SLIDE 1
Fresno County Employees Retirement System Data as of September 30, - - PowerPoint PPT Presentation
Fresno County Employees Retirement System Data as of September 30, - - PowerPoint PPT Presentation
International Equity T E M P L E T O N Fresno County Employees Retirement System Data as of September 30, 2006 November 1, 2006 Gary P. Motyl, CFA Peter A. Nori, CFA President Executive Vice President Templeton Global Equities Templeton
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International Equity T E M P L E T O N
Portfolio Summary
Fresno County Employees’ Retirement System
As of September 30, 2006
3 *Average Annual Returns All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability
- f any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited.
Fresno County Employees’ Retirement System
As of September 30, 2006
Portfolio Performance (USD %)
Fresno County Employees’ Retirement System MSCI EAFE Index 1 Quarter
5.0 4.0
YTD
16.6 14.9
1 Year
19.6 19.7
3 Years*
20.4 22.8
5 Years*
13.9 14.7
7 Years*
7.5 5.7
Since Inception*
9.3 7.1 Portfolio Overview
Investment Mandate International Equity Inception Date August 1, 1994 Lead Portfolio Manager Peter A. Nori Total Net Assets (USD) 227,235,421 Cash & Cash Equivalent 7.2% Number of Holdings 81 Market Capitalization (Weighted Average in Millions USD)—Fresno County Employees’ Retirement System 48,704 Market Capitalization (Weighted Average in Millions USD)—MSCI EAFE Index 51,084
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INVESTMENT OBJECTIVES
- The investment objectives for Templeton Investment Counsel,
LLC will be for the asset value, exclusive of contribution or withdrawals, to grow over the long run and earn, through a combination of investment income and capital appreciation, a rate of return (time-weighted total return) in excess of the benchmarks established for the long-term (five years). [IPS]
PERFORMANCE OBJECTIVES
- The total equity segment of the portfolio is to exceed the Morgan
Stanley Capital International Europe, Australia and Far East (MSCI EAFE) Index as well as the median equity return in a representative international equity performance universe. [IPS]
ELIGIBLE SECURITIES
- Equity securities listed on the major local country stock
- exchanges. [IPS]
- American Depository Receipts (ADRs) and Global Depository
Receipts (GDRs). [IPS]
INVESTMENT RESTRICTIONS
- No U.S. Securities. [International Mandate]
- No Non-EAFE Ex-Canada, Bermuda and Cayman Islands. [IPS]
- No Derivatives. [IPS]
- No Regulation S Securities. [IPS (letter stock restriction)]
- No OTC. [IPS (exchange listing requirement)]
- Maximum 10% Cash and Cash Equivalents (“fully invested” as
per Templeton’s definition). [January 1995 Letter]
- Maximum 25% Investment Companies. [California Code]
- Maximum 5% in one equity security at market. [IPS]
- No single equity position in the portfolio may comprise more
than 5% of the company’s total market capitalization. [Maximum 5% O/S—IPS]
- The weight average market capitalization of the portfolio should
not fall below $1 billion. [IPS]
- The portfolio will not engage in investment transactions
involving: – Stock options; – Short sales; – Purchases on margin; – Letter stock; – Private placement securities (with the exception of Rule 144A securities); – Commodities without the written consent of the Association. [IPS]
Investment Objectives and Guidelines
International Equity T E M P L E T O N
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SLIDE 5
- The portfolio shall not hold securities classified as “compounded
risk” or “risk” by the Investor Responsibility Research Center (IRRC) Global Security Risk Monitor. The Investment Manager must screen the portfolio against the IRRC Global Security Risk Monitor at least on a monthly basis. In the event that a security already in the portfolio becomes classified as “compounded risk”
- r “risk,” the Investment Manager has 60 days to sell the
- security. If the Investment Manager believes that the IRRC
classification is in error and believes that the security in question poses an important investment opportunity, the Investment Manager may petition the Board of Trustees for a waiver of this
- guideline. [IPS (Letter dated June 16, 2004—IRRC screening is
no longer a requirement)]
CORRESPONDENCE
- Manager shall provide Client with a monthly written report of
all transactions undertaken on behalf of Client.
PROXY VOTING REQUIREMENTS
- Effective March 21, 2003, Templeton Investment Counsel, LLC
will have the responsibility to vote proxies. Proxy vote decisions should be made to maximize shareholder values. Please provide
- Mr. Brian Knutson at Fifth Third Bank with your individual
voting instructions and any other information he may require on this matter. Please send this information to: Fifth Third Bank Fifth Third Center MD 1090CC Cincinnati, OH 45263 [2/26/03 Letter]
BROKERAGE
- FCERA will not prescribe a pre-determined percentage of trades
that must be executed through the commission recapture
- program. Each Manager must determine the percentage of
participation based solely on the objective to minimize costs wherever possible without sacrificing best execution. FCERA respects the position of those Investment Managers that have justified limited or no participation in the program on this basis. [Letter dated 4/9/03]
- Client sent updated Traders List on September 27, 1995.
Investment Objectives and Guidelines (continued)
International Equity T E M P L E T O N
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- The Manager shall maintain complete and detailed records of
all billed services provided pursuant to soft dollar and directed brokerage arrangements and such services shall be clearly
- defined. [California Code]
- The Manager shall disclose to the Client:
(1) A list of all billed services provided pursuant to soft dollar and directed brokerage arrangements with respect to investment transactions for the Client; (2) The justification for providing each of those services; (3) The maximum percentage of the investment transactions
- f the Client planned for use in soft dollar and directed
brokerage arrangements; (4) An annual statement of all billed services provided during the previous year under soft dollar and directed brokerage arrangements with respect to investment transactions for the Client; and (5) A determination of whether each service provided under soft dollar and directed brokerage arrangements with respect to investment transactions for the Client is proprietary or is being shared by other clients of the
- Manager. [California Code]
- The Manager shall provide a written quarterly report detailing
the name of each brokerage institution which received commissions from the fund as a result of the discretionary trading authority bestowed upon the investment advisor by the Board of Trustees. [IPS]
FEES
- No special requirements.
Investment Objectives and Guidelines (continued)
International Equity T E M P L E T O N
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VALUE
We seek companies that we believe are trading at a discount to what our research indicates the company may be worth.
PATIENCE
Security prices can fluctuate more widely than underlying security values. In our opinion, market efficiencies should recognize and correct these security prices over time.
BOTTOM-UP
We identify value through rigorous fundamental analysis of a company’s business to determine what we consider its economic worth based on projected future earnings, cash flow or asset value potential.
Templeton’s Investment Philosophy
International Equity T E M P L E T O N
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T E M P L E T O N Templeton has 17 Global Equity and Emerging Markets research offices worldwide, providing on-the-ground, comprehensive research insights and contacts
Global Research Offices Emerging Markets Research Offices Nassau Buenos Aires Rio de Janeiro
- Ft. Lauderdale
Toronto Istanbul Edinburgh Johannesburg Melbourne Mumbai Singapore Warsaw Moscow Shanghai Seoul Hong Kong Geneva
International Equity T E M P L E T O N
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Templeton—Global Presence
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FORT LAUDERDALE 7 PM/Analysts 5 Analysts TORONTO NASSAU HONG KONG MELBOURNE EDINBURGH SINGAPORE 6 PM/Analysts 1 Analyst 4 PM/Analysts 1 PM/Analyst 1 Analyst 1 PM/Analyst 5 PM/Analysts 1 PM/Analyst
Investment Locations
CIO—INSTITUTIONAL CIO—RETAIL Gary Motyl, CFA Jeffrey Everett, CFA DIRECTOR OF RESEARCH DIRECTOR OF PORTFOLIO MANAGEMENT—INSTITUTIONAL Norman Boersma, CFA Cindy Sweeting, CFA GENEVA 1 PM/Analyst
Templeton Global Equity Group Management Team
International Equity T E M P L E T O N
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T E M P L E T O N Seeks to uncover the best opportunities across sectors and around the world
GLOBAL INDUSTRY TEAMS
INFORMATION TECHNOLOGY Matthew Nagle, CFA Peter Nori, CFA Katherine Owen, CFA Peter Wilmshurst, CFA Dale Winner, CFA INDUSTRIALS Alan Chua, CFA Neil Devlin, CFA Peter Moeschter, CFA Tian Qiu, CFA, CPA Tucker Scott, CFA Uwe Zoellner, CFA TELECOM SERVICES Tony Docal, CFA Matthew Nagle, CFA Tina Sadler, CFA Peter Wilmshurst, CFA HEALTH CARE Norm Boersma, CFA Andrew MacKirdy Katherine Owen, CFA Guang Yang, CFA MATERIALS Maarten Bloemen Martin Cobb Neil Devlin, CFA Tony Docal, CFA Tina Sadler, CFA Tucker Scott, CFA Mathias Strohfeldt, CFA FINANCIALS Neil Devlin, CFA Harlan Hodes, CPA Andrew MacKirdy Christine Montgomery, ASIP Murdo Murchison, CFA Brad Radin, CFA George Ritchie Simon Rudolph, ACA Mathias Strohfeldt, CFA Joanne Wong, CFA UTILITIES Mathias Strohfeldt, CFA Joanne Wong, CFA Guang Yang, CFA CONSUMER Alan Chua, CFA Harlan Hodes, CPA Peter Moeschter, CFA Murdo Murchison, CFA Lisa Myers, CFA Matthew Nagle, CFA Katherine Owen, CFA George Ritchie Joanne Wong, CFA
Director of Research: Cindy Sweeting, CFA ADDITIONAL RESOURCES Research Technology Group Global Research Library Junior Research Analysts Global Risk Management Global Trading Platform Emerging Markets Group Institutional Product Management
International Equity T E M P L E T O N
Integrated Global Research Platform
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5 4 3
TEMPLETON'S BOTTOM-UP STOCK SELECTION PROCESS
2 1
Ongoing valuation analysis Disciplined sell methodology Weekly peer review and risk analytics Investment guidelines Industry and sector framework Build and diversify portfolio Long-term approach: 20% historical turnover Presentation of investment thesis Investment debate and critique Director of Research approval Five-year financial forecasts Management/supplier/competitive evaluation Recommendation of Bargain List candidates Experienced analysts Focus on global industry sectors Quantitative and qualitative assessment
Portfolio Monitoring and Risk Management Bottom-Up Portfolio Construction Research Team Evaluation In-Depth Fundamental Analysis Identify Potential Bargains
Building the Templeton Portfolio
International Equity T E M P L E T O N
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THE ECONOMY AND EQUITY MARKETS
- Global equity markets rallied during the third quarter, as investors shed fears about high energy prices,
inflation pressures and rising interest rates.
- The equity market rally, while geographically global in nature, was more selective on a sector basis. In
general, investors sold stocks in cyclically geared sectors, all of which had performed strongly over the previous several quarters, and bought in more defensive areas of the market.
- Strongest performing sectors during the quarter were utilities, telecom and consumer staples. Weakest
performing sectors were energy and materials (driven by metals & mining).
- Strongest performing developed markets were Spain, Belgium and the Netherlands. Emerging Markets
were strong for the quarter with Egypt, the Philippines, Colombia, Indonesia, India and Mexico all up more than 15%. Weakest performing developed markets were Norway, Japan and Finland.
COMMODITIES
- Oil prices fell from peak levels during the quarter largely driven by: demand risk in the U.S., the easing
- f some of the Middle East geo-political risks and the fact that there was no significant hurricane
activity in the Gulf during the quarter.
UNITED STATES
- The pause in interest rate hikes by the Federal Reserve led to renewed optimism that higher interest
rates would not stifle U.S. and global economic growth.
- The U.S. dollar rose against the euro and yen during the quarter.
International Equity T E M P L E T O N
Market Summary
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EUROPE
- European equities surged during the quarter boosted by easing inflationary fears, increased
consumer confidence and business sentiment that held up better than expected.
- The European Union approved Bulgaria and Romania for inclusion in the union (under strict
conditions) in January 2007.
JAPAN
- The Bank of Japan introduced its first interest-rate hike during the quarter, moving rates 0.5%.
The impact on markets was small as the hike had been forecast. However, the movement signaled a new phase of possible interest-rate increases for the BOJ.
- Japan’s new Prime Minister Shinzo Abe took over after five-and-a-half years of the Koizumi
administration.
EMERGING MARKETS
- The Middle East crisis in Lebanon and Northern Israel ended with a ceasefire on August 14th after
five weeks of fighting between Hezbollah and the Israeli military.
- Thailand suffered its first coup in 15 years, ousting Prime Minister Sinawatra from office. Retired
General Chulanont was sworn in as Thailand’s interim Prime Minister.
OUTLOOK
- We are optimistic that even in the context of slower growth around the world, the valuation themes
we identified over the past few quarters should continue to provide a positive outcome for the portfolios.
- In addition, equity markets will continue to periodically overreact to perceptions, fears and
newsflow and punish stocks indiscriminately. This will give us future opportunities to buy undervalued stocks at prices that would typically not materialize in a more stable environment.
Market Summary (continued)
International Equity T E M P L E T O N
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Total Returns (USD %)
Inception Date 1 Quarter YTD 1 Year 3 Years* 5 Years* 7 Years* Since Inception*
Fresno County Employees’ Retirement System — Gross of Fees 08.01.1994 5.0 16.6 19.6 20.4 13.9 7.5 9.3 MSCI EAFE Index 4.0 14.9 19.7 22.8 14.7 5.7 7.1 MSCI All Country World ex U.S. Index 4.0 14.3 19.4 23.9 16.4 6.8 7.3 *Average Annual Returns All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited.
Historical Performance
Fresno County Employees’ Retirement System
As of September 30, 2006
International Equity T E M P L E T O N
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SLIDE 15
T E M P L E T O N International Equity
Supplemental Historical Performance
Fresno County Employees’ Retirement System
Inception: September 1994 to June 2003
1.1 4.8 Entire Period* 1.6 5.3 8 Yrs* 0.1 3.7 7 Yrs*
- 2.1
- 0.3
6 Yrs*
- 2.8
- 2.5
5 Yrs*
- 12.5
- 8.7
3 Yrs*
- 4.2
- 10.8
1 Yr MSCI All Country World ex U.S. Index Fresno County Employees’ Retirement System
IRRC Period: July 2003 to July 2004
28.6 28.0 Entire Period 26.1 25.6 Entire Period* 25.5 22.5 1 Yr MSCI EAFE Index Fresno County Employees’ Retirement System
August 2004 to September 2006
22.7 20.9 Entire Period* 22.9 20.9 2 Yrs* 19.7 19.6 1 Yr 14.9 16.6 YTD 4.0 5.0 1 Qtr 0.2 0.8 1 Mth MSCI EAFE Index Fresno County Employees’ Retirement System *Average Annual Returns (USD) - Average annual total return figures represent the average annual change in value of an investment over the specified periods, assuming reinvestment of dividends and capital gains at net asset value. Total return figures for one year or less represent the change in value of an investment over the specified periods. All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection with the MSCI data or the portfolio described herein. Copying or distributing the MSCI data is strictly prohibited.
Supplemental Historical Performance
15
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International Equity T E M P L E T O N
Fresno County Employees’ Retirement System
- vs. MSCI EAFE Index
July 1, 2006 to September 30, 2006
Portfolio Attribution: by Sector and Country
Contributors/Detractors by Country
Sweden Hong Kong Denmark Italy Canada Finland Netherlands United Kingdom Australia Japan
- 1.0
- 0.5
0.0 0.5 1.0 Total Effect (%)
- 0.2
- 0.2
- 0.1
- 0.1
- 0.1
0.2 0.2 0.2 0.3 1.0 16 Total Effect represents the opportunity cost of investment decisions in a group relative to the overall benchmark. Index statistics calculated by FactSet Research Systems, Inc. Profile data is calculated as a percentage of equity. All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited.
Contributors/Detractors by Sector
Consumer Staples Health Care Telecommunication Services Industrials Consumer Discretionary Utilities Financials Information Technology Energy Materials
- 1.0
- 0.5
0.0 0.5 1.0 Total Effect (%)
- 0.1
0.0 0.1 0.1 0.1 0.1 0.2 0.3 0.4 0.4
SLIDE 17
MSCI EAFE Index Returns (USD)
Telecommunication Services Utilities Information Technology Energy Health Care Consumer Staples Materials Industrials Consumer Discretionary Financials
- 10
- 2
5 12 20
July 1, 2006 to September 30, 2006
International Equity T E M P L E T O N
17 All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability
- f any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited.
Index Sector Returns
Market Cap (Billions) % Return in USD Price to Earnings Price to Book Price to Cash Earnings Yield MSCI EAFE 11,634.0 4.0 15.0 2.3 9.2 2.5 Financials 3,496.7 6.0 13.4 2.0 14.9 2.9 Banks 1,935.1 5.0 13.1 2.1
- 3.2
Diversified Financials 654.0 6.6 12.8 2.3 12.4 2.5 Insurance 571.5 7.1 13.1 1.7
- 2.4
Real Estate 336.1 8.9 18.7 1.5 18.7 2.6 Consumer Discretionary 1,394.3 4.7 17.9 2.1 9.3 2.0 Automobiles & Components 449.0 5.6 13.6 1.6 6.1 1.7 Consumer Durables & Apparel 380.1 4.0 24.3 2.0 12.0 1.4 Consumer Services 131.9 4.6 21.9 2.9 13.1 2.9 Media 238.0 2.7 16.8 2.9 11.7 2.8 Retailing 195.3 6.3 21.3 3.3 14.1 2.2 Industrials 1,235.3 1.7 17.7 2.3 9.8 1.9 Capital Goods 864.4 0.5 17.3 2.3 10.3 1.9 Commercial Services & Supplies 108.9 4.0 21.8 3.1 11.8 1.9 Transportation 262.0 4.9 17.8 2.2 7.8 2.0 Materials 937.9 0.4 12.9 2.3 7.8 2.1 Materials 937.9 0.4 12.9 2.3 7.8 2.1 Consumer Staples 926.3 7.9 19.9 3.4 13.4 2.2 Food & Staples Retailing 235.7 8.0 23.3 2.8 11.9 2.0 Food Beverage & Tobacco 599.1 7.8 18.2 3.7 13.5 2.3 Household & Personal Products 91.4 8.1 25.8 4.0 18.5 1.5 Health Care 886.4 2.4 20.6 4.0 16.5 1.9 Health Care Equipment & Services 95.7 7.8 26.9 4.0 19.0 1.1 Pharmaceuticals & Biotechnology 790.7 1.8 20.0 4.0 16.2 2.0 Energy 866.0
- 3.8
9.4 2.5 6.4 3.1 Energy 866.0
- 3.8
9.4 2.5 6.4 3.1 Information Technology 656.8 2.0 24.9 2.8 12.2 1.2 Semiconductors & Semiconductor Equipment 84.8 7.0 46.3 2.4 11.8 0.5 Software & Services 137.4
- 1.4
27.5 3.9 19.1 1.0 Technology Hardware & Equipment 434.6 2.2 22.2 2.6 11.0 1.4 Utilities 639.4 10.8 16.4 2.3 7.7 3.5 Utilities 639.4 10.8 16.4 2.3 7.7 3.5 Telecommunication Services 594.8 5.7 12.5 1.8 5.3 4.3 Telecommunication Services 594.8 5.7 12.5 1.8 5.3 4.3
SLIDE 18
Fresno County Employees’ Retirement System
- vs. MSCI EAFE Index
As of September 30, 2006
International Equity T E M P L E T O N
Utilities Information Technology Materials Consumer Staples Health Care Energy Telecommunication Services Industrials Consumer Discretionary Financials 8 16 24 32 40 Fresno County Employees’ Retirement System MSCI EAFE Index Portfolio % Index % Over/ Under Financials 21.7 30.1
- 8.4
Banks 9.8 16.6
- 6.9
Insurance 7.7 4.9 2.8 Diversified Financials 2.7 5.6
- 2.9
Real Estate 1.5 2.9
- 1.4
Consumer Discretionary 16.5 12.0 4.5 Consumer Durables & Apparel 5.9 3.3 2.7 Media 5.2 2.1 3.2 Consumer Services 2.8 1.1 1.7 Automobiles & Components 2.6 3.9
- 1.3
Retailing 0.0 1.7
- 1.7
Industrials 14.1 10.6 3.5 Capital Goods 9.3 7.4 1.9 Commercial Services & Supplies 2.4 0.9 1.5 Transportation 2.4 2.3 0.1 Telecommunication Services 9.9 5.1 4.8 Telecommunication Services 9.9 5.1 4.8 Energy 7.7 7.4 0.2 Energy 7.7 7.4 0.2 Health Care 7.6 7.6
- 0.1
Pharmaceuticals Biotechnology & Life Sciences 6.3 6.8
- 0.5
Health Care Equipment & Services 1.3 0.8 0.5 Consumer Staples 6.3 8.0
- 1.7
Food Beverage & Tobacco 4.4 5.2
- 0.7
Food & Staples Retailing 1.9 2.0
- 0.2
Household & Personal Products 0.0 0.8
- 0.8
Materials 5.8 8.1
- 2.3
Materials 5.8 8.1
- 2.3
Information Technology 5.3 5.7
- 0.3
Technology Hardware & Equipment 3.3 3.7
- 0.5
Semiconductors & Semiconductor Equipment 1.1 0.7 0.4 Software & Services 0.9 1.2
- 0.3
Utilities 5.2 5.5
- 0.3
Utilities 5.2 5.5
- 0.3
Weightings as percent of equity. All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability
- f any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited.
Portfolio Composition: Sector Allocation
18
SLIDE 19
International Equity T E M P L E T O N
Index Market Returns
MSCI EAFE Index Returns (USD)
Singapore New Zealand Japan Hong Kong Australia United Kingdom Switzerland Sweden Spain Portugal Norway Netherlands Italy Ireland Greece Germany France Finland Denmark Belgium Austria
- 10
10 20
July 1, 2006 to September 30, 2006
19 All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability
- f any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited.
Market Cap (Billions) % Return in USD % Return in Local Currency % Change in Ex. Rate (USD) Price to Earnings Price to Book Price to Cash Earnings Yield EAFE 11,634.0 4.0 5.1
- 15.0
2.3 9.2 2.5 Europe 7,963.1 5.7 6.2
- 13.7
2.5 8.9 2.9 Austria 64.8 3.4 4.4 0.9 15.7 2.2 7.9 1.5 Belgium 144.0 11.5 12.6 0.9 12.4 2.0 9.2 3.1 Denmark 88.5 8.7 9.7 0.9 18.7 3.0 14.0 1.7 Finland 166.1 1.2 2.2 0.9 15.8 3.1 10.4 2.9 France 1,159.3 4.9 5.9 0.9 13.3 2.2 8.2 2.7 Germany 826.4 4.8 5.8 0.9 13.8 1.8 6.9 2.4 Greece 73.6 5.1 6.1 0.9 16.5 2.9 9.2 2.7 Ireland 96.9 8.8 9.8 0.9 15.8 2.9 13.2 2.3 Italy 447.4 4.5 5.4 0.9 14.0 2.1 6.5 3.9 Netherlands 407.7 11.0 12.1 0.9 12.4 2.5 10.1 3.0 Norway 94.7
- 6.2
- 1.7
4.8 12.3 2.4 6.9 2.6 Portugal 39.3 7.2 8.2 0.9 14.5 2.8 7.0 3.3 Spain 468.1 12.4 13.5 0.9 14.2 3.0 7.4 3.2 Sweden 282.5 6.9 8.7 1.7 14.7 2.8 11.2 2.7 Switzerland 823.9 7.5 10.0 2.4 18.1 3.3 16.5 1.7 United Kingdom 2,780.0 4.3 3.2
- 1.0
12.6 2.6 9.2 3.3 Pacific 3,670.9 0.5 2.9
- 18.9
2.0 9.9 1.7 Australia 608.5 3.0 2.5
- 0.4
15.6 2.7 11.7 3.9 Hong Kong 196.5 6.3 6.7 0.3 16.6 1.8 11.9 2.9 Japan 2,750.8
- 0.7
2.6 3.3 20.2 2.0 9.5 1.1 New Zealand 17.1 8.6 1.5
- 6.5
17.7 2.8 9.6 5.3 Singapore 98.0 6.9 7.2 0.3 16.0 1.9 10.6 2.7
SLIDE 20
International Equity T E M P L E T O N
Weightings as percent of equity. All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability
- f any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited.
Portfolio Composition: Geographic Allocation
Australia/NZL North America Asia Europe 15 30 45 60 75 90
Fresno County Employees’ Retirement System
- vs. MSCI EAFE Index
As of September 30, 2006
20 Portfolio % Index % Over/ Under Europe 82.9 68.4 14.5 United Kingdom 30.3 23.9 6.4 France 9.9 10.0
- 0.1
Germany 9.9 7.1 2.8 Netherlands 6.8 3.5 3.3 Spain 6.3 4.0 2.3 Italy 4.5 3.9 0.6 Switzerland 3.8 7.1
- 3.2
Sweden 3.1 2.4 0.7 Norway 2.8 0.8 2.0 Finland 2.8 1.4 1.3 Portugal 1.4 0.3 1.1 Denmark 1.3 0.8 0.5 Belgium 0.0 1.2
- 1.2
Other 0.0 2.0
- 2.0
Asia 13.1 26.2
- 13.1
Japan 8.9 23.6
- 14.7
Hong Kong 2.3 1.7 0.6 Singapore 1.9 0.8 1.0 North America 2.0 0.0 2.0 Bermuda 2.0 0.0 2.0 Australia/NZL 1.9 5.4
- 3.5
Australia 1.9 5.2
- 3.3
New Zealand 0.0 0.2
- 0.2
Fresno County Employees’ Retirement System MSCI EAFE Index
SLIDE 21
Name of Security Country Industry Percent
- f Total
- 1. ING GROEP NV
Netherlands Diversified Financials 2.0
- 2. TELEFONICA SA
Spain Telecommunication Services 2.0
- 3. TELENOR ASA
Norway Telecommunication Services 1.9
- 4. BAE SYSTEMS PLC
United Kingdom Capital Goods 1.9
- 5. ALLIANCE BOOTS PLC
United Kingdom Food & Staples Retailing 1.7
- 6. KONINKLIJKE PHILIPS ELECTRONICS NV
Netherlands Consumer Durables & Apparel 1.7
- 7. COMPASS GROUP PLC
United Kingdom Consumer Services 1.6
- 8. VODAFONE GROUP PLC
United Kingdom Telecommunication Services 1.6
- 9. ROYAL BANK OF SCOTLAND GROUP PLC
United Kingdom Banks 1.6
- 10. SHIRE PLC
United Kingdom Pharmaceuticals Biotechnology & Life Sciences 1.5 Total 17.6
International Equity T E M P L E T O N
Top Ten Equity Holdings
Fresno County Employees’ Retirement System
As of September 30, 2006
21 Holdings of the same issuer have been combined.
SLIDE 22
International Equity T E M P L E T O N
Fundamental Portfolio Characteristics
Dividend Yield
Portfolio Benchmark
Weighted Average 2.8% 2.5% Median 2.7% 1.8% Percentage Covered 99.8% 99.7% Market Capitalization (Millions USD)
Portfolio Benchmark
Weighted Average 48,704 51,084 Median 22,195 5,056 Max 216,717 216,717 Min 874 438 Percentage Covered 100.0% 100.0% 22 Source: FactSet. For the portfolio, the Price to Earnings, Price to Cash Flow, and Price to Book Value calculations for the weighted average use harmonic means. Values less than 0.01 (i.e., negative values) are excluded and values in excess of 200x are capped at 200x. Yields above 100% are also excluded. For the benchmark, no limits are applied to these ratios in keeping with the benchmark’s calculation methodology. Market capitalization statistics are indicated in the base currency for the portfolio presented. Due to data limitations all equity holdings are assumed to be the primary equity issue (usually the ordinary or common shares) of each security’s issuing company. This methodology may cause small differences between the portfolio’s reported characteristics and the portfolio’s actual characteristics. In practice, Franklin Templeton’s portfolio managers invest in the class or type of security which they believe is most appropriate at the time of purchase. The market capitalization figures for both the portfolio and the benchmark are the security level, not aggregated up to the main issuer. The dividend yield quoted here should not be used as an indication of the income to be received from this portfolio. All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited.
Fresno County Employees’ Retirement System
- vs. MSCI EAFE Index
As of September 30, 2006
Price to Earnings
Portfolio Benchmark
Weighted Average 14.8x 15.0x Median 16.0x 18.6x Percentage Covered 94.4% 99.9% Price to Cash Flow
Portfolio Benchmark
Weighted Average 7.2x 9.2x Median 8.5x 11.9x Percentage Covered 99.8% 88.0% Price to Book Value
Portfolio Benchmark
Weighted Average 2.1x 2.3x Median 2.3x 2.3x Percentage Covered 98.9% 99.9%
SLIDE 23
GARY P. MOTYL, CFA President Templeton Investment Counsel, LLC Chief Investment Officer, Templeton Institutional Global Equities Fort Lauderdale, Florida, United States Gary P. Motyl is chief investment officer of Templeton Institutional Global Equities and president of Templeton Investment Counsel, LLC.
- Mr. Motyl manages several institutional mutual funds and separate
account portfolios and shares country research coverage of the United States. Prior to joining Templeton in 1981, Mr. Motyl worked from 1974 to 1979 as a security analyst with Standard & Poor’s Corporation. He then worked as a research analyst and portfolio manager from 1979 to 1981 with Landmark First National Bank. In this capacity, he had responsibility for equity research and managed several pension and profit sharing plans.
- Mr. Motyl earned a B.S. in finance from Lehigh University in
Pennsylvania and an M.B.A. from Pace University in New York. He is a Chartered Financial Analyst (CFA) Charterholder.
Management Profile
International Equity T E M P L E T O N
23
SLIDE 24
PETER A. NORI, CFA Executive Vice President Portfolio Manager/Research Analyst Templeton Global Equities Templeton Investment Counsel, LLC Fort Lauderdale, Florida, United States Peter A. Nori, executive vice president, has global research responsibility for computers and peripherals, as well as semiconductor equipment and
- products. In addition, Mr. Nori serves as the coordinator for the global
technology research team and manages several institutional portfolios as well as the FTVIPT Templeton Foreign Securities Fund and FTVIPT Templeton Global Asset Allocation Fund.
- Mr. Nori joined Franklin in 1987 as a shareholder services representative
and entered the management training program in 1988. In March 1990, he joined the research department as an equity analyst and co-portfolio manager of the Franklin Convertible Securities Fund. After joining Templeton’s global equity research team in 1994, Mr. Nori’s initial responsibilities involved researching small capitalization securities on a global basis.
- Mr. Nori earned a B.S. in finance and an M.B.A., with an emphasis in
finance, from the University of San Francisco. He is a Chartered Financial Analyst (CFA) Charterholder and a member of the CFA Institute.
Management Profile
International Equity T E M P L E T O N
24
SLIDE 25
THOMAS J. DICKSON Senior Vice President Client Service Franklin Templeton Institutional San Mateo, California, United States Thomas J. Dickson, senior vice president, is a relationship manager in the Client Service group and is responsible for a number of separate account and institutional fund client relationships. Mr. Dickson started his career at Franklin Templeton in the San Mateo management training program in
- 1992. In 1994, he moved to Templeton’s Fort Lauderdale office where he
took on the role of portfolio manager and research analyst.
- Mr. Dickson earned a B.S. in managerial economics from the University
- f California, Davis, and an M.B.A. with emphasis in international