polaris capital
TRANSCRIPT
2
Organization
Pure global investment discipline
Focused on investment performance; administration and marketing are handledby affiliated experts
Business model focuses management on performance
Polaris still has the capacity to grow
Firm goals aligned with clients – management team is invested in firm’sproducts
Performance
Management track record proves adherence to value discipline
One of the longest performance records among global/international equitymanagers
Nationally recognized
Investment Process
Invest in companies that generate high cash flow that sell at modest valuations
Process is disciplined, scaleable, consistently applied and repeatable
Seek above average returns with lower than market risk
Polaris Capital Management
3
Assets Under Management: $4.3 billionAs of June 30, 2011
($ millions)
Global Mutual Fund,
$186
International Mutual
Funds, $597
Private Placements,
$81
US Sector Fund, $11
Separate Accounts,
$774
Non US Fund
Distributors, $2,510
International Small
Cap Mutual Fund,
$104
Global
$2,712
International
$1,540
Sector Fund
$11
4
ObjectiveSeek to deliver above average returns with lower than market risk
PhilosophyValuation Criteria
Companies exist to deliver cash to shareholders
Cash is the primary metric used to measure value
PCM process seeks to invest in companies with strong sustainable cash flow
Priced at a discount to the present value of future cash flows
Required Rate of ReturnA company = a stream of cash flow
Only make positive NPV (Net Present Value) investments
Compute company valuations based PCM Global Cost of Equity1. Long-term equity market return
2. + active mgt. premium (target alpha)
3. + country risk premium (real interest rates)
Purchase the most undervalued streams of “free” cash flow - anywhere
Investment Objective/Philosophy
5
Global Universe 32,000 Companies
Historic Portfolio Turnover ~ 30% 20-25 New Investments Per Year
Investment Technology – Screens
Cash Flow from Operations > 0
Maintenance Cash Flow (MCF) > 0
MCF / Market Value> 8%
Real MCFROMV > 8%
FCF Per Share Slope/FCF Margin
0
Debt/Assets < 50%
Mkt Val > $50 M
Mkt Val > $250 M
Mkt Val > $500 M+/- 50 stock International Portfolio+/- 75 stock International Small Cap Portfolio+/- 75 stock Global Portfolio
16,800
Results
21,200
6,700
5,800
3,300
2,900
1,900
1,000
700
As of June 30, 2011
6
0
20
40
60
80
100
120
140
160
Arg
entina
Austr
alia
Austr
iaB
arb
ad
os
Belg
ium
Berm
uda
Bra
zil
Canada
Caym
an Isla
nds
Chile
Chin
aC
olo
mbia
Cro
atia
Czech R
epublic
Denm
ark
Fin
land
Fra
nce
Germ
any
Gre
ece
Hong K
ong
Hungary
India
Indonesia
Isra
el
Ita
lyJapan
Ko
rea
Luxem
bourg
Ma
laysia
Me
xic
oN
eth
erlands
Norw
ay
Pa
kis
tan
Peru
Phili
ppin
es
Pola
nd
Port
ugal
Ru
ssia
Sin
gapore
South
Afr
ica
Spain
Sw
eden
Sw
itzerland
Taiw
an
Thaila
nd
Turk
ey
UK
US
A
Utilities
Telco Service
Materials
Info. Tech.
Industrials
Health Care
Financials
Energy
Cons. Stap.
Cons. Disc.
Global Country & Sector Screens
>$500 mil.
Market Cap
As of June 30, 2011
7
Global Sector Screens by Market Cap
0
50
100
150
200
250
300
350
400
Cons.
Disc.
Cons.
Stap.
Energy Financials Health
Care
Industrials Info. Tech. Materials Telco
Service
Utilities
> $500 million
> $50 million
As of June 30, 2011
8
Fundamental Graham & Dodd “Style” Research
Primary source data, in-depth financial statement analyses
Sustainable Free Cash Flow and sustainable business model
Before and after working capital changes
Market capitalization based on full dilution
Profitability, operating and financial leverage, quality of management
Management Contact – Research Trips
Suppliers, customers, competitors
Industry structure, competitive advantages
Step 3 - Fundamental Analysis
9
Global Equity Composite - Beta
Polaris Global Equity Composite Beta gross of feees vs. MSCI World
Inception thru June 30, 2011
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2D
ec-8
3
Dec-8
4
Dec-8
5
Dec-8
6
Dec-8
7
Dec-8
8
Dec-8
9
Dec-9
0
Dec-9
1
Dec-9
2
Dec-9
3
Dec-9
4
Dec-9
5
Dec-9
6
Dec-9
7
Dec-9
8
Dec-9
9
Dec-0
0
Dec-0
1
Dec-0
2
Dec-0
3
Dec-0
4
Dec-0
5
Dec-0
6
Dec-0
7
Dec-0
8
Dec-0
9
Dec-1
0
Dec-1
1
PC
M
Glo
bal
Beta
V
s
MSC
I W
orl
d
Past performance is not indicative of future results. See disclosure in the Appendix.
10
Global Equity Composite - Alpha
Past performance is not indicative of future results. See disclosure in the Appendix.
Polaris Global Equity Composite gross of fees Alpha
Inception thru June 30, 2011
-10
-8
-6
-4
-2
0
2
4
6
Dec-8
3
Dec-8
4
Dec-8
5
Dec-8
6
Dec-8
7
Dec-8
8
Dec-8
9
Dec-9
0
Dec-9
1
Dec-9
2
Dec-9
3
Dec-9
4
Dec-9
5
Dec-9
6
Dec-9
7
Dec-9
8
Dec-9
9
Dec-0
0
Dec-0
1
Dec-0
2
Dec-0
3
Dec-0
4
Dec-0
5
Dec-0
6
Dec-0
7
Dec-0
8
Dec-0
9
Dec-1
0
Dec-1
1
PC
M
Glo
bal
Alp
ha
vs
MSC
I W
orl
d
11
Defensive Companies
12
Nichirei Corp.
Industry
#1 frozen food manufacturer andlogistics company (refrigeratedstorage and transport) in Japan
Fragmented market
Opportunities
Growing consumer demand for foodconvenience and of food logisticsoutsourcing by retailers
Logistics is fastest growth segment
Stabilizing margins in processed foodsegment with increased in-housepoultry processing ratio
Yen strength a net positive
Risks
Overcapacity
Aging demographics
Current stock price ¥ 360 / $ 4.7
Target stock price ¥ 420 / $ 5.5
2011 estimates:
MCF ¥ 9B / $ 0.117B
Market cap. ¥ 110B / $ 1.43B
MCF yield 8%
Valuation
13
Nichirei Corp. - Selected quotes from annual report
“While we succeeded in meeting our company-wide numerical targets in
the first year of our Medium-Term plan, segment results were mixed, and
we found a number of issues that need to be resolved. We do not view
such issues in a negative light, but rather take them as positive
opportunities to prepare for the next growth phase. By the same token,
rather than getting overly excited about our successes in the first year, we
must identify even more areas where we can improve and link these
improvements to new growth.” (p. 9)
“Additionally, we anticipate that lease renewals will cause our Real Estate
business’ operating income to decline by ¥1.5 billion in the fiscal year
through March 2012, so we need other businesses to make up for that
shortfall.” (p. 9)
“Unless we succeed in overseas markets, sustainable growth in unlikely”
(p. 11)
14
Cyclical Companies
15
Methanex Corporation
IndustryLargest global methanol producer
High cost Chinese producers providea floor to pricing
Oil and gas prices establish a ceilingfor price
PCM long-term price assumption$230/tonne
Current price $400/tonne
OpportunitiesConsolidated industry
Methanol - Alternative source ofenergy
One of the lowest cost producers
Strong Chinese demand
New Egypt facility
RisksChilean production
Current stock price $ 20
Target stock price $ 47
2012-2013 estimates:
MCF $ 175M to $ 225M
Market cap. $ 2B
MCF yield 10%
Valuation
16
Trevi Finanziaria Industriale S.p.A.
Industry
Foundation equipment
Foundation engineering
Oil & gas drilling equipment
Oil & gas drilling services
3 global foundation players
Opportunities
Global infrastructure spending
Strong demand in on-shore
equipment for drilling
Risks
Volatile order pattern
Weak commercial real estate
Current stock price 7
Target stock price 15
2011 estimates:
MCF 66M
Market cap. 450M
MCF yield 15%
Valuation
17
Smurfit Kappa
Industry
Packaging materials
Demand supply in balance
Fragmented European market
Opportunities
Price increases
Consolidation
Growing South America assets
Cost saving efforts results in higheroperating margin over the cycle
Risks
Financial leverage
Uncertain demand outlook, marginpressure
Private players with deep pockets
Cost pressure: Chinese buying of OCC
Pricing lags cost increases
European manufacturing capacity movingeast
Current stock price 4
Target stock price 9
2012 estimates:
MCF 260M
Market cap. 890M
MCF yield 20%+ after reachingtarget leverage
Gross Debt 3.6B
Net Debt 3B
Total Assets 8.1B
Valuation
18
YIT OYJ
Industry
Building & Industrial Services50%
Construction Finland 40%
Construction Intl. 10%
Opportunities
Stable markets in Nordics
Strong growth in Russia
New growth in services inGermany and Switzerland
Risks
Slowdown in construction
Lower margins in services inDenmark
Russian competition
Current stock price 11
Target stock price 21
2011 estimates:
MCF 180M
Market cap. 1.35B
MCF yield 13%
Valuation
19
Imerys
Industry
Industrial (refractory andabrasives)
Paper (pigments)
Construction (French housing)
Opportunities
Leading player with pricingpower
Controls their supply base
Low substitution risk
Product innovation
Risks
Uncertainty on demand
Customer inventories
Current stock price 36.5
Target stock price 50
2011 estimates:
MCF 260M
Market cap. 2.8B
MCF yield 9.3%
Valuation
20
Fallen Angels
21
Ameris Bancorp
Industry
Community banks experiencingelevated NPA levels
South Georgia market weak
Many potential bank failures
Opportunities
FDIC assisted deals
Adjustments to earnings for
Lower FDIC premiums
Normalized LLP
Repay/eliminate TARP Pref.Div.
Risks
Lower loan growth
OREO portfolio
Current stock price $ 9
Target stock price $ 19
2011-2012 estimates:
MCF $ 19M to $30M
Market cap. $ 210M
MCF yield 9% to 14%
P/BV ratio 0.94
Tangible Common Equity/Asset ratio7.8% (ex. TARP)
Valuation
22
Special Situations
23
Transgene SA
Special situation – Bio tech
Low risk model
Major development cost born by
partners with milestone payments
to Transgene
56% of market cap in cash –
enough to take them to the next
milestone payment
Significant news flow in next 18
months
Strong family shareholder
(Institut Mérieux)
Current stock price 8
Target stock price 20
2011 estimates:
MCF -40m
Market cap. 250m
Cash 140m
Milestone payments on 1 of 5 drugs
1Q13: 100m (Novartis)
After: 700m + royalties
Tax loss carry forward 300m
Valuation
24
Appendix
Country Yields
Country/Industry Weightings
Historical PCE Ratios
Fee Schedules
What is the Optimum Size?
Investment Team Biographies
Composite Disclosures
25
Country YieldsAs of June 30, 2011
Country
Bond
Yield CPI
Real
Yield Country
Bond
Yield CPI
Real
Yield
ARGENTINA 12.19 9.70 2.49 KOREA 4.21 4.10 0.11
AUSTRAL 5.19 3.30 1.89 MALAYSIA 3.93 3.30 0.63
AUSTRIA 3.50 3.70 -0.20 MEXICO 6.77 3.30 3.47
BELG_LUX 4.10 3.70 0.40 NETHLNDS 3.34 2.30 1.04
BRAZIL 12.46 6.60 5.86 NEWZLAND 5.07 4.50 0.57
CANADA 3.08 3.70 -0.62 NORWAY 3.41 1.60 1.81
CHILE 5.64 3.30 2.34 PAKISTAN 14.09 13.20 0.89
CHINA - DOMESTIC FREE 6.80 5.50 1.30 PERU 4.25 2.91 1.34
CZECH REPUBLIC 3.94 2.00 1.94 PHILIPPINES 6.56 4.50 2.06
DENMARK 3.19 3.10 0.09 POLAND 5.83 5.00 0.83
FINLAND 3.34 3.30 0.04 PORTUGAL 10.90 3.78 7.12
FRANCE 3.39 2.00 1.39 RUSSIA 4.73 9.60 -4.87
GERMANY 2.98 2.30 0.68 SPORE 2.09 4.50 -2.41
GREECE 16.34 3.10 13.24 SOAFRICA 8.34 4.60 3.74
HONGKONG 1.96 5.20 -3.24 SPAIN 5.45 3.20 2.25
HUNGARY 7.35 3.90 3.45 SWEDEN 2.88 3.30 -0.42
INDIA 8.46 9.10 -0.64 SWTZRLND 1.63 0.40 1.23
INDONESIA 7.55 6.00 1.55 TAIWAN 1.41 1.70 -0.29
IRELAND 8.39 2.70 5.69 THAILAND 3.79 4.20 -0.41
ISRAEL 4.52 4.10 0.42 TURKEY 9.54 7.20 2.34
ITALY 4.95 2.60 2.35 UK 3.24 4.50 -1.26
JAPAN 1.10 0.30 0.80 USA 3.10 3.60 -0.50
26
Regional/Sector WeightingsAs of June 30, 2011
Information presented is supplemental to the annual disclosure presentation in the appendix
Energy Utilities Materials Industrials Health Care Financials Cash
N. America 0.00% 2.38% 0.00% 0.00% 2.38% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Japan 20.03% 14.78% 0.00% 1.53% 2.17% 3.01% 0.00% 5.98% 0.00% 0.00% 0.00% 2.09% 0.00%
Other Asia 13.18% 11.81% 1.71% 0.69% 2.17% 0.00% 0.00% 0.00% 0.00% 1.99% 3.51% 1.74% 0.00%
Europe 60.01% 46.94% 2.06% 0.00% 12.28% 7.73% 10.92% 1.55% 2.43% 5.77% 2.12% 2.09% 0.00%
Scandinavia 6.08% 16.62% 0.00% 0.00% 0.00% 6.58% 2.54% 0.00% 0.00% 7.50% 0.00% 0.00% 0.00%
Africa & Middle East 0.71% 5.42% 2.23% 0.00% 1.27% 0.00% 0.00% 0.00% 1.91% 0.00% 0.00% 0.00% 0.00%
Cash 0.00% 2.06% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2.06%
Portfolio Totals 100.00% 6.00% 2.22% 20.28% 17.33% 13.45% 7.53% 4.34% 15.25% 5.63% 5.93% 2.06%
MSCI EAFE iShares 100.00% 8.21% 4.65% 11.33% 12.63% 10.49% 10.25% 8.84% 23.45% 4.65% 5.51% 0.00%
MSCI EAFE
WeightPortfolio
Weight
Representative International Portfolio
Consumer
Discretionary
Consumer
Staples
Information
Technology
Telecom.
Services
Portfolio
Weighting Energy Utilities Materials Industrials Health Care Financials Cash
N. America 54.78% 38.32% 1.98% 2.74% 3.23% 6.13% 1.39% 2.70% 6.05% 9.07% 2.65% 2.38% 0.00%
Japan 9.06% 9.91% 0.00% 1.01% 1.44% 2.18% 0.00% 3.90% 0.00% 0.00% 0.00% 1.38% 0.00%
Other Asia 5.96% 7.11% 1.16% 0.45% 1.42% 0.00% 0.00% 0.00% 0.00% 1.35% 1.92% 0.80% 0.00%
Europe 27.13% 27.75% 1.38% 0.00% 9.50% 4.41% 4.03% 0.72% 1.64% 3.41% 1.25% 1.40% 0.00%
Scandinavia 2.75% 10.56% 0.00% 0.00% 0.00% 5.14% 1.40% 0.00% 0.00% 4.02% 0.00% 0.00% 0.00%
Africa & Middle East 0.32% 3.43% 1.39% 0.00% 0.78% 0.00% 0.00% 0.00% 1.26% 0.00% 0.00% 0.00% 0.00%
Cash 0.00% 2.93% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2.93%
Portfolio Totals 100.00% 5.90% 4.21% 16.36% 17.86% 6.82% 7.32% 8.96% 17.85% 5.83% 5.96% 2.93%
MSCI World Weighting 100.00% 11.38% 3.80% 8.18% 11.52% 10.51% 9.90% 9.81% 19.56% 11.17% 4.17% 0.00%
MSCI World
Weight
Representative Global Portfolio
Consumer
Discretionary
Consumer
Staples
Information
Technology
Telecom.
Services
27
What is the optimum size?
A. Example: Firm assets under management - $10.0 billion.
B. If the firm invests in a 50 company portfolio, then each position is 2% of $10 billion or $200
million per company.
C. If the client wants to own no more than 1% of each company in the portfolio, then the market
capitalization of each company in the portfolio must be greater than $20 billion. (1% of $20b =
$200m)
D. So, how many non-US companies are there in the world that are larger than $20b? Only 329
E. And how many of these 329 companies satisfy the Polaris Global Cost of Equity? Only 28
If the Assets Under Management at an investment firrm are...
And the maximum % of each company the firrm is willing to hold is……..
$0.5b
$1.0b $5.0b $10.0b $25.0b $50.0b $100.00b
AAnd the firm has a 50 stock portfolio, then, the number of noon-US companies the firm can invest in, is…
1.0% 3127 2029 629 329 129 69 48
2.0% 4448 3127 1060 629 256 129 69
3.0% 5360 3852 1437 872 379 203 91
28
Investment Team
Bernard R. Horn, Jr., President, Portfolio Manager
More than 25 years managing global equity portfolios
Developed proprietary quantitative analysis for screening prospective companies
Alfred P. Sloan School of Management, MIT S.M. Management
Northeastern University, B.S. Business Administration
Sumanta Biswas, CFA, Vice President & Assistant Portfolio Manager
More than 10 years of experience in global equity research
Boston College, MS in Finance and Calcutta University, MBA
North Bengal University in India, B.S. Engineering
Officer, Securities & Exchange Board of India
Engineer, Bridge & Roof Co.
29
Andry Sutanto, CFA, Analyst
Research and teaching assistant for finance and MIS departments at Northeastern
University
Northeastern University, Master of Finance and Masters of Business Administration
Boston University, B.S. Business Administration, minor in Computer Science
Former computer engineer at Cambridge Research Group
Bin Xiao, CFA, Analyst
Internship at HSBC Global Investment Banking and Polaris Capital Management
MIT Sloan School of Management, MBA and Rochester Institute of Technology, Master of
Science in Computer Science
Beijing Institute of Technology in China, Undergraduate degree
Project Manager at PNC Financial Services and Information System Engineer at Vanguard
Group
Eleanor Marsh, Analyst
More than 20 years of experience in international and global equity research
Analyst & Portfolio Manager at State Street Global Advisors & State Street Research
Stanford University, MA and Yale University, B.A. in East Asian Studies
Investment Team (continued)
30
Global Composite Disclosure (Page 1 of 2)
Total
Firm Composite Assets Quarterly / Annual Performance Results
Year Assets U.S. Dollars Number of Composite MSCI Composite Dispersion
End (millions ) (millions) Accounts Gross Net World AW STD EW STD High Low
2010 3,724.2 1,984.3 7 20.85% 20.14% 12.34% 0.95 2.04 26.22 19.87
2009 2,867.9 1,189.7 9 40.68% 39.82% 30.79% 2.14% 5.75% 52.47% 30.93%
2008 1,845.8 623.0 9 (45.04%) (45.41%) (40.33%) 1.01% 1.77% (42.49%) (47.70%)
2007 4,288.1 765.3 8 (2.29% ) (2.94%) 9.57% 1.35% 1.54% 0.74% (3.16%)
2006 2,617.5 58.0 6 25.55% 24.66% 20.65% N.A. N.A. 27.9 8% 23.95%
2005 1,260.9 31.3 6 13.40% 12.38% 10.02% N.A. N.A. 16.8 0% 12.34%
2004 484.6 13.6 2 27.67% 26.49% 15.25% N.A. N.A. 28.53% 25.58%
2003 237.2 10.9 2 48.87% 47.54% 33.76% N.A. N.A. 50.0 1% 46.13%
2002 174.4 7.5 2 5.00% 3.81% (19.54% ) N.A. N.A. 5.2 2% 4.32%
2001 113.7 7.3 2 5.45% 4.72% (16.52% ) N.A. N.A. 5.7 4% 4.83%
2000 87.9 16.1 3 (8.25% ) (9.14%) (12.92% ) N.A. N.A. (3.49%) (9.44 %)
1999 92.7 18.1 4 17.69% 16.53% 25.34% N.A. N.A. 22.19% 7.79%
1998 84.8 20.5 5 (5.64% ) (6.57%) 24.80% N.A. N.A. (2.82%) (9.57 %)
1997 52.8 14.7 4 34.56% 33.25% 16.23% N.A. N.A. 41.51% 25.79%
1996 31.0 11.0 4 25.08% 23.86% 14.00% N.A. N.A. 29.22% 25.93%
1995* 17.8 4.1 3 33.73% 32.45% 21.32% N.A. N.A. 34.92% 31.80%
1994* - 41.3 4 (0.89%) (1.45%) 5.58% N.A. N.A. 0.79% (1.35%)
1993* - 41.8 4 24.00% 23.35% 23.13% N.A. N.A. 25.99% 23.66%
1992* - 32.1 6 10.06% 9.06% (4.66% ) N.A. N.A. 13.33% 8.64%
1991* - 1.9 4 17.86% 16.71% 18.97% N.A. N.A. 18.53% 15.12%
1990* - 1.2 3 (7.68% ) (8.62%) (16.52% ) N.A. N.A. (6.35%) (9.14%)
1989* - 1.5 4 12.61% 11.52% 17.19% N.A. N.A. 14.63% 11.36%
1988* - 1.5 4 14.38% 13.27% 23.95% N.A. N.A. 17.20% 9.78%
1987* - 1.2 4 8.00% 6.96% 16.76% N.A. N.A. 11.93% 1.81 %
1986* - 1.0 3 38.63% 37.28% 42.80% N.A. N.A. 45.57% 40.99%
1985* - 0.5 2 34.30% 33.00% 41.77% N.A. N.A. N.A. N.A.
1984* - 0. 1 1
N.A. - Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire period . * Information presented prior to April 1, 1995 pertains to portfolios managed by the Portfolio Manager while affiliated with a prior firm. The presentation conforms to
GIP S guidelines regarding the portability of investment results.
31
Global Composite Disclosure (Page 2 of 2)
Polaris Capital Management, LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Polaris Capital Management, LLC has been independently verified for the period April 1, 1995 through December 31, 2010. 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 Polar is Capital Global Equity composite has been examined for the
period April 1, 1995 through September 30, 2010. The verification and performance examination repo rts are available upon request.
The Global Equity Composite was created April 1, 1995 ; performan ce presented prior to this date occurred while the Portfolio Manager was affiliated with another firm and the Portfolio Manager was the only individual responsible for selecting the securities to buy and sell. Ashland Partners examined the portability of this track record from October 1,
1984 through March 31, 1995. The composite includes all fee -paying, discretionary accounts managed according to the Polaris Global Equity strategy. Composite portfolios are
globally diversified portfolios of equity or eq uity related securities and for comparative purposes is measured against the MSCI World Index. The investment universe for the portfolios in this composite includes companies from any country in the world, including emerging markets. Investment in less re gulated markets may carry increased political,
economic and issuer risk. Composite portfolios are managed according to the firm’s value oriented philosophy. The f irm seeks to invest in the most under valued companies with strong sustainable cash flows. All the portfolios are managed using a mode l portfolio however; the timing of cash flows may differ among po rtfolios. A minimum account size of
$75 million for separately managed accounts was established in December 2006 however, it may be waived at the firm’ s discretion. Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. Composite performance is presented net of foreign
withholding taxes on dividends, interest income, and capital gains. With holding taxes may vary according to an investor’s domicile. Composite returns include the effect of foreign currency exchange rates . Additional information regarding the percentage of the composite which may not be invested in countries or regions include d in the index, is
available upon request. Past performance is not indicative of future results.
Options may be used in composite portfolios to the extent that client/portfolio investment guidelines permit such transactions. The options program is not central to the overall
investment strategy of the firm; it is a complimentary approach aimed at improving portfolio risk/return profiles.
The U.S. Dollar is the currency used to express performance. Returns are presented gross and net of management fees and include the reinvestment of all income. Net of fee performance is calculated using actual management fees. The composite dispersion presented is an asset -weighted and equal -weighted standard deviation calculated for the
accounts in the composite for the entire year, or period presented. The “High” and “Low” dispersion represents the highest and lowest returning accounts for the period indicated .Policies for valuing portfolios, calculating performance and preparing compliant presentations are availa ble upon request.
Polaris Capital Management, LLC is an independent registered investment adviser. The firm maintains a complete list and description of composites, which is available upon request. Prior to 12/14/07 the firm was known as Polaris Capital Management, Inc. The investment management fee schedule for the composite is 1% on the first $25 million; 0.75% on the next $25 million; 0.60% on the next $1 billion; 0.55% on the next $2
billion, and 0.50% thereafter. Actual investment advisory fees in curred by clients may vary.
Polaris Capital Management LLC's compliance with the GIPS Standards has been verified by Ashland Partners & Company LLP.
32
International Composite Disclosure (Page 1 of 2)
Total
Firm Composite Assets Quarterly / Annual Performance Results
Year Assets U.S. Dollars Number of Composite MSCI Composite Dispersion
End (millions) (millions) Accounts Gross Net EAFE AW STD EW STD High Low
2010 3,724.2 937.9 17 20.83% 20.03% 8.21% 0.73% 1.66% 27.17 19.52
2009 2,867.9 889.3 19 55.17% 54.15% 32.46% 2.51% 5.52% 72.56% 45.78%
2008 1,845.8 675.9 22 (50.19%) (50.57%) (43.06%) 0.71% 1.01% (48.63%) (52.90%)
2007 4,288.1 1,444.1 26 1.25% 0.62% 11.63% 0.75% 1.15% 4.65% (1.38%)
2006 2,617. 5 1,197.8 26 34.17% 33.39% 26.86% 0.60% 0.79% 36.27% 33.29%
2005 1,260.9 594.4 17 16.83% 15.86% 14.02% 0.70% 1.29% 19.94% 15.19%
2004 484.6 13 9.6 9 29.61% 28.51% 20.70% 0.68% 2.74% 30.66% 22.64%
2003 237.2 52.0 6 53.63% 52.29% 39.17% N.A. N.A. 55.36% 36.79%
2002 174.4 32.1 5 6.27% 5.27% (15.66%) N.A. N.A. 10.07% 6.02%
2001 113.7 29.7 5 (0.29%) (1.17%) (21.21%) N.A. N.A. 0.79% (3.58%)
2000 87 .9 23.2 5 (5.26%) (5.95%) (13.96%) N.A. N.A. (2.54%) (6.78%)
1999 92.7 26.6 7 21.71% 20.93% 27.30% 2.16% 7.20% 39.55% 17.27%
1998 84.8 24.1 8 (5.88%) (6.59%) 20.33% 2.06% 2.47% (3.24%) (11.48%)
1997 52.8 7.1 7 10.93% 9.86% 2.06% N.A. N.A. 14.28% 7.32%
1996 31.0 4.1 5 24.00% 22.79% 6.36% N.A. N.A. 26.18% 23.02%
1995* 17.8 1.2 3 19.01% 17.86% 11.55% N.A. N.A. 20.87% 14.25%
1994* - 3.9 5 0.75% 0.08% 8.06% N.A. N.A. 1.65% (2.43%)
1993* - 3.9 5 26.69% 25.89% 32.95% N.A. N.A. 28.22% 22.92%
1992* - 3.1 5 6.39% 5.71% (11.85%) N.A. N.A. 9.35% 3.42%
1991* - 2.8 5 5.81% 5.15% 12.50% N.A. N.A. 12.23% 3.96%
1990* - 0.7 4 (4.57%) (5.54%) (23.20%) N.A. N.A. (3.57%) (5.79%)
1989* - 0.8 4 25.77% 24.56% 10.80% N.A. N.A. 31.09% 20.37%
1988* - 0.6 4 15.99% 14.87% 28.59% N.A. N.A. 20.68% 11.29%
1987* - 0.5 4 1.45% 0.46% 24.93% N.A. N.A. 9.98% 0.37%
1986* - 0.5 2 49.22% 47.77% 69.94% N.A. N.A. 57.00% 47.61%
1985* - 0.3 2 33.53% 32.22% 56.72% N.A. N.A. N.A. N.A.
1984 * - 0.2 1
N.A. - Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire period . * Information presented prior to April 1, 1995 pertains to
portfolios managed by the Portfolio Manager while affiliated wit h a prior firm. The presentation conforms to GIPS guidelines regarding the portability of investment results.
33
International Composite Disclosure (Page 2 of 2)
Polaris Capital Management, LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this reporcompliance with the GIPS standards. Polaris Capital Management, LLC has been independently verified for the period April 1, 1995 through December 31, 2010 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 perform ance in compliance with the GIPS standards. The Polaris Capital International Equity composite has been examined for
the period April 1, 1995 through September 30, 2010. The verification and performance examination repo rts are available upon request.
The International Equity Composite was created April 1, 1995; performance presented prior to this date occurred while the Portfolio Manager was affiliated with another firm and the Portfolio Manager was the only individual responsible for selecting the securit ies to buy and sell. Ashland Partners examined the portability of this track record from July 1,
1984 through March 31, 1995. The composite includes all fee -paying, discretionary accounts managed according to the Polaris International Equity strategy. C omposite portfolios are diversified portfolios of equity or equity related securities and for comparative purposes is measured against the MSCI EAFE Index. The investment universe for the portfolios
in this composite includes companies from any country in the world except the United States. Composite portfolios include investments in emerging markets. Investment in less
regulated markets may carry increased political, economic and issuer risk. Composite portfolios are managed according to the firm’s value oriented philosophy. The firm seeks to invest in the most under valued companies with strong sustainable cash flows. Portfolios are managed using a model portfolio however; the timing of cash flows may differ among
portfolios. A minimum account size of $7 5 million for separately managed accounts was established in December 2006 however, it may be waived at the firm’s discretion.
Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. Composite performance is presented net of foreign
withholding taxes on dividends, interest income, and capital gains. Returns include the effect of foreign currency exchange rates. Withholding taxes may vary according to an investor’s domicile. Additional informat ion regarding the percentage of the composite which may not be invested in countries or
regions included in the index, is available upon request. Past performance is not indicative of future results.
Options may be used in composite portfolios to the extent that client/portfolio investment guidelines permit such transactions. The options program is not central to the overall investment strategy of the firm; it is a complimentary approach aimed at improving portfolio risk/return profiles.
The U.S. Dol lar is the currency used to express performance. Returns are presented gross and net of management fees and include the reinvestment of all income. Net of fee performance is calculated using actual management fees. The composite dispersion presented is an asset -weighted and equal -weighted standard deviation calculated for the
accounts in the composite for the entire year or period presented . The “High” and “Low” dispersion represents the highest and lowest returning accounts for the indicated period .Polici es for valuing portfolios , calculating performance and preparing compliant presentations is available upon request.
Polaris Capital Management, LLC is an independent registered investment adviser. The firm maintains a complete list and description of com posites, which is available upon request. Prior to 12/14/07 the firm was known as Polaris Capital Management, Inc. The investment management fee schedule for the composite is 1% on the first $25million; 0.75% on the next $25 million; 0.60% on the next $1 billion; 0.55% on the next $2
billion, and 0.50% thereafter. Actual investment advisory fees incurred by clients may vary.
Polaris Capital Management LLC's compliance with the GIPS Standards has been verified by Ashland Partners & Company LLP.