Objectivity Experience Pro-Active Advice Sr. Investment - - PowerPoint PPT Presentation

Objectivity Experience Pro-Active Advice

Graystone Consulting 28 State Street, Suite , Boston,, MA 02109 Tel 504-561-6855 Fax 617-557-6966 5051 Westheimer Blvd, Suite 2100, Houston, TX 77056 Tel 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 CIMA

• Sr. Vice President
• Sr. Investment Management

Consultant

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 Graystone

A 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

• utside 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 working together 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 Nabhan CIMA Managing Director James Bee

• Sr. 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 President

• Sr. Investment

Management Consultant 18 Years of Experience

Scott Guptill

Research Analyst 5 Years of Experience

Elese Jackson

Group Administrator 11 Years of Experience

Jennifer Reardon

Relationship Manager 16 Years of Experience

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

• f 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 List

Foundations & 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 Strength

Our Duty is to assist Trustees in fulfilling their Fiduciary Responsibility. We help you execute and document 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

• n 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 Consulting

403Teams 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 GROUP

INVESTMENT ADVISOR RESEARCH

31 Investment Professionals

Long only Equity – 16 analysts Fixed Income – 7 analysts Research Management – 3 analysts

Graystone Teams

Institutional 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 Recommendations Advice

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 Reporting and 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

For Illustrative Purposes Only

» 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

For Illustrative Purposes Only

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 Graph

Manager Performance

July 2004 - June 2012 (Single Computation)

60 80 100 120 140 160 180 200 220 240 Hypothetical Portfolio S&P 500 0% 50% 100% Q2 2004 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q2 2012 Cumulative Excess Return

• vs. Market Benchmark

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Annual Return

Manager vs Benchmark: Return

July 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 Hypothetical Portfolio 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 Table

July 2004 - June 2012: Summary Statistics

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 Hypothetical Portfolio S&P 500 Return Cumulative Return Standard Deviation Sharpe Ratio Excess Return vs. Market Tracking Error vs. Market Information Ratio vs. Market Alpha vs. Market Beta vs. Market R-Squared vs. 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

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 Hypothetical Portfolio 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 Return

As of June 2012

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Standard Deviation

Manager vs Benchmark: Standard Deviation

July 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 Hypothetical Portfolio 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 / Return

September 2009 - June 2012 (Single Computation) Return

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

Standard Deviation

0% 5% 10% 15% 20% 25% 30% 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 Hypothetical Portfolio Market Benchmark: S&P 500 Cash Equivalent: Citigroup 3-month T-bill Capital Market Line

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5 Year Risk Return Profile

Risk / Return

September 2007 - June 2012 (Single Computation) Return

• 5%

0% 5% 10% 15%

Standard Deviation

0% 5% 10% 15% 20% 25% 30% 35% 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 Hypothetical Portfolio Market Benchmark: S&P 500 Cash Equivalent: Citigroup 3-month T-bill Capital Market Line

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7 Year Risk Return Profile

Risk / Return

July 2005 - June 2012 (Single Computation) Return

Standard Deviation

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 Hypothetical Portfolio Market Benchmark: S&P 500 Cash Equivalent: Citigroup 3-month T-bill Capital Market Line

Fees and Services

Consulting Fees

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

.54%

• n the first $5 Million

.32% on the next $5 Million .16% on the next $15 Million The fee includes:

• 1. Investment Policy Development and Review
• 2. Asset Allocation Analysis
• 3. Manager Review and Searches
• 4. Quarterly Performance Evaluation
• 5. Custody (Optional)
• 6. All transaction costs for trades executed on trading desk at zero cents per share
• 7. Trustee Education and training
• 8. 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

• ther 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

• thers

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