p i c t u r e f o r 2 0 1 5 ; G P S t r a te g i e s C o r p o r a t i o n ( G P X ) a n d S a i a , I n c . (S A I A ) l e d t h e w a y l o w e r ; G P X s a w p r i c e t o e a r n i n g s ( P E ) c o m p r e s s i o n i n A p r i l a s it r e t r e n c h e d f o l l o w i n g a 9 m o n t h r u n fr o m a $ 2 4 t o $ 3 7 s h a r e p r i c e , a n d t h e fo r w a r d P E d r o p p e d f r o m 2 2 x t o 1 9 . 5 x ; S A IA f e l l a s t r a n s p o r t s w e a k e n e d a c r o s s th e b o a r d , S A I A f a c e s f a l l i n g r e v e n u e s a n d d e c l i n i n g t o n n a g e t r e n d s i n 2 0 1 5 He a l t h C a r e – n o t h o l d i n g S y n a g e v a B i o P h a r m a C o r p o r a t i o n ( G E V A ) c o s t u s 1 9 ba s i s p o i n t s a s i t r e t u r n e d 1 4 4 % f o r th e q u a r t e r a s i t w a s a c q u i r e d ; L a n n e t t Co m p a n y , I n c . ( L C I ) c o s t u s a n o t h e r 2 3 b a si s p o i n t s a s i t m i l d l y b e a t e s t i m a t e s bu t d i d n o t r a i s e g u i d a n c e , c a u s i n g s h a r e s t o d e c l i n e 1 2 . 2 % f o r t h e q u a r t e r In d i v i d u a l C o n t r i b u t o r s Sk e c h e r s U . S . A . , I n c . 52.68% Am b a r e l l a , I n c . 35.64% Li g a n d P h a r m a c e u t i c a l s , I n c . 3 0 . 8 5 % St a r z , I n c . C l a s s A 29.96% Ze b r a T e c h n o l o g i e s C o r p o r a t i o n 2 2 . 4 2 % In d i v i d u a l D e t r a c t o r s Me t h o d e E l e c t r o n i c s , I n c . -41.53% Ic o n i x B r a n d G r o u p , I n c . -25.84% Sa b r a H e a l t h C a r e R E I T , I n c . -21.21% Am e r i c a n A x l e & M f g . H o l d i n g s - 1 9 . 0 5 % PN M R e s o u r c e s , I n c . -15.17%10 ww w . D a n a I n v e s t m e n t . c o m AD D I T I O N S A N D D E L E T I O N S : 2 NDQUARTER 2015 DA N A S M A L L C A P E Q U I T Y ST R A T E G Y Se l e c t A d d i t i o n s AM A G P h a r m a c e u t i c a l s , I n c. ( A M A G ) – s p e c i a l t y ph a r m a c e u t i c a l c o m p a n y h a s be a t e n c o n s e n s u s e a r n i n g s pe r s h a r e ( E P S ) e s t i m a t e s i n e a c h o f t h e l a s t f o u r q u a r t e r s ; ro b u s t c a s h f l o w s s u p p o r t a d d i t i o n a l a c c r e t i v e a c q u i s i t i o n s an d / o r s i g n i f i c a n t c a p i t a l r e t u r n ; n o t w i t h s t a n d i n g fu n d a m e n t a l s t r e n g t h , t h e c u r r e n t v a l u a t i o n i s h e a v i l y di s c o u n t e d r e l a t i v e t o s e c t o r p e e r s a n d t h e b r o a d e r m a r k e t AM N H e a l t h c a r e S e r v i c e s , I n c . ( A H S ) – h e a l t h c a r e s t a f f i n g co m p a n y r e p o r t e d s t r o n g E P S b e a t s i n e a c h o f t h e l a s t t w o qu a r t e r s d r i v e n b y r o b u s t t o p l i n e g r o w t h ; i n c r e a s e d p a t i e n t vo l u m e s a t h e a l t h c a r e p r o v i d e r s i s i n c r e a s i n g d e m a n d f o r nu r s e s , d o c t o r s a n d r e l a t e d w o rk e r s ; F Y 1 5 e s t i m a t e s h a v e tr e n d e d s u b s t a n t i a l l y u p w a r d s i n c e t h e b e g i n n i n g o f t h e ye a r a n d f o r w a r d e s t i m a t e s m a y b e c o n s e r v a t i v e Fe r r o C o r p o r a t i o n ( F O E ) – m a n u f a c t u r e r o f s p e c i a l t y g l a s s an d a s s o r t e d p i g m e n t s a n d c o a t i n g s i s e x p e c t e d t o d e l i v e r su b s t a n t i a l E P S g r o w t h i n F Y 1 5 ; e x e c u t i o n o n c o s t c u t t i n g in i t i a t i v e s h a s b e e n i m p r e s s i v e a n d d i v e s t i t u r e s o f n o n - c o r e as s e t s f u r t h e r i m p r o v e t h e m a r g i n p r o f i l e ; c a s h p r o c e e d s fr o m a s s e t s a l e s a n d o n g o i n g f r e e c a s h f l o w s u p p o r t ac c r e t i v e a c q u i s i t i o n s o f s m a l l e r b u s i n e s s e s w i t h i n t h e co m p a n y ’ s c o r e c o m p e t e n c i e s ; ro b u s t E P S b e a t s i n r e c e n t qu a r t e r s h a v e d r i v e n c o n s e n s u s e s t i m a t e s u p w a r d a n d fo r w a r d v a l u a t i o n r e m a i n s b e l o w t h e b r o a d e r m a r k e t Se l e c t D e l e t i o n s Ak o r n , I n c . ( A K R X ) – d i v e r s i fi e d p h a r m a c e u t i c a l c o m p a n y ha s e x h i b i t e d r o b u s t t o p a n d b o t t o m l i n e g r o w t h th r o u g h o u t i t s h o l d i n g p e r i o d , a n d v a l u a t i o n c u r r e n t l y ap p r o a c h e s $ 5 b i l l i o n ; m a r k e t c a p i t a l i z a t i o n a t t h e h i g h e n d of t h e s t r a t e g y r a n g e a n d r e c e n t i s s u e s s u r r o u n d i n g fi n a n c i a l r e p o r t i n g a n d r e s t a t e m e n t o u t w e i g h u n d e r l y i n g fu n d a m e n t a l s t r e n g t h Ac a d i a H e a l t h c a r e C o m p a n y , I n c . ( A C H C ) – b e h a v i o r a l he a l t h c a r e p r o v i d e r h a s e x hi b i t e d s t r o n g s h a r e p r i c e pe r f o r m a n c e t h r o u g h o u t i t s h o l d i n g p e r i o d ; o n g o i n g fu n d a m e n t a l s t r e n g t h a n d a c c r e t i v e a c q u i s i t i o n s h a v e dr i v e n m a r k e t c a p i t a l i z a t i o n a b o v e $ 5 b i l l i o n , s i g n i f i c a n t l y ex c e e d i n g t h e S t r a t e g y a v e r a g e Mo o g , I n c . ( M O G . A ) – m a n u f a c t u r e r o f c o m p o n e n t s a n d sy s t e m s f o r i n d u s t r i a l a n d a e r o s p a c e e n d - m a r k e t s h a s mi s s e d c o n s e n s u s E P S e s t i m a t e s i n e a c h o f t h e l a s t t h r e e qu a r t e r s ; e s t i m a t e s t r e n d e d d o w n w a r d a f t e r t h e c o m p a n y re d u c e d g u i d a n c e i n i t s m o s t r e c e n t q u a r t e r ; t h e c o m p a n y bl a m e d l o w e r t h a n e x p e c t e d e n d - m a r k e t d e m a n d , b u t st a g n a n t m a r g i n s s u g g e s t t h a t e x e c u t i o n i s a l s o l a c k i n g 11 Po r t f o l i o C h a r a c t e r i s t i c s • As o f 6 / 3 0 / 1 5 S T R A T E G Y P R O F I L E / O V E R V I E W DA N A S M A L L C A P E Q U I T Y ST R A T E G Y ww w . D a n a I n v e s t m e n t . c o m Pr i c e t o E a r n i n g s R a t i o Fo r w a r d 1 2 M o n t h s ( H a r m o n i c A v e r a g e ) En t e r p r i s e V a l u e / E B I T D A (H a r m o n i c A v e r a g e ) Sa l e s G r o w t h R a t e Hi s t o r i c a l 3 Y e a r s EPS Growth Rate Next 12 Months (Median) Re t u r n o n E q u i t y ( R O E ) M a r k e t C a p (W e i g h t e d A v g / M e d i a n ) 3 Y e a r D i v i d e n d G r o w t h S h a r e h o l d e r Y i e l d Ac t u a l c o m p o s i t e h o l d i n g s a s o f 6 / 3 0 / 1 5 - C h a r a c t e r i s t i c s a n d d i v i d e n d s r e p r e s e n t w e i g h t e d a v e r a g e s , u n l e s s o t h e r w i s e n o t e d Se e I m p o r t a n t D i s c l o s u r e I n f o r m a t i o n S o u r c e : F a c t S e t R e s e a r c h S y s t e m 15 . 7 1 6. 6 8 016 Da n a S C R u 2 0 0 0 13.38 7.84 014 Dana SCRu2000 2. 2 6 1. 9 0 1. 9 8 0. 8 1 0. 0 2. 5 Da n a S C R u 2 0 0 0 26 . 3 5 14 . 3 6 027 Da n a S C R u 2 0 0 0 0.46 -0.23 -0 . 5 0. 5 Dana SCRu2000 15 . 6 0 16 . 4 0 017 Da n a S C R u 2 0 0 0 16 . 8 7 17 . 8 5 018 Da n a S C R u 2 0 0 0 11 . 2 3 14 . 2 0 015 Da n a S C R u 2 0 0 0 12 ww w . D a n a I n v e s t m e n t . c o m CO N S I S T E N T E A R N I N G S E X E C U T I O N Co n s i s t e n t E a r n i n g s E x e c u t i o n Da n a ’ s i n v e s t m e n t p r o c e s s f o c u s e s o n m a n a g e me n t t e a m s t h a t e x e c u t e a t a h i g h l e v e l Da n a S m a l l C a p E q u i t y h o l d i n g s h a v e c o n s i s te n t l y p r o v i d e d q u a r t e r l y e a r n i n g s s u r p r i se s a t a r a t e g r e a t e r t h a n t h e b e n c h m a r k Pe r c e n t a g e o f C o m p a n i e s M e e t i n g o r B e a t i n g E a r n i n g s E s t i m a t e s T h r o u g h J u n e 3 0 , 2 0 1 5 So u r c e : M o r n i n g s t a r DA N A S M A L L C A P E Q U I T Y ST R A T E G Y 69.84 72.13 75.86 75.86 74.14 74.60 77.05 70.00 74.19 66.67 77.05 71.88 75.38 77.78 76.19 82.54 65.71 56.06 73.02 75.38 71.43 73.02 64.97 63.13 66.83 63.43 62.98 60.28 62.03 63.24 60.24 62.00 62.23 62.57 60.60 64.56 65.27 64.84 61.45 50.00 62.88 64.02 64.76 64.65 0255075 10 0 Q1 ' 1 0 Q 2 ' 1 0 Q 3 ' 1 0 Q 4 ' 1 0 Q 1 ' 1 1 Q 2 ' 1 1 Q 3 ' 1 1 Q 4 ' 1 1 Q 1 ' 1 2 Q 2 ' 1 2 Q 3 ' 1 2 Q 4 ' 1 2 Q 1 ' 1 3 Q 2 ' 1 3 Q 3 ' 1 3 Q 4 ' 1 3 Q 1 ' 1 4 Q 2 ' 1 4 Q 3 ' 1 4 Q 4 ' 1 4 Q 1 ' 1 5 Q 2 '15 Da n a S m a l l C a p Ru s s e l l 2 0 0 0 13 ww w . D a n a I n v e s t m e n t . c o m MA C R O E C O N O M I C B A C K G R O U N D Se c o n d q u a r t e r G D P e x p e c t e d t o r e b o u n d m o d e s t l y Ne g a t i v e e f f e c t s o f w e a t h e r a n d W e s t C o a s t p o r t s t r i k e wa n e Do m e s t i c e n e r g y r e c e s s i o n a n d s t r o n g e r d o l l a r a r e he a d w i n d s Ro b u s t G D P g r o w t h – i . e . “ l i f t o f f ” – r e m a i n s e l u s i v e Fe d p o l i c y t u g g e d i n a l l d i r e c t i o n s No r e a l c o n s e n s u s o n r a t e n o r m a l i z a t i o n U. S . G D P u n d e r p e r f o r m i n g e x p e c t a t i o n s Gl o b a l e c o n o m i e s a n d G r e e k v a r i a b l e p r e s s u r e t h e F e d to m a i n t a i n l i q u i d i t y p o l i c i e s Bo n d s m o r e v o l a t i l e , o i l , U . S . D o l l a r m o r e s t a b l e U. S . g l o b a l b o n d y i e l d s r a t e s s u r g e d i n Q 2 Do l l a r r e v e r s e d t r e n d a g a i n s t P o u n d , E u r o Go l d h a s s t a b i l i z e d i n $ 1 1 7 0 – $ 1 2 1 0 r a n g e Oi l c o n s u m p t i o n k e e p s f a l l i n g , b u t p r i c e s r e b o u n d Ge o p o l i t i c a l f a t i g u e i n t e r r u p t e d b y G r e e c e Gr e e k d e f a u l t s i t u a t i o n r e a c h e s c r i t i c a l s t a g e , v o l a t i l i t y in c r e a s e s De s p i t e I S I S a t t a c k i n g M i d d l e E a s t t a r g e t s , U . S . r e l y i n g on r e g i o n a l e f f o r t s a n d d i s e n g a g i n g As i a n e c o n o m i e s d a t a - d r i v e n b y C h i n a Ma r k e t s r e a c t a n d a n t i c i p a t e U. S . e q u i t i e s h o v e r a r o u n d a l l - t i m e h i g h s , b u t f l a t t i s h YT D a s e a r n i n g s g r o w t h i n q u e s t i o n Gl o b a l m a r k e t s o u t p e r f o r m i n g Y T D Bo n d s f l a t t i s h d e s p i t e s e l l - o f f EC O N O M I C UP D A T E Wo r l d G D P S o u r c e : S o u r c e : O E C D ( ht t p s : / / d a t a . o e c d . o r g / g d p / r e a l - g d p - f o r e c a s t . h t m # i n d i c a t o r - c h a r t ) O E C D ( 2 0 1 5 ) , R e a l G D P f o r e c a s t ( i n d i c a t o r ) . d o i : 1 0 . 1 7 8 7 / 1 f 8 4 1 5 0 b - e n ( A c c e s s e d o n 0 7 J u l y 2 0 1 5 ) -0.34% 2.22% 1.59% 7.69% 2.74%6.37% 0.85% 2.39% -0.09% 7.35% 0.16%7.25% 1.45% 2.02% 0.74% 6.80%-0.82%6.88% 2.06% 2.76% 1.40% 6.68%1.11%7.61% -3 % -2 % -1 %0%1%2%3%4%5%6%7%8% Eu r o A r e a U. S . Ja p a n Ch i n a BrazilIndia Wo r l d G D P G r o w t h F o r e c a s t s : I m p r o v i n g G r o w t h E x p e c t e d 20 1 3 20 1 4 20 1 5 ( E ) 2016(E) Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313Q413Q114Q214Q314Q414Q115Q215Q315Q415 ‐3% ‐2% ‐1%0%1%2%3%4%5%6% 1.31 3.93 1.74 3.92 2.73 2.54 ‐1.54 2.94 0.84 4.58 2.25 1.63 2.49 0.06 2.74 1.77 4.52 3.50 ‐2.114.594.97 2.22 ‐0.172.503.003.00 2.24 ©FactSet Research Systems GD P Gr o w t h Si n c e R e c e s s i o n Ended (% 1Q An n ) Gr o s s Do m e s t i c Pr o d u c t , Bi l . Ch a i n e d 20 0 5 $, SAAR ‐ U.S. [Last: ‐0.17 (MAR‐2015)] Q2 20 1 5 to Q4 20 1 5 Es t i m a t e s ‐ So u r c e : Bl o o m b e r g Ec o n o m i c Forecasts an as of 6/24/15 Tr e n d l i n e : Av e r a g e Si n c e 6/ 3 0 / 2 0 0 9 14 ww w . D a n a I n v e s t m e n t . c o m Th e F e d h a s f i g u r e d i n t o e v e r y s t o c k m a r k e t hi c c u p . H o w e v e r , e a c h b o u t o f r a t e h i k e ji t t e r s h a s r e s o l v e d t o t h e u p s i d e o n s t e adily im p r o v i n g U . S . e c o n o m i c d a t a . June 8, 2015 BARRON’S Do w F a l l s 1 % o n F e a r s o f a F e d R a t e H i k e Oc t o b e r 2 0 1 4 QE 3 e n d s , F e d r a t e h i k e ji t t e r s . gl o b a l s l o w d o w n wo r r i e s -9 . 8 % 4/6/15 St o c k s r a l l y on weak Mar jobs 6/5/15 Stocks drop on better June jobs 7/ 3 0 / 1 4 Fe d r e a f f i r m s ta p e r t o e n d Q E by O c t o b e r 2 0 1 4 -4 . 3 % 3/ 6 / 1 5 St o c k s d r o p on s t r o n g Fe b j o b s -3 . 6 % 5/8/15 Stocks drop on better May jobs 12 / 1 7 / 1 4 Fe d t o b e "p a t i e n t " i n ra i s i n g r a t e s -5 . 1 % 1/ 6 / 1 5 Oi l p r i c e s si n k b e l o w $5 0 -4 . 2 % 18 0 0 18 5 0 19 0 0 19 5 0 20 0 0 20 5 0 21 0 0 21 5 0 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15May-15Jun-15 S&P 500 Index S& P 5 0 0 I N D E X – E C O N O M I C F U N D A M E N T A LS A R E I N T H E D R I V E R ’ S S E A T So u r c e : S t a n d a r d a n d P o o r ’ s , d a t a t h r o u g h J u n e 5 , 2 0 1 5 . EC O N O M I C UP D A T E 15 ww w . D a n a I n v e s t m e n t . c o m SE N T I M E N T - G O O D F O R C O N S U M E R S P E N D I N G B U T N O T I R R A T I O N A L L Y E X U B E R A N T Co n s u m e r s e n t i m e n t h a s f i n a l l y n o r m a l i z ed s e v e n y e a r s f o l l o w i n g t h e c o l l a p s e . Yo u h a v e t o g o b a c k a g e n e r a t i o n – m o r e t h a n 3 0 y e a r s – t o f i n d co n s u m e r s e n t i m e n t a s l o w a s i t g o t t h r o u g h t h e r e c e n t c r i s i s . So u r c e : T h e U n i v e r s i t y o f M i c h i g a n S u r v e y R e s e a r c h C e n t e r , d a t a t h r o u g h M a y 2 0 1 5 . EC O N O M I C UP D A T E Sh a d e d b a n d s re p r e s e n t r e c e s s i o n s . 405060708090 10 0 11 0 12 0 Jun-59 Jun-61 Jun-63 Jun-65 Jun-67 Jun-69 Jun-71 Jun-73 Jun-75 Jun-77 Jun-79 Jun-81 Jun-83 Jun-85 Jun-87 Jun-89 Jun-91 Jun-93 Jun-95 Jun-97 Jun-99 Jun-01 Jun-03 Jun-05 Jun-07Jun-09Jun-11Jun-13Jun-15 U Mich Consumer Sentiment Index (Q1 1966=100) no r m a l se n t i m e n t 19 8 0 re c e s s i o n , c r u d e > d o u b l e d , 1 4 % i n f l a t i o n , s i l v e r bu b b l e / b u r s t s t o c k s f l a t f o r > 1 0 y e a r s 2007-8/2011 gl o b a l f i n a n c i a l c r i s i s , r e c e s s i o n , U . S . d e b t do w n g r a d e , s t o c k s f l a t f o r > 1 0 y e a r s st o c k m a r k e t b u b b l e May at 90.7 is a return to normal 16 ww w . D a n a I n v e s t m e n t . c o m HOUSEHOLD NET WORTH Household net worth has fully recovered Good for consumer spending but not in irrational exuberance territory So u r c e : F e d e r a l R e s e r v e . D a t a t h r o u g h De c e m b e r 2 0 1 4 , r e l e a s e d M a r c h 1 2 , 2 0 1 5 . 1Co m p o u n d a n n u a l g r o w t h r a t e . $ 8 . 0 E + 0 7 = $ 8 0 t r i l l i o n . EC O N O M I C UP D A T E Tr e n d L i n e C A G R 1 = 5 . 5 % $0 $1 0 $2 0 $3 0 $4 0 $5 0 $6 0 $7 0 $8 0 $9 0 $1 0 0 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2 2011Q1 2011Q4 2012Q3 2013Q2 2014Q12014Q4 Household Net Worth ( in Trillions) St o c k m a r k e t bu b b l e Re a l e s t a t e an d s t o c k m a r k e t bu b b l e 17 ww w . D a n a I n v e s t m e n t . c o m 02468101214 million barrels per day Ja n - 1 0 Au g - 1 3 Ma r - 1 5 WO R L D C R U D E O I L P R O D U C T I O N – W H Y T H E P R I C E W A R ? Saudi Arabia has borne the brunt of the production cuts while others in OPEC have increased EC O N O M I C UP D A T E U. S . s h a l e p r o d u c t i o n h a s u p s e t t h e g l o b a l s u p p l y / d e m a n d e q u i l i b r i u m OP E C 1/ 1 0 : 9 . 4 m m b p d 3/ 1 5 : 1 4 . 7 m m b p d +5 6 % So u r c e : U . S . E n e r g y I n f o r m a t i o n A g e n c y , S h o r t - T e r m E n e r g y O u t l oo k , A p r i l 2 0 1 5 . F o r n o n - O P E C p r o d u c e r s t h e f i g u r e s i n c l u d e c r u d e o i l p l u s l i q u i d s p r o d u c t i o n . F o r O P E C p r o d u c e r s t h e f i g u r e s i n c l u d e c r u d e o i l b u t e x c l u d e l i q u i d s . 18 ww w . D a n a I n v e s t m e n t . c o m QE 1 QE 2 3/ 2 / 1 1 : B i l l G r o s s : w i t h t h e e n d o f QE 2 , b o n d y i e l d s a r e l i k e l y t o g o "h i g h e r , m a y b e e v e n m u c h hi g h e r . " 1. 4 3 % QE 3 2. 4 1 % 0. 0 0 0. 5 0 1. 0 0 1. 5 0 2. 0 0 2. 5 0 3. 0 0 3. 5 0 4. 0 0 4. 5 0 5. 0 0 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17 10-year U.S. Treasury Bond Yield (%) MU C H L O W E R T H A N E X P E C T E D B O N D Y I E L D S Lo w e r t h a n e x p e c t e d b o n d y i e l ds h a v e b e e n t h e b i g s u r p r i s e f o r t h e l a s t f o u r y e a r s Wh e r e y i e l d s g o f r o m h e r e d e p e n d s o n t h e i n fl a t i o n d a t a a n d s u p p l y a n d d e m a n d f o r b o n d s In f l a t i o n i s v e r y l o w a n d a p t t o r e m a i n s o ; t h e r a t e o f ne t n e w s u p p l y o f U . S T r e a s u r y b o n d s w i l l b e c l o s e t o f l a t So u r c e : F e d e r a l R e s e r v e . D a t a t h r o u g h J u n e 5 , 2 0 1 5 . 1 A v e r a g e of e c o n o m i s t s ’ f o r e c a s t s f r o m T h e W a l l S t r e e t J o u r n a l ‘ s m o n t h ly s u r v e y s t a k e n N o v e m b e r 2 0 1 1 , J a n u a r y 2 0 1 4 , S e p t e m b e r 2 0 1 4 a n d A p r i l 2 0 1 5 . EC O N O M I C UP D A T E 19 ww w . D a n a I n v e s t m e n t . c o m INFLATION CP I , o i l a n d o t h e r co m m o d i t i e s a r e mo v i n g d o w n Di s i n f l a t i o n i s a c u r r e n t gl o b a l p h e n o m e n o n EC O N O M I C UP D A T E 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20112012201320142015‐4% ‐4% ‐2% ‐2% 0% 0% 2% 2% 4% 4% 6% 6% 8% 8% 10% 10 % 0.031.732.35 ©FactSet Research Systems US Co n s u m e r Pr i c e In f l a t i o n vs . 10 Ye a r Tr e a s u r y U. S . 10 Ye a r Tr e a s u r y Yi e l d ‐ Co n s t a n t Ma t u r i t y [ L a s t : 2. 3 5 (0 6 / 2 0 1 5 ) ] (% 1Y R ) U. S . CP I (a l l It e m s U. S . ci t y av g SA ) (1 9 8 2 ‐84 = 1 0 0 ) [L a s t : 0. 0 3 (0 5 / 2 0 1 5 ) ] (% 1Y R ) CP I ‐U Al l It e m s Le s s Fo o d An d En e r g y U. s . Ci t y Av e r a g e SA 19 8 2 ‐84 = 1 0 0 ‐ Un i t e d States [Last: 1.73 (05/2015)] U. S . Re c e s s i o n Pe r i o d s Fe d In f l a t i o n Ta r g e t 2. 0 % 20 ww w . 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S . Tr e n d l i n e : Av e r a g e 21 ww w . D a n a I n v e s t m e n t . c o m BU L L A N D B E A R M A R K E T A R G U M E N T S A S O F 6 / 3 0 / 1 5 Bu l l C a s e : Gl o b a l m o n e t a r y p o l i c y r e m a i n s a c c o m m o d a t i v e U. S . l a b o r m a r k e t s h o w i n g i n c r e a s i n g s t a b i l i t y a n d g a i n s i n mo n t h l y e m p l o y m e n t U. S . a u t o s e c t o r u n i t s a l e s ru n n i n g a t b e s t l e v e l s i n c e 2 0 0 5 U. S . h o u s i n g a f f o r d a b i l i t y r e m a i n s a t t r a c t i v e i n a l l b u t a f e w lo c a l m a r k e t s In f l a t i o n r e m a i n s m u t e d “R e n a i s s a n c e ” i n d o m e s t i c e n er g y p r o d u c t i o n ( b o t h o i l & ga s a n d “ g r e e n ” a l t e r n a t i v e s ) r e d u c i n g d e p e n d e n c y o n fo r e i g n o i l Do m e s t i c e n e r g y p r o d u c t i o n i s l o w e r i n g e n e r g y p r i c e s ac r o s s t h e b o a r d , b e n e f i t i n g b o t h c o n s u m e r s a n d m a n y bu s i n e s s e s Co r p o r a t e e a r n i n g s g r o w t h a n d p r o f i t m a r g i n e x p a n s i o n re m a i n s a b o v e t r e n d f o r m a n y s e c t o r s Co r p o r a t i o n s a r e s i t t i n g o n r e c o r d a m o u n t s o f c a s h , le a d i n g t o s h a r e h o l d e r f r i e n d l y a c t i o n s Me r g e r & a c q u i s i t i o n a n d I P O (i n i t i a l p u b l i c o f f e r i n g ) ac t i v i t y h a v e p i c k e d u p s i g n i f i c a n t l y Eq u i t y m a r k e t v a l u a t i o n s r e m a i n r e a s o n a b l e r e l a t i v e t o in v e s t m e n t a l t e r n a t i v e s EC O N O M I C UP D A T E Be a r C a s e : Po l i t i c a l u n c e r t a i n t y a c r o s s m u l t i p l e r e g i o n s c o n t i n u e s t o hi n d e r g l o b a l c a p i t a l i n v e s t m e n t a n d e m p l o y m e n t g r o w t h Lo w e r c r u d e p r i c e s r a i s e a d d i t i o n a l q u e s t i o n s a b o u t t h e gl o b a l g r o w t h p i c t u r e Eu r o p e a n g r o w t h r e m a i n s m u t e d a n d a C h i n e s e e c o n o m i c “h a r d l a n d i n g ” r e m a i n s a t h r e a t Pe r i o d i c E u r o p e a n s o v e r e i g n d e b t “ c r i s e s ” ( i . e . G r e e c e ) er o d e f i n a n c i a l m a r k e t c o n f i d e n c e Ch i n e s e s t o c k m a r k e t v o l a t i l i t y and potential manipulation ma y s i g n a l a l a c k o f g o v e r n m e n t o v e r s i g h t a n d c o n t r o l i n a sl o w i n g e c o n o m i c e n v i r o n m e n t Un c e r t a i n t y o v e r F e d i n t e r e s t r a t e a c t i o n s a n d ac c o m p a n y i n g e f f e c t s o n a s s e t c l a s s v a l u a t i o n s p e r s i s t s St r o n g e q u i t y m a r k e t a p p r e c i a t i on in 2014 leads to fears of a p o t e n t i a l i m b a l a n c e b e t w e e n c o r p o r a t e f u n d a m e n t a l s an d v a l u a t i o n s Hi g h c o r p o r a t e p r o f i t m a r g i n s m a y r e v e r t t o t h e m e a n a s wa g e i n f l a t i o n a c c o m p a n i e s h i g h e r e m p l o y m e n t l e v e l s an d d o l l a r s t r e n g t h p e r s i s t s Ce r t a i n s e c t o r s o f t h e m a r k e t , i n c l u d i n g b i o t e c h n o l o g y , so c i a l m e d i a a n d c l o u d s o f t wa r e , a p p e a r u n s u s t a i n a b l y va l u e d 22 ww w . D a n a I n v e s t m e n t . c o m HOLDINGS 6/30/15 Se e I m p o r t a n t D i s c l o s u r e I n f o r m a t i o n PA L M B E A C H G A R D E N S FI R E F I G H T E R S ‘ RE T I R E M E N T S Y S T E M Sh a r e s / P A R I d e n t i f i e r De s c r i p t i o n Pr i c e Ma r k e t V a l u e P c t . A s s e t s I n c o m e A c c r u e d C u r . Y i e l d Ca s h S h o r t T e r m I n v e s t m e n t s 00 0 0 0 9 Ca s h - M o n e y F u n d 16 7 , 1 9 5 . 5 0 .9 1 .00.01 To t a l S h o r t T e r m I n v e s t m e n t s 16 7 , 1 9 5 . 5 0 .9 1 .00.01 St o c k s D o m e s t i c E q u i t y S t r a t e g y C o n s u m e r D i s c r e t i o n a r y 3, 2 2 6 A X L Am e r i c a n A x l e & M a n u f a c t u r i n g H o l d i n g s I n c . 20 . 9 1 67 , 4 5 5 . 6 6 .3 7 .00.00 80 5 A B G As b u r y A u t o m o t i v e G r o u p I n c . 90 . 6 2 72 , 9 4 9 . 1 0 .4 0 .00.00 1, 1 4 2 C O L M Co l u m b i a S p o r t s w e a r C o 60 . 4 6 69 , 0 4 5 . 3 2 .3 7 .00.99 4, 9 0 0 C M C S A Co m c a s t C o r p ( A ) 60 . 1 4 29 4 , 6 8 6 . 0 0 1. 6 0 1 , 2 2 5 . 0 0 1.66 8, 8 4 4 H B I Ha n e s b r a n d s I n c 33 . 3 2 29 4 , 6 8 2 . 0 8 1. 6 0 .001.20 2, 7 4 4 I C O N Ic o n i x B r a n d G r o u p I n c . 24 . 9 7 68 , 5 1 7 . 6 8 .3 7 .00.00 1, 1 2 0 L O W Lo w e ` s C o m p a n i e s I n c . 66 . 9 7 75 , 0 0 6 . 4 0 .4 1 .001.67 4, 6 0 0 M Ma c y ` s I n c 67 . 4 7 31 0 , 3 6 2 . 0 0 1. 6 8 1 , 6 5 6 . 0 0 2.13 5, 2 0 0 M G A Ma g n a I n t e r n a t i o n a l I n c . 56 . 0 9 29 1 , 6 6 8 . 0 0 1. 5 8 .001.57 4, 0 0 0 R C L Ro y a l C a r i b b e a n C r u i s e s L t d . 78 . 6 9 31 4 , 7 6 0 . 0 0 1. 7 1 .001.52 64 1 S K X Sk e c h e r s U . S . A . I n c . C l a s s A 10 9 . 7 9 70 , 3 7 5 . 3 9 .3 8 .00.00 2, 1 1 1 S O N C So n i c C o r p . 28 . 8 0 60 , 7 9 6 . 8 0 .3 3 .001.25 1, 7 6 9 S T R Z A St a r z 44 . 7 2 79 , 1 0 9 . 6 8 .4 3 .00.00 3, 6 0 0 T G T Ta r g e t C o r p 81 . 6 3 29 3 , 8 6 8 . 0 0 1. 5 9 .002.74 74 1 M T N Va i l R e s o r t s I n c 10 9 . 2 0 80 , 9 1 7 . 2 0 .4 4 461.272.28 To t a l C o n s u m e r D i s c r e t i o n a r y 2, 4 4 4 , 1 9 9 . 3 1 13 . 2 5 3 , 3 4 2 . 2 7 1.52 C o n s u m e r S t a p l e s 3, 1 6 3 C V S CV S H e a l t h C o r p 10 4 . 8 8 33 1 , 7 3 5 . 4 4 1. 8 0 .001.33 3, 9 0 0 D P S Dr P e p p e r S n a p p l e G r o u p 72 . 9 0 28 4 , 3 1 0 . 0 0 1. 5 4 1 , 8 7 2 . 0 0 2.63 53 2 J J S F J & J S n a c k F o o d s C o r p 11 0 . 6 7 58 , 8 7 6 . 4 4 .3 2 191.521.30 2, 2 0 0 K M B Ki m b e r l y - C l a r k C o r p 10 5 . 9 7 23 3 , 1 3 4 . 0 0 1. 2 6 1 , 9 3 6 . 0 0 3.32 4, 4 0 0 K R Kr o g e r C o 72 . 5 1 31 9 , 0 4 4 . 0 0 1. 7 3 .001.16 3, 3 0 0 R A I Re y n o l d s A m e r i c a n I n c . 74 . 6 6 24 6 , 3 7 8 . 0 0 1. 3 4 2 , 2 1 1 . 0 0 3.59 85 4 T H S Tr e e H o u s e F o o d s I n c 81 . 0 3 69 , 1 9 9 . 6 2 .3 8 .00.00 To t a l C o n s u m e r S t a p l e s 1, 5 4 2 , 6 7 7 . 5 0 8. 3 6 6 , 2 1 0 . 5 2 2.14 E n e r g y 17 , 7 3 8 A X A S Ab r a x a s P e t r o l e u m C o r p 2. 9 5 52 , 3 2 7 . 1 0 .2 8 .00.00 2, 1 6 0 C V X Ch e v r o n C o r p 96 . 4 7 20 8 , 3 7 5 . 2 0 1. 1 3 .004.44 3, 2 0 0 D V N De v o n E n e r g y C o r p o r a t i o n 59 . 4 9 19 0 , 3 6 8 . 0 0 1. 0 3 .001.61 2, 8 0 0 X O M Ex x o n M o b i l C o r p 83 . 2 0 23 2 , 9 6 0 . 0 0 1. 2 6 .003.51 1, 7 6 3 G P R E Gr e e n P l a i n s I n c . 27 . 5 5 48 , 5 7 0 . 6 5 .2 6 .001.16 92 5 P D C E PD C E n e r g y I n c 53 . 6 4 49 , 6 1 7 . 0 0 .2 7 .00.00 2, 6 0 0 S L B Sc h l u m b e r g e r L t d 86 . 1 9 22 4 , 0 9 4 . 0 0 1. 2 2 1 , 3 0 0 . 0 0 2.32 2, 8 0 0 TS O Te s o r o C o r p 84 . 4 1 23 6 , 3 4 8 . 0 0 1. 2 8 .002.01 To t a l E n e r g y 1, 2 4 2 , 6 5 9 . 9 5 6. 7 4 1 , 3 0 0 . 0 0 2.50 F i n a n c i a l s 4, 6 0 0 A L L Al l s t a t e C o r p 64 . 8 7 29 8 , 4 0 2 . 0 0 1. 6 2 1 , 3 8 0 . 0 0 1.85 23 ww w . D a n a I n v e s t m e n t . c o m HOLDINGS 6/30/15 Se e I m p o r t a n t D i s c l o s u r e I n f o r m a t i o n PA L M B E A C H G A R D E N S FI R E F I G H T E R S ‘ RE T I R E M E N T S Y S T E M Sh a r e s / P A R I d e n t i f i e r De s c r i p t i o n Pr i c e Ma r k e t V a l u e P c t . A s s e t s I n c o m e A c c r u e d C u r . Y i e l d 2, 1 5 2 A M P Am e r i p r i s e F i n a n c i a l I n c . 12 4 . 9 3 26 8 , 8 4 9 . 3 6 1. 4 6 .002.15 1, 4 6 7 A M S F Am e r i s a f e I n c 47 . 0 6 69 , 0 3 7 . 0 2 .3 7 .001.27 10 0 A F S I Am t r u s t F i n a n c i a l S e r v i c e s 65 . 5 1 6, 5 5 1 . 0 0 .0 4 25.001.53 2, 5 5 3 B X S Ba n c o r p s o u t h I n c 25 . 7 6 65 , 7 6 5 . 2 8 .3 6 191.471.16 2, 4 3 7 C L N Y Co l o n y C a p i t a l I n c . 22 . 6 5 55 , 1 9 8 . 0 5 .3 0 901.696.53 1, 5 5 4 E C P G En c o r e C a p i t a l G r o u p I n c . 42 . 7 4 66 , 4 1 7 . 9 6 .3 6 .00.00 3, 1 4 9 F R M E Fi r s t M e r c h a n t s C o r p 24 . 7 0 77 , 7 8 0 . 3 0 .4 2 .001.78 1, 5 0 0 G S Go l d m a n S a c h s G r o u p I n c 20 8 . 7 9 31 3 , 1 8 5 . 0 0 1. 7 0 .001.25 1, 7 8 6 H O M B Ho m e B a n c S h a r e s I n c 36 . 5 6 65 , 2 9 6 . 1 6 .3 5 .001.37 5, 1 0 0 L N C Li n c o l n N a t i o n a l C o r p . 59 . 2 2 30 2 , 0 2 2 . 0 0 1. 6 4 .001.35 7, 4 0 0 O H I Om e g a H e a l t h c a r e I n v e s t o r s I n c . 34 . 3 3 25 4 , 0 4 2 . 0 0 1. 3 8 .006.29 1, 4 4 2 P E B Pe b b l e b r o o k H o t e l T r u s t 42 . 8 8 61 , 8 3 2 . 9 6 .3 4 447.022.89 1, 4 2 9 P N F P Pi n n a c l e F i n a n c i a l P a r t n e r s I n c 54 . 3 7 77 , 6 9 4 . 7 3 .4 2 .00.88 3, 0 0 0 P N C PN C F i n a n c i a l S e r v i c e s G r o u p I n c . 95 . 6 5 28 6 , 9 5 0 . 0 0 1. 5 6 .002.13 1, 3 3 0 P R I Pr i m e r i c a I n c . 45 . 6 9 60 , 7 6 7 . 7 0 .3 3 .001.40 2, 2 1 9 R N S T Re n a s a n t C o r p . 32 . 6 0 72 , 3 3 9 . 4 0 .3 9 377.232.09 2, 5 4 3 S B R A Sa b r a H e a l t h C a r e R E I T I n c 25 . 7 4 65 , 4 5 6 . 8 2 .3 5 .006.06 94 4 S S B So u t h S t a t e C o r p 75 . 9 9 71 , 7 3 4 . 5 6 .3 9 .001.26 80 8 S S S So v r a n S e l f S t o r a g e I n c . 86 . 9 1 70 , 2 2 3 . 2 8 .3 8 .003.45 4, 7 7 1 I N N Su m m i t H o t e l P r o p e r t i e s I n c . 13 . 0 1 62 , 0 7 0 . 7 1 .3 4 .003.61 7, 2 0 0 S T I Su n T r u s t B a n k s I n c . 43 . 0 2 30 9 , 7 4 4 . 0 0 1. 6 8 .002.23 5, 5 0 0 W F C We l l s F a r g o & C o 56 . 2 4 30 9 , 3 2 0 . 0 0 1. 6 8 .002.67 To t a l F i n a n c i a l s 3, 2 9 0 , 6 8 0 . 2 9 17 . 8 4 3 , 3 2 2 . 4 1 2.39 H e a l t h C a r e 4, 7 0 0 A B B V Ab b V i e I n c . 67 . 1 9 31 5 , 7 9 3 . 0 0 1. 7 1 .003.04 3, 2 0 0 A E T Ae t n a I n c . 12 7 . 4 6 40 7 , 8 7 2 . 0 0 2. 2 1 .00.78 99 8 A M A G AM A G P h a r m a c e u t i c a l s I n c 69 . 0 6 68 , 9 2 1 . 8 8 .3 7 .00.00 1, 8 8 9 A M G N Am g e n I n c . 15 3 . 5 2 28 9 , 9 9 9 . 2 8 1. 5 7 .002.06 2, 3 3 5 A H S AM N H e a l t h c a r e S e r v i c e s I n c . 31 . 5 9 73 , 7 6 2 . 6 5 .4 0 .00.00 2, 2 6 0 E B S Em e r g e n t B i o s o l u t i o n s I n c 32 . 9 5 74 , 4 6 7 . 0 0 .4 0 .00.00 2, 9 0 0 G I L D Gi l e a d S c i e n c e s I n c . 11 7 . 0 8 33 9 , 5 3 2 . 0 0 1. 8 4 .001.47 2, 6 1 5 G M E D Gl o b u s M e d i c a l I n c . 25 . 6 7 67 , 1 2 7 . 0 5 .3 6 .00.00 4, 0 0 0 H C A HC A H o l d i n g s I n c 90 . 7 2 36 2 , 8 8 0 . 0 0 1. 9 7 .00.00 2, 1 0 0 J N J Jo h n s o n & J o h n s o n 97 . 4 6 20 4 , 6 6 6 . 0 0 1. 1 1 .003.08 1, 1 0 2 L C I La n n e t t C o I n c 59 . 4 4 65 , 5 0 2 . 8 8 .3 6 .00.00 72 9 LG N D Li g a n d P h a r m a c e u t i c a l s I n c 10 0 . 9 0 73 , 5 5 6 . 1 0 .4 0 .00.00 1, 2 9 0 M C K Mc K e s s o n C o r p 22 4 . 8 1 29 0 , 0 0 4 . 9 0 1. 5 7 309.60.43 1, 6 3 0 M Y L My l a n N V 67 . 8 6 11 0 , 6 1 1 . 8 0 .6 0 .00.00 1, 6 2 8 B A B Y Na t u s M e d i c a l I n c 42 . 5 6 69 , 2 8 7 . 6 8 .3 8 .00.00 91 7 P R X L Pa r e x e l I n t e r n a t i o n a l C o r p 64 . 3 1 58 , 9 7 2 . 2 7 .3 2 .00.00 1, 2 9 5 W O O F VC A I n c . 54 . 4 1 70 , 4 5 4 . 4 8 .3 8 .00.00 To t a l H e a l t h C a r e 2, 9 4 3 , 4 1 0 . 9 7 15 . 9 6 309.601.06 I n d u s t r i a l s 73 9 A T R O As t r o n i c s C o r p 70 . 8 9 52 , 3 8 7 . 7 1 .2 8 .00.00 24 ww w . D a n a I n v e s t m e n t . c o m HOLDINGS 6/30/15 Se e I m p o r t a n t D i s c l o s u r e I n f o r m a t i o n PA L M B E A C H G A R D E N S FI R E F I G H T E R S ‘ RE T I R E M E N T S Y S T E M Sh a r e s / P A R I d e n t i f i e r De s c r i p t i o n Pr i c e Ma r k e t V a l u e P c t . A s s e t s I n c o m e A c c r u e d C u r . Y i e l d 1, 8 0 0 B A Bo e i n g C o 13 8 . 7 2 24 9 , 6 9 6 . 0 0 1. 3 5 .002.62 5, 8 0 0 D A L De l t a A i r L i n e s I n c . 41 . 0 8 23 8 , 2 6 4 . 0 0 1. 2 9 .00.88 3, 6 3 4 F S S Fe d e r a l S i g n a l C o r p . 14 . 9 1 54 , 1 8 2 . 9 4 .2 9 .001.61 1, 2 4 0 F C N FT I C o n s u l t i n g I n c . 41 . 2 4 51 , 1 3 7 . 6 0 .2 8 .00.00 1, 9 5 0 G D Ge n e r a l D y n a m i c s C o r p . 14 1 . 6 9 27 6 , 2 9 5 . 5 0 1. 5 0 1 , 3 4 5 . 5 0 1.95 1, 5 7 8 G P X GP S t r a t e g i e s C o r p 33 . 2 4 52 , 4 5 2 . 7 2 .2 8 .00.00 2, 1 6 7 H A Ha w a i i a n H o l d i n g s I n c 23 . 7 5 51 , 4 6 6 . 2 5 .2 8 .00.00 5, 6 4 3 M W A Mu e l l e r W a t e r P r o d u c t s I n c 9. 1 0 51 , 3 5 1 . 3 0 .2 8 .00.88 71 6 L A B L Mu l t i - C o l o r C o r p 63 . 8 8 45 , 7 3 8 . 0 8 .2 5 .00.31 1, 7 2 8 N N B R NN I n c 25 . 5 2 44 , 0 9 8 . 5 6 .2 4 .001.10 1, 1 2 4 S A I A Sa i a I n c 39 . 2 9 44 , 1 6 1 . 9 6 .2 4 .00.00 45 4 T D Y Te l e d y n e T e c h n o l o g i e s I n c . 10 5 . 5 1 47 , 9 0 1 . 5 4 .2 6 .00.00 7, 4 0 0 T R N Tr i n i t y I n d u s t r i e s I n c . 26 . 4 3 19 5 , 5 8 2 . 0 0 1. 0 6 .001.66 2, 4 7 0 U N P Un i o n P a c i f i c C o r p 95 . 3 7 23 5 , 5 6 3 . 9 0 1. 2 8 .002.31 2, 0 0 0 U T X Un i t e d T e c h n o l o g i e s C o r p 11 0 . 9 3 22 1 , 8 6 0 . 0 0 1. 2 0 .002.31 To t a l I n d u s t r i a l s 1, 9 1 2 , 1 4 0 . 0 6 10 . 3 7 1 , 3 4 5 . 5 0 1.56 I n f o r m a t i o n T e c h n o l o g y 49 3 A M B A Am b a r e l l a I n c . 10 2 . 6 9 50 , 6 2 6 . 1 7 .2 7 .00.00 6, 0 0 0 D O X Am d o c s L t d 54 . 5 9 32 7 , 5 4 0 . 0 0 1. 7 8 1 , 0 2 0 . 0 0 1.25 2, 3 3 9 A A P L Ap p l e I n c . 12 5 . 4 3 29 3 , 3 6 9 . 0 8 1. 5 9 .001.66 1, 8 1 7 A R R S Ar r i s G r o u p I n c 30 . 6 0 55 , 6 0 0 . 2 0 .3 0 .00.00 5, 7 0 0 B R Br o a d r i d g e F i n a n c i a l S o l u t i o n s I n c . 50 . 0 1 28 5 , 0 5 7 . 0 0 1. 5 5 1 , 5 3 9 . 0 0 2.16 8, 2 0 0 C D W CD W C o r p 34 . 2 8 28 1 , 0 9 6 . 0 0 1. 5 2 .00.79 9, 9 0 0 C S C O Ci s c o S y s t e m s I n c . 27 . 4 6 27 1 , 8 5 4 . 0 0 1. 4 7 .003.06 2, 5 8 5 C V G Co n v e r g y s C o r p . 25 . 4 9 65 , 8 9 1 . 6 5 .3 6 206.801.26 93 8 E P A M EP A M S y s t e m s I n c 71 . 2 3 66 , 8 1 3 . 7 4 .3 6 .00.00 2, 9 1 0 I N F N In f i n e r a C o r p o r a t i o n 20 . 9 8 61 , 0 5 1 . 8 0 .3 3 .00.00 2, 4 8 1 I D T I In t e g r a t e d D e v i c e T e c h n o l o g y I n c . 21 . 7 0 53 , 8 3 7 . 7 0 .2 9 .00.00 1, 0 1 4 M A N H Ma n h a t t a n A s s o c i a t e s I n c . 59 . 6 5 60 , 4 8 5 . 1 0 .3 3 .00.00 1, 5 1 4 M E I Me t h o d e E l e c t r o n i c s I n c . 27 . 4 5 41 , 5 5 9 . 3 0 .2 3 .001.31 4, 5 0 0 M S F T Mi c r o s o f t C o r p 44 . 1 5 19 8 , 6 7 5 . 0 0 1. 0 8 .002.81 6, 3 4 7 O R C L Or a c l e C o r p 40 . 3 0 25 5 , 7 8 4 . 1 0 1. 3 9 .001.49 3, 0 6 8 P R F T Pe r f i c i e n t I n c . 19 . 2 4 59 , 0 2 8 . 3 2 .3 2 .00.00 3, 5 0 0 Q R V O Qo r v o I n c 80 . 2 7 28 0 , 9 4 5 . 0 0 1. 5 2 .00.00 5, 2 0 0 S T X Se a g a t e T e c h n o l o g y P L C 47 . 5 0 24 7 , 0 0 0 . 0 0 1. 3 4 .004.55 2, 8 0 0 SW K S Sk y w o r k s S o l u t i o n s I n c . 10 4 . 1 0 29 1 , 4 8 0 . 0 0 1. 5 8 .001.00 1, 9 0 8 V D S I VA S C O D a t a S e c u r i t y I n t e r n a t i o n a l I n c . 30 . 1 9 57 , 6 0 2 . 5 2 .3 1 .00.00 1, 0 0 2 V R N T Ve r i n t S y s t e m s I n c . 60 . 7 5 60 , 8 6 6 . 4 9 .3 3 .00.00 To t a l I n f o r m a t i o n T e c h n o l o g y 3, 3 6 6 , 1 6 3 . 1 7 18 . 2 5 2 , 7 6 5 . 8 0 1.50 M a t e r i a l s 1, 6 3 7 A C E T Ac e t o C o r p 24 . 6 3 40 , 3 1 9 . 3 1 .2 2 .00.97 2, 5 7 8 F O E Fe r r o C o r p 16 . 7 8 43 , 2 5 8 . 8 4 .2 3 .00.00 3, 4 8 9 G P K Gr a p h i c P a c k a g i n g H o l d i n g C o 13 . 9 3 48 , 6 0 1 . 7 7 .2 6 174.451.44 4, 7 0 0 I P In t e r n a t i o n a l P a p e r C o 47 . 5 9 22 3 , 6 7 3 . 0 0 1. 2 1 .003.36 25 ww w . D a n a I n v e s t m e n t . c o m HOLDINGS 6/30/15 Se e I m p o r t a n t D i s c l o s u r e I n f o r m a t i o n PA L M B E A C H G A R D E N S FI R E F I G H T E R S ‘ RE T I R E M E N T S Y S T E M Sh a r e s / P A R I d e n t i f i e r De s c r i p t i o n Pr i c e Ma r k e t V a l u e P c t . A s s e t s I n c o m e A c c r u e d C u r . Y i e l d 2, 1 7 1 L Y B Ly o n d e l l B a s e l l I n d u s t r i e s 10 3 . 5 2 22 4 , 7 4 1 . 9 2 1. 2 2 .003.01 68 2 N P Ne e n a h P a p e r 58 . 9 6 40 , 2 1 0 . 7 2 .2 2 .002.04 To t a l M a t e r i a l s 62 0 , 8 0 5 . 5 6 3. 3 7 174.452.61 T e l e c o m m u n i c a t i o n S e r v i c e s 4, 9 0 0 T AT & T I n c . 35 . 5 2 17 4 , 0 4 8 . 0 0 .9 4 .005.29 3, 5 0 0 V Z Ve r i z o n C o m m u n i c a t i o n s I n c . 46 . 6 1 16 3 , 1 3 5 . 0 0 .8 8 .004.72 99 0 W S T C We s t C o r p o r a t i o n 30 . 1 0 29 , 7 9 9 . 0 0 .1 6 .002.99 To t a l T e l e c o m m u n i c a t i o n S e r v i c e s 36 6 , 9 8 2 . 0 0 1. 9 9 .004.85 U t i l i t i e s 6, 3 0 0 C M S CM S E n e r g y C o r p 31 . 8 4 20 0 , 5 9 2 . 0 0 1. 0 9 .003.64 2, 4 6 1 P N M PN M R e s o u r c e s I n c 24 . 6 0 60 , 5 4 0 . 6 0 .3 3 .003.25 1, 2 4 9 S W X So u t h w e s t G a s C o r p 53 . 2 1 66 , 4 5 9 . 2 9 .3 6 .003.04 6, 8 0 0 X E L Xc e l E n e r g y I n c . 32 . 1 8 21 8 , 8 2 4 . 0 0 1. 1 9 2 , 1 7 6 . 0 0 3.98 To t a l U t i l i t i e s 54 6 , 4 1 5 . 8 9 2. 9 6 2 , 1 7 6 . 0 0 3.66 To t a l D o m e s t i c E q u i t y S t r a t e g y 18 , 2 7 6 , 1 3 4 . 7 0 99 . 0 9 2 0 , 9 4 6 . 5 5 1.89 To t a l S t o c k s 18 , 2 7 6 , 1 3 4 . 7 0 99 . 0 9 2 0 , 9 4 6 . 5 5 1.89 To t a l P o r t f o l i o 18 , 4 4 3 , 3 3 0 . 2 0 Di v i d e n d s A c c r u e d 20 , 9 4 6 . 5 5 To t a l P o r t f o l i o w i t h A c c r u a l s & R e c e i v a b l e s 18 , 4 6 4 , 2 7 6 . 7 5 26 IN T R O D U C T I O N T O D A N A I N V E S T M E N T A D V I S O R S ww w . D a n a I n v e s t m e n t . c o m Aw a r d s a n d R e c o g n i t i o n IMP A C T M AN A G E R OF TH E Y EA R A WA R D DAN A ’S S OC I A L L Y R ES P O N S I B L E EQU I T Y S TR A T E G Y Da n a I n v e s t m e n t A d v i s o r s h a s b e e n n a m e d th e S M A I m p a c t M a n a g e r o f t h e Y e a r b y En v e s t n e t | P M C . T h i s w a s t h e 1 1 t h a n n u a l SM A A w a r d s b y E n v e s t n e t a n d t h e f i r s t t i m e an a w a r d w a s g i v e n i n t h e I m p a c t s p a c e . Da n a ’ s D i r e c t o r o f E q u i t i e s a n d P o r t f o l i o Ma n a g e r , D u a n e R o b e r t s , n o t e s t h a t c o n t r a r y to m a n y i n v e s t o r s ’ c o n c e p t i o n , i n t e g r a t i n g en v i r o n m e n t a l , s o c i a l a n d g o v e r n a n c e ( E S G ) cr i t e r i a i n t o t h e p o r t f o l i o m a n a g e m e n t pr o c e s s m a y e n h a n c e f i n a n c i a l r e t u r n s . “ W e h a v e d e l i v e r e d c o n s i s t e n t , s u p e r i o r in v e s t m e n t p e r f o r m a n c e o v e r t h e S o c i a l l y Re s p o n s i b l e E q u i t y S t r a t e g y ’ s 1 5 y e a r h i s t o r y . ” SM A U . S . L AR G E C AP E QU I T Y MAN A G E R OF TH E Y EA R Da n a I n v e s t m e n t A d v i s o r s h a s b e e n n a m e d th e S M A U . S . L a r g e C a p E q u i t y M a n a g e r o f th e Y e a r b y E n v e s t n e t | P M C . T h i s w a s t h e 10 t h a n n u a l S M A A w a r d s b y E n v e s t n e t | P M C , fo r m e r l y P r i m a C a p i t a l , a n d r e c o g n i z e s ma n a g e r s t h a t c o n s i s t e n t l y o u t p e r f o r m t h e i r pe e r s o v e r t i m e , f o l l o w i n g a c l e a r l y d e f i n e d su s t a i n a b l e a n d r e p e a t a b l e a l p h a s t r a t e g y . Fi r m C E O M a r k M i r s b e r g e r - “ T h i s r e c o g n i t i o n is t h e r e s u l t o f h a r d w o r k a n d d e d i c a t i o n o f ou r t a l e n t e d i n v e s t m e n t t e a m a n d h i g h l i g h t s th a t s t a y i n g t r u e t o a s u p e r i o r i n v e s t m e n t pr o c e s s w i t h d i s c i p l i n e d r i s k c o n t r o l s ca n l e a d t o c o n s i s t e n t o u t - p e r f o r m a n c e . ” PEN S I O N S & I NVESTMENTS BES T P LA C E S TO WORK AWARD 20 1 4 / 2 0 1 3 / 2 0 1 2 Da n a I n v e s t m e n t A d v i s o r s h a s b e e n re c o g n i z e d a s o n e o f t h e “ 2 0 1 4 B e s t P l a c e s to W o r k i n M o n e y M a n a g e m e n t ” b y P e n s i o n s & I n v e s t m e n t s . T h i s i s t h e t h i r d y e a r i n a r o w Da n a I n v e s t m e n t A d v i s o r s h a s b e e n a w a r d e d th i s i n d u s t r y d i s t i n c t i o n . “ W e a r e p r o u d an d h o n o r e d t h a t P e n s i o n s & I n v e s t m e n t s ha s r e c o g n i z e d u s f o r o u r p r o g r e s s i v e w o r k en v i r o n m e n t a n d o u r d e d i c a t i o n t o o u r em p l o y e e s , ” s t a t e d M a r k M i r s b e r g e r , F i r m CE O , a d d i n g , “ W e b e l i e v e w e b e s t s e r v e o u r cl i e n t s b y b e s t s e r v i n g o u r t e a m a n d t h e i r fa m i l i e s . A s a n i n d e p e n d e n t , 1 0 0 % e m p l o y e e ow n e d c o m p a n y , t h i s b e l i e f s p e a k s t o h e a r t o f ou r s h a r e d v a l u e s . ” DA N A I N V E S T M E N T AD V I S O R S 27 ww w . D a n a I n v e s t m e n t . c o m IM P O R T A N T D I S C L O S U R E I N F O R M A T I O N Da n a I n v e s t m e n t A d v i s o r s , I n c . i s a n i n d e pe n d e n t f e d e r a l l y r e g i s t e r e d i n v e s t m e n t a d v i se r p r o v i d i n g e q u i t y a n d f i x e d i n c o m e i n v e st m e n t m a n a g e m e n t s e r v i c e s t o a b r o a d ra n g e o f c l i e n t s . A l l d a t a i s p r e s e n t e d i n U . S . D o l l a r s . P o r t f o l i o C h a r a c t e r i s t i c s , Pe r f o r m a n c e R e p o r t , P o r t f o l i o H o l d i n g s , a n d S e c t o r D i s t r i b u t i o n s r e f l ect applicable investment ho l d i n g s a s o f m a r k e t c l os e o n t h e d a t e i n d i c a t e d . R e t u r n s p r e s e n t e d a r e e x c l u s i v e o f i n v e s t m e n t m a n a g e m e n t a n d c u s t o d i a l f e e s , a n d n e t o f t r a n s a c t i o n c o s t s . I n v e s t m e n t ma n a g e m e n t f e e s w o u l d r e d u c e t h e r e t u r n s p r es e n t e d , f o r e x a m p l e : o n a o n e - m i l l i o n d o l l a r p o r t f o l i o w i t h a n a d v i s o r y f e e o f . 7 5 % e a r n i n g a 1 0 % r e t u r n , t h e t o t a l c o m p o u n d e d ad v i s o r y f e e o v e r a f i v e y e a r p e r i o d w o u l d b e $ 5 0 , 3 6 8 . T h e r e su l t i n g a v e r a g e a n n u a l r e t u r n f o r t h e p e r i o d w o u l d t h e r e f o r e b e 9 . 17 % . A l l r e t u r n s w e r e c a l c u l a t e d o n a t i m e we i g h t e d t o t a l r e t u r n b a s i s . P e r f o r m a n c e d o e s i n c l u d e t h e a c c r u a l o f i n c o m e a n d t h e r e i n v e s t m e n t o f d i v i d e n d s a n d i n t e r e s t r e c ei v e d . Du r i n g v a r i o u s m a r k e t c y c l e s , t h e s t r a t e g i e s d i s c u s s e d h e r e i n h a v e d e m o n s t r a t e d p o r t f o l i o c h a r a c t e r i s t i c s a n d r e t u r n s t h a t h a v e b e e n b o t h m o r e a n d l e s s v o l a t i l e t h a n t h a t o f th e c o m p a r a b l e i n d e x . I n d i c e s s h o w n w e r e s e le c t e d b e c a u s e t h e y d e m o n s t r a t e d a b r o a d r a ng e o f c h a r a c t e r i s t i c s , s o m e o f t h e s e c h a ra c t e r i s t i c s b e i n g d e e m e d u s e f u l f o r li m i t e d c o m p a r i s o n p u r p o s e s o n l y . H i s t o r i c al p e r f o r m a n c e r e s u l t s f o r i n v e s t m e n t i n d i c e s a n d / o r c a t e g o r i e s h a v e b e e n p r o v i d e d f o r g e n e r a l c o m p a r i s o n p u r p o s e s o n l y , a n d ge n e r a l l y d o n o t r e f l e c t t h e d e d u c t i o n o f t r a n s a c t i o n a n d / o r c u s t o di a l c h a r g e s , t h e d e d u c t i o n o f a n i n v e s t m e n t m a n a g e m e n t f e e , no r t h e i m p a c t o f t a x e s , t h e i n c u r r e n c e o f wh i c h w o u l d h a v e t h e e f f e c t o f d e c r e a s i n g h i s t o r i c a l p e r f o r m a n c e re s u l t s . I t s h o u l d n o t b e a s s u me d t h a t y o u r a c c o u n t h o l d i n g s d o or w i l l c o r r e s p o n d d i r e c t l y t o a n y co m p a r a t i v e i n d i c e s . Wh i l e d a t a c o n t a i n e d h e r e i n w a s g a t h e r e d f r om s o u r c e s d e e m e d r e l i a b l e , t h e a c c u r a c y o f t h e d a t a p r e s e n t e d c a n n o t b e g u a r a n t e e d . P l e a s e r e m e m b e r t h a t p a s t p e r f o r m a n c e ma y n o t b e i n d i c a t i v e o f f u t u r e r e s u l t s . D i f f e r e n t t y p e s o f in v e s t m e n t s i n v o l v e v a r y i n g d e g r e e s o f r i s k , a n d t h e r e c a n b e n o a s su r a n c e t h a t t h e f u t u r e p e r f o r m a n c e o f a n y sp e c i f i c i n v e s t m e n t o r i n v e s t m e n t s t r a t e g y m a d e r e f e r e n c e t o d i re c t l y o r i n d i r e c t l y i n t h i s r e po r t , w i l l b e p r o f i t a b l e , e q u a l a n y c o r r e s p o n d i n g i n d i c a t e d h i s t o r i c a l p e r f o r m a n c e le v e l ( s ) , o r w i l l c o n t i n u e t o b e s u i t a b l e fo r y o u r p o r t f o l i o . D u e t o v a r i o u s f a c t o r s, i n c l u d i n g c h a n g i n g m a r k e t c o n d i t i o n s , t h e c o n t e n t o f t h i s r e p o r t m a y n o l o n g e r b e r e f l e c t i v e of c u r r e n t o p i n i o n s , p o s i t i o n s , i n v e s t m e n t s or a c c o u n t a l l o c a t i o n s . M o r e o v e r , y o u s h o u ld n o t a s s u m e t h a t a n y d i s c u s s i o n o r i n f or m a t i o n c o n t a i n e d i n t h i s r e p o r t s e r v e s a s t h e re c e i p t o f , o r a s a s u b s t i t u t e f o r , p e r s o n a l i z e d i n v e s t m e n t a d v i c e f r om D a n a I n v e s t m e n t A d v i s o r s , I n c . Da n a I n v e s t m e n t A d v i s o r s i s n o t a c u s t o d i a n . C l i e n t s s h o u l d b e re c e i v i n g d e t a i l e d s t a t e m e n t s f r o m t h e i r c u s t o d i a n a t l e a s t q u a rt e r l y . W h i l e D a n a I n v e s t m e n t A d v i s o r s re g u l a r l y r e c o n c i l e s t o c u s t o d i a n i n f o r m a t i o n , w e e n c o u r a g e c l i e nt s t o r e v i e w t h e i r c u s t o d i a n s t at e m e n t ( s ) . T h e m a r k e t p r i c e s s h o w n o n t h e s e p a g e s r e p r e s e n t t h e l a s t re p o r t e d s a l e o n t h e s t a t e d r e p o r t d a t e a s t o l i s t e d s e c u r i t i e s o r t h e b i d p r i c e i n t h e c a s e o f o v e r - t h e - c o u n t e r q u o t a t i o n s . P ri c e s o n b o n d s a n d s o m e o t h e r i n v e s t m e n t s a r e ba s e d o n r o u n d l o t p r i c e q u o t a t i o n s a n d a r e f o r e v a l u a t i o n p u r p o s es o n l y a n d m a y n o t r e p r e s e n t a c t u a l m a r k e t v a l u e s . B o n d s s o l d o n a n o d d l o t b a s i s (less than $1 million) ma y h a v e a d o l l a r p r i c e l o w e r t h a n t h e r o u n d l o t q u o t e . W h e r e n o r e g u l a r m a r k e t e x i s t s , p r i c e s sh o w n a r e e s t i m a t e s b y s o u r c e s co n s i d e r e d r e l i a b l e b y D a n a I n v e s t m e n t Ad v i s o r s , I n c . W h i l e t h e p r i c e s a r e o b t a i n e d f r o m s o ur c e s w e c o n s i d e r r e l i a b l e , w e c a n n o t g u a r a n t e e t h e m . Pl e a s e r e m e m b e r t o c o n t a c t D a n a I n v e s t m e n t A d v i s o r s , I n c . a t ( 8 0 0 ) 7 6 5 - 0 1 5 7 , o r P . O . B o x 1 0 6 7 B r o o k f i e l d , W I 5 3 0 0 8 w i t h a n y q u es t i o n s o r i f t h e r e a r e a n y c h a n g e s i n y o u r pe r s o n a l f i n a n c i a l s i t u a t i o n o r i n v e s t m e n t o b j e c t i v e s f o r t h e p u rp o s e o f r e v i e w i n g , e v a l u a t i n g , an d r e v i s i n g a n y p r e v i o u s r e c o m me n d a t i o n s o r i n v e s t m e n t s e r v i c e s . P l e a s e a l s o ad v i s e D a n a i f y o u w o u l d l i k e t o i m p o s e , a d d , o r m o d i f y a n y r e a s on a b l e r e s t r i c t i o n s t o y o u r a c c o un t . A c o p y o f D a n a ’ s c u r r e n t Fo r m A D V B r o c h u r e d e t a i l i n g a c o m p l e t e l i s t o f Da n a ’ s a d v i s o r y s e r v i c e s a n d f e e s c o n t i n u e s t o re m a i n a v a i l a b l e f o r yo u r re v i e w up o n r e q u e s t . Cu r r e n t L i s t o f H o l d i n g s : T h e m a r k e t p r i c e s s h o w n o n t h e s e p a g e s r e p r e s e n t t h e l a s t r e po r t e d s a l e o n t h e s t a t e d r e p o r t d a t e a s t o l i s t e d s e c u r i t i e s o r t h e b i d p r i c e i n t h e c a s e o f ov e r - t h e - c o u n t e r q u o t a t i o n s . P r i c e s o n b o n d s a n d s o m e o t h e r i n ve s t m e n t s a r e b a s e d o n r o u n d l o t p r i c e q u o t a t i o n s a n d a r e f o r e v al u a t i o n p u r p o s e s o n l y a n d m a y n o t re p r e s e n t a c t u a l m a r k e t v a l u e s . B o n d s s o l d o n a n o d d l o t b a s i s ( l e s s t h a n $ 1 m i l l i o n ) m a y h a v e a d o l l a r p r i c e l o w e r t h a n t h e r o un d l o t q u o t e . W h e r e n o r e g u l a r m a r k e t e x i s t s , pr i c e s s h o w n a r e e s t i m a t e s b y s o u r c e s c o n s i d er e d r e l i a b l e b y D a n a I n v e s t m e n t A d v i s o r s . W h i l e t h e p r i c e s a r e o b t a i n e d f r o m s o u r ce s w e c o n s i d e r r e l i a b l e , w e c a n n o t gu a r a n t e e t h e m . D a n a I n v e s t m e n t A d v i s o r s i s n o t a c u s t o d i a n . C l ie n t s s h o u l d b e r e c e i v i n g d e t a i l e d s t a t e m e n t s f r o m t h e i r c u s t o d ia n a t l e a s t q u a r t e r l y . W h i l e D a n a I n v e s t m e n t Ad v i s o r s r e g u l a r l y r e c o n c i l e s t o c u s t o d i an i n f o r m a t i o n , w e e n c o u r a g e c l i e n t s t o r e v i e w t h e i r c u s t o d i a n s t a t e m e n t ( s ) . DA N A I N V E S T M E N T AD V I S O R S 28 15 8 0 0 W e s t B l u e m o u n d R o a d Su i t e 2 5 0 Br o o k f i e l d , W i s c o n s i n 5 3 0 0 5 Ma i l i n g A d d r e s s : P. O . B o x 1 0 6 7 Br o o k f i e l d , W i s c o n s i n 5 3 0 0 8 - 1 0 6 7 80 0 - 7 6 5 - 0 1 5 7 ww w . D a n a I n v e s t m e n t . c o m