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HomeMy WebLinkAboutPension General_Documentation_Tab 12_02/05/2007~ ~ Tequesta General Employees' Pension Fund I~A~A I~rv~Sr~~s~rlr AI~vISC~r.~, INC:. February 5, 2007 DANA INVESTMENT ADVISORS, INC. PERFORMANCE Investment Objectives: Obtain a reasonable total rate of return, with reasonable consistency while attempting to protect the assets against the inroads of inflation. Performance over 3-5 year market cycle to be in excess of composite indices. Managers performance to be in the top 40% of Mobius Universe. Total Return to be equal to actuarial earnings assumption and equal or exceed CPI plus 3% over 3-5 year cycle. Comparative Indices: 60% S&P 500 40% Lehman Govt/Credit Intermediate Investment Restrictions: Not more than 5% of funds assets invested in any one issuing company or aggregate investment in one company exceed 5% of outstanding capital stock of the company. Equity: Investments in stock not to exceed 60% at cost or 70% at market. Listed on National Exchange Fixed: Standard & Poor's Investment Grade or Moody's Investment Grade. Value of bonds in single corporation shall not exceed 10% of the total fund. DANA INVESTMENT ADVISORS, INC. 2 ;z~~ Account 1'rotile Key Money Rates As of 1-2 2-07 Late New York Latest Rate Week Ago Year Ago Prime Rate 8.25 8.25 7.25 Discount Rate 6.25 6.25 5.25 Federal Funds 5.23 5.27 4.23 Late New York Latest Yield Week Ago Year Ago 3-mo. T Bill 5.13 5.08 4.35 6-mo. T-Bill 5.16 5.13 4.45 1-yr. T-Bill 5.08 5.05 4.46 10-yr. Note 4.77 4.77 4.35 30-yr. Bond 4.87 4.86 4.52 Y4 Ik'.n~ ,K,, z,. BanxQuote U.S.Index Latest Yield i a Week Ago Year Ago Money Market 1.27 1.26 1.21 6-mo. CD 3.30 3.30 2.87 1-yr. CD 3.86 3.85 3.42 2-yr. CD 3.76 3.76 3.60 5-yr. CD 3.91 3.91 3.99 DANA INVESTMENT ADVISORS, INC. ~~r~~u ~~~a~~~~ N ~ ~ . 4 BanxQuote U.S.Index atest Yield ~ ~ e Week Ago ear Ago 3-mo. CD 3.05 3.06 2.98 6-mo. CD 3.75 3.75 3.27 1-yr. CD 4.08 4.07 3.62 2-yr. CD 3.97 3.97 3.75 5-yr. CD 4.10 4.11 4.12 ~~A •~~: Latest Week Year Late London Rate Ago Ago 1-mo. 5.32 5.32 4.51 3-mo. 5.36 5.35 4.61 6-mo. 5.38 5.37 4.73 ~F~ LIBOR Latest Rate Week Ago Year Ago 1-mo. 5.32 5.32 4.52 3-mo. 5.36 5.36 4.62 6-1110. 5.39 5.39 4.74 1-yr. 5.39 5.38 4.84 Source: hup:%-'«titini~.baiu~iuote.comimune~~.asp 3 No Text Total Return Through 12-=~ 1-06 Bonds Equities Total Portfolio 4111 Qtr 4th Qtr 4th Qtr Aver a ge A nnu al 2006 ** 1Z Months 2006 ~~~ 12 Months 2006 *~ I2 Months Since Inception 10-~? 3-0 5 Tequesta General Employees 1.09% 4.49%* 6.02% 14.60% 3.85% 10.28% 12.31% Lehman Govt/Corp Intermediate 1.03% 4.08% S&P 500 6.70% 15.80% Blend: 60% S&P 500 4.43% 11.11% 10.20% 40% Lehman G/C Intermediate Return includes cash from 12.31-05 to 3-31-06 ** Unanmlalized Current Asset Allocation Bonds Stocks Cash 41% 58% 1% "The information set forth above is based upon information believed to be accurate and reliable but we do not guarantee its accuracy." DANA INVESTMENT ADVISORS, INC. ~~ ~ Yertormance vs ~omparables (lJross of tees) Portfolio Characteristics Credit Quality Current Annualized Yield to Average Effective Coupon Duration Maturity C~ Market Tequesta General Employees AA+ 0.00% 0.00% 0.00 LB G/C Intermediate AA+ 0.00% 0.00% 0.00 As of October 2005, the Portfolio's inception, the Yield to Maturity was 4.82%. The Portfolio's yield has increased 0.00% resulting in a potential annual yield increase on a $000,000 portfolio of $ 000. "The information set forth above is based upon information believed to be accurate and reliable but we do not guarantee its accuracy." DANA INVESTMENT ADVISORS, INC. 6 ;; 2~ Mond l.;haracteristics vs ~;omparables OUTLOOK F .,y ---~ FOMC Statement IZ-12-o~ y ~~~ I'h~ N~~c~~~ral ~c'~c'1'F~'t~ t~~tiar4-3 .,~; ~, .. ., .. ?:<~ For immediate release The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5- 1/4 percent. Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market. Although recent indicators have been mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters. Readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand. Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that maybe needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. DANA INVESTMENT ADVISORS, INC. 7 Treasury Yield Curve 5.5 5.0 ~----'~-------- ---------------------------- 4.5 ~- -------------- 4.0 - ------------ Shorter portfolios no longer sacrifice yield 3.5 ~ _ ., _ .. _ .. ... .. .., w.. .... ..... .._v., 03 Months 06 Months 02 Years 05 Years 10 Years 30 Years -~-~----Jan 23, 2007 5.13 5.16 4.90 4.77 4.77 4.86 ~- Dec 30, 2005 4.07 4.37 4.40 4.35 4.39 4.54 DANA INVESTMENT ADVISORS, INC. COTe CPI (trailing twelve months) .,...~ .~ 3.00 ~~;`~2.75 2.50 2.25 2.00 1.75 1.50 1.25 1.00 DANA INVESTMENT ADVISORS, INC. 9 00 ~ ~ ~ ~ O O O O ~--~ ~--+ ^~ ~ N N N N M M M M ~ ~ ~ ~ u1 u1 Ln in ~ ~ ~ ~ ~ O~ O~ O~ O~ O O O O O O O O O O O O O O O O O O O O O O O O O O O O ~ ~ ~ ~ ~ O O O O O O O O O O O O O O O O O O O O O O O O O O O O ~--i .-~ ~ ~--~ ~--i N N N N N N N N N N N N N N N N N N N N N N N N N N N N ~ cd ~ ~ a~ m ~ ~ a~ cC ~ y y ca ~ ~ y ro ~ ~ a~ ~ ~ y ~ ca ~ y y cC ~ ~ a~ Current Economic Environment ~~~~ a ~~~~ - Earnings growth will be in the mid teens for 2006. - Economic activity is decelerating, not slumping. Real GDP growth should still be above 3% this year. - Housing slump is still in the early stages - no telling how deep. - Personal income growth, now at 6% per year, will prevent the housing slump from significantly affecting the economy. - Inflation, pushed by wage growth, will pressure the Fed to stay above 5% indefinitely. - Core inflation remains above the Fed comfort level. - Unemployment is low. 1.11-06 DANA INVESTMENT ADVISORS, INC. 10 Bond Performance Review ,_ j ~ ~ ..~ .~..i ~fi. Y. T , _ ,:~:,~ , _; ~`":-~ On a total return basis, Fixed Mortgage securities were the top performing asset class for the Lehman Brothers Aggregate Index for the fourth r~'~ uarter of 2006. r { ~ 2006 ~~ Aggregate 1.24% Treasuries .72% Agencies l.ll% Corporate 1.36% Asset-Backed 1.10% Fixed MBS 1.60% TIPS (1.29%) • Over the quarter, bond ma 2006 YTD 4.33% 3.08% 4.37% 4.30% 4.70% 5.22% .41% rket returns were limited to the collection of coupon income as the yield curve shifted upwards 9-30-06 12-31-06 2 yr 4.68% 4.81% 5 yr 4.58% 4.69% 10 yr 4.63% 4.70% 30 yr 4.76% 4.81% • Returns were limited to the collection of coupon income as the future expectations of monetary policy remained uncertain. The Federal Reserve met twice during the fourth quarter (October 25 and December 12) and ended both meetings by keeping the Fed Funds rate at 5.25%. Even though the Fed kept rates at 5.25%, the bond market had begun the quarter by pricing an early 2007 Fed Funds rate cut into interest rate securities. However, by the end of the quarter, the bond market began to reverse the inference of an early 2007 rate cut as economic data continued to confirm an economy experiencing positive growth. DANA INVESTMENT ADVISORS, INC. II Bond Performance Review -Continued ... ., ., - -:'~ ,`~ • At the beginning of the fourth quarter, the economic indicators were suggesting that the economy was slowing down and the ~~;r Federal Reserve would begin to ease monetary policy. o GDP growth slowed from 5.6% in the first quarter of 2006, 2.6% in the second quarter, to 2.0% in the third quarter of 2006. o The Institute of Supply Management index dropped below 50 for the first time since April of 2003. o Retail sales and personal consumption continued to moderate over the fourth quarter. ~.~ o New home sales were down 24.7% in October. o Oil and gas levels remained elevated as the forth quarter began. • By December, economic data began to reverse and suggest that the economy is continuing to expand on a solid pace. o Payroll employment averaged a firm 136,000 new jobs per month in the forth quarter. o Average hourly earning rose 4.2%; the fastest year-over-year growth in earnings since February 2001. o Unemployment rate at 4.5%. o Core inflation is above the 2% Federal Reserve threshold. o Corporate credit spreads are tight. • . Given the uncertainty in the Bond market as to the future expectation of monetary policy and interest rates suggesting overbought yield levels, the current portfolio is being managed to experience lower interest rate risk than our benchmarks. Our portfolios continue to be well-diversified between Corporates, Treasuries, Agencies and Mortgages. We have maintained our over-weight sector allocation to corporate and mortgage securities due to our fundamental economic and bond sector outlook. In addition, throughout the fourth quarter, the bond portfolio has held a yield advantage to the benchmark and a slightly shorter duration. Therefore, we have been able to maintain performance with lower risk and higher yield than the benchmark. DANA INVESTMENT ADVISORS, INC. 12 4th Quarter Equity Review ~.,., .., ~ ~ Another fourth-quarter Santa Claus put the icing on the cake for a great year of returns. The equity markets and most markets globally had an ~~~~ outstanding year as it seemed that every market and every asset class went up during the year. The success of the markets in 2006 has been ~~s~ simplified to a one-word explanation-liquidity. Liquidity contributed to many areas in 2006, including frenzied M&A activity, increases in dividends and stock buybacks, and the bidding up of many asset classes. The markets roared ahead during the fourth quarter and for the entire year. The S&P 500 increased 15.8% for the year and was up 6.7% in the fourth quarter alone. The small cap indexes did even better, as the Russell 2000 was up 18.4% on the year acid 8.9% for the fourth quarter. According to Ibbotson, this is the eighth year in a row that small caps bested large caps. The NASDAQ was the laggard, but still managed a 9.5% return. Some interesting themes that we monitor continued to hold as value beat growth, with the Russell 1000 Value returning 22.3% for the year and 8.0% for the quarter while the Russell 1000 Growth was up 9.1% in 2006 and 5.9% for the fourth quarter. We are definitely in the midst of one of the better bull markets on record. The S&P 500 seta 6-year high. This was the fourth straight year of market gains, and stocks were up during the past five months and eleven of the past twelve months. A good time to be in the equity markets, indeed. Preview: What will transpire in 2007? For 2007, the fundamental outlook for the markets is still strong. Growth is moderating but sustainable, headline inflation and energy prices have receded, and equity valuations are reasonable. A unique feature of this bull market is that it has been strictly an earnings driven bull market and we have yet to experience significant multiple expansion. As such, the market multiple did not budge after the double digit returns in 2006 because earnings grew at a level commensurate with stock returns. With analysts expecting about 9% earnings growth for 2007, the multiple does not have to expand for further price appreciation. We are heading into the fifth year of a bull market, a very long cycle, especially since the S&P 500 has not had a 10% correction during this run. Sentiment maybe overly bullish as investors are approaching 2007 with a high degree of optimism. Most market pundits are in agreement that 2007 is going to be a strong year and the fundamentals back up this argument. Also, we are in the third year of a presidential cycle, which has typically been strong in terms of market performance. To us, the overwhelming optimism is a concern. Markets tend to increase in the midst of walls of worries; the second half of 2006 was a prime example. However, beginning 2D07 there does not seem to be much to lose sleep over, which is a worry in itself. January is starting off with the usual ramblings: will growth finally beat value? Will large cap outperform small cap? Will the housing market's collapse weaken an over-stretched consumer? Unfortunately, we do not know with certainty the answer to any of these questions, so we are going to stay away from that fool's game and stick to what we do best: rwzning disciplined, risk controlled portfolios, where our focus is on fundamental stock selection. Our approach is relative value, which we think is a superior model as we focus on stocks with attractive valuation levels that also display current growth catalysts. DANA INVESTMENT ADVISORS, INC. 13 Equity Review -Large Cap _ _t . ~~ ,i,t. X11 :...,. l~ .y, £~`~~i`•. ~:. '~y',ti~(d,,,r '~i-.13::._', i ,~. _~~;'-~ Large Cap Core ,,"~~q'~ Our Large Cap Core performed well on an absolute basis by returning 14.5% for the year and 5.8% for the fourth quarter. The mega big cap bias <{ in the market was detrimental to our relative performance. Moreover, the S&P index's largest constituents had the best returns. As you move ~` ~ down in terms of market cap, the returns were worse, hence the larger the size the better the stock likely performed. Our top performer for the quarter was an industrial firm, Terex Corp. (TEX), which was up over 40% for the quarter. The construction equipment company reported outstanding third quarter results and raised earnings guidance. Terex is benefiting from a strong global non- residential construction market as well as increasing new equipment demand from the mining sector. Energy was a top sector for the fourth quarter and we had a few exceptional stocks from the oil patch. ConocoPhillips (COP) rebounded during the quarter after a good third quarter earnings report. The company's recent alliance with EnCana to create an integrated, North American heavy oil business has been positively received for its potential to further enhance the companies upstream and downstream prospects. Another stalwart was Marathon Oil Corp. (MRO). The stock began a steady rebound powered mainly by stellar third quarter earnings, the announcement of a deepwater discovery in Angola, and approval for a refinery expansion. From the consumer side we had three winners-two discretionary names and one staple. Our staple, Supervalu Inc. (SVU), a grocer and distributor, had a significant jump in price in early October, subsequent to the announcement of stronger than expected earnings. Concurrently, the company raised its annual earnings forecast, citing lower than expected costs related to the Albertsons purchase. Our discretionary stocks were Johnson Controls Inc. (JCI) and Nordstrom Inc. QWN). Johnson Controls, a maker of auto components and climate control systems, rebounded during the fourth quarter due to an analyst upgrade based on attractive valuation and the company's diversification from automotive end markets. Nordstrom, the high-end retailer, continues to see increased traffic and higher ticket prices at the store level, which has resulted in robust revenue and earnings results. In particular, women's apparel is showing signs of improvement as more designer brands are looking to come aboard. Nordstrom is also seeing greater potential from their direct business. The financial sector, which was in the middle of the pack for returns during the quarter, was good to our portfolios as we had several winners. Bear Stearns Cos. (BSC) continues to benefit from increased merger and acquisition activity. In addition, despite a weakening mortgage environment, Bear's fixed income division continued to outpace expectations. American Capital Strategies (ACAS), a mezzanine and debt Lender that supports management buyouts, jumped during the quarter as investor sentiment improved towards the economy and ACAS's credit quality. CIT Group (CIT), an equipment leasing lender, also had healthy returns during the quarter. CIT shares were rewarded for the company's strong origination growth and healthy credit quality and positive investor sentiment towards credit sensitive names. DANA INVESTMENT ADVISORS, INC. 14 Equity Reviev~ -Small dap .~:~ .~~, °`~ Small Cap t#;' , t'r: Small cap was an area of the market that continued to set record highs in 2006. Our strategy has a lower beta and as a result experienced less ~._. ~~~'volatiliry and slightly less upside during the strong market. Our returns for the fourth quarter were 8.1%, which resulted in an annual 2006 ~- ~~'~ return of 16.4%. Our winners for the quarter were from a variety of sectors with the healthcare sector leading the way with three of our top six `~ winners. Our top performer was a Russian telecom firm that is listed on the US exchange, Golden Telecom Inc. (GLDN). The stock has recently received more attention regarding their favorable long term prospects as a consolidator of the Russian alternative fixed-line market. Several analysts initiated coverage of the stock during the quarter with favorable recommendations. In addition, Golden reported impressive sequential revenue growth. An industrial firm was our number two performer. Lennox International Inc. (LII), a provider of climate control solutions, reported strong organic growth in both commercial HVAC and refrigeration during the third quarter. Lennox also increased their full year 2006 guidance. The healthcare sector had our largest concentration of winners. Leading the way was Apria Healthcare Group Inc. (AHG), a provider of home healthcare services, which reported noticeably better free cash flow generation as the company has implemented billing and collection initiatives and improved working capital management. WellCare Group Inc. (WCG), a managed care provider, reached a 52-week high during the quarter as the company reported better than expected earnings and revenues and increased guidance. The stock had a steady run-up throughout the quarter, except for the brief pull-back following the mid-term election results. Sciele Phanna Inc. (SCRX), a specialty pharma company, reported strong revenue and earnings growth. In addition, a broker initiated coverage on the stock with a Buy rating. We also did well in technology as Netgear Inc. (NTGR), a maker of networking products, had a huge gain in late October, gapping up more than 16% following a superb earnings release. The company experienced a 35% increase in revenues as it beat on both the top and bottom lines. The company also guided revenues and earnings above expectations for the next reporting period. Following the earnings release, several analysts raised their price targets and ratings on the stock. SPSS Inc. (SPSS), a technology company that makes predictive analytics software, reported an in-line quarter, but several analysts upgraded their rating and increased their price target, which caused the stock to swell during the quarter. Finally on the consumer side we had two winners as Oxford Industries Inc. (OXM), an apparel company that makes Tommy Bahama and Ben Sherman branded clothing, had a steady increase throughout the quarter. Nothing spectacular was going on as the company reported in line results and reaffirmed previous guidance. Sentiment seems to be turning more positive as a turnaround at the Ben Sherman segment appears to be underway. DSW Inc. (DSW), a branded footwear retailer, had a one day pop of 16% after the Company reported better than expected results and relayed to the Street higher expectations in the future. DANA INVESTMENT ADVISORS, INC. 15 ASSET ALLOCATION Asset Alloc~ti~n ~s of 12-31-06 Government Bonds $nn 2nc Federal Agencies $98,399 {2% Corporate Bonds $101,170 12% DANA INVESTMENT ADVISORS, INC. Money Market Fixed Rate Mtg Pools $11,170 Accrues{ & Receivables Dana International $61,790 7% ~Il Cap $429,747 5{% 16 All Cap Cap Sector Distribution as of 12-31-06 22% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Financials Information Health Care Industrials Consumer Energy Consumer Utilities Materials Telecomm Technology Discretionary Staples Services DANA INVESTMENT ADVISOKS, INC. 17 CURRENT HOLDINGS Dana Investment Advisors PORTFOLIO APPRAISAL 1087 Tequesta General Employees' Pension Fund December 31, 2006 Market Pct. Quantity Security Price Value Assets CASH AND EQUIVALENTS Cash -Money Fuud _ 11,169.63 _1.3 11,169.63 1.3 COMMON STOCK Materials 92 PPG Industries Inc. 64.21 5,907.32 0.7 190 PW Eagle Inc. 34.50 6,555.00 0.8 12,462.32 1.5 Industrials 90 Burlington Northern Santa Fe 73.81 6,642.90 0.8 94 Caterpillar Inc. 61.33 5,765.02 0.7 100 Eaton Coip. 75.14 7,514.00 0.9 206 Gardner Denver Inc 37.31 7,685.86 0.9 100 Parker Hannifin Corp. 76.88 7,688.00 0.9 100 United Technologies Corp 62.52 6,252.00 0.7 220 Wabtec Corporation 30.38 6,683.60 0.8 48,231.38 5.7 Telecorrununication Services 200 AT&T [nc. 35.75 7,150.00 0.8 9 Idearc Inc. Com Delaware 28.65 257.85 0.0 180 Verizon Communications 37.24 6,703.20 0.8 14,111.05 1.7 Consumer Discretionary 175 Cato Corp. 22.91 4,009.25 0.5 188 Jarden Corporation 34.79 6,540.52 0.8 80 Johnson Controls hic. 85.92 6,873.60 0.8 185 Leggett & Platt 23.90 4,421.50 0.5 160 Nordstrom Inc 49.34 7,894.40 0.9 160 The Men's Wearhouse Inc. 38.26 6,121.60 0.7 117 V F Corporation 82.08 9,603.36 l.] 45,464.23 5.4 1 18 Dana Investment Advisors PORTFOLIO APPRAISAL 1087 Teyuesta General Employees' Pension Fund December 31. 2006 Quantity Security Price Market Value Pct. Assets Consumer Staples 90 Altria Group Inc. 85.82 7,723.80 0.9 50 General Mills Inc. 57.60 2,880.00 0.3 95 Kimberly-Clark Corp. 67.95 6,455.25 0.8 194 Pepsi Bottling Group Inc. 30.91 5,996.54 0.7 210 Supervalu Inc. 35.75 7,507.50 0.9 117 The Pantry Inc 46.84 5,480.28 0.6 36,043.37 4.3 Energy 104 Apache Corp 66.51 6,917.04 0.8 220 Complete Production Services 21.20 4,664.00 0.6 120 Conocophillips 71.95 8,634.00 1.0 125 Ensco International Inc. 50.06 6,257.50 0.7 109 Marathon Oil Corp. 92.50 10,082.50 1.2 130 Valero Energy Corp. 51.16 6,650.80 0.8 43,205.84 5.1 Financials 160 Bank of America Corporation 53.39 8,542.40 1.0 56 Bear Stearns Companies Inc. 162.78 9,115.68 L1 180 CIT Group 55.77 10,038.60 1.2 180 Capital Bancorp Ltd 46.20 8,316.00 1.0 170 Citigroup Inc. 55.70 9,469.00 1.1 220 FPIC Insurance Group hic 38.97 8,573.40 1.0 84 Hartford Financial Services 93.31 7,838.04 0.9 170 J. P. Morgan Chase & Company 48.30 8,211.00 1.0 149 MetLife Inc 59.01 8,792.49 1.0 150 Selective Insurance Group 57.29 8,593.50 1.0 150 Wachovia Corporation 56.95 8,542.50 1.0 96,032.61 11.4 Utilities 250 PPL Corporation 35.84 8,960.00 1.1 160 Sempra Energy 56.04 8,966.40 1.1 17,926.40 2.1 z 19 Dana Investment Advisors PORTFOLIO APPRAISAL 1087 Tequesta General Employees' Pension Fund December 31, 2006 Market Pct. Quantity Security Price Value Assets Information Techno logy 180 Amdocs Ltd 38.75 6,975.00 0.8 420 Applied Materials Inc. 18.45 7,749.00 0.9 180 Diodes Inc. 35.48 6,386.40 0.8 149 Fiserv Inc. 52.42 7,810.58 0.9 332 Global Imaging Systems hic. 21.95 7,287.40 0.9 90 Interiational Business Machines Corp. 97.15 8,743.50 1.0 160 Komag Incorporated 37.88 6,060.80 0.7 280 Motorola Inc. 20.56 5,756.80 0.7 270 Talx Corporation 27.45 7,411.50 0.9 64,180.98 7.6 Health Care 70 Becton Dickinson & Co 70.15 4,910.50 0.6 109 Johnson & Johnson 66.02 7,196.18 0.9 140 McKesson Corp. 50.70 7,098.00 0.8 139 Quest Diagnostics Inc. 53.00 7,367.00 0.9 170 Sierra Health Services 36.04 6,126.80 0.7 150 Wellponit Health Networks 78.69 11,803.50 1.4 149 Wyeth 50.92 7,587.08 0.9 52,089.06 6.2 International 110 Central Europe & Russia Fund 53.80 5,918.00 0.7 89 Morgan Stanley India Investment Fund 50.82 4,522.98 0.5 141 New Ireland Fund Inc. 36.80 5,188.66 0.6 189 iShares MSCI Australia Index Fetid 23.50 4,441.50 0.5 174 iShares MSCI Austria Index Fund 36.99 6,436.26 0.8 67 iShares MSCI Brazil Index Fund 46.85 3,138.95 0.4 82 iShares MSCI EAFE Index Fund 73.22 6,004.04 0.7 322 iShares MSCI Japan Index Fund 14.21 4,575.62 0.5 92 iShares MSCI Korea Index Fund 49.40 4,544.80 0.5 94 iShares MSCI Mexico Index Fund 51.25 4,817.50 0.6 114 iShares MSCI Netherlands Index Fund 26.31 2,999.34 0.4 148 iShares MSCI Sweden Index Fund 32.28 4,777.44 0.6 3 20 Dana Investment Advisors PORTFOLIO APPRAISAL 1087 Tequesta General Employees' Pension Fund December 31, 2006 Market Pct. Quantity Security Price Value Assets 189 iShares MSCI United Kingdom Index Fund 23.41 4,424.49 0.5 61,789.58 7.3 491,536.82 58.2 CORPORATE BONDS 5,000.00 Carolina. Power & Light 100.72 5,035.95 0.6 6.800% Due 08-15-07 5,000.00 Cit Group Inc. 99.15 4,957.55 0.6 4.750% Due 08-15-08 5,000.00 CSX Corp 101.40 5,070.15 0.6 6.250% Due 10-15-08 6,000.00 Deutsche Bank Financial 104.58 6,274.86 0.7 7.500% Due 04-25-09 5,000.00 Target Corp. 100.57 5,028.40 0.6 5.375% Due 06-15-09 5,000.00 Countrywide Home Loan 100.81 5,040.40 0.6 5.620% Due 07-15-09 5,000.00 Intl Lease Finance Corp 98.90 4,944.90 0.6 5.000% Due 04-15-10 5,000.00 Capital One Bank 101.61 5,080.50 0.6 5.750% Due 09-I 5-10 5,000.00 Lehman Brothers Inc. 99.09 4,954.60 0.6 5.000%Due 01-14-11 5,000.00 Kohls Corporation 103.12 5,155.80 0.6 6.300% Due 03-01-11 5,000.00 Washington Mutual Inc. 100.15 5,007.75 0.6 5.500% Due OS-24-11 5,000.00 Bank One Corp 102.78 5,138.76 0.6 5.900% Due I1-15-11 5,000.00 Gannett Co Inc. 102.94 5,147.15 0.6 6.370% Due 04-01-12 5,000.00 SLM Corp 98.59 4,929.54 0.6 5.120% Due 08-27-12 5,000.00 Avon Products Inc. 95.05 4,752.60 0.6 4.620% Due OS-15-13 5,000.00 Goldman Sachs Group Inc. 99.26 4,963.10 0.6 5.250%Due 10-15-13 a 21 Dana Investment Advisors PORTFOLIO APPRAISAL 1087 Teyuesta General Employees' Pension Fund Decernber 31, 2006 Quantity 5,000.00 HSBC Finance Corp 5.250% Due 04-15-15 5,000.00 Lowe's Companies Inc. 5.000%Due 10-15-15 5,000.00 Home Depot Inc. 5.400% Due 03-01-16 5,000.00 Wachovia Bank NA 5.600% Due 03-15-16 Security Price 98.65 96.33 97.80 100.98 Market Value 4,932.75 4,816.50 4,890.25 5,048.90 Pct. Assets 0.6 0.6 0.6 0.6 101,170.40 12.0 FEDERAL AGENCY SECURITIES 10,000.00 Federal Home Loan Bank Bond 99.12 9,912.50 1.2 4.125% Due 10-19-07 10,000.00 Federal Home Loan Mortgage Corp. 100.77 10,076.60 1.2 5.750% Due 04-15-08 5,000.00 *Federal Home Loan Mortgage Corp. 100.20 5,010.15 0.6 5.125% Due 10-15-08 10,000.00 *Federal National Mortgage Association 100.55 10,054.70 1.2 5.250% Due O 1-15-09 10,000.00 Federal Home Loan Mortgage Corp. 101.61 10,160.90 1.2 5.750% Due 03-15-09 10,000.00 Federal National Mortgage Association 101.09 10,109.40 1.2 5.375% Due 08-15-09 5,000.00 Federal National Mortgage Association 99.34 4,967.20 0.6 4.750% Due 12-15-10 7,000.00 Federal National Mortgage Association 102.06 7,144.41 0.8 5.500% Due 03-15-11 15,000.00 Federal National Mortgage Association 100.23 15,035.10 1.8 5.000% Due 10-15-11 3,000.00 Federal Home Loan Mortgage Corp. 97.67 2,930.16 0.3 4.500%Due 01-15-13 5,000.00 Federal Home Loan Mortgage Corp. 99.44 4,971.90 0.6 4.875% Due 11-15-13 8,000.00 Federal National Mortgage Association 100.33 8,026.24 1.0 5.000% Due 04-15-15 _ __ 98,399.26 11.7 5 22 Dana Investment Advisors PORTFOLIO APPRAISAL 1087 Teyuesta General Employees' Pension Fund Decern~ber 31, 2006 Quantity Security Price Market Value Pct. Assets GOVERNMENT BONDS 15,000.00 U.S. Treasury Notes 99.23 14,885.16 1.8 4.000% Due 09-30-07 20,000.00 U.S. Treasury Notes 98.92 19,784.37 2.3 4.120% Due 08-15-08 10,000.00 U.S. Treasury Notes 101.70 10,170.31 1.2 5.500% Due OS-I 5-09 15,000.00 U.S. Treasury Notes 98.48 14,772.66 1.7 4.250%Due 10-15-10 15,000.00 U.S. Treasury Notes 99.67 14,950.78 1.8 4.625% Due 10-31-11 10,000.00 U.S. Treasury Notes 97.52 9,751.56 1.2 4.250% Due 08-15-13 5,000.00 U.S. Treasury Notes 96.78 4,839.06 0.6 4.250% Due 08-15-15 5,000.00 U.S. Treasury Notes 103.03 5,151.56 0.6 5.120%Due OS-15-16 94,305.47 11.2 FIXED RATE MORTGAGE POOLS 13,771.04 FHLMC C90939 12-1-OS 99.47 13,698.05 1.6 5.500% Due 12-01-25 14,560.01 FHLMC GOLD C90978 7-1-06 101.15 14,727.45 1.7 6.000% Due 07-01-26 14,506.46 FNMA 884093 5-1-06 100.69 14,606.55 1.7 6.000% Due OS-O1-36 43,032.06 5.1 Accrued Income 4,083.43 0.5 Dividends Receivable 500.96 0.1 Interest Receivable 62.47 0.0 TOTAL ACCRUED AND RECEIVABLE 4,646.86 0.5 TOTAL PORTFOLIO 844,260.50 100.0 6 23 Dana Investment Advisors PORTFOLIO APPRAISAL 1087 Teyuesta General Employees' Pension Fund Decern~ber 31, 2006 Quantity Security Market Price Value The market prices shown on these pages represent the last reported sale on the valuation date us to listed securities or the bid price do the case ofover-the-counter yuotutions. Prices on bonds and some other im~estments are based on round lot price quotations and are for evaluation purposes only and may not represent actual market values. Bonds sold on an odd lot basis (less than $1 million) may have a dollar price lower than the rowed lot quote. Where no regular market exists, prices shown are estimates by sources considered reliable by Dana Investment Advisors, Inc. While the prices are obtained from sources we consider reliable, we cannot guarantee them. Pct. Assets 24 COMPLIANCE -:, ~ Investment Policy and Corporate Governance Compliance Section DANA INVESTMENT ADVISORS. INC. 25 TABLE OF CONTENTS Table of Contents :, ~ - - -~ I. Value Line Ratings, Corporate Governance Rankings, Corporate Bond Ratings II. Corporate Governance Supporting Data III. Proxy Vote Summary Report IV. Proxy Voting Guidelines DANA INVESTMENT ADVISORS, INC. 26 No Text I. Value Line Ratings and Corporate Governance Rankings I Value Line Safety Rating °4±< ~~-:'~~~ Stocks are broken into 5 groups ~`~; y~~;~ The Value Line universe is comprised of approximately 1,700 stocks • Value Line Safety Ranking equally weights a Companies Financial Strength & Stocks Price =~ Stability • Group 1 contains those that are expected to have the best Company Financial Strength & Stock Price Stability in the next 6-12 months • Group 5 contains those expected to have the worst Company Financial Strength & Stock Price Stability in the next 6-12 months • Stocks with a Value Line Safety ranking of 6 have not yet been rated Corporate Governance • Institutional Shareholder Services (ISS) has been retained to vote proxy statements • ISS also provides a Corporate Governance Quotient (CGQ) rating • 100 is the highest, 1 is the lowest • Stocks are rated on a relative basis • Rating is based on Shareholder Advocacy issues and not on financial strength or investment potential • Stocks with an "n/a" rating have not yet been analyzed for corporate governance by ISS DANA INVESTMENT ADVISORS, INC. 27 Dana. Investment Advisors VALUE LINE SAFETY RATINGS ISS CORPORATE GOVERNANCE RATI NGS 1087 Tequesta General Employees' Pension Fund Jody Forsythe December 31, 2006 Security Value Line ISS Corp Gov Symbol Security Safety Rating Index Rati ng COMMON STOCK Dana Large Cap t AT&T Inc. 2 82 mo Altria Group Inc. 3 59 dox Amdocs Ltd 4 n/a apa Apache Corp 3 2 amat Applied Materials Inc. 3 57 bac Bank of America 2 38 Corporation bsc Bear Steams Companies 3 36 Inc. bdx Becton Dickinson & Co 1 84 bni Burlington Northern 3 92 Santa Fe cit CIT Group 3 82 cat Caterpillar Inc. 2 88 c Citigroup Inc. 3 95 cop Conocophillips 2 35 etn Eaton Corp. 1 66 esv Ensco International Inc. 3 61 fisv Fiserv Inc. 3 41 gis General Mills Inc. 1 83 hig Hartford Financial 3 64 Services iar Idearc Inc. Com n/a n/a Delaware ibm International Business 1 10 Machines Corp. jpm J. P. Morgan Chase & 3 92 Company jnj Johnson & Johnson 1 18 jci Johnson Controls Inc. 2 64 kmb Kimberly-Clark Corp. 1 79 leg Leggett & Platt i~/a 50 mro Marathon Oil Corp. 2 60 mck McKesson Corp. 3 63 Market Percent of Value Equities 7,150.00 1.45 7,723.80 1.57 6,975.00 1.42 6,917.04 1.41 7,749.00 1.58 8,542.40 1.74 9,115.68 1.85 4,910.50 1.00 6,642.90 1.35 10,038.60 2.04 5,765.02 1.17 9,469.00 1.93 8,634.00 1.76 7,514.00 1.53 6,257.50 1.27 7,810.58 1.59 2,880.00 0.59 7,838.04 1.59 257.85 0.05 8,743.50 1.78 8,211.00 1.67 7,196.18 1.46 6,873.60 1.40 6,455.25 1.31 4,421.50 0.90 10,082.50 2.05 7,098.00 1.44 28 Security Symbol rnet mot jwn ppg ppl ph pbg dgx sre svu utx vfc vlo vz wb wlp wye Dana Investment Advisors VALUE LINE SAFETY RATINGS ISS CORPORATE GOVERNANCE RATI NGS 1087 Tequesta General Employees' Pension Fund Jody Forsythe December 31, 2006 Value Line ISS Corp G ov Security Safety Rating Index Rating MetLifc Inc 2 49 Motorola Inc. 3 89 Nordstrom Inc 3 87 PPG Industries Inc. 2 20 PPL Corporation 3 58 Parker Hannifin Corp. 3 67 Pepsi Bottling Group 3 44 Ine. Quest Diagnostics Inc. 3 68 Sempra Energy 2 47 Supervalu Inc. 3 59 United Technologies 1 94 Corp V F Corporation 3 80 Valero Energy Corp. 3 61 Verizon 2 68 Communications Wachovia Corporation 3 47 Wellpoint Health 2 71 Networks W yeth 2 95 Market Percent of Value Equities 8,792.49 1.79 5,756.80 1.17 7,894.40 1.61 5,907.32 1.20 8,960.00 1.82 7,688.00 1.56 5,996.54 1.22 7,367.00 1.50 8,966.40 1.82 7,507.50 1.53 6,252.00 1.27 9,603.36 1.95 6,650.80 1.35 6,703.20 1.36 8,542.50 1.74 11,803.50 2.40 7,587.08 1.54 323,251.33 Dana Small Cap cbc Capital Bancorp Ltd n/a 30 8,316.00 1.69 ctr Cato Corp. 3 4 4,009.25 0.82 cpx Complete Production n/a n/a 4,664.00 0.95 Services diod Diodes Inc. 4 9 6,386.40 1.30 fpic FPIC insurance Group n/a 36 8,573.40 1.74 Inc gdi Gardner Denver Inc n/a 87 7,685.86 1.56 gisx Global Imaging 3 42 7,287.40 1.48 Systems Inc. jah Jarden Corporation 3 51 6,540.52 L33 komg Komag Incorporated n/a 71 6,060.80 1.23 z 29 Dana Investment Advisors VALUE LINE SAFETY RATINGS ISS CORPORATE GOVERNANCE RATINGS 1087 Tequesta General Employees' Pension Fund Jody Forsythe December 31, 2006 Security Value Line ISS Corp Gov Market Symbol Security Safety Rating Index Rating Value pwei PW Eagle Inc. n/a 94 6,555.00 sigi Selective Insurance 3 67 8,593.50 Group sie Sierra Health Services 3 84 6,126.80 talx Talx Corporation n/a 94 7,411.50 mw The Men's Wearhouse 3 72 6,121.60 Inc. ptry The Pantry Inc n/a 46 5,480.28 wab Wabtec Corporation n/a 66 6,683.60 106,495.91 Mutual & Exchange Traded Funds cee Central Europe & 3 n/a 5,918.00 Russia Fund iif Morgan Stanley India n/a n/a 4,522.98 Investment Fund irl New Ireland Fm~d Inc. i~/a n/a 5,188.66 ewa iShares MSCI Australia n/a n/a 4,441.50 Index Fund ewo iShares MSCI Austria n/a n/a 6,436.26 Index Fwid ewz iShares MSCI Brazil n/a n/a 3,138.95 Index Fund efa iShares MSCI EAFE n/a n/a 6,004.04 hidex Fetid ewj iShares MSCI Japan n/a n/a 4,575.62 Index Fund ewy iShares MSCI Korea n/a n/a 4,544.80 Index Fund eww iShares MSCI Mexico n/a n/a 4,817.50 Index Fund ewn iShares MSCI n/a n/a 2,999.34 Netherlands Index Fund ewd iShares MSCI Sweden n/a n/a 4,777.44 Index Fund Percent of Equities 1.33 1.75 1.25 1.51 1.25 1.11 1.36 1.20 0.92 1.06 0.90 1.31 0.64 1.22 0.93 0.92 0.98 0.61 0.97 3 30 Dana Investment Advisors VALUE LINE SAFETY RATINGS ISS CORPORATE GOVERNANCE RATINGS 1087 Tequesta General Employees' Pension Fund Jody Forsythe December 31, 2006 Security Value Line ISS Corp Gov Market Percent of Symbol Security Safety Rating Index Rating Value Equities ewii iShares MSCI United n/a n/a 4,424.49 0.90 Kingdom Index Fttnd _ 61,78_9.58 491,536.82 TOTAL EQUITIES 491,536.82 31 Security Dana Investment Advisors CORPORATE BOND RATINGS 1087 Tequesta General Employees' Pension Fund Jody Forsythe December 31, 2006 Market Quantity Value S & P Moody CORPORATE BONDS Carolina Power & Light 6.800% Due OS-15-07 Cit Group Inc. 4.750% Due 08-15-08 CSX Corp 6.250% Due 10-15-08 Deutsche Bank Financial 7.500% Due 04-25-09 Target Corp. 5.375% Due 06-15-09 Countrywide Home Loan 5.620% Due 07-15-09 Intl Lease Finance Corp 5.000% Due 04-15-10 Capital One Bank 5.750% Due 09-15-10 Lehman Brothers Inc. 5.000% Due 01-14-11 Kohls Corporation 6.300% Due 03-01-11 Washington Mutual Inc. 5.500% Due 08-24-11 Bank One Corp 5.900% Due 11-15-11 Gannett Co Inc. 6.370% Due 04-01-12 SLM Corp 5.120% Due 08-27-12 Avon Products Inc. 4.620% Due OS-15-13 Goldman Sachs Group Inc. 5.250%Due 10-15-13 HSBC Finance Corp. 5.250% Due 04-15-15 5,000.00 5,000.00 5,000.00 6,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,035.95 BBB A3 4,957.55 A A2 5,070.15 BBB Baal 6,274.86 A+ A 1 5,028.40 A+ Al 5,040.40 A A3 4,944.90 AA- Al 5,080.50 A- A2 4,954.60 A+ A 1 5,155.80 BBB+ A3 5,007.75 A- A3 5,138.76 A AI 5,147.15 A- A2 4,929.54 A A2 4,752.60 A A2 4,963.10 AA- Aa3 4,932.75 AA- Aa3 32 Dana Investment Advisors CORPORATE BOND RATINGS 1087 Tequesta General Employees' Pension Fund Jody Forsythe December 31. 2006 Security Quantity Market Value S & P Moody Lowe's Companies Inc. 5,000.00 4,816.50 A+ Al 5.000% Due 10-15-15 Home Depot liic. 5,000.00 4,89025 A+ Aa3 5.400% Due 03-O1-16 Wachovia Bank NA 5,000.00 5,048.90 A+ Aa3 5.600% Due 03-15-16 101,170.40 TOTAL CORPORATE BONDS 101,170.40 2 33 II II. Corporate Governance Supporting Data . - _ ~. I 1 t. ~; 1 Corporate Governance Supporting Data • All stocks that received an ISS Corporate Governance Quotient (CGQ) rating below 50, as ,~ indicated in Section I, are included in this report. • The supporting information identifies 4 policies that have a favorable impact on corporate governance and 4 policies that negatively effect corporate governance. • ISS, CGQ ratings are a proprietary ranking methodology and may or may not be either accurate or predictive. • Relative ratings continually change, and such changes may be the result of another company's rating change. • CGQ ratings are neither intended as a means to assess financial viability of a company, nor a determining factor for future returns. DANA INVESTMENT ADVISORS, INC. 34 rr, r., All of the audit: committee members arc "financial experts' x The audit committee is comprised solely of independent outside directors x The average annual burn rate over the past three fiscal years is 2`%, or less, or is within one standard deviati x The company has a committee that overseas governance issues and the committee met: in the past year x There is no disclosure of a policy that directors are required to submit a letter of resignation upon a job ch x There is no disclosure of stock ownership guidelines for executives x There is no disclosure of stock ownership guidelines for outside directors x The company has a poison pill in place x The company has a committee that overseas governance issues and the committee met in the past year x The audit committee is comprised solely of independent outside directors x Executives are subject to stock ownership guidelines x Directors arc subject to stock ownership guidelines x The average annual burn rate over the past three fiscal years is greater than 2% and exceeds on standard de x There is no disclosure of a policy that limits the slumber of other boards that directors may serve on x The board has more than 15 directors x The company does not utilize perfomance-based equity awards with specific performance criteria and hurdl x All of the audit committee members arc "financial experts' x Directors arc subject to stock ownership guidelines x Executives are subject to stock ownership guidelines x The audit committcc is comprised solely of independent outside directors x There is no disclosure of a policy that directors arc required to submit a letter of resignation upon a job ch x The average annual burn rate over the past three fiscal years is greater than 2% and exceeds on standard de x The company does not utilize perfomance-based equity awards with specific performance criteria and hurdl x There is no disclosure of mandatory holding periods for restricted stock after vesting x The company has a committee that overseas governance issues and the committcc met in the past year x There is not a dual class capital structure in place x The audit committcc is comprised solely of independent outside directors x A board approved CEO succession plan is in place x There is no disclosure of stock ownership guidelines for executives x The board is controlled fiy a supermajoriry of independent insiders (insiders and affiliated outsiders greater x The average annual burn rate over the past three fiscal years is greater than 2% and exceeds on standard de x There is no disclosure of stock ownership guidelines for outside directors x Reterc n re: 6 ttp://www. p roxym asteem m 1087 Tequesta General Employees' Pension Fund The audit committee is comprised solely of independent outside directors x The board approved CEO succession plan is in place X The average annual burn rate over the past three fiscal years is 2%, or less, or is within one standard deviati x The company has a committee that overseas governance issues and the committee met in the past year x There is no disclosure of stock ownership guidelines for outside directors X There is no disclosure of stock ownership guidelines for executives X The company has a poison pill in place x The company has a dual class capital structure in place with one class held to maintain voting control x The Board is controlled by a supcrmajority of independent outsiders (independent outsiders greater than 9 x The average annual burn rate over the past three fiscal years is 2"/c> or less, or is within one standard deviati x Directors are subject to stock ownership guidelines x The audit committee is comprised solely of independent outside directors x There is no disclosure of mandatory holding periods for restricted stock after vesting x The company does not utilize perfomance-based equity awards with specific performance criteria and hurdl x The board of directors is classified ~ X The company has a poison pill in place X The average annual burn rate over the past three fiscal years is 2°~, or Icss, or is within one standard deviati x There is not a dual class capital structure in place x The company has a committee that overseas governance issues and the committee met in the past year x The company does not have a poison pill x There is no disclosure of stock ownership guidelines for executives X The board is controlled by a majority of insiders and affiliated outsiders (insiders and affiliated outsiders gr x The audit committee includes affiliated outsiders x There is no disclosure of stock ownership guidelines for outside directors x All of the audit committee members arc "financial experts' x The audit committee is comprised solely of independent outside directors x The average annual burn rate over the past three fiscal years is 2%~ or less, or is within one standard deviati x Directors arc suZiject to stock ownership guidelines x The Lioard of directors is classified x There is no disclosure of stock ownership guidelines for executives x The company has a poison pill in place x There is no disclosure of mandatory holding periods for restricted stock after vesting x Refemnce: http://www.pmxyuu~,rer.cum 1087 Tcquesta General Employees' Pension Fund r- f., The audit committee is comprised solely of independent outside directors x Thcrc is not a dual class capital structure in place x The company has a committee that overseas governance issues and the committee met in the past year x The average annual burn rate over the past three fiscal years is 2°0 or less, or is within one standard dcviati x The board of directors is classified x Thcrc is no disclosure of a policy that directors are required to submit a letter of resignation upon a job ch x There is no disclosure of stock ownership guidelines for outside directors x There is no disclosure of stock ownership guidelines for executives x Directors are subject to stockownership guidelines x Executives arc subject to stock ownership guidelines x The average annual burn rate over the past three fiscal years is 2% or less, or is within one standard dcviati x The ci}mpany has a committee that overseas governance issues and the committee met in the past year x The audit committee includes affiliated outsiders x There is no disclosure of a policy that the board regularly approves a CEO succession plan x Thcrc is no disclosure of mandatory holding periods for restricted stock after vesting x there is no disclosure of mandatory holding periods for stock acquired upon exercise of options x The company has a committee that overseas governance issues and the committee met in the past year x Thcrc is not a dual clans capital structure in place x The average annual burn rate over the past three fiscal years is 2°0 or less, or is within one standard dcviati x The audit committee is comprised solely of independent outside directors x Thcrc is no disclosure of stock ownership guidclincs for executives x There is no disclosure of mandatory holding periods for restricted stock after vesting x The company does not utilize performance-based equity awards with specific performance criteria and hurl x There is no disclosure of stock ownership guidclincs for outside directors x The audit committee is comprised solely of independent outside directors x The average annual burn rate over the past three fiscal years is 2`% or less, or is within one standard dcviati x Executives are subject to stock ownership guidclincs x The board is controlled Liy a supermajority of independent outsiders (independent outsiders greater than 9 x There is no disclosure of stock ownership guidelines for outside directors x The company has a poison pill in place x The company does not utilize performance-fused equity awards with specific performance criteria and hurl x The board of directors is classified x Reference: 6ttp://www. p roxymasrer.co m 1087 Tequesta General Employees' Pension Fund ~, The average annual burn rate over the past three fiscal years is 2% or less, or is within one standard deviati x The audit committee is comprised solely of independent outside directors x Only one inside director and no affiliated outsiders serve on the board x The company has a committee that overseas governance issues and the committee met in the past year x There is no disclosure of stock ownership guidelines for outside directors x There is no disclosure of stock ownership guidelines for executives x There is no disclosure of a policy that the board regularly approves a CEO succession plan x The company does not have governance guidelines that have been publicly disclosed x The audit committee is comprised solely of independent outside directors x Directors are subject to stock ownership guidelines x Executives are subject to stock ownership guidelines x The average annual burn rate over the past three fiscal years is 2% or less, or is within one standard deviati x The company does not utilize performance-based equity awards with specific performance criteria and Kurd x The last time ISS evaluated the company's option plans, ISS deemed the shareholder value transfer of the p x there is no disclosure of mandatory holding periods for stock acquired upon exercise of options x There is no disclosure of mandatory holding periods for restricted stock after vesting x The board is controlled by a supermajority of independent outsiders (independent outsiders greater than 9 x The average annual burn rate over the past three fiscal years is 2°0 or less, or is within one standard deviati x The audit committee is comprised solely of independent outside directors x Directors are subject to stock ownership guidelines x There is no disclosure of stock ownership guidelines for executives x There is no disclosure of mandatory holding periods for restricted stock after vesting x The company has a poison pill in place x The board of directors is classified x Directors arc subject to stock ownership guidelines x The company is incorporated in a state without anti-takeover provisions x The audit committee is comprised solely of independent outside directors x Executives are subject to stock ownership guidelines x The average annual burn rate over the past three fiscal years is greater than 2% and exceeds on standard de x There is no disclosure of mandatory holding periods for restricted stock after vesting x The a~mpany does not utilize performance-based equity awards with specific performance criteria and hurl x The board of directors is classified x Reference: http://www.proxymnsear.ann 1087 Tequesta General Employees' Pension Fund M Directors am su~ijcct to stock ownership guidelines Executives are subject to stock ownership guidelines The audit committee is comprised solely of independent outside directors The company has a committee that overseas governance issues and the committee met in the past year The average annual burn rate over the past three fiscal years is greater than 2%, and exceeds on standard de The board has more than ] 5 directors The board of directors is classified The company has a poison pill in place Reference: 6rrp://www.proxymasmr.com 1087 Tcqucsta General Employees' Pension Fwld ISS: CGQ Research Methodology ~,,,., - ,x ,:. } ~;a~! Ct>n7t,,ii~ie~ haler ^ U.S. Companies _~. ISS analyzes 6l data points to derive each U.S. issuer's rating.The database includes all companies in the S&P 400, S&P 500, S&P 600 and the Russell 3000 indexes, along with many other companies not in these indexes. ^ Non-U.S. Companies ISS reviews 55 data points to determine the CGQ score of clearly 2,000 companies in the MSCI EAFE© Index, MSCI World Index and the Canadian S&P/TSX Composite Index. Companies outside the U.S. are also rated against other companies in the same index, industry and country.* 12atin~~s Critec-ia CGQ uses a comprehensive set of objectives and consistently applied criteria for each of the companies rated. The database features corporate governance rankings on more than 7,500 companies worldwide, and includes underlying data points for up to 61 corporate governance variables, categorized under eight areas of focus. Some ot" the variables are reviewed together under the premise that corporate governance is enhanced when selected combinations of these variables are adopted. To facilitate analytical comparison, each. company is scored individt.~ally, relative to it`s market index and its industry group. 'Only companies domiciled within countries with more than 75 rated companies are subject to the country rating. Currently, dais applies to the following markets: Australia, Canada, France, Germany, Japan and the United Kingdom. DANA INVESTMENT ADVISORS, INC. 40 ISS: CGQ Research Methodology *^~, ~. r! 1 E_` r; 1.1 r 1 l' ~ { :~1' L' 1" <1 1 Ei ~i ~ ([1 `.; l' () 1!1 E'> rl I1 ] t' ~.~ _t?2 _ ~,;~q~ 1. Board of directors 4. Anti-takeover provisions 7. Ownership ~,~ ~'_: 2. Audit 5. Executive and director compensation 8. Director education 3. Charter and bylaw provisions 6. Progressive practices To review the specific data points in each category that are factored into a company's CGQ rating, please visit w~Y~«~.i;sprox}~.con~. CGQ also inchldes sub-scores that provide a measure of a company's governance in four key areas: board of directors, takeover defenses, executive and director compensation and ownership and audit review. Companies are ranked in quintiles relative to their index and industry group. Sub- scores are given from 1-5. A score of 5 indicates a company is in the top quintile in a governance area. A score of 1 indicates a company is in the bottom quintile in a governance area. Data `~otlrceti The data provided in CGQ is derived primarily from public disclosure documents, press releases and corporate websites. It then goes through a rigorous verification process by ISS' senior corporate governance analysts and is put in to the CGQ database. ISS' CGQ, database. is updated daily to reflect all governance data changes that occur. Each company profile is updated every 120 days, unless the company voluntarily submits updates, at which time an updated score is generated. Iu addition, the scores are updated in advance of a company's amoral shareholder meeting, so that the latest score is included on the ISS proxy analysis. As a result, investors can be sure that every CGQ rating is based on the latest and most accurate information available. C~L,~e~rrire, Inl~~a~-t~al I1~1orrl~atiol~ CGQ is a quantitative database that provides objective and impartial information, and is not tied to any other ISS service. Companies are rated whether they want to be or not, and they cannot change their ratings by subscribing to the CGQ service, or any other service provided by ISS. The only way a company can improve its rating is to make and publicly disclose changes in its governance structure and~or practices. ISS does encourage corporate issuers to submit any material changes related to their corporate governance str>,.icture, policies and procedures via a specially designed web portal, available to them free of charge. Corporate issuers are invited to access www.isscgq.com to better understand how ISS calculates its CCiQ scores and review the exact data ISS used to generate their CGQ score. DANA INVESTMENT ADVISORS, INC. 41 III III. Proxy emote Su ~ymmar~yr~ ~~ :1 ~=~' Identifies each company that had a shareholder proxy vote during the most recent !!;';~; calendar quarter. • Summarizes each proxy item by company. • States Management's position on each vote. • Identifies whether vote was cast for or against. • Number of shares voted. DANA INVESTMENT ADVISORS, INC. 42 4 f ,. ,.._ .-, - -. - n ;.~ N/A DANA INVESTMENT ADVISORS, INC. 43