los angeles department of water & power retirement …retirement.ladwp.com/agendaitems/agenda -...

Los Angeles Department of Water & Power Retirement Plan and Retirees Health Benefits Fund

April 30, 2011

Presenters

Jessie Magee, CFA

Director

Mr. Magee is responsible for research and portfolio management at EARNEST Partners. He graduated with a BS in Mechanical Engineering from Southern University and also holds an MS in Mechanical Engineering from the University of Michigan as well as an MBA from Emory University. He began his career in Research

& Vehicle Technology at Ford Motor Company where he spent seven years working on alternative fuel technologies, occupant safety, and new product development. Later, he worked in Corporate Finance at Intel Corporation, where he developed strategies to proliferate the usage of reverse internet auctions for semi-conductor materials procurement. He also spent six years in the Army National Guard as a Combat Engineer.

Katie Driver

Product Management

Ms. Driver is responsible for product management at EARNEST Partners. Prior to joining EARNEST Partners, she spent six years as an Equity Research Associate for SunTrust Robinson Humphrey with a focus on the specialty retail group. She holds a BA in Business Administration and Spanish from Furman University. Her studies included a semester in Madrid, Spain as well as an internship in San Jose, Costa Rica. She is involved with several non-profit organizations including the Children's Museum of Atlanta and is a member of the Atlanta Association of Women in Securities.

2

EARNEST PartnersBackgroundMarch 31, 2011*

Firm Assets Under Management ($ Billions)

03/31/2011

Total Assets under Management 16.7

Total Small Cap Value 3.7* AUM are updated on a quarterly basis.

3

Investment Team

Note: See form ADV, Part 2, Schedule F, Item #6 for former employers, dates of affiliation, and positions held.

Mr. Viera is the founder of EARNEST Partners, an investment firm

responsible for overseeing more than $15 billion for municipalities, states, corporations, endowments, sovereign wealth funds, and universities. He

developed Return Pattern Recognition®, the investment methodology used to screen equities at EARNEST Partners. He has a BA in Economics from the University of Michigan, an MBA from the Harvard Business School, and has over twenty-five years of investment experience. Mr. Viera was a Vice President at Bankers Trust in both New York and London. He later joined Invesco, where he became a Global Partner and senior member of its Investment Team. Mr. Viera is a member of the Council on Foreign Relations, a Board member for the National Center for Civil and Human Rights, and a member of the Atlanta Society of Financial Analysts. He is also a commentator for several news organizations, including, among others, CNBC and Bloomberg News.

Paul E. Viera, CEO and Partner

Mr. Bronfman holds a BA from Williams College and an MBA from Harvard Business School and his investment experience includes the telecommunications, consumer products, consumer cyclicals, retailing, and technology sectors. He is also the Chairman of BHB Holdings and serves on the boards of Bronfman Fisher Real Estate Holdings and James River Group. Mr. Bronfman has served on the board of the 92nd Street Y since 1991, previously serving as President and Chairman.

Matthew Bronfman, Partner

4

Investment Team


Mr. Connor holds an MBA from New York University where he majored in Investments with a minor in Economics. He began his career in 1959 as an associate of the National Securities Growth Stock Series. He left to become manager of the Heritage Fund and Vice President of Scientific Venture Corp., a privately-owned venture capital firm. Later, he joined the brokerage firm of Ralph E. Samuel and was Partner and Director of Research at Schaenen, Fellerman

& Co. He was also the Founder and CEO of Connor & Associates,

a money management firm that focused on small and mid-capitalization stocks.

Michael A. Connor, Partner

Mr. Folk is a portfolio management and research professional at EARNEST Partners with over twenty years of investment experience. He holds a BA degree from Millsaps

College and an MBA from Millsaps' Else School of Management. He has extensive experience with government, corporate, mortgage-backed and asset-backed securities. His prior experience includes ten years of portfolio management with Southern Farm Bureau Life Insurance Company, where he was responsible for the company's fixed-income portfolio. He is a member of the CFA Institute and the Atlanta Society of Financial Analysts.

Douglas S. Folk, CFA, Partner

5

Investment Team


Mr. Greer is responsible for research and portfolio management activities at EARNEST Partners. He has a BS in Business Administration and a Master of Accounting from the University of North Carolina at Chapel Hill and an MBA from Emory University. He has fifteen years of investment experience and began his career in public accounting. He later joined AMVESCAP PLC where he was an Investment Manager with assignments in London, Houston, and Atlanta. He is a member of the CFA Institute, the Atlanta Society of Financial Analysts, and the American Institute of Certified Public Accountants.

Trey Greer, CFA, CPA, Partner

Mr. Royer is responsible for portfolio management and research at EARNEST Partners. He holds a BA in Physics and an MBA in Operations Research and Finance, both from

the University of Chicago. Before becoming a partner at EARNEST Partners, he was the principal at a business systems consulting group. His clients included Zurich Investment Management, Merrill Lynch, Hewitt Associates, and First National Bank of Chicago. In all, his constructions helped employ billions of dollars. He has more than twenty-five years of investment experience.

Dan Royer, Partner

6

Investment Team


Mr. Hovis is responsible for research and portfolio management at EARNEST Partners. Prior to joining EARNEST Partners, he served as a Senior Analyst with Morgan Keegan where he was an analyst in US Software. His extensive background also includes experience in the information technology industry as well as in Equity Research with SunTrust Robinson Humphrey and CQ Partners. Previously, he was VP of Marketing and Business Development at Lancope, and a senior software engineer at Intel and Alliance Semiconductor. He holds an MBA with Distinction from The Wharton School of Business and Bachelor degrees with Highest Honors in Electrical Engineering from Georgia Tech and in Physics from Centre College. Mr. Hovis is also a member of the CFA Institute and the Atlanta Society of Financial Analysts.

Chris Hovis, CFA, Director

Mr. Royer is responsible for portfolio management and research at EARNEST Partners. He holds a BA in Physics and an MBA in Operations Research and Finance, both from

the University of Chicago. Before becoming a partner at EARNEST Partners, he was the principal at a business systems consulting group. His clients included Zurich Investment Management, Merrill Lynch, Hewitt Associates, and First National Bank of Chicago. In all, his constructions helped employ billions of dollars. He has more than twenty-five years of investment experience.

Jessie Magee, CFA, Director

7

Investment Team


Mr. Malcom is responsible for product management at EARNEST Partners. He is a graduate of the United States Military Academy at West Point where he led the Varsity Football

team in scoring for three consecutive years. In his senior year, he was named the "Chevrolet Player of the Game"

in the annual Army-Navy game. He holds an MBA from Emory University, where he was a recipient of the 2003 Donald Keough

Scholarship. Prior to joining EARNEST Partners, he worked in the Global Investment Bank for JPMorgan Chase in New York. He also served as a helicopter pilot in the United States Army for more than seven years, an experience that included leading a Blackhawk Helicopter Company along the demilitarized zone between North and South Korea. Mr. Malcom is a member of the CFA Institute and the Atlanta Society of Financial Analysts.

Patmon Malcom, CFA, Director, Product Management

Ms. Wurst is responsible for research and portfolio management at EARNEST Partners. Her operational experience includes worldwide management of several product lines within Hewlett Packard's LaserJet business. She worked to develop a new, lower-cost architecture that enabled expansion in China and India and was a member of a corporate venture commercializing a microdisplay

technology developed in HP Labs. She has been awarded nine intellectual property disclosures and a US patent and has a second patent pending at the US Patent and Trademark Office. Prior to her work at HP, Ms. Wurst was responsible for international macroeconomic forecasting and investment risk analysis at Global Insight. She

holds a BA in Classical and Medieval Studies from Bates College and an MBA from Harvard Business School.

Alysia Wurst, Director

8

Investment Team


Farez

Alibay

is responsible for research and portfolio management at EARNEST

Partners. He previously held a variety of roles in global financial institutions including Deutsche Bank and Barclays Capital. In those roles, he worked to determine the real balance sheet value of financial firms and participated in price discovery for illiquid assets. Mr. Alibay

also worked in venture capital vetting potential investments through business and legal analysis/verification, capital structure analysis, financial modeling and related valuation work. Mr. Alibay

holds an MBA from The Wharton School, a Masters of Engineering in Computer Science from Cornell University and a BS in Computer Science from the Illinois Institute of Technology. He is also a member of the CFA Institute and the Atlanta Society of Financial Analysts..

Farez

Alibay, Investment Management

Richard Burgess is responsible for research and portfolio management at EARNEST Partners, with coverage responsibilities including the defense, transportation, and materials industries, among others. Prior to joining EARNEST Partners, Mr. Burgess served as an Artillery Officer in the United States Army, with duties ranging from tactical planning for combat operations to intelligence gathering and dissemination. His military experience includes a combat tour in Iraq, during which he earned the Bronze Star Medal for meritorious service. A graduate of the Army Ranger School, he also commanded a stateside detachment, where he was responsible for logistical planning and support for a deployed 900-person infantry battalion, as well as for training 200+ soldiers

in battlefield survival skills. He holds a BS in Engineering Physics from the United States Military Academy at West Point, where he was ranked in the top 3% of cadets in terms of academic standing and was awarded the Lieutenant General Leslie R. Groves Memorial Award for the highest overall achievement in Nuclear Physics. Mr. Burgess also holds an MBA from the Harvard Business School.

.

Richard Burgess, Investment Management

9

Investment Team


Chris Fitze, CFA, Investment Management

Mr. Fitze is responsible for research and portfolio management for EARNEST Partners. He holds a BA in Economics from Emory University where he was an Academic All-American in golf and inducted into the International Economics Honor Society. At Emory, he concentrated

his economic studies in banking, interest rates, and inflation. His prior experience includes analyzing low cost financing for a regional bank.

Mr. Kelly is responsible for research and portfolio management for EARNEST Partners. As a member of the investment team, Mr. Kelly specializes in the analysis and trading of all fixed income sectors. He has worked extensively with the United States Department of the Treasury’s Small Business Administration securities buy program in the firm’s role as financial agent. He holds a BS in Business Administration with a focus in Finance from The University of North Carolina at Chapel Hill, where he was a member of the crew team and participated in the study abroad program in Seville, Spain. He began his career as an analyst with MetLife Securities. He is a member of the CFA Institute and the Atlanta Society of Financial

Analysts.

Ryan Kelly, CFA, Investment Management

10

Investment Team


Mr. Patodia is responsible for research and portfolio management

at EARNEST Partners. He began his career at Microsoft where he worked as a Software Engineer for Windows Mobile Phones designing and developing core technologies for new releases. Subsequently, he worked as a Program Manager leading cross-divisional teams to incubate new Windows Mobile services. During his career at Microsoft, he collaborated with several telecom operators and device manufacturers to commercialize new releases

and to develop innovative data services. He graduated with a BS in Computer Science and MS in Software Engineering from Carnegie Mellon University, and holds an MBA from Harvard Business School.

Yash Patodia, Investment Management

Dr. Ryan is responsible for research and portfolio management at

EARNEST Partners. Prior to joining

EARNEST Partners she was the Chief Operating Officer for MTEM Ltd. She started her career with Schlumberger as a wireline

field engineer, and during her fifteen years with the company lived in six countries and worked in the areas of field operations, research, research management, engineering, manufacturing, product development, marketing and general management. She also worked in the utilities industry as a manager responsible for technical and commercial asset management of Australian gas pipelines and networks. Dr. Ryan holds patents in the United States, United Kingdom and Europe. She earned her Ph.D. in petroleum geology and geophysics from the University of Adelaide, Australia. She received a B Sc with First Class Honors in Geophysics from the University of Adelaide, a B Sc in Geology from the University of Melbourne, Australia and is an alumna of IMD, Lausanne, Switzerland. She is a Fellow of the Australian

Institute of Energy.

Sarah Ryan, Ph.D., FAIE, Investment Management

11

Investment Team


Patmon Malcom, CFA, Director, Product Management

Dr. Singh is responsible for research and portfolio management at EARNEST Partners. Prior to joining EARNEST Partners, he worked for more than five years at the IBM Research Center in the Silicon Technology group. Leading a team of Ph.D.s/engineers, he helped develop semiconductor technology for next-generation electronic chips, resulting in the first demonstration of an advanced memory and world record chip speed and was awarded five U.S. patents with four additional patent applications pending. Dr. Singh has a Ph.D. from Stanford University in Applied Physics, an MBA with high honors from University of Chicago, and studied previously at the Indian Institute of Technology.

Margaret Champagne, Product Management

Ms. Champagne is responsible for product management at EARNEST Partners. Prior to joining EARNEST Partners, Margaret worked for Ernst & Young, specializing in real estate and financial service engagements. In addition to her audit engagements, Margaret worked on special projects helping companies implement

International Financial Reporting Standards and Sarbanes Oxley regulations. She holds a BA in International Business from the University of Georgia and a Masters of Science

in Accounting from The University of Virginia's McIntire School of Commerce.

Dinkar Singh, Ph.D., Investment Management

12

Investment Team


Andrew Farmer, Product Management

Mr. Farmer is responsible for product management at EARNEST Partners. He holds a Bachelor of Science degree from Lipscomb University where he majored in Financial Markets and minored in Communications. Prior to joining EARNEST Partners, Mr. Farmer helped start an ecommerce apparel company where he directed the day-to-day operations. He also has experience in the small market investment banking sector.

Katie Driver, Product Management

Ms. Driver is responsible for product management at EARNEST Partners. Prior to joining EARNEST Partners, she spent six years as an Equity Research Associate for SunTrust

Robinson Humphrey with a focus on the specialty retail group. She holds a BA in Business Administration and Spanish from Furman University. Her studies included a semester in Madrid, Spain as well as an internship in San Jose, Costa Rica. She is involved with several non-profit organizations including Answer Atlanta and serves on the Endowment Consulting Group for Furman University.

13

Investment Team


Mondrell Moore, Product Management

Mr. Moore is responsible for product management at EARNEST Partners. He has more than ten years of experience in the financial services area. He began his career in the Global Investor Services group at Brown Brothers Harriman with assignments in Boston, Zurich, and London. He then joined the American Depository Receipts division of The Bank of New York, working with institutional asset managers and international companies across a broad spectrum of industries. Prior to joining EARNEST Partners, he worked as a portfolio manager for SunTrust Robinson Humphrey in its Debt Capital Markets group focusing on asset securitization transactions. He holds a BA in Business Administration and Finance from Clark Atlanta University and an MBA from Cornell University.

14

EARNEST Partners’

Organization

Portfolio Management

Paul E. VieraCEO, Partner

Alysia WurstDirector

Ryan Kelly, CFAInvestment Management

Jessie Magee, CFADirector

Trey Greer, CFA, CPAPartner

Lihua ShenProduct Management

Dan RoyerPartner

Tammy Qiuhong TangDirector

Doug Folk, CFAPartner

Matthew BronfmanPartner

Operations/AdministrationClient Service Product Management

Patmon Malcom, CFADirector

Kathryn PhiladelphiaTrade Settlements

Damaris TurnbullManager, Trading

Olivia Vaughn, CPAManager, Compliance

Jay Wilson, CFA, CPA, CSCP, CIPMChief Compliance Officer

L. Cord CampbellDeputy Chief Operating Officer

Margaret Champagne, CPAProduct ManagementChristy Jordan, CIPM

Manager, Reporting

Anthony Ciliberto, CPADirector

Aimee BennettManager, Portfolio

Accounting

Nal UmraoSMA-Trader

Marcia Abbott Portfolio Accounting

John Whitmore II, CPAChief Operating Officer, Partner

Nadia BarnesTrade Settlements

Amie Wilkes, CSOPManager, Operations

Chris Fitze, CFAInvestment Management

Kaivalya YoungLead Trader

Chris Hovis, CFADirector

Kevin McKenzieNetwork Engineer

Sarah Ryan, PhD.Investment Management

Emily GriggTrader

Andrew FarmerProduct Management

Don Nguyen Portfolio Accounting

Mondrell MooreProduct Management

Yash PatodiaInvestment Management

Patrina ThomasManager, Logistics

Dinkar Singh, PhD.Investment Management Daniel Montgolf

Network Administrator

Katie DriverProduct Management

Saje KirkExecutive Assistant

Nikita SmeshkoTrade Settlements

Mike ConnorPartner

Becky DoDirector, Chief of Staff

Christelle KimAssistant, Reporting

Vanessa Pope Portfolio Accounting

Varsha TelangAccounting

Josh AycoxAssociate, Reporting

Farez AlibayInvestment Management

Richard BurgessInvestment Management

15

Representative Client List

Government of Guam Retirement Fund

United Technologies

National Collegiate Athletic Association

Oklahoma Municipal Retirement Fund

Maryland State Retirement System

Illinois Municipal Retirement Fund

Pacific Gas & Electric

General Mills

Exelon Corporation

Valero Energy

Indiana State Teachers’

Retirement

Williams College

Verizon Communications

New York Common Retirement Fund

New Mexico State Investment Council

NFL Player Annuity and Insurance

Eli Lilly and Company

New Mexico State University

Prudential

State of North Carolina Retirement

16

EARNEST PartnersKey ContactsApril 30, 2011

EARNEST Partners1180 Peachtree Street, Suite 2300

Atlanta, Georgia 30309404-815-8772

Paul Viera

CEO and [email protected]

Trey Greer, CFA, CPA

Partner

[email protected]

Jessie Magee, CFA

Director

[email protected]

Katie DriverProduct Management

[email protected]

Anthony C. Ciliberto, CPA Director of Client Service

[email protected]

Christy L. Jordan, CIPMManager of Reporting

[email protected]

mailto:[email protected]






EARNEST PartnersInvestment Philosophy and ObjectiveApril 30, 2011

EARNEST Partners is a fundamental, bottom-up stock selector. The Firm’s investment objective is to outperform the benchmark while controlling volatility and risk. EARNEST Partners implements this philosophy using a screen developed in-house called Return Pattern Recognition®, thorough fundamental analysis, and risk management that minimizes the likelihood of meaningfully underperforming the benchmark.

18

EARNEST PartnersInvestment ProcessApril 30, 2011

EARNEST Partners is a fundamental, bottom-up investment manager.

We understand that each company is unique and consider these differences in selecting companies that make good investments.

The first step in our investment process is to screen the relevant universe to identify companies likely to outperform based on their financial characteristics and the current environment.

The screening approach is called Return Pattern Recognition®, and it allows us to review thousands of companies and focus our attention on those we believe to have the best prospects. Return Pattern Recognition®

ranks each company according to specific financial and market characteristics.

Then it identifies the most attractive set of characteristics for each company, and finally, it identifies companies currently exhibiting the set of characteristics that has led to outperformance.

The second step in our investment process is to construct a portfolio that includes those stocks we expect to have the best performance and that effectively manages risk.

Our clients are primarily concerned about the risk of meaningfully underperforming the assigned benchmark.

Hence, we focus our attention on reducing this possibility.

We use a statistical approach called downside deviation to measure the likelihood of significant underperformance.

Using this information, we select investments that blend together to manage downside risk.

We reconstruct the portfolio until downside deviation is within

acceptable limits.

In the last step of the process, the stocks we’ve identified as potential investments undergo a more rigorous fundamental review.

We develop an investment thesis for each company; this thesis must be tested.

The test generally includes conversations with the company’s management team and industry specialists, review of the company’s financial reports, analysis of industry and company-

specific studies, and independent field research.

We seek companies in attractive industries with developed strategies, talented and honest management teams, sufficient funding, and strong financial results.

The experience and different perspectives of our investment team are an advantage in determining which companies are best positioned to meet or exceed expectations.

We eliminate from consideration any company that does not pass our exhaustive

fundamental analysis.

The result is a client portfolio of stocks with high expected excess returns and limited risk of meaningful underperformance.

19

Portfolio Construction & Design

Stock universe: begin with 2,000 stocks Universe (2,000 stocks)

High-potential stocks (150)

Trial portfolios (60)

Portfolio companies (60)

Initial screen: use Return Pattern Recognition®

Risk control: constrain downside risk

Research: scrutinize the companies

20


Guidelines and Investment Policy Audit

Yes No

•

No prohibited securities held

•

No more than 5% of outstanding stock of a single company

•

Cash not to exceed 5% *

•

No more than 15% of outstanding stock of a single company held across firm

•

Benchmark: Exceed Russell 2000 Value over a full market cycle

* Threshold may be temporarily exceeded due to market conditions.

21

Equity Market Overview April 30, 2011U.S. equity markets started 2011 in positive territory, following up on a strong 4th quarter and full year 2010. The Russell 2000 small cap market was up 11%, while the large cap market, represented by the Russell 1000, finished up over 9% YTD through April. World events put pressure on certain international markets, but despite those headwinds, the MSCI ACWI ex-US produced an 8.6% return for the 4-month period.

The attention of both U.S. and international investors shifted east during the quarter. Although the still-strained economic environment in both the U.S. and Europe remained top of mind, events in the Middle East, North Africa, and Japan raised additional concerns. Decades-old factors including economic decline, unemployment, rising food prices, concentration of wealth, and stagnant leadership manifested in revolutions and uprisings in North Africa and the Middle East during the quarter. Oil prices jumped more than 15% due to concerns about supply and the possibility that unrest could spread to oil-rich Saudi Arabia. A second global crisis unfolded in mid March when Japan suffered the largest earthquake in its recorded history. Although the epicenter of the earthquake was hundreds of miles away from Tokyo, the impact of the earthquake and resulting tsunami were felt throughout the country and will continue to be felt in many parts of the world. In addition to the devastating loss of human life, Japan is also facing a disruption in manufacturing and sales across a broad spectrum of goods, including automobiles, industrial equipment, and consumer

electronics. That disruption will further pressure global GDP growth.

U.S. equity markets ended April near their highest levels in almost four years, roughly doubling from the lows experienced in March 2009. Although markets dropped sharply mid March due to the unfolding global events, they rebounded in the following month supported by a slowly improving employment outlook and a renewed appetite for risk. GDP grew at a 3.1% annual rate

in the 4th quarter of 2010 as increasing exports and business investment in property and equipment drove the third straight quarter of accelerating economic growth. This economic growth, along with stabilizing capital markets and continued low interest rates, pushed merger and acquisition activity up 80% compared to the first quarter of 2010, boosting valuations across multiple industries. Private sector hiring also accelerated for the third straight quarter helping drop the unemployment rate to 8.8%, another sign that businesses are beginning to spend some of the record $1.9 trillion that was sitting on corporate balance sheets at the end of 2010. Data suggests that those who are employed are gradually feeling more secure about their income and, in some cases, are increasing their purchases of durable goods that were deferred during the

downturn. Durable good purchases like cars and appliances were up during 4Q10 and have carried forward into 2011.

Despite a pickup in payrolls, income growth continues to lag inflation. Consumer sentiment fell towards the end of the quarter as food and gas prices continued to rise. Prices across the major segments of energy, materials, and agriculture rose sharply with oil approaching $110 a barrel,

aluminum rising 7%, and cotton prices increasing by approximately 40% during the first quarter.

Further, the housing market still shows no signs of a solid bottom. The S&P/Case-Shiller

home price index continues to trend downwards with only select markets showing any year-over-year improvement. As a result of these factors, overall consumer spending has stalled causing expectations for 1Q11 GDP growth to

drop below 3%. Nevertheless, many expect these trends to be short-lived with the longer term trend for the economy remaining upward sloping. The index of leading economic indicators rose for the eighth straight month in February, and as evidenced by the equity market returns in the 1st quarter, investors are also optimistic.

22

EARNEST Partners Small Cap Value Portfolio Review April 30, 2011

The EARNEST Partners Small Cap Value portfolio significantly outperformed its benchmark, the Russell 2000 Value, for the four months ended April 30. Strong stock selection across the portfolio drove the relative outperformance. Absolute returns were led by gains in the Energy, Healthcare, and Materials sectors. Cabot Oil & Gas, an independent exploration and production company with properties concentrated in East Texas, Appalachia and the Rockies, rose 49% YTD through April. The company’s highly profitable natural gas projects (including the Marcellus Shale) account for more than 90% of revenue; and that business is growing organically at 15%+. COG announced in 4Q that it is selling its midstream (gas compression and pipeline) assets to focus on its core upstream business. A number of the portfolio’s healthcare holdings performed well including Covance, which rose 22%. Covance is a leading contract research organization that provides outsourced research and development for pharmaceutical and biotech companies. Covance’s focus on early stage FDA trials resulted in some weakness in 2010 as pharmaceutical companies focused on drugs in late stage trials. However, early stage development has rebounded in 2011 as pharmaceutical companies seek to refill their pipelines in the face of significant patent expirations in the coming 24 months. CVD should continue to benefit from better demand for early stage testing, operating leverage from an expanding revenue base, and a continued shift towards strategic partnerships between big pharma

and the top CROs. Technology holding SRA International was among the portfolio’s best performers for the period, up 52%. SRA is a leading provider of technology and strategic consulting services to national security, civil government, and healthcare agencies. Those services include business intelligence, data assurance, disaster response planning, and environmental strategies, among others. A new management team has

consolidated operations and focused on building out higher-margin businesses and driving operating profitability and earnings higher. As a result, strategic and private equity buyers expressed interest in the company, and subsequent to quarter-end, SRA announced that it entered into a definitive merger agreement to be acquired by Providence Equity Partners.

23

Equity Market OverviewApril 30, 2011

8.611.5

9.3 8.3 9.111.6

14.115.5

24.5

15.1

ACWI Ex US Dow JonesIndustrials

Russell 1000Value

Russell 2000Value

S&P 500

Equity Index ReturnsYTD2010

Period Ended YTD 2010 5 Years 10 YearsACWI Ex US 8.62 11.60 4.01 7.66Dow Jones Industrials 11.49 14.06 5.20 4.28Russell 1000 Value 9.29 15.51 1.40 4.31Russell 2000 Value 8.33 24.50 2.50 8.69S&P 500 9.06 15.06 2.95 2.82

24

Equity Market OverviewApril 30, 2011

Energy

Materials

Industrials

Consumer Discretionary

Consumer Staples

Health Care

Financials

Information Technology

Telecommunication Services

Utilities

4.18

4.50

7.39

7.93

8.43

9.25

9.46

13.05

19.93

21.89

Russell 2000 Value –YTD ReturnsPercent

4.10

6.27

20.51

19.26

12.37

20.05

15.25

33.45

33.55

35.15

Russell 2000 Value –Latest 12 Month ReturnsPercent

25


Guidelines and Investment Policy Audit

During the period May 1, 2010 through April 30, 2011, EARNEST Partners verifies that the WPERP has been in compliance with the Investment Management Agreement and Guidelines including the Investment and Legal/Compliance Guidelines.

Signature: __________________

Date: 04/30/2011Trey Greer

Title:

Investment Management

26

Los Angeles Department of Water & Power Retirement Plan Performance MeasurementApril 30, 2011

Performance

Total Portfolio -

Gross

Total Portfolio -

Net Equities

Russell 2000 Value

Excess Return (Basis Points)

YTD 12.94% 12.77% 13.44% 8.33% 444

1 Year 19.96 19.23 20.31 14.57 466

Since Inception Annualized* 6.25 5.62 6.18 5.16 46

* Annualized. Performance Inception is 11/30/2004.Net of fee performance results presented herein may be based on estimated information for the most recent quarter(s).

27

6.3

12.9

5.6

19.2

12.8

20.3

13.4

5.2

8.3

20.0

6.2

14.6

Since Inception 1 Year YTD

Portfolio (Gross)

Portfolio (Equity Only)

Period ending April 30, 2011 Portfolio (Net)

Russell 2000®

Value

Los Angeles Department of Water & Power Retirement Plan Performance MeasurementApril 30, 2011

28

Retirees Health Benefits FundPerformance MeasurementApril 30, 2011

Performance

Total Portfolio -

Gross

Total Portfolio -

Net Equities

Russell 2000 Value

Excess Return (Basis Points)

YTD 12.97% 12.72% 13.78% 8.33% 439

1 Year 20.07 19.00 20.98 14.57 443

Since Inception Annualized* 26.48 25.42 27.66 22.51 291

* Annualized. Performance Inception is 09/15/2009.Net of fee performance results presented herein may be based on estimated information for the most recent quarter(s).

29

26.5

13.0

25.4

19.0

12.7

21.0

13.8

22.5

8.3

20.1

27.7

14.6

Since Inception 1 Year YTD

Portfolio (Gross)

Portfolio (Equity Only)

Period ending April 30, 2011 Portfolio (Net)

Russell 2000®

Value

Retirees Health Benefits FundPerformance MeasurementApril 30, 2011

30

Los Angeles Department of Water & Power Retirement Plan Market Cap WeightingsApril 30, 2011

8

59.1

32.9

44

55.6

0.5

Percentage HeldPortfolioRussell 2000®

Value

$0 -

$1 Billion $1 -

$4 Billion $4 –

$12 Billion

31

Retirees Health Benefits FundMarket Cap WeightingsApril 30, 2011

7.6

58.6

33.9

44

55.6

0.5

Percentage HeldPortfolioRussell 2000®

Value

$0 -

$1 Billion $1 -

$4 Billion $4 –

$12 Billion

32

Energy

Materials

Industrials


Consumer Staples

Health Care

Financials



Utilities

0.00

1.61

4.20

6.18

7.02

10.14

10.92

14.11

22.66

23.17

Portfolio –Last 12 MonthsPercent

3.03

0.55

6.15

6.33

10.19

7.26

5.47

9.51

36.92

14.59

Russell 2000 Value –Last 12 MonthsPercent

Los Angeles Department of Water & Power Retirement Plan Sector AttributionApril 30, 2011

33

Energy

Materials

Industrials


Consumer Staples

Health Care

Financials



Utilities

0.00

1.64

4.22

6.22

6.94

11.08

11.12

14.37

21.87

22.54

Portfolio –Last 12 MonthsPercent

3.03

0.55

6.15

6.33

10.19

5.47

7.26

9.51

14.59

36.92

Russell 2000 Value –Last 12 MonthsPercent

Retirees Health Benefits FundSector AttributionApril 30, 2011

34

Los Angeles Department of Water & Power Retirement Plan Contributors/DetractorsMay 1, 2010 –

April 30, 2011

Top 10 Contributors Top 10 Detractors

Bucyrus International Inc. Amedisys

Inc.

Lufkin Industries Inc. Itron

Inc.

AMERIGROUP Corp. URS Corp.

Timken Co. School Specialty Inc.

Cabot Oil & Gas Corp. Astoria Financial Corp.

Whiting Petroleum Corp. Jefferies Group Inc.

GATX Corp. Sonic Corp.

ONEOK Inc. Eaton Vance Corp.

South Jersey Industries Inc. Arris

Group Inc.

Medical Properties Trust Inc. Healthways Inc.

35

Retirees Health Benefits FundContributors/DetractorsMay 1, 2010 –

April 30, 2011

Top 10 Contributors Top 10 Detractors

Lufkin Industries Inc. Amedisys

Inc.

Bucyrus International Inc. Itron

Inc.

AMERIGROUP Corp. URS Corp.

Timken Co. School Specialty Inc.

Cabot Oil & Gas Corp. Astoria Financial Corp.

Whiting Petroleum Corp. Sonic Corp.

ONEOK Inc. Jefferies Group Inc.

South Jersey Industries Inc. Eaton Vance Corp.

Hexcel Corp. Healthways Inc.

Medical Properties Trust Inc. Arris

Group Inc.

36

Los Angeles Department of Water & Power Retirement Plan and Retirees Health Benefits FundSector DecisionsApril 30, 2011

EARNEST Partners does not target sector or industry weights. Instead, the weightings are an outgrowth of our bottom-up, fundamental stock selection process. Our process is designed to identify the individual securities with the most attractive expected returns; relative overweights

and underweights

are an outgrowth of where we're finding those individual opportunities. As of April 30, 2011, the portfolio was overweight in the Healthcare and Energy and Information Technology sectors. The portfolio continues

to be underweight the Financial sector.

The overweight in Information Technology is attributed to our having

identified a number of

attractively valued

companies with both the technical and domain expertise to

improve the effectiveness and efficiency of their clients by

addressing unique

industry needs.

This

has helped

our

holdings drive

solid earnings growth and

establish

entrenched positions

within their markets.

The overweight in Healthcare is attributed to our having identified companies that will benefit from rising demand (stemming from an aging population, technological advancement and a growing insured population resulting from recent legislation). Many of these companies offer a value proposition to their customers by either

increasing productivity or reducing costs.

The underweight in financials is attributed to our investment team having found what we believe are better opportunities in other sectors. The portfolio has relatively less exposure to regional commercial banks and mortgage companies; as we believe many still have balance sheet issues to work through. The stocks owned in the portfolio are primarily financial services companies including brokerages, asset managers and specialty insurance companies.

37

Stock price performance

Cabot Oil & Gas


Key Performance Drivers – Stock Selection

$35$41$47$53

12/31/

2010

1/15/

20111/

30/2011

2/14/

20113/

1/2011

3/16/

20113/

31/2011

Covance


$20$23$26$29

12/31/

2010

1/15/

20111/

30/2011

2/14/

20113/

1/2011

3/16/

20113/

31/2011

•

SRA is a leading provider of technology and strategic consulting

services to national security, civil government, and healthcare agencies.

•

Those services include business intelligence, data assurance, disaster response planning, and environmental strategies, among others.

•

A new management team has consolidated operations and focused on

building out higher-margin businesses and driving operating profitability and earnings higher. As a result, strategic and private equity buyers expressed interest in the company, and subsequent to quarter-end, SRA announced that it entered into a definitive merger agreement to be acquired by Providence Equity Partners.

Shares rose 39% in 1Q.

•

Cabot Oil & Gas is an independent exploration and production company with North American properties concentrated in East Texas, Appalachia

and the Rockies.

•

The company’s highly profitable natural gas projects (including the Marcellus Shale) account form more than 90% of revenue; and that business is growing organically at 15%+.

•

COG is in the process of selling its midstream (gas compression and pipeline) assets to focus on its core upstream business. This sale will alleviate bottlenecks with the regulatory authorities that were slowing drilling and installation. Shares rose 41% for the quarter.

SRA International

•

Covance is a leading contract research organization (CRO) providing outsourced research and development for pharmaceutical and biotech companies.

•

Covance’s focus on early stage FDA trials resulted in some weakness in 2010 as pharmaceutical companies focused on drugs in late stage trials.

•

However, 2011 has seen a resurgence in early stage development as

pharmaceutical companies look to refill their pipelines in the face of significant patent expirations in the coming 24 months.

•

CVD should continue to benefit from better demand for early stage testing,

operating leverage as revenues grow, and a continued shift towards strategic partnerships between big pharma

and the top CROs. Shares rose 6% in 1Q.

$48$52$56$60

12/31/

2010

1/15/

20111/

30/2011

2/14/

20113/

1/2011

3/16/

20113/

31/2011

Los Angeles Department of Water & Power Retirement Plan and Retirees Health Benefits FundPerformance AttributionApril 30, 2011

38

Los Angeles Department of Water & Power Retirement Plan Top 10 HoldingsApril 30, 2011

Company NamePortfolio

Weight (%)

Bucyrus International Inc. 4.63

FLIR Systems Inc 3.05

Cabot Oil & Gas Corp. 2.70

Phillips-Van Heusen Corp. 2.68

Lufkin Industries Inc. 2.68

Timken Co. 2.52

Raymond James Financial Inc. 2.51

AMERIGROUP Corp. 2.40

Reinsurance Group of America Inc. 2.32

Global Payments Inc. 2.32

39

Retirees Health Benefits FundTop 10 HoldingsApril 30, 2011

Company NamePortfolio

Weight (%)

Bucyrus International Inc. 4.74

Lufkin Industries Inc. 3.63

FLIR Systems Inc 3.05

Cabot Oil & Gas Corp. 2.75

Phillips-Van Heusen Corp. 2.62

Timken Co. 2.53

Raymond James Financial Inc. 2.53

AMERIGROUP Corp. 2.46

Global Payments Inc. 2.35

Reinsurance Group of America Inc. 2.32

40

Statement of Assets & Transaction Summary

Los Angeles Department of Water & Power Retirement Plan

April 30, 2011

41

Los Angeles Department of Water & Power Retirement PlanStatement of AssetsApril 30, 2011

Market Pct. AnnualQuantity Security Price Value Assets Income Yield

US - COMMON STOCKCONSUMER DISCRETIONARY

79,800 AARON'S 28.79 2,297,442 1.9 4,150 0.253,900 LIFE TIME FITNESS INC 39.12 2,108,568 1.7 0 0.050,800 MERITAGE HOMES CORP 23.91 1,214,628 1.0 0 0.045,000 PHILLIPS VAN HEUSEN CORP 70.41 3,168,450 2.6 6,750 0.233,400 SNAP ON INC COM 61.77 2,063,118 1.7 42,752 2.1

10,852,206 8.9 53,652 0.5

ENERGY33,700 BRISTOW GROUP INC 46.40 1,563,680 1.3 0 0.073,100 CABOT OIL & GAS CORP 56.28 4,114,068 3.4 8,772 0.238,000 LUFKIN INDUSTRIES INC 92.33 3,508,540 2.9 19,000 0.554,400 SWIFT ENERGY CO 39.19 2,131,936 1.7 0 0.036,800 WHITING PETROLEUM CORP 69.50 2,557,600 2.1 0 0.0

13,875,824 11.4 27,772 0.2

FINANCIAL114,650 ASTORIA FINL CO. 14.47 1,658,985 1.4 59,618 3.652,422 CASH AMERICA INTL INC 47.45 2,487,424 2.0 7,339 0.354,750 DELPHI FINL GROUP 31.95 1,749,262 1.4 24,090 1.463,500 EATON VANCE 33.77 2,144,395 1.8 45,720 2.176,600 JEFFERIES GROUP 24.17 1,851,422 1.5 22,980 1.280,300 PROTECTIVE LIFE CORP 26.91 2,160,873 1.8 44,968 2.181,200 RAYMOND JAMES FINL INC. 37.50 3,045,000 2.5 42,224 1.443,900 REINSURANCE GROUP OF AMERICA INC. 63.30 2,778,870 2.3 21,072 0.844,000 STATE AUTO FINANCIAL CORP 16.98 747,120 0.6 26,400 3.556,292 TRUSTMARK CORP 23.24 1,308,226 1.1 51,789 4.073,700 UNITED BANKSHARES INC 26.16 1,927,992 1.6 88,440 4.641,000 UNITED FIRE & CASUALTY 19.80 811,800 0.7 24,600 3.0

22,671,370 18.6 459,240 2.0



HEALTH CARE42,100 AMEDISYS INC. 33.32 1,402,772 1.1 0 0.053,600 AMERIGROUP CORP 68.30 3,660,880 3.0 0 0.034,300 CANTEL MEDICAL CORP 25.93 889,399 0.7 4,116 0.531,100 COVANCE INC 62.60 1,946,860 1.6 0 0.062,900 HEALTHWAYS INC 16.92 1,064,268 0.9 0 0.034,499 MEDNAX INC. 70.92 2,446,669 2.0 0 0.076,300 PHARMACEUTICAL PROD DEV 30.85 2,353,855 1.9 45,780 1.9

13,764,703 11.3 49,896 0.4

INDUSTRIALS55,200 AAR CORP COM 26.04 1,437,408 1.2 0 0.058,600 BUCYRUS INTERNATIONAL 91.46 5,359,556 4.4 5,860 0.114,600 ENERSYS INC. 37.89 553,194 0.5 0 0.067,000 GATX 42.27 2,832,090 2.3 77,720 2.767,500 HARSCO CORP 35.60 2,403,000 2.0 55,350 2.3

111,100 HEXCEL CORP NEW 21.53 2,391,983 2.0 0 0.041,500 MOOG INC CL A 44.12 1,830,980 1.5 0 0.029,300 TELEDYNE TECHNOLOGIES INC 50.49 1,479,357 1.2 0 0.061,600 TIMKEN CO 56.39 3,473,624 2.8 44,352 1.341,800 URS CORP NEW COM 44.75 1,870,550 1.5 0 0.0

23,631,742 19.4 183,282 0.8

INFORMATION TECHNOLOGY151,900 ARRIS GROUP INC 12.00 1,823,559 1.5 0 0.032,000 BLACKBOARD INC 48.11 1,539,520 1.3 0 0.023,900 CABOT MICROELECTRONICS CORP 48.86 1,167,754 1.0 0 0.074,900 CHECKPOINT SYSTEMS INC 21.06 1,577,394 1.3 0 0.053,011 DIGITAL RIVER INC 32.54 1,724,978 1.4 0 0.0

102,100 FLIR SYS INC COM 35.22 3,595,962 2.9 24,504 0.753,000 GLOBAL PAYMENTS INC 53.24 2,821,720 2.3 4,240 0.2



28,626 ITRON INC 54.43 1,558,113 1.3 0 0.015,809,001 12.9 28,744 0.2

MATERIALS40,000 SCOTTS MIRACLE-GRO 56.47 2,258,800 1.9 40,000 1.861,000 VALSPAR CORP. 39.31 2,397,910 2.0 43,920 1.8

4,656,710 3.8 83,920 1.8

TELECOMMUNICATION SVCS41,200 SBA COMMUNICATIONS CORP 38.63 1,591,556 1.3 0 0.0

UTILITIES36,900 ONEOK INC 69.94 2,580,786 2.1 76,752 3.042,395 SOUTH JERSEY INDUSTRIES INC 57.45 2,435,593 2.0 61,897 2.563,535 WGL HOLDINGS INC. 39.52 2,510,903 2.1 98,479 3.9

7,527,282 6.2 237,128 3.2114,380,394 93.7 1,123,633 1.0

REITSFINANCIAL

111,100 FIRST POTOMAC REALTY TRUST 16.23 1,803,153 1.5 88,880 4.9212,300 MEDICAL PROPERTIES TRUST INC. 12.34 2,619,782 2.1 169,840 6.5

4,422,935 3.6 258,720 5.84,422,935 3.6 258,720 5.8

CASH AND EQUIVALENTSCASH & EQUIVALENTS

DIVIDENDS RECEIVABLE 78,960 0.1 0 0.0



PRINCIPAL CASH 3,213,296 2.6 3,213 0.13,292,257 2.7 3,213 0.13,292,257 2.7 3,213 0.1

TOTAL PORTFOLIO 122,095,585 100.0 1,385,567 1.1

Los Angeles Department of Water & Power Retirement Plan Transaction SummaryMay 1, 2010 –

April 30, 2011

Security UnitQuantity Security Symbol Price Amount

PURCHASES 10,200.00 AARON'S aan 20.04 204,458.00$ 15,200.00 AMEDISYS INC. amed 37.03 562,630.00$ 18,800.00 BLACKBOARD INC bbbb 41.83 786,303.00$ 33,700.00 BRISTOW GROUP INC brs 37.21 1,243,626.00$ 23,900.00 CABOT MICROELECTRONICS CORP ccmp 48.11 1,149,392.00$ 35,800.00 CANTEL MEDICAL CORP cmn 16.75 599,708.00$ 12,500.00 CASH AMERICA INTL INC csh 43.42 542,566.00$ 15,500.00 CHECKPOINT SYSTEMS INC ckp 21.53 333,622.00$ 14,600.00 ENERSYS INC. ens 22.06 322,013.00$ 69,900.00 GATX gmt 30.79 2,137,611.00$ 19,100.00 GEOEYE INC geoy 31.71 605,470.00$ 21,000.00 HARSCO CORP hsc 34.17 717,545.00$ 2,100.00 LUFKIN INDUSTRIES INC lufk 49.37 103,687.00$

17,700.00 MERITAGE HOMES CORP mth 24.58 435,129.00$ 7,800.00 SOUTH JERSEY INDUSTRIES INC sji 43.57 339,803.00$ 4,400.00 TNS INC tns 18.92 83,229.00$

31,300.00 UNITED BANKSHARES INC ubsi 27.4 856,432.00$ 23,635.00 WGL HOLDINGS INC. wgl 37.12 876,307.00$ 52,000.00 FIRST POTOMAC REALTY TRUST fpo 15.49 805,480.00$ 84,100.00 MEDICAL PROPERTIES TRUST INC. mpw 10.57 881,030.00$

13,586,043.00$

46

Los Angeles Department of Water & Power Retirement Plan Transaction Summary (continued)May 1, 2010 –

April 30, 2011


SALES 49,250.00 BRINKER INTL. INC. eat 18.95 933,083.00$ 5,600.00 BUCYRUS INTERNATIONAL bucy 89.4 500,664.00$ 6,575.00 FURIEX PHARMACEUTICALS INC furx 9.72 63,833.00$

19,100.00 GEOEYE INC geoy 37.31 712,448.00$ 29,700.00 SCHOOL SPECIALTY INC schs 13.11 389,482.00$ 62,450.00 SONIC CORP sonc 9.11 568,530.00$

448.00 SPECTRUM GROUP INTERNATIONAL spgz 1.89 847.00$ 62,200.00 SRA INTERNATIONAL INC. srx 31.01 1,929,085.00$ 4,400.00 TNS INC tns 15.58 68,566.00$

39,200.00 TORO CO ttc 62.8 2,461,480.00$ 22,900.00 WATSCO INC. wso 61.62 1,411,174.00$

9,039,192.00$

47

Statement of Assets & Transaction Summary

The Retiree Health Benefits Fund

April 30, 2011

48

The Retiree Health Benefits FundStatement of AssetsApril 30, 2011


US - COMMON STOCKCONSUMER DISCRETIONARY

11,450 AARON'S 28.79 329,645 1.9 595 0.27,700 LIFE TIME FITNESS INC 39.12 301,224 1.7 0 0.07,300 MERITAGE HOMES CORP 23.91 174,543 1.0 0 0.06,400 PHILLIPS VAN HEUSEN CORP 70.41 450,624 2.6 960 0.24,800 SNAP ON INC COM 61.77 296,496 1.7 6,144 2.1

1,552,532 8.9 7,699 0.5

ENERGY4,800 BRISTOW GROUP INC 46.40 222,720 1.3 0 0.0

10,400 CABOT OIL & GAS CORP 56.28 585,312 3.3 1,248 0.29,000 LUFKIN INDUSTRIES INC 92.33 830,970 4.7 4,500 0.57,800 SWIFT ENERGY CO 39.19 305,682 1.7 0 0.05,000 WHITING PETROLEUM CORP 69.50 347,500 2.0 0 0.0

2,292,184 13.1 5,748 0.3

FINANCIAL16,300 ASTORIA FINL CO. 14.47 235,861 1.3 8,476 3.67,500 CASH AMERICA INTL INC 47.45 355,875 2.0 1,050 0.37,800 DELPHI FINL GROUP 31.95 249,210 1.4 3,432 1.49,000 EATON VANCE 33.77 303,930 1.7 6,480 2.1

10,900 JEFFERIES GROUP 24.17 263,453 1.5 3,270 1.211,400 PROTECTIVE LIFE CORP 26.91 306,774 1.7 6,384 2.111,600 RAYMOND JAMES FINL INC. 37.50 435,000 2.5 6,032 1.46,300 REINSURANCE GROUP OF AMERICA INC. 63.30 398,790 2.3 3,024 0.86,300 STATE AUTO FINANCIAL CORP 16.98 106,974 0.6 3,780 3.58,000 TRUSTMARK CORP 23.24 185,920 1.1 7,360 4.07,100 UNITED BANKSHARES INC 26.16 185,736 1.1 8,520 4.65,800 UNITED FIRE & CASUALTY 19.80 114,840 0.7 3,480 3.0

3,142,363 17.9 61,288 2.0

HEALTH CARE6,000 AMEDISYS INC. 33.32 199,920 1.1 0 0.0

49



7,600 AMERIGROUP CORP 68.30 519,080 3.0 0 0.04,900 CANTEL MEDICAL CORP 25.93 127,057 0.7 588 0.54,400 COVANCE INC 62.60 275,440 1.6 0 0.09,000 HEALTHWAYS INC 16.92 152,280 0.9 0 0.04,900 MEDNAX INC. 70.92 347,508 2.0 0 0.0

10,900 PHARMACEUTICAL PROD DEV 30.85 336,265 1.9 6,540 1.91,957,550 11.2 7,128 0.4

INDUSTRIALS7,900 AAR CORP COM 26.04 205,716 1.2 0 0.08,400 BUCYRUS INTERNATIONAL 91.46 768,264 4.4 840 0.11,800 ENERSYS INC. 37.89 68,202 0.4 0 0.06,600 HARSCO CORP 35.60 234,960 1.3 5,412 2.3

15,800 HEXCEL CORP NEW 21.53 340,174 1.9 0 0.05,900 MOOG INC CL A 44.12 260,308 1.5 0 0.04,200 TELEDYNE TECHNOLOGIES INC 50.49 212,058 1.2 0 0.08,800 TIMKEN CO 56.39 496,232 2.8 6,336 1.36,000 URS CORP NEW COM 44.75 268,500 1.5 0 0.0

2,854,414 16.3 12,588 0.4

INFORMATION TECHNOLOGY21,600 ARRIS GROUP INC 12.00 259,308 1.5 0 0.04,600 BLACKBOARD INC 48.11 221,306 1.3 0 0.03,500 CABOT MICROELECTRONICS CORP 48.86 171,010 1.0 0 0.0

10,800 CHECKPOINT SYSTEMS INC 21.06 227,448 1.3 0 0.07,600 DIGITAL RIVER INC 32.54 247,304 1.4 0 0.0

14,500 FLIR SYS INC COM 35.22 510,690 2.9 3,480 0.77,600 GLOBAL PAYMENTS INC 53.24 404,624 2.3 608 0.24,100 ITRON INC 54.43 223,163 1.3 0 0.0

2,264,853 12.9 4,088 0.2

MATERIALS5,700 SCOTTS MIRACLE-GRO 56.47 321,879 1.8 5,700 1.8

50



8,700 VALSPAR CORP. 39.31 341,997 2.0 6,264 1.8663,876 3.8 11,964 1.8

TELECOMMUNICATION SVCS5,900 SBA COMMUNICATIONS CORP 38.63 227,917 1.3 0 0.0

UTILITIES5,300 ONEOK INC 69.94 370,682 2.1 11,024 3.06,000 SOUTH JERSEY INDUSTRIES INC 57.45 344,700 2.0 8,760 2.57,662 WGL HOLDINGS INC. 39.52 302,802 1.7 11,876 3.9

1,018,184 5.8 31,660 3.115,973,874 91.1 142,163 0.9

REITSFINANCIAL

8,400 FIRST POTOMAC REALTY TRUST 16.23 136,332 0.8 6,720 4.924,400 MEDICAL PROPERTIES TRUST INC. 12.34 301,096 1.7 19,520 6.5

437,428 2.5 26,240 6.0437,428 2.5 26,240 6.0

CASH AND EQUIVALENTSCASH & EQUIVALENTS

DIVIDENDS RECEIVABLE 10,108 0.1 0 0.0PRINCIPAL CASH 1,108,612 6.3 1,109 0.1

1,118,720 6.4 1,109 0.11,118,720 6.4 1,109 0.1

TOTAL PORTFOLIO 17,530,022 100.0 169,512 1.0 51

Retirees Health Benefits FundTransaction SummaryMay 1, 2010 –

April 30, 2011Security Unit

Quantity Security Symbol Price Amount

PURCHASES 500.00 AAR CORP COM air 21.17 10,586.00$

1,700.00 AARON'S aan 19.77 33,538.00$ 2,400.00 AMEDISYS INC. amed 35.76 84,920.00$

200.00 AMERIGROUP CORP agp 43.13 8,627.00$ 1,700.00 ARRIS GROUP INC arrs 9.64 16,391.00$

400.00 ASTORIA FINL CO. af 13.05 5,222.00$ 2,100.00 BLACKBOARD INC bbbb 41.84 87,855.00$

500.00 BRINKER INTL. INC. eat 19.52 9,762.00$ 4,800.00 BRISTOW GROUP INC brs 37.57 179,013.00$

300.00 BUCYRUS INTERNATIONAL bucy 73.98 22,195.00$ 3,500.00 CABOT MICROELECTRONICS CORP ccmp 48.13 168,398.00$

500.00 CABOT OIL & GAS CORP cog 30.66 15,332.00$ 4,900.00 CANTEL MEDICAL CORP cmn 16.77 82,152.00$ 2,200.00 CASH AMERICA INTL INC csh 42.15 92,216.00$ 2,900.00 CHECKPOINT SYSTEMS INC ckp 21.31 61,755.00$

200.00 COVANCE INC cvd 47.97 9,595.00$ 600.00 DELPHI FINL GROUP dfg 26.65 15,993.00$ 500.00 DIGITAL RIVER INC driv 35.29 17,647.00$ 500.00 EATON VANCE ev 29.29 14,647.00$

1,800.00 ENERSYS INC. ens 22.06 39,703.00$ 1,200.00 FLIR SYS INC COM flir 24.67 29,599.00$ 2,400.00 GEOEYE INC geoy 31.74 76,143.00$

600.00 GLOBAL PAYMENTS INC gpn 38.26 22,959.00$

52

Retirees Health Benefits FundTransaction Summary (continued)May 1, 2010 –



500.00 HARSCO CORP hsc 24.59 12,297.00$ 100.00 HEALTHWAYS INC hway 11.93 1,193.00$ 300.00 HEXCEL CORP NEW hxl 18.5 5,551.00$ 400.00 ITRON INC itri 61.72 24,689.00$

1,500.00 JEFFERIES GROUP jef 22.33 33,500.00$ 900.00 LIFE TIME FITNESS INC ltm 41.27 37,147.00$ 400.00 MEDNAX INC. md 56.23 22,494.00$

3,100.00 MERITAGE HOMES CORP mth 23.85 73,346.00$ 400.00 MOOG INC CL A mog.a 35.64 14,258.00$ 300.00 ONEOK INC oke 47.94 14,383.00$ 900.00 PHARMACEUTICAL PROD DEV ppdi 24.5 22,054.00$ 800.00 PHILLIPS VAN HEUSEN CORP pvh 61.69 49,356.00$

1,600.00 PROTECTIVE LIFE CORP pl 22.23 35,563.00$ 900.00 RAYMOND JAMES FINL INC. rjf 27.14 24,430.00$ 700.00 REINSURANCE GROUP OF AMERICA INrga 48.03 33,624.00$ 400.00 SBA COMMUNICATIONS CORP sbac 40.63 16,254.00$ 500.00 SCOTTS MIRACLE-GRO smg 50.6 25,300.00$ 400.00 SNAP ON INC COM sna 47.23 18,894.00$

1,100.00 SONIC CORP sonc 8.68 9,553.00$ 1,300.00 SOUTH JERSEY INDUSTRIES INC sji 45.28 58,619.00$

400.00 SRA INTERNATIONAL INC. srx 19.04 7,618.00$ 200.00 STATE AUTO FINANCIAL CORP stfc 15.78 3,157.00$ 800.00 SWIFT ENERGY CO sfy 31.93 25,544.00$ 300.00 TELEDYNE TECHNOLOGIES INC tdy 40.7 12,211.00$

53




800.00 TIMKEN CO tkr 39.32 31,455.00$ 600.00 TNS INC tns 18.92 11,350.00$ 600.00 TORO CO ttc 56.6 33,961.00$ 200.00 TRUSTMARK CORP trmk 21.67 4,335.00$

1,200.00 UNITED BANKSHARES INC ubsi 25.73 30,870.00$ 500.00 UNITED FIRE & CASUALTY ufcs 20.78 10,392.00$ 100.00 URS CORP NEW COM urs 37.83 3,783.00$ 500.00 VALSPAR CORP. val 31.73 15,867.00$

2,262.00 WGL HOLDINGS INC. wgl 36.5 82,511.00$ 400.00 FIRST POTOMAC REALTY TRUST fpo 15.28 6,114.00$

7,500.00 MEDICAL PROPERTIES TRUST INC. mpw 9.7 72,615.00$ 1,988,542.00$

54


April 30, 2011


SALES 7,000.00 BRINKER INTL. INC. eat 18.95 132,630.00$

700.00 BUCYRUS INTERNATIONAL bucy 89.4 62,583.00$ 833.00 FURIEX PHARMACEUTICALS INC furx 9.74 8,103.00$

2,400.00 GEOEYE INC geoy 37.28 89,466.00$ 3,700.00 SCHOOL SPECIALTY INC schs 13.11 48,520.00$ 8,900.00 SONIC CORP sonc 9.11 80,995.00$ 8,900.00 SRA INTERNATIONAL INC. srx 31.01 276,027.00$

600.00 TNS INC tns 15.58 9,347.00$ 5,600.00 TORO CO ttc 62.78 351,556.00$ 3,000.00 WATSCO INC. wso 61.63 184,883.00$

1,244,110.00$

55

Los Angeles Department of Water & Power Retirement Plan Historical Asset GrowthApril 30, 2011

Asset Growth

Investment Change

Period EndingEnding

Portfolio Value Withdrawals Contributions PeriodSince

Inception

11/17/04 $94,822,9282004 98,883,401 $0 $0 $4,060,474 $4,060,4742005 109,824,791 0 0 10,941,390 15,001,8642006 121,332,152 0 0 11,507,361 26,509,2252007 121,191,717 0 0 -140,435 26,368,7902008 81,695,395 259 13,224 -39,509,287 -13,140,4972009 93,777,422 8,106,946 0 20,188,973 7,048,4762010 108,106,223 4,874,242 0 19,203,043 26,251,51903/31/11 119,443,160 0 0 11,336,937 37,588,45604/30/11 122,095,585 0 0 2,652,425 40,240,881

56

Retirees Health Benefits FundHistorical Asset GrowthApril 30, 2011

Asset Growth

Investment Change

Period EndingEnding

Portfolio Value Withdrawals Contributions PeriodSince

Inception

09/15/09 $11,204,7252009 12,069,455 $0 $0 $864,731 $864,7312010 15,517,723 0 803,439 2,644,829 3,509,55903/31/11 17,201,410 0 0 1,683,688 5,193,24704/31/11 17,530,021 0 0 328,611 5,521,858

57

Los Angeles Department of Water & Power Retirement Plan Sector WeightingsApril 30, 2011

7.4

0.0

11.7

22.8

11.6

21.6

13.3

3.91.3

6.3

9.3

3.0

8.6

36.5

5.9

14.1

9.36.6

0.6

6.1

Percentage HeldPortfolioRussell 2000 Value


Consumer Staples

Energy Financials Health Care Industrials Information Technology

Materials Telecom-

municationsUtilities

58

Retirees Health Benefits FundSector WeightingsApril 30, 2011

7.7

0.0

14.0

21.8

11.9

19.2

13.8

4.11.4

6.2

9.3

3.0

8.6

36.5

5.9

14.1

9.36.6

0.6

6.1

Percentage HeldPortfolioRussell 2000 Value


Consumer Staples

Energy Financials Health Care Industrials Information Technology

Materials Telecom-

municationsUtilities

59

Los Angeles Department of Water & Power Retirement Plan CharacteristicsApril 30, 2011

Portfolio

Russell 2000

Value

Market Cap 2,117 742

Dividend Yield 1.18 1.87

Price/Earnings 19.45 15.53

P/E using FY1 Est 17.22 16.73

Price/Cash Flow 9.68 8.07

Price/Book 1.92 1.40

Price/Sales 1.28 0.85

Historical 3 Year EPS Growth -2.15 -2.18

Estimated 3-5 Year EPS Growth 12.42 10.39

ROE 10.95 5.84

Beta 0.94 1.00

R Squared 0.91 1.00

Turnover (Trailing 1 Year) 8.67% N/A

SCV Composite*

Total Volatility 22.86

Tracking Error 6.76

Sharpe Ratio 0.03

CAPM Alpha 0.32

* Characteristics are based on 5 year numbers.

60

Retirees Health Benefits FundCharacteristicsApril 30, 2011

Portfolio

Russell 2000

Value

Market Cap 2,167 742

Dividend Yield 1.04 1.87

Price/Earnings 19.48 15.53

P/E using FY1 Est 17.07 16.73

Price/Cash Flow 9.96 8.07

Price/Book 1.96 1.40

Price/Sales 1.28 0.85

Historical 3 Year EPS Growth -1.66 -2.18

Estimated 3-5 Year EPS Growth 12.56 10.39

ROE 11.23 5.84

Beta 0.87 1.00

R Squared 0.95 1.00

Turnover (Trailing 1 Year) 8.67% N/A

SCV Composite*

Total Volatility 22.86

Tracking Error 6.76

Sharpe Ratio 0.03

CAPM Alpha 0.32

* Characteristics are based on 5 year numbers.

61

Los Angeles Department of Water & Power Retirement Plan Equity Portfolio CharacteristicsApril 30, 2011

0.94 1.000.91

1.00

Risk Profile PortfolioRussell 2000 Value

Beta

Volatility

R Squared

Diversification

Probability of Exceeding Risk Target

Benchmark Risk

86%

62

Retirees Health Benefits FundEquity Portfolio CharacteristicsApril 30, 2011

0.94 1.000.91

1.00

Risk Profile PortfolioRussell 2000 Value

Beta

Volatility

R Squared

Diversification

Probability of Exceeding Risk Target

Benchmark Risk

84%

63

0.50% thereafter

0.60% on the next $25,000,000

0.75% on the next $15,000,000

0.95% on the first $10,000,000

Los Angeles Department of Water & Power Retirement Plan and Retirees Health Benefits FundFee ScheduleApril 30, 2011

0.50% thereafter

0.60% on the next $25,000,000

0.75% on the next $15,000,000

0.95% on the first $10,000,000

64

Glossary of Key Indices

ACWI Ex US The MSCI ACWI (All Country World Index) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009 the MSCI ACWI consisted of 45 country indices comprising 23 developed and

22 emerging market country indices. The developed market country indices included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. The emerging market country indices included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Peru,

Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and

Turkey.

Dow Jones Industrials

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Russell 1000 Value The Russell 1000 Value Index offers investors access to the large-cap value segment of the U.S. equity universe. The Russell 1000 Value is constructed to provide a comprehensive and

unbiased barometer of the large-cap value market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine growth probability approximates the aggregate large-cap value manager's opportunity set.

Russell 2000 Value The Russell 2000 Value Index offers investors access to the small-cap value segment of the U.S. equity universe. The Russell 2000 Value is constructed to provide a comprehensive and

unbiased barometer of the small-cap value market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine value probability approximates the aggregate small-cap value manager's opportunity set.

S&P 500 Standard and Poor’s 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the

aggregate market value of 500 stocks representing all major industries.

65

los angeles department of water & power retirement …retirement.ladwp.com/agendaitems/agenda -...

Documents