Fourth Quarter 2014

Rothschild U.S. Small-Cap Growth

Firm History

Objective

The Rothschild Group is family-controlled and has been at the

center of the worlds financial markets for over 200 years. From its
historical roots in Europe, it has developed a unique global footprint.

Our teams build diversified portfolios with an eye on risk and the
goal of consistent, repeatable alpha for our clients.

Today, Rothschild has full-scale advisory businesses around

the world. Rothschild provides outstanding client service, with
the highest standards of professional integrity to build enduring
relationships of trust and confidence.

Investment Philosophy

Rothschild Asset Management Inc.

Headquartered in New York, Rothschild Asset Management Inc.
manages investments covering a range of U.S. strategies
including:
U.S. Large-Cap Core

U.S. Small-Cap Core

U.S. Large-Cap Value

U.S. Small-Cap Value

U.S. Small/Mid-Cap Core

U.S. Small-Cap Growth

U.S. Fixed Income

U.S. Balanced

U.S. Small- and Small/Mid-Cap Team

A portfolio of stocks with attractive valuations and rising

expectations will lead to outperformance and down-market
protection.
A blended analytical approach that includes both the judgment
of experienced fundamental analysts and the objectivity and
efficiency of quantitative tools, provides an investment
decision-making platform for consistency and repeatability of
outperformance
Our disciplined use of risk controls and desire to minimize
the influence of factor-based risks also drives consistency of
relative performance, and leads to attractive portfolio returns
with less volatility than the benchmark

Process Overview

Doug Levine, CFA

Managing Director

Joe Bellantoni, CFA

Managing Director

Eric Fraser, CFA

Vice President

Generalist

Basic Materials

Financial Services

Manufacturing
Real Estate

Quantitative
Analysis

Utilities

Fundamental
Research
Portfolio

Tina Jones, CFA

Managing Director

Michael Kehoe
Senior Vice President

Dan Oshinskie, CFA

Co-Head

Commercial Services

Healthcare

Energy

Consumer

Technology

Transportation

Telecommunications

Risk Management

Past performance is not necessarily indicative of future results. Data as of December 31, 2014.

Rothschild Asset Management Inc. 1251 Avenue of the Americas New York, NY 10020 Tel +1 (212) 403 5460 Email raminc@rothschild.com

Rothschild
U.S.Small-Cap
Small-Cap Growth
Rothschild
Core Strategy

Fourth Quarter 2014

Portfolio Highlights
Key Facts

Performance

Investment Vehicle

Separate Account

Product Inception Date

QTD

October 1, 2007

1 yr

3 yrs

5 yrs 10/1/2007

Portfolio (gross of fees)

8.0%

11.7%

21.5%

19.1%

10.3%

$2.0 Billion

Portfolio (net of fees)

7.7%

10.6%

20.3%

17.9%

9.2%

Firm Assets

$5.2 Billion

Russell 2000 Growth

10.1%

5.6%

20.1%

16.8%

8.1%

Benchmark

Russell 2000 Growth

Gross Excess Returns

-2.1%

6.1%

1.4%

2.3%

2.2%

U.S. Small- and Small/Mid-Cap Assets

Holdings Based Characteristics

Returns Based Characteristics

Rothschild

Russell 2000 Growth

5 years ending 12/31/2014

Rothschild

Russell 2000 Growth

$2,212

$2,089

18.82

19.42

Price/Cash Flow

12.1x

14.4x

Sharpe Ratio

1.01

0.86

Estimated Price/Earnings*

21.3x

21.8x

Information Ratio

0.73

3.8x

4.0x

Alpha

2.85

0.50%

0.56%

Beta

0.95

1.00

95

1,205

Tracking Error

3.91

Weighted Avg. Mkt. Cap ($mm)

Price/Book
Dividend Yield
Number of Holdings

Standard Deviation

*Excluding negative earnings.

Top 10 Holdings

Top 10 Active Weights

Annualized Returns

Deluxe Corp.

2.00%

Deluxe Corp.

+1.82%

As of December 31, 2014 (gross of fees)

Euronet Worldwide

1.96%

Euronet Worldwide

+1.64%

25%

STERIS Corp.

1.81%

Take-Two Interactive

+1.56%

Outerwall

1.68%

Outerwall

+1.52%

MarketAxess

1.65%

Sonic Corp.

+1.43%

21.5%

20%
15%

20.1%

19.1%
16.8%

11.7%

10.3%

10%

Take-Two Interactive

1.58%

STERIS Corp.

+1.38%

Isis Pharmaceuticals

1.54%

MarketAxess

+ 1.35%

5%

Sonic Corp.

1.54%

G-III Apparel Group

+1.32%

0%

G-III Apparel Group

1.54%

Polycom

+1.24%

Puma Biotechnology

1.53%

LogMeIn

+1.22%

8.1%
5.6%

1 Year

3 Years

5 Years

Rothschild U.S. Small-Cap Growth

Since inception
(10/1/07)

Russell 2000 Growth

Analysis includes only securities held in the portfolio.

Up Capture Ratio (5 years based on 15 up quarters)

40%

38.3%

Down Capture Ratio (5 years based on 5 down quarters)

39.0%

Capture Ratio: 78.6%

Annualized Returns

Annualized Returns

0%

20%

-20%
-24.1%
-30.7%

0%
Capture Ratio: 98.4%
Rothschild U.S. Small-Cap Growth

Russell 2000 Growth

-40%

Rothschild U.S. Small-Cap Growth

Russell 2000 Growth

Past performance is not necessarily indicative of future results. Data as of December 31, 2014.

Rothschild Asset Management Inc. 1251 Avenue of the Americas New York, NY 10020 Tel +1 (212) 403 5460 Email raminc@rothschild.com

Rothschild
U.S. Small-Cap
Rothschild
Small-CapGrowth
Core Strategy

Fourth Quarter 2014

Sector Attribution Analysis

15.3%

100.0%

40.2%

100.0%

35.3%

22.4%

2.0%
98.0%

84.7%

77.6%
64.7%

59.8%

2014

2013

Attribution analysis based on gross of fees performance.

2012

2011
Stock Selection

2010

2009

2008

Sector Selection

Detailed Attribution
Best Relative Contributors (Q4 2014)

Worst Relative Contributors (Q4 2014)

Relative
Contr.*

Total
Return

Leisure Facilities

27

Consumer
Discretionary

Retail

Healthcare

Biotechnology

Name

Sector

Industry

Outerwall

Consumer
Services

Francesca's
Neurocrine
Biosciences

Relative
Contr.*

Total
Return

Oilfield
Services

-91

-59%

Energy

Energy
Production

-62

-50%

Technology

Software

-47

-20%

Name

Sector

Industry

34%

U.S. Silica

Energy

24

41%

Rosetta
Resources

23

43%

NetScout
Systems

*Relative contribution in basis points versus Russell 2000 Growth.

Analysis includes only securities held in the portfolio.

Market Commentary
With global growth concerns and geopolitical issues coupled with an uncertain interest rate outlook, small-cap stocks had a difficult period on a year-to-date basis. Specifically, during
the third quarter the Russell 2000 Growth index declined 6.1%, with all economic sectors posting negative returns. The worst performing sectors were Energy (-16%), Manufacturing
(-10%) and Commercial Services (-9.5%).
The Rothschild U.S. Small-Cap Growth strategy protected on the downside for the quarter by outperforming its benchmark by nearly 5.0%. On a year-to-date basis, the strategy was
up roughly 3.5% compared to a decline in the Russell 2000 Growth Index of almost 4%.
Our strong third quarter relative outperformance was driven primarily by stock selection. Sector outperformance was led by Healthcare, with the largest detractor being
Manufacturing.
On a year-to-date basis, the strong stock selection drove all of the relative performance, with minimal impact from any sector exposures. The strategy posted positive stock selection
in all but one of the sectors in which it was exposed.
On a stock-specific basis, the largest positive contributions for the quarter were: Puma Biotechnology, which announced positive phase 3 data on its key oncology drug; Conversant,
a digital marketing company which announced it was being acquired by Alliance Data Systems for a 30% premium; and Auxilium Pharmaceuticals, which was approached by Endo
International with a take-over offer representing a 31% premium.
The largest third-quarter detractors were: Web.com Group, a provider of on-line services for small-medium sized businesses, which modestly missed sales estimates and lowered
guidance after meeting or beating expectations for 26 consecutive quarters, causing an atypical negative reaction; Aspen Technology, a technical software vendor, delivered betterthan-expected results and reiterated guidance, which proved to be below loftier whisper expectations; and Lithia Motors, an auto dealer, following a very strong positive reaction last
quarter to its acquisition of DCH Auto Group the street began to discount risks associated with the transaction.
On a year-to-date-basis, the largest positive contributors were Puma Biotechnology, US Silica and NetScout Systems. US Silica, a sand provider, posted better-than-expected
results, announced price increases on its proppant sand as demand from energy companies increased. In addition, the company announced multiple capacity additions translating
into upward estimate revisions. NetScout Systems, a network software vendor, consistently beat and raised expectations.
The largest year-to-date detractors were Comverse, Artic Cat and Web.com Group. Comverse, a telecom software company, missed and lowered expectations as there was a delay
in new business signings. Artic Cat, a snowmobile and ATV manufacturer, had disappointing sales of its new side by side vehicle.
Buoyed by stronger economic growth, and led by small cap stocks, the U.S. stock market continued its bull run in the December quarter. The Russell 2000, a measure of small cap
equities, returned 9.7% in 2014s final three months, more than offsetting a weak September quarter. The full year return on the Russell was 4.9%, well behind large-cap indexes. But
in 2013 small caps returned 38.8%, so being even mildly positive in 2014 should not be dismissed.
Large-Cap stocks, as measured by the S&P 500, returned 4.9% in the fourth quarter. This brought the full-year return to 13.7%, a nice add-on to the 32.4% 2013 return.
During the December quarter, third quarter Gross Domestic Product growth was revised upward to 5.0%, adjusted for inflation. That marks the strongest quarter of expansion in
years. The figure was probably inflated by several items, like a push to spend budgeted defense dollars before the governments fiscal yearend on September 30. But clearly the U.S.
economy had momentum going into Q4, and from the perspective of early 2015, growth appeared to continue at a good pace through the quarter.
The housing sector has been an exception to the economys positive performance. Despite low interest rates, new home buyers have apparently been turned off by escalating new

Past performance is not necessarily indicative of future results. Data as of December 31, 2014.

Rothschild Asset Management Inc. 1251 Avenue of the Americas New York, NY 10020 Tel +1 (212) 403 5460 Email raminc@rothschild.com

Rothschild
U.S.Small-Cap
Small-Cap Growth
Rothschild
Core Strategy

Fourth Quarter 2014

home prices. Banks are now easing credit standards-- yes, memories of 2007 and what followed apparently are covered by cobwebs in Washington-- to make purchases easier for
first time buyers. Continuing declines in mortgage rates as 2015 begins would seem to augur well for at least modest growth for this important sector.
Automobile buying is also interest-rate sensitive. The sector finished last year with a flourish, perhaps enhanced by the ongoing decline in gasoline prices. Indeed, the drop in the
price of oil is probably the main economic event for the second half of 2014.
By early 2015 the price of crude oil has fallen more than 50% from its mid-2014 peak. For consumers all over the world, the drop represents the equivalent of an enormous tax cut.
It will take time for the full impact to manifest itself. But for consumers, and businesses that use energy as a feedstock or simply to keep their facilities warm, the oil price collapse is
great news.
However, for countries that produce oil, the effect ranges from a period of harsh belt tightening to potential disaster. Its only a matter of time before Venezuela may not be able to pay
its bills without inflicting severe hardship on its people. For Russia, the combination of economic sanctions as punishment for its foray into Ukraine and the fall in the price of its main
source of revenue is leading to recession. For Iran, the loss of oil revenue may pressure the government to reach a nuclear agreement with the U.S. and its allies.
In the U.S. the energy industry has been a great success story in recent years -- the shale boom. Tens of thousands of jobs have been created -- not just for oil production, but
to build rail tank cars and barges and pipelines to carry oil, steel tubing for use in the oil fields, housing and a full range of services for workers. Production is going to decelerate
and eventually level off, unless prices reverse sharply to the upside. Energy company profits will be damaged; dividends will fall or be eliminated. In some cases, exploration and
production companies who borrowed heavily to speculate will be forced to sell assets to survive. Some wont make it.
So as we move into 2015 the simple view that the U.S. economy will continue to grow at a moderate space has its flaws. Will the weakness in energy have a more broad effect? As
has been the case for a few years, with faltering economies abroad-- in Japan, in Russia, in Europe--finally prove too much for Americas economy to carry along?
The strong dollar is already having an impact on U.S. exports ability to compete on world markets. Tourists from around the world will increasingly see the U.S. an expensive
destination. Large American companies, with their 40% non-U.S. exposure in terms of S&P earnings, for several months have seen foreign currency losses weigh on their revenues
and earnings. After six years of a rising stock market, will there be enough fuel in the tank to spur another good year?
The image is apt because the low price of oil will prove to be an enormous benefit to economic growth. In late 2014 and early 2015 the oil price drop below $50 a barrel was
accompanied by a fall in U.S. Treasury. 10-year yields to below 2%, as if we were back in a recession. Of course, our bond yields are so much higher than the sovereign debt of
European nations that money is attracted here, further driving up the dollar, raising fears of slower growth and at least suggesting that the Federal Reserve could take a long summer
vacation rather than boost short-term rates in June, as it has been hinting and hinting.
Chairperson Yellen has said that the Feds decision will be data driven, which makes sense. At times there have been fears that the Fed was behind the curve and its failure to act
more quickly would lead to inflation. Given global slowing, this seems like a non-issue for the moment. If the economy sputters, the central bank could wait longer, but we just dont
see two quarter point rate increases this year as that worrisome, even though the U.S. might continue to sop up the worlds capital as rates rise here (keep in mind that the Fed can
determine only short-term rates). The market will set longer rates, and we may find that the bond market will not be troubled as the Fed does what it believes it has to, to at least
start to return to normalcy. The Feds December minutes leave little doubt that Ms. Yellen and colleagues have confidence in the U.S. business expansion.
As 2015 began, the Republican Party took over both houses of Congress. One area that could see bipartisan cooperation would be infrastructure spending. Americas roads and
bridges and tunnels are often old, decrepit and increasingly dangerous. Fixing them is long over-due.
A Republican focus on onerous regulations would reduce business costs. Extension of the long delayed Keystone Pipeline would create jobs and potentially add more business for
U.S. Gulf Coast refiners (though President Obama has threatened a veto) when oil prices recover. Perhaps changes in the 1974 law that precludes crude oil exports will enable the
U.S. to take fuller advantage of its growing shale production.
So we are optimistic about equities as the New Year begins. The familiar mantra of moderate growth, low inflation and interest rates, good job creation that we heard as 2014 began
still applies. Stocks are somewhat more expensive, as the market has risen faster than corporate profits. But valuations arent worrisome with so little competition for equities from
other asset classes. Portfolios of high-quality stocks yield more than 10-year Treasury bonds, and offer dividend growth as well. A major cost to the world economy, energy is far
cheaper than a year ago. There always are geopolitical risks and economic policies sometimes do go very wrong (China, we are watching you.) But for U.S. stocks, theres still a lot
to like. We expect another positive year.
Finally, we are excited to announce that as of January 1st, all six of Rothschilds U.S. equity strategies are now available in a 40-Act mutual fund. This provides yet another vehicle,
along with our collective investment trust and commingled funds, for clients to access our investment services.
Performance

3-Year Standard Deviation

Composite Totals

Rothschild U.S.
Small-Cap
Growth
(Gross of Fees)

Rothschild U.S.
Small-Cap
Growth
(Net of Fees)

2014

11.72%

10.61%

5.60%

11.96

14.02

N/A

$2

$5,157

2013

41.32%

39.95%

43.30%

17.55

17.57

N/A

$2

$4,613

2012

13.67%

12.55%

14.59%

21.29

21.01

N/A

$1

$3,950

2011

2.94%

1.91%

(2.91%)

23.35

24.65

N/A

$1

$3,826

2010

29.50%

28.24%

29.09%

25.43

25.36

N/A

$1

$4,034

Year

Russell
2000
Growth

Rothschild U.S.
Small-Cap
Growth

Russell
2000
Growth

Annual
Dispersion
(pct pts)

Number of
Portfolios

Assets
($mil)

Total Firm Assets

($ mil)

2009

28.83%

27.57%

34.47%

N/A

$1

$4,683

2008

(32.12%)

(32.82%)

(38.54%)

N/A

$1

$3,768

2007

(2.53%)

(2.77%)

(2.10%)

N/A

$1

$5,612

Inception

10.32%

9.23%

8.09%

Disclaimer: * Inception period = 10/1/07 12/31/14.

Notes: Rothschild Asset Management Inc. (Rothschild) is a registered investment advisor specializing in diversified U.S. equity portfolios. The Rothschild U.S. Small-Cap Growth strategy invests in companies that we believe have the best combination
of attractive valuation and improving business prospects. The Rothschild U.S. Small-Cap Growth Composite was created on October 1, 2007 and funded with money from Rothschild Asset Management Inc. The Composite is made up of 1 tax-exempt
account with a Russell 2000 Growth benchmark and no investment restrictions. This account, funded by Rothschild, does not pay fees. Excluded from the Rothschild U.S. Small-Cap Growth composite is 1 wrapfee platform (<$1 million). The Rothschild U.S. Small-Cap Growth Composite assets as of December 31, 2014 were $2 million, which represented less than 1% of the firms total assets. Returns are calculated in U.S.
dollars. Rothschild Asset Management has been verified for the periods from 1/1/93 through 12/31/13 by Mengel Metzger Barr & Co. LLP. A performance examination was not conducted on the Rothschild U.S. Small-Cap
Growth Composite. A copy of the verification report is available upon request. The Rothschild U.S. Small-Cap Growth Composite is asset-weighted, using daily market values. Returns for periods longer than one year are
annualized. Returns are time-weighted, based on daily cash flow applications, and are presented before and after management fees. Past performance is not necessarily indicative of future results. Rothschild Asset Management claims compliance with
Global Investment Performance Standards (GIPS). To receive a complete list and description of Rothschild Asset Managements composites and/or a presentation that adheres to the GIPS, contact Anna Niziol at 212-403-3714 or anna.niziol@rothschild.
com. The standard institutional tax-exempt account fee schedule for Rothschild U.S. Small-Cap Growth is: First $25 million, 1.00%; next $25 million, 0.80%; thereafter, 0.70%. Net returns are calculating by subtracting the highest applicable fee (1.00% on
an annual basis) on monthly basis from the gross Composite monthly return. The securities shown above are to illustrate the methodology used by Rothschild Asset Management. Securities selected by Rothschild Asset Management for client portfolios
under management may decline as well as increase in value. A list of all securities purchased or sold during the past 12 months by accounts using a similar investment strategy is available upon request. Portfolio characteristics are based on a representative
portfolio of the Rothschild U.S. Small-Cap Growth strategy. The Rothschild U.S. Small-Cap Growth is a product offered by Rothschild Asset Management. Returns reflect the reinvestment of dividends and other earnings. The Russell 2000 Growth Index is an
unmanaged index considered representative of small-cap U.S. stocks. The investment strategy of the Rothschild U.S. Small-Cap Growth is not restricted to securities of the Russell 2000 Growth Index. In addition, the Rothschild U.S. Small-Cap Growth may
use various investment techniques, such as eliminating stocks with a relatively short trading history, which are not reflected in the Russell 2000 Growth Index. For the foregoing and other reasons, the performance of the Rothschild U.S. Small-Cap Growth
and the Russell 2000 Growth Index will differ. Investing in equities involves certain risks, including the possibility the price of equity securities may vary in response to general market and economic conditions.

Past performance is not necessarily indicative of future results. Data as of December 31, 2014.

Rothschild Asset Management Inc. 1251 Avenue of the Americas New York, NY 10020 Tel +1 (212) 403 5460 Email raminc@rothschild.com