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HomeMy WebLinkAboutAgenda Fire Pension 050714THE RESOURCE CENTERS , LLC 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 Phone (561) 624-3277 Fax (561) 624-3278 WWW.RESOURCECENTERS.COM PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND Meeting of Wednesday, May 7, 2014 Location: City Hall, Council Chambers Palm Beach Gardens City Hall 10500 North Military Trail Palm Beach Gardens, FL 33410 Time: 1 PM AGENDA 1. Call Meeting to Order 2. Public Comments 3. Minutes: • Regular Meeting Held on January 13, 2014 • Regular Meeting Held on March 10, 2014 • Special Meeting Held on April 17, 2014 4. ICMA Discussion/Presentation: (Cary Scaglione) 5. Presentation of the 9/30/2014 Actuarial Valuation Report (Doug Lozen) 6. Investment Monitor Report: The Bogdahn Group (Dan Johnson) • GHA 3/31/2014 Performance Report 7. Attorney Report: Sugarman & Susskind, P.A. (Pedro Herrera) 8. Administrative Report: Resource Centers (Audrey Ross) • Disbursements • Benefit Approvals • 2014 Meeting Dates (reminder of the year) • Update Regions Bank Authorized Signors • DROP & Share Statements Proposal 9. Old Business • Review of Draft Summary Plan Description 10. New Business 11. Other Business • Service Provider Contract Review – Auditor & Actuary 12. Next Scheduled Meeting: Monday July 7, 2014 @ 9AM. 13. Adjourn 2 PLEASE NOTE: Should any interested party seek to appeal any decision made by the Board with respect to any matter considered at such meeting or hearing, he will need a record of the proceedings, and for such purpose he may need to insure that a verbatim record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based. In accordance with the Americans With Disabilities Act of 1990, persons needing a special accommodation to participate in this meeting should contact The Resource Centers, LLC no later than four days prior to the meeting. THE RESOURCE CENTERS , LLC 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 Phone (561) 624-3277 Fax (561) 624-3278 WWW.RESOURCECENTERS.COM PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND 2014 MEETING DATES Monday July 7, 2014 @ 9AM Wednesday August 6, 2014 @ 1PM Monday September 8, 2014 @ 9AM Wednesday November 5, 2014 @ 1PM City of Palm Beach Gardens Firefighters' Pension Trust Fund Investment Performance Review 1st Quarter 2014 Universe Sample Information is Preliminary Private Real Estate Data is Preliminary 1st Quarter 2014 Market Environment 1 ƒIfthefirstquarterof2014isanyindication,theeuphoriaof2013appearsto befadingintherearviewmirror.Sofarthisyearithasbeenamuchbumpier ridewithmarketvolatilityabovewhatwasseenforalmostallof2013.The quarterstartedwithamodestselloffbutreversedinMarchafternew FederalReserveChairwomanJanetYellenofferedreassuringcomments whichhelpedbolsterthemarket.Overallreturnsforbroadbasedindices rangedfromslightlynegative(-0.4%fortheMSCIEmergingMarketsindex) tomodestlypositive(+1.8%fortheS&P500and+1.8%fortheBarclays U.S.AggregateBondIndex). ƒDomesticequitiesprovedresilientduringthequarter,overcomingprofit takinginJanuaryandwarningsignscomingoutofemergingmarkets.Prices inFebruaryandMarchweremixedbutoverallreturnsweregenerally positive.Onetrendthatappearsincongruousgiventheeconomicuncertainty isthestrengthfoundinlowerqualitycompanies.While“safehaven”areas suchasUtilitiesandConsumerStaplesfaredbestduringthequarter,lower qualitycompanies(noearnings,negativefreecashflow)outperformedtheir higherqualitycounterparts. ƒDespitepostingclosetoflatreturnsduringatumultuousquarter, internationalequitiesweretheworstperformerscomparedtodomestic equitiesandfixedincome.Emergingequitiesendedinslightlynegative territory,astheturmoilinEasternEurope(Russia/Ukraine)drovethose marketsdownsignificantly.One-yearreturnsfordevelopedinternational equitiesremainedwellinpositiveterritory,butemergingmarketequities continuedtostrugglewithacombinedone-yearreturnof-1.1%. ƒTheU.S.bondmarket,representedbytheBarclaysU.S.AggregateBond Index,reboundedfromitsweak2013performancebyrising1.8%inthefirst quarterof2014.Onatrailing,one-yearbasisbondsreturnedaweak-0.1%. Strongquarterlyresultswerebroad-basedasallthreemajorsectorsposted positivereturns,ledbytheinvestmentgradecorporatesector’s+2.9% return.U.S.governmentandmortgagebackedsecuritiesrose1.3%and 1.6%,respectively.U.S.TIPSrose1.9%intheperiod,butthetrailingone- yearreturnremainedinnegativeterritoryat-6.5%. Source: Investment Metrics The Market Environment Major Market Index Performance As of March 31, 2014 0.0% 2.9% 1.6% 1.9% 1.3% 1.8% 1.1% 3.5% 2.0% 2.0% 1.8% -0.4% 0.8% 0.6% -1.0%0.0%1.0%2.0%3.0%4.0% 3-Month T-Bill Barclays Corp IG Barclays MBS Barclays US TIPS Barclays US Govt Barclays US Agg Russell 2000 Russell MidCap Russell 1000 Russell 3000 S&P 500 MSCI Emerg Mkts MSCI EAFE MSCI ACWxUS Quarter Performance 0.0% 1.5% 0.2% -6.5% -1.2% -0.1% 24.9% 23.5% 22.4% 22.6% 21.9% -1.1% 18.1% 12.8% -10.0%-5.0%0.0%5.0%10.0%15.0%20.0%25.0%30.0% 3-Month T-Bill Barclays Corp IG Barclays MBS Barclays US TIPS Barclays US Govt Barclays US Agg Russell 2000 Russell MidCap Russell 1000 Russell 3000 S&P 500 MSCI Emerg Mkts MSCI EAFE MSCI ACWxUS 1-Year Performance 2 Source: Investment Metrics The Market Environment Domestic Equity Style Index Performance As of March 31, 2014 ƒInaperiodmarkedbyhighervolatilityandgeneraleconomicuncertainty,it wasnosurprisethatlargercapstocksoutperformedtheirsmallercap brethren.Midcapswerethebestoverallperformer(+3.5%)followedbylarge caps(+1.8%)andsmallcaps(+1.1%).Valueoutpacedgrowthatall capitalizationlevels. ƒHowmuchdidinclementweatherimpactequityreturnsduringthequarter? Theimmediateimpactwasfeltviahigherutilitypricesandlowerconsumer spending,whichnegativelyaffectedmanysectorshighlycorrelatedto consumerspending.However,realwageincreases(nominalwagegrowth aboveinflation)andpositiveeconomicleadingindicatorssuggestthat continuedeconomicgrowthisastrongpossibility.Giventhatbackdrop,the temporaryquarterlyslowdownappearstobeaweatherrelated phenomenon. ƒAsofMarch2014,intrastockcorrelations(~0.33),whileabovethelong-term average(~0.26since1926),reachedoneofthelowestpointssincetheearly 2000’s.Thisbodeswellforthefuturesuccessofactivelymanaged strategies. ƒCurrentvaluationsremainfair.TheMarch31,2014valuationontheS&P 500(1,872or15.2xforwardlookingearnings)waswithinahistorically normaltradingrangefortheindex.Infact,thecurrentlevelisfarbelowthe inflectionpointseenonMarch24,2000(26x)andisnotdissimilartothe troughvaluationseenonOctober9,2002,whenthemarkettradedat14.1x andsubsequentlyappreciatedfrom$777to$1,565(15.2x)overthenextfive years. ƒOnereasonwhyvaluationsdidnotincreasecommensuratewithmarket performancewastheimpactofcorporatesharerepurchases.Fewershares outstandingresultinhigherearningspershare,whichisthedenominatorin theprice-to-earningsmultiple.Stockbuybacksincreased15%in2013to $445billion. ƒOnanabsolutebasis,smallcapstocksaremoreexpensiverelativetotheir midandlargecapcounterparts(18.9xPEversus18.2xand15.2x, respectively).However,relativetotheirlongtermaverages,smallcap valuationsarein-linewithmidcap.Bothareslightlyexpensiverelativeto largecaps,especiallyonthevalueside. 0.5% 1.1% 1.8% 2.0% 3.5% 5.2% 1.1% 2.0% 3.0% 1.1% 2.0% 2.9% 0.0%1.0%2.0%3.0%4.0%5.0%6.0% 2000 Growth 2000 Index 2000 Value MidCap Growth MidCap Index MidCap Value 1000 Growth 1000 Index 1000 Value 3000 Growth 3000 Index 3000 Value Quarter Performance -Russell Style Series 27.2% 24.9% 22.6% 24.2% 23.5% 23.0% 23.2% 22.4% 21.6% 23.5% 22.6% 21.7% 0.0%5.0%10.0%15.0%20.0%25.0%30.0% 2000 Growth 2000 Index 2000 Value MidCap Growth MidCap Index MidCap Value 1000 Growth 1000 Index 1000 Value 3000 Growth 3000 Index 3000 Value 1-Year Performance -Russell Style Series 3 The Market Environment GICS Sector Performance & (Sector Weight) As of March 31, 2014 Source: Morningstar Direct ƒSectorselectionhadabiggerimpactonactivemanageroutperformance duringthequarterthanhasbeenseeninrecentperiods.The“defensive” sectorsofUtilities,HealthCareandConsumerStapleswerelargelyleft behindduringaverystrong2013marketrallywitnessedacrossall capitalizationsandstyles.Asinvestoruncertaintyincreasedinthefirst quarter,theshifttomorestableareasofthemarketwasevident,giventhe reboundexperiencedinthesethreeareas. ƒREITshadapositiveimpactontheperformanceoftheFinancialssector withinthelargecapsegmentofthemarketduringthequarter.While investorslargelysoldoffREITexposurein2013duetofearsofrisingrates, interestratestrendedlowerinearly2014,andREITsadvanced10.4%. ƒConsumerDiscretionarywasanegativecontributortoperformanceinboth thesmallandlargecapbenchmarksduringtheperiod.Again,mostofthe impactcouldbeweatherrelated.Manyanalystshighlightedthesoftretail andautosalesfiguresinthefirstquartertothecolderthannormalwinter anditsimpactonconsumerspending. ƒOnanabsolutevaluationbasis,whenviewedacrossaten-yeartrailing periodendingMarch31,2014,Financials,EnergyandTelecomwerethe mostattractivelyvaluedareaswithintheS&P500.Eachsectortradedat approximately13-14timesforwardearningspershare.Bycontrast,Health Care,Materials,andbothConsumersectorswerethemostexpensiveat approximately17times.Relativetotheten-yearaverage,onlytwosectors currentlytradeatbelowaveragevaluations:TelecomandInformation Technology. ƒHealthCarecontinuedtodominatebyplacingsevenstockswithinthetop tensmallcapperformersduringthequarter,continuingatrendthatstartedin late2013.Biotechcompaniesnowmakeupover9%oftheRussell2000 Growthbenchmark.Thetoptenlistinlargecapwasmoreuniformwith HealthCare,InformationTechnology,andIndustrialsallplacingtwostocks onthelist. ƒThetwoConsumersectors,plusInformationTechnology,accountedfor60% ofthetoptennegativecontributorswithinlargecapduringtheperiod.Within smallcaps,underperformancewaslessconcentratedbysector,whichis understandablegiventhatsmallcapstocksarelessimpactedby macroeconomicvariablesversusidiosyncraticcompanyfundamentals. 10.1% 3.9% 22.4% 26.2% 27.5% 29.7% 22.4% 15.4% 11.3% 26.1% 9.7% -0.4% 3.2% 2.3% 0.5% 5.9% 3.0% 1.5% 0.6% -2.0% -5.0%0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0% Utilities (3.0%) Telecom Services (2.2%) Materials (3.7%) Info Technology (18.3%) Industrials (11.4%) Health Care (13.0%) Financials (17.0%) Energy (9.5%) Consumer Staples (8.8%) Consumer Disc (13.2%) Russell 1000 Quarter 1-Year 13.5% 31.4% 14.9% 30.8% 26.8% 39.8% 17.2% 22.1% 33.0% 25.8% 5.4% 2.9% 0.8% 0.4% 0.5% 3.9% 1.4% 4.8% 1.8% -3.2% -10.0%0.0%10.0%20.0%30.0%40.0%50.0% Utilities (3.1%) Telecom Services (0.8%) Materials (4.9%) Info Technology (18.0%) Industrials (14.4%) Health Care (13.7%) Financials (22.8%) Energy (5.5%) Consumer Staples (3.6%) Consumer Disc (13.3%) Russell 2000 Quarter 1-Year 4 The Market Environment Top 10 Index Weights & Quarterly Performance for the Russell 1000 & 2000 As of March 31, 2014 Source: Morningstar Direct Top 10 Weighted Stocks Top 10 Weighted Stocks Russell 1000 Weight 1-Qtr Return 1-Year Return Sector Russell 2000 Weight 1-Qtr Return 1-Year Return Sector Apple Inc 2.61%-3.8%24.3%Information Technology American Realty Capital Properties 0.39%11.1%2.1%Financials Exxon Mobil Corporation 2.25%-2.8%11.4%Energy AthenaHealth, Inc.0.35%19.1%65.1%Health Care Microsoft Corporation 1.77%10.4%47.5%Information Technology Acuity Brands Inc 0.34%21.4%92.3%Industrials Google Inc Class A 1.55%-0.6%40.3%Information Technology CoStar Group, Inc.0.32%1.2%70.6%Information Technology Johnson & Johnson 1.43%8.0%24.0%Health Care SunEdison Inc 0.30%44.4%328.2%Information Technology General Electric Co 1.39%-6.8%15.7%Industrials Northstar Realty Finance Corporation 0.30%21.9%84.1%Financials Wells Fargo & Co 1.24%10.3%38.4%Financials Middleby Corporation 0.30%10.2%73.7%Industrials Chevron Corp 1.19%-4.0%3.5%Energy Isis Pharmaceuticals 0.29%8.5%155.1%Health Care JPMorgan Chase & Co 1.19%4.5%31.5%Financials Rite Aid Corporation 0.27%23.9%230.0%Consumer Staples Berkshire Hathaway Inc Class B 1.16%5.4%19.9%Financials Kate Spade & Co 0.27%15.7%96.5%Consumer Discretionary Top 10 Performing Stocks (by Quarter)Top 10 Performing Stocks (by Quarter) Russell 1000 Weight 1-Qtr Return 1-Year Return Sector Russell 2000 Weight 1-Qtr Return 1-Year Return Sector Myriad Genetics, Inc.0.01%63.0%34.6%Health Care Intercept Pharmaceuticals Inc 0.14%383.0%781.8%Health Care Forest Laboratories, Inc.0.13%53.7%142.6%Health Care InterMune, Inc.0.18%127.2%269.8%Health Care Freescale Semiconductor Ltd 0.01%52.1%63.9%Information Technology Endocyte, Inc.0.04%122.9%91.2%Health Care Nabors Industries Ltd 0.04%45.3%53.4%Energy RCS Capital Corp Class A 0.00%113.1%NA Financials American Airlines Group Inc 0.04%45.0%NA Industrials Pernix Therapeutics Holdings, Inc.0.01%112.3%7.9%Health Care FireEye Inc 0.01%41.2%NA Information Technology Furiex Pharmaceuticals, Inc.0.03%107.1%132.1%Health Care Keurig Green Mountain Inc 0.08%40.2%86.6%Consumer Staples Horizon Pharma Inc 0.05%98.4%457.9%Health Care Tesla Motors, Inc.0.09%38.6%450.1%Consumer Discretionary GT Advanced Technologies Inc0.14%95.6%416.7%Information Technology Royal Gold, Inc.0.02%35.9%-10.4%Materials Harvard Apparatus Reg Technology0.00%90.9%NA Health Care Engility Holdings Inc 0.00%34.9%87.9%Industrials McClatchy Company Class A 0.02%88.8%121.4%Consumer Discretionary Bottom 10 Performing Stocks (by Quarter)Bottom 10 Performing Stocks (by Quarter) Russell 1000 Weight 1-Qtr Return 1-Year Return Sector Russell 2000 Weight 1-Qtr Return 1-Year Return Sector NII Holdings Inc 0.00%-56.7%-72.5%Telecommunication Services Dolan Co 0.00%-97.7%-99.3%Industrials Walter Energy Inc 0.00%-54.5%-73.2%Materials Global Geophysical Services, Inc.0.00%-92.6%-95.1%Energy Alpha Natural Resources Inc 0.00%-40.5%-48.2%Energy GSE Holding Inc 0.00%-86.0%-96.5%Materials Nu Skin Enterprises, Inc. Class A 0.03%-39.8%90.4%Consumer Staples Body Central Corp 0.00%-72.8%-88.6%Consumer Discretionary UTi Worldwide, Inc.0.00%-39.7%-26.6%Industrials Ventrus Biosciences, Inc.0.00%-66.6%-57.4%Health Care Weight Watchers International, Inc.0.00%-37.6%-50.8%Consumer Discretionary KiOR Inc 0.00%-65.9%-87.7%Energy 3D Systems Corporation 0.03%-36.3%83.5%Information Technology American Apparel, Inc.0.00%-59.3%-76.9%Consumer Discretionary NeuStar, Inc.0.01%-34.8%-30.1%Information Technology Fairway Group Holdings Corp Class A 0.01%-57.9%NA Consumer Staples Groupon Inc 0.02%-33.4%28.1%Consumer Discretionary NII Holdings Inc 0.01%-56.7%-72.5%Telecommunication Services Best Buy Co Inc 0.04%-33.3%21.8%Consumer Discretionary Geron Corporation 0.02%-55.9%95.3%Health Care 5 Source: MSCI Global Index Monitor (Returns are Gross) ƒWhilethefinalreturnforthefirstquarterof2014showedlittlechange fromyear-end2013,thepaththroughthequarterwasextremely uncomfortable.Non-USequityindicesweredownover4%inJanuarybut thenreversedup5%inFebruary.Marchreturnsendedfairlyflat,but, onceagain,theintra-monthvolatilitywassignificant. ƒDevelopedinternationalequitiesweregenerallypositiveduringthe quarter.However,Japan’sresultswerealargeexception.Inlocalterms, Japanwasdownover7%,butyenappreciationbufferedU.S.investors slightlyasthereturnwas-5.5%inUSDterms.Thestrongestinternational developedmarketsforthefirstquarterwereNewZealand,Denmark, Ireland,andItaly. ƒEmergingequitiescontinuedtounderperformmoderatelyasawhole,but returnsweresegmentedbyregion.EquitiesinRussiawereonthe extremeendofunderperformance,returning-14.5%.Russia’sinvasion andannexationoftheCrimearegioninUkrainecausedinvestorsin Russianequitiestoflee.Indonesiawasontheotherendofthe performanceextremeasthecountry’sequitymarketendedthequarter up21.2%. ƒCurrencymovesweregenerallyfavorabletoU.S.investorsinoverseas assetswiththebiggestexceptionbeingRussia. ƒOverall,fornon-USequities,defensivesectors(HealthCareandUtilities) turnedinthebestperformanceforthequarter.ConsumerDiscretionary (-2.0%)wastheworstperformingsectorwithintheMSCIEAFEIndex, whileTelecom(-5.8%)wastheworstperformingsectorwithintheMSCI EMIndex. ƒValueoutperformedgrowthindevelopedequities,whilegrowth outperformedvalueamongemergingequities.Smallcapcompanies outperformedlargecapswithinnon-USequities. The Market Environment International and Regional Market Index Performance (Country Count) As of March 31, 2014 -1.7% -0.3% -3.5% -0.5% -4.6% 2.0% -0.2% 0.3% 0.2% 0.4% -0.2% -6.5% -0.4% -2.4% 2.3% 0.8% 0.9% 0.6% -8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0% EM Latin Amer (5) EM Asia (8) EM Europe & ME (8) Emerging Mkt (21) Pacific (5) Europe & ME (16) EAFE (21) WORLD x US (22) AC World x US (43) Quarter Performance USD Local Currency -4.9% 5.3% -0.7% 3.8% 14.4% 16.4% 15.9% 15.9% 13.1% -13.6% 3.4% -7.7% -1.1% 5.3% 25.2% 18.1% 17.0% 12.8% -20.0%-10.0%0.0%10.0%20.0%30.0% EM Latin Amer (5) EM Asia (8) EM Europe & ME (8) Emerging Mkt (21) Pacific (5) Europe & ME (16) EAFE (21) WORLD x US (22) AC World x US (43) 1-Year Performance USD Local Currency 6 The Market Environment U.S. Dollar International Index Attribution & Country Detail As of March 31, 2014 Source: MSCI Global Index Monitor (Returns are Gross in USD) MSCI-EAFE MSCI-ACWIxUS Quarter 1-Year Country Weight Weight Return Return United Kingdom 21.1%15.2%-0.8%16.8% Japan 19.7%14.2%-5.5%7.8% France 10.4%7.5%3.0%30.6% Germany 9.5%6.8%-0.3%31.7% Switzerland 9.3%6.7%5.1%20.1% Australia 7.9%5.7%6.0%1.3% Spain 3.6%2.6%4.8%46.5% Sweden 3.3%2.4%3.0%18.2% Hong Kong 2.8%2.0%-3.4%3.7% Netherlands 2.8%2.0%1.1%30.1% Italy 2.6%1.9%14.6%54.1% Singapore 1.5%1.1%-0.9%-2.1% Denmark 1.4%1.0%16.5%40.6% Belgium 1.2%0.9%2.4%21.1% Finland 0.9%0.7%0.3%44.0% Norway 0.8%0.6%2.2%12.3% Israel 0.5%0.4%18.7%24.0% Ireland 0.3%0.2%14.2%43.4% Austria 0.3%0.2%-2.7%16.5% Portugal 0.2%0.1%9.7%23.6% New Zealand 0.1%0.1%16.7%18.0% Total EAFE Countries 100.0%72.1%0.8%18.1% Canada 7.3%1.8%7.2% Total Developed Countries 79.4%0.9%17.0% China 3.9%-5.9%2.5% Korea 3.3%-2.0%5.5% Taiwan 2.5%1.1%11.2% Brazil 2.3%2.9%-12.7% South Africa 1.6%4.9%8.4% India 1.4%8.2%6.7% Russia 1.1%-14.5%-10.5% Mexico 1.1%-5.0%-10.2% Malaysia 0.8%-0.4%8.2% Indonesia 0.6%21.2%-17.8% Thailand 0.5%7.5%-16.4% Poland 0.4%3.4%21.2% Turkey 0.3%4.8%-28.8% Chile 0.3%-2.2%-26.5% Colombia 0.2%5.1%-11.3% Philippines 0.2%10.3%-9.1% Greece 0.1%18.1%58.1% Peru 0.1%4.4%-24.9% Czech Republic 0.1%7.6%15.1% Hungary 0.1%-8.7%-7.9% Egypt 0.0%9.2%32.5% Total Emerging Countries 20.6%-0.4%-1.1% Total ACWIxUS Countries 100.0%0.6%12.8% MSCI -EAFE Sector Weight Quarter Return 1-Year Return Consumer Discretionary 11.8%-2.0%23.7% Consumer Staples 11.0%0.7%6.3% Energy 6.9%1.8%16.5% Financials 25.6%-0.3%18.2% Health Care 10.4%6.2%21.7% Industrials 13.0%0.6%19.1% Information Technology 4.5%-0.3%20.3% Materials 8.1%0.7%9.0% Telecommunication Services 5.0%-2.1%35.6% Utilities 3.8%7.2%24.2% Total 100.0%0.8%18.1% MSCI -ACWIxUS Sector Weight Quarter Return 1-Year Return Consumer Discretionary 10.8%-0.8%21.7% Consumer Staples 9.9%0.4%4.0% Energy 9.1%0.8%7.6% Financials 26.6%-0.4%11.9% Health Care 8.2%6.0%21.8% Industrials 11.2%0.4%16.2% Information Technology 6.8%1.8%18.6% Materials 8.7%0.1%0.1% Telecommunication Services 5.2%-2.9%22.0% Utilities 3.5%6.2%17.1% Total 100.0%0.6%12.8% MSCI -Emerging Mkt Sector Weight Quarter Return 1-Year Return Consumer Discretionary 9.3%3.9%12.7% Consumer Staples 8.5%-1.3%-6.8% Energy 10.8%-4.5%-9.1% Financials 26.7%-0.4%-5.9% Health Care 1.7%1.6%8.1% Industrials 6.5%0.0%0.2% Information Technology 16.7%4.0%17.6% Materials 9.4%-3.5%-10.8% Telecommunication Services 6.9%-5.8%-2.1% Utilities 3.5%2.8%-1.9% Total 100.0%-0.4%-1.1% 7 Source: Barclays Capital Live The Market Environment Domestic Bond Sector & Broad/Global Bond Market Performance (Duration) As of March 31, 2014 2.2% 3.2% 0.0% -0.1% -6.5% 1.5% 0.2% -1.3% 7.5%1.7% 1.0% -0.1% -0.6% -8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%8.0% Multiverse (6.19) Global Agg x US (6.81) Intermediate Agg (4.41) Aggregate (5.65) U.S. TIPS (6.77) U.S. Corporate IG (7.030) U.S. Mortgage (5.51) U.S. Treasury (5.14) U.S. High Yield (4.02) Baa (7.33) A (6.98) AA (5.59) AAA (5.17) 1-Year Performance 2.4% 2.8% 1.2% 1.8% 1.9% 2.9% 1.6% 1.3% 3.0% 3.6% 2.7% 2.1% 1.4% 0.0%1.0%2.0%3.0%4.0% Multiverse (6.19) Global Agg x US (6.81) Intermediate Agg (4.41) Aggregate (5.65) U.S. TIPS (6.77) U.S. Corporate IG (7.030) U.S. Mortgage (5.51) U.S. Treasury (5.14) U.S. High Yield (4.02) Baa (7.33) A (6.98) AA (5.59) AAA (5.17) Quarter Performance ƒDomesticbondsbegan2014withastrongrally,rising1.5%amid lacklustereconomicnewsandturmoilinseveralemergingeconomies (Argentina,Turkey,Venezuela,andChina).Marketsentimentturned bullish,andbondmarketstradedflat-to-higherinFebruary(0.5%) despitetherecenteconomicandgeopoliticalunrestinUkraineand Venezuela.InMarch,bondspostedmodestdeclines(-0.2%)afterthe FOMCminutesrevealedsupportforcontinuedtaperingoftheFederal Reserve’squantitativeeasingprogramaswellasamorehawkishtonein regardstoanincreaseinthefedfundsratein2015.Thoughthequarter endedwithadownmonth,thelossesdetractedonlyamodestamount fromgainsearnedearlierinthequarter. ƒEachofthethreekeyinvestmentgradesectorsroseduringthefirst quarter.Corporatebondswerethestrongestperformingsegmentofthe market,returning2.9%.Followingcreditwasthesecuritizedsector (1.6%)andTreasury/Agencysecurities(1.3%).Onatrailingtwelve monthbasis,returnsaremixedwiththecreditandmortgagesectors landinginpositiveterritoryandgovernmentsecuritiesdown-1.3%. ƒThetrendoflowqualitybondsoutperforminghigherqualitysecurities continuedforyetanotherquarter.BondsratedBaarose3.6%,followed byA-rated(2.7%),AA-rated(2.1%),andAAA-rated(1.4%). ƒRenewedbuyingoflonger-datedTreasuriesresultedinthebroad-based BarclaysAggregateIndexoutperformingshortandintermediatebonds duringthefirstquarter. ƒHighyieldbondscontinuedtheirstrongperformanceexceeding investmentgradecreditfortheseventhconsecutivequarter(3.0%versus 2.9%).Thecontinueddemandforincomeresultedinsecuritiesrated belowinvestmentgradeoutperforminginvestmentgradeby600basis points(bps)overthepasttwelvemonths. ƒAfterunderperformingU.S.bondsinthefourthquarter,international bonds,representedbytheBarclaysGlobalAggregateexU.S.Index, surpassedtheirdomesticbondcounterparts(2.8%versus1.8%).The strongshowingpushedinternationalbondsaheadoftheU.S.marketby 3.3%onatrailing,one-yearbasis. 8 Source: US Department of Treasury, FRED (Federal Reserve of St. Louis) The Market Environment Market Rate & Yield Curve Comparison As of March 31, 2014 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 1 mo3 mo6 mo 1 yr2 yr3 yr5 yr7 yr 10 yr20 yr30 yr Treasury Yield Curve 12/31/2012 9/30/2013 12/31/2013 3/31/2014 ƒAfterending2013witha2.0%annualdecline,theU.S.bondmarket, representedbytheBarclaysU.S.AggregateBondIndex,rose1.8%in thefirstquarter.Weakeconomicnews,coupledwithgreatervisibilityand guidancefromtheFederalReserve,resultedingreaterdemandfor domesticbondsduringthequarter.Strengthinlonger-datedmaturities andthecorporatebondsectorledmarketreturnshigher. ƒOtherthanmodestweaknessinMarch,yieldlevelsformaturitiesfive yearsandunderweremostlyunchangedduringthefirstquarter. However,ratesonlonger-datedbonds(10to30-yearmaturities) declinedbetween31and41bpsduringtheperiod.Mostofthedecline inratesoccurredinJanuaryinresponsetoweakereconomicnewsand troublesinemergingmarketcountries. ƒAlthoughtheyieldcurveflattenedinthefirstquarter,itstillprovides investorsasizableyieldgainforextendingmaturities,especiallyin intermediatematurities.Thespreadbetweenkeypointsontheyield curveisshownbelow. 2-5YearU.S.Treasury 129bps 5-10YearU.S.Treasury 100bps 10-30YearU.S.Treasury 86bps ƒTherecentriseininterestrateshaspushedyieldstomoreattractive levels,particularlyinlonger-datedmaturities,whichnowcarryayieldin excessofthecurrentrateofinflation.Thehigheryieldshelpedpropel bondstoanincreasinglyrarequarterofstrongperformance.Despitethe solidquarter,theoveralloutlookfordomesticbondmarketsremains challengingduetoratesremainingwellbelowhistoricalaverages. -1.00 -0.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 Apr-13May-13Jun-13Jul-13Aug-13Sep-13Oct-13Nov-13Dec-13Jan-14Feb-14Mar-14 1-Year Trailing Market Rates Fed Funds Rate TED Spread 3-Month Libor BAA OAS 10yr Treasury 10yr TIPS 9 Pa g e I n t e n t i o n a l l y L e f t B l a n k 10 Schedule of Investable Assets Total Fund Total Fund Policy Net Cash Flow $0.0 $7,000,000.0 $14,000,000.0 $21,000,000.0 $28,000,000.0 $35,000,000.0 $42,000,000.0 $49,000,000.0 $56,000,000.0 $63,000,000.0 $70,000,000.0 $77,000,000.0 Market Valu e 7/07 1/08 7/08 1/09 7/09 1/10 7/10 1/11 7/11 1/12 7/12 1/13 7/13 3/14 $44,581,508.5 $65,255,647.4 Schedule of Investable Assets Periods Ending Beginning Market Value $ Net Cash Flow $ Gain/Loss $ Ending Market Value $ %Return Aug-2007 To Mar-2014 20,255,072 24,326,436 20,674,139 65,255,647 5.55 Schedule of Investable Assets Total Fund August 1, 2007 To March 31, 2014 11 March 31, 2014 : $65,255,647 US Cash $214,087 0% US Private Real Estate $5,473,826 8% Global Fixed Income $3,378,594 5% US Fixed Income $12,823,856 20% International Equity $6,960,048 11% US Equity $36,405,236 56% December 31, 2013 : $63,165,953 US Cash $452,334 1% US Private Real Estate $4,328,451 7% Global Fixed Income $3,124,488 5% US Fixed Income $12,593,889 20% International Equity $6,750,188 11% US Equity $35,916,603 57% Asset Allocation By Asset Class Total Fund As of March 31, 2014 12 March 31, 2014 : $65,255,647 VG TSMI $13,265,428 20% Dana (LC) $13,654,484 21% R & D $214,087 0% Intercontinental $2,913,251 4% American $2,560,576 4% Templeton GB $3,378,594 5% GHA $6,409,537 10% Agincourt $6,414,319 10% Manning & Napier $3,522,030 5% RBC $3,438,019 5% Dana (SC) $3,707,640 6% Fiduciary $5,777,683 9% December 31, 2013 : $63,165,953 VG TSMI $12,649,423 20% Dana (LC) $13,693,259 22% R & D $452,334 1% Intercontinental $2,109,773 3% American $2,218,678 4% Templeton GB $3,124,488 5% GHA $6,298,091 10% Agincourt $6,295,798 10% Manning & Napier $3,448,627 5% RBC $3,301,561 5% Dana (SC) $3,913,089 6% Fiduciary $5,660,832 9% Asset Allocation By Manager Total Fund As of March 31, 2014 13 Asset Allocation vs. Target Allocation Allocation Differences 0.00%3.00%6.00%9.00%11.00%-3.00 %-6.00 %-9.00 %-11.00 % Cash Equivalents Real Estate Global Fixed Income Intermediate Fixed Income Broad Fixed Income International Equity Domestic Equity 0.33% -1.61 % 0.18% -0.18 % -0.17 % 0.67% 0.79% Market Value $Allocation (%)Target (%) Domestic Equity 36,405,236 55.8 55.0 International Equity 6,960,048 10.7 10.0 Broad Fixed Income 6,414,319 9.8 10.0 Intermediate Fixed Income 6,409,537 9.8 10.0 Global Fixed Income 3,378,594 5.2 5.0 Real Estate 5,473,826 8.4 10.0 Cash Equivalents 214,087 0.3 0.0 Total Fund 65,255,647 100.0 100.0 Asset Allocation vs. Target Allocation Total Fund As of March 31, 2014 14 Asset Allocation Attributes Domestic EquityInternational Equity Domestic Fixed Income Global Fixed IncomeReal EstateCash Equivalent Total Fund ($)%($)%($)%($)%($)%($)%($)% Total Domestic Equity 35,607,46997.81 --------797,7672.1936,405,23655.79 Vanguard Total Stock Index (VITSX)13,265,428100.00 ----------13,265,42820.33 Dana (Large Cap)13,555,34499.27 --------99,1400.7313,654,48420.92 Fiduciary Management, Inc.5,114,12788.52 --------663,55611.485,777,6838.85 Dana (Small Cap)3,672,57099.05 --------35,0710.953,707,6405.68 Total International Equity --6,960,048100.00 --------6,960,04810.67 RBC International Portfolio --3,438,019100.00 --------3,438,0195.27 Manning & Napier Overseas (EXOSX)--3,522,030100.00 --------3,522,0305.40 Total Domestic Fixed Income ----12,672,52498.82 ----151,3321.1812,823,85619.65 Agincourt Capital Management ----6,312,28298.41 ----102,0371.596,414,3199.83 Garcia, Hamilton & Associates ----6,360,24299.23 ----49,2950.776,409,5379.82 Total Global Fixed Income ------3,378,594100.00 ----3,378,5945.18 Templeton Global Bond Adv (FBNRX)------3,378,594100.00 ----3,378,5945.18 Total Real Estate --------5,473,826100.00 --5,473,8268.39 American Core Realty Fund --------2,560,576100.00 --2,560,5763.92 Intercontinental Real Estate --------2,913,251100.00 --2,913,2514.46 Receipt & Disbursement ----------214,087100.00214,0870.33 Total Fund Portfolio 35,607,46954.576,960,04810.6712,672,52419.423,378,5945.185,473,8268.391,163,1861.7865,255,647100.00 Asset Allocation Total Fund As of March 31, 2014 15 Financial Reconciliation Quarter to Date Market Value 01/01/2014 ContributionsDistributions Management Fees Other Expenses Return On Investment Market Value 03/31/2014 Total Domestic Equity 35,916,603 338,127 -750,000 -38,127 -938,633 36,405,236 Vanguard Total Stock Index (VITSX)12,649,423 300,000 ---316,005 13,265,428 Dana (Large Cap)13,693,259 21,415 -500,000 -21,415 -461,225 13,654,484 Fiduciary Management, Inc.5,660,832 10,592 --10,592 -116,851 5,777,683 Dana (Small Cap)3,913,089 6,120 -250,000 -6,120 -44,552 3,707,640 Total International Equity 6,750,188 7,083 --7,083 -209,860 6,960,048 RBC International Portfolio 3,301,561 7,083 --7,083 -136,457 3,438,019 Manning & Napier Overseas (EXOSX)3,448,627 ----73,403 3,522,030 Total Domestic Fixed Income 12,593,889 11,488 --11,488 -229,967 12,823,856 Agincourt Capital Management 6,295,798 7,552 --7,552 -118,521 6,414,319 Garcia, Hamilton & Associates 6,298,091 3,936 --3,936 -111,446 6,409,537 Total Global Fixed Income 3,124,488 225,000 ---29,106 3,378,594 Templeton Global Bond Adv (FBNRX)3,124,488 225,000 ---29,106 3,378,594 Total Real Estate 4,328,451 1,012,500 ---132,875 5,473,826 American Core Realty Fund 2,218,678 262,500 ---79,398 2,560,576 Intercontinental Real Estate 2,109,773 750,000 ---53,478 2,913,251 Receipt & Disbursement 452,334 1,683,752 -1,867,346 --54,672 20 214,087 Total Fund Portfolio 63,165,953 3,277,949 -2,617,346 -56,697 -54,672 1,540,461 65,255,647 Financial Reconciliation Total Fund 1 Quarter Ending March 31, 2014 16 Financial Reconciliation Fiscal Year to Date Market Value 10/01/2013 ContributionsDistributions Management Fees Other Expenses Return On Investment Market Value 03/31/2014 Total Domestic Equity 32,329,467 970,272 -1,010,000 -70,272 -4,185,769 36,405,236 Vanguard Total Stock Index (VITSX)10,962,682 900,000 ---1,402,746 13,265,428 Dana (Large Cap)12,620,516 41,226 -760,000 -41,226 -1,793,968 13,654,484 Fiduciary Management, Inc.5,231,333 17,409 --17,409 -546,351 5,777,683 Dana (Small Cap)3,514,936 11,637 -250,000 -11,637 -442,704 3,707,640 Total International Equity 5,912,660 363,407 --13,407 -697,388 6,960,048 RBC International Portfolio 2,954,820 13,407 --13,407 -483,199 3,438,019 Manning & Napier Overseas (EXOSX)2,957,841 350,000 ---214,189 3,522,030 Total Domestic Fixed Income 12,121,597 415,382 --15,382 -302,259 12,823,856 Agincourt Capital Management 5,890,744 407,552 --7,552 -123,575 6,414,319 Garcia, Hamilton & Associates 6,230,854 7,830 --7,830 -178,684 6,409,537 Total Global Fixed Income 2,903,577 365,000 ---110,016 3,378,594 Templeton Global Bond Adv (FBNRX)2,903,577 365,000 ---110,016 3,378,594 Total Real Estate 4,109,274 1,125,000 -18,626 -34,739 -292,917 5,473,826 American Core Realty Fund 2,056,054 375,000 --6,118 -135,640 2,560,576 Intercontinental Real Estate 2,053,220 750,000 -18,626 -28,621 -157,278 2,913,251 Receipt & Disbursement 458,224 3,668,608 -3,840,468 --72,311 35 214,087 Total Fund Portfolio 57,834,800 6,907,669 -4,869,094 -133,800 -72,311 5,588,383 65,255,647 Financial Reconciliation Total Fund October 1, 2013 To March 31, 2014 17 Pa g e I n t e n t i o n a l l y L e f t B l a n k 18 Comparative Performance Trailing Returns QTR FYTD 1 YR 3 YR 5 YR Inception Inception Date Total Fund Portfolio (Gross)2.41 (15)9.44 (7)16.25 (3)10.09 (14)13.66 (55)5.87 (67)05/01/1998 Total Fund Policy 1.83 (32)8.21 (33)15.10 (8)10.91 (2)15.75 (5)5.59 (84) All Public Plans-Total Fund Median 1.66 7.71 12.97 8.90 13.76 6.14 Total Fund Portfolio (Net)2.33 9.20 15.75 9.55 13.13 5.29 05/01/1998 Total Fund Policy 1.83 8.21 15.10 10.91 15.75 5.59 Total Equity 2.75 12.61 23.17 11.76 18.76 9.03 07/31/2008 Total Equity Policy 1.77 11.23 21.54 13.47 21.08 8.56 Total Domestic Equity 2.68 (28)12.86 (24)23.49 (38)12.25 (60)19.19 (68)8.83 (28)07/01/2002 Total Domestic Equity Policy 1.97 (45)12.28 (36)22.61 (47)14.61 (29)21.93 (30)8.00 (50) IM U.S. All Cap Core Equity (SA+CF+MF) Median 1.81 11.44 22.38 13.09 20.60 7.97 Total International Equity 3.11 (12)11.28 (8)21.51 (17)9.35 (17)17.57 (31)7.51 (23)01/01/2006 Total International Equity Policy 0.61 (42)5.45 (50)15.32 (41)6.88 (36)16.01 (47)N/A MSCI EAFE Index 0.77 (39)6.56 (37)18.06 (27)7.72 (28)16.56 (41)4.99 (60) IM International Equity (SA+CF+MF) Median 0.29 5.44 13.26 5.52 15.84 5.53 Total Fixed Income 1.65 2.67 1.27 4.93 6.37 5.24 07/01/2002 Total Fixed Income Policy 1.75 1.42 0.47 2.80 4.10 4.61 Total Domestic Fixed Income 1.83 (75)2.43 (31)1.17 (8)N/A N/A 3.80 (22)09/01/2011 IM U.S. Broad Market Core Fixed Income (SA+CF) Median1.98 2.03 0.28 4.29 5.98 3.09 IM U.S. Intermediate Duration (SA+CF) Median 1.19 1.38 0.41 3.50 4.98 2.44 Total Global Fixed Income 0.86 (94)3.62 (28)1.76 (33)N/A N/A 5.43 (11)09/01/2011 Citigroup World Government Bond 2.66 (41)1.55 (90)1.37 (39)1.91 (82)3.84 (95)-0.73 (94) IM Global Fixed Income (MF) Median 2.43 2.78 0.82 3.36 6.34 2.67 Total Real Estate 2.49 (48)6.39 (29)14.39 (38)13.74 (57)6.48 (64)4.60 (50)07/01/2006 Total Real Estate Policy 2.45 (51)5.65 (59)12.34 (80)12.08 (81)8.11 (31)6.29 (6) NCREIF Property Index 0.00 (100)2.53 (100)8.21 (100)10.69 (100)7.31 (57)5.78 (9) IM U.S. Open End Private Real Estate (SA+CF) Median2.45 5.75 13.72 13.83 7.73 4.51 Comparative Performance Total Fund As of March 31, 2014 Returns for periods greater than 1 yr. are annualized. Returns are expressed as percentage. Dana Large Cap Portfolio: Managed as broad equity from 7/1/2002-1/1/2008; large cap value from 1/1/2008-1/1/2011; and core equity from 1/1/2011 to present. Dana Custom Index: 100% Russell 3000 Index prior to 1/1/2008; 100% Russell 1000 Value Index 1/1/2008-12/31/2010; 100% S&P 500 Index 1/1/2011-present. 19 Comparative Performance Total Fund As of March 31, 2014 QTR FYTD 1 YR 3 YR 5 YR Inception Inception Date Total Domestic Equity Vanguard Total Stock Index (VITSX)2.05 (41)12.33 (33)22.71 (45)N/A N/A 22.71 (45)04/01/2013 Vanguard Total Stock Market Index 2.04 (42)12.33 (33)22.70 (45)14.65 (26)22.08 (25)22.70 (45) IM U.S. Multi-Cap Core Equity (MF) Median 1.77 11.41 22.31 12.93 20.44 22.31 Dana (Large Cap)3.53 (13)14.48 (18)24.11 (38)14.89 (51)20.69 (62)8.62 (54)07/01/2002 Dana Custom Index 1.81 (65)12.51 (57)21.86 (67)14.66 (57)21.54 (42)7.58 (88) IM U.S. Large Cap Core Equity (SA+CF) Median 2.11 12.74 22.82 14.90 21.17 8.69 Fiduciary Management, Inc.2.06 (44)10.44 (75)N/A N/A N/A 12.05 (74)08/01/2013 Russell 3000 Index 1.97 (47)12.28 (52)22.61 (64)14.61 (64)21.93 (55)13.20 (60) IM U.S. All Cap Core Equity (SA+CF) Median 1.87 12.32 23.73 15.19 22.09 14.27 Dana (Small Cap)1.29 (49)12.77 (23)28.53 (41)18.53 (8)27.19 (34)9.61 (79)05/01/2005 Russell 2000 Index 1.12 (53)9.94 (75)24.90 (74)13.18 (81)24.31 (74)9.69 (79) IM U.S. Small Cap Core Equity (SA+CF) Median 1.25 11.29 26.99 15.33 26.20 10.95 Total International Equity RBC International Portfolio 4.13 (6)16.35 (1)27.52 (8)13.58 (6)20.64 (11)9.33 (7)01/01/2006 MSCI AC World ex USA 0.61 (64)5.45 (83)12.80 (89)4.63 (83)16.04 (56)5.32 (63) IM International Large Cap Value Equity (SA+CF) Median1.13 7.41 20.24 7.51 16.62 5.75 Manning & Napier Overseas (EXOSX)2.13 (10)6.76 (40)15.95 (48)5.21 (67)N/A 11.27 (41)06/01/2009 MSCI AC World ex USA 0.61 (40)5.45 (66)12.80 (76)4.63 (73)16.04 (35)10.59 (54) IM International Multi-Cap Core Equity (MF) Median 0.39 6.11 15.75 6.43 15.39 10.84 Returns for periods greater than 1 yr. are annualized. Returns are expressed as percentage. Dana Large Cap Portfolio: Managed as broad equity from 7/1/2002-1/1/2008; large cap value from 1/1/2008-1/1/2011; and core equity from 1/1/2011 to present. Dana Custom Index: 100% Russell 3000 Index prior to 1/1/2008; 100% Russell 1000 Value Index 1/1/2008-12/31/2010; 100% S&P 500 Index 1/1/2011-present. 20 Comparative Performance Total Fund As of March 31, 2014 QTR FYTD 1 YR 3 YR 5 YR Inception Inception Date Total Domestic Fixed Income Agincourt Capital Management 1.88 (67)1.99 (53)0.29 (50)4.30 (50)5.59 (67)6.57 (38)10/01/2008 Barclays Aggregate Index 1.84 (74)1.70 (82)-0.10 (75)3.75 (86)4.80 (85)5.23 (91) IM U.S. Broad Market Core Fixed Income (SA+CF) Median1.98 2.03 0.28 4.29 5.98 6.25 Garcia, Hamilton & Associates 1.77 (13)2.87 (8)2.05 (5)4.92 (6)6.72 (14)6.35 (8)07/01/2008 Barclays Intermediate Aggregate Index 1.20 (48)1.06 (79)0.01 (76)3.04 (80)4.24 (79)4.46 (82) IM U.S. Intermediate Duration (SA+CF) Median 1.19 1.38 0.41 3.50 4.98 4.99 Total Global Fixed Income Templeton Global Bond Adv (FBNRX)0.86 (94)3.62 (28)1.83 (31)N/A N/A 8.06 (6)10/01/2011 Citigroup World Government Bond 2.66 (41)1.55 (90)1.37 (39)1.91 (82)3.84 (95)0.03 (95) IM Global Fixed Income (MF) Median 2.43 2.78 0.82 3.36 6.34 3.55 Total Real Estate American Core Realty Fund 3.20 (25)5.88 (41)13.15 (62)12.42 (78)5.76 (71)3.60 (73)07/01/2006 NCREIF Fund Index-Open End Diversified Core (EW)2.45 (51)5.65 (59)13.21 (62)12.85 (64)6.59 (63)3.88 (56) IM U.S. Open End Private Real Estate (SA+CF) Median2.45 5.75 13.72 13.83 7.73 4.51 Intercontinental Real Estate 1.87 (89)7.06 (20)15.81 (22)15.19 (27)N/A 15.59 (27)10/01/2010 NCREIF Fund Index-Open End Diversified Core (EW)2.45 (51)5.65 (59)13.21 (62)12.85 (64)6.59 (63)13.70 (71) IM U.S. Open End Private Real Estate (SA+CF) Median2.45 5.75 13.72 13.83 7.73 14.30 Returns for periods greater than 1 yr. are annualized. Returns are expressed as percentage. Dana Large Cap Portfolio: Managed as broad equity from 7/1/2002-1/1/2008; large cap value from 1/1/2008-1/1/2011; and core equity from 1/1/2011 to present. Dana Custom Index: 100% Russell 3000 Index prior to 1/1/2008; 100% Russell 1000 Value Index 1/1/2008-12/31/2010; 100% S&P 500 Index 1/1/2011-present. 21 Pa g e I n t e n t i o n a l l y L e f t B l a n k 22 Comparative Performance Fiscal Year Returns FY2013FY2012FY2011FY2010FY2009FY2008FY2007FY2006 FY2005 Total Fund Portfolio (Gross)15.11 (12)18.93 (30)0.08 (56)8.61 (83)0.00 (67)-11.96 (28)11.67 (89)8.65 (50)14.35 (26) Total Fund Policy 14.70 (16)19.99 (14)2.54 (13)9.32 (69)-1.86 (82)-14.02 (55)13.39 (67)9.16 (41)9.23 (84) All Public Plans-Total Fund Median 12.5517.93 0.29 9.98 1.31-13.6714.39 8.6412.34 Total Fund Portfolio (Net)14.5618.28 -0.37 8.14 -0.46-12.3010.96 7.9213.82 Total Fund Policy 14.7019.99 2.54 9.32 -1.86-14.0213.39 9.16 9.23 Total Equity 22.0625.54 -4.3810.56 -1.59 N/A N/A N/A N/A Total Equity Policy 21.8227.76 -0.89 9.91 -4.90 N/A N/A N/A N/A Total Domestic Equity 21.70 (61)26.53 (43)-2.59 (56)11.15 (30)-3.60 (43)-16.51 (10)14.18 (74)10.21 (33)21.50 (14) Total Domestic Equity Policy 21.60 (62)30.20 (18)0.55 (26)10.96 (34)-6.42 (68)-21.52 (34)16.52 (54)10.22 (33)12.69 (74) IM U.S. All Cap Core Equity (SA+CF+MF) Median 23.3525.47 -2.04 9.78 -4.67-22.8816.78 9.1215.06 Total International Equity 24.24 (23)20.29 (18)-10.51 (42)8.14 (54)11.28 (30)-30.51 (46)24.22 (72)N/A N/A Total International Equity Policy 22.69 (31)14.33 (67)-8.94 (31)3.71 (76)3.80 (56)-30.13 (42)N/A N/A N/A MSCI EAFE Index 24.29 (23)14.33 (67)-8.94 (31)3.71 (76)3.80 (56)-30.13 (42)25.38 (64)19.65 (46)26.32 (56) IM International Equity (SA+CF+MF) Median 18.2416.38-11.44 8.91 5.08-31.0928.1619.1827.00 Total Fixed Income 0.12 8.82 3.39 9.2015.33 0.03 5.24 3.64 1.77 Total Fixed Income Policy -1.56 4.11 4.22 7.52 9.69 4.16 5.43 3.54 1.48 Total Domestic Fixed Income -0.24 (11)8.27 (14)N/A N/A N/A N/A N/A N/A N/A Total Domestic Fixed Income Policy -0.80 (29)4.31 (98)4.22 (91)7.52 (96)9.69 (89)4.16 (21)5.43 (26)3.54 (87)1.48 (100) IM U.S. Broad Market Core Fixed Income (SA+CF) Median-1.28 6.62 5.26 9.2612.34 2.57 5.14 3.85 3.11 Total Global Fixed Income 3.33 (6)13.25 (7)N/A N/A N/A N/A N/A N/A N/A Citigroup World Government Bond -4.60 (86)3.29 (97)4.61 (8)4.99 (94)13.78 (52)5.90 (6)8.69 (30)2.23 (64)3.02 (74) IM Global Fixed Income (MF) Median -1.45 7.39 1.53 7.8013.96-1.53 7.21 2.54 5.11 Total Real Estate 15.18 (34)12.45 (55)15.92 (78)2.44 (79)-32.96 (41)4.98 (36)21.07 (13)N/A N/A Total Real Estate Policy 11.84 (80)11.00 (77)16.10 (78)5.84 (53)-22.09 (5)5.27 (29)17.31 (71)N/A N/A NCREIF Property Index 11.00 (82)11.00 (77)16.10 (78)5.84 (53)-22.09 (5)5.27 (29)17.31 (71)17.62 (55)19.19 (68) IM U.S. Open End Private Real Estate (SA+CF) Median12.9612.8916.62 6.39-34.36 3.6018.7318.0819.98 Comparative Performance Total Fund As of March 31, 2014 Returns for periods greater than 1 yr. are annualized. Dana Large Cap Portfolio: Managed as broad equity from 7/1/2002-1/1/2008; large cap value from 1/1/2008-1/1/2011; and core equity from 1/1/2011 to present. Dana Custom Index: 100% Russell 3000 Index prior to 1/1/2008; 100% Russell 1000 Value Index 1/1/2008-12/31/2010; 100% S&P 500 Index 1/1/2011-present. 23 Comparative Performance Total Fund As of March 31, 2014 FY2013FY2012FY2011FY2010FY2009FY2008FY2007FY2006 FY2005 Total Domestic Equity Vanguard Total Stock Index (VITSX)N/A N/A N/A N/A N/A N/A N/A N/A N/A Vanguard Total Stock Market Index 21.50 (63)30.28 (16)0.71 (20)11.16 (28)-6.03 (64)-21.19 (29)16.98 (47)10.38 (29)14.70 (53) IM U.S. Multi-Cap Core Equity (MF) Median 23.1925.43 -2.33 9.62 -4.54-22.9816.72 9.1114.89 Dana (Large Cap)19.62 (62)31.58 (21)-0.89 (72)10.10 (42)-13.66 (97)-12.23 (6)15.43 (71)10.93 (45)18.87 (23) Dana Custom Index 19.34 (63)30.20 (45)0.95 (53)8.90 (59)-10.62 (92)-21.56 (62)16.52 (58)10.22 (57)14.57 (56) IM U.S. Large Cap Core Equity (SA+CF) Median 20.6229.78 1.13 9.46 -5.79-20.4816.9710.7615.16 Fiduciary Management, Inc.N/A N/A N/A N/A N/A N/A N/A N/A N/A Russell 3000 Index 21.60 (78)30.20 (30)0.55 (62)10.96 (53)-6.42 (60)-21.52 (63)16.52 (63)10.22 (37)14.57 (72) IM U.S. All Cap Core Equity (SA+CF) Median 23.8627.38 0.9811.05 -6.06-21.1117.67 9.1517.13 Dana (Small Cap)31.48 (57)39.20 (8)3.82 (15)15.86 (35)-13.06 (84)-21.93 (80)8.02 (89)5.23 (80)N/A Russell 2000 Index 30.06 (71)31.91 (54)-3.53 (77)13.35 (72)-9.55 (65)-14.48 (25)12.34 (70)9.92 (32)17.95 (82) IM U.S. Small Cap Core Equity (SA+CF) Median 32.3032.35 -0.2314.61 -7.80-17.6514.74 8.1621.91 Total International Equity RBC International Portfolio 27.45 (16)24.65 (3)-8.87 (57)12.31 (10)7.72 (39)-29.87 (70)24.22 (48)N/A N/A MSCI AC World ex USA 16.98 (82)15.04 (50)-10.42 (70)8.00 (36)6.43 (47)-29.97 (70)31.06 (13)19.36 (72)29.48 (28) IM International Large Cap Value Equity (SA+CF) Median22.6315.01 -8.41 4.95 6.01-27.3823.9120.9226.81 Manning & Napier Overseas (EXOSX)20.93 (49)16.04 (39)-12.51 (72)2.52 (82)N/A N/A N/A N/A N/A MSCI AC World ex USA 16.98 (80)15.04 (56)-10.42 (41)8.00 (23)6.43 (26)-29.97 (32)31.06 (6)19.36 (31)29.48 (8) IM International Multi-Cap Core Equity (MF) Median 20.6415.37-11.09 5.13 2.20-31.3624.9718.2525.34 Returns for periods greater than 1 yr. are annualized. Dana Large Cap Portfolio: Managed as broad equity from 7/1/2002-1/1/2008; large cap value from 1/1/2008-1/1/2011; and core equity from 1/1/2011 to present. Dana Custom Index: 100% Russell 3000 Index prior to 1/1/2008; 100% Russell 1000 Value Index 1/1/2008-12/31/2010; 100% S&P 500 Index 1/1/2011-present. 24 Comparative Performance Total Fund As of March 31, 2014 FY2013FY2012FY2011FY2010FY2009FY2008FY2007FY2006 FY2005 Total Domestic Fixed Income Agincourt Capital Management -1.40 (60)6.96 (44)4.92 (69)9.55 (38)14.76 (19)N/A N/A N/A N/A Barclays Aggregate Index -1.68 (81)5.16 (91)5.26 (49)8.16 (87)10.56 (80)3.65 (32)5.14 (51)3.67 (76)2.80 (81) IM U.S. Broad Market Core Fixed Income (SA+CF) Median-1.28 6.62 5.26 9.2612.34 2.57 5.14 3.85 3.11 Garcia, Hamilton & Associates 0.88 (8)9.51 (4)2.32 (90)8.87 (28)15.91 (7)N/A N/A N/A N/A Barclays Intermediate Aggregate Index -0.71 (77)4.31 (85)4.22 (21)7.52 (77)9.69 (82)4.16 (35)5.33 (69)3.84 (61)2.23 (42) IM U.S. Intermediate Duration (SA+CF) Median -0.24 5.57 3.58 8.2711.46 3.26 5.49 3.92 2.09 Total Global Fixed Income Templeton Global Bond Adv (FBNRX)3.44 (5)13.25 (7)N/A N/A N/A N/A N/A N/A N/A Citigroup World Government Bond -4.60 (86)3.29 (97)4.61 (8)4.99 (94)13.78 (52)5.90 (6)8.69 (30)2.23 (64)3.02 (74) IM Global Fixed Income (MF) Median -1.45 7.39 1.53 7.8013.96-1.53 7.21 2.54 5.11 Total Real Estate American Core Realty Fund 12.27 (70)11.57 (66)16.11 (74)2.72 (75)-32.96 (41)4.98 (36)16.31 (81)N/A N/A NCREIF Fund Index-Open End Diversified Core (EW)12.47 (67)11.77 (65)18.03 (41)6.14 (52)-36.09 (54)3.73 (49)17.84 (61)17.49 (55)18.91 (71) IM U.S. Open End Private Real Estate (SA+CF) Median12.9612.8916.62 6.39-34.36 3.6018.7318.0819.98 Intercontinental Real Estate 18.19 (8)13.33 (42)15.80 (79)N/A N/A N/A N/A N/A N/A NCREIF Fund Index-Open End Diversified Core (EW)12.47 (67)11.77 (65)18.03 (41)6.14 (52)-36.09 (54)3.73 (49)17.84 (61)17.49 (55)18.91 (71) IM U.S. Open End Private Real Estate (SA+CF) Median12.9612.8916.62 6.39-34.36 3.6018.7318.0819.98 Returns for periods greater than 1 yr. are annualized. Dana Large Cap Portfolio: Managed as broad equity from 7/1/2002-1/1/2008; large cap value from 1/1/2008-1/1/2011; and core equity from 1/1/2011 to present. Dana Custom Index: 100% Russell 3000 Index prior to 1/1/2008; 100% Russell 1000 Value Index 1/1/2008-12/31/2010; 100% S&P 500 Index 1/1/2011-present. 25 Plan Sponsor Peer Group Analysis - All Public Plans-Total Fund Comparative Performance -30.00 -20.00 -10.00 0.00 10.00 20.00 30.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Total Fund15.11 (12)18.93 (30)0.08 (56)8.61 (83)0.00 (67)-11.96 (28)Ł Total Policy14.70 (16)19.99 (14)2.54 (13)9.32 (69)-1.86 (82)-14.02 (55)Ł Median12.5517.930.299.981.31-13.67 -4.00 -1.00 2.00 5.00 8.00 11.00 14.00 17.00 20.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR Total Fund2.41 (15)9.44 (7)16.25 (3)13.53 (3)10.09 (14)11.21 (7)13.66 (55)Ł Total Policy1.83 (32)8.21 (33)15.10 (8)12.99 (10)10.91 (2)11.66 (2)15.75 (5)Ł Median1.667.7112.9711.308.909.9913.76 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 Total Fund 6.86 (8)5.02 (45)1.15 (6)6.83 (8)1.44 (62)5.02 (34) Total Policy 6.27 (26)5.12 (42)1.19 (6)6.76 (10)1.00 (77)4.78 (49) All Public Plans-Total Fund Median 5.63 4.91 0.10 5.47 1.72 4.77 As of March 31, 2014 Performance Review Total Fund NONE 26 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0R e t u r n P e r c e n t i l e R a n k 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 3/14 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count Total Fund20 5 (25%)1 (5%)10 (50%)4 (20%)Ł Total Policy20 10 (50%)0 (0%)3 (15%)7 (35%)Ł Over Performance Under Performance Earliest Date Latest Date -15.0 0.0 15.0 30.0 To t a l F u n d ( % ) -15.0 -12.5 -10.0 -7.5 -5.0 -2.5 0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5 20.0 22.5 25.0 27.530.0 Total Policy (%) Over Performance Under Performance 7.50 9.00 10.50 12.00 R e t u r n ( % ) 9.20 9.40 9.60 9.80 10.00 10.20 10.40 10.6010.80 Risk (Standard Deviation %) Return Standard Deviation Total Fund 10.09 10.57Ł Total Policy 10.91 9.52Ł Median 8.90 9.74¾ 12.00 13.50 15.00 16.50 R e t u r n ( % ) 9.8 9.9 10.0 10.1 10.2 10.3 10.4 10.510.6 Risk (Standard Deviation %) Return Standard Deviation Total Fund 13.66 9.92Ł Total Policy 15.75 10.50Ł Median 13.76 10.11¾ Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Total Fund 1.63 101.45 122.86 -1.74 -0.39 0.97 1.10 6.65 Total Policy 0.00 100.00 100.00 0.00 N/A 1.14 1.00 5.53 90 Day U.S. Treasury Bill 9.52 0.36 -0.24 0.07 -1.14 N/A 0.00 0.00 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Total Fund 3.14 90.76 105.14 -0.41 -0.62 1.35 0.90 5.59 Total Policy 0.00 100.00 100.00 0.00 N/A 1.46 1.00 5.18 90 Day U.S. Treasury Bill 10.50 0.45 -0.38 0.09 -1.46 N/A 0.00 0.00 As of March 31, 2014 Performance Review Total Fund NONE 27 Pa g e I n t e n t i o n a l l y L e f t B l a n k 28 Peer Group Analysis - IM U.S. Multi-Cap Core Equity (MF) Comparative Performance -55.00 -40.00 -25.00 -10.00 5.00 20.00 35.00 50.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 VG TSMIN/AN/AN/AN/AN/AN/AŁ VG TSM Index21.50 (63)30.28 (16)0.71 (20)11.16 (28)-6.03 (64)-21.19 (29)Ł Median23.1925.43-2.339.62-4.54 -22.98 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR VG TSMI2.05 (41)12.33 (33)22.71 (45)N/AN/AN/AN/AŁ VG TSM Index2.04 (42)12.33 (33)22.70 (45)18.50 (40)14.65 (26)15.39 (23)22.08 (25)Ł Median1.7711.4122.3117.6712.9313.7320.44 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 VG TSMI 10.08 (31)6.30 (64)2.77 (44)N/A N/A N/A VG TSM Index 10.09 (30)6.29 (65)2.76 (44)11.02 (50)0.19 (78)6.24 (33) IM U.S. Multi-Cap Core Equity (MF) Median 9.45 6.85 2.57 11.01 1.51 5.68 Performance Review (Fiscal Years) As of March 31, 2014 VG TSMI NONE 29 Peer Group Analysis - IM U.S. Large Cap Core Equity (SA+CF) Comparative Performance -40.00 -30.00 -20.00 -10.00 0.00 10.00 20.00 30.00 40.00 50.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Dana LC19.62 (62)31.58 (21)-0.89 (72)10.10 (42)-13.66 (97)-12.23 (6)Ł Dana Index19.34 (63)30.20 (45)0.95 (53)8.90 (59)-10.62 (92)-21.56 (62)Ł Median20.6229.781.139.46-5.79-20.48 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR Dana LC3.53 (13)14.48 (18)24.11 (38)18.72 (42)14.89 (51)15.38 (47)20.69 (62)Ł Dana Index1.81 (65)12.51 (57)21.86 (67)17.84 (59)14.66 (57)14.64 (64)21.54 (42)Ł Median2.1112.7422.8218.3514.9015.2621.17 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 Dana LC 10.58 (46)6.01 (50)2.26 (66)11.16 (35)-0.74 (75)5.18 (83) Dana Index 10.51 (49)5.24 (72)2.91 (45)10.61 (54)-0.38 (61)6.35 (53) IM U.S. Large Cap Core Equity (SA+CF) Median 10.49 5.99 2.75 10.67 0.00 6.41 Performance Review (Fiscal Years) As of March 31, 2014 Dana LC NONE 30 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0R e t u r n P e r c e n t i l e R a n k 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 3/14 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count Dana LC20 0 (0%)5 (25%)10 (50%)5 (25%)Ł Dana Index20 0 (0%)3 (15%)6 (30%)11 (55%)Ł Over Performance Under Performance Earliest Date Latest Date -25.0 0.0 25.0 50.0 D a n a L C ( % ) -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.050.0 Dana Index (%) Over Performance Under Performance 14.60 14.80 15.00 R e t u r n ( % ) 14.10 14.40 14.70 15.00 15.30 15.60 15.90 16.2016.50 Risk (Standard Deviation %) Return Standard Deviation Dana LC 14.89 15.95Ł Dana Index 14.66 14.52Ł Median 14.90 15.25¾ 20.00 21.00 22.00 R e t u r n ( % ) 15.50 15.60 15.70 15.80 15.90 16.00 16.10 16.2016.30 Risk (Standard Deviation %) Return Standard Deviation Dana LC 20.69 15.66Ł Dana Index 21.54 16.02Ł Median 21.17 16.17¾ Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Dana LC 2.07 102.49 103.14 -0.27 0.14 1.14 1.04 7.52 Dana Index 0.00 100.00 100.00 0.00 N/A 1.17 1.00 7.05 90 Day U.S. Treasury Bill 12.30 0.15 -0.20 0.07 -1.17 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Dana LC 3.23 97.01 98.39 0.47 -0.24 1.44 0.94 7.37 Dana Index 0.00 100.00 100.00 0.00 N/A 1.44 1.00 7.55 90 Day U.S. Treasury Bill 14.24 0.22 -0.23 0.09 -1.44 N/A 0.00 0.00 Performance Review (Fiscal Years) As of March 31, 2014 Dana LC NONE 31 Pa g e I n t e n t i o n a l l y L e f t B l a n k 32 Peer Group Analysis - IM U.S. All Cap Core Equity (SA+CF) Comparative Performance -55.00 -40.00 -25.00 -10.00 5.00 20.00 35.00 50.00 65.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 FiduciaryN/AN/AN/AN/AN/AN/AŁ R300021.60 (78)30.20 (30)0.55 (62)10.96 (53)-6.42 (60)-21.52 (63)Ł Median23.8627.380.9811.05-6.06-21.11 -10.00 0.00 10.00 20.00 30.00 40.00 50.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR Fiduciary2.06 (44)10.44 (75)N/A N/A N/A N/A N/AŁ R30001.97 (47)12.28 (52)22.61 (64)18.52 (66)14.61 (64)15.31 (61)21.93 (55)Ł Median1.8712.3223.7319.1815.1915.5822.09 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 Fiduciary 8.21 (88)N/A N/A N/A N/A N/A R3000 10.10 (53)6.35 (78)2.69 (53)11.07 (62)0.25 (71)6.23 (35) IM U.S. All Cap Core Equity (SA+CF) Median 10.12 7.54 2.70 11.29 0.74 5.93 Performance Review (Fiscal Years) As of March 31, 2014 Fiduciary NONE 33 Peer Group Analysis - IM U.S. Small Cap Core Equity (SA+CF) Comparative Performance -55.00 -40.00 -25.00 -10.00 5.00 20.00 35.00 50.00 65.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Dana SC31.48 (57)39.20 (8)3.82 (15)15.86 (35)-13.06 (84)-21.93 (80)Ł R200030.06 (71)31.91 (54)-3.53 (77)13.35 (72)-9.55 (65)-14.48 (25)Ł Median32.3032.35-0.2314.61-7.80-17.65 -10.00 0.00 10.00 20.00 30.00 40.00 50.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR Dana SC1.29 (49)12.77 (23)28.53 (41)23.69 (34)18.53 (8)21.74 (9)27.19 (34)Ł R20001.12 (53)9.94 (75)24.90 (74)20.52 (67)13.18 (81)16.21 (85)24.31 (74)Ł Median1.2511.2926.9921.7015.3318.7726.20 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 Dana SC 11.33 (22)9.64 (68)3.96 (51)14.86 (10)0.43 (93)6.89 (17) R2000 8.72 (78)10.21 (55)3.08 (60)12.39 (59)1.85 (68)5.25 (56) IM U.S. Small Cap Core Equity (SA+CF) Median 9.74 10.45 3.97 12.82 2.40 5.49 Performance Review (Fiscal Years) As of March 31, 2014 Dana SC NONE 34 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0R e t u r n P e r c e n t i l e R a n k 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 3/14 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count Dana SC20 8 (40%)1 (5%)4 (20%)7 (35%)Ł R200020 0 (0%)2 (10%)9 (45%)9 (45%)Ł Over Performance Under Performance Earliest Date Latest Date -50.0 0.0 50.0 D a n a S C ( % ) -50.0 -45.0 -40.0 -35.0 -30.0 -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.050.0 R2000 (%) Over Performance Under Performance 10.00 15.00 20.00 R e t u r n ( % ) 19.10 19.20 19.30 19.40 19.50 19.60 19.7019.80 Risk (Standard Deviation %) Return Standard Deviation Dana SC 18.53 19.57Ł R2000 13.18 19.18Ł Median 15.33 19.66¾ 22.00 24.00 26.00 28.00 R e t u r n ( % ) 18.60 18.80 19.00 19.20 19.40 19.60 19.8020.00 Risk (Standard Deviation %) Return Standard Deviation Dana SC 27.19 18.87Ł R2000 24.31 19.83Ł Median 26.20 19.70¾ Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Dana SC 4.41 105.60 80.73 5.12 1.06 1.10 0.98 9.36 R2000 0.00 100.00 100.00 0.00 N/A 0.83 1.00 9.91 90 Day U.S. Treasury Bill 16.55 0.11 -0.18 0.06 -0.83 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Dana SC 4.95 95.93 77.35 4.97 0.41 1.49 0.88 9.01 R2000 0.00 100.00 100.00 0.00 N/A 1.25 1.00 10.27 90 Day U.S. Treasury Bill 18.84 0.17 -0.19 0.10 -1.25 N/A 0.00 0.00 Performance Review (Fiscal Years) As of March 31, 2014 Dana SC NONE 35 Peer Group Analysis - IM International Large Cap Value Equity (SA+CF) Comparative Performance -55.00 -40.00 -25.00 -10.00 5.00 20.00 35.00 50.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 RBC27.45 (16)24.65 (3)-8.87 (57)12.31 (10)7.72 (39)-29.87 (70)Ł MSCI ACW16.98 (82)15.04 (50)-10.42 (70)8.00 (36)6.43 (47)-29.97 (70)Ł Median22.6315.01-8.414.956.01-27.38 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR RBC4.13 (6)16.35 (1)27.52 (8)24.51 (2)13.58 (6)16.05 (1)20.64 (11)Ł MSCI ACW0.61 (64)5.45 (83)12.80 (89)10.82 (90)4.63 (83)6.80 (78)16.04 (56)Ł Median1.137.4120.2414.527.518.7716.62 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 RBC 11.73 (1)8.86 (78)0.67 (34)8.77 (2)6.92 (34)11.26 (2) MSCI ACW 4.81 (83)10.17 (59)-2.90 (89)3.27 (69)5.89 (63)7.49 (43) IM International Large Cap Value Equity (SA+CF) Median 6.11 10.79 0.03 4.19 6.26 7.27 Performance Review (Fiscal Years) As of March 31, 2014 RBC NONE 36 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0R e t u r n P e r c e n t i l e R a n k 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 3/14 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count RBC 20 11 (55%)5 (25%)3 (15%)1 (5%)Ł MSCI ACW20 0 (0%)9 (45%)7 (35%)4 (20%)Ł Over Performance Under Performance Earliest Date Latest Date -20.0 0.0 20.0 40.0 R B C ( % ) -20.0 -16.0 -12.0 -8.0 -4.0 0.0 4.0 8.0 12.0 16.0 20.0 24.0 28.0 32.0 36.040.0 MSCI ACW (%) Over Performance Under Performance 0.00 10.00 20.00 R e t u r n ( % ) 15.50 16.00 16.50 17.00 17.50 18.00 18.50 19.00 19.5020.00 Risk (Standard Deviation %) Return Standard Deviation RBC 13.58 19.30Ł MSCI ACW 4.63 16.32Ł Median 7.51 16.59¾ 15.00 20.00 25.00 R e t u r n ( % ) 18.60 18.90 19.20 19.50 19.80 20.10 20.40 20.7021.00 Risk (Standard Deviation %) Return Standard Deviation RBC 20.64 18.78Ł MSCI ACW 16.04 20.66Ł Median 16.62 19.87¾ Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk RBC 5.38 125.97 90.62 8.66 1.58 0.80 1.02 11.46 MSCI ACW 0.00 100.00 100.00 0.00 N/A 0.35 1.00 11.72 90 Day U.S. Treasury Bill 16.62 0.15 -0.12 0.06 -0.35 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk RBC 7.54 100.74 79.38 6.23 0.50 1.16 0.86 9.75 MSCI ACW 0.00 100.00 100.00 0.00 N/A 0.89 1.00 10.69 90 Day U.S. Treasury Bill 18.52 0.18 -0.21 0.09 -0.89 N/A 0.00 0.00 Performance Review (Fiscal Years) As of March 31, 2014 RBC NONE 37 Peer Group Analysis - IM International Multi-Cap Core Equity (MF) Comparative Performance -55.00 -40.00 -25.00 -10.00 5.00 20.00 35.00 50.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 M & N20.93 (49)16.04 (39)-12.51 (72)2.52 (82)N/AN/AŁ MSCI ACW16.98 (80)15.04 (56)-10.42 (41)8.00 (23)6.43 (26)-29.97 (32)Ł Median20.6415.37-11.095.132.20-31.36 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR M & N2.13 (10)6.76 (40)15.95 (48)11.91 (63)5.21 (67)6.94 (65)N/AŁ MSCI ACW0.61 (40)5.45 (66)12.80 (76)10.82 (73)4.63 (73)6.80 (68)16.04 (35)Ł Median0.396.1115.7513.336.437.7515.39 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 M & N 4.54 (88)9.59 (64)-0.90 (48)5.15 (25)5.89 (67)6.93 (39) MSCI ACW 4.81 (83)10.17 (49)-2.90 (82)3.27 (61)5.89 (67)7.49 (23) IM International Multi-Cap Core Equity (MF) Median 5.86 10.13 -1.03 3.90 6.62 6.57 Performance Review (Fiscal Years) As of March 31, 2014 M & N NONE 38 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0R e t u r n P e r c e n t i l e R a n k 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 3/14 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count M & N 8 0 (0%)1 (13%)6 (75%)1 (13%)Ł MSCI ACW20 8 (40%)7 (35%)4 (20%)1 (5%)Ł Over Performance Under Performance Earliest Date Latest Date -6.0 0.0 6.0 12.0 M & N ( % ) -6.0-5.5-5.0-4.5-4.0-3.5-3.0-2.5-2.0-1.5-1.0-0.50.00.5 1.01.5 2.02.5 3.0 3.54.0 4.55.0 5.56.0 6.57.0 7.5 8.08.5 9.09.510.010.511.011.512.0 MSCI ACW (%) Over Performance Under Performance 3.00 4.50 6.00 7.50 R e t u r n ( % ) 16.20 16.50 16.80 17.10 17.40 17.70 18.00 18.3018.60 Risk (Standard Deviation %) Return Standard Deviation M & N 5.21 18.08Ł MSCI ACW 4.63 16.62Ł Median 6.43 16.50¾ 15.00 15.50 16.00 16.50 R e t u r n ( % ) 18.38 18.40 18.42 18.44 18.46 18.48 18.50 18.52 18.5418.56 Risk (Standard Deviation %) Return Standard Deviation M & N N/A N/AŁ MSCI ACW 16.04 18.53Ł Median 15.39 18.41¾ Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk M & N 4.56 106.33 104.08 0.50 0.18 0.37 1.05 12.72 MSCI ACW 0.00 100.00 100.00 0.00 N/A 0.35 1.00 11.72 90 Day U.S. Treasury Bill 16.62 0.15 -0.12 0.06 -0.35 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk M & N N/A N/A N/A N/A N/A N/A N/A N/A MSCI ACW 0.00 100.00 100.00 0.00 N/A 0.89 1.00 10.69 90 Day U.S. Treasury Bill 18.52 0.18 -0.21 0.09 -0.89 N/A 0.00 0.00 Performance Review (Fiscal Years) As of March 31, 2014 M & N NONE 39 Peer Group Analysis - IM U.S. Broad Market Core Fixed Income (SA+CF) Comparative Performance -12.00 -8.00 -4.00 0.00 4.00 8.00 12.00 16.00 20.00 24.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Agincourt-1.40 (60)6.96 (44)4.92 (69)9.55 (38)14.76 (19)N/AŁ BC Agg-1.68 (81)5.16 (91)5.26 (49)8.16 (87)10.56 (80)3.65 (32)Ł Median-1.286.625.269.2612.342.57 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR Agincourt1.88 (67)1.99 (52)0.29 (49)2.41 (57)4.30 (50)4.74 (46)5.59 (66)Ł BC Agg1.84 (74)1.70 (82)-0.10 (75)1.82 (85)3.75 (86)4.09 (85)4.80 (85)Ł Median1.982.030.282.474.274.685.98 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 Agincourt 0.11 (50)0.81 (20)-2.46 (57)-0.07 (78)0.34 (62)2.21 (45) BC Agg -0.14 (77)0.57 (64)-2.32 (37)-0.12 (87)0.21 (82)1.58 (90) IM U.S. Broad Market Core Fixed Income (SA+CF) Median 0.09 0.63 -2.42 0.09 0.46 2.14 Performance Review (Fiscal Years) As of March 31, 2014 Agincourt NONE 40 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0R e t u r n P e r c e n t i l e R a n k 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 3/14 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count Agincourt11 0 (0%)3 (27%)8 (73%)0 (0%)Ł BC Agg20 0 (0%)1 (5%)5 (25%)14 (70%)ŁOver Performance Earliest Date Latest Date 0.0 5.0 10.0 15.0 Ag i n c o u r t ( % ) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.510.010.511.011.512.012.513.013.514.014.515.0 BC Agg (%) Over Performance Under Performance 3.50 4.00 4.50 R e t u r n ( % ) 2.76 2.79 2.82 2.85 2.88 2.91 2.94 2.97 3.003.03 Risk (Standard Deviation %) Return Standard Deviation Agincourt 4.30 2.82Ł BC Agg 3.75 2.98Ł Median 4.27 2.90¾ 4.00 5.00 6.00 7.00 R e t u r n ( % ) 3.04 3.08 3.12 3.16 3.20 3.24 3.28 3.32 3.36 3.40 3.443.48 Risk (Standard Deviation %) Return Standard Deviation Agincourt 5.59 3.10Ł BC Agg 4.80 3.14Ł Median 5.98 3.41¾ Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Agincourt 0.70 108.68 99.48 0.54 0.76 1.46 1.00 1.60 BC Agg 0.00 100.00 100.00 0.00 N/A 1.31 1.00 1.55 90 Day U.S. Treasury Bill 2.80 0.74 -0.78 0.06 -1.31 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Agincourt 1.13 115.15 112.31 0.18 0.68 1.63 1.13 1.90 BC Agg 0.00 100.00 100.00 0.00 N/A 1.66 1.00 1.50 90 Day U.S. Treasury Bill 2.80 1.19 -0.88 0.09 -1.66 N/A 0.00 0.00 Performance Review (Fiscal Years) As of March 31, 2014 Agincourt NONE 41 Peer Group Analysis - IM U.S. Intermediate Duration (SA+CF) Comparative Performance -8.00 -4.00 0.00 4.00 8.00 12.00 16.00 20.00 24.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 GHA0.88 (8)9.51 (4)2.32 (90)8.87 (28)15.91 (7)N/AŁ BC Int Agg-0.71 (77)4.31 (85)4.22 (21)7.52 (77)9.69 (82)4.16 (35)Ł Median-0.245.573.588.2711.463.26 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR GHA1.77 (13)2.87 (8)2.05 (5)4.13 (6)4.92 (6)5.21 (8)6.72 (14)Ł BC Int Agg1.20 (48)1.06 (79)0.01 (76)1.51 (85)3.04 (80)3.47 (78)4.24 (79)Ł Median1.191.380.412.103.503.874.98 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 GHA 1.08 (5)0.93 (17)-1.70 (43)0.67 (12)1.00 (8)3.10 (4) Barclays Int Agg -0.14 (92)0.76 (41)-1.78 (53)0.15 (91)0.18 (85)1.36 (86) IM U.S. Intermediate Duration (SA+CF) Median 0.20 0.72 -1.75 0.34 0.40 1.74 Performance Review (Fiscal Years) As of March 31, 2014 GHA NONE 42 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0R e t u r n P e r c e n t i l e R a n k 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 3/14 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count GHA 12 11 (92%)1 (8%)0 (0%)0 (0%)Ł BC Int Agg20 0 (0%)1 (5%)13 (65%)6 (30%)ŁOver Performance Earliest Date Latest Date 2.5 5.0 7.5 10.0 G H A ( % ) 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.510.0 Barclays Int Agg (%) Over Performance Under Performance 1.50 3.00 4.50 6.00 R e t u r n ( % ) 2.00 2.10 2.20 2.30 2.40 2.50 2.60 2.70 Risk (Standard Deviation %) Return Standard Deviation GHA 4.92 2.58Ł BC Int Agg 3.04 2.10Ł Median 3.50 2.09¾ 2.00 4.00 6.00 8.00 R e t u r n ( % ) 2.20 2.40 2.60 2.80 3.00 3.20 3.40 Risk (Standard Deviation %) Return Standard Deviation GHA 6.72 3.18Ł BC Int Agg 4.24 2.38Ł Median 4.98 2.71¾ Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk GHA 2.38 151.29 132.49 1.91 0.77 1.53 0.98 1.68 Barclays Int Agg 0.00 100.00 100.00 0.00 N/A 1.42 1.00 1.11 90 Day U.S. Treasury Bill 2.09 0.95 -1.16 0.06 -1.42 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk GHA 2.39 141.85 99.42 2.28 1.00 1.94 1.03 1.77 Barclays Int Agg 0.00 100.00 100.00 0.00 N/A 1.82 1.00 1.16 90 Day U.S. Treasury Bill 2.25 1.41 -1.20 0.09 -1.82 N/A 0.00 0.00 Performance Review (Fiscal Years) As of March 31, 2014 GHA NONE 43 Pa g e I n t e n t i o n a l l y L e f t B l a n k 44 Peer Group Analysis - IM International Fixed Income (MF) Comparative Performance -20.00 -10.00 0.00 10.00 20.00 30.00 40.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Templeton GB3.44 (8)13.25 (5)N/AN/AN/AN/AŁ Citi WGB-4.60 (62)3.29 (90)4.61 (6)4.99 (64)13.78 (71)5.90 (1)Ł Median-3.386.511.706.6616.13-0.05 -10.00 -7.00 -4.00 -1.00 2.00 5.00 8.00 11.00 14.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR Templeton GB0.86 (90)3.62 (16)1.83 (33)5.76 (11)N/AN/AN/AŁ Citi WGB2.66 (33)1.55 (82)1.37 (47)0.35 (77)1.91 (62)3.23 (62)3.84 (80)Ł Median2.392.521.251.872.293.685.77 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 Templeton GB 2.74 (6)1.03 (71)-2.73 (16)1.38 (9)3.83 (6)5.40 (12) Citi WGB -1.09 (91)2.88 (40)-2.97 (23)-2.77 (55)-1.71 (82)2.99 (90) IM International Fixed Income (MF) Median 0.14 1.93 -3.47 -2.63 0.19 4.56 Performance Review (Fiscal Years) As of March 31, 2014 Templeton GB NONE 45 Peer Group Analysis - IM U.S. Open End Private Real Estate (SA+CF) Comparative Performance -85.00 -70.00 -55.00 -40.00 -25.00 -10.00 5.00 20.00 35.00 50.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 American12.27 (70)11.57 (66)16.11 (74)2.72 (75)-32.96 (41)4.98 (36)Ł NCREIF ODCE13.01 (50)11.61 (66)18.27 (39)6.97 (46)-35.19 (52)3.18 (54)Ł Median12.9612.8916.626.39 -34.36 3.60 -4.00 0.00 4.00 8.00 12.00 16.00 20.00 24.00 28.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR American3.20 (25)5.88 (41)13.15 (62)11.91 (64)12.42 (78)13.55 (92)5.76 (71)Ł NCREIF ODCE2.47 (49)5.72 (57)13.71 (56)12.22 (63)13.03 (63)14.77 (50)7.30 (57)Ł Median 2.455.7513.7213.4713.8314.757.73 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 American 2.59 (77)3.40 (54)3.36 (65)2.49 (68)2.50 (53)2.58 (69) NCREIF ODCE 3.17 (52)3.56 (50)3.86 (50)2.68 (60)2.33 (63)2.77 (53) IM U.S. Open End Private Real Estate (SA+CF) Median 3.22 3.54 3.86 3.10 2.52 2.79 Performance Review (Fiscal Years) As of March 31, 2014 American NONE 46 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0R e t u r n P e r c e n t i l e R a n k 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 3/14 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count American 19 0 (0%)7 (37%)5 (26%)7 (37%)Ł NCREIF ODCE20 0 (0%)13 (65%)7 (35%)0 (0%)Ł Over Performance Under Performance Earliest Date Latest Date -20.0 0.0 20.0 Am e r i c a n ( % ) -20.0 -16.0 -12.0 -8.0 -4.0 0.0 4.0 8.0 12.0 16.0 20.024.0 NCREIF ODCE (%) Over Performance Under Performance 12.00 13.00 14.00 15.00 R e t u r n ( % ) 0.60 0.75 0.90 1.05 1.20 1.35 1.50 1.65 1.801.95 Risk (Standard Deviation %) Return Standard Deviation American 12.42 0.82Ł NCREIF ODCE 13.03 1.28Ł Median 13.83 1.71¾ 4.50 6.00 7.50 9.00 R e t u r n ( % ) 7.50 7.60 7.70 7.80 7.90 8.00 8.10 8.20 8.30 8.408.50 Risk (Standard Deviation %) Return Standard Deviation American 5.76 7.69Ł NCREIF ODCE 7.30 7.61Ł Median 7.73 8.33¾ Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk American 0.78 95.52 N/A 5.53 -0.71 14.40 0.52 0.00 NCREIF ODCE 0.00 100.00 N/A 0.00 N/A 9.67 1.00 0.00 90 Day U.S. Treasury Bill 1.28 0.50 N/A 0.05 -9.67 N/A 0.00 0.00 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk American 1.65 89.72 107.37 -1.35 -0.89 0.76 0.99 5.77 NCREIF ODCE 0.00 100.00 100.00 0.00 N/A 0.96 1.00 5.43 90 Day U.S. Treasury Bill 7.62 0.63 -0.66 0.11 -0.96 N/A 0.00 0.00 Performance Review (Fiscal Years) As of March 31, 2014 American NONE 47 Peer Group Analysis - IM U.S. Open End Private Real Estate (SA+CF) Comparative Performance -85.00 -70.00 -55.00 -40.00 -25.00 -10.00 5.00 20.00 35.00 50.00 R e t u r n Oct-2012 To Sep-2013 Oct-2011 To Sep-2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Intercontinental18.19 (8)13.33 (42)15.80 (79)N/AN/AN/AŁ NCREIF ODCE13.01 (50)11.61 (66)18.27 (39)6.97 (46)-35.19 (52)3.18 (54)Ł Median12.9612.8916.626.39 -34.36 3.60 -4.00 0.00 4.00 8.00 12.00 16.00 20.00 24.00 28.00 R e t u r n QTRFYTD1 YR2 YR3 YR4 YR5 YR Intercontinental1.87 (89)7.06 (20)15.81 (22)15.55 (15)15.19 (27)N/AN/AŁ NCREIF ODCE2.47 (49)5.72 (57)13.71 (56)12.22 (63)13.03 (63)14.77 (50)7.30 (57)Ł Median 2.455.7513.7213.4713.8314.757.73 1 Qtr Ending Dec-2013 1 Qtr Ending Sep-2013 1 Qtr Ending Jun-2013 1 Qtr Ending Mar-2013 1 Qtr Ending Dec-2012 1 Qtr Ending Sep-2012 Intercontinental 5.10 (4)3.66 (42)4.35 (27)2.78 (58)6.31 (6)2.80 (50) NCREIF ODCE 3.17 (52)3.56 (50)3.86 (50)2.68 (60)2.33 (63)2.77 (53) IM U.S. Open End Private Real Estate (SA+CF) Median 3.22 3.54 3.86 3.10 2.52 2.79 Performance Review (Fiscal Years) As of March 31, 2014 Intercontinental NONE 48 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0R e t u r n P e r c e n t i l e R a n k 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 3/14 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count Intercontinental3 1 (33%)2 (67%)0 (0%)0 (0%)Ł NCREIF ODCE20 0 (0%)13 (65%)7 (35%)0 (0%)ŁOver Performance Earliest Date Latest Date 13.0 13.5 14.0 14.5 15.0 15.5 16.0 16.5 I n t e r c o n t i n e n t a l ( % ) 12.8 13.0 13.2 13.4 13.6 13.8 14.0 14.2 14.4 14.6 14.8 15.0 15.2 15.4 15.6 15.8 16.0 16.2 16.4 NCREIF ODCE (%) Over Performance Under Performance 12.00 13.50 15.00 16.50 R e t u r n ( % ) 1.00 1.20 1.40 1.60 1.80 2.00 2.20 2.402.60 Risk (Standard Deviation %) Return Standard Deviation Intercontinental 15.19 2.35Ł NCREIF ODCE 13.03 1.28Ł Median 13.83 1.71¾ 7.00 7.50 8.00 R e t u r n ( % ) 7.50 7.60 7.70 7.80 7.90 8.00 8.10 8.20 8.30 8.408.50 Risk (Standard Deviation %) Return Standard Deviation Intercontinental N/A N/AŁ NCREIF ODCE 7.30 7.61Ł Median 7.73 8.33¾ Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Intercontinental 2.64 115.90 N/A 14.39 0.75 6.12 0.06 0.00 NCREIF ODCE 0.00 100.00 N/A 0.00 N/A 9.67 1.00 0.00 90 Day U.S. Treasury Bill 1.28 0.50 N/A 0.05 -9.67 N/A 0.00 0.00 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Intercontinental N/A N/A N/A N/A N/A N/A N/A N/A NCREIF ODCE 0.00 100.00 100.00 0.00 N/A 0.96 1.00 5.43 90 Day U.S. Treasury Bill 7.62 0.63 -0.66 0.11 -0.96 N/A 0.00 0.00 Performance Review (Fiscal Years) As of March 31, 2014 Intercontinental NONE 49 Total Fund Compliance:Yes No N/A Equity Compliance:Yes No N/A Fixed Income Compliance:Yes No N/A 50 Yes No N/A Manager Compliance: Yes No N/A Yes No N/A Yes No N/A Yes No N/A 51 Total Fund Policy Allocation Mandate Weight (%) May-1998 S&P 500 Index 60.00 Barclays U.S. Government/Credit 35.00 Citigroup 3 Month T-Bill Index 5.00 Jan-2001 S&P 500 Index 65.00 Barclays U.S. Government/Credit 30.00 Citigroup 3 Month T-Bill Index 5.00 Apr-2003 S&P 500 Index 65.00 Barclays Intermediate U.S. Gov/Credit Index 30.00 Citigroup 3 Month T-Bill Index 5.00 Jul-2005 S&P 500 Index 55.00 Barclays Intermediate U.S. Gov/Credit Index 30.00 MSCI EAFE Index 10.00 Citigroup 3 Month T-Bill Index 5.00 Oct-2007 Russell 3000 Index 55.00 Barclays Intermediate Aggregate Index 30.00 MSCI EAFE Index 10.00 Citigroup 3 Month T-Bill Index 5.00 Jul-2008 Russell 3000 Index 55.00 Barclays Intermediate Aggregate Index 25.00 MSCI EAFE Index 10.00 NCREIF Property Index 10.00 Oct-2011 Russell 3000 Index 55.00 MSCI EAFE Index 10.00 Barclays Intermediate Aggregate Index 20.00 Citigroup World Government Bond 5.00 NCREIF Property Index 10.00 Allocation Mandate Weight (%) Jul-2013 Russell 3000 Index 55.00 MSCI AC World ex USA 10.00 Barclays Aggregate Index 10.00 Barclays Intermediate Aggregate Index 10.00 Citigroup World Government Bond 5.00 NCREIF Fund Index-Open End Diversified Core (EW)10.00 Citigroup 3 Month T-Bill Index 0.00 Benchmark History Investment Policy Benchmarks As of March 31, 2014 52 Total Equity Policy Allocation Mandate Weight (%) Jul-2008 MSCI EAFE Index 15.00 Russell 3000 Index 85.00 Oct-2011 MSCI EAFE Index 15.00 Russell 3000 Index 85.00 Jul-2013 Russell 3000 Index 85.00 MSCI AC World ex USA 15.00 Dana Custom Index Allocation Mandate Weight (%) Jul-2002 Russell 3000 Index 100.00 Jan-2008 Russell 1000 Value Index 100.00 Jan-2011 S&P 500 Index 100.00 Vanguard Total Stock Market Index Allocation Mandate Weight (%) Jun-2003 MSCI US Broad Market Index 100.00 Jun-2013 CRSP U.S. Total Market TR Index 100.00 Total Domestic Equity Policy Allocation Mandate Weight (%) May-1998 S&P 500 Index 100.00 Jul-2005 Russell 3000 Index 100.00 Oct-2011 Russell 3000 Index 100.00 Total International Equity Policy Allocation Mandate Weight (%) May-2007 MSCI EAFE Index 100.00 Jul-2013 MSCI AC World ex USA 100.00 Benchmark History Investment Policy Benchmarks As of March 31, 2014 Prior to 6/1/2011, the data and inception dates for Dana LC and Dana SC were provided by the manager. 53 Total Real Estate Policy Allocation Mandate Weight (%) Jul-2006 NCREIF Property Index 100.00 Oct-2011 NCREIF Property Index 100.00 Jul-2013 NCREIF Fund Index-Open End Diversified Core (EW)100.00 Total Fixed Income Policy Allocation Mandate Weight (%) May-1998 Barclays U.S. Government/Credit 100.00 Apr-2003 Barclays Intermediate U.S. Gov/Credit Index 100.00 Oct-2007 Barclays Intermediate Aggregate Index 100.00 Oct-2011 Barclays Intermediate Aggregate Index 80.00 Citigroup World Government Bond 20.00 Jul-2013 Barclays Aggregate Index 40.00 Barclays Intermediate Aggregate Index 40.00 Citigroup World Government Bond 20.00 Total Domestic Fixed Income Policy Allocation Mandate Weight (%) May-1998 Barclays U.S. Government/Credit 100.00 Apr-2003 Barclays Intermediate U.S. Gov/Credit Index 100.00 Oct-2007 Barclays Intermediate Aggregate Index 100.00 Oct-2011 Barclays Intermediate Aggregate Index 100.00 Jul-2013 Barclays Aggregate Index 50.00 Barclays Intermediate Aggregate Index 50.00 Benchmark History Investment Policy Benchmarks As of March 31, 2014 Prior to 6/1/2011, the data and inception dates for Dana LC and Dana SC were provided by the manager. 54 The Bogdahn Group Your Service Team Contact Information De p a r t m e n t : Co n s u l t a n t  Te a m Ti t l e : In t e r n a l  Co n s u l t a n t Di r e c t  Ph o n e : 40 7 ‐52 0 ‐53 5 4 Em a i l : Da v i d R @ b o g d a h n g r o u p . c o m Da v i d R a y Ad d r e s s : 49 0 1  Vi n e l a n d  Road, Suite 600 Or l a n d o ,  Fl o r i d a  32811 Ph o n e : 8 6 6 ‐24 0 ‐79 3 2 Se r v i c e T e a m C o n t a c t I n f o r m a t i o n De p a r t m e n t : Pe r f o r m a n c e  Me a s u r e m e n t Ti t l e : Pe r f o r m a n c e  An a l y s t Di r e c t  Ph o n e : 86 3 ‐90 4 ‐08 4 8 Em a i l : La u r e n C @ b o g d a h n g r o u p . c o m La u r e n C a p p e l l o De p a r t m e n t : Co n s u l t a n t  Team Ti t l e : Di r e c t o r  of  Consulting Di r e c t  / Mo b i l e  Ph o n e : 8 6 3 ‐90 4 ‐08 4 7  / 863‐221‐4930 Em a i l : Tr o y B @ b o g d a h n g r o u p . c o m Tr o y B r o w n , C F A De p a r t m e n t : Co n s u l t a n t  Team Ti t l e : Co n s u l t a n t Di r e c t  / Mo b i l e  Ph o n e : 8 6 3 ‐90 4 ‐08 6 1  / 904‐655‐3557 Em a i l : Da n J @ b o g d a h n g r o u p . c o m Da n J o h n s o n 55 Report Statistics Definitions and Descriptions R e t u r n - Co m p o u n d e d r a t e o f r e t u r n f o r t h e p e r i o d . S t a n d a r d D e v i a t i o n - A s t a t i s t i c a l m e a s u r e o f t h e r a n g e o f a p o r t f o l i o ' s p e r f o r m a n c e. I t r e p r e s e n t s t h e v a r i a b i l i t y o f r e t u r n s a r o u n d t h e a v e r a g e r e tu r n o v e r a s p e c i f i e d t i m e p e r i o d . S h a r p e R a t i o - Re p r e s e n t s t h e e x c e s s r a t e o f r e t u r n o v e r t h e r i s k f r e e r e t u r n d i v i d e d b y t h e s t a n d a r d d e v i a t i o n o f t h e e x c e s s r e t u r n . T h e r e s u lt i s a n a b s o l u t e r a t e o f r e t u r n p e r u n i t o f r i s k . A hi g h e r v a l u e d e m o n s t r a t e s b e t t e r h i s t or i c a l r i s k - a d j us t e d p e r f o r m a n c e . A l p h a - A m e a s u r e o f t h e d i f f e r e n c e b e t w e e n a p o r t f o li o ' s a c t u a l p e r f o r m a n c e a n d i t s e x p e c t e d r e tu r n b a s e d o n i t s l e v e l o f r i s k a s d e t e rmined by beta. It determines the portfolio's no n - s y s t e m i c r e t u r n , o r i t s h i s t o r i c a l p e r f o r m a n ce n o t e x p l a i n e d b y m o v e m e n t s o f t h e m a r k e t . B e t a - A m e a s u r e o f t h e s e n s i t i v i t y o f a p o r t f o l i o t o t h e m o v e m e n t s i n th e m a r k e t . I t i s a m e a s u r e o f th e p o r t f o l i o ' s s y s t e m a t i c r i s k . R - S q u a r e d - Th e p e r c e n t a g e o f a p o r t f o l i o ' s p e r f o r m a n c e t h a t c a n b e e x p l a i ne d b y t h e b e h a v i o r o f t h e a p p r o p r i a t e b e n c h m a r k . A h i g h R - S q u a r e d means the portfolio's performance has hi s t o r i c a l l y m o v e d i n t h e s a m e d i r e ct i o n a s t h e a p p r o p r i a t e b e n c h m a r k . T r e y n o r R a t i o - Si m i l a r t o S h a r p e r a t i o b u t u t i l i z e s b e t a r a t h e r t h a n e x c e s s r i sk a s d e t e r m i n e d b y s t a n d a r d d e v i a t i o n . I t i s c a l c u l a t e d b y t a k i ng t h e e x c e s s r a t e o f r e t u r n a b o v e t h e r i s k f r e e ra t e d i v i d e d b y b e t a t o d e r i v e t h e a b s o l u t e r a t e o f r e t u r n p e r u n i t o f r i s k . A h i g h e r v a l u e i n d i c a t e s a p r o d u c t h a s a c h i e v e d b e tt e r h i s t o r i c a l r i s k - adjusted performance. D o w n s i d e R i s k - A m e a s u r e s i m i l a r t o s t a n d a r d d e v i a t i o n t h a t u t i l i z e s o n l y t h e n e g a t iv e m o v e m e n t s o f t h e r e t u r n s e r i e s . I t i s c a l c u l a t e d b y t a k in g t h e s t a n d a r d d e v i a t i o n o f t h e n e g a t i v e qu a r t e r l y s e t o f r e t u r n s . A h i g h e r f a c t o r i s i n d i c a t i v e o f a r i s k i e r p r o d u c t . T r a c k i n g E r r o r - Th i s i s a m e a s u r e o f t h e s t a n d a r d d e v i a t i o n o f a p o r t f o l i o ' s r e t u r n s i n r e l a t i o n t o t h e p e r f o r m a n c e o f i t s d e s i g n a t e d m a r k e t b e n c h m a r k . I n f o r m a t i o n R a t i o - Th i s c a l c u l a t e s t h e v a l u e - a d d e d c o n t r i b u t i o n o f th e m a n a g e r a n d i s d e r i v e d b y d i v i d i n g t h e a c t i ve r a t e o f r e t u r n o f t h e p o r t f o l i o b y the tracking error. The higher the In f o r m a t i o n R a t i o , t h e m o r e t h e m a n a g e r h a s a d d e d v a l u e t o t h e p o r t f o l i o . C o n s i s t e n c y - Th e p e r c e n t a g e o f q u a r t e r s t h a t a p r o d u c t a c h i e v e d a r a t e o f r e t u rn h i g h e r t h a n t h a t o f i t s b e n c h m ar k . H i g h e r c o n s i s t e n c y i n d i c ates the manager has contributed more to the pr o d u c t ’ s p e r f o r m a n c e . E x c e s s R e t u r n - Ar i t h m e t i c d i f f e r e n c e b e t w e e n t h e m a n a g e r ’ s p e r f o r m a n c e a n d t h e r i s k - f r e e r e t u r n o v e r a s p e c i f i e d t i m e p e r i o d . A c t i v e R e t u r n - Ar i t h m e t i c d i f f e r e n c e b e t w e e n t h e m a n a g e r ’ s p e r f o r m a n c e a n d t h e d e s i g n a t e d b e n c h m a r k r e t u r n o v er a s p e c i f i e d t i m e p e r i o d . E x c e s s R i s k - A m e a s u r e o f t h e s t a n d a r d d e v i a t i o n o f a p o r t f o l i o ' s p e r f o r m a n c e r e l a t i v e t o t h e r i s k f r e e r e t u r n . Up M a r k e t C a p t u r e - Th e r a t i o o f a v e r a g e p o r t f o l i o p e r f o r m a n c e o v e r t h e d e s i g n a t e d b e n ch m a r k d u r i n g p e r i o d s o f p o s i t i v e r e t u r n s . A h i g h e r v a l u e i n d icates better product performance. Do w n M a r k e t C a p t u r e - Th e r a t i o o f a v e r a g e p o r t f o l i o p e r f o r m a n c e o v e r t h e d e s i g n a t e d b e n ch m a r k d u r i n g p e r i o d s o f n e g a t i v e r e t u r n s . A l o w e r v a l u e i n d i cates better product performance 56 Disclosures Th e B o g d a h n G r o u p c o m p i l e d t h i s r e p o r t f o r t h e s o l e u s e o f t h e c li e n t f o r w h i c h i t w a s p r e p a r e d . T h e B o g d a h n G r o u p i s r e s p o n s i b l e f o r e v a l u a t i n g t h e p e r f o r m a n c e r e s u l t s o f t h e T o t a l F u n d a l o n g w i t h t h e in v e s t m e n t a d v i s o r s b y c o m p a r i n g t h e i r p e r f o r m a n c e w i t h i n d i c e s a n d o t h e r r e l a t e d p e e r u n i v e r s e d a t a t h a t i s d e e m e d a p p r o p r i a t e . T h e B o g d a h n g r o u p u s e s t h e r e s u l t s f r o m this evaluation to make observations an d r e c o m m e n d a t i o n s t o t h e c l i e n t . Th e B o g d a h n G r o u p u s e s t i m e - w e i g h t e d c a l c u l a t io n s w h i c h a r e f o u n d e d o n s t a n d a r d s r e c o m m e n d e d b y t h e C F A I n s t i t u t e . T h e c a l c u l a ti o n s a n d v a l u e s s h o w n a r e b a s e d o n i n f o r m a t i o n t h a t i s r e c e i v e d f r o m cu s t o d i a n s . T h e B o g d a h n G r o u p a n a l y z e s t r a n s a c t i on s a s i n d i c a t e d o n t h e c u s t o d i a n s t a t e m en t s a n d r e v i e w s t h e c u s t o d i a l m a r k e t va l u e s o f t h e p o r t f o l i o . A s a r e s u l t, t h i s p r o v i d e s T h e B o g d a h n G r o u p w i t h a re a s o n a b l e b a s i s t h a t t h e i n v e s t m e n t i n f o r m at i o n p r e s e n t e d i s f r e e f r o m m a t e r i a l m i s s t at e m e n t . T h i s m e t h o d o l o g y o f e v a l u a t i n g an d m e a s u r i n g p e r f o r m a n c e p r o v i d e s T h e B o g d a h n G r o u p w i t h a p r a c t i c a l f o u n d a t i o n fo r o u r o b s e r v a t i o n s a n d r e c o m m e n d a t i o n s . N o t h i n g c a m e t o o u r a tt e n t i o n t h a t w o u l d c a u s e T h e B o g d a h n G r o u p t o b e l i e v e t h a t t h e i n f o r m a t i o n p r e s e n t e d i s s i g n i f i c a n t l y m i s s t a t e d . Th e s t r a t e g i e s l i s t e d m a y n o t b e s u i t a b l e f o r a l l i n v e s t o r s . W e b e l i e v e t h e i n f o r m a t i o n p r o v i d e d h e r e i s r e l i a b l e , b u t d o n o t wa r r a n t i t s a c c u r a c y o r c o m p l e t e n e s s . P a s t p e r f o r m a n c e i s n o t a n i n d i c a t i o n o f f u t u r e pe r f o r m a n c e . A n y i n f o r m a t i o n c o n t a i n e d i n t h i s r e p o r t i s f o r i n f o r m a t i o n a l p u r p o s e s o n l y a n d s h o u l d n o t b e c o n s t r u e d t o b e a n of f e r t o b u y o r s e l l a n y s e c u r i t i e s , i n v e s t m e n t c o n s u l t i n g , o r i n v e s t m e n t m a n a g e m e n t se r v i c e s . Ad d i t i o n a l i n f o r m a t i o n i n c l u d e d i n t h i s d o c um e n t m a y c o n t a i n d a t a p r o v i d e d b y f r o m in d e x d a t a b a s e s , p u b l i c e c o n o m i c s o u r c e s a n d t h e m a n a g e r s t h e m s e l v e s . Th i s d o c u m e n t m a y c o n t a i n d a t a p r o v i d e d b y B a r c l a y s . B a r c l a y s I n d e x d a t a p r o v i d e d b y w a y o f B a r c l a y s L i v e . Th i s d o c u m e n t m a y c o n t a i n d a t a p r o v i d e d b y St a n d a r d a n d P o o r ’ s . N o t h i n g c o n t a i n e d w i th i n a n y d o c u m e n t , a d v e r t i s e m e n t o r p r e s e n ta t i o n f r o m S & P I n d i c e s c o n s t i t u t e s a n o f f e r of services in jurisdictions where S& P I n d i c e s d o e s n o t h a v e t h e n e c e s s a r y l i c e n s e s . A l l i n f o r m a t i o n pr o v i d e d b y S & P I n d i c e s i s i m p e r s o n a l a n d i s n o t t a i l o r e d t o th e n e e d s o f a n y p e r s o n , e n t i t y o r g r o u p o f p e r s o n s . A n y r e t u r n s o r p e r f o r m a n c e pr o v i d e d w i t h i n a n y d o c u m e n t i s p r o v i d e d f o r i l l u s t r a t i v e p u r p o s es o n l y a n d d o e s n o t d e m o n s t r a t e a c tu a l p e r f o r m a n c e . P a s t p e r f o rm a n c e i s n o t a g u a r a n t e e o f f u t u r e i n v e s t m e n t r e s u l t s . Th i s d o c u m e n t m a y c o n t a i n d a t a p r o v i d e d b y M S C I , I n c . C o p y r i g h t M S C I , 2 0 1 2 . U n p u b l i s h e d . A l l R i g h t s R e s e r v e d . T h i s i n f o r m a t io n m a y o n l y b e u s e d f o r y o u r i n t e r n a l u s e , m a y n o t b e r e p r o d u c e d o r re d i s s e m i n a t e d i n a n y f o r m a n d m a y n o t b e u s e d t o c r e a t e a n y f i n a n c i a l i n s t r u m e n t s o r p r o d u c t s o r a n y i n d i c e s . T h i s i n f o r m a t i o n i s p r o v i d e d o n a n “ a s i s ” b a s i s a n d t h e u s e r of this information assumes the entire ri s k o f a n y u s e i t m a y m a k e o r p e r m i t t o b e m a d e o f t h i s i n f o r m at i o n . N e i t h e r M S C I , a n y o f i t s a f f i l i a t e s o r a n y o t h e r p e r s o n in v o l v e d i n o r r e l a t e d t o c o m p i l i n g , c o m p u t i n g o r c r e a t i n g t h i s i n f o r m a t i o n m a k e s a n y ex p r e s s o r i m p l i e d w a r r a n t i e s o r r e p r e s e n t a t io n s w i t h r e s p e c t t o s u c h i n f o r m a t i o n o r t h e r e s u l t s t o b e o b t a i n e d b y t h e u s e t h e r eo f , a n d M S C I , i t s a f f i l i a t e s a n d e a c h s u c h other person hereby expressly disclaim all wa r r a n t i e s ( i n c l u d i n g , w i t h o u t l i m i t a t i o n , a l l w a r r a n t i e s o f o r ig i n a l i t y , a c c u r a c y , c o m p l e t e n e ss , t i m e l i n e s s , n o n - i n f r i n g e m e n t , m e r c h a n t a b i l i t y a n d f i t n e s s f o r a p a r t i c u l a r p u r p o s e ) w i t h r e s p e c t t o t h i s i n f o r m a t i o n . Wi t h o u t l i m i t i n g a n y o f t h e f o r e g o i n g , i n n o e v e n t s h a l l M S C I , a n y o f i t s a f f i l i a t e s o r a n y o t h e r p e r s o n i n v o l v e d i n o r r e l a t e d t o c o m p i l i n g , c o m p u t i n g o r c r e a t i n g t h i s i n f o r m ation have any liability for any direct, indirect, sp e c i a l , i n c i d e n t a l , p u n i t i v e , c o n s e q u e n t i a l o r a n y o t h e r d a m a g e s ( i n c l u d i n g , w i t h o u t l i m it a t i o n , l o s t p r o f i t s ) e v e n i f n o t i f i e d o f , o r i f i t m i g h t o t h e r w i s e h a v e a n t i c i p a t e d , t h e p o s s i b i l i t y o f s u c h d a m a g e s . Th i s d o c u m e n t m a y c o n t a i n d a t a p r o v i d e d b y R u s s e l l I n v e s t m e n t G r ou p . R u s s e l l I n v e s t m e n t G r o u p i s t h e s o u r c e o w n e r o f t h e d a t a co n t a i n e d o r r e f l e c t e d i n t h i s m a t e r i a l and all trademarks and copyrights related th e r e t o . T h e m a t e r i a l m a y c o n t a i n c o n f i d e n t i a l i n f o r m a t i o n a n d un a u t h o r i z e d u s e , d i s c l o s u r e , c o p y i n g , d i s s e m i n a t i o n o r r e d i s t r ib u t i o n i s s t r i c t l y p r o h i b i t e d . T h i s i s a u s er p r e s e n t a t i o n o f t h e data. Russell Investment Gr o u p i s n o t r e s p o n s i b l e f o r t h e f o r m a t t i n g o r c o n f i g u r a t i o n o f th i s m a t e r i a l o r f o r a n y i n a c c u r a c y i n p r e s e n t a t i o n t h e r e o f . Th i s d o c u m e n t m a y c o n t a i n d a t a p r o v i d e d b y M o r n in g s t a r . A l l r i g h t s r e s e r v e d . U s e o f t h is c o n t e n t r e q u i r e s e x p e r t k n o w l e d g e . It i s t o b e u s e d b y s p e c i a l i s t i n s t i t u t i o n s o n l y . The information contained herein: (1) is pr o p r i e t a r y t o M o r n i n g s t a r a n d / o r i t s c o n t e n t p r o v i d e r s ; ( 2 ) m a y n o t b e c o p i e d , a d a p t e d o r d i s t r i b u t e d ; a n d ( 3 ) i s n o t w a r r a n t e d t o b e a c c u r a t e , c o m p l e t e o r t i m e l y . N e i t he r M o r n i n g s t a r n o r i t s c o n t e n t p r o v i d e r s a r e re s p o n s i b l e f o r a n y d a m a g e s o r l o s s e s a r i s i n g f r o m a n y u s e o f t h is i n f o r m a t i o n , e x c e p t w h e r e s u c h d a m a g e s o r l o s s e s c a n n o t b e l im i t e d o r e x c l u d e d b y l a w i n y o u r j u r i s d i c tion. Past financial performance is not gu a r a n t e e o f f u t u r e r e s u l t s . 57   800 N. Magnolia Avenue, Suite 1300, Orlando, FL 32803  |  P  407.423.7911  |  cbh.com  November 6, 2013 Board of Trustees City of Palm Beach Gardens Firefighters' Pension Fund Palm Beach Gardens, Florida Board of Trustees: This engagement letter between City of Palm Beach Gardens Firefighters' Pension Fund Palm Beach Gardens Firefighters' Pension Fund(hereafter referred to as the “Fund”) and Cherry Bekaert LLP (the “Firm” or “CB”) sets forth the nature and scope of the services we will provide, the Fund’s required involvement and assistance in support of our services, the related fee arrangements and other Terms and Conditions, which are attached hereto and incorporated by reference, designed to facilitate the performance of our professional services and to achieve the mutually agreed upon objectives of the Fund. SUMMARY OF SERVICES  We will provide the following services to the Fund as of and for the year ended September 30, 2013: Audit services  1. We will audit the basic financial statements of the Fund as of and for the year ended September 30, 2013. 2. We will audit the schedule of administrative and investment expenses. As part of our engagement, we will apply certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or the financial statements themselves. 3. We will apply limited procedures to the pension plan information and management’s discussion and analysis (MD&A)) which will consist of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the financial statements. Accounting and other services  We will provide the following additional services: 1. Assist in the preparation of the financial statements and footnotes. YOUR EXPECTATIONS  As part of our planning process, we will discuss with you your expectations of CB, changes that occurred during the year, your views on risks facing you, any relationship issues with CB, and specific engagement arrangements and timing. Our services plan, which includes our audit plan, is designed to provide a foundation for an effective, efficient, and quality-focused approach to accomplish the engagement objectives and meet or exceed your expectations. Our service plan will be reviewed with you periodically and will serve as a benchmark against which you will be able to measure our performance. Any additional services that you may request, and that we agree to provide, will be the subject of separate written arrangements. Town of Jupiter Police Officers' Pension Fund November 6, 2013  Page 2  The engagement will be led by Jim Burdick, who will be responsible for assuring the overall quality, value, and timeliness of the services provided to you. AUDIT SERVICES   The objective of our audit is the expression of opinions as to whether your basic financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the additional information referred to in the Summary of Services section when considered in relation to the basic financial statements taken as a whole. The objective also includes reporting on:  Internal control related to the financial statements and compliance with the provisions of applicable laws, regulations, contracts, agreements and grants, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. The reports on internal control and compliance will each include a paragraph that states that the purpose of the report is solely to describe (1) the scope of testing of internal control over financial reporting and compliance and the result of that testing and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance, and (2) that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering internal control over financial reporting and compliance. The paragraph will also state that the report is not suitable for any other purpose. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; Government Auditing Standards, issued by the Comptroller General of the United States; and will include tests of accounting records and other procedures as deemed necessary to enable us to express such opinions and to render the required reports. If any of our opinions resulting from the procedures described above are other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or issue a report as a result of this engagement. ACCOUNTING AND OTHER SERVICES  Accounting services  We will advise Management about the application of appropriate accounting principles, and may propose adjusting journal entries to the Fund’s financial statements. Management is responsible for reviewing the entries and understanding the nature of any proposed entries and the impact they have on the Fund’s financial statements. If, while reviewing the journal entries, Management determines that a journal entry is inappropriate, it will be Management’s responsibility to contact us to correct it. Financial statement preparation  We will assist in the preparation of the Fund’s financial statements and notes, based on information in the Fund’s accounting records. However, the responsibility for the Fund’s financial statements and notes remains with Management. This responsibility includes establishing and maintaining adequate records and effective internal controls over financial reporting, the selection and application of accounting principles, the safeguarding of assets, and adjusting the financial statements for any material misstatements as well as reviewing and approving for publication the draft financial statements prepared with our assistance. Town of Jupiter Police Officers' Pension Fund November 6, 2013  Page 3  Management’s responsibilities related to accounting and other services  For all nonattest services we perform in connection with the engagement, you are responsible for designating a competent employee to oversee the services, make any management decisions, perform any management functions related to the services, evaluate the adequacy of the services, and accept overall responsibility for the results of the services. Prior to the release of the report, Management will need to sign a representation letter acknowledging your responsibility for the results of these services. FEES  The estimated fee contemplates only the services described in the Summary of Services section of this letter. If Management requests additional services not listed above, we will provide an estimate of those fees prior to commencing additional work. The following summarizes the fees for the services described above: Description of Services Estimated Fee Audit services Audit of the financial statements, including assistance with Preparation of financial statements $14,050 If the foregoing is in accordance with your understanding, please sign a copy of this letter in the space provided and return it to us. If you have any questions, please call Jim Burdick at (407)423-7911. Sincerely, CHERRY BEKAERT LLP  ATTACHMENT – Engagement Letter Terms and Conditions City of Palm Beach Gardens Firefighters' Pension Fund ACCEPTED BY: ____________________________________________________________ TITLE: ________________________________________ DATE: ___________________ Attachment ‐ Page 1    Cherry Bekaert LLP  Engagement Letter Terms and Conditions  The following terms and conditions are an integral part of the attached engagement letter and should be read in their entirety in conjunction with your review of the letter. LIMITATIONS OF THE AUDIT REPORT   Should the Fund wish to include or incorporate by reference these financial statements and our report thereon into any other document at some future date, we will consider granting permission to include our report into another such document at the time of the request. However, we may be required by generally accepted auditing standards (“GAAS”) to perform certain procedures before we can give our permission to include our report in another document such as an annual report, private placement, regulator filing, official statement, offering of debt securities, etc. You agree that you will not include or incorporate by reference these financial statements and our report thereon, or our report into any other document without our prior written permission. In addition, to avoid unnecessary delay or misunderstandings, it is important to provide us with timely notice of your intention to issue any such document. LIMITATIONS OF THE AUDIT PROCESS  In conducting the audit, we will perform tests of the accounting records and such other procedures as we consider necessary in the circumstances to provide a reasonable basis for our opinion on the financial statements. We also will assess the accounting principles used and significant estimates made by Management, as well as evaluate the overall financial statement presentation. Our audit will include procedures designed to obtain reasonable assurance of detecting misstatements due to errors or fraud that are material to the financial statements. Absolute assurance is not attainable because of the nature of audit evidence and the characteristics of fraud. For example, audits performed in accordance with GAAS are based on the concept of selective testing of the data being examined and are, therefore, subject to the limitation that material misstatements due to errors or fraud, if they exist, may not be detected. Also, an audit is not designed to detect matters that are immaterial to the financial statements. In addition, an audit conducted in accordance with GAAS does not include procedures specifically designed to detect illegal acts having an indirect effect (e.g., violations of fraud and abuse statutes that result in fines or penalties being imposed on the Fund) on the financial statements. Similarly, in performing our audit we will be aware of the possibility that illegal acts may have occurred. However, it should be recognized that our audit provides no assurance that illegal acts generally will be detected, and only reasonable assurance that illegal acts having a direct and material effect on the determination of financial statement amounts will be detected. We will inform you with respect to errors and fraud, or illegal acts that come to our attention during the course of our audit unless clearly inconsequential. In the event that we have to consult with the Fund’s counsel or counsel of our choosing regarding any illegal acts we identify, additional fees incurred may be billed to the Fund. You agree to cooperate fully with any procedures we deem necessary to perform with respect to these matters. If, for any reason, we are unable to complete the audit, or are unable to form, or have not formed an opinion on the financial statements, we may decline to express an opinion or decline to issue a report as a result of the engagement. We will notify the appropriate party within your organization of our decision and discuss the reasons supporting our position. MANAGEMENT’S RESPONSIBILITIES RELATED TO THE AUDIT  Management is responsible for the fair presentation of the financial statements in conformity with GAAP, including the appropriate basis of accounting is applied by all component units, if applicable, for making all financial records and related information available to us, for ensuring that all material information is   Attachment ‐ Page 2      disclosed to us, and for identifying and ensuring that the Fund complies with the laws and regulations applicable to its activities and with the provisions of contracts and grant agreements. Management is responsible for the preparation of the supplementary information in conformity with GAAP. Management agrees to include our report on the supplementary information in any document that contains and indicates that we have reported on the supplementary information. Management also agrees to include the audited financial statements with any presentation of the supplementary information that includes our report thereon or make the audited financial statements readily available to users of the supplementary information no later than the date the supplementary information is issued with our report thereon. Management is also responsible for adjusting the financial statements to correct material misstatements, informing us of events that occurred subsequent to the balance sheet date until the date of the auditors’ report that might affect the financial statements or related disclosures and informing us of any discovery of facts related to items that existed at the financial statement date that might affect the financial statements or related disclosures. Management is responsible for informing us of its views regarding the risk of fraud at the Fund. Management must inform us of their knowledge of any allegations of fraud or suspected fraud affecting the Fund received in communications from employees, former employees, regulators, or others and for informing us about all known or suspected fraud affecting the Fund involving (a) Management, (b) employees who have significant roles in internal control, and (c) others where the fraud could have a material effect on the financial statements. Management is responsible for the design and implementation of programs and controls over financial reporting and to prevent and detect fraud. Appropriate supervisory review procedures are necessary to provide reasonable assurance that adopted policies and prescribed procedures are adhered to and to identify errors and fraud or illegal acts. As a part of our audit, we will consider the Fund’s internal control structure, as required by GAAS, sufficient to plan the audit and to determine the nature, timing, and extent of auditing procedures necessary for expressing our opinion concerning the financial statements. An audit is not designed to provide any assurance on internal controls. As part of our consideration of the Fund’s internal control structure, we will inform you of matters that come to our attention that represent significant deficiencies or material weaknesses in the design or operation of the internal control structure. Management is responsible for establishment and maintenance of a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying to us previous audits or other engagements or studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits or other engagements or studies. You are also responsible for providing management’s views on our current findings, conclusions and recommendations, as well as your planned corrective actions, and the timing and format related thereto. At the conclusion of the engagement, Management will provide to us a representation letter that, among other things, addresses (1) Management’s responsibilities related to the audit and confirms certain representations made to us during the audit, including, Management’s acknowledgement of its responsibility for the design and implementation of programs and controls to prevent and detect fraud; (2) Management’s responsibilities related to the monitoring of internal control over financial reporting; and (3) Management’s knowledge, directly or from allegations by others, of fraud or suspected fraud affecting the Fund. The representation letter will also affirm to us that Management believes that the effects of any uncorrected misstatements, if any, pertaining to the financial statements are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. The Firm will rely on Management providing these representations to us, both in the planning and performance of the audit, and in considering the fees that we will charge to perform the audit.   Attachment ‐ Page 3      AUDIT PROCEDURES – GENERAL  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve professional judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the Fund or to acts by management or employees acting on behalf of the Fund. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or major programs. However, we will inform you of any material errors and fraud, or illegal acts that come to our attention during the course of our audit. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also require certain written representations from you about the financial statements and related matters. AUDIT PROCEDURES – INTERNAL CONTROLS  Our audit will include obtaining an understanding of the Fund and its environment, including internal controls, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. An audit is not designed to provide assurance on internal control or to identify significant deficiencies. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under professional standards, and Government Auditing Standards. AUDIT PROCEDURES ‐ COMPLIANCE  As part of obtaining reasonable assurance about whether the basic financial statements are free of material misstatement, we will perform tests of the Fund's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards.   Attachment ‐ Page 4      Communications  At the conclusion of the audit engagement, we may provide Management and those charged with governance a letter stating any significant deficiencies or material weaknesses which may have been identified by us during the audit and our recommendations designed to help the Fund make improvements in its internal control structure and operations related to the identified matters discovered in the financial statement audit. As part of this engagement we will ensure that certain additional matters are communicated to the appropriate members of the Fund. Such matters include (1) our responsibility under GAAS; (2) the initial selection of and changes in significant accounting policies and their application; (3) our independence with respect to the Fund; (4) the process used by Management in formulating particularly sensitive accounting estimates and the basis for our conclusion regarding the reasonableness of those estimates; (5) audit adjustments, if any, that could, in our judgment, either individually or in the aggregate be significant to the financial statements or our report; (6) any disagreements with Management concerning a financial accounting, reporting or auditing matter that could be significant to the financial statements; (7) our views about matters that were the subject of Management’s consultation with other accountants about auditing and accounting matters; (8) major issues that were discussed with Management in connection with the retention of our services, including, among other matters, any discussions regarding the application of accounting principles and auditing standards; and (9) serious difficulties that we encountered in dealing with Management related to the performance of the audit. OTHER MATTERS  Access to working papers  The working papers and related documentation for the engagement are the property of the Firm and constitute confidential information. We have a responsibility to retain the documentation for a period of time to satisfy legal or regulatory requirements for records retention. Except as discussed below, any requests for access to our working papers will be discussed with you prior to making them available to requesting parties. We may be requested to make certain documentation available to regulators, governmental agencies (e.g., SEC, PCAOB, HUD, DOL, etc.) or their representatives (“Regulators”) pursuant to law or regulations. If requested, access to the documentation will be provided to the Regulators. The Regulators may intend to distribute to others, including other governmental agencies, our working papers and related documentation without our knowledge or express permission. You hereby acknowledge and authorize us to allow Regulators access to and copies of documentation as requested. In addition, our Firm, as well as all other major accounting firms, participates in a “peer review” program covering our audit and accounting practices as required by the American Institute of Certified Public Accountants. This program requires that once every three years we subject our quality assurance practices to an examination by another accounting firm. As part of the process, the other firm will review a sample of our work. It is possible that the work we perform for you may be selected by the other firm for their review. If it is, they are bound by professional standards to keep all information confidential. If you object to having the work we do for you reviewed by our peer reviewer, please notify us in writing. Electronic transmittals  During the course of our engagement, we may need to electronically transmit confidential information to each other, within the Firm, and to other entities engaged by either party. Although email is an efficient way to communicate, it is not always a secure means of communication and thus, confidentiality may be compromised. You agree to the use of email and other electronic methods to transmit and receive information, including confidential information between the Firm, the Fund and other third party providers utilized by either party in connection with the engagement.   Attachment ‐ Page 5      Subpoenas  In the event we are requested or authorized by you or required by government regulation, subpoena, or other legal process to produce our working papers or our personnel as witnesses with respect to our engagement for you, you will, so long as we are not a party to the proceeding in which the information is sought, reimburse us for our professional time and expense, as well as the fees and expenses of our counsel, incurred in responding to such a request at standard billing rates. TERMS AND CONDITIONS SUPPORTING FEE  The estimated fees set forth in the attached engagement letter are based on anticipated full cooperation from your personnel, timely delivery of requested audit schedules and supporting information, timely communication of all significant accounting and financial reporting matters, the assumption that unexpected circumstances will not be encountered during the audit, as well as working space and clerical assistance as mutually agreed upon and as is normal and reasonable in the circumstances. We strive to ensure that we have the right professionals scheduled on each engagement. As a result, sudden Fund requested scheduling changes or scheduling changes necessitated by the agreed information not being ready on the agreed upon dates can result in expensive downtime for our professionals. Any last minute schedule changes that result in downtime for our professionals could result in additional fees. Our estimated fee does not include assistance in bookkeeping or other accounting services not previously described. If for any reason the Fund is unable to provide such schedules, information and assistance, the Firm and the Fund will mutually revise the fee to reflect additional services, if any, required of us to achieve these objectives. The estimated fees contemplate that the Fund will provide adequate documentation of its systems and controls related to significant transaction cycles and audit areas. In providing our services, we will consult with the Fund with respect to matters of accounting, financial reporting or other significant business issues as permitted by professional standards. Accordingly, time necessary to effect a reasonable amount of such consultation is reflected in our fee. However, should a matter require research, consultation or audit work beyond that amount, the Firm and the Fund will agree to an appropriate revision in our fee. The estimated fees are based on auditing and accounting standards effective as of the date of this engagement letter and known to apply to the Fund at this time, but do not include any time related to the application of new auditing or accounting standards that impact the Fund for the first time. If new auditing or accounting standards are issued subsequent to the date of this letter and are effective for the period under audit, we will estimate the impact of any such standard on the nature, timing and extent of our planned audit procedures and will communicate with you concerning the scope of the additional procedures and the estimated fees. In the event of nonpayment of any invoice rendered by us, we retain the right to (a) suspend the performance of our services, (b) change the payment conditions under this engagement letter, or (c) terminate our services. If we elect to suspend our services, such services will not be resumed until your account is paid. If we elect to terminate our services for nonpayment, the Fund will be obligated to compensate us for all time expended and reimburse us for all expenses through the date of termination. This engagement letter sets forth the entire understanding between the Fund and the Firm regarding the services described herein and supersedes any previous proposals, correspondence, and understandings whether written or oral. Any subsequent changes to the terms of this letter, other than additional billings, will be rendered in writing and shall be executed by both parties. Should any portion of this engagement letter be ruled invalid, it is agreed that such invalidity will not affect any of the remaining portions. OR I G I N A L CO N T R A C T Ac t u a r y 1 1 / 5 / 2 0 1 2 be i n g r e v i e w e d a t 5 / 7 / 1 4 m e e t i n g Ad m i n i s t r a t o r 8 / 2 4 / 2 0 0 0 At t o r n e y 1 1 / 1 9 / 2 0 0 1 Au d i t o r 9 / 3 0 / 2 0 1 2 be i n g r e v i e w e d a t 5 / 7 / 1 4 m e e t i n g Cu s t o d i a n 5 / 3 / 2 0 0 2 Co n s u l t a n t 1 1 / 2 0 / 2 0 0 0 3 y e a r f e e g u a r e n t e e PA L M B E A C H G A R D E N S F I R E F I G H T E R S ' P E N S I O N F U N D Se r v i c e P r o v i d e r C o n t r a c t R e v i e w - M a y 2 0 1 4 9/ 3 0 / 2 0 1 3 3/ 1 0 / 2 0 1 4 2/ 1 / 2 0 1 1 Re s o u r c e C e n t e r s Su g a r m a n & S u s s k i n d DA T E O F L A S T BO A R D R E V I E W 11 / 5 / 2 0 1 2 Bo g d a h n G r o u p Ch e r r y B e k a e r t ( C B ) SE R V I C E P R O V I D E R Fo s t e r & F o s t e r 3/ 1 0 / 2 0 1 4 6/ 1 8 / 2 0 1 0 Re g i o n s B a n k PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD MARCH 10, 2014 A meeting of the Board of Trustees was called to order at 9:03AM at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Rick Rhodes, Chairman Audrey Ross, Administrator Tom Murphy, Secretary Pedro Herrera, Attorney Ed Morejon Dan Johnson, Investment Consultant Martin Cohen Mike Barry, Class Action Attorney Allan Owens, Finance Director PUBLIC COMMENTS N/A MINUTES The Board tabled the minutes of the regular meeting held on January 10, 2013 until the next meeting so that Mr. Cohen had more time to review them. GRANT & EISNEHOFER PRESENTATION – MIKE BARRY Mr. Barry introduced himself to the board and explained why he was here today and what services his firm provides for this board. His firm represents share holders in litigation and today he has a derivative case to bring forth to the board. A motion was made by Ed Morejon to hold an executive closed door session (beginning at 9:11AM). The motion was seconded by Tom Murphy and carried 4-0. A motion was made by Tom Murphy to conclude the executive closed session (closing at 9:42AM) and to reopen the regular meeting. The motion was seconded by Marty Cohen and carried 4-0. The Trustees had a lengthy discussion on the derivative case that was brought forth to them today. The case is related to AmTrust, which is held by Dana Advisors. A motion was made by Ed Morejon to retain Grant & Eisenhofer and to authorize them to file the section 220 document/records request against AmTrust on behalf of the Plan. The motion was seconded by Tom Murphy and carried 4-0. Mr. Barry stated that he will bring back the findings of the 220 document to the board and then they will go from there in regards to moving ahead with the case or not. In the meantime the manager, Dana Advisors will need to hold onto at least 100 share in AmTrust during this process. Mr. Herrera noted that holding onto 1 share is legal, but not recommended. A motion was made by Tom Murphy to authorize the Plan’s investment consultant to send a letter to Dana explaining that they need to hold onto at least 100 shares in AmTrust due to possible litigation. The motion was seconded by Tom Murphy and carried 4-0. 2 INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (DAN JOHNSON) Mr. Johnson reviewed the December 31, 2013 quarterly report. He briefly reviewed the market environment during the quarter and noted that all the indices where up with the exception of bonds. At the end of the quarter the fund had $63M in assets, which was up $4M since the end of the last quarter. The total return net of fees for the quarter was 6.72% versus the index at 6.27%, and for the one year to date they are also ahead of the index net of fees at 20.70% versus 20.68%. Mr. Johnson reviewed all the managers’ performance during the quarter and noted that all the managers outperformed their index’s except for Fiduciary Management and American Realty. Fiduciary Management is currently holding onto a lot of cash and Mr. Johnson stated that they will keep an eye on that. Mr. Johnson reviewed the February 28, 2014 market update. For the quarter the fund is up 1.1%, but for the fiscal year to date they are already up 8.1%. Mr. Johnson stated that there are no recommendations at this time regarding any of the managers, but he did note that the plan is holding a lot of cash at $850K. Therefore Mr. Johnson would recommend moving a total of $525K out of cash and into the Templeton and Vanguard accounts. A motion was made by Ed Morejon to authorize the transfer of $525K from the plans cash account to be distributed to Templeton ($225K) and Vanguard ($300K). The motion was seconded by Tom Murphy and carried 5-4. Mr. Johnson updated the board on ICMA and where they stand with the contract. Mr. Herrera stated that he has reviewed the ICMA contract and made some minor revisions to it and then sent it back to ICMA to review and sign off on. He explained that the original contract had an 8-10 year lock up so Mr. Herrera removed that language. He commented that he will keep the board posted when he receives more information. The Trustees also tabled the revised IPG until the ICMA contract is signed. ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA) Mr. Herrera explained that recently a new law passed that now states that same sex marriages are now granted in regards to benefits such as pensions and insurances. No action is needed at this time (information purposes only) Mr. Herrera stated the SB 246 & HB 509 is still pending up in the Legislative Session and that he will update the board as more information becomes available. Lastly Mr. Herrera noted that the Division of Retirement is holding a school from May 12-14, 2014. ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS) DISBURSEMENTS The Board reviewed the disbursements presented for approval by the Administrator. A motion was made by Tom Murphy to approve the disbursements as presented by the Administrator. The motion was seconded by Marty Cohen and carried 4-0. 3 BENEFIT APPROVALS The Board reviewed the application to enter the DROP for Richard Holder. A motion was made by Tom Murphy to approve the application to enter the DROP for Richard Holder. The motion was seconded by Ed Morejon and carried 4-0. The Board reviewed the 2014 COLA increases for the active DROP members that were prepared by the actuary. A motion was made by Tom Murphy to approve the 2014 COLA increases for the active DROP members as presented. The motion was seconded by Marty Cohen and carried 3-0. (Mr. Morejon abstained from the vote since he was one of the members on the COLA list). Ms. Ross presented the board with the 2014/2015 fiduciary insurance renewal. Ms. Ross stated that the fee for this year is $25.83 lower that last year. The Trustees’ had a brief discussion on the type and amount of coverage and asked Ms. Ross to get quotes for higher coverage next year ($2M & $5M). Ms. Ross notified the board that she did get in hold of Mr. Zace regarding a refund of his contributions, but she has not heard anything else since. PRESENTATION OF THE 9/30/2013 AUDITED FINANIAL STATEMENTS: CHERY, BEKAERT (JIM BURDICK) Mr. Burdick welcomed himself back and reviewed the required communications letter. He noted that all together an unmodified opinion was issued, which is the highest level that can be issued. There were no deficiencies or material weaknesses found while performing the audit as well. Mr. Burdick discussed the DROP liability and how it is being accounted for in this report. Currently the DROP assets are considered a liability to the plan and then when the member exits the DROP and takes their money out, then that distribution is deducted from the plan’s DROP liabilities. Mr. Burdick explained that this board had the same conversation last year regarding the DROP assets and ultimately decided to continue to do it the same way. Also the Division of Retirement will accept the report either way, so it is more of a housekeeping thing. Lastly Mr. Martin asked if the audit should have a footnote reflected somewhere indicating that the board reduced their assumed rate of return, although it was after September 30, 2013. Mr. Burdick stated that the change will not have any impact on the numbers or the financials, but he could add in the footnote if the board wished for. Mr. Burdick noted that this is only a draft copy of the September 30, 2013 financial statements that are being presented today and that the board will need to meet again within a week or two to finalize them. NEW BUSINESS The Trustees reviewed the updated service provider contract list and the Sugarman & Susskind contract. Mr. Rhodes noted that the Sugarman & Susskind contact was signed in 2008 and the fee was guaranteed through December 31, 2010, and the fee has still remained the same till this day. The Trustees concurred that they were pleased with their legal services and do not want to make any changes at this time. 4 Mr. Morejon reviewed the 415 IRS rule and the timing of implementing the self-directed DROP accounts. He explained that currently the plan has an IRS determination letter which is good through 2016, and then they will re-file for another letter. Mr. Morejon wants to know what would happen to the self directed accounts if the IRS was to implement the 415 IRS rule in between the filings. Mr. Herrera explained that there are ways to get around the 415 IRS rule, but in the meantime nothing has been approved yet. Mr. Johnson presented the board with the Bogdahn fee proposal for monitoring the self- directed DROP accounts. After review with his firm Mr. Johnson thinks the best way to approach this is by increasing the annual rate altogether to $30K (from $22,500) and they would guarantee this fee for the next 3 years. This new fee would include all the DROP accounting and monitoring as well as all the other work they do for the board. Mr. Johnson explained the Bogdahn Group is a hard dollar fee and by increasing the hard dollar option, it actually decreased the fee as a percentage of assets. The Trustees discussed the fee increase and noted that they are happy with the services. A motion was made by Tom Murphy to approve and accept the Bogdahn fee increase to $30K per year effective July 1, 2014. The motion was seconded by Marty Cohen and carried 4-0. Lastly Ms. Ross stated that for the reminder of 2014 we will move the quarterly meeting dates (May, August & November 2013) back from 9AM to 1PM. OLD BUSINESS Mr. Morejon asked if the Actuarial Valuation report and the share account statements are available yet. Ms. Ross stated that as of yesterday neither documents where available yet. Mr. Murphy stated that 2 members received incorrect benefit statements. Ms. Ross stated that she will check with the Actuary and get them revised. Lastly Mr. Morejon wanted confirmation that members are not allowed to withdrawal or have access to their share or DROP accounts prior to them separating service. Mr. Herrera confirmed that was correct. Members must be collecting a pension check in order to have access to their DROP or share accounts. OTHER BUSINESS Mr. Rhodes acknowledged that the Division of Retirement has accepted and approved all of the plans Actuarial Valuation Reports through September 30, 2011. There being no further business, the meeting adjourned at 12:40PM. Respectfully submitted, Tom Murphy, Secretary CITY OF PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2013 CONTRIBUTIONS APPLICABLE TO THE CITY'S PLAN/FISCAL YEAR ENDING SEPTEMBER 30, 2015 May 2, 2014 Board of Trustees City of Palm Beach Gardens Firefighters' Pension Fund Resource Centers, LLC 4360 Northlake Blvd., Suite 206 Palm Beach Gardens, FL 33410 Re: City of Palm Beach Gardens Firefighters' Pension Fund Dear Board: We are pleased to present to the Board this report of the annual actuarial valuation of the City of Palm Beach Gardens Firefighters' Pension Fund. The valuation was performed to determine whether the assets and contributions are sufficient to provide the prescribed benefits and to develop the appropriate funding requirements for the applicable plan year. The valuation has been conducted in accordance with generally accepted actuarial principles and practices, including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards Board, and reflects laws and regulations issued to date pursuant to the provisions of Chapters 112, 175, Florida Statutes, as well as applicable federal laws and regulations. In our opinion, the assumptions used in this valuation, as adopted by the Board of Trustees, represent reasonable expectations of anticipated plan experience. In conducting the valuation, we have relied on personnel, plan design, and asset information supplied by the City of Palm Beach Gardens, financial reports prepared by the custodian bank, and the actuarial assumptions and methods described in the Actuarial Assumptions section of this report. While we cannot verify the accuracy of all this information, the supplied information was reviewed for consistency and reasonableness. As a result of this review, we have no reason to doubt the substantial accuracy of the information and believe that it has produced appropriate results. This information, along with any adjustments or modifications, is summarized in various sections of this report. 13420 Parker Commons Blvd., Suite 104 Fort Myers, FL 33912 · (239) 433-5500 ·Fax (239) 481-0634 · www.foster-foster.com ·~42-L 2 The undersigned is familiar with the immediate and long-term aspects of pension valuations, and meets the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions contained herein. All of the sections of this report are considered an integral part of the actuarial opinions. To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the program has any direct financial interest or indirect material interest in the City of Palm Beach Gardens, nor does anyone at Foster & Foster, Inc. act as a member of the Board of Trustees of the City of Palm Beach Gardens Firefighters' Pension Fund. Thus, there is no relationship existing that might affect our capacity to prepare and certify this actuarial report. If there are any questions, concerns, or comments about any of the items contained in this report, please contact me at 239-433-5500. Respectfully submitted, Foster & Foster, Inc. By: DHL/lke Enclosures 3 4 TABLE OF CONTENTS Section Title Page I Introduction a. Summary of Report 5 b. Changes Since Prior Report 7 c. Comparative Summary of 8 Principal Valuation Results II Valuation Information a. Reconciliation and Derivation of the 13 Unfunded Actuarial Accrued Liability b. Actuarial Assumptions and Methods 14 c. Valuation Notes 16 III Trust Fund 17 IV Member Statistics a. Statistical Data 22 b. Age and Service Distribution 23 c. Member Reconciliation 24 v Summary of Plan Provisions 25 VI Governmental Accounting Standards 28 Board Disclosure Information VII Share Plan Reconciliation 31 SUMMARY OF REPORT The regular annual actuarial valuation of the City of Palm Beach Gardens Firefighters' Pension Fund, performed as of October 1, 2013, has been completed, and the results are presented in this Report. The contribution amounts developed in this valuation are applicable to the plan/fiscal year ended September 30, 2015. The contribution requirements, compared with amounts developed in the October 1, 2012, actuarial valuation, are as follows: Valuation Date Applicable Plan/Fiscal Year End Total Required Contribution % of Total Annual Payroll Member Contributions (Est.) % of Total Annual Payroll City and State Required Contribution % of Total Annual Payroll State Contribution 1 % of Total Annual Payroll Balance from City 1 % of Total Annual Payroll 10/1/2012 9/30/2014 48.97% 6.00% 42.97% 530,988 6.80% 36.17% 10/1/2013 9/30/2015 52.61% 6.00% 46.61% 530,988 6.80% 39.81 % 1 State Contribution shown is an amount based on 6.8% of the October 1, 2013 valuation payroll. For budgeting purposes, the required Sponsor Contribution (City and State) is 42.97% of Pensionable Earnings for the fiscal year ending September 30, 2014, and 46.61 % for the fiscal year ending September 30, 2015. The precise City requirement is the applicable Sponsor percentage, less State Contributions equal to 6.80% of Pensionable Payroll realized for the applicable fiscal year. 5 Experience during the last twelve months was more favorable than expected, relative to the Plan's actuarial assumptions. The primary sources of favorable experience included a 10.1 % investment return (Actuarial Asset Basis), exceeding the 8.25% assumption, and an average decrease in Pensionable Compensation of more than 6%. These gains were partially offset by lower than expected employee turnover. In spite of the Plan's net favorable experience for the year, funding requirements, when expressed as a percentage of payroll have increased for the following reasons: 1. A reduction in the payroll growth assumption (as required by Chapter 112, Florida Statutes) for the purpose of amortizing the Unfunded Actuarial Accrued Liability (UAAL). This reduction results in an increase to the Principal portion of the amortization payment. 2. An approximate 12% reduction in Valuation Payroll. This decrease results in an increase in the required payment toward the UAAL, expressed as a percentage of payroll. 3. A reduction in the investment return assumption from 8.25% to 8.05% (as approved by the Board at the November 6, 2013 Board Meeting). The balance of this Report presents additional details of the actuarial valuation and the general operation of the Fund. The undersigned would be pleased to meet with the Board to discuss the Report and answer any questions concerning its contents. Respectfully submitted, FOSTER & FOSTER, INC. 6 Plan Changes Since Prior Valuation There were no changes in benefits since the prior valuation. Actuarial Assumption/Method Changes Since Prior Valuation • The payroll growth assumption, utilized for amortization of the Unfunded Actuarial Accrued Liability (UAAL) has been decreased from 4.5% to 2.9% (the actual ten-year payroll growth as of 10/1/2013). This decrease was made for the purpose of compliance with Part VII of Chapter 112, Florida Statutes. Additionally, the following changes in methods and assumptions were made (as approved by the Board at the November 6, 2013 Meeting): • The Investment return assumption has been decreased from 8.25% to 8.05%. Further reductions will be implemented with future valuations according to the following schedule: Valuation Date 10/1/2014 10/1/2015 10/1/2016 10/1/2017 Investment Return Assumption 7.85% 7 .65% 7.45% 7.25% • The amortization period for components of the UAAL established prior to 10/1/2013 are limited to no more than 20 years as of 10/1/2013. Assumption changes on and after 10/1/2013 will be amortized over 20 years, and Experience Gains and Losses established on and after 10/1/2013 will be amortized over 10 years. 7 8 COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS new assumption old assumption old assumption 10/1/2013 10/1/2013 10/1/2012 A. Participant Data Number Included Actives 105 105 108 Service Retirees 9 9 7 Beneficiaries 1 1 1 Terminated Vested 3 3 2 Disability Retirees 5 5 5 DROP Retirees 8 8 6 Total 131 131 129 Total Annual Payroll 8,686,040 8,686,040 9,720,044 Payroll Under Assumed Ret. Age 7,808,654 7,808,654 8,909,034 Annual Rate of Payments to: Service Retirees 676,505 676,505 451,643 Beneficiaries 31,584 31,584 31,584 Terminated Vested 90,766 90,766 71,566 Disability Retirees 118,217 118,217 118,217 DROP Retirees 586,468 586,468 471,287 B. Assets Actuarial Value 1 56,934,843 56,934,843 48,969,796 Market Value 1 59,994,725 59,994,725 50,720,309 C. Liabilities Present Value of Benefits Active Members Retirement Benefits 54,426,225 52,767,304 56,205,472 Disability Benefits 398,117 388,634 445,806 Death Benefits 206,155 201,387 221,166 Vested Benefits 2,989,602 2,866,554 3,299,360 Refund of Contributions 15,549 15,497 11,751 Service Retirees 10,110,520 9,894,532 6,555,356 Beneficiaries 58,710 58,609 84,607 Terminated Vested 772,068 747,263 613,950 Disability Retirees 1,147,127 1,129,280 1,141,658 DROP Retirees 1 9,705,609 9,509,940 7,976,089 Share Plan Balances 8,078,808 8,078,808 7,175,953 Total 87,908,490 85,657,808 83,731,168 9 new assumption old assumption old assumption C. Liabilities -(Continued) 10/1/2013 10/1/2013 10/1/2012 Present Value of Future Salaries 51,038,562 50,622,675 58,338,596 Normal Cost (Projected Unit Credit) Service Ret 1,903,639 1,841,568 2,039,700 Dis Benefits 23,935 23,375 26,623 Death Benefits 10,299 10,057 11,022 Vest Benefits 163,922 157,021 182,747 Refunds 4,332 4,318 3,636 Total Normal Cost 2,106,127 2,036,339 2,263,728 Present Value of Future Normal Costs 14,171,585 13,620,896 15,612,111 Actuarial Accrued Liability Service Ret 41,277,368 40,125,910 41,759,767 Dis Benefits 282,930 276,724 314,680 Death Benefits 147,614 144,509 155,948 Vest Benefits 2,148,869 2,064,071 2,336,339 Refunds 7,282 7,266 4,710 Inactives 1 21,794,034 21,339,624 16,371,660 Share Plan Balances 8,078,808 8,078,808 7,175,953 Total Actuarial Accrued Liability 73,736,905 72,036,912 68,119,057 Unfunded Actuarial Accrued Liability (UAAL) 16,802,062 15,102,069 19,149,261 D. Actuarial Present Value of Accrued Benefits Vested Accrued Benefits Inactives 1 21,794,034 21,339,624 16,371,660 Share Plan Balances 8,078,808 8,078,808 7,175,953 Actives 25,388,520 24,571,806 23,945,495 Member Contributions 5,916,021 5,916,021 5,844,494 Total 61,177,383 59,906,259 53,337,602 Non-vested Accrued Benefits 1,942,839 1,890,863 1,997,570 Total Present Value Accrued Benefits 63,120,222 61,797,122 55,335,172 Increase (Decrease) in Present Value of Accrued Benefits Attributable to: Plan Amendments 0 0 Assumption Changes 1,323,100 0 New Accrued Benefits 0 3,576,852 Benefits Paid 0 (1,613,497) Interest 0 4,498,595 Other 0 0 Total: 1,323,100 6,461,950 Valuation Date Applicable to the Fiscal Year Ending E. Pension Cost Normal Cost (with interest) % of Total Annual Payroll 2 Administrative Expenses (with interest) % of Total Annual Payroll 2 Payment Required to Amortize Unfunded Actuarial Accrued Liability over 20 years as of 10/1/13 (with interest) % of Total Annual Payroll 2 Total Required Contribution % of Total Annual Payroll 2 Expected Member Contributions % of Total Annual Payroll 2 Expected City and State Contrib. % of Total Annual Payroll 2 F. Past Contributions Plan Year Ending: Total Required Contribution City and State Requirement Actual Contributions Made: Members City State Total G. Actuarial Gain (Loss) 3,549,892 new assumption 10/1/2013 9/30/2015 28.06 1.33 23.22 52.61 6.00 46.61 9/30/2013 3,940,827 3,443,143 497,684 3,347,645 564,042 3 4,409,371 old assumption 10/1/2013 9/30/2015 27.15 1.33 21.71 50.19 6.00 44.19 1 The asset values and liabilities for DROP Members include accumulated DROP Balances as of 9/30/2013 and 9/30/2012. 2 Contributions developed as of 10/1/2013 are expressed as a percentage of Payroll Under Assumed Retirement Age at 10/1/2013 of $7,808,654. 3 "Frozen" under the traditional interpretation of Chapter 99-1, Florida Statutes. old assumption 10/1/2012 9/30/2014 26.46 1.13 21.38 48.97 6.00 42.97 10 H. Schedule Illustrating the Amortization of the Total Unfunded Actuarial Accrued Liability as of: 2013 2014 2015 2020 2025 2033 Projected Unfunded Accrued Liability 16,802,062 16,271,038 15,642,643 10,680,748 5,089,040 0 I. (i) 3 Year Comparison of Actual and Assumed Increases in Pensionable Compensation Year Ended Year Ended Year Ended 9/30/2013 9/30/2012 9/30/2011 Actual -6.2% 2.7% 7.2% (ii) 3 Year Comparison of Investment Return on Actuarial Value Year Ended Year Ended Year Ended (iii) Average Annual Payroll Growth (a) Payroll as of: (b) Total Increase (c) Number of Years ( d) Average Annual Rate 9/30/2013 9/30/2012 9/30/2011 Actual 10.1% 7.2% 1.1 % 10/1/2013 10/1/2003 Assumed 5.1% 5.1% 1 5.1% Assumed 8.25% 8.25% 8.25% $8,686,040 6,541,837 32.8% 10 2.9% 1 The reported Actual Increase in Pensionable Compensation for fiscal 2012 is based on estimated pay utilized for purposes of the September 12, 2012 Actuarial Impact Statement. 11 STATEMENT BY ENROLLED ACTUARY This actuarial valuation was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate, and in my opinion, the techniques and assumptions used are reasonable and meet the requirements and intent of Part VII, Chapter 112, Florida Statutes. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Please let us know when the report is approved by the Board and unless otherwise directed we will provide copies of the report to the following offices to comply with Chapter 112 Florida Statutes: Mr. Keith Brinkman Bureau of Local Retirement Systems Post Office Box 9000 Tallahassee, FL 32315-9000 Ms. Sarah Carr Municipal Police and Fire Pension Trust Funds Division of Retirement Post Office Box 3010 Tallahassee, FL 32315-3010 12 13 RECONCILIATION OF UNFUNDED ACTUARIAL ACCRUED LIABILITIES (1) Unfunded Actuarial Accrued Liability $19' 149 ,261 as of October 1, 2012 (2) City and State Normal Cost Applicable for the Year 1,729,186 (3) Expected Administrative Expenses for the Year 96,825 (4) Interest on (1 ), (2), and (3) 1,726,466 (5) Sponsor Contributions to the System during the 3,911,687 year ending September 30, 2013 (6) Interest on ( 5) 138,090 (7) Expected Unfunded Accrued Liability as of October 1, 2013 18,651,961 (1)+(2)+(3)+(4)-(5)-(6) (8) New UAAL due to Experience (Gain)/Loss (3,549,892) (9) New UAAL due to Reduction in Investment Return Assumption 1,699,993 (10) UAAL as of October 1, 2013 16,802,062 Date Years 10/1/2013 Amortization Established Remaining Amount Amount Prior Experience 10/1/1993 10 13,208,579 1,629,425 Benefit Change 10/1/2002 19 2,367,502 186,636 Experience Loss 10/1/2006 20 753,294 57,589 Assum/Method Change 10/1/2006 20 (2,364,211) (180,743) Experience Gain 10/1/2007 20 (317,241) (24,253) Experience Loss 10/1/2008 20 1,500,881 114,742 Experience Loss 10/1/2009 20 941,610 71,986 Experience Loss 1011/2010 20 492,646 37,663 Experience Loss 10/1/2011 20 4,242,169 324,312 Benefit Change 10/1/2011 20 (2,473,617) (189,107) Experience Loss 10/1/2012 20 300,349 22,962 Experience Gain 10/1/2013 IO (3,549,892) (437,919) Assumption Change 10/1/2013 20 1,699,993 129,964 16,802,062 1,743,257 ACTUARIAL ASSUMPTIONS AND METHODS Mortality Rates Interest Rate Retirement Rates Actuarial Value of Assets Cost of Living Adjustments Funding Method Salary Increases * RP-2000 Table, sex distinct, without projection. 8.05% (previously 8.25%) per year compounded annually, net of investment related expenses. Probability of Age Retirement 50 5.0% 51 5.0 52 50.0 53 10.0 54 10.0 55 100.0 For those Members who attain 25 years of Credited Service, regardless of Age, the probability of retirement is 100%. The Actuarial Value of Assets is calculated by recognizing 25% of the difference between the Market Value of Assets and the expected Market Value of Assets. 1.0% increase for members who are Age 53, 2.0% increase for members who are Age 54, and 1.5% increase for members who are Age 5 5 and greater. Projected Unit Credit Cost Method. Age Increase 20 3.7% 30 1.1 40 0.7 50 0.2 60 0.0 * Expected increase in salary in addition to 4.5% inflation assumption. 14 Administrative Expenses Payroll Growth Assumption Final Pay Load Termination Rates Disability Rates $99,667 2.9% (previously 4.5%) for amortization of the Unfunded Actuarial Accrued Liability. For Members hired prior to October 1, 2011, active liabilities are increased by 3 % to account for assumed payments of unused sick and annual leave time. Members protected from benefit changes set forth in Ordinance 23, 2012 are valued with a 4.5% final salary load. Members hired on and after October 1, 2011 are valued with no final pay load. Age All Ages 25 30 35 40 45 50 55 Age 20 25 30 35 40 45 50 % Separating from Years Employment Within the of Service Next Year 0 15.0% 1 10.0 2 9.0 3 8.0 4 7.0 5 & Over 7.0 5.9 4.4 3.0 2.1 1.7 1.0 % Become Disabled within Next Year 0.0545% 0.0545 0.0580 0.0895 0.1210 0.2750 0.4290 It is assumed that 75% of disablements and active Member deaths are service related. 15 VALUATION NOTES Total Annual Payroll is the projected annual rate of pay as of the valuation date of all covered Members. Present Value of Benefits is the single sum value on the valuation date of all future benefits to be paid to current Members, Retirees, Beneficiaries, Disability Retirees and Vested Terminations. Normal (Current Year's) Cost is determined for each participant as the present value of the increase in the accrued benefit for the plan year, utilizing projected salary. Projected Unit Credit Actuarial Cost Method (Level Percent of Compensation) is the method used to determine required contributions under the Plan. The use of this method involves the systematic funding of the Normal Cost (described above) and the Unfunded Accrued (Past Service) Liability. The actuarial accrued liability is the present value of accrued benefits, utilizing projected salary for active Plan Participants. Unfunded Actuarial Accrued Liability (UAAL) is the difference between the actuarial accrued liability (described above) and the actuarial value of assets. Under the Projected Unit Credit Actuarial Cost Method, an actuarial gain or loss, based on actual versus expected U AAL, is determined in conjunction with each valuation of the plan. Total Required Contribution is equal to the Normal Cost plus an amount sufficient to amortize the Unfunded Accrued Liability over no more than 30 years. The required amount is adjusted for interest according to the timing of contributions during the year. 16 ASSETS Cash and Cash Equivalents: Money Market Total Cash and Equivalents Receivable: City Contributions in Transit State Contributions Accrued Income Total Receivable Investments: Fixed Income Stocks Mutual Funds: Fixed Income Equity Pooled/Common/Commingled Funds: Real Estate Total Investments TOT AL ASSETS LIABILITIES AND NET ASSETS Liabilities: Payable: Unpaid Investment Expenses Unpaid Administrative Expenses Total Liabilities Net Assets, including DROP Account Balances TOTAL LIABILITIES AND NET ASSETS BALANCE SHEET September 30, 2013 17 MARKET VALUE 2, 176,592.33 2, 176,592.33 836,911.25 750,072.76 104,266.04 1,691,250.05 12,000,452.61 20,348,405 .15 2,903,577.47 16,822,125.97 4, 109,273 .95 56,183,835.15 60,051,677.53 48,338.20 8,614.50 56,952.70 59,994,724.83 60,051,677.53 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS September 30, 2013 Contributions: Member City State Total Contributions Earnings from Investments Interest & Dividends Net Realized Gain (Loss) Unrealized Gain (Loss) Total Earnings and Investment Gains Expenses: Investment Related 1 Administrative Total Expenses Distributions to Members: Benefit Payments Lump Sum DROP Distributions Lump Sum Share Distributions Termination Payments Total Distributions Change in Net Assets for the Year Net Assets Beginning of the Year Net Assets End of the Year Market Value Basis REVENUES EXPENDITURES 497,683.94 3,347,645.00 750,072.76 1,293,617.23 3,400,552.48 1,932,910.36 234,901.52 99,667.02 657,210.14 805, 761.63 150,525.56 0.00 1 Investment Related expenses include investment advisory, custodial and performance monitoring fees. 18 4,595,401. 70 6,627,080.07 334,568.54 1,613,497.33 9,274,415.90 50, 720,308.93 59,994,724.83 ACTUARIAL ASSET VALUATION September 30, 2013 Actuarial Assets for funding purposes are developed by recognizing the total actuarial investment gain or loss for each Plan Year over a four year period. In the first year, 25% of the gain or loss is recognized. In the second year 50%, in the third year 75%, and in the fomih year 100% of the gain or loss is recognized . The actuarial investment gain or loss is defined as the actual return on investments minus the actuarial assumed investment return. Actuarial Assets shall not be less than 80% nor greater than 120% of Market Value of Assets. Gains/(Losses} Not Yet Recognized Plan Year Amounts Not Yet Recognized by Valuation Year Ending Gain/(Loss) 2013 2014 09/30/2010 ( 407 ,459) 0 0 09/30/2011 (3,099,811) (774,953) 0 09/30/2012 4 ,536,378 2,268, 189 1,134,094 09/30/2013 2,088,861 1,566,646 1,044,430 Total 3,059,882 2,178 ,524 Development of Investment Gain/(Loss} Market Value of Assets, including DROP & Share Balances, 09/30/2012 Contributions Less Benefit Payments & Admin Expenses Expected Investment Earnings * Actual Net Investment Earnings 0913012013 Actuarial Investment Gain/(Loss) *Expected Investment Earnings= 0.0825 * (50,720,309 + 0.5 * 2,882 ,237) Development of Actuarial Value of Assets (1) Market Value of Assets, including DROP & Share Balances, 09/30/2013 (2) Gains/(Losses) Not Y et Recognized (3) Actuarial Value of Assets, 09/30/2013 , (1) -(2) (A) 09/30/2012 Actuarial Assets, including DROP & Share Balances: (I) Net Investment Income: 1 . Interest and Dividends 2. Realized Gains (Losses) 3. Change in Actuarial Value 4. Investment Expenses Total (B) 09/30/2013 Actuarial Assets, including DROP & Share Balances: Actuarial Assets Rate of Return= 21/(A+B-I): Market Value of Assets Rate of Return: 10/01/2013 Limited Actuarial Assets: 2015 0 0 0 522,215 522,215 50,720,309 2,882,237 4 ,303,318 6,392,179 2 ,088 ,861 59 ,994,725 3 ,059,882 56,934,843 48,969,796 1,293,617 3,400,552 623,541 (234,902) 5 ,082,810 56,934,843 10.1% 12.3% 56,934,843 2016 19 0 0 0 0 0 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS September 30, 2013 Contributions: Member City State Total Contributions Earnings from Investments Interest & Dividends Net Realized Gain (Loss) Change in Actuarial Value Total Earnings and Investment Gains Expenses: Investment Related 1 Administrative Total Expenses Distributions to Members: Benefit Payments Lump Sum DROP Distributions Lump Sum Share Distributions Termination Payments Total Distributions Change in Net Assets for the Year Net Assets Beginning of the Year Net Assets End of the Year2 Actuarial Asset Basis REVENUES EXPENDITURES 497,683.94 3,347,645.00 750,072.76 1,293,617.23 3,400,552.48 623 ,541.36 234,901.52 99 ,667.02 657,210.14 805,761.63 150,525.56 0.00 'Investment Related expenses include investment advisory, custodial and performance monitoring fees. 2 Net Assets may be limited for actuarial consideration. 20 4,595,401. 70 5,317,711.07 334,568.54 1,613,497.33 7,965 ,046.90 48 ,969, 795 .93 56,934,842.83 09/30/2012 Balance Plus Additions Investment Return Earned Less Distributions 09/30/2013 Balance DEFERRED RETIREMENT OPTION PLAN ACTIVITY October 1, 2012 to September 30, 2013 945,148.36 710,468.86 21,549.61 (805, 761.63) 871,405.20 21 22 STATISTICAL DATA 10/1/2010 10/1/2011 10/1/2012 10/1/2013 Number 114 111 108 105 Average Current Age 40.9 41.8 42.0 42.6 Average Age at Employment 28.1 28.5 28.3 28.5 Average Past Service 12.8 13.3 13.7 14.1 Average Annual Salary $86,824 $89,150 $90 ,000 $82,724 23 AGE AND SERVICE DISTRIBUTION PAST SERVICE AGE 0 1 2 3 4 5-9 10 -14 15-19 20-24 25-29 30+ Total 15 -19 0 0 0 0 0 0 0 0 0 0 0 0 20 -24 0 1 0 0 0 0 0 0 0 0 0 25 -29 0 1 0 0 0 0 0 0 0 0 0 30 -34 0 0 0 0 0 9 7 0 0 0 0 16 35 -39 2 1 0 0 0 6 7 2 0 0 0 18 40 -44 0 0 0 0 0 6 8 6 1 0 0 21 45 -49 0 0 0 0 0 4 7 11 6 0 0 28 50 -54 0 0 0 0 0 0 8 5 2 0 16 55 -59 0 0 0 0 0 0 0 0 3 0 0 3 60 -64 0 0 1 0 0 0 0 0 0 0 0 1 65+ 0 0 0 0 0 0 0 0 0 0 0 0 Total 2 3 1 0 0 25 30 27 15 2 0 105 VALUATION PARTICIPANT RECONCILIATION 1. Active lives a. Number in prior valuation 10/1/12 b. Terminations i. Vested (partial or full) with deferred benefits ii. Non-vested or full lump sum distribution received c. Deaths i. Beneficiary receiving benefits ii. No future benefits payable d. Disabled e. Retired f. DROP g. Continuing participants h. New entrants i. Total active life participants in valuation 2. Non-Active lives (including beneficiaries receiving benefits) Service Retirees, Vested Receiving Receiving Receiving Death Disability Benefits Benefits Benefits a. Number prior 7 1 5 valuation b. In 2 0 0 c. Out 0 0 0 d. Number current 9 1 5 valuation Vested Deferred 2 1 0 3 108 1 0 0 0 0 0 4 103 2 105 DROP 6 4 2 8 24 Total 21 7 2 26 Eligibility Credited Service Average Final Compensation Member Contributions City and State Contributions Normal Retirement Date Benefit Form of Benefit Early Retirement Eligibility Benefit SUMMARY OF PLAN PROVISIONS (Through Ordinance 2, 2013) Full-time certified Firefighters. Total years and fractional parts of years of employment with the City as a Firefighter while making Member contributions. Total compensation, excluding overtime and payments for unused accrued sick and annual leave for salary earned after September 13, 2012. Average Salary for the 5 best years of the 10 years immediately preceding retirement or termination. 6.0% of Salary. Remaining amount required in order to pay current costs and amortize unfunded past service cost, if any, as provided in Part VII, Chapter 112, F.S. Earlier of: 1) Age 52 with 10 years of Credited Service, or 2) attainment of 25 years of Credited Service, regardless of Age. 3.0% of Average Final Compensation times Credited Service, not to exceed 75% of Average Final Compensation. Ten Year Certain and Life Annuity (options available). Age 50 with 10 years of Credited Service. Accrued benefit, reduced 3. 0% per year that the benefit commencement date precedes age 52. 25 Vesting Schedule Benefit Amount Disability Eligibility Service Incurred Non-Service Incurred Exclusions Benefit Service Incurred Non-Service Incurred Duration Death Benefits 10 or more years of Credited Service Less than 10 years of Credited Service 25% after 5 years of Credited Service, then 15% for each additional year until 100% after 10 years of Credited Service. Member will receive the vested portion of his (her) accrued benefit payable at age 50 (reduced) or age 52. Covered from Date of Employment. 10 years of Credited Service. Disability resulting from use of drugs, illegal participation in riots, service in military, etc. 60% of Average Final Compensation, but not less than 2.0% of Average Final Compensation times Credited Service. 2.5% of Average Final Compensation times Credited Service. Payable for life (with 120 payments guaranteed) or until recovery (as determined by the Board). Optional forms of payment are available. Monthly accrued benefit payable to designated beneficiary for 10 years at otherwise Early (reduced) or Normal (unreduced) Retirement Date. Refund of Member contributions. 26 Post-Retirement Cost of Living Adjustment Eligibility Amount Deferred Retirement Option Plan Eligibility Participation Rate of Return Distribution Chapter 175/185 Share Accounts Allocation Investment Earnings Vesting Schedule Distribution Benefits payable to beneficiary in accordance with option selected at retirement. Normal and Early Retirees and Beneficiaries (including Vested Terminated Retirees). COLA is not payable to Disability Retirees. 1.0% increase for members who are Age 53 , 2.0% increase for members who are Age 54, and 1.5% increase for members who are Age 55 and greater. Satisfaction of Normal Retirement requirements. Maximum participation period of 60 months . At the Member 's option, a fixed rate , actual rate of investment return for the Plan, or returns generated by self-directed accounts. Cash lump sum (options available) at termination of employment. Ordinance 27 , 1998 established a Share Plan for all Active Members. Premium tax monies received in excess of the base amounts, less 6.8% of salary, is allocated annually to each individual Share Account based on Credited Service, determined as of September 30. Net rate of investment return realized by the Plan for the preceding Plan Year. Active Members who terminate employment with less than 5 years of Credited Service forfeit their Share. Active Members with 5 or more years of Credited Service will be paid a lump sum upon separation from service. 27 Actuarial Valuation Date 10 /01/13 10 /01/12 10/01/11 10/01/10 10/01/09 DISCLOSURE INFORMATION PER STATEMENT NO. 25 OF THE GOVERNMENTAL ACCOUNTING STANDARDS BOARD The schedule provided below has been prepared in accordance with the requirements of paragraph 37 of Statement No. 25 of the Governmental Accounting Standards Board. SCHEDULE OF FUNDING PROGRESS Actuarial Accrued Actuarial Liability Unfunded Value of (AAL) AAL Funded Covered Assets -Projected Unit Credit (UAAL) Ratio Payroll (a) (b) (b-a) (alb) (c) 56,934,843 73,736,905 16,802,062 77 .2% 8,686,040 48,969,796 68, 119,057 19, 149,261 71.9% 9,720,044 35,152,000 57,098,000 21,946,000 61.6% 10,576,000 31,110,000 49,208,000 18,098,000 63.2% 10,072,000 26,484,000 44,358,000 17,874,000 59.7% 9,994,000 The schedule provided below has been prepared in accordance with the requirements of paragraph 38 of Statement No . 25 of the Governmental Accounting Standards Board. SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER AND OTHER CONTRIBUTING ENTITIES Year Annual Ended Required City State Percentage September 30 Contribution Contribution Contribution I Contributed 2013 3,443,143 3,347,645 564,042 113.6% 2012 3,634,796 3,974,487 188,039 114.5% 2011 3,942,436 3,745,497 196,939 100.0% 2010 3,751,350 3,550,238 201,112 100 .0% 2009 3,381,790 3,180,731 201,059 100.0% 1 State Contribuiton shown reflects 2% of Pensionable Payroll through fiscal 2012. For the fiscal year ended September 30, 2013, the State Contribution is 6.8% of Pensionable Payroll for that year. UAALas a% of Covered Payroll ((b-a)/c) 193.4% 197.0% 207.5% 179.7% 178 .8% 1:0 00 DISCLOSURE INFORMATION PER STATEMENT NO. 27 OF THE GOVERNMENTAL ACCOUNTING STANDARDS BOARD ANNUAL PENSION COSTS AND RELATED INFORMATION Contribution rates as of 9/30/13 City and State Plan Members Actuarially Determined Contribution (City and State) Contributions made Actuarial valuation date Actuarial cost method 41.51% 6.00% 3,443,143 3 ,911,687 10/112011 Projected Unit Credit Amortization method Level Percentage of Pay , Closed Remaining amortization period Asset valuation method Actuarial assumptions (as of 10/1/2011): Investment rate of return Projected salary increase * * Includes inflation at Post Retirement COLA 25 years (as of 101112011) 4 Year Smooth 8 .25% 4 .5% -8.2% 4.5% Age 53 -1 % Age 54 -2% Age 55 and later -3% THREE YEAR TREND INFORMATION Annual Percentage Year Pension Cost of APC Ending (APC) Contributed 9/30/13 3 ,430,813 114.0% 9/30/12 3,634,796 114.5% 9/30/11 3 ,942 ,436 100.0% Net Pension Obligation (1 ,008 ,604) (527 ,730) 0 29 DISCLOSURE INFORMATION PER STATEMENT NO. 27 OF THE GOVERNMENTAL ACCOUNTING STANDARDS BOARD DEVELOPMENT OF NET PENSION OBLIGATION (NPO) This municipal Defined Benefit Plan has been subject to the minimum funding standards since the adoption of the "Florida Protection of Public Employee Retirement Benefits Act" (Part VII of Chapter 112, Florida Statutes) in 1980. Accordingly, the sponsor has funded the actuarially determined required contributions for all years from October 1, 1987, through the transition date, October 1, 1997. Thus, the NPO on October 1, 1997, is 0. The development of the Net Pension Obligation to date is as follows: Actuarially Determined Contribution (A) Interest on NPO Adjustment to (A) Annual Pension Cost Contributions Made Increase in NPO NPO Beginning of Year NPO End of Year (527,730) 9/30/13 3,443,143 (43,538) 31,208 3,430,813 3,911,687 (480,874) (527,730) (1,008,604) 30 9/30/2012 Balance Plus Additions Investment Return Earned Less Distributions Less Expenses 9/30/2013 Balance SHARE PLAN RECONCILIATION October 1, 2012 to September 30, 2013 31 7,175,953.18 186,030.96 913,498.85 ( 150,525 .56) (46,149.34) 8,078,808.09 PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD JANUARY 13, 2014 A meeting of the Board of Trustees was called to order at 9:03AM at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Rick Rhodes, Chairman Scott Baur, Administrator Mark Joyce, Vice Chair Audrey Ross Administrator Tom Murphy, Secretary Dan Johnson, Investment Consultant Ed Morejon Pedro Herrera, Attorney Martin Cohen Fernando deAguero, ICMA Steven Feigelis, ICMA Cary Scaglione, ICMA PUBLIC COMMENTS N/A MINUTES The Board reviewed the minutes of the regular meeting held on November 6, 2013. A motion was made by Ed Morejon to approve the minutes of the November 6, 2013 regular meeting as amended. The motion was seconded by Tom Murphy and carried 5-0. SELECTION OF CHAIRMAN, VICE CHAIR & SECRETARY Ms. Ross stated that the board needs to select a Chair, Vice Chair, and Secretary according to their policy. A motion was made by Ed Morejon to nominate Rick Rhodes as Chair. The motion was seconded by Tom Murphy and carried 5-0. Mr. Rhodes accepted the nomination as Chair. A motion was made by Mark Joyce to elect Rick Rhodes as Chair. The motion was seconded by Tom Murphy and carried 5-0. A motion was made by Tom Murphy to nominate Martin Cohen as Vice Chair. The motion was seconded by Mark Joyce and carried 5-0. Mr. Cohen accepted the nomination as Vice Chair. A motion was made by Tom Murphy to elect Martin Cohen as Vice Chair. The motion was seconded by Mark Joyce and carried 5-0. A motion was made by Ed Morejon to nominate Tom Murphy as Secretary. The motion was seconded by Mark Joyce and carried 5-0. Mr. Murphy accepted the nomination as Secretary. 2 A motion was made by Mark Joyce to elect Tom Murphy as Secretary. The motion was seconded by Ed Morejon and carried 5-0. ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS & SCOTT BAUR) DISBURSEMENTS The Board reviewed the disbursements presented for approval by the Administrator. A motion was made by Martin Cohen to approve the disbursements as presented by the Administrator. The motion was seconded by Ed Morejon and carried 5-0. BENEFIT APPROVALS The Board reviewed the application for distribution of Share Account (final payout) for Glen Aitken and the application to enter the DROP for Michael Dunaway. A motion was made by Tom Murphy to approve the application for final distribution of Share account for Glen Aitken and the application to enter the DROP for Michael Dunaway. The motion was seconded by Mark Joyce and carried 5-0. The Board reviewed the 2014 COLA increase for the retirees. The board asked the Actuary to prepare the same kind of list for the active DROP members as well for approval at the next meeting. A motion was made by Ed Morejon to approve the 2014 COLA increases for the retirees effective 1/1/2014. The motion was seconded by Mark Joyce and carried 5- 0. Ms. Ross noted that Mr. Cohen has a conflict with the May and November 2014 meetings dates. Therefore those dates will be rescheduled and Ms. Ross will notify the board as soon as possible. ICMA PRESENTATION: FERNANDO DEAGUERO, STEVEN FEIGELIS & CARY SCAGLIONE Mr. deAguero explained that ICMA is here today to help the board with a self directed DROP account as an alternative for their DROP investments. He noted that the City also uses ICMA for their 457 account. Mr. deAguero reviewed ICMA as a company and stated that they were founded in 1972 and they currently have a 96.7% client retention rate. ICMA is non-profit organization with close to $50B in assets. ICMA administers over 2,100 defined contribution plans and over 4,900 457 plans, and they also have quite a few DROP plans that they administer locally as well. Mr. dAguero introduced Mr. Feigelis and stated that he is ICMA’s retirement specialist. Mr. Feigilis will be the one who will help the plan’s administrator get set up on their computer program, EZ Link. He explained that this software will allow the plan administrator to set up new DROP members and also choose their investments. Mr. Feiglis will also be assisting with the transition and he also puts on educational seminars for the members once the transition is complete. Mr. deAguero reviewed the products that ICMA invests in and noted that most of these investments can be traded daily, except for the few that have restrictions. The pension board will work with their consultant and ICMA to narrow down the investment list to a couple of options to offer the members, and then from there the board would 3 create their own policy regarding distributions, etc. Mr. deArgues reviewed the transition process and stated that the entire process takes about 90 days from start to finish. The Trustees discussed the fee with ICMA and asked if they would consider giving them a discount since ICMA would be the manager for both the Pension Plan and the 457 Account with the City of Palm Beach Gardens. Mr. deArgues stated that they could not offer a discount to the ongoing monthly fee at this time because they are two totally separate accounts with different assets, but ICMA will not charge the pension board the start up admin fee because of the relationship (the start-up admin fee is 55 basis points). The proposed ICMA fee is 29 basis points for the stable market value fund and then each investment has their own fee built into their stock price. The Trustees discussed the IRS’s outlook on DROP accounts and if ICMA would tie into that “variable account” situation. Mr. Herrera stated that from a legal standpoint the IRS has not passed anything in regards to the variable rate on DROP accounts versus the fixed rate, and what is consider a defined contribution account versus a defined benefit account. Although with ICMA there are so many different investment options that they offer that they can deal with the IRS situation in the future if it was to ever come forth, but in the meantime the plan has a qualified IRS determination letter as well. Lastly the Trustees asked ICMA if they would consider offering the same service to members on their 175 (Share) account. Mr. deArgues stated that ICMA could also administer the Share accounts as well, but it would be a separate account. The Trustees noted that they wanted to deal with setting up the DROP accounts first before they move on with the Share accounts. BOARD DISCUSSION: The Trustees had a lengthly discussion on the ICMA presentation and also what steps they need to take to move forward. Mr. Herrera confirmed with the Trustees that if the board where to hire ICMA, then they will be replacing the plans current money market option. A motion was made by Ed Morejon to hire ICMA to administer the self-directed DROP accounts and to authorize the Plan’s Attorney to review the ICMA contract. The motion was seconded by Mark Joyce and carried 5-0. Mr. Johnson reviewed the process from there. He stated that he will work with ICMA to come up with a list of investments, he will prepare a draft IPG, and he will also get a written fee proposal from Bogdahn reflecting the additional cost to administer and report on the ICMA accounts. Ms. Ross stated that she will also check with her firm to see if there will be any additional cost on their end as well. Mr. Johnson stated that after all the contracts are signed between the board and ICMA, then they can start working on putting together a policy surrounding the administration of the self-directed DROP accounts. INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (DAN JOHNSON) Mr. Johnson reviewed the December 31, 2014 flash performance report. Fiscal year to date the fund is up 6.6%, which was a gain of $3.8M for the quarter. He explained that the market continues to be in a positive rebound and therefore all the managers outperformed their index for the quarter. Mr. Johnson stated that he will have the full December 31, 2014 quarterly report at the next meeting. 4 Mr. Johnson reviewed the revised investment policy guidelines (IPG). He noted the changes that were made including the change to the plans assumed rate of return. The board had a brief discussion on the assumption rate and Mr. Cohen commented that he does not think that 7.75% is a reasonable rate. A motion was made by Tom Murphy to approve and accept the revised investment policy guidelines as presented. The motion was seconded by Mark Joyce and carried 5-0. Mr. Brown explained that the Templeton Global Bond Mutual fund account has launched a new share class. The new R6 shares (retirement class) are exactly the same underlying fund as what is currently in the portfolio, however, the R6 share class is offered at a lower cost. Mr. Brown stated that he has no objection to this share class transfer because there are no costs associated with the transfer, it has the same benefits of the share class that we are currently in, and the new share class will actually save the plan some money. ATTORNEY REPORT: SUGERMAN & SUSSKIND (BOB SUGARMAN) Mr. Herrera reminded the Trustees of the upcoming continuing education programs for the Trustees and also of the Division of Retirement school in May. OLD BUSINESS The board reviewed the revised COLA example from the Actuary that will be incorporated into the Summary Plan Description (SPD). The Trustees concurred that the example was readable and that they can move forward with the SPD. A motion was made by Martin Cohen to approve and accept the revised summary plan description as presented with the revised COLA example. The motion was seconded by Tom Murphy and carried 5-0. NEW BUSINESS Ms. Ross presented that board with the September 30, 2013 audit engagement letter from Cherry, Bekaert (CB). She noted that CB did propose a fee increase from $13,750 to $14,050. The Trustees discussed the fee increase and noted that it was too late to go out for an RFP at this time. A motion was made by Martin Cohen to approve and accept the September 30, 2013 audit engagement letter with the fee increase to $14,050. The motion was seconded by Mark Joyce and carried 4-1 (Ed Morejon opposed the vote). OTHER BUSINESS Mr. Cohen discussed the responsibility of a Trustee and noted that he thinks this board is doing a great in regards to the investments and all, but he stated that he thinks they should be more focused on paying down the plans unfunded liability. Mr. Morejon reviewed the history of this board and stated that this plan is a fairly new defined benefit plan compared to other defined benefit plans around. Every year the City and the pension plan contribute their required contributions to make the plan whole. This pension plan is unfunded like most plans around here, but they are not underfunded. Mr. Cohen commented that he would like to speak directly to the pension plans Actuary and the City officials regarding some of his concerns about the plans unfunded liability. He would also like to have the Actuary run some scenarios in regards to paying down or paying off 5 the plans unfunded liability. Mr. Morejon explained that making more changes to the plan right now could have a negative impact on the plan and the City because of the recent changes that were just made to the plan. Mr. Murphy stated that he does no think the plans unfunded liability is unreasonable, as the board consults with their professional service providers each year in regards to paying down the unfunded liability (which happens over many of years). The Trustees noted that Mr. Cohen is more then welcome to speak to the City officials and the plan’s Actuary in regards to coming up with ways to pay off the plans unfunded liability as long as there is no fee incurred to the plan. Mr. Rhodes stated that he will provide Ms. Ross with Brandon Zace’s phone number in regards to his share account balance that he is entitled to. There being no further business, the meeting adjourned at 12:14PM. Respectfully submitted, Tom Murphy, Secretary