Income & Growth Portfolio

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Leeb
Capital Management, Inc.
6.30.2012
LCM
17 4.4% $71.4 bil
8 West 40th Street, 19th floor, New York, NY 10018 • 800.524.LEEB (5332) • www.leebcapital.com
Income & Growth Portfolio Leeb Capital Management
• Employs a disciplined investment process which seeks to produce superior returns over a complete market cycle. • Provides service tailored to individual client requirements as well as sector specific investment strategies. • Offers regular communications from our investment and client service professionals regarding our current market outlook and individual portfolio holdings. Portfolio Characteristics
Forward P/E Ratio Yield Wtd Average Market Cap
S&P 500
13 2.0% $111.7 bil
Top Ten Equity Holdings
The Southern Company SPDR Gold Trust Enterprise Products Partners LP Chevron Dominion Resources Intel Aqua America AT &T Duke Energy Australian Dollar Trust 4.1% 3.8% 3.8% 3.6% 3.5% 3.0% 3.0% 2.8% 2.7% 2.5%
Investment Philosophy and Approach
Income & Growth approach focuses primarily on:
• Securities that provide a combination of income and the potential for long term capital appreciation. • Healthy businesses on the basis of market share, leverage, dividend coverage ratios, business stability and vulnerability to event risk or regulatory concerns. • Diversifying portfolios across sectors to limit overall portfolio volalitily. • Businesses that have a steady dividend payout and are positioned to increase the dividend over time. • High quality fixed income investments.
$2,000 $1,800 $1,600 $1,400
Portfolio characteristics and holdings are based on a model portfolio and are supplemental information to the compliant presentation. Growth of $1000 Since Inception (11/30/99 – 6/30/12)
Leeb I&G Composite, Gross of Fees Leeb I&G Composite, Net of Fees Blended Benchmark 4
+97.6%
+74.3%
Investment Process
LCM believes that superior long-term results are best achieved by selecting investments that, through a combination of balance sheet strength and high payout potential, have an investment value that is not reflected in current prices and offer dividend protection.
Investment Universe 250-300 Stocks Watch List 150 Stocks Portfolio 25-35 Positions
$1,200 $1,000 $800
+47.1%
11/99
11/01
11/03
11/05
11/07
11/09
11/11
6/12
Annualized Returns as of 6/30/12
1 year Leeb I&G Composite, Gross Leeb I&G Composite, Net 5.1% 4.1% 6.3% 3 years 13.7% 12.6% 14.2% 5 years 2.9% 1.9% 2.2% 10 years 6.5% 5.4% 5.7% Since Inception 5.6% 4.5% 3.1%
Macro-Economic Sector Analysis
Screening Process
Blended Benchmark 4
Fundamental Research
Fundamental Research
LCM’s fundamental research process seeks to identify companies with the following characteristics:
Portfolio Construction Business Analysis Fixed Income Analysis Company Analysis Management Analysis
• Dominant
Strict sell discipline minimizes commissions and fees while maximizing the collection of dividends and interest. Positions are sold when business fundamentals deteriorate, or when price appreciation has unbalanced the overall portfolio.
market position largely immune to competitive threats
• Diversified
holdings yield
• Overall financial
strength
• Companies • Barriers to
entry
• Steady •
Preference is given to investment grade
• Above average • Profitability
dividend paying ability
• Strategic vision • Stability • Reputation • Experience • Track record
Leeb Capital Management (LCM) Performance Results: Income & Growth Composite
December 1, 1999 through June 30, 2012
Total Return (Gross) Total Return (Net of Fees) Blended Benchmark 4 Composite 3-Year St Dev13 Benchmark 3-Year St Dev13 Number of Accounts Composite Dispersion Composite Assets (US$ mil) Composite Assets as % of Firm assets Total Firm Assets (US$ mil)
Year
1999 11 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 11
2.7% 17.8% -4.4% -15.1% 17.4% 12.4% 8.2% 15.6% 7.0% -22.6% 14.9% 16.8% 5.6% 3.7%
2.6% 16.7% -5.4% -15.9% 16.3% 11.3% 7.2% 14.5% 6.0% -23.4% 13.8% 15.7% 4.6% 3.2%
4.3% -4.2% -6.7% -14.6% 22.4% 9.3% 4.3% 12.8% 5.9% -27.8% 21.3% 13.3% 3.8% 7.8%
10.8% 9.6% 9.2% 5.9% 5.8% 6.0% 10.9% 13.1% 14.2% 11.1% -
13.9% 13.4% 11.0% 6.9% 5.3% 5.8% 11.7% 15.2% 16.8% 14.2% -
<5 6 7 <5 <5 13 21 24 28 16 18 23 25 30
N/A N/A N/A N/A N/A 2.4% 4.0% 4.5% 3.7% 1.7% 2.1% 1.1% -
$0.7 $3.4 $5.1 $2.0 $2.1 $9.5 $14.0 $16.8 $21.3 $11.4 $12.1 $15.9 $17.7 $21.3
1.0% 3.9% 5.4% 3.0% 2.5% 8.7% 9.4% 11.3% 13.6% 10.3% 10.3% 13.3% 17.3% 20.6%
$67.0 $87.8 $95.1 $67.1 $83.8 $109.1 $148.2 $148.0 $157.1 $110.4 $117.3 $119.4 $102.1 $103.4
Leeb Capital Management (“LCM”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared this report in compliance with the GIPS Standards. LCM has been independently verified for the periods 4/1/99 through 6/30/122. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The Income & Growth Composite has been examined for the periods 12/1/99 - 6/30/12. The verification and performance examination reports are available upon request. 1.) Leeb Capital Management ("LCM") is a registered investment advisor with the Securities and Exchange Commission. Prior to 2001, the firm was doing business as Money Growth Institute. LCM provides equity money management to retail and institutional investors. LCM’s Income & Growth Composite (“Composite”) represents all fee-paying accounts with assets greater than $250,000 that are managed in accordance with LCM's Income & Growth investment strategy. LCM's Income & Growth Composite combines income generating securities, including common equity, preferred stocks, convertible bonds, and fixed income investments. Portfolios are managed to generate current income and with the objective of preserving capital. Portfolios are subject to minimal security turnover. Objectives of the portfolio are to minimize: inflation risk through current income, credit risk by focusing the majority of holdings in investment grade securities and market risk by diversifying between various income sectors i.e. REITs, utilities and preferred stocks. The composite contains both taxable and tax-exempt portfolios. 2.) The Composite was created as of November 30, 1999 which coincides with the inception of this strategy. A complete list and description of LCM’s composites is available upon request. For the periods from April 1, 1999 through September 30, 2007, LCM has been verified by Ashland Partners and Company LLP For the period October 1, 2007 through June 30, 2012, LCM has been verified by ACA Verification Services, LLC. . A copy of the verification report is available upon request. Additional information regarding the firm's policies and procedures for valuing portfolios, calculating and reporting performance results as well as preparing compliant presentations are available upon request. 3.) Prior to July 1, 2006 the Composite was known as the Pure Income Composite. 4.) The composite returns are compared to a custom blended benchmark. This static blended benchmark consists of 75% the S&P 500 Total Return Index and 25% Bond Index. From inception through 6/30/08, the DJ Lehman Bond Index was the bond index used. This benchmark was discontinued in 3Q08. LCM has replaced it with the ML US Corporate, Government, & Mortgage Bond Index.* Benchmarks are selected based upon similarity to the investment style of our composites and accepted norms within the industry. 5.) Valuations are computed and performance is reported in U.S. dollars. 6.) Composite returns are calculated using the aggregate method. This methodology has been applied consistently for all periods. Other methods may produce different results. 7.) Composite returns are presented gross and net of all management fees, transaction fees, and other expenses and include the reinvestment of all dividends and income. Gross returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. Net of fee performance was calculated using the highest management fee charged to clients in accordance with LCM’s Income & Growth strategy fee schedule which is stated as: 1.0% on all assets. 8.) Quarterly and annual rates of return for the portfolio are computed by compounding the monthly rates of return over the applicable number of months. 9.) LCM utilizes neither leverage nor derivative instruments as a material component of its investment strategies. 10.) Composite dispersion is calculated using the asset-weighted standard deviation of all portfolios that were included in the composite for the entire year. N/A - Information that is not statistically significant due to an insufficient number of portfolios in the composite for the entire year. 11.) Performance periods of less then 12 months are not annualized. 1999 results are for the period of Dec. 1, 1999 through Dec. 31, 1999. Year 2012 results are for the period of Jan. 1, 2012 through June 30, 2012. 12.) LCM defines a significant cash flow as an external flow of cash or securities (capital additions or withdrawals) that is client initiated. An external flow of at least 10% of the portfolio market value is considered significant. This policy became effective July 1, 2002. 13.) The 3-year annualized standard deviation measures variability of the (gross) composite and the benchmark returns over the preceding 36month period. 14.) Actual performance of client accounts may differ substantially. 15.) Past performance is not indicative of future results. The content presented in this document is for informational purposes and should not be taken as a recommendation to purchase any individual securities. Index returns shown in the performance comparisons where provided by Standard & Poor's, Dow Jones, Lehman Brothers, Merrill Lynch, and Bloomberg. All of this information comes from sources believed by LCM to be reliable. LCM, however, cannot guarantee the accuracy of the comparative returns and therefore shall not be held liable for inaccurate information obtained from data providers. *Source Merrill Lynch, used with permission. Merrill Lynch is licensing the Merrill Lynch indices "as is," makes no warranties regarding same, does not guarantee the quality, accuracy and/or completeness of the Merrill Lynch indices or any data included therein or derived therefrom, and assumes no liability in connection with their use.