franklin regional retirement systemsecurity weight tjx companies 4.06% exxon mobil corp 3.65% copa...

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Randell A. Cain, Jr., CFA – Principal / Portfolio Manager

Marc O. Sydnor – Senior Vice President, Marketing & Client Services

Presentation To:

Franklin Regional Retirement System

Wednesday, January 11, 2012

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INTRODUCTION

OUR FIRM and OUR PHILOSOPHY - Experience, Discernment, Reliance

OUR INVESTMENT PRODUCTS - Committed to Excellence

Large Cap US Value Equity

OPERATIONS OVERVIEW

APPENDIX

PERFORMANCE DISCLOSURES

T A B L E O F C O N T E N T S

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O U R L E G A C Y

WHO WE ARE

Herndon Capital Management, LLC

Herndon Capital Management, LLC (formerly Atlanta Life Investment Advisors, LLC) is an institutional investment management

firm specializing in large and mid capitalization equity strategies. Founded and registered with the SEC in 2001, the firm is an

affiliate of the Atlanta Life Financial Group, a 106 year old financial services firm. All of the members of the portfolio management

team have an ownership stake in the firm.

As of September 30, 2011 Herndon Capital Management managed approximately $4.04 billion* in institutional client assets.

* Includes discretionary and non-discretionary assets

Drake J. Craig, CFA

Principal / Portfolio Manager

22 yrs experience

MBA - 1997

Kenan Flagler School of Business

University of North Carolina

BA - 1989

Morehouse College

Joined Herndon Capital

Management, LLC in 2002

Previous employment was as

Director of Equities/Senior VP at

NCM Capital Management Group,

Inc.

Randell A. Cain Jr., CFA


20 yrs experience

MBA - 1994

Harvard Business School

BIE - 1991

Georgia Institute of Technology

BS - 1991

Morehouse College




Portfolio Manager/Vice President at

NCM Capital Management Group,

Inc.

Kenneth R. Holley, CFA

Chief Investment Officer / Principal /

Portfolio Manager

25 yrs experience

MBA - 1987

The Wharton School

BS - 1982

University of Pennsylvania




Portfolio Manager / Principal at

Morgan Stanley Asset Management

OUR PORTFOLIO MANAGEMENT TEAM

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5

$-

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

$3,500.00

$4,000.00

$4,500.00

$5,000.00

12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 9/30/2011

$52.11 $53.90 $156.30

$453.30

$711.07

$1,093.23 $883.80

$1,577.29

$2,483.84

$4,041.28

GROWTH IN AUM (in millions)

A S S E T S U N D E R M A N A G E M E N T

Breakdown of Assets Under Management

by Client Type:

(in millions)

by Strategy:

(in millions)

Total Assets as of September 30, 2011: $4.04 billion (167 accounts)

Client Type # of Accounts % of Mkt Value

Public Funds 78 45%

Mutual Funds 4 25%

Corporate Assets 7 8%

UMA (Non-Discretionary Models) 10 6%

WRAP Platforms 15 6%

Endowments/Foundations/Other 30 4%

Commingled Trusts 3 2%

Taft Hartley 12 2%

ALFG (Affiliate) Assets 8 0%

Corporate Assets, $322.91

Public Funds, $1,804.22

Commingled Trusts, $82.17

Taft Hartley, $88.35

ALFG (Affiliate) Assets, $18.60

Endow ment / Foundations/

Other, $196.56 WRAP Platforms, $250.14 UMA (Non-Discretionary

Models), $250.41

Mutual Funds, $1,027.94

Strategy # of Accounts % of Mkt Value

Large Cap Value** 122 83%

Large Cap Core International 19 10%

Large Cap Growth 18 5%

Large Cap Core* 11 4%

Mid Cap Value 5 2%

Other 3 0%

Large Cap Value, $3,360.15

Large Cap Grow th, $216.51

Large Cap Core International,

$384.52

Mid Cap Value, $66.50

Other, $13.60

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*Assets represented in Large Cap Value & Large Cap Growth Strategies

**One Hospital Plan closed and one Model Account is not included **One Hospital Plan closed and one Model Account is not included

7 MANAGER OF MANAGERS PROGRAMS

Attucks Asset Management

Public School Teachers Pension & Retirement Plan of Chicago

Seattle City Employees’ Retirement System

New York State Insurance Fund

Capital Prospects, LLC

FIS Funds Management

California Public Employee Retirement System

City of Baltimore Employees Retirement System

New York City Employees Retirement System

New York City Police Department

New York City Teachers Retirement System

Municipal Employee Annuity & Benefit Fund of Chicago

Leading Edge Investment Advisors, LLC

Northern Trust Global Advisors / Northern Trust Co. of CT

State Retirement and Pension of Maryland

Progress Investment Management

Ford Motor Company

Gray & Company

City of Pontiac, MI

DIRECT

Blue Cross Blue Shield of Michigan

Chicago Transit Authority

City of Atlanta Firefighters Pension Fund

Illinois State Board of Investment

Memphis Light Gas & Water Retirement & Pension

PepsiCo, Inc.

State Universities Retirement System of Illinois

Veterans of Foreign Wars

Dillard University

Retirement Plan for CTA Employees

Cook County Employees’ Annuity & Benefit Fund

Employees Retirement System of Texas

Teachers’ Retirement System of the State of Illinois

Shelby County, Tennessee, Retirement System

SUB-ADVISORY

Summit Alliance

Global Bridge, Inc.

Aston Funds’ Aston Herndon LCV Fund

Delaware Investments’ Optimum LCV Fund

Scotia Asset Management

Principal Financial Group

Herndon Capital Management, LLC – REPRESENTATIVE CLIENT LIST

Clients listed above have provided permission to use their names on a representative client list. Performance was not a criteria for inclusion on the provided client list.

Randell Cain Jr., CFA

Principal

Drake Craig, CFA

Principal

Kenneth Holley, CFA

Principal

Mellissa Craig

Chief Administrative Officer

Ken Grimes

Director of Research

Jason Recio, CFA

Senior Investment Analyst

Romerro Williams

Investment Analyst

Jazmin Williams

Investment Analyst

James Nelson, CFA


Annette Marshall

Chief Compliance Officer

Diane Bromfield

Senior Equity Trader

Adrian Chastain

Equity Trader

Todd Campbell

Compliance Officer

Arlene Pine, CFA

Director of Marketing & Client Services

Marc Sydnor

SVP, Marketing & Client Services

Walter Lindsay, Jr.

SVP, Marketing & Client Services

Dawn Swift

Marketing & Client Services Coordinator

Anthony Pinkston

Marketing & Client Services Associate

Shannon Barnes

Director of Operations

Christine Wizzard

Sr. Operations Analyst

Lorraine Betts

Operations Analyst

Williette Shanu-Wilson

Operations Analyst

Rachel Roffman

Operations Analyst

Kara Rainey

Operations Analyst

Alexandria Jenkins

Jr. Operations Analyst

Tonya Lynch

Accountant

Colette Ray

Contract Specialist

Shawn Ayton

Network Manager

Executive Committee

Herndon Capital Management, LLC’s Organizational Chart

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Kenneth Holley, CFA

Principal / CIO / Portfolio Manager

International Equity Strategy

Randell Cain Jr., CFA


Value Equity Strategy

Drake Craig, CFA


Growth Equity Strategy

James Nelson, CFA


Sector Assignments:

Financials

Consumer Staples

Jazmin Williams

Investment Analyst

Sector Assignments:

Energy

Industrials

Romerro Williams

Investment Analyst

Sector Assignments:

Materials

Healthcare

Utilities

Herndon Capital Management, LLC

INVESTMENT MANAGEMENT TEAM

Kenneth Grimes

Director of Research

Sector Assignments:

Telecommunications

Jason Recio, CFA


Sector Assignments:

Consumer Discretionary

Technology

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O U R I N V E S T M E N T P R O D U C T S

Our institutional products allow us to construct portfolios that take advantage of the broadest opportunities in

domestic and international equity markets.

Large Cap Core International Equity

Large Cap US Growth Equity

Large Cap US Value Equity

Large Cap US Core Equity

Mid Cap US Value Equity

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O U R I N V E S T M E N T P R O C E S S

Large Cap US Value Equity Investment Philosophy & Strategy

committed to excellence

“To everything there is a season…” (Ecclesiastes 3:1). True value is defined by companies that

trade at a discount to what their fundamentals merit. Identifying sound companies out of favor

with investors due to temporary conditions has historically proven to be a successful strategy as

their true value is ultimately recognized in the marketplace. We call these companies value

creating opportunities.

Our process identifies stocks based upon relative value versus the other stocks in our Russell

1000 universe. We combine fundamental analysis in a valuation-oriented framework with risk

assessment. We do not want to own stocks merely because they appear “cheap”. We screen

our value candidates for performance-based characteristics to avoid “value traps”. The stocks we

own tend to have low valuation metrics, but they also have sound fundamental characteristics,

hopefully leading to outperformance as their value is recognized in the market.

12 STOCK SELECTION

Step 1: Identify Value Creating Opportunities

Screen for stocks with 30% or more upside based on

relative fundamental (5 year average ROE) variance

from relative valuation (relative P/E and/or relative

P/CF).

Russell 1000 Index

Value Creating Opportunities


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Step 2: Qualify for Potential Inclusion

• Market capitalization $1 billion and above

• S & P Quality Ranking of “C” or better

Value Creating Opportunities

Qualified Companies


STOCK SELECTION

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Ranked Companies

Step 3: Rank

Rank fundamental competitiveness versus overall portfolio:

• ROE/ROA/ROC

• Earnings Purity

• Cash Flow to Earnings

• Long Term Debt/Capitalization

• Dividend Analysis

- Yield

- Payout

- Growth

• Valuation

- Price to Earnings

- Price to Sales

- Price to Book

- Price to Cash Flow

• Earnings Growth

• Net Profit Margins

• S&P Quality Rankings

Qualified Companies


STOCK SELECTION

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STOCK SELECTION

Step 5: Purchase 1% initial position

Strengths?

Weaknesses?

Opportunities?

Threats?

Step 4: Fundamental Analysis - Analyze ranked companies on 4 dimensions to answer 4 questions.

Strategy

Operation Finance

Management

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Calculate Percentage of Value Creating Opportunities in Russell 1000

Calculate Percentage of Value Creating Opportunities Grouped by Sector

Sector Percentage of Value Creating Opportunities Compared to Russell 1000 Percentage

Relative Sector Percentage of Value Creating Opportunities Compared to Russell 1000 Value Sector

Adjust Portfolio Sectors to Reflect Current Allocation of Value Creating Opportunities


SECTOR ALLOCATION

17 SELL DISCIPLINE

Weekly Sector Adjustments

No Longer a Value Creating Opportunity

Weakest Performer Among Value Creating Opportunities

Profit Taking

Erosion of Fundamentals (identified both fundamentally and quantitatively)

Conviction Check at 25% decline from cost


18 Risk Management

PORTFOLIO PARAMETERS

Sector diversification rules: Min/Max Sector weight +\-10% of index weight

Security diversification rules: Maximum weight 5% portfolio

Fully invested: Maximum cash position 5%

40-70 securities

Top 10 positions earned not purchased


19 Large Cap US Value Equity Characteristics as of 09/30/11

Portfolio Russell 1000 Value

Price/Earnings Ratio (TTM) 10.1x 11.0x

S&P Quality Ranking A- B+

Dividend Yield 3.6% 2.6%

Weighted Average Market Cap $56.3 billion $65.4 billion

Average Market Cap $46.2 billion $12.4 billion

Median Market Cap $15.4 billion $4.1 billion

Average Return on Equity 43.0% 23.3%

Earnings Growth 11% 9%

LT Debt/Capitalization 33% 39%

Number of Securities 47 653

PORTFOLIO FUNDAMENTAL CHARACTERISTICS

Security Weight

TJX Companies 4.06%

Exxon Mobil Corp 3.65%

Copa Holdings 3.50%

Herbalife 3.13%

Coach 2.79%

Waters 2.76%

Apple Inc 2.72%

Microsoft 2.68%

Altria 2.66%

Windstream 2.65%

Total 30.60%

TOP TEN LARGEST HOLDINGS

Please see APPENDIX for GIPS presentation

The Large Cap Value Equity Characteristics are shown as supplemental information only and complements

the Large Cap Value Composite presentation which is located in the Appendix.

Portfolio

Batting Average 78.00%

Upside Capture Ratio 119.27%

Downside Capture Ratio 82.19%

Tracking Error 5.64

Information Ratio 1.08

R-squared 0.92

Beta (versus R1000 Value) 0.96

PORTFOLIO PERFORMANCE CHARACTERISTICS

65.91%Annualized Since Inception Turnover

O U R I N V E S T M E N T R E S U L T S

20 Large Cap US Value Equity Characteristics as of 09/30/11

*Relative to the Russell 1000 Value

Sector Allocation*

The Large Cap Value Equity Characteristics are shown as supplemental information only and complements

the Large Cap Value Composite presentation which is located in the Appendix.


Utilities

Telecommunications

Technology

Materials

Industrials

Health Care

Financials

Energy

Consumer Staples

Consumer Discretionary

-10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

21 Large Cap US Value Equity Investment History as of 09/30/11

See APPENDIX for performance disclosures.

*Since Inception Annualized 06/30/02


Past performance is not indicative of future results.

-20.00%

-10.00%

0.00%

10.00%

QTD YTD 1 YEAR 3 YEAR 5 YEAR INCEPTION*

Gross -14.92% -6.32% 4.53% 7.21% 4.54% 9.47%

Net -15.00% -6.58% 4.15% 6.82% 4.16% 9.13%

Russell 1000 Value -16.20% -11.24% -1.89% -1.52% -3.53% 3.38%

Gross Net Russell 1000 Value

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GROSS PERFORMANCE Shown as supplemental information only.

See APPENDIX for fully compliant performance disclosures.


23 Large Cap US Value Equity Investment History


For one on one presentations only.

GROSS PERFORM ANCE

YR P R OD UC T QI QII QIII QIV YT D

2002 US VALUE -16.59 7.39 -10.43

RUSSELL 1000 VALUE -18.77 9.22 -11.28

2003 US VALUE -3.68 14.92 2.81 15.34 31.26

RUSSELL 1000 VALUE -4.86 17.27 2.06 14.19 30.03

2004 US VALUE 7.42 0.44 6.18 12.60 29.00

RUSSELL 1000 VALUE 3.02 0.88 1.54 10.38 16.49

2005 US VALUE 2.13 5.14 6.33 1.28 15.64

RUSSELL 1000 VALUE 0.09 1.67 3.88 1.27 7.05

2006 US VALUE 2.86 1.29 1.25 9.21 15.20

RUSSELL 1000 VALUE 5.93 0.59 6.22 8.00 22.25

2007 US VALUE 1.61 9.81 0.03 -1.19 10.28

RUSSELL 1000 VALUE 1.24 4.93 -0.24 -5.80 -0.17

2008 US VALUE -5.86 2.19 -12.56 -19.07 -31.93

RUSSELL 1000 VALUE -8.72 -5.31 -6.11 -22.17 -36.85

2009 US VALUE -10.91 20.40 22.65 3.62 36.33

RUSSELL 1000 VALUE -16.77 16.69 18.24 4.22 19.69

2010 US VALUE 7.21 -11.88 13.03 11.60 19.23

RUSSELL 1000 VALUE 6.78 -11.15 10.13 10.54 15.51

2011 US VALUE 7.72 2.28 -14.92 -6.32

RUSSELL 1000 VALUE 6.46 -0.50 -16.20 -11.24

Since Inception Annualized*: US VALUE 9.47

RUSSELL 1000 VALUE 3.38


*Since Inception Annualized 06/30/02


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Shown as supplemental information only.


GROSS PERFORMANCE



HCM Large Cap Value Excess Returns over R1000V Index (quarterly, as of 09/30/11)

HCM LCV outperforms in 29 out of 37 quarterly time periods since inception. (78% of the time)

The average out-performance margin per quarter = 1.43%

-7%

0%

7%

Q3 0

2Q

4 0

2Q

1 0

3Q

2 0

3Q

3 0

3Q

4 0

3Q

1 0

4Q

2 0

4Q

3 0

4Q

4 0

4Q

1 0

5Q

2 0

5Q

3 0

5Q

4 0

5Q

1 0

6Q

2 0

6Q

3 0

6Q

4 0

6Q

1 0

7Q

2 0

7Q

3 0

7Q

4 0

7Q

1 0

8Q

2 0

8Q

3 0

8Q

4 0

8Q

1 0

9Q

2 0

9Q

3 0

9Q

4 0

9Q

1 1

0Q

2 1

0Q

3 1

0Q

4 1

0Q

1 1

1Q

2 1

1Q

3 1

1

QUARTERLY RETURNS SINCE INCEPTION(as of 09/30/11) HCM LCV Minus R1000V

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GROSS PERFORMANCE



HCM LCV outperforms in 29 out of 34 rolling 1 year time periods. (85% of the time)

The average out-performance margin = 6.13%


-10%-5%0%5%

10%15%20%

Q2 0

3Q

3 0

3Q

4 0

3Q

1 0

4Q

2 0

4Q

3 0

4Q

4 0

4Q

1 0

5Q

2 0

5Q

3 0

5Q

4 0

5Q

1 0

6Q

2 0

6Q

3 0

6Q

4 0

6Q

1 0

7Q

2 0

7Q

3 0

7Q

4 0

7Q

1 0

8Q

2 0

8Q

3 0

8Q

4 0

8Q

1 0

9Q

2 0

9Q

3 0

9Q

4 0

9Q

1 1

0Q

2 1

0Q

3 1

0Q

4 1

0Q

1 1

1Q

2 1

1Q

3 1

1

ROLLING 1 YEAR TRAILING RETURNS (as of 09/30/11) HCM LCV Minus R1000V

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GROSS PERFORMANCE






-10%-5%0%5%

10%15%20%

Q2 0

5

Q3 0

5

Q4 0

5

Q1 0

6

Q2 0

6

Q3 0

6

Q4 0

6

Q1 0

7

Q2 0

7

Q3 0

7

Q4 0

7

Q1 0

8

Q2 0

8

Q3 0

8

Q4 0

8

Q1 0

9

Q2 0

9

Q3 0

9

Q4 0

9

Q1 1

0

Q2 1

0

Q3 1

0

Q4 1

0

Q1 1

1

Q2 1

1

Q3 1

1


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GROSS PERFORMANCE






0%

5%

10%

Q2 0

7

Q3 0

7

Q4 0

7

Q1 0

8

Q2 0

8

Q3 0

8

Q4 0

8

Q1 0

9

Q2 0

9

Q3 0

9

Q4 0

9

Q1 1

0

Q2 1

0

Q3 1

0

Q4 1

0

Q1 1

1

Q2 1

1

Q3 1

1


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C L I E N T C O V E R A G E

Each client has a 5-tier coverage

Client Service Representative

- Day-to-day contact

- Ad hoc requests

- Client meetings

Equity Trader

-Trading: Domestic / International Securities

including Foreign Currency

- Oversee integrity of Trade Order Management System

- Commission Management

Chief Compliance Officer

- Checks compliance with investment guidelines

- Creates restriction rules in order management system

- provides compliance attestations as requested

Portfolio Manager

- Portfolio Investment Selection

- Portfolio Risk Management

- Client Meetings

CLIENT

Operations Analyst

- Standard / Custom reporting

- Trade settlement

- Reconciliation with custodian

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Standard Monthly Reporting

Holdings Report

Purchase and Sales Report

Income and Expenses Report

Performance Report

Standard Quarterly Reporting

Standard Monthly Reports

Commentary

Custom Reporting (client specified)

Proxy Reports

Commission Reports

Organizational Updates

We utilize Axys®, Advent’s industry-leading reporting and accounting solution

which allows us to generate numerous customized reports for clients and interested parties

R E P O R T I N G C A P A B I L I T Y

33

Trading Moxy Trading Platform

– interfaces with brokers – Interfaces with Axys

Compliance – a pre-trade, trade and post-trade compliance solution – Compliance Department enters restrictions (stock, sector,

country, cash) – Any attempts to buy restricted securities will not be allowed.

Compliance

Chief Compliance Officer (CCO) rule mandated by SEC

Compliance Department and Third Party Compliance Consultant

Compliance Department and Consultant ensures compliance in a number of areas: Books and Records

Personal Securities Transactions

Trading

Soft Dollars

Marketing / Advertisements

Auditing

3-tier Auditing of Firm

Internal audit by Compliance Department and Consultant (SEC Mock Inspections)

Parent Level - ALFG and entities audited by Dixon Hughes

External – Ashland Partners (firm verification)

B U S I N E S S M A N A G E M E N T

Proxy Voting Glass, Lewis & Co. (Glass Lewis)

– Votes proxies – Maintain records of proxy voting (access via web) – HCM adopted Glass Lewis policy – Client-supplied guidelines overrides those on file with Glass

Lewis Internal Proxy Policy Committee

― Meets to review Glass Lewis Proxy Policy

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Utilize backup procedures of ALFG

Leapfrog – external IT Consultant

Monitors network

Provides tech support

Disaster recovery partner

3-tier back-up system

Daily backup – tapes stored offsite monthly

Network is backed up to a network

Synchronize to a disaster recovery platform (located in Suwannee, GA) every 2 hours.

Laptops

Each employee has a company issued laptop to access resources via a VPN connection.

D I S A S T E R R E C O V E R Y

OUR MANAGEMENT TEAM

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KENNETH R. HOLLEY, CFA Chief Investment Officer/ 25 years experience


Ken oversees the firm's investment activities: setting policy and directing the activities of the investment staff. He is the portfolio

manager responsible for Herndon Capital Management, LLC’s Large Cap Core International Equity product and one of the three

portfolio managers responsible for managing our Large Cap US Core Equity product.

Before coming to Herndon Capital Management, LLC, Ken spent more than 8 years at Morgan Stanley Asset Management. In

his first four years there he managed a domestic intermediate fixed-income portfolio. For the last four years at Morgan Stanley

he was the co-manager of an international equity portfolio. In addition, he served on Morgan Stanley's Asset Allocation

Committee which determined MSAM's investment policies and positions in the various asset classes. Prior to that Ken spent

almost three years at the African Development Bank in Abidjan, Cote d'Ivoire as the Senior Finance Officer where he developed

and implemented the investment philosophy and trading strategies for the Bank's portfolios in U.S. dollars, Canadian dollars,

French francs, Deutsche marks and Japanese yen. Before the ADB he managed the portfolios at Ward & Associates Asset

Management, a fixed-income asset management firm serving public and private pension plans. Ken began his career in finance

as a fixed-income salesman at Salomon Brothers in 1986.

Ken’s education includes a Bachelor of Science in Engineering from the University of Pennsylvania and an M.B.A. from the

Wharton School. He also earned the Chartered Financial Analyst designation in 1995.

OUR MANAGEMENT TEAM

DRAKE CRAIG, CFA Principal / Portfolio Manager 22 years experience

Drake Craig is the portfolio manager responsible for managing Herndon Capital Management, LLC‘s Large Cap US Growth Equity

product. Drake is also one of the three portfolio managers responsible for managing our Large Cap US Core Equity product.

Prior to joining the company, he spent 7 years at NCM Capital Management Group in Durham, N.C. rising from senior equity

analyst to Senior Vice President and Director of Equities where he oversaw a 9-member equity investment team that managed over

$5 billion in equity assets. Drake managed one of the firm's largest products, a $1.5 billion broad growth portfolio which included a

subadvisory relationship with the Calvert Group. Prior to that he was an equity analyst at Edward Jones & Co. responsible for

making stock recommendations in consumer oriented sectors.

Drake received a Bachelor of Arts in Business Administration from Morehouse College in 1989, the Chartered Financial Analyst

designation in 1997 and an Executive MBA from the Kenan Flagler School of Business at the University of North Carolina.

36

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OUR MANAGEMENT TEAM

RANDELL A. CAIN, JR., CFA Principal / Portfolio Manager 20 years experience

Randell (“Randy”) Cain is the portfolio manager responsible for managing Herndon Capital Management, LLC’s Large Cap US

Value Equity and Mid Cap US Value product. Randy is also one of the three portfolio managers responsible for managing the

Large Cap US Core Equity product.

Prior to joining Herndon Capital Management, LLC, Randy spent 5 years at NCM Capital managing nearly $200 million in large

cap core equities while also analyzing the Financial, Basic Material, Energy, and Utility sectors. In addition, in his last 2 years,

he managed a $200 million large cap value portfolio that outperformed the benchmark. Randy’s experience includes equity

and fixed income analysis at TradeStreet Investment Associates (a former subsidiary of Bank of America) and Putnam

Investments as well as a one year fellowship with JP Morgan to gain experience in international investing.

Randy received an MBA from Harvard Business School in 1994, a Bachelor of Industrial Engineering degree from the Georgia

Institute of Technology in 1991, and an Interdisciplinary Bachelor of Science degree from Morehouse College in 1991. He also

earned the Chartered Financial Analyst designation in 1997.

38

OUR MANAGEMENT TEAM

MELLISSA D. CRAIG Chief Administrative Officer 15 years experience

Mellissa is our Chief Administrative Officer. Her responsibilities include ensuring that the company’s overall mission is

executed. She manages the day-to-day operations of the firm and monitors the effectiveness and efficiency of the firm’s main

departments: Marketing & Client Services, Research, Compliance & Trading and Operations. She confers directly with

organization’s department heads to plan objectives, develop organizational policies and coordinate functions.

Prior to joining Herndon Capital Management, LLC, Mellissa spent 6 years at NCM Capital Management Group, Inc. rising from

Marketing Assistant to Vice President of Client Services and Marketing. She was responsible for servicing numerous

institutional accounts as well as new business development.

Mellissa received a Bachelor of Business Administration degree (magna cum laude) with an emphasis in marketing from North

Carolina Central University in 1995.

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KEN GRIMES Director of Research 14 years experience

Ken Grimes is our Director of Research and is responsible for covering the Telecommunications sector.

Ken has more than 14 years of experience in the investment and finance field. Prior to joining Herndon Capital Management, Ken

was Senior Vice President and Director of Research at Piedmont Investment Advisors. Ken also served as Director, Investment

Management at EARNEST Partners, LLC in Atlanta, GA where he was a member of the equity investment team that managed

approximately $15 billion in domestic and international equities. Additionally, Ken was an investment banker at Merrill Lynch & Co.

in their Telecommunications and Technology Investment Banking Group and also spent his early professional life as an engineer

and business development executive in the wireless telecommunications industry.

Ken graduated in 1989 magna cum laude from Morehouse College, where he received his Bachelor of Science in Physics and was

elected to the Phi Beta Kappa honor society. Ken completed his MS in Electrical Engineering from Boston University in 1992 and

his MBA from Harvard Business School in 1997.

RESEARCH TEAM

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JAMES N. NELSON, III, CFA Senior Investment Analyst 13 years experience

James Nelson is our Senior Investment Analyst responsible for covering the Financial and Consumer Staples sectors.

Prior to joining Herndon Capital Management, James was a Partner at McHugh Associates Inc. While at McHugh, he co-managed

a $1.5 billion large cap equity strategy and acted as a Senior Equity Analyst analyzing stocks in the Consumer, Financial, Health

Care, and IT sectors. In addition to his co-management and research responsibilities, he acted as the lead Portfolio Manager for

high net-worth and institutional clients with combined assets over $100 million. Prior to McHugh, James held analytical positions at

Cooke & Bieler, the Ewing Marion Kauffman Foundation, and Towers Perrin.

James earned a MBA from The Wharton School at the University of Pennsylvania and a Bachelor of Arts in Economics from The

College of Arts & Sciences at the University of Pennsylvania. He also earned the Chartered Financial Analyst designation in 2004.

RESEARCH TEAM

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JASON RECIO, CFA Senior Investment Analyst 12 years experience

Jason Recio is our Senior Investment Analyst responsible for covering the Information Technology and Consumer Discretionary

sectors.

Jason brings more than a decade of equity experience to Herndon Capital Management, LLC where he presently covers the

Information Technology and Consumer Discretionary sectors. Jason has covered both U.S. and international companies in multiple

sectors, including Consumer Discretionary, Consumer Staples, and Materials. Jason has honed his professional experience at a

couple of area firms, including Invesco and Atlanta Capital, where he analyzed companies across the market cap spectrum in both

the Growth and Value styles.

Jason completed an undergraduate degree in Accounting & Finance at Emory University, graduating with High Distinction and Beta

Gamma Sigma. He earned the CFA designation in 2003 and is a member of the CFA Institute, Atlanta Society of Financial Analysts

and Georgia Securities Association.

RESEARCH TEAM

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ROMERRO WILLIAMS Investment Analyst 4 years experience

Romerro Williams is our investment analyst responsible for coverage of our holdings in the Healthcare, Materials, and Utility

sectors.

His current areas of focus include providing and maintaining research on our holdings in the Specialty and Large Cap

Pharmaceutical Industries, Precious Metal and Mining companies, Telephony service providers, as well as our holdings in the

Industrial Chemical space.

Romerro graduated cum laude from Morehouse College in 2007. He received a Bachelor of Arts in Business Administration with

double concentrations in Finance and Marketing, and a minor in Economics. Romerro is currently in pursuit of his CFA designation,

and is a candidate for the level two CFA exam.

RESEARCH TEAM

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JAZMIN WILLIAMS Investment Analyst 3 years experience

Jazmin Williams is our investment analyst who is responsible for covering our holdings in the Energy and Industrials sectors.

Prior to joining Herndon Capital Management, Jazmin was a marketing intern with the Georgia Department of Economic

Development and a program assistant in the Spelman College Communications Department. Jazmin also volunteered as a co-site

coordinator, leadership team member and mentor with Raising Expectations, a non-profit youth development organization serving

children in the 4th through 12th grade.

Jazmin graduated in 2008 cum laude from Spelman College, where she received her Bachelor of Arts in Economics. She is

currently a candidate for the level one exam of the CFA program.

RESEARCH TEAM

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ARLENE B. PINE, CFA Director of Marketing & Client Services 14 years experience

As the Director of Marketing and Client Service for Herndon Capital Management, LLC, Arlene is charged with executing the

long-term strategic growth efforts of the firm. Her responsibilities include consultant relations, marketing and client service.

Ms. Pine joined HCM in 2011 after gaining fourteen years of industry experience. She spent almost seven years working as a

consultant with two of the largest investment consulting firms in the country advising corporate defined benefit and defined

contribution plan sponsors on investment manager research and selection, performance evaluation, asset allocation and

investment policy development. Prior to that Arlene began her career on the investment management side of the business

where she gained seven years client service experience as a Portfolio Associate providing investment support to large

institutional clients including, private and public plan sponsors, endowments and foundations.

Arlene holds the Charted Financial Analyst designation. She is a member of the CFA Society and the CFA Society of Atlanta.

She earned her Bachelor of Business Administration in Finance from Georgia State University.

MARKETING & CLIENT SERVICES

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MARC O. SYDNOR Senior Vice President, Marketing & Client Services 18 years experience

Marc is our Senior Vice President of Marketing & Client Services and brings his experience in the financial and asset

management industry to effectively meet our current and future client requirements. Having worked on the product / portfolio

side for many years he brings a tremendous amount of product knowledge to this position.

Prior to joining Herndon Capital Management, LLC Marc was a Senior Economist and Equity Portfolio Manager at MDL Capital

Management, where he created the MDL Economic Matrix, an economic forecasting product. His tenure also includes serving

as Investment Manager Search Consultant for Gray & Company. Sydnor began his career as a Broker for Oppenheimer &

Company.

Marc holds a Bachelor of Arts in Economics from the University of Delaware. Marc also holds the Series 65 registration.


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WALTER L. LINDSAY, JR. Senior Vice President, Marketing & Client Services 29 years experience

Walter brings 29 years of experience in the Investment Management Industry. Prior to joining Herndon Capital Management, LLC, Walter

was at Madison Square Investors where he served as Director of Institutional Sales. In this role, he was head of Public Funds Sales

covering all regions. Prior to Madison Square, Walter was SVP at Hartford Investment Management Company where he was responsible

for coverage of Public, Corporate Endowments and Foundations. Before joining Hartford, Walter was a Managing Director of Public Funds

for Trusco Capital Management. He managed a Sales and Client Service team that focused on Public Pension Funds. Prior to Trusco,

Walter spent 17 years at Fidelity Investments as a SVP managing existing Public Fund Clients and worked closely with the Investment

team to develop Institutional Products.

Walter earned his Bachelor of Science in Business Administration from Northeastern University. He has the FINRA registrations: Series 7,

52, 53 and 63.


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COMPLIANCE

ANNETTE MARSHALL Chief Compliance Officer 22 years experience

Annette Marshall is responsible for our firm’s compliance program. Prior to joining Herndon Capital Management, LLC, Annette

spent 2 years as an Investment Adviser Compliance Consultant to institutional investment advisers as well as some retail

investment advisors with Barge Consulting LLC Prior to that, Annette was Head of Trading at Peachtree Asset Management for

5 years. Before Peachtree, she spent 3 years at NCM Capital Management Group, Inc. as one of a 3-member trading team.

Annette began her career in the investment management industry in 1989 at Edward Jones in operations and later transferred

to their Corporate Bond Trading Desk as an assistant Trader.

Annette received her Bachelor of Science degree in Business Administration from the University of Missouri – St. Louis in

1990. She is a member of the National Society of Compliance Professionals. She holds the FINRA Series 7, 63, and 65

registrations and maintains the CSCP (Certified Securities Compliance Professionals) designation.

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TRADING

DIANE BROMFIELD Senior Equity Trader 24 years experience

Diane is our Equity Trader and is responsible for all aspects of the trading environment which includes domestic, international, and

currency trades. She maintains our commission purposes; reconciles our holdings between our OMS and Accounting systems; and

explores and keeps up-to-date on any new trading/technology ideas.

Prior to joining Herndon Capital Management, LLC., Diane was an Equity Trader with INVESCO Capital Management. Her extensive

career there began in 1987 under the firm name Citicorp Investment Management, then Chancellor Capital Management and more

recently INVESCO. While there she held positions of Equity Trader with a concentration in blind principal bid trading as well as agency

trading; Trade Operations Manager responsible for trade settlement/Operations/OMS administration; and Chancellor Business

Administrator responsible for new/closed accounts.

Diane received an MBA from St. John’s University, and a Bachelor of Science degree in Finance also from St. John’s University

graduating summa cum laude. She holds the FINRA Series 7 registration.

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SHANNON D. BARNES Director of Operations 24 years experience

Shannon is our Director of Operations. Her operational functions include overseeing a department responsible for client

reporting, portfolio accounting, account reconciliations and trade settlement.

Prior to joining Herndon Capital Management, LLC, Shannon was a Financial Service Representative at SunTrust Bank. Prior

to that she spent 9 years at Peachtree Asset Management rising from Portfolio Associate/Operations Coordinator to Assistant

Vice President. Shannon began her career in the financial industry at SunTrust Bank as a Marketing Assistant and later

transferred to Corporate Banking before moving on to SunTrust’s investment division, Trusco Capital Management.

Shannon received a Bachelor of Science degree in Business Education from the University of Southern Mississippi.

OPERATIONS

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