BBH Institutional Investment Management INTERMEDIATE MUNICIPAL Fact Sheet /3Q 2013 INVESTMENT PHILOSOPHY: COMPOSITE DESCRIPTION (As of September 30, 2013) We are value investors. Bottom-up, fundamental analysis drives our investment process. We seek to protect capital and generate superior returns by combining deep independent research and valuation discipline to take advantage of market mispricings. Our process has a long-term focus on creditoriented sectors and emphasizes patience for attractive entry points. Style Intermediate Investment Grade Municipals Index Barclays Capital 1-10 Yr. Municipal Bond Index Composite Inception May 1, 2001 Composite Assets $338 Million 2 # of Accounts In Composite 80-100 Typical # of Holdings DESCRIPTION/OBJECTIVE: Our separately managed Intermediate Municipal fixed income portfolios are designed to deliver superior after-tax results relative to standard industry benchmarks such as the Barclays Capital 1-10 Year Municipal Bond Index and various investment-grade intermediate maturity municipal benchmarks. A typical Intermediate Municipal portfolio at BBH will hold 80–100 geographically diversified securities in major subsectors of the U.S. municipal bond market including State/ Local General Obligation bonds, a wide range of revenue bonds, and pre-refunded/escrow to maturity securities. PORTFOLIO MANAGEMENT TEAM Years Investment Experience Names Gregory S. Steier Managing Director, Head of Tax-Exempt Portfolio Management & TIPS 20 Christian Romaglino, CFA Vice President, Portfolio Manager / Trader 12 Soonkyu Shin, CFA Vice President, Senior Municipal Analyst 18 Roy Edwards Assistant Vice President, Senior Municipal Analyst 9 INVESTMENT PROCESS: BBH employs a collaborative, team-based approach. Our independent research serves as the foundation of our investment process. We invest in durable, well-managed, appropriately structured, and transparent credits. We apply a proprietary quantitative framework to help assess each security’s valuation and its long-term return potential. When opportunities to purchase securities that pass both our credit and valuation criteria are not available, we own pre-refunded bonds or other liquid reserves. For more information, please contact: John W. Ackler, CFA Senior Vice President 140 Broadway, New York, NY 10005 212.493.8247, [email protected] ©2013 brown brothers harriman & co. / im-2013-10-17-0734 Exp. Date 1/31/2014 CHARACTERISTICS* (As of September 30, 2013) Effective Duration Yield to Worst† Representative Account Index 4.55 Years 4.37 Years 2.07% 1.88% * Portfolio characteristics subject to change. † The Yield to Worst (YTW) represents the lowest potential rate of return the Portfolio would achieve by making worst-case scenario assumptions that provisions, including prepayments, calls or sinking funds, are used by the issuers for all bonds currently held in the Portfolio. Yield to worst is only an estimation of future return, because both future cash flows and the rate of return at which coupon payments can be reinvested when received are unknown. This figure is subject to change and is not meant to represent the rate of return earned by any particular client. This information has been prepared for sophisticated investors. INTERMEDIATE MUNICIPAL / 3Q 2013 Representative Account Characteristics*† – As of September 30, 2013 Sector Exposure1 Portfolio % Cash Treasury General Obligations Pre-Refunded Build America Bonds ABS Corporates Revenues Total: Hospital Special Tax Transportation Leasing Power Water Airport Other Credit Distribution1 Barclays Capital 1-10 Yr. Muni Index % 1.1 0.0 17.9 7.1 0.0 0.0 0.9 72.9 15.1 6.6 12.8 3.8 4.2 3.4 10.7 16.3 Over/Under Weight % 0.0 0.0 33.4 10.0 0.0 0.0 0.0 56.7 4.1 10.5 9.7 6.7 7.3 6.3 3.1 9.1 1.1 0.0 -15.5 -2.9 0.0 0.0 0.9 16.2 11.0 -3.9 3.1 -2.9 -3.1 -2.9 7.6 7.2 Portfolio %† Barclays Capital 1-10 Yrs. Muni Index % Over/Under Weight % 0.1 6.6 3.7 39.8 41.9 7.9 0.0 0.0 10.1 14.2 46.8 24.8 4.1 0.0 0.1 -3.5 -10.5 -7.0 17.1 3.8 0.0 1.1% 0.0% 0.0% 0.0% 12 Yr. - 17 Yr. 17+ Yr. Cash / Cash Equiv Pre-Refunded AAA AA A BBB BB / Lower Duration Contribution1 26.3% 21.1% 0 - 2 Yr. 17.2% 26.3% 24.0% 25.0% 2 Yr. - 4 Yr. 4 Yr. - 6 Yr. 15.7% 19.6% 6 Yr. - 8 Yr. Representative Account 15.7% 8.0% 8 Yr. - 12 Yr. Barclays Capital 1-10 Yr. Municipal Bond Index * Portfolio holdings are subject to change. Data presented is that of a single representative account ("Representative Account") that invests in the investment grade style. It is the account whose investment guidelines allow the greatest flexibility to express active management positions. It is managed with the same investment objectives and employs substantially the same investment philosophy and processes as the proposed investment strategy. 1 Totals may not sum due to rounding. † Ratings are provided by Standard and Poor’s and Moody’s which are independent third parties. When ratings for S&P and Moody's are not available, we will substitute other nationally recognized statistical ratings organizations such as Fitch or DBRS. In order to be more conservative, when ratings differ, the lower rating is used. Quality ratings reflect the credit quality of the underlying issues in the fund portfolio and not of the fund itself. Information obtained from third parties is believed to be reliable, but cannot be guaranteed. Issuers with credit ratings of AA or better are considered to be of high credit quality, with little risk of issuer failure. Issuers with credit ratings of BBB or better are considered to be of good credit quality, with adequate capacity to meet financial commitments. Issuers with credit ratings below BBB are considered speculative in nature and are vulnerable to the possibility of issuer failure or business interruption. Composite Performance – As of September 30, 2013 Portfolio Returns 3 Month Year to Date 1 Year 3 Years** 5 Years** Standard Deviation*** Absolute Performance Composite % Composite % (Gross of Fees) (Net of Fees) 0.53 -0.74 -0.22 3.06 5.10 3.32 0.44 -1.00 -0.57 2.71 4.75 3.32 Top 10 Holdings – As of September 30, 2013 Holdings Index % Relative Performance %* 0.72 -0.63 -0.34 2.79 4.75 3.05 -0.19 -0.11 0.12 0.27 0.35 0.27 * Relative performance calculations are based on returns gross of fees ** Annualized *** Based on trailing 60 months of returns. Commonwealth of MA - Prerefunded Tampa Bay Water Greater Orlando Aviation Authority VA College Bldg Auth - Prerefunded Wylie Texas Independent Sch District Colorado State Health Facilities Auth. Wisconsin State General Funding Los Angeles Harbor District of Columbia IL Metropolitan Pier & Exposition Auth. Maturity* % 12/15/2013 10/1/2018 10/1/2013 2/1/2021 8/15/2022 7/15/2024 5/1/2020 8/1/2020 6/1/2015 6/15/2026 2.39 1.85 1.71 1.71 1.43 1.42 1.37 1.19 1.11 1.09 * Maturity or prerefunded date Past performance does not guarantee future results. As of December 31, 2011 the firm is defined as BBH Institutional Investment Management (IIM) to reflect corporate restructuring that resulted in the addition of equity strategies to the institutional investment department. For the period January 1, 2005 to June 30, 2011 the firm was defined as BBH Institutional Fixed Income, a separately identifiable department that managed institutional fixed income mandates. Prior to January 1, 2005 the firm was defined as Brown Brothers Harriman & Co and included both the institutional investment management and private wealth management businesses of BBH. IIM claims compliance with the Global Investment Performance Standards (GIPS®). To receive a list of composite descriptions of IIM and/or a presentation that complies with the GIPS standards, contact John W. Ackler at (212) 493-8247, or via email at [email protected]. “Gross” of fee performance results for this composite do not reflect the deduction of investment advisory fees. Actual returns will be reduced by such fees. “Net” of fees performance results reflect the deduction of the maximum investment advisory fees. Performance is in U.S. Dollars. This information has been prepared for sophisticated investors and their advisers. The Composite is a fully discretionary fee paying municipal fixed income accounts over $5 million that are managed to an average duration of approximately 4.5 years and are benchmarked to the Barclays index or equivalent. The Barclays Capital 1-10 Year Municipal Bond Index is a rules-based, market-value-weighted index for the long-term tax-exempt bond market. One cannot invest directly in an index. This publication is provided by Brown Brothers Harriman & Co. and its subsidiaries (“BBH”) to recipients, who are classified as Professional Clients and Eligible Counterparties if in the European Economic Area (“EEA”), solely for informational purposes. This does not constitute legal, tax or investment advice and is not intended as an offer to sell or a solicitation to buy securities or investment products. Any reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code or for promotion, marketing or recommendation to third parties. This information has been obtained from sources believed to be reliable that are available upon request. This material does not comprise an offer of services. Any opinions expressed are subject to change without notice. Unauthorized use or distribution without the prior written permission of BBH is prohibited. This publication is approved for distribution in member states of the EEA by Brown Brothers Harriman Investor Services Limited, authorized and regulated by the Financial Conduct Authority (FCA). BBH is a service mark of Brown Brothers Harriman & Co., registered in the United States and other countries. © Brown Brothers Harriman & Co. 2013. All rights reserved. 10/2013. ©2013 brown brothers harriman & co. / im-2013-10-17-0734 Page 2 Exp. Date 1/31/2014