Sr. Vice President Objectivity Experience Pro-Active Advice Presentation.pdf · Consulting Group (CG) CG was established over 30 years ago and is the managed-account unit of MSSB

Objectivity Experience Pro-Active Advice

Graystone Consulting28 State Street, Suite , Boston,, MA 02109Tel 504-561-6855 Fax 617-557-6966

5051 Westheimer Blvd, Suite 2100, Houston, TX 77056Tel 713-499-3024 Fax 713-499-3090

A BUSINESS OF MORGAN STANLEY SMITH BARNEY, LLC

Norman E. Nabhan, CIMA Managing Director Institutional Consulting Director

James Bee CIMASr. Vice PresidentSr. Investment ManagementConsultant

Dec 18, 2012

AMERICAN SOCIETY OF VARIABLE STAR OBSERVERS

Morgan Stanley A leading global financial services firm providing a wide range of investment banking, securities,

investment management and wealth management services. With over 45,000 employees the firm serves clients worldwide from more than 1,300 offices in 42 countries.

Morgan Stanley GraystoneA global leader in wealth management, provides access to a wide range of products and services to

individuals, businesses and institutions, including brokerage and investment advisory services, financial and wealth planning, credit and lending, cash management, annuities and insurance, retirement and

trust services.

Alternative Investment Research 37 Alternative Investment Research analysts who employ rigorous due diligence to identify, evaluate and

select hedge funds, fund of funds, private equity and real estate investment.

Approximately 200 investment strategies are available to our clients.

Global Investment Committee (GIC) 22 member committee

comprised of senior professionals from Morgan Stanley Research, MSSB, Citi Investment Research & Analysis and

outside financial market experts.

Provides strategic and tactical capital markets advice across global asset classes

Consulting Group (CG) CG was established over 30 years ago

and is the managed-account unit of MSSB with over $500 Billion in

consulting assets.

266 Professionals that includes management, operations, technology, sales, marketing, legal and risk support

Investment Advisor Research Investment Advisor Research team has 26 experienced

manager research analysts who evaluate over 1,100 traditional

investment strategies.

Graystone Consulting Houston/Boston

Each client has the intellectual capital of their local Graystone Consultants as well as the entire MSSB organization workingtogether to achieve each client’s investment goals.

**The information presented shows the combined institutional consulting assets of Graystone Consulting, Consulting Group, and Morgan Stanley Global Wealth Manager Group as of December 31, 2010.

Graystone Consulting 43 U.S. Graystone Consulting Office

124 Consultants 195 Operations/Analysts

Consulting to over $151 Billion in assets**

Norm NabhanCIMA

Managing Director

James BeeSr. Vice President

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ASVSO Service Team

Norman E. Nabhan, CIMA

Managing Director

Institutional Consulting Director

39 Years of Experience

James Bee, CIMA

Senior Vice PresidentSr. Investment

Management Consultant


Scott GuptillResearch Analyst


Elese JacksonGroup Administrator


Jennifer ReardonRelationship Manager


Institutional Consultants

Investment Policy Development

Asset Allocation Analysis

Portfolio Strategy and Rebalancing

Quarterly Performance and Other Client Meetings

Client Education

Analysts

Manager Searches

Performance Reporting

Performance Attribution

Other Customized Client Reports

Client Administration

Client Inquiries & Updates

Reallocations/Fund Movements

Marketing

Follow-up & Client Correspondence

Meeting Arrangements

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Our Value Proposition» Independent, Objective, Client Centric Advice

» Graystone Consulting-Created to Avoid Conflicts of Interest

» Boutique Consulting Team backed by significant Capital Market and Research Resources

» Significant Industry Experience of the team that would be responsible for the Louisiana Assessor’s Association Fund.

» We believe strongly in an ongoing program of board education. We provide regular educational presentations on: Fiduciary Responsibility, asset allocation, capital markets, trends in Investing, etc.

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As of 1-14-10. Consulting Group services are offered through Morgan Stanley Smith Barney. The listed clients may participate in various Consulting Group advisory

Allied Services Foundation

American Psychological Foundation

Aurora Foundation, Inc.

Capital Federal Foundation

Chrysalis Foundation

Consumer Health Foundation, Inc.

Cornerstone Foundation of Northeastern Wisconsin, Inc.

Coshocton Communication Foundation

Cupertino Educational Endowment Foundation

Decker Foundation

Dover Foundation Inc.

Edward W. Hazen Foundation

Etscheit Foundation

Five Bridges Foundation

Fullerton Foundation

Genesis Healthcare Systems Foundation

George Mason University Foundation

Heritage Hill Endowment Fund

Hilda E. Bretzlaff Foundation

K.C. Stock Foundation, Inc

.

Lee Hysan Foundation

Leever Foundation

Lithuanian Foundation, Inc.

Lumina Foundation for Education

Marianas Public Land Trust

Mercy Foundation of Des Moines

Michigan Turfgrass Foundation

Northeast Health Designated Fund

Otterbein Homes Endowment

Otterbein Homes Capital Reserve

Ohio Masonic Endowment Fund

Orchard Foundation

Pan American Health & Education Foundation

Princess Grace Foundation-USA

Ruth & Lovett Peters Foundation

Southern Minnesota Initiative Foundation

Steve & Cindy Van Andel Foundation

St Luke’s Episcopal Hosptal

St. Luke’s Health Initiatives-Phoenix

Sunflower Foundation

Wallace Research Foundation

Wyandotte Health Foundation

Institutional Consulting Representative Client ListFoundations & Endowments:

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Who We Consult To

ERISA Plans – 29 Clients Defined Contribution Plans and Defined Benefit Plans (over

$2.2 billion)

12 Defined Benefit Clients

12 Defined Contribution Clients

5 Defined Contribution and Defined Benefit Clients

Endowment and Foundations (over $1 billion)

Total Assets: > $5.0 billion

Representative Clients St. Luke’s Episcopal Health System Baker & Botts, LLP St. Luke’s Health Initiatives – Phoenix, AZ Bracewell & Guiliani, LLP Theater Under The Stars USA Funds

Broad Local and National Experience

MedSynergies United Regional Health Care System Riviana Foods Houston Country Club Indiana University Healthcare -Bloomington Valero Energy

Institutional Investor Solutions

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Our StrengthOur Duty is to assist Trustees in fulfilling their Fiduciary Responsibility. We help you execute anddocument the process that you need to be prudent fiduciaries.

Manager Searches documented with both, Quantitative data and

detailed written reports on Qualitative issues.

Cash Flow Analysis, Asset Allocation Development

and Asset Liability Modeling.

Quarterly Performance Evaluation customized to

client needs.

Ongoing Committee education on current and relevant topics.

Investment/ Spending Guidelines

and Policy Development

“Chief Investment Officer”

As your hired expert, our job is to serve as the

“Chief Investment Officer”

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142 Senior Research Analysts and Strategists

Graystone Consulting403Teams 125 Consultants over 260 Total Field Staff 20 Home Office Management Staff

GLOBAL INVESTMENT STRATEGY COMMITTEE

22 Economic/Investment Thought Leaders* Combined Resources of Graystone, Citi, Morgan Stanley, MSSB, Alternative Investment Partners

CONSULTING GROUPINVESTMENT ADVISOR RESEARCH

31 Investment Professionals Long only Equity – 16 analysts

Fixed Income – 7 analysts

Research Management – 3 analysts

Graystone TeamsInstitutional Research Analysts - 45

SINGLE MANAGER HEDGE FUNDS

16 Analysts*

PRIVATE EQUITY

10 Analysts*

REAL ESTATE

9 Analysts*

MANAGED FUTURES

9 Analysts*

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Graystone Consulting

»Deliver access to a world-class platform of quality, independent investment firms

»Identify superior traditional and alternative investment money managers through a rigorous quantitative and qualitative research process

»Analyze the risks: investment risk, business risk, management risk and event risk

»Educate clients on investment manager trends, specific product characteristics and portfolio positioning of specific investment products

Information Gathering

Quantitative & Qualitative Analyses

RecommendationsAdvice

Information Gathering

Quantitative & Qualitative Analyses

Recommendations

Advice

Investment Advisor Research

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Services Provided for All-Inclusive Fee:

»We deliver a broad range of traditional, alternative, mutual funds and exchange traded fund options.

»Asset Allocation is tailored for Client’s specific goals.

»Research on over 1100 asset managers.

»Research flexibility allows us to identify niche investment opportunities.

Open Architecture For Investment Solutions Focusing On Client Needs

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KEY EVALUATION ASPECTS

Narrows the universe of managers

Evaluates managers in specific asset classes

Applies measurable criteria:

Return / return characteristics

Risk-Adjusted Performance

Style consistency

Portfolio turnover

STRATEGY / PROCESS

Sources of returns

Risk controls

Style analysis

Attribution analysis

Strategy implementation

PEOPLE AND ORGANIZATION

History and stability of firm

Background of key professionals

Business evaluation

Ownership structure

Compensation/incentive to key professionals

Personnel turnover

QUALITY OF RESEARCH

Proprietary systems and analytical tools

Depth and breadth of research process

Technology and business operations

Standards of Traditional Strategies Review Process

Quantitative Analysis Qualitative Assessment

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Research on over 1100 3rd party

managers, mutual funds and

ETFs

Performance Reportingand Fiduciary Education

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Institutional Performance Measurement: Total Fund Reports

For Illustrative Purposes Only

» Detailed, sophisticated performance reports designed for institutional investors and their auditors

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Institutional Performance Measurement: Manager Reports and Risk Analysis


» Performance reports include:

»Total fund statement

»Total fund asset allocation

»Manager attribution analysis

»Manager style analysis

»Total fund risk analysis

»Summary rates of return

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Our Benefits: Commitment to Fiduciary Education and Communication


Hypothetical Portfolio-with Tactical Allocation Strategy

Hypothetical Portfolio

»14% Santa Barbara Dividend Growth»11% Blackrock Equity Dividend»5% Orleans Capital Energy Opportunities»5% Center Coast Capital MLPs*»7.5% Cambiar International Value**»12.5% Lazard Emerging Markets»15% PIMCO Total Return»10% Emerging Markets Debt» 5% Spectrum Preferred Securities» 5% Alkeon Growth Strategy Hedge Fund»10% Skybridge Series G Fund of Funds

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*Center Coast Capital incepted 2007, Alerian MLP Index is used for periods prior to inception in the following analysis

**Cambiar International Value SMA incepted in 2006, Cambiar International Value Mutual Fund used in the following analysis

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Performance GraphManager PerformanceJuly 2004 - June 2012 (Single Computation)

60

80

100

120

140

160

180

200

220

240

Hypothetical PortfolioS&P 500

0%

50%

100%

Q2 2004 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q2 2012

Cumulative Excess Returnvs. Market Benchmark

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Annual Return Manager vs Benchmark: ReturnJuly 2004 - June 2012 (not annualized if less than 1 year)

Santa Barbara Dividend Growth

BlackRock: Equity Dividend

Orleans Capital Energy Opportunities

Center Coast plus Alerian backfill

Cambiar International Equity

Lazard Emerging Markets

PIMCO Total Return

TCW Emerging Markets Income

Spectrum Preferred Securities

Alkeon Growth Strategy

Skybridge Multi-Adviser Series G


S&P 500

1 year 3 years 5 years 7 years

5.71 16.23 3.89% 7.75%

6.33 16.64 2.56% 7.47%

-24.59 11.39 0.13% 8.09%

10.68 28.19 10.57% 13.49%

-10.90 10.89 -3.80% 3.74%

-8.34 14.06 1.02% 11.75%

7.84 8.36 8.94% 7.01%

4.28 16.47 11.29% 10.30%

6.50 17.90 4.77% 4.47%

0.58 10.75 9.40% 14.14%

1.26 12.75 5.63% 7.14%

0.89 14.75 5.79% 9.31%

5.45 16.40 0.22% 4.09%

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Risk Return Statistics Custom TableJuly 2004 - June 2012: Summary Statistics







PIMCO Total Return






S&P 500

Return CumulativeReturn

StandardDeviation

SharpeRatio

Excess Returnvs.

Market

TrackingErrorvs.

Market

InformationRatiovs.

Market

Alphavs.

Market

Betavs.

Market

R-Squaredvs.

Market

8.69% 94.80% 15.01% 0.45 4.32% 6.02% 0.72 4.91% 0.80 89.46%

8.62% 93.82% 16.02% 0.42 4.25% 5.17% 0.82 4.64% 0.87 91.77%

12.96% 165.08% 35.56% 0.31 8.59% 26.49% 0.32 11.50% 1.40 48.40%

15.91% 225.72% 18.08% 0.77 11.54% 15.26% 0.76 13.46% 0.65 40.54%

4.36% 40.65% 23.96% 0.10 -0.01% 11.89% -0.00 0.29% 1.19 77.34%

14.64% 198.24% 26.77% 0.48 10.27% 14.13% 0.73 10.06% 1.32 76.71%

6.99% 71.67% 4.13% 1.23 2.62% 18.21% 0.14 7.08% -0.00 0.00%

11.37% 136.75% 10.79% 0.88 7.00% 11.48% 0.61 8.97% 0.48 61.06%

5.17% 49.66% 19.78% 0.16 0.80% 14.87% 0.05 2.33% 0.77 47.71%

12.29% 152.76% 16.57% 0.63 7.92% 16.02% 0.49 10.36% 0.53 31.95%

6.62% 66.95% 9.00% 0.52 2.25% 12.15% 0.18 4.63% 0.39 60.14%

10.21% 117.73% 13.32% 0.62 5.84% 7.48% 0.78 6.82% 0.69 85.14%

4.37% 40.80% 17.72% 0.14 0.00% 0.00% 0.00 0.00% 1.00 100.00%

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Calendar Year Returns







PIMCO Total Return






S&P 500

YTD 2011 2010 2009 2008 2007 2006 2005

6.78% 5.87% 16.56% 18.51% -24.23% 13.11% 19.63% 7.88%

7.24% 6.70% 14.12% 23.19% -31.97% 15.78% 20.24% 13.62%

-10.27% -7.14% 27.76% 69.13% -53.39% 54.70% 4.70% 62.11%

-1.48% 19.28% 34.91% 76.58% -36.69% 12.65% 26.06% 6.32%

4.74% -8.08% 12.83% 42.88% -49.73% 19.68% 29.04% 5.55%

7.67% -15.89% 24.29% 67.93% -49.51% 31.43% 38.64% 36.19%

4.39% 6.19% 7.97% 12.92% 4.68% 8.80% 4.58% 2.61%

8.72% 1.94% 21.27% 44.78% -12.60% 4.23% 8.21% 7.64%

10.14% 2.89% 17.50% 46.70% -30.26% -7.58% 6.88% 3.25%

8.14% 0.22% 7.42% 30.62% -18.97% 56.65% 16.96% 10.39%

8.34% -0.63% 17.21% 21.79% -19.62% 14.03% 8.69% 5.67%

5.88% 0.70% 17.76% 34.28% -26.21% 17.83% 16.73% 13.83%

9.49% 2.11% 15.06% 26.46% -37.00% 5.49% 15.79% 4.91%

Calendar Year ReturnAs of June 2012

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Standard DeviationManager vs Benchmark: Standard DeviationJuly 2004 - June 2012 (not annualized if less than 1 year)







PIMCO Total Return






S&P 500

1 year 3 years 5 years 7 years

23.78 17.70 18.45% 15.85%

21.06 16.68 19.48% 17.01%

38.90 34.07 41.62% 37.49%

18.89 14.16 21.10% 18.91%

30.03 22.93 28.57% 25.05%

32.36 24.79 30.84% 28.23%

1.22 3.47 4.23% 4.23%

15.84 11.80 13.26% 11.25%

11.17 11.76 25.03% 21.11%

20.10 13.10 17.45% 16.37%

11.42 8.50 11.00% 9.54%

18.14 14.09 16.22% 14.12%

25.37 19.02 21.75% 18.66%

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3 Year Risk Return Profile Risk / ReturnSeptember 2009 - June 2012 (Single Computation)

Ret

urn

0%

5%

10%

15%

20%

25%

30%

Standard Deviation

0% 5% 10% 15% 20% 25% 30%







PIMCO Total Return






Market Benchmark:S&P 500Cash Equivalent:Citigroup 3-month T-bill

Capital Market Line

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5 Year Risk Return Profile Risk / ReturnSeptember 2007 - June 2012 (Single Computation)

Ret

urn

-5%

0%

5%

10%

15%

Standard Deviation

0% 5% 10% 15% 20% 25% 30% 35%







PIMCO Total Return







Capital Market Line

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7 Year Risk Return Profile Risk / ReturnJuly 2005 - June 2012 (Single Computation)

Ret

urn

0%

2%

4%

6%

8%

10%

12%

14%

16%

Standard Deviation

0% 5% 10% 15% 20% 25% 30% 35% 40%







PIMCO Total Return







Capital Market Line

Fees and Services

Consulting Fees» We would propose an all-inclusive annual asset based fee of:

» Investment Consulting on:

.54% on the first $5 Million

.32% on the next $5 Million

.16% on the next $15 Million

The fee includes:1. Investment Policy Development and Review2. Asset Allocation Analysis3. Manager Review and Searches4. Quarterly Performance Evaluation5. Custody (Optional)6. All transaction costs for trades executed on trading desk at zero cents per share7. Trustee Education and training8. Travel

We consider this fee to be competitive for the following reasons:

» The fee is all-inclusive of our services, custody and all execution costs. When compared to other fee bids that require paying additionally for custody and transaction costs, our fees should be highly competitive. According to the Elkins McSherry annual transaction cost survey, trading costs for New York Stock Exchange stocks in 2010 were 19.69 basis points and higher for NASDAQ, while Global stock trading costs were 41.38 basis points. Custody costs can range from 5 to 10 basis points plus transaction settlement fees. These costs would be eliminated.

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Asset Management Fees» In addition, due to our size and scope in the industry and our investment in trading and back office support, if we act

as custodian of your assets, we can hire over 350 asset management firms, at lower management fees than many other consultants. Fees for equity managers are generally:

» Equity Managers .47%» Fixed Income Managers .20% to .32%

» NOTE: Should The American Society of Variable Star Observers add alternative asset managers, the fees for those types of managers may be higher and vary greatly from manager to manager due to their respective strategy and structure. All fees for these types of investments would be fully disclosed on a case by case basis.

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Resources of one of the leading providers of investment advice:

Your global financial advocate Breadth of investment strategy, technical and research

professionals Range of financial services including markets and banking,

wealth management, lending, trust, capital markets and others

Robust benefits of an investment leader:

Unbiased investment research; relentless in pursuit of results

Objective in all recommendations Full disclosure of fees Highest standards of ethical behaviour

Customized local advice; world class services:

Comprehensive approach to fiduciary investment advice Decisions tailored to your unique needs Detailed performance reporting and ongoing monitoring Full-service team delivering personalized services Fully committed to Louisiana

The Power of an Industry Leader

Graystone Consulting

Boston/Houston Team

The Advantages of Working with Graystone Consulting

Documents

Sr. Vice President Objectivity Experience Pro-Active Advice Presentation.pdf · Consulting Group (CG) CG was established over 30 years ago and is the managed-account unit of MSSB