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HomeMy WebLinkAboutAgenda Fire Pension 110514THE 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 November 5, 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 September 8, 2014 4. Investment Monitor Report: The Bogdahn Group (Dan Johnson) • 9/30/2014 Quarterly Performance Report • 9/30/2014 Quarterly DROP Review • Emerging Market Equity (Asset Class & Manager Review) 5. Attorney Report: Sugarman & Susskind, P.A. (Pedro Herrera) • Robbins, Geller, Rudman & Dowd, LLP Engagement Agreement 6. Administrative Report: Resource Centers (Audrey Ross) • Disbursements • Benefit Approvals • Proposed 2015 Meeting Dates • Ratification of the 9/30/2014 Audit Engagement Letter 7. Actuary Report: Foster & Foster (Doug Lozen) • Letter Regarding the New GASB Rules & Senate Bill 534 8. Old Business 9. New Business 10. Other Business 11. Next Meeting to be Scheduled 12. Adjourn 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 2015 MEETING DATES Monday January 12, 2015 @ 9AM Wednesday February 4, 2015 @ 1PM Monday March 9, 2015 @ 9AM Wednesday May 6, 2015 @ 1PM Monday July 13, 2015 @ 9AM Wednesday August 5, 2015 @ 1PM Monday September 7, 2015 @ 9AM Wednesday November 4, 2015 @ 1PM City of Pa Firefighters' Beach Gardens Pension Trust Fund Investment Performance Review Period ended September 30, 2014 Real Estate Universe Sample Information is Preliminary Private Real Estate Data is Preliminary WWW.BOGDAHNGROUP.COM N THE BOGDAHN GRoup. sinmlifyinl- your investment rind fiduciary decisions 3rd Quarter 2014 Market Environment '•,;, THE BOGDAHN GROUP',. ■ Large cap companies made it through the quarter relatively unscathed compared to their mid and small cap peers. While experiencing the same 'down -up -down' monthly pattern as seen in mid and small caps, the magnitude of the declines was far less pronounced. The strong +4.0% August return of large caps more than offset the minor declines in both July and September. The general consensus was that macro uncertainty (ISIS, Ukraine, Ebola, etc.) had a disproportionate impact on small and mid cap companies when compared to large caps, largely due to investor preference for safe haven blue chip equities. ■ Small cap stocks experienced their worst quarter in three years and ended a streak of eight consecutive positive quarters. After months of worry expressed by small cap managers regarding stretched valuations for small cap companies, these fears were finally realized in the third quarter as the market sold off considerably. Unlike the first two quarters of the year, which were both marked by slow starts to the quarter followed by two consecutive up months, the third quarter saw the Russell 2000 decline -6.0% in July, followed by an increase of +5.0% in August, only to reverse course again in September, declining -6.0%. MSCI ACWxUS MSCI EAFE MSCI Emerg Mkts S&P 500 Russell 3000 Russell 1000 Russell MidCap Russell 2000 Barclays US Agg Barclays US Govt Barclays US TIPS Barclays MBS Barclays Corp IG 3-Month T-Bill The Market Environment Major Market Index Performance As of September 30, 2014 Quarter Performance -5.2% -5.8% -3.4% 1.1 0.0% 0.7% -7.4% -1.7% 0.2% 0.3% -2.0% 0.2% -0.1 % 0.0% -8.0% -6.0% -4.0% -2.0% ■ In international equity, emerging markets (-3.4%) once again outperformed developed markets (-5.8%) for the quarter. However, both market segments WxUS posted negative absolute returns, primarily driven by September's sell-off. Mscl Ac MSCIAFE While one-year returns for the three non -US equity indices remained in EAFE positive territory, they significantly lagged all domestic equity index MSCI Emerg Mkts performance with the exception of small caps. ■ After moving higher in the first half of 2014, domestic bonds were essentially flat during the third quarter, rising just +0.2%. The trailing, one-year return remained in positive territory (+4.0%). Performance dispersion across sectors was low, as Government Bonds returned +0.3% followed by Mortgages at +0.2%. In contrast, Corporate Bonds lagged, declining -0.1% for the period. TIPS performance remained volatile, falling -2.0% after rising sharply in the first half of the year. Source: Investment Metrics S&P 500 Russell 3000 Russell 1000 Russell MidCap Russell 2000 Barclays US Agg Barclays US Govt Barclays US TIPS Barclays MBS Barclays Corp IG 3-Month T-Bill 1-Year Performance 5.2% 4.7% 4.7% 3.9% - 4.0% 2.3% 1.6% 3.8% 6.8% 15.8% 0.0% 2.0% = 19.7% 17.8% 19.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% THE ( BOGDAHN 2 'e GROUP',. ■ Large cap stocks tend to outperform mid and small cap companies at the tail end of economic cycles, so the returns seen in the chart to the right were no surprise. However, the disparity of returns was somewhat unexpected and was largely driven by macro uncertainty and investor preference. With interest rates remaining low, equities remained the investment of choice by income -starved investors. Despite a challenged third quarter, dividend paying companies had a strong first half of the year, and a higher percentage of dividend payers resided in greater numbers in the larger market capitalization areas. In addition, investors often flocked to the security of large caps when macro uncertainties became more pronounced. ■ The third quarter represented the second consecutive quarter in which small cap stocks lagged large cap stocks. Notably, the relative performance gap was the largest since the first quarter of 1999. ■ Equities with the highest quartile dividend yield returned -5.6% during the period. This is a stark contrast from the first two quarters in which the highest yielding companies returned +10.2%. Much of this heightened volatility was attributed to the end of the Fed's quantitative easing (QE) program, which culminated in October. With the prospect of interest rates naturally creeping higher over time as a result of the additional stimulus, higher dividend paying companies temporarily suffered. ■ The discrepancy in quarterly returns between growth and value benchmarks was largely related to performance within the Health Care sector. Health Care was the second best performing sector during the quarter in both value and growth benchmarks (only Financials were better in value; Consumer Staples in growth). However, Health Care made up a far higher percentage weight in the growth benchmarks, catapulting growth benchmarks ahead of value in all market capitalizations. ■ As a result of the recent sell-off, on an absolute basis, small cap stocks became cheaper, when compared to their mid cap brethren, but remained more expensive than large caps. At 17.8x current P/E, small caps fell between mid caps (18.1x) and large caps (15.2x). On a relative P/E basis, when compared to 20-year average P/E ratios, value appeared overvalued across all capitalizations while growth was undervalued across the capitalization spectrum. Source: Investment Metrics The Market Environment Domestic Equity Style Index Performance As of September 30, 2014 Quarter Performance - Russell Style Series 3000 Value 30001ndex 3000 Growth 1000 Value 10001ndex 1000 Growth MidCap Value MidCap Index MidCap Growth 2000 Value 20001ndex 2000 Growth -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 3000 Value 30001ndex 3000 Growth 1000 Value 10001ndex 1000 Growth MidCap Value MidCap Index MidCap Growth 2000 Value 20001ndex 2000 Growth 1-Year Performance - Russell Style Series - 17.5% 15.8°% 14.4% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% THE BOGDAHN 3 Group. The Market Environment GICS Sector Performance & (Sector Weight) As of September 30, 2014 ■ There was wide economic sector performance dispersion during the third Russell 1000 quarter. Within large caps, Health Care and Technology posted the Consumer Disc (12.4%) strongest results. These two areas comprised a larger combined weight in the Russell 1000 Growth Index (42.0%) than in the Russell 1000 Value Consumer Staples (8.6%) Index (22.9%). As a result, growth outpaced value during the third quarter. These sectors house some of the largest companies in the S&P 500 Index Energy (10.0%) and many have led the index on a year-to-date basis. Financials (16.8%) ■ After performing very well in the second quarter, both the Energy and Health Care (13.1%) Utilities sectors experienced a reversal due to selling off during the third quarter. Energy did poorly in large caps (-8.5%) but fared even worse in the Industrials (11.2%) Russell 2000 Index of small cap companies, declining-20.6%. While seven of the ten S&P 500 economic sectors finished the third quarter higher, each Info Technology (18.7%) sector of the Russell 2000 posted negative returns for the period. Materials (3.8%) ■ On a trailing P/E basis, Energy and Telecom Services were significantly Telecom Services (2.3%) cheaper than other sectors within the S&P 500. These two areas traded at 14.6x and 10.7x, respectively, which was well below the Index trailing P/E of Utilities (3.1%) 18.4x. On a relative basis, when compared to the 20-year average P/E ratio ■Quarter ❑1-Year 12.0% 1.6°% 16.5% 12.5% 1.5% 17.3% _ 5.3% 28.0% 15.6% 4.3% 27.6% 19.1% 2.8% 14.5% 15.9% of 19.5x, the index was fairly valued to somewhat cheap. In fact, half the -10.0% 0.0% 10.0% 20.0% 30.0% index trades below its long-term average P/E. Russell 2000 ■Quarter 01-Year ■ Traditionally, September is the worst month for equity markets and this year Consumer Disc (13.2%) was no exception. Despite a weak September, there is some reason for optimism. First, the US dollar (USD) continues to gain strength. Since many Consumer Staples (3.2%) global commodities are priced in USD, the USD's strength has a downward pressure on commodity prices, particularly crude oil (-10%), which can fuel Energy (6.2%) greater discretionary consumption and lead to stronger GDP growth. In Financials (23.3%) addition, US companies have arguably superior relative fundamental growth prospects, which should provide support to domestic equities going forward. Health Care (13.2%) Industrials (14.1%) Info Technology (17.7%) Materials (5.1%) Telecom Services (0.8%) Utilities (3.3%) -8.5% 2.3% -3.3% 5.5% -20.6% 5.2% 6.9% -3.5% 1o.z°i° -9.5% 1.9% -5.6% 3.9% -8.4% 4.5% -7.0% -2.3% -9.9% 9.8% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% Source: Morningstar Direct THE 1r BOGDAHN 4 GROup. The Market Environment Russell iii Apple Inc Top 10 Weighted Weight 3.01% Stocks 1-Qtr Return 9.0% 1-Year Return 51.3% Sector Information Technology Exxon Mobil Corporation 2.00% -5.9% 12.4% Energy Microsoft Corp 1.90% 11.9% 43.3% Information Technology Johnson & Johnson 1.50% 2.6% 26.4% Health Care General Electric Co 1.27% -1.7% 10.9% Industrials Berkshire Hathaway Inc Class B 1.25% 9.1% 21.7% Financials Wells Fargo & Co 1.23% -0.6% 29.1 % Financials JPMorgan Chase & Co 1.13% 5.3% 19.7% Financials Chevron Corp 1.13% -7.8% 1.6% Energy Procter & Gamble Co 1.12% 7.4% 14.3% Consumer Staples Top Russell 000 United States Steel Corp i Performing Weight 0.02% Stocks (by 1-Qtr Return 50.6% Quarter) 1-Year Return 91.6% Sector Materials United Therapeutics Corp 0.02% 45.4% 63.2% Health Care Weight Watchers International Inc 0.01% 36.0% -26.6% Consumer Discretionary Concur Technologies Inc 0.03% 35.9% 14.8% Information Technology Veritiv Corp 0.00% 35.1% NA Industrials Sigma -Aldrich Corp 0.06% 34.3% 61.0% Materials Pharmacyclics Inc 0.05% 30.9% -15.1% Health Care American Eagle Outfitters 0.02% 30.5% 7.9% Consumer Discretionary Ulta Salon Cosmetics & Fragrances Inc 0.04% 29.3% -1.1 % Consumer Discretionary Dresser -Rand Group Inc 0.03% 29.1% 31.8% Energy Bottom Russell 000 Theravance Inc 10 Performing Weight 0.02% Stocks (by 1-Qtr Return -42.0% Quarter) 1-Year Sector Return -47.5% Health Care SandRidge Energy Inc 0.02% -40.0% -26.8% Energy Nu Skin Enterprises Inc Class A 0.03% -38.6% -52.0% Consumer Staples Sears Holdings Corp 0.01% -36.9% -47.7% Consumer Discretionary Rite Aid Corp 0.00% -32.5% 1.7% Consumer Staples Herbalife Ltd 0.03% -32.2% -36.7% Consumer Staples Aaron's Inc 0.01% -31.7% -12.0% Consumer Discretionary SeaWorld Entertainment Inc 0.01% -31.4% -33.1% Consumer Discretionary Kate Spade & Co 0.00% -31.2% 4.4% Consumer Discretionary Cliffs Natural Resources Inc 0.029/ 30.4°/n -47.8% Materials Source: Morningstar Direct Top 10 Index Weights & Quarterly Performance for the Russell 1000 & 2000 As of September 30, 2014 VTop Russell iii Puma Biotechnology Inc 10 Weighted Weight 0.35% Stocks 1-Qtr Return 261.5% 1-Year Return 344.6% Sector Health Care Isis Pharmaceuticals 0.28% 12.7% 3.4% Health Care W EX Inc 0.27% 5.1 % 25.7% Information Technology Team Health Holdings Inc 0.25% 16.1% 52.8% Health Care Graphic Packaging Holding Co 0.25% 6.2% 45.2% Materials Ultimate Software Group Inc 0.25% 2.4% 4.0% Information Technology Prosperity Bancshares, Inc. 0.25% -8.3% -6.1% Financials Brunswick Corp 0.24% 0.3% 6.6% Consumer Discretionary RLJ Lodging Trust 0.23% -0.4% 25.7% Financials CNO Financial Group Inc 0.23% -4.4% 1 19.2% Financials Top 10 Performing Stocks (by Quarter) Russell 2000 Weight 1-Qtr 1-Year Sector Return Return Puma Biotechnology Inc 0.35% 261.5% 344.6% Health Care AVANIR Pharmaceuticals Class A 0.13% 111.3% 181.8% Health Care EveryWare Global Inc 0.00% 102.3% -76.9% Consumer Discretionary OvaScience Inc 0.02% 81.0% 67.5% Health Care Peregrine Semiconductor Corp 0.02% 80.3% 37.9% Information Technology Amicus Therapeutics Inc 0.00% 78.1 % 156.5% Health Care IGI Inc 0.02% 75.5% 412.1 % Consumer Staples Enphase Energy Inc 0.02% 75.3% 84.6% Industrials PTC Therapeutics Inc 0.06% 68.4% 105.1 % Health Care Century Aluminum Co 0.08% 65.6% 223.4% Materials Quarter)Bottom 10 Performing Stocks (by Russell 2000 Weight 1-Qtr 1-Year Sector Nil Holdings Inc 0.00% -90.0 % -99.1 % Telecommunication Services Regado Biosciences Inc 0.00% -83.4% -83.1 % Health Care Endeavour International Corp 0.00% -78.2% -94.4% Energy Body Central Corp 0.00% -78.0% -96.8% Consumer Discretionary Quicksilver Resources Inc 0.00% -77.4% -69.4% Energy Marrone Bio Innovations Inc 0.00% -77.1% -84.2% Materials ITT Educational Services, Inc. 0.01% -74.3% -86.2% Consumer Discretionary Vringo Inc 0.00% -72.4% -67.1% Information Technology Cytori Therapeutics Inc 0.00% -71.7% -71.0% Health Care L & L Energy, Inc. 0.00% -69.9% 1 -91.6% Energy THE /- $OGDAHN GROUP ■ After a relatively stable first half of 2014, volatility spiked during the third quarter. July and September were significant, negative months for the developed overseas indices, while August returns were slightly positive. ■ Similar to last quarter, the range of returns for the individual countries outside of the US was wide. The only developed country whose equities ended the quarter in positive territory was Israel (+0.4%). The worst - performing developed country was Portugal (-24.9%) followed closely by Austria (-21.5%). On the emerging side, Egypt and the UAE were the top equity performers, up +28.2% and +22.9%, respectively. Greece was again the worst -performing equity market within the EM universe with a return of -20.0% for the quarter. ■ During the third quarter, USD appreciation created a significant drag on returns for U.S. investors in overseas markets. All four of the broad, non - US equity indices shown to the right ended the quarter in positive territory when measured in local currency terms, but negative performance in USD. ■ USD strength weighed on the Energy sector during the third quarter, which posted the weakest sector return (-10.0%) in the MSCI-ACWI xUS index. The Materials sector, which is also negatively impacted by USD strength, was the second worst performing sector within the MSCI ACWI x US index, returning -9.5% for the quarter. In the developed market MSCI-EAFE index, Health Care was the only sector to end the quarter in positive territory (+0.4%). Health Care (+9.9%) was also positive in the MSCI-EM index along with Telcom Services, which returned 6.2% for the third quarter. ■ The Health Care sector's strength led growth to outperform value in both developed and emerging markets. Small cap stocks underperformed large caps in developed markets but outperformed in emerging markets. The Market Environment International and Regional Market Index Performance (Country Count) As of September 30, 2014 AC World x US (45) WORLD x US (22) EAFE (21) Europe & ME (16) Pacific (5) Emerging Mkt (23) EM EMEA (10) EM Asia (8) EM Latin Amer (5) -8.0% -6.0% -4.0% 1-Year Performance AC World x US (45) WORLD x US (22) EAFE (21) Europe & ME (16) Pacific (5) Emerging Mkt (23) EM EMEA (10) EM Asia (8) EM Latin Amer (5) Quarter Performance ■USD ❑Local Currency -5.2% 0.9% -5.7% 0.9% -5.8% 1.0% -6.9% -0.1 -3.6% 3.3% -3.4% -7.8% 0.7% -1.4% 0.6% -5.4 2.3% -2.0% 0.0% 2.0% 4.0% ■USD oLocal Currency 5.2% 11.3% 5.3% 12.1% 4.7% 11.2% 6.5% 11.6% 10.2% 4.7% -4.9 % 8.6% 6.7% 9.4% 9.7% -0.7% 7.2% -5.0% 0.0% 5.0% 10.0% 15.0% Source: MSCI Global Index Monitor (Returns are Gross) THE r BOGDAHN 6 GRoup The Market Environment Consumer Discretionary 11.6% "TuarterReturn -8.4% 1 -Year Return -8.4% Consumer Staples 10.9% -6.9% -6.9% Energy 6.9% -11.1 % -11.1 % Financials 25.7% -4.6% -4.6% Health Care 11.2% 0.4% 0.4% Industrials 12.5% -7.0% -7.0% Information Technology 4.7% -0.7% -0.7% Materials 7.7% -9.3% -9.3% Telecommunication Services 4.9% -5.2% -5.2% Utilities Total 3.9% ii i -5.4% -5.4% IVISCI - ACWIxUS W=11101 Consumer Discretionary Sector Weight 10.6% Quarter Return -7.7% 1 -Year Return -7.7% Consumer Staples 9.8% -5.8% -5.8% Energy 9.1% -10.0% -10.0% Financials 27.0% -3.6% -3.6% Health Care 8.7% 0.9% 0.9% Industrials 10.9% -5.7% -5.7% Information Technology 7.0% -3.5% -3.5% Materials 8.0% -9.5% -9.5% Telecommunication Services 5.3% -1.9% -1.9% Utilities Total 3.6% ii i -5.1% -5.1% MSCI - Emerging Mkt Consumer Discretionary Sector WeigholWaarter 9.0% Return -6.4% 1 -Year Return 4.0% Consumer Staples 8.3% -2.4% -1.3% Energy 10.2% -7.5% -5.1% Financials 27.5% -1.1% 4.9% Health Care 2.1% 9.9% 26.3% Industrials 6.6% -3.0% 4.6% Information Technology 16.7% -6.0% 17.2% Materials 8.3% -8.2% -6.0% Telecommunication Services 7.7% 6.2% 5.8% Utilities Total 3.6% ii i -3.8% 14.4% Source: MSCI Global Index Monitor (Returns are Gross in USD) U.S. Dollar International Index Attribution & Country Detail As of September 30, 2014 Country United Kingdom 4- Weight 21.3% Weight 15.1% s Return MN -6.1% Return 6.2% Japan 21.0% 14.8% -2.2% 0.9% France 9.9% 7.0% -8.3% 2.6% Switzerland 9.2% 6.5% -4.4% 7.4% Germany 8.8% 6.2% -11.2% 2.6% Australia 7.5% 5.3% -7.9% -0.5% Spain 3.6% 2.6% -7.4% 16.2% Sweden 3.1% 2.2% -5.8% 1.8% Hong Kong 2.9% 2.1 % -2.6% 5.3% Netherlands 2.7% 1.9% -4.6% 5.4% Italy 2.5% 1.8% -8.6% 16.3% Denmark 1.6% 1.1% -3.8% 27.7% Singapore 1.5% 1.1% -1.2% 4.3% Belgium 1.3% 0.9% -3.7% 12.5% Finland 0.9% 0.6% -2.9% 15.1% Norway 0.9% 0.6% -7.4% 11.1 % Israel 0.6% 0.4% 0.4% 29.8% Ireland 0.3% 0.2% -3.1 % 12.2% Austria 0.2% 0.2% -21.5% -21.3% Portugal 0.2% 0.1% -24.9% -18.1 % New Zealand Total EAFE Countries Canada DevelopedTotal 0.1% 00 0.1% i 7.6% -8.7% -4.3% 1.3% 11.6% China 4.2% 1.5% 4.9% Korea 3.3% -7.3% 0.6% Taiwan 2.6% -3.0% 12.9% Brazil 2.2% -8.6% -4.3% South Africa 1.6% -6.5% 5.1% India 1.5% 2.3% 37.6% Mexico 1.2% 2.1 % 11.9% Russia 1.0% -15.1% -19.2% Malaysia 0.9% -3.2% 5.2% Indonesia 0.6% 3.5% 20.5% Thailand 0.5% 7.7% 11.8% Poland 0.4% -2.1 % 4.3% Turkey 0.3% -11.8% -8.4% Chile 0.3% -7.7% -13.7% Philippines 0.3% 4.2% 19.3% Colombia 0.2% -8.3% -7.5% Greece 0.1% -20.0% -7.1 % Qatar 0.1% 17.7% 36.8% United Arab Emirates 0.1% 22.9% 72.6% Peru 0.1% -1.6% 14.7% Egypt 0.1% 28.2% 68.9% Czech Republic 0.1% 5.2% 16.5% Hungary Total ACWIxUS Countries 0.0% 00 -12.8% -22.0% THE BOGDAHN GROUP',. ■ Domestic bond markets were mostly flat in the third quarter, as economic fundamentals continued to indicate moderate growth and low inflation. Central bank policy remained mostly unchanged as the Federal Reserve remained on pace to end its QE program in October. Conversely, in September the European Central Bank announced additional interest rate cuts as well as the creation of their own bond buying (QE) program. The moves were designed to boost anemic growth in the Eurozone. ■ In contrast to the second quarter, when all major sectors posted positive results, sector performance was mixed during the third quarter. Treasuries and mortgages rose +0.3% and +0.2%, respectively. These modest gains were partially off -set by weakness in corporate credit (- 0.1 %) and TIPS (-2.0%). ■ After outperforming for several quarters, lower rated bonds lagged their higher quality peers. Baa-rated bonds lagged higher quality credits by 20 - 50 basis points (bps) during the period. On a one-year basis, Baa-rated bonds outpaced higher -rated credits by a wide margin. ■ Longer -dated securities outperformed short and intermediate maturities despite the continued decline of the Federal Reserve's QE program. The rally pushed the broad -based Barclays Aggregate Index ahead of the Barclays Intermediate Index by +0.2% for the quarter and +1.3% over the past twelve months. ■ High Yield bonds fell -1.9%, marking the first negative quarterly return for the asset class since the second quarter of 2013. After exceeding investment grade bonds for seven consecutive quarters, high yield bonds trailed investment grade securities for the last six months, but remain ahead on a trailing one-year basis by 40 bps. ■ The US bond market easily outpaced International bonds, represented by the Barclays Global Aggregate ex US Index, which was negatively impacted by USD strength by 560 bps. The third quarter's weak performance by global bonds pushed one-year trailing domestic bond performance ahead by a wide margin. The Market Environment Domestic Bond Sector & Broad/Global Bond Market Performance (Duration) As of September 30, 2014 AAA (5.1) AA (5.7) A (7.1) Baa (7.4) U.S. High Yield (4.4) U.S. Treasury (5.3) U.S. Mortgage (5.0) U.S. Corporate IG (7.1) U.S. TIPS (7.2) Aggregate (5.6) Intermediate Agg (4.3) Global Agg x US (7.1) Multiverse (6.3) Quarter Performance 0.2 % 0.3% 0.0% -0.2 % 0.3°% 0.2°% -0.1 % -2.0% 0.2% 0.0% -5.4% -3.2% -6.0% -5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 1-Year Performance AAA (5.1) AA (5.7) A (7.1) Baa (7.4) U.S. High Yield (4.4) U.S. Treasury (5.3) U.S. Mortgage (5.0) U.S. Corporate IG (7.1) U.S. TIPS (7.2) Aggregate (5.6) Intermediate Agg (4.3) Global Agg x US (7.1) Multiverse (6.3) 2.9% 4.4% 6.1% 8.3% 7.2% 2.3% 3.8% 6.8% 1.6% 4.0% 2.7% -0.8% 1.4% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Source: Barclays Capital Live THE (� BOGDAHN 8 `� GROUP',. ■ With the Fed's bond buying program drawing to a telegraphed close, investors are increasingly focused on the timing and magnitude of an eventual increase in interest rates and the impact it will have on bond portfolios. ■ After moving sharply lower in the second quarter, option adjusted spreads on Baa-rated bonds widened by 15 bps during the third quarter. This spread widening has a negative impact on bond prices (which move in the opposite direction) and performance of lower quality credits. This quarter's rise in spreads erased the rally that occurred during the second quarter, though current spread levels remain below the level from one year ago. ■ The yield curve in the US continued to flatten during the third quarter. Since prices and performance move in the opposite direction of yields, the long -end of the curve was the best performing maturity segment. The yield on the 10-year Treasury rose from 2.53% to 2.65% in early July and then steadily rallied to 2.34% by late August. In September, bonds retreated from the August rally, pushing the yield back to 2.52% by quarter -end. ■ Yields on shorter -dated maturities were essentially unchanged as the Fed continued to hold the Fed fund rate near zero. Rates on intermediate maturities ended the quarter 10 to 20 bps higher. ■ Since rising to more attractive yields in mid -to -late 2013, the yield curve has gradually flattened, spreads have narrowed, and interest rates have declined, particularly in longer -dated maturities. While this has resulted in mildly positive returns over the past twelve months, the return outlook is likely to be challenged by the prospect of higher interest rates in the future. The impact of any future rate increases will likely be exacerbated by the fact that low nominal yields and narrow credit spreads offer only a modest level of income to offset this interest rate risk, particularly if rates rise significantly and in a short period of time. Source: US Department of Treasury, FRED (Federal Reserve of St. Louis) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 The Market Environment Market Rate & Yield Curve Comparison As of September 30, 2014 1-Year Trailing Market Rates Fed Funds Rate TED Spread 3-Month Libor BAA OAS 10yr Treasury 10yr TIPS 0.00 I Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 9 Treasury Yield Curve -- 9/30/2013 12/31 /2013 6/30/2014 —<— 9/30/2014 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr THE �$OGDAHN - GRoup 10 THE (� BOGDAHN ♦-� GROUP Schedule of Investable Assets $84,000,000.5 $77,538,462.0 $71,076,923.5 $64,615,385.0 $58,153,846.5 $51,692,308.0 $45,230,769.5 m m $38,769,231.0 Y A $32,307,692.5 $25, 846,154.0 $19,384,615.5 $12,923,077.0 $6,461, 538.5 $0.0 ($6,461,538.5) 7/07 1 /08 — Total Fund 7/08 1 /09 — Total Fund Policy Schedule of Investable Assets Total Fund August 1, 2007 To September 30, 2014 7/09 1/10 7/10 1/11 7/11 1/12 7/12 1/13 7/13 1/14 Net Cash Flow 7.753.1 9/14 THE BOGDAHN 11 GROup. June 30, 2014 : $67,999,549 Cash & Global Fi Domestic Fi Internal Domestic Equity Cash & Global Fi Domestic Fi Internal Asset Allocation by Asset Class Total Fund As of September 30, 2014 September 30, 2014 : $67,430,983 Domestic Equity Allocation Allocation Market Value Allocation Market Value Allocation ■ Domestic Equity 38,264,665 56.3 ■ Domestic Equity 37,128,157 55.1 International Equity 7,162,042 10.5 International Equity 6,535,131 9.7 ■ Domestic Fixed Income 13,074,118 19.2 ■ Domestic Fixed Income 13,503,205 20.0 Global Fixed Income 3,470,204 5.1 Global Fixed Income 3,473,887 5.2 ■ Real Estate 5,582,034 8.2 ■ Real Estate 6,495,210 9.6 ■ Cash & Equivalents 446,486 0.7 ■ Cash & Equivalents 295,392 0.4 �\ THE 1� \ BOGDAHN 12 GROup. June 30, 2014 : $67,999,549 Ma VG TSMI Dana (LC) Fiduciary Ma Asset Allocation By Manager Total Fund As of September 30, 2014 September 30, 2014 : $67,430,983 VG TSMI Dana (LC) Fiduciary Allocation Allocation Market Value Allocation Market Value Allocation ■ VG TSMI 13,910,124 20.5 ■ VG TSMI 13,909,254 20.6 ■ Dana (LC) 14,411,114 21.2 ■ Dana (LC) 13,941,669 20.7 ■ Fiduciary 6,111,714 9.0 ■ Fiduciary 5,970,041 8.9 ■ Dana (SC) 3,831,713 5.6 ■ Dana (SC) 3,307,195 4.9 RBC 3,525,976 5.2 RBC 3,250,350 4.8 Manning & Napier 3,636,066 5.3 Manning & Napier 3,284,781 4.9 ■ Agincourt 6,555,437 9.6 ■ Agincourt 6,642,209 9.9 ■ GHA 6,518,680 9.6 ■ GHA 6,860,996 10.2 Templeton GB 3,470,204 5.1 Templeton GB 3,473,887 5.2 ■ American 2,617,818 3.8 ■ American 2,903,857 4.3 ■ Intercontinental 2,964,216 4.4 ■ Intercontinental 3,591,353 5.3 ■ R & D 446,486 0.7 ■ R & D 295,392 0.4 THE BOGDAHN 13 GROup. Asset Allocation vs. Target Allocation Domestic Equity International Equity Broad Fixed Income Intermediate Fixed Income Global Fixed Income Real Estate Cash Equivalents -11.00 % -9.00 % -6.00 % Allocation Differences Market Value -3.00 % 1 0.06i -0.31 -0.15 0.17% 0.15 % -0.37 'Yj 0.44 i 0.00% Allocation (%) Asset Allocation vs. Target Allocation Total Fund As of September 30, 2014 3.00% 6.00% 9.00% 11.00% Target (%) Domestic Equity 37,128,157 55.1 55.0 International Equity 6,535,131 9.7 10.0 Broad Fixed Income 6,642,209 9.9 10.0 Intermediate Fixed Income 6,860,996 10.2 10.0 Global Fixed Income 3,473,887 5.2 5.0 Real Estate 6,495,210 9.6 10.0 Cash Equivalents 295,392 0.4 0.0 Total Fund 67,430,983 100.0 100.0 �\ THE \ BOGDAHN 14 GROup. Asset Allocation Total Fund As of September 30, 2014 Asset Allocation Attributes Domestic Equity International Equity Domestic Fixed Global Fixed Income Real Estate Cash Equivalent Total Fund Income Total Domestic Equity 35,753,575 96.30 - - - 1,374,582 3.70 37,128,157 55.06 Vanguard Total Stock Index (VITSX) 13,850,086 99.57 - 59,168 0.43 13,909,254 20.63 Dana (Large Cap) 13,396,583 96.09 545,086 3.91 13,941,669 20.68 Fiduciary Management, Inc. 5,177,425 86.72 792,616 13.28 5,970,041 8.85 Dana (Small Cap) 3,329,482 100.67 - -22,287 -0.67 3,307,195 4.90 Total International Equity - - 6,535,131 100.00 - - - - - - - - 6,535,131 9.69 RBC International Portfolio - 3,250,350 100.00 - 3,250,350 4.82 Manning & Napier Overseas (EXOSX) - 3,284,781 100.00 - - - - 3,284,781 4.87 Total Domestic Fixed Income - - - - 13,384,422 99.12 - - - - 118,784 0.88 13,503,205 20.03 Agincourt Capital Management - 6,570,756 98.92 71,453 1.08 6,642,209 9.85 Garcia, Hamilton & Associates - 6,813,666 99.31 47,331 0.69 6,860,996 10.17 Total Global Fixed Income - - - - - - 3,473,887 100.00 - - - - 3,473,887 5.15 Templeton Global Bond Adv (FBNRX) - 3,473,887 100.00 - - 3,473,887 5.15 Total Real Estate - - - - - - - - 6,495,210 100.00 - - 6,495,210 9.63 American Core Realty Fund - - 2,903,857 100.00 2,903,857 4.31 Intercontinental Real Estate - 3,591,353 100.00 - 3,591,353 5.33 Receipt & Disbursement - - - - - - - - - - 295,392 100.00 295,392 0.44 Total Fund Portfolio 35,753,575 53.02 6,535,131 9.69 13,384,422 19.85 3,473,887 5.15 6,495,210 9.63 1,788,758 2.65 67,430,983 100.00 THE BOGDAHN 15 GROup. Financial Reconciliation Total Fund 1 Quarter Ending September 30, 2014 Financial Reconciliation Quarter to Date Market Value Net Contributions Distributions Management Other Return On Market Value 07/01/2014 Transfers Fees Expenses Investment 09/30/2014 Total Domestic Equity 38,264,665 -760,055 39,945 -800,000 -39,945 - -336,508 37,128,157 Vanguard Total Stock Index (VITSX) 13,910,124 - - - - -870 13,909,254 Dana (Large Cap) 14,411,114 -427,493 22,507 -450,000 -22,507 -19,446 13,941,669 Fiduciary Management, Inc. 6,111,714 11,454 11,454 - -11,454 -141,674 5,970,041 Dana (Small Cap) 3,831,713 -344,016 5,984 -350,000 -5,984 -174,518 3,307,195 Total International Equity 7,162,042 7,679 7,679 - -7,679 - -626,912 6,535,131 RBC International Portfolio 3,525,976 7,679 7,679 -7,679 - -275,626 3,250,350 Manning & Napier Overseas (EXOSX) 3,636,066 - - - - - -351,285 3,284,781 Total Domestic Fixed Income 13,074,118 408,153 658,153 -250,000 -8,153 - 29,088 13,503,205 Agincourt Capital Management 6,555,437 79,079 329,079 -250,000 -4,079 - 11,772 6,642,209 Garcia, Hamilton & Associates 6,518,680 329,074 329,074 - -4,074 - 17,316 6,860,996 Total Global Fixed Income 3,470,204 - - - - - 3,683 3,473,887 Templeton Global Bond Adv (FBNRX) 3,470,204 - - - - - 3,683 3,473,887 Total Real Estate 5,582,034 699,500 699,500 - -8,008 - 221,684 6,495,210 American Core Realty Fund 2,617,818 199,500 199,500 - -8,008 - 94,547 2,903,857 Intercontinental Real Estate 2,964,216 500,000 500,000 - - - 127,137 3,591,353 Receipt & Disbursement 446,486 -355,276 2,250,513 -2,355,248 - -46,364 6 295,392 Total Fund Portfolio 67,999,549 - 3,655,789 -3,405,248 -63,784 -46,364 -708,959 67,430,983 THE BOGDAHN 16 GROup. Financial Reconciliation Total Fund October 1, 2013 To September 30, 2014 Financial Reconciliation Fiscal Year to Date Market Value Net Contributions Distributions Management Other Return On Market Value 10/01/2013 Transfers Fees Expenses Investment 09/30/2014 Total Domestic Equity 32,329,467 -761,792 1,048,208 -1,810,000 -148,208 - 5,708,691 37,1289157 Vanguard Total Stock Index (VITSX) 10,962,682 900,000 900,000 - - 2,046,571 13,909,254 Dana (Large Cap) 12,620,516 -1,124,901 85,099 -1,210,000 -85,099 2,531,153 13,941,669 Fiduciary Management, Inc. 5,231,333 39,686 39,686 - -39,686 738,708 5,970,041 Dana (Small Cap) 3,514,936 -576,577 23,423 -600,000 -23,423 392,259 3,307,195 Total International Equity 5,912,660 378,559 378,559 - -28,559 - 272,470 6,535,131 RBC International Portfolio 2,954,820 28,559 28,559 - -28,559 295,530 3,250,350 Manning & Napier Overseas (EXOSX) 2,957,841 350,000 350,000 - - -23,060 3,284,781 Total Domestic Fixed Income 12,121,597 831,550 1,081,550 -250,000 -31,550 - 581,608 13,503,205 Agincourt Capital Management 5,890,744 490,641 740,641 -250,000 -15,641 276,465 6,642,209 Garcia, Hamilton & Associates 6,230,854 340,909 340,909 - -15,909 - 305,143 6,860,996 Total Global Fixed Income 2,903,577 365,000 365,000 - - - 2057310 3,473,887 Templeton Global Bond Adv (FBNRX) 2,903,577 365,000 365,000 - - 205,310 3,473,887 Total Real Estate 4,109,274 1,805,874 1,824,500 -29,765 -68,140 - 659,341 6,495,210 American Core Realty Fund 2,056,054 574,500 574,500 - -28,386 301,690 2,903,857 Intercontinental Real Estate 2,053,220 1,231,374 1,250,000 -29,765 -39,754 - 357,652 3,591,353 Receipt & Disbursement 458,224 -2,619,191 6,739,694 -6,745,635 - -156,945 54 295,392 Total Fund Portfolio 57,834,800 - 11,437,511 -8,835,400 -276,457 -156,945 7,427,475 67,430,983 THE BOGDAHN 17 GROup. 18 THE (� BOGDAHN ♦-� GROUP Comparative Performance Trailing Returns Comparative Performance Total Fund As of September 30, 2014 QTR FYTD 1 YR 3 YR 5 YR Inception Inception Date Total Fund Portfolio (Gross) -1.04 (44) 12.51 (7) 12.51 (7) 15.49 (6) 10.86 (17) 5.86 (72) 05/01/1998 Total Fund Policy -0.34 (12) 12.13 (10) 12.13 (10) 15.56 (6) 11.58 (5) 5.65 (80) All Public Plans -Total Fund Median -1.14 10.05 10.05 13.37 10.06 6.14 Total Fund Portfolio (Net) -1.13 12.03 12.03 14.93 10.34 5.29 05/01/1998 Total Fund Policy -0.34 12.13 12.13 15.56 11.58 5.65 Total Equity -2.14 15.44 15.44 20.94 13.34 8.71 07/31/2008 Total Equity Policy -0.77 15.81 15.81 21.70 14.45 8.55 Total Domestic Equity -0.89 (50) 17.57 (27) 17.57 (27) 21.88 (50) 14.41 (50) 8.81 (26) 07/01/2002 Total Domestic Equity Policy 0.01 (28) 17.76 (24) 17.76 (24) 23.08 (33) 15.78 (23) 8.08 (47) IM U.S. All Cap Core Equity (SA+CF+MF) Median -0.95 15.36 15.36 21.83 14.37 7.89 Total International Equity -8.75 (97) 4.49 (51) 4.49 (51) 16.02 (15) 8.61 (25) 6.30 (31) 01/01/2006 Total International Equity Policy -5.19 (52) 5.22 (42) 5.22 (42) 13.86 (38) 6.87 (48) N/A MSCI EAFE Index -5.83 (65) 4.70 (48) 4.70 (48) 14.16 (33) 7.04 (45) 4.49 (60) IM International Equity (SA+CF+MF) Median -5.12 4.52 4.52 12.84 6.74 5.00 Total Fixed Income 0.18 5.04 5.04 4.60 5.26 5.22 07/01/2002 Total Fixed Income Policy -0.68 2.66 2.66 1.71 3.35 4.52 Total Domestic Fixed Income 0.21 (48) 4.65 (40) 4.65 (40) 4.17 (13) N/A 3.89 (22) 09/01/2011 IM U.S. Broad Market Core Fixed Income (SA+CF) Median 0.19 4.42 4.42 3.25 4.80 3.41 IM U.S. Intermediate Duration (SA+CF) Median 0.00 2.87 2.87 2.70 3.95 2.61 Total Global Fixed Income 0.11 (14) 6.54 (10) 6.54 (10) 7.63 (5) N/A 5.48 (10) 09/01/2011 Citigroup World Government Bond -3.78 (91) -0.07 (97) -0.07 (97) -0.51 (97) 1.58 (96) -1.13 (95) IM Global Fixed Income (MF) Median -1.59 3.63 3.63 3.31 3.73 2.56 Total Real Estate 3.53 (N/A) 13.10 (N/A) 13.10 (N/A) 13.57 (N/A) 11.71 (N/A) 5.09 (N/A) 07/01/2006 Total Real Estate Policy 3.47 (N/A) 12.41 (N/A) 12.41 (N/A) 11.75 (N/A) 11.39 (N/A) 6.70 (N/A) NCREIF Property Index 2.63 (N/A) 11.26 (N/A) 11.26 (N/A) 11.09 (N/A) 10.99 (N/A) 6.47 (N/A) IM U.S. Open End Private Real Estate (SA+CF) Median N/A N/A N/A N/A N/A N/A 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 THE I� BOGDAH7N �` GRO �.J p Total Domestic Equity Vanguard Total Stock Index (VITSX) Vanguard Total Stock Market Index IM U.S. Multi -Cap Core Equity (MF) Median Dana (Large Cap) Dana Custom Index IM U.S. Large Cap Core Equity (SA+CF) Median Fiduciary Management, Inc. Russell 3000 Index IM U.S. All Cap Core Equity (SA+CF) Median Dana (Small Cap) Russell 2000 Index IM U.S. Small Cap Core Equity (SA+CF) Median Comparative Performance Total Fund As of September 30, 2014 QTR FYTD 1 YR 3 YR 5 YR Inception Inception Date -0.01 (29) 17.78 (24) 17.78 (24) N/A N/A 18.30 (35) 04/01/2013 -0.02 (30) 17.77 (24) 17.77 (24) 23.07 (32) 15.85 (18) 18.28 (36) -0.96 15.30 15.30 21.71 14.20 17.49 -0.15 (77) 20.65 (31) 20.65 (31) 23.83 (37) 15.69 (57) 8.71 (51) 07/01 /2002 1.13 (42) 19.73 (44) 19.73 (44) 22.99 (56) 15.38 (62) 7.81 (88) 0.81 19.26 19.26 23.25 15.86 8.74 -2.32 (73) 14.12 (67) 14.12 (67) N/A N/A 13.38 (72) 08/01/2013 0.01 (39) 17.76 (31) 17.76 (31) 23.08 (58) 15.78 (60) 15.85 (38) -0.92 16.37 16.37 23.38 15.96 14.96 -4.75 (21) 11.01 (16) 11.01 (16) 26.65 (15) 19.57 (7) 8.90 (70) 05/01/2005 -7.36 (89) 3.93 (76) 3.93 (76) 21.26 (79) 14.29 (87) 8.51 (80) -5.85 6.50 6.50 23.46 16.58 9.97 Total International Equity RBC International Portfolio -7.82 (94) 10.00 (10) 10.00 (10) 20.45 (5) 12.33 (2) 8.07 (9) 01/01/2006 MSCI AC World ex USA -5.19 (36) 5.22 (58) 5.22 (58) 12.29 (79) 6.50 (72) 4.98 (55) IM International Large Cap Value Equity (SA+CF) Median -5.70 5.74 5.74 13.77 7.59 5.31 Manning & Napier Overseas (EXOSX) -9.66 (100) -0.43 (95) -0.43 (95) 11.80 (75) 4.62 (88) 8.73 (61) 06/01/2009 MSCI AC World ex USA -5.19 (29) 5.22 (29) 5.22 (29) 12.29 (64) 6.50 (49) 9.51 (44) IM International Multi -Cap Core Equity (MF) Median -5.62 4.32 4.32 13.11 6.36 9.20 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 THE ![/ BOGDAHN GROUP' Comparative Performance Total Fund As of September 30, 2014 QTR FYTD 1 YR 3 YR 5 YR Inception Inception Date Total Domestic Fixed Income Agincourt Capital Management 0.16 (65) 4.40 (51) 4.40 (51) 3.26 (50) 4.82 (49) 6.42 (38) 10/01/2008 Barclays Aggregate Index 0.17 (64) 3.96 (79) 3.96 (79) 2.43 (89) 4.12 (87) 5.17 (93) IM U.S. Broad Market Core Fixed Income (SA+CF) Median 0.19 4.42 4.42 3.25 4.80 6.13 Garcia, Hamilton & Associates Barclays Intermediate Aggregate Index IM U.S. Intermediate Duration (SA+CF) Median Total Global Fixed Income Templeton Global Bond Adv (FBNRX) Citigroup World Government Bond IM Global Fixed Income (MF) Median Total Real Estate American Core Realty Fund NCREIF Fund Index -Open End Diversified Core (EW) IM U.S. Open End Private Real Estate (SA+CF) Median Intercontinental Real Estate NCREIF Fund Index -Open End Diversified Core (EW) IM U.S. Open End Private Real Estate (SA+CF) Median 0.25 (8) 4.88 (9) 4.88 (9) 5.03 (6) 5.24 (10) 6.16 (9) 07/01/2008 0.03 (37) 2.74 (60) 2.74 (60) 2.09 (82) 3.58 (74) 4.37 (80) 0.00 2.87 2.87 2.70 3.95 4.84 0.11 (14) 6.54 (10) 6.54 (10) 7.67 (5) N/A 7.67 (5) 10/01/2011 -3.78 (91) -0.07 (97) -0.07 (97) -0.51 (97) 1.58 (96) -0.51 (97) -1.59 3.63 3.63 3.31 3.73 3.31 3.36 (N/A) 12.49 (N/A) 12.49 (N/A) 12.11 (N/A) 10.94 (N/A) 4.15 (N/A) 07/01/2006 3.47 (N/A) 12.41 (N/A) 12.41 (N/A) 12.22 (N/A) 12.10 (N/A) 4.42 (N/A) N/A N/A N/A N/A N/A N/A 3.67 (N/A) 13.88 (N/A) 13.88 (N/A) 15.11 (N/A) N/A 15.28 (N/A) 10/01/2010 3.47 (N/A) 12.41 (N/A) 12.41 (N/A) 12.22 (N/A) 12.10 (N/A) 13.64 (N/A) N/A N/A N/A N/A N/A N/A 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 THE �BOGDAH7N `-� GRO �.J p 22 THE (� BOGDAHN ♦-� GROUP Comparative Performance Total Fund As of September 30, 2014 Comparative Performance Fiscal Year Returns FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 FY2005 Total Fund Portfolio (Gross) 15.11 (11) 18.93 (29) 0.08 (57) 8.61 (83) 0.00 (68) -11.96 (28) 11.67 (90) 8.65 (51) 14.35 (25) Total Fund Policy 14.70 (15) 19.99 (14) 2.54 (13) 9.32 (69) -1.86 (83) -14.02 (56) 13.39 (69) 9.16 (41) 9.23 (84) All Public Plans -Total Fund Median 12.51 17.88 0.32 9.95 1.36 -13.67 14.39 8.65 12.31 Total Fund Portfolio (Net) 14.56 18.28 -0.37 8.14 -0.46 -12.30 10.96 7.92 13.82 Total Fund Policy 14.70 19.99 2.54 9.32 -1.86 -14.02 13.39 9.16 9.23 Total Equity 22.06 25.54 -4.38 10.56 -1.59 N/A N/A N/A N/A Total Equity Policy 21.82 27.76 -0.89 9.91 -4.90 N/A N/A N/A N/A Total Domestic Equity 21.70 (60) 26.53 (46) -2.59 (56) 11.15 (29) -3.60 (42) -16.51 (10) 14.18 (74) 10.21 (35) 21.50 (14) Total Domestic Equity Policy 21.60 (61) 30.20 (18) 0.55 (26) 10.96 (33) -6.42 (66) -21.52 (35) 16.52 (53) 10.22 (35) 12.69 (73) IM U.S. All Cap Core Equity (SA+CF+MF) Median 22.92 25.78 -1.98 9.62 -4.88 -22.84 16.74 9.28 14.91 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 18.29 16.45 -11.43 8.87 5.09 -31.11 28.19 19.20 27.01 Total Fixed Income 0.12 8.82 3.39 9.20 15.33 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 (12) 8.27 (14) N/A N/A N/A N/A N/A N/A N/A Total Domestic Fixed Income Policy -0.80 (30) 4.31 (98) 4.22 (91) 7.52 (96) 9.69 (89) 4.16 (21) 5.43 (25) 3.54 (87) 1.48 (100) IM U.S. Broad Market Core Fixed Income (SA+CF) Median -1.22 6.60 5.26 9.22 12.30 2.54 5.14 3.85 3.10 Total Global Fixed Income 3.33 (4) 13.25 (7) N/A N/A N/A N/A N/A N/A N/A Citigroup World Government Bond -4.60 (85) 3.29 (97) 4.61 (8) 4.99 (95) 13.78 (51) 5.90 (6) 8.69 (30) 2.23 (64) 3.02 (74) IM Global Fixed Income (MF) Median -1.52 7.34 1.56 7.82 13.91 -1.47 7.29 2.53 5.11 Total Real Estate 15.18 (36) 12.45 (56) 15.92 (79) 2.44 (80) -32.96 (39) 4.98 (35) 21.07 (12) N/A N/A Total Real Estate Policy 11.84 (81) 11.00 (77) 16.10 (78) 5.84 (52) -22.09 (5) 5.27 (28) 17.31 (69) N/A N/A NCREIF Property Index 11.00 (83) 11.00 (77) 16.10 (78) 5.84 (52) -22.09 (5) 5.27 (28) 17.31 (69) 17.62 (56) 19.19 (69) IM U.S. Open End Private Real Estate (SA+CF) Median 13.09 12.90 16.62 6.09 -35.27 3.47 18.53 18.17 19.98 Returns for periods greater than 1 yr. are annualized. THE 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. BO ViJt�li 11 V 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 GRo l.J p. Comparative Performance Total Fund As of September 30, 2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 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 (62) 30.28 (16) 0.71 (20) 11.16 (27) -6.03 (61) -21.19 (30) 16.98 (47) 10.38 (31) 14.70 (52) IM U.S. Multi -Cap Core Equity (MF) Median 22.82 25.66 -2.22 9.38 -4.81 -22.95 16.71 9.28 14.82 Dana (Large Cap) 19.62 (62) 31.58 (21) -0.89 (72) 10.10 (41) -13.66 (97) -12.23 (6) 15.43 (71) 10.93 (45) 18.87 (23) Dana Custom Index 19.34 (64) 30.20 (46) 0.95 (54) 8.90 (59) -10.62 (92) -21.56 (62) 16.52 (57) 10.22 (57) 14.57 (56) IM U.S. Large Cap Core Equity (SA+CF) Median 20.71 29.79 1.16 9.45 -5.81 -20.49 16.96 10.76 15.13 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 (80) 30.20 (31) 0.55 (62) 10.96 (55) -6.42 (61) -21.52 (64) 16.52 (60) 10.22 (37) 14.57 (73) IM U.S. All Cap Core Equity (SA+CF) Median 23.91 28.01 0.98 11.08 -6.02 -21.09 17.25 9.29 17.13 Dana (Small Cap) 31.48 (59) 39.20 (7) 3.82 (14) 15.86 (36) -13.06 (84) -21.93 (79) 8.02 (90) 5.23 (52) N/A Russell 2000 Index 30.06 (73) 31.91 (55) -3.53 (77) 13.35 (72) -9.55 (66) -14.48 (24) 12.34 (71) 9.92 (35) 17.95 (82) IM U.S. Small Cap Core Equity (SA+CF) Median 32.41 32.36 -0.56 14.62 -7.80 -17.69 14.61 5.68 21.89 Total International Equity RBC International Portfolio MSCI AC World ex USA IM International Large Cap Value Equity (SA+CF) Median Manning & Napier Overseas (EXOSX) MSCI AC World ex USA IM International Multi -Cap Core Equity (MF) Median 27.45 (15) 24.65 (3) -8.87 (57) 12.31 (10) 7.72 (39) -29.87 (69) 24.22 (49) N/A N/A 16.98 (82) 15.04 (52) -10.42 (70) 8.00 (36) 6.43 (48) -29.97 (69) 31.06 (14) 19.36 (72) 29.48 (29) 22.63 15.33 -8.41 5.00 6.18 -27.38 24.06 20.94 26.87 20.93 (47) 16.04 (36) -12.51 (74) 2.52 (80) N/A N/A N/A N/A N/A 16.98 (80) 15.04 (52) -10.42 (42) 8.00 (20) 6.43 (23) -29.97 (39) 31.06 (7) 19.36 (35) 29.48 (8) 20.48 15.14 -11.04 4.71 1.85 -31.07 24.85 18.58 25.33 Returns for periods greater than 1 yr. are annualized. PSI THE 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. �O ViJt�li 11 V 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 � GAQ l.J p. Comparative Performance Total Fund As of September 30, 2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 FY2005 Total Domestic Fixed Income Agincourt Capital Management -1.40 (61) 6.96 (43) 4.92 (69) 9.55 (38) 14.76 (18) N/A N/A N/A N/A Barclays Aggregate Index -1.68 (81) 5.16 (91) 5.26 (50) 8.16 (87) 10.56 (81) 3.65 (32) 5.14 (51) 3.67 (76) 2.80 (81) IM U.S. Broad Market Core Fixed Income (SA+CF) Median -1.22 6.60 5.26 9.22 12.30 2.54 5.14 3.85 3.10 Garcia, Hamilton & Associates Barclays Intermediate Aggregate Index IM U.S. Intermediate Duration (SA+CF) Median Total Global Fixed Income Templeton Global Bond Adv (FBNRX) Citigroup World Government Bond IM Global Fixed Income (MF) Median Total Real Estate American Core Realty Fund NCREIF Fund Index -Open End Diversified Core (EW) IM U.S. Open End Private Real Estate (SA+CF) Median Intercontinental Real Estate NCREIF Fund Index -Open End Diversified Core (EW) IM U.S. Open End Private Real Estate (SA+CF) Median 0.88 (8) 9.51 (4) 2.32 (91) 8.87 (28) 15.91 (7) N/A N/A N/A N/A -0.71 (77) 4.31 (85) 4.22 (21) 7.52 (78) 9.69 (82) 4.16 (34) 5.33 (69) 3.84 (60) 2.23 (41) -0.26 5.57 3.60 8.27 11.48 3.21 5.49 3.92 2.08 3.44 (3) 13.25 (7) N/A N/A N/A N/A N/A N/A N/A -4.60 (85) 3.29 (97) 4.61 (8) 4.99 (95) 13.78 (51) 5.90 (6) 8.69 (30) 2.23 (64) 3.02 (74) -1.52 7.34 1.56 7.82 13.91 -1.47 7.29 2.53 5.11 12.27 (71) 11.57 (67) 16.11 (75) 2.72 (76) -32.96 (39) 4.98 (35) 16.31 (82) N/A N/A 12.47 (68) 11.77 (66) 18.03 (42) 6.14 (50) -36.09 (53) 3.73 (47) 17.84 (59) 17.49 (57) 18.91 (72) 13.09 12.90 16.62 6.09 -35.27 3.47 18.53 18.17 19.98 18.19 (10) 13.33 (43) 15.80 (79) N/A N/A N/A N/A N/A N/A 12.47 (68) 11.77 (66) 18.03 (42) 6.14 (50) -36.09 (53) 3.73 (47) 17.84 (59) 17.49 (57) 18.91 (72) 13.09 12.90 16.62 6.09 -35.27 3.47 18.53 18.17 19.98 Returns for periods greater than 1 yr. are annualized. PSI THE 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. �O ViJt�li 11 V 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 � GAQ l.J p. Plan Sponsor Peer Group Analysis - All Public Plans -Total Fund 20.00 17.00 00 14.00 O 0 O • O O 11.00 �� A O 8.00 MW c 3 W 5.00 2.00 O -1.00 -4.00 -7.00 32.00 26.00 20.00 14.00 • 0 8.00 c 3 2.00 N -4.00 -10.00 -16.00 -22.00 -28.00 0 Performance Review Total Fund As of September 30. 2014 Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • Total Fund -1.04 (44) 12.51 (7) 12.51 (7) 13.80 (4) 15.49 (6) 11.43 (9) 10.86 (17) • Total Fund 15.11 (11) 18.93 (29) 0.08 (57) 8.61 (83) 0.00 (68) -11.96 (28) O Total Policy -0.34 (12) 12.13 (10) 12.13 (10) 13.41 (6) 15.56 (6) 12.16 (3) 11.58 (5) O Total Policy 14.70 (15) 19.99 (14) 2.54 (13) 9.32 (69) -1.86 (83) -14.02 (56) Median -1.14 10.05 10.05 11.38 13.37 10.04 10.06 Median 12.51 17.88 0.32 9.95 1.36 -13.67 Comparative Performance 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 Total Fund 3.88 (33) 2.41 (14) 6.87 (7) 5.02 (46) 1.15 (6) 6.83 (8) Total Policy 3.96 (27) 1.84 (38) 6.27 (24) 5.12 (43) 1.19 (6) 6.76 (10) All Public Plans -Total Fund Median 3.64 1.72 5.60 4.91 0.08 5.45 THE 26 �BOGDAHN � GRoup 3 Yr Rolling Under/Over Performance - 5 Years 24.0 Over 18.0 Performance 12.0 C LL 6.0 0 0.0 -6.0 Under -12.0 Performance -12.0 -9.0 -6.0 -3.0 0.0 3.0 6.0 9.0 12.0 15.0 18.0 21.0 24.0 Total Policy (% ) ® Over Performance Under Performance Earliest Date X Latest Date Peer Group Scattergram - 3 Years 16.56 15.84 O e • 15.12 14.40 a K 13.68 12.96 6.00 6.20 6.40 6.60 6.80 7.00 Risk (Standard Deviation %) Return Standard Deviation Performance Review Total Fund As of September 30. 2014 3 Yr Rolling Percentile Ranking - 5 Years x 0.0 Q p Q Q 0 0 m _ C 25.0 0 • • 2 50.0 • • • • • a 0 0: E 75.0 0• O 00 • 100.0 12/09 6/10 12/10 6/11 12111 6/12 12/12 6/13 12/13 9/14 Total Period 5-25 25-Median Median-75 75-95 Count Count Count Count • Total Fund 20 O Total Policy 20 Peer Group Scattergram - 5 Years 12.24 11.73 e 11.22 10.71 d K 10.20 9.69 9.1 9.2 9.3 9.4 Risk (Standard Deviation %) Return 5 (25%) 3 (15%) 8 (40%) 4 (20%) 11 (55%) 1 (5%) 5 (25%) 3 (15%) 9.5 9.6 Standard Deviation • Total Fund 15.49 6.80 • Total Fund 10.86 9.51 O Total Policy 15.56 6.35 O Total Policy 11.58 9.29 - Median 13.37 6.21 - Median 10.06 9.15 Historical Statistics - 3 Years Tracking Up Market Down Market Alpha Information Sharpe Beta Downside Error Capture Capture Ratio Ratio Risk Total Fund 1.28 102.86 166.62 -0.82 -0.03 2.18 1.05 1.60 Total Policy 0.00 100.00 100.00 0.00 N/A 2.34 1.00 1.08 Historical Statistics - 5 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture Total Fund 1.83 97.87 108.95 -0.70 -0.35 1.14 1.00 5.61 Total Policy 0.00 100.00 100.00 0.00 N/A 1.23 1.00 5.19 THE BOGDAHN 27 GROUP 28 THE (� BOGDAHN ♦-� GROUP Peer Group Analysis - IM U.S. Multi -Cap Core Equity (MF) 35.00 30.00 25.00 20.00 15.00 c 3 10.00 m 5.00 0.00 00 -5.00 0 0 0 0 1 N" Im QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR • VG TSMI -0.01 (29) 17.78 (24) 17.78 (24) N/A N/A N/A N/A O VG TSM Index -0.02 (30) 17.77 (24) 17.77 (24) 19.62 (46) 23.07 (32) 17.05 (21) 15.85 (18) Median -0.96 15.30 15.30 19.46 21.71 15.31 14.20 Comparative Performance Performance Review (Fiscal Years) VG TSMI As of September 30. 2014 50.00 35.00 0 0 20.00 0 5.00 c 0 m -10.00 -25.00 0 -40.00 -55.00 Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • VG TSMI N/A N/A N/A N/A N/A N/A O VG TSM Index 21.50 (62) 30.28 (16) 0.71 (20) 11.16 (27) -6.03 (61) -21.19 (30) Median 22.82 25.66 -2.22 9.38 -4.81 -22.95 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 VG TSMI 4.86 (32) 2.05 (44) 10.08 (32) 6.30 (62) 2.77 (44) N/A VG TSM Index 4.87 (31) 2.04 (45) 10.09 (31) 6.29 (62) 2.76 (44) 11.02 (49) IM U.S. Multi -Cap Core Equity (MF) Median 4.37 1.93 9.48 6.81 2.59 10.98 > THE BOGDAHN 29 �-�'' GROUP Peer Group Analysis - IM U.S. Large Cap Core Equity (SA+CF) 35.00 30.00 25.00 0 0� 20.00 0 0 0 0 0 0 - 0 0 15.00 d K 10.00 5.00 0.00 -5.00 -10.00 P 1 1 1 QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ® Dana LC -0.15 (77) 20.65 (31) 20.65 (31) 20.13 (48) 23.83 (37) 17.13 (55) 15.69 (57) O Dana Index 1.13 (42) 19.73 (44) 19.73 (44) 19.54 (58) 22.99 (56) 17.07 (57) 15.38 (62) Median 0.81 19.26 19.26 20.06 23.25 17.26 15.86 Comparative Performance Performance Review (Fiscal Years) Dana LC As of Seotember 30. 2014 50.00 40.00 30.00 0 0 20.00 • 0 10.00 0 0 d 0.00 0 O 10.00 0 -20.00 0 -30.00 -40.00 -50.00 1 Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • Dana LC 19.62 (62) 31.58 (21) -0.89 (72) 10.10 (41) -13.66 (97) -12.23 (6) eg Dana Index 19.34 (64) 30.20 (46) 0.95 (54) 8.90 (59) -10.62 (92) -21.56 (62) Median 20.71 29.79 1.16 9.45 -5.81 -20.49 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 Dana LC 5.54 (22) 3.53 (13) 10.58 (45) 6.01 (50) 2.26 (67) 11.16 (37) Dana Index 5.23 (31) 1.81 (63) 10.51 (48) 5.24 (71) 2.91 (47) 10.61 (55) IM U.S. Large Cap Core Equity (SA+CF) Median 4.86 2.06 10.45 5.99 2.82 10.69 THE r BOGDAHN 30 �-� GRoup 3 Yr Rolling Under/Over Performance - 5 Years 30.0 Over Performance 20.0 e v 10.0 J 0 0.0 C -10.0 Under -20.0 Performance -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 Dana Index(%) ® Over Performance Under Performance Earliest Date X Latest Date Peer Group Scattergram - 3 Years 24.08 23.80 e 23.52 a 23.24 o O 22.96 22.68 9.60 9.80 10.00 10.20 10.40 10.60 Risk (Standard Deviation %) Return Standard Deviation Performance Review (Fiscal Years) Dana LC As of September 30. 2014 3 Yr Rolling Percentile Ranking - 5 Years x 0.0 m 25 0 d 0 0 • 2 50.0 • • • E 75.0 v 0000e0o K 0 100.0 12/09 6/10 12/10 6/11 12111 6/12 12/12 6/13 12/13 9/14 Total Period 5-25 25-Median Median-75 75-95 Count Count Count Count • Dana LC 20 O Dana Index 20 Peer Group Scattergram - 5 Years 16.00 15.80 15.60 d 15.40 O 15.20 13.60 13.80 14.00 14.20 14.40 Risk (Standard Deviation %) Return 0 (0%) 8 (40%) 7 (35%) 5 (25%) 0 (0%) 4 (20%) 7 (35%) 9 (45%) -J 14.60 Standard Deviation 14.80 • Dana LC 23.83 10.27 0 Dana LC 15.69 14.60 O Dana Index 22.99 9.73 O Dana Index 15.38 13.88 - Median 23.25 10.42 - Median 15.86 14.64 Historical Statistics - 3 Years Tracking Up Market Down Market Alpha Information Sharpe Beta Downside Error Capture Capture Ratio Ratio Risk Dana LC 1.82 102.39 99.08 0.39 0.40 2.05 1.02 4.59 Dana Index 0.00 100.00 100.00 0.00 N/A 2.05 1.00 4.69 Historical Statistics - 5 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture Dana LC 2.30 99.98 97.91 0.61 0.11 1.18 0.98 7.41 Dana Index 0.00 100.00 100.00 0.00 N/A 1.15 1.00 7.59 THE [� BOGDAHN 31 `` GROUP 32 THE (� BOGDAHN ♦-� GROUP Peer Group Analysis - IM U.S. All Cap Core Equity (SA+CF) 38.00 32.00 26.00 20.00 0 O O 14.00 c v Q! 8.00 2.00 O tIt -4.00 -10.00 -16.00 Performance Review (Fiscal Years) Fiduciary As of September 30. 2014 65.00 50.00 35.00 O O O 20.00 0 O O c m 5.00 O O -10.00 O -25.00 -40.00 QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR • Fiduciary -2.32 (73) 14.12 (65) 14.12 (65) N/A N/A N/A N/A O R3000 0.01 (38) 17.76 (30) 17.76 (30) 19.66 (63) 23.08 (57) 17.01 (57) 15.78 (59) Median -0.93 16.19 16.19 20.45 23.29 17.18 15.92 Comparative Performance -55.00 Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • Fiduciary N/A N/A N/A N/A N/A N/A O R3000 21.60 (80) 30.20 (31) 0.55 (62) 10.96 (55) -6.42 (61) -21.52 (64) Median 23.91 28.01 0.98 11.08 -6.02 -21.09 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 Fiduciary 5.78 (17) 2.06 (43) 8.21 (88) N/A N/A N/A R3000 4.87 (33) 1.97 (48) 10.10 (55) 6.35 (80) 2.69 (54) 11.07 (65) IM U.S. All Cap Core Equity (SA+CF) Median 4.44 1.87 10.14 7.28 2.70 11.32 THE BOGDAHN 33�� GROUP Peer Group Analysis - IM U.S. Small Cap Core Equity (SA+CF) 38.00 32.00 26.00 20.00 • 0 14.00 c • • ' 8.00 v Q: 0 0 2.00 -4.00 0 -10.00 -16.00 -22.00 65.00 50.00 35.00 0 0 • •0 0 0 0 20.00 c 5.00 m o: QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR • Dana SC -4.75 (21) 11.01 (16) 11.01 (16) 20.81 (33) 26.65 (15) 20.51 (7) 19.57 (7) O R2000 -7.36 (89) 3.93 (76) 3.93 (76) 16.26 (85) 21.26 (79) 14.52 (84) 14.29 (87) Median -5.85 6.50 6.50 18.95 23.46 16.76 16.58 Comparative Performance AI -10.00 -25.00 -40.00 Performance Review (Fiscal Years) Dana SC As of September 30. 2014 0 0 ji -55.00 Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • Dana SC 31.48 (59) 39.20 (7) 3.82 (14) 15.86 (36) -13.06 (84) -21.93 (79) O R2000 30.06 (73) 31.91 (55) -3.53 (77) 13.35 (72) -9.55 (66) -14.48 (24) Median 32.41 32.36 -0.56 14.62 -7.80 -17.69 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 Dana SC 3.35 (27) 1.29 (48) 11.33 (23) 9.64 (69) 3.96 (49) 14.86 (10) R2000 2.05 (63) 1.12 (54) 8.72 (79) 10.21 (57) 3.08 (61) 12.39 (59) IM U.S. Small Cap Core Equity (SA+CF) Median 2.45 1.23 9.80 10.45 3.79 12.63 THE r BOGDAHN 34 ��� GROUP Performance Review (Fiscal Years) Dana SC As of September 30. 2014 3 Yr Rolling Under/Over Performance - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years 40.0 Over c 0.00 0 0 0 0 0 0 0 Performance e ®x f0 d 25.0 0 0 y u 50.0 0 0 0 0 0 0 0 0.0 o. 0 o . ° 75.0 p 0 0 D O O 0 0 0 O 0 O -20.0 Under 0 0 0 0 0 0 Performance of 100.0 -30.0 -20.0 -10.0 0.0 10.0 20.0 30.0 40.0 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 12/13 9/14 R2000I%) Total Period 5-25 25-Median Median-75 75-95 ® Over Performance Under Performance Count Count Count Count Earliest Date X Latest Date • Dana SC 20 10 (50%) 1 (5%) 4 (20%) 5 (25%) O R2000 20 0 (0%) 1 (5%) 9 (45%) 10 (50%) Peer Group Scattergram - 3 Years Peer Group Scattergram - 5 Years 28.00 22.00 e 26.00 ® e 20.00 • 24.00 18.00 a d 16.00 22.00 O 14.00 O 20.00 12.00 13.02 13.23 13.44 13.65 13.86 14.07 14.28 18.28 18.32 18.36 18.40 18.44 18.48 Risk (Standard Deviation %) Risk (Standard Deviation %) Return Standard Return Standard Deviation Deviation • Dana SC 26.65 14.09 • Dana SC 19.57 18.43 O R2000 21.26 13.20 O R2000 14.29 18.30 - Median 23.46 13.60 - Median 16.58 18.38 Historical Statistics - 3 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture Dana SC 4.52 104.99 76.19 5.32 0.98 1.65 0.96 6.65 R2000 0.00 100.00 100.00 0.00 N/A 1.36 1.00 7.30 Historical Statistics - 5 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture Dana SC 4.30 99.56 76.69 5.86 1.01 1.13 0.91 9.56 100.00 100.00 0.00 N/A 0.82 1.00 11.09 THE BOGDAHN GRoup. 35 Performance Review (Fiscal Years) RBC As of September 30. 2014 Peer Group Analysis - IM International Large Cap Value Equity (SA+CF) 30.00 50.00 25.00 35.00 20.00 20.00 15.00 Q Q Q 0 0 Q 10.00 Q 5.00 • � c c 3 � Q Q Q z 5.00 Q Q -10.00 • Q 0.00 -25.00 -5.00 Q ! 0 • -40.00 -10.00 -15.00 -55.00 Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • RBC -7.82 (94) 10.00 (10) 10.00 (10) 18.41 (8) 20.45 (5) 12.34 (6) 12.33 (2) • RBC 27.45 (15) 24.65 (3) -8.87 (57) 12.31 (10) 7.72 (39) -29.87 (69) O MSCI ACW -5.19 (36) 5.22 (58) 5.22 (58) 10.94 (86) 12.29 (79) 6.12 (80) 6.50 (72) O MSCI ACW 16.98 (82) 15.04 (52) -10.42 (70) 8.00 (36) 6.43 (48) -29.97 (69) Median -5.70 5.74 5.74 14.01 13.77 8.17 7.59 Median 22.63 15.33 -8.41 5.00 6.18 -27.38 Comparative Performance 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 RBC 2.56 (85) 4.13 (5) 11.73 (1) 8.86 (79) 0.67 (34) 8.77 (2) MSCI ACW 5.25 (23) 0.61 (63) 4.81 (83) 10.17 (59) -2.90 (89) 3.27 (69) IM International Large Cap Value Equity (SA+CF) Median 4.15 1.14 6.13 10.71 -0.03 4.24 >� THE r BOGDAHN 36 �-� GRoup 3 Yr Rolling Under/Over Performance - 5 Years 30.0 Over 20.0 Performance O 10.0 00 U 0.0 -1 0 ° m o -10.0 -20.0 Under -30.0 Performance -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 MSCI ACW (%) ® Over Performance Under Performance Earliest Date X Latest Date Peer Group Scattergram - 3 Years 24.00 21.00 • e 18.00 a 15.00 K 12.00 O 9.00 11.20 11.90 12.60 13.30 14.00 14.70 Risk (Standard Deviation %) Return Standard Deviation Performance Review (Fiscal Years) RBC As of September 30. 2014 3 Yr Rolling Percentile Ranking - 5 Years x 0.0 • • • • • • • • • m 25.0 • • O o 50.0 0 O O O• p O a O O O E 75.0 • • O 0 0 0 O m a 100.0 12/09 6/10 12/10 6/11 12111 6/12 12/12 6/13 12/13 9/14 Total Period 5-25 25-Median Median-75 75-95 Count Count Count Count • RBC 20 O MSCI ACW 20 Peer Group Scattergram - 5 Years 14.00 12.00 � 10.00 8.00 C 6.00 4.00 15.91 16.34 16.77 17.20 17.63 Risk (Standard Deviation %) Return 12 (60%) 5 (25%) 2 (10%) 1 (5%) 0 (0%) 6 (30%) 8 (40%) 6 (30%) 18.06 Standard Deviation 18.49 • RBC 20.45 14.16 • RBC 12.33 18.06 O MSCI ACW 12.29 11.16 O MSCI ACW 6.50 16.22 - Median 13.77 11.41 - Median 7.59 16.23 Historical Statistics - 3 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture RBC 5.74 122.02 87.81 7.37 1.27 1.29 1.01 8.66 MSCI ACW 0.00 100.00 100.00 0.00 N/A 0.89 1.00 8.73 Historical Statistics - 5 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture RBC 6.34 110.83 84.98 5.85 0.86 0.77 0.97 10.13 MSCI ACW 0.00 100.00 100.00 0.00 N/A 0.46 1.00 10.90 THE T BOGDAHN 37 �-�'` GROUP Performance Review (Fiscal Years) Manning & Napier As of September 30. 2014 Peer Group Analysis - IM International Multi -Cap Core Equity (MF) 25.00 50.00 20.00 35.00 15.00 O O 20.00 O 10.00 O O � O 00 0 O O O 5.00 c O O 0 O 5.00 c � O 3 m N 0.00 p p -10.00 O O -5.00 Q -25.00 -10.00 - O -40.00 -15.00 - -20.00 a. - 1 1 1 -55.00 - Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • M & N -9.66 (100) -0.43 (95) -0.43 (95) 9.73 (81) 11.80 (75) 5.15 (85) 4.62 (88) • M & N 20.93 (47) 16.04 (36) -12.51 (74) 2.52 (80) N/A N/A • MSCI ACW -5.19 (29) 5.22 (29) 5.22 (29) 10.94 (62) 12.29 (64) 6.12 (64) 6.50 (49) • MSCI ACW 16.98 (80) 15.04 (52) -10.42 (42) 8.00 (20) 6.43 (23) -29.97 (39) Median -5.62 4.32 4.32 12.14 13.11 6.71 6.36 Median 20.48 15.14 -11.04 4.71 1.85 -31.07 Comparative Performance 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 M & N 3.24 (70) 2.13 (9) 4.54 (83) 9.59 (65) -0.90 (50) 5.15 (21) MSCI ACW 5.25 (7) 0.61 (42) 4.81 (78) 10.17 (49) -2.90 (83) 3.27 (62) IM International Multi -Cap Core Equity (MF) Median 3.89 0.41 5.79 10.13 -0.93 3.88 THE r BOGDAHN 38 �-� GRoup 3 Yr Rolling Under/Over Performance - 5 Years Over 12.0 Performance 8.0 Z ea 4.0 0 0.0 -4.0 -4.0 -2.0 0.0 2.0 4.0 6.0 MSCI ACW (%) ® Over Performance Under Performance Earliest Date X Latest Date Peer Group Scattergram - 3 Years 13.64 13.20 e 12.76 12.32 O K 11.88 11.44 13.32 13.69 14.06 14.43 14.80 Risk (Standard Deviation %) Return Performance Review (Fiscal Years) Manning & Napier As of September 30. 2014 3 Yr Rolling Percentile Ranking - 5 Years x 0.0 m O O O O d zs.o O O O O O O jj O c O 2 50.0 O E75.0 • • O E a . Under w Performance of 100.0 8.0 10.0 12.0 14.0 12/09 6/10 12/10 6/11 12111 6/12 12/12 6/13 12/13 9/14 Total Period 5-25 25-Median Median-75 75-95 Count Count Count Count • 15.17 Standard Deviation • M&N 10 O MSCI ACW 20 Peer Group Scattergram - 5 Years 6.82 _ 6.20 C 5.58 4.96 4.34 3.72 0 (0%) 1 (10%) 8 (80%) 1 (10%) 9 (45%) 4 (20%) 7 (35%) 0 (0%) 15.54 15.60 16.00 16.40 16.80 17.20 17.60 18.00 Risk (Standard Deviation %) Return Standard Deviation 18.40 • M&N 11.80 15.21 0 M&N 4.62 17.98 O MSCI ACW 12.29 14.12 O MSCI ACW 6.50 16.29 - Median 13.11 13.60 - Median 6.36 16.57 Historical Statistics - 3 Years Tracking Up Market Down Market Alpha Information Sharpe Beta Downside Error Capture Capture Ratio Ratio Risk M & N 4.51 101.39 104.94 -0.66 -0.06 0.81 1.03 9.40 MSCI ACW 0.00 100.00 100.00 0.00 N/A 0.89 1.00 8.73 Historical Statistics - 5 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture M & N 4.88 103.51 113.25 -1.96 -0.30 0.34 1.06 12.52 MSCI ACW 0.00 100.00 100.00 0.00 N/A 0.46 1.00 10.90 THE 39 �BOGDAHN '�� GROUP Peer Group Analysis - IM U.S. Broad Market Core Fixed Income (SA+CF) 7.80 6.82 5.84 4.86 3.88 c 2.90 1.92 0.94 -0.04 -1.02 -2.00 24.00 20.00 16.00 3 12A0 O O 8.00 O E O � 4.00 O 0.00 O -4.00 QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR • Agincourt 0.16 (65) 4.40 (51) 4.40 (51) 1.46 (57) 3.26 (50) 3.67 (56) 4.82 (49) O BC Agg 0.17 (64) 3.96 (79) 3.96 (79) 1.10 (81) 2.43 (89) 3.13 (88) 4.12 (87) Median 0.19 4.42 4.42 1.57 3.25 3.74 4.80 Comparative Performance -8.00 •O Performance Review (Fiscal Years) Agincourt As of September 30. 2014 b jo -12.00 Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • Agincourt -1.40 (61) 6.96 (43) 4.92 (69) 9.55 (38) 14.76 (18) N/A O BC Agg -1.68 (81) 5.16 (91) 5.26 (50) 8.16 (87) 10.56 (81) 3.65 (32) Median -1.22 6.60 5.26 9.22 12.30 2.54 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 Agincourt 2.20 (42) 1.88 (71) 0.11 (50) 0.81 (20) -2.46 (58) -0.07 (79) BC Agg 2.04 (72) 1.84 (77) -0.14 (78) 0.57 (64) -2.32 (39) -0.12 (88) IM U.S. Broad Market Core Fixed Income (SA+CF) Median 2.15 2.03 0.09 0.63 -2.42 0.09 >� THE 40 �BOGDAHN �� GRouP 3 Yr Rolling Under/Over Performance - 5 Years 12.0 Over 10.0 Performance 8.0 p. 0 6.0 O 4.0 O °� 2.0 Under Performance 0.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 BC Agg I ) ® Over Performance + Earliest Date X Latest Date Peer Group Scattergram - 3 Years 3.60 3.30 e 3.00 a 2.70 o 2.40 O 2.36 2.40 2.44 2.48 2.52 2.56 2.60 Risk (Standard Deviation %) Return Standard Deviation Performance Review (Fiscal Years) Agincourt As of September 30. 2014 3 Yr Rolling Percentile Ranking - 5 Years x 0.0 m m 25.0 • u 50.0 • • • ° ° ° ° ° ° - ° ° ° ° ° ° 75.0 ° °°° O O° O° O O O O O O O 100.0 12/09 6/10 12/10 6/11 12111 6/12 12/12 6/13 12/13 9/14 Total Period 5-25 25-Median Median-75 75-95 Count Count Count Count • Agincourt 13 O BC Agg 20 Peer Group Scattergram - 5 Years 5.10 4.80 4.50 d 4.20 3.90 2.88 2.90 2.92 2.94 Risk (Standard Deviation %) Return 0 (0%) 4 (31 %) 9 (69%) 0 (0%) 0 (0%) 0 (0%) 4 (20%) 16 (80%) O 2.96 Standard Deviation 2.98 • Agincourt 3.26 2.56 • Agincourt 4.82 2.90 O BC Agg 2.43 2.38 O BC Agg 4.12 2.96 - Median 3.25 2.54 - Median 4.80 2.91 Historical Statistics - 3 Years Tracking Up Market Down Market Alpha Information Sharpe Beta Downside Error Capture Capture Ratio Ratio Risk Agincourt 0.59 116.13 99.17 0.74 1.38 1.15 1.03 1.64 BC Agg 0.00 100.00 100.00 0.00 N/A 0.91 1.00 1.60 Historical Statistics - 5 Years Tracking Up Market Down Market Alpha Information Sharpe Beta Downside Error Capture Capture Ratio Ratio Risk Agincourt 1.12 114.89 111.08 0.21 0.62 1.41 1.12 1.92 BC Agg 0.00 100.00 100.00 0.00 N/A 1.42 1.00 1.53 THE 41 �BOGDAHN '�� GROUP Peer Group Analysis - IM U.S. Intermediate Duration (SA+CF) 7.52 6.56 5.60 4.64 3.68 0 2.72 0 0 • 0 0 1.76 0 0.80 0 -0.16 -1.12 -2.08 QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR 0 GHA 0.25 (8) 4.88 (9) 4.88 (9) 2.86 (7) 5.03 (6) 4.35 (7) 5.24 (10) O BC Int Agg 0.03 (37) 2.74 (60) 2.74 (60) 1.00 (77) 2.09 (82) 2.62 (69) 3.58 (74) Median 0.00 2.87 2.87 1.27 2.70 2.89 3.95 Comparative Performance Performance Review (Fiscal Years) GHA As of September 30. 2014 23.00 20.00 17.00 14.00 11.00 � 0 c 8.00 o: 0 5.00 0 0 0 2.00 -1.00 0 -4.00 -7.00 Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • GHA 0.88 (8) 9.51 (4) 2.32 (91) 8.87 (28) 15.91 (7) N/A O BC Int Agg -0.71 (77) 4.31 (85) 4.22 (21) 7.52 (78) 9.69 (82) 4.16 (34) Median -0.26 5.57 3.60 8.27 11.48 3.21 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 GHA 1.70 (18) 1.77 (12) 1.08 (6) 0.93 (17) -1.70 (41) 0.67 (13) Barclays Int Agg 1.62 (27) 1.20 (50) -0.14 (92) 0.76 (41) -1.78 (50) 0.15 (91) IM U.S. Intermediate Duration (SA+CF) Median 1.40 1.20 0.20 0.72 -1.78 0.34 THE 42 �BOGDAHN �--� GROUP 3 Yr Rolling Under/Over Performance - 5 Years 10.0 Over Performance • 8.0 • ® as 6.0 a x 2 00 (9 4.0 2.0 Under Performance 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Barclays Int Agg (%) ® Over Performance + Earliest Date X Latest Date Peer Group Scattergram - 3 Years 6.00 4.00 c 2.00 O 0.00 1.60 1.80 2.00 2.20 2.40 2.60 Risk (Standard Deviation %) Return Standard Deviation Performance Review (Fiscal Years) GHA As of September 30. 2014 3 Yr Rolling Percentile Ranking - 5 Years x m 0.0 0 ®o • • m 25.0 ©• C 2 50.0 75.0 0 0 O 0 O 0 0 0 0 0 O O w 0 0 0 0 0 0 0 K 100.0 12/09 6/10 12/10 6/11 12111 6/12 12/12 6/13 12/13 9/14 Total Period 5-25 25-Median Median-75 75-95 Count Count Count Count • GHA 14 13 (93%) O BC Int Agg 20 0 (0%) Peer Group Scattergram - 5 Years 5.90 5.31 4.72 4.13 K 3.54 O 2.95 1 (7%) 0 (0%) 0 (0%) 0 (0%) 12 (60%) 8 (40%) 2.16 2.20 2.24 2.28 2.32 2.36 2.40 Risk (Standard Deviation %) Return Standard Deviation 2.44 • GHA 5.03 2.48 • GHA 5.24 2.39 O BC Int Agg 2.09 1.78 O BC Int Agg 3.58 2.19 - Median 2.70 1.88 - Median 3.95 2.34 Historical Statistics - 3 Years Tracking Up Market Down Market Alpha Information Sharpe Beta Downside Error Capture Capture Ratio Ratio Risk GHA 1.97 172.11 95.05 2.73 1.45 1.70 1.08 1.51 Barclays Int Agg 0.00 100.00 100.00 0.00 N/A 1.05 1.00 1.15 Historical Statistics - 5 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture GHA 2.25 130.54 98.45 1.83 0.72 1.64 0.94 1.78 Barclays Int Agg 0.00 100.00 100.00 0.00 N/A 1.55 1.00 1.18 THE 43 `BOGDAHN �_� GROUP Performance Review (Fiscal Years) Templeton GB As of September 30. 2014 Peer Group Analysis - IM International Fixed Income (MF) 14.00 38.00 11.00 32.00 26.00 8.00 20.00 5.00 i i 14.00 • 04 Z 2.00 0 a: Q: 0 8.00 � O O -1.00 0 0 0 � O 0 2.00 -4.00 0 -4.00 0 -7.00 -10.00 -10.00 -16.00 Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • Templeton GB 0.11 (18) 6.54 (11) 6.54 (11) 4.98 (5) 7.67 (6) N/A N/A • Templeton GB 3.44 (8) 13.25 (5) N/A N/A N/A N/A O Citi WGB -3.78 (57) -0.07 (77) -0.07 (77) -2.36 (82) -0.51 (86) 0.74 (74) 1.58 (72) O Citi WGB -4.60 (62) 3.29 (90) 4.61 (6) 4.99 (64) 13.78 (71) 5.90 (1) Median -2.95 2.74 2.74 -0.88 1.64 1.66 2.53 Median -3.38 6.51 1.70 6.66 16.13 -0.05 Comparative Performance 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 Templeton GB 2.71 (32) 0.86 (90) 2.74 (6) 1.03 (71) -2.73 (16) 1.38 (9) Citi WGB 2.27 (78) 2.66 (33) -1.09 (91) 2.88 (40) -2.97 (23) -2.77 (55) IM International Fixed Income (MF) Median 2.56 2.39 0.14 1.93 -3.47 -2.63 THE r BOGDAHN 44 ��� GROUP 3 Yr Rolling Under/Over Performance - 5 Years No data found. Peer Group Scattergram - 3 Years 9.00 6.00 3.00 a 0.00 O -3.00 3.30 3.96 4.62 5.28 5.94 6.60 Risk (Standard Deviation %) Return • 7.26 7.92 Standard Deviation 8.58 Performance Review (Fiscal Years) Templeton GB As of September 30. 2014 3 Yr Rolling Percentile Ranking - 5 Years x 0.0 • 25.0 0 0 2 50.0 0 0 0 d a 0 0 0 0 0 0 0 0 0 e 75.0 0 0 v 0 0 K 100.0 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 12/13 9/14 Total Period 5-25 25-Median Median-75 75-95 Count Count Count Count • Templeton GB 1 O Citi WGB 20 Peer Group Scattergram - 5 Years 2.79 2.48 2.17 t d 1.86 1.55 O 1.24 5.40 5.76 6.12 6.48 6.84 7.20 Risk (Standard Deviation %) Return 1 (100%) 0 (0%) 0 (0%) 0 (0%) 0 (0%) 5 (25%) 12 (60%) 3 (15%) 7.56 7.92 Standard Deviation 8.28 • Templeton GB 7.67 7.75 • Templeton GB N/A N/A O Citi WGB -0.51 4.38 O Citi WGB 1.58 5.89 - Median 1.64 5.99 - Median 2.53 7.80 Historical Statistics - 3 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture Templeton GB 7.14 163.85 34.35 8.32 1.14 0.99 0.74 4.71 Citi WGB 0.00 100.00 100.00 0.00 N/A -0.11 1.00 3.43 Historical Statistics - 5 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture Templeton GB N/A N/A N/A N/A N/A N/A N/A N/A Citi WGB 0.00 100.00 100.00 0.00 N/A 0.28 1.00 4.27 THE 45 �BOGDAHN '- GROUP Peer Group Analysis - IM U.S. Open End Private Real Estate (SA+CF) 16.00 14.00 12.00 10.00 c v 8.00 Q: 6.00 4.00 � Q 2.00 0.00 • p • p • 0 00 50.00 35.00 20.00 5.00 10.00 c m a: -25.00 -40.00 -55.00 -70.00 -85.00 O 00 •0 Performance Review (Fiscal Years) American As of September 30. 2014 00 Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • American 3.36 (N/A) 12.49 (N/A) 12.49 (N/A) 12.38 (N/A) 12.11 (N/A) 13.10 (N/A) 10.94 (N/A) • American 12.27 (71) 11.57 (67) 16.11 (75) 2.72 (76) -32.96 (39) 4.98 (35) O NCREIF ODCE 3.24 (N/A) 12.40 (N/A) 12.40 (N/A) 12.72 (N/A) 12.35 (N/A) 13.80 (N/A) 12.40 (N/A) O NCREIF ODCE 13.04 (51) 11.61 (67) 18.27 (41) 6.97 (45) -35.19 (50) 3.18 (52) Median N/A N/A N/A N/A N/A N/A N/A Median 13.09 12.90 16.62 6.09 -35.27 3.47 Comparative Performance 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 American 2.80 (60) 3.20 (39) 2.59 (76) 3.40 (54) 3.36 (66) 2.49 (69) NCREIF ODCE 2.93 (59) 2.52 (66) 3.17 (53) 3.56 (50) 3.86 (52) 2.68 (61) IM U.S. Open End Private Real Estate (SA+CF) Median 3.22 2.87 3.23 3.54 3.88 3.14 THE r BOGDAHN 46 ��� GROUP 3 Yr Rolling Under/Over Performance - 5 Years 20.0 Over Performance 10.0 • -' 0.0 • °1 • -10.0 Under -20.0 Performance -20.0 -16.0 -12.0 -8.0 -4.0 0.0 4.0 8.0 12.0 16.0 20.0 24.0 NCREIF ODCE (%) ® Over Performance Under Performance Earliest Date X Latest Date Peer Group Scattergram - 3 Years 12.42 12.33 O 12.24 a 12.15 • 12.06 0.64 0.68 0.72 0.76 0.80 0.84 0.88 0.92 Risk (Standard Deviation %) Return Standard Deviation Performance Review (Fiscal Years) American As of September 30. 2014 3 Yr Rolling Percentile Ranking - 5 Years x 0.0 m m 25.0 a a o e•• o 0 0 50.0 0 0 o a • E 75.0 • • • : . • K 100.0 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 12/13 9/14 Total Period 5-25 25-Median Median-75 75-95 Count Count Count Count • American 19 0 (0%) 6 (32%) 7 (37%) 6 (32%) O NCREIF ODCE 19 0 (0%) 11 (58%) 8 (42%) 0 (0%) Peer Group Scattergram - 5 Years 12.74 12.25 O 11.76 11.27 K • 10.78 10.29 3.56 3.60 3.64 3.68 3.72 3.76 3.80 Risk (Standard Deviation %) Return Standard Deviation • American 12.11 0.67 • American 10.94 3.76 O NCREIF ODCE 12.35 0.84 O NCREIF ODCE 12.40 3.60 - Median N/A N/A - Median N/A N/A Historical Statistics - 3 Years Tracking Up Market Down Market Alpha Information Sharpe Beta Downside Error Capture Capture Ratio Ratio Risk American 0.65 98.16 N/A 5.52 -0.34 17.05 0.52 0.00 NCREIF ODCE 0.00 100.00 N/A 0.00 N/A 13.84 1,00 0.00 Historical Statistics - 5 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture American 1.11 90.59 121.38 -1.29 -1.21 2.80 1.00 1.91 NCREIF ODCE 0.00 100.00 100.00 0.00 N/A 3.29 1.00 1.56 THE 47 �BOGDAHN - GROUP Peer Group Analysis - IM U.S. Open End Private Real Estate (SA+CF) 20.00 18.00 16.00 14.00 O O O O 12.00 c 10.00 m K 8.00 6.00 4.00 • O 2.00 0.00 50.00 35.00 20.00 . O 0 O 5.00 O -10.00 c m a: -25.00 -40.00 -55.00 -70.00 -85.00 Performance Review (Fiscal Years) Intercontinental As of September 30. 2014 .i U Oct-2012 Oct-2011 Oct-2010 Oct-2009 Oct-2008 Oct-2007 To To To To To To QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR Sep-2013 Sep-2012 Sep-2011 Sep-2010 Sep-2009 Sep-2008 • Intercontinental 3.67 (N/A) 13.88 (N/A) 13.88 (N/A) 16.01 (N/A) 15.11 (N/A) 15.28 (N/A) N/A • Intercontinental 18.19 (10) 13.33 (43) 15.80 (79) N/A N/A N/A O NCREIF ODCE 3.24 (N/A) 12.40 (N/A) 12.40 (N/A) 12.72 (N/A) 12.35 (N/A) 13.80 (N/A) 12.40 (N/A) O NCREIF ODCE 13.04 (51) 11.61 (67) 18.27 (41) 6.97 (45) -35.19 (50) 3.18 (52) Median N/A N/A N/A N/A N/A N/A N/A Median 13.09 12.90 16.62 6.09 -35.27 3.47 Comparative Performance 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr 1 Qtr Ending Ending Ending Ending Ending Ending Jun-2014 Mar-2014 Dec-2013 Sep-2013 Jun-2013 Mar-2013 Intercontinental 2.38 (90) 1.80 (90) 5.40 (3) 3.66 (43) 4.35 (30) 2.78 (59) NCREIF ODCE 2.93 (59) 2.52 (66) 3.17 (53) 3.56 (50) 3.86 (52) 2.68 (61) IM U.S. Open End Private Real Estate (SA+CF) Median 3.22 2.87 3.23 3.54 3.88 3.14 THE r BOGDAHN 48 �-� GRoup 3 Yr Rolling Under/Over Performance - 5 Years Over 16.0 Performance 4- c 15.0 w 14.0 0 u 2 13.0 c Under 12.0 Performance 12.0 12.5 13.0 13.5 14.0 14.5 15.0 15.5 16.0 16.5 NCREIF ODCE (%) ® Over Performance + Earliest Date X Latest Date Peer Group Scattergram - 3 Years 16.15 ,.., 15.20 e • 14.25 a 13.30 o 12.35 O 11.40 0.40 0.80 1.20 1.60 2.00 2.40 2.80 Risk (Standard Deviation %) Return Standard Deviation Performance Review (Fiscal Years) Intercontinental As of September 30. 2014 3 Yr Rolling Percentile Ranking - 5 Years x 0.0 m m 25.0 • • = O O O O O O O O O O 2 50.0 O O O O O O O O = 75.0 O K 100.0 12/09 6/10 12/10 6/11 12111 6/12 12/12 6/13 12/13 9/14 Total Period 5-25 25-Median Median-75 75-95 Count Count Count Count • Intercontinental 4 O NCREIF ODCE 19 Peer Group Scattergram - 5 Years 13.53 13.12 12.71 d 12.30 K 11.89 11.48 1 (25%) 3 (75%) 0 (0%) 0 (0%) 0 (0%) 11 (58%) 8 (42%) 0 (0%) 20 3.20 3.36 3.43 3.50 3.57 3.64 3.71 3.78 Risk (Standard Deviation %) Return Standard Deviation 3.85 • Intercontinental 15.11 2.52 0 Intercontinental N/A N/A O NCREIF ODCE 12.35 0.84 O NCREIF ODCE 12.40 3.60 - Median N/A N/A - Median N/A N/A Historical Statistics - 3 Years Tracking Up Market Down Market Alpha Information Sharpe Beta Downside Error Capture Capture Ratio Ratio Risk Intercontinental 2.51 121.50 N/A 8.47 1.01 5.68 0.52 0.00 NCREIF ODCE 0.00 100.00 N/A 0.00 N/A 13.84 1,00 0.00 Historical Statistics - 5 Years Tracking Up Down Information Sharpe Downside Error Market Market Alpha Ratio Ratio Beta Risk Capture Capture 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 3.29 1.00 1.56 10 THE r� BOGDAHN 49 ��_'' GROUP Palm Beach Gardens Firefighters' Pension Plan Compliance Checklist as of September 30, 2014 1. The total plan return equaled or exceeded the total plan benchmark over the trailing three year period. ✓ 2. The total plan return equaled or exceeded the total plan benchmark over the trailing five year period. ✓ 3. The total plan return ranked within the top 40th percentile of its peer group over the trailing three year period. ✓ 4. The total plan return ranked within the top 40th percentile of its peer group over the trailing five year period. ✓ 5. The total plan return equaled or exceeded the actuarial earnings assumption (8.25%) over the trailing three year period. ✓ 6. The total plan return equaled or exceeded the actuarial earnings assumption (8.25%) over the trailing five year period. ✓ 0 via•JK611116 4 1. Total domestic equity returns meet or exceed the benchmark over the trailing three year period. ✓ 2. Total domestic equity returns meet or exceed the benchmark over the trailing five year period. ✓ 3. Total domestic equity returns ranked within the top 40th percentile of its peer group over the trailing three year period. ✓ 4. Total domestic equity returns ranked within the top 40th percentile of its peer group over the trailing five year period. ✓ 5. The total equity allocation was less than or equal to 75% but greater than or equal to 55% of the total fund value at market. ✓ 6. The total domestic equity allocation was less than or equal to 65% but greater than or equal to 45% of the total fund value at market. ✓ 7. The total international equity allocation was less than or equal to 15% but greater than or equal to 5% of the total fund value at market. ✓ 1. Total fixed income returns meet or exceed the benchmark over the trailing three year period. ✓ 2. Total fixed income returns meet or exceed the benchmark over the trailing five year period. ✓ 3. Total fixed income returns ranked within the top 40th percentile of its peer group over the trailing three year period. ✓ 4. Total fixed income returns ranked within the top 40th percentile of its peer group over the trailing five year period. ✓ 5. The total fixed income allocation was less than or equal to 35% but greater than or equal to 15% of the total fund value at market. ✓ 6. All fixed income investments had a minimum rating of investment grade or higher as determined by a major credit rating service. ✓ Real Estate Compliance: 1. Total Real Estate allocation was less than 15% of the total plan assets at market. 50 THE 1� BOGDAHN GRoup � tli�V V 1 1. VG TSMI ✓ 2. Dana LC ✓ 3. Fiduciary ✓ 4. Dana SC ✓ 5. RBC ✓ 6. Manning & Napier ✓ 7. Agincourt ✓ 8. GHA ✓ 9. Templeton GB 10. American ✓ 11. Intercontinental ✓ Palm Beach Gardens Firefighters' Pension Plan Compliance Checklist as of September 30, 2014 ✓ ✓ ✓ 51 ✓ ✓ ✓ ✓ ✓ ✓ THE BOGDAHN GRoup � tli�V V 1 52 THE (� BOGDAHN ♦-� GROUP Total Fund Policy Allocation Mandate Weight (%) Allocation Mandate Benchmark History Investment Policy Benchmarks As of September 30, 2014 Weight (%) May-1998 Jul-2013 S&P 500 Index 60.00 Russell 3000 Index 55.00 Barclays U.S. Gov't/Credit 35.00 MSCI AC World ex USA 10.00 Citigroup 3 Month T-Bill Index 5.00 Barclays Aggregate Index 10.00 Barclays Intermediate Aggregate Index 10.00 Jan-2001 Citigroup World Government Bond 5.00 S&P 500 Index 65.00 NCREIF Fund Index -Open End Diversified Core (EW) 10.00 Barclays U.S. Gov't/Credit 30.00 Citigroup 3 Month T-Bill Index 0.00 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 53 THE BOGDAHN GROUP',. Total Equity Policy Allocation Mandate Weight (%) Dana Custom Index Allocation Mandate Benchmark History Investment Policy Benchmarks As of September 30, 2014 Weight (%) Jul-2008 Jul-2002 MSCI EAFE Index 15.00 Russell 3000 Index 100.00 Russell 3000 Index 85.00 Jan-2008 Oct-2011 Russell 1000 Value Index 100.00 MSCI EAFE Index 15.00 Russell 3000 Index 85.00 Jan-2011 S&P 500 Index 100.00 Jul-2013 Russell 3000 Index 85.00 MSCI AC World ex USA 15.00 Total Domestic Equity Policy Vanguard Total Stock Market Index Allocation Mandate Weight (%) Allocation Mandate Weight (%) May-1998 Jun-2003 S&P 500 Index 100.00 MSCI US Broad Market Index 100.00 Jul-2005 Jun-2013 Russell 3000 Index 100.00 CRSP U.S. Total Market TR 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 Prior to 6/1/2011, the data and inception dates for Dana LC and Dana SC were provided by the manager. THE BOGDAHN 54 GROup. Total Fixed Income Policy Allocation Mandate Weight (%) May-1998 Barclays U.S. Gov't/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. Gov't/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 Total Real Estate Policy Allocation Mandate Benchmark History Investment Policy Benchmarks As of September 30, 2014 Weight (%) J u I-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 Prior to 6/1/2011, the data and inception dates for Dana LC and Dana SC were provided by the manager. THE ,ice BOGDAHN 55 Guoup Report Statistics Definitions and Descriptions Active Return - Arithmetic difference between the manager's performance and the designated benchmark return over a specified time period. Alpha - A measure of the difference between a portfolio's actual performance and its expected return based on its level of risk as determined by beta. It determines the portfolio's non -systemic return, or its historical performance not explained by movements of the market. Beta - A measure of the sensitivity of a portfolio to the movements in the market. It is a measure of the portfolio's systematic risk. Consistency - The percentage of quarters that a product achieved a rate of return higher than that of its benchmark. Higher consistency indicates the manager has contributed more to the product's performance. Down Market Capture - The ratio of average portfolio performance over the designated benchmark during periods of negative returns. A lower value indicates better product performance Downside Risk - A measure similar to standard deviation that utilizes only the negative movements of the return series. It is calculated by taking the standard deviation of the negative quarterly set of returns. A higher factor is indicative of a riskier product. Excess Return - Arithmetic difference between the manager's performance and the risk -free return over a specified time period. Excess Risk - A measure of the standard deviation of a portfolio's performance relative to the risk free return. Information Ratio - This calculates the value-added contribution of the manager and is derived by dividing the active rate of return of the portfolio by the tracking error. The higher the Information Ratio, the more the manager has added value to the portfolio. R-Squared - The percentage of a portfolio's performance that can be explained by the behavior of the appropriate benchmark. A high R-Squared means the portfolio's performance has historically moved in the same direction as the appropriate benchmark. Return - Compounded rate of return for the period. Sharpe Ratio - Represents the excess rate of return over the risk free return divided by the standard deviation of the excess return. The result is an absolute rate of return per unit of risk. A higher value demonstrates better historical risk -adjusted performance. Standard Deviation - A statistical measure of the range of a portfolio's performance. It represents the variability of returns around the average return over a specified time period. Tracking Error - This is a measure of the standard deviation of a portfolio's returns in relation to the performance of its designated market benchmark. Treynor Ratio - Similar to Sharpe ratio but utilizes beta rather than excess risk as determined by standard deviation. It is calculated by taking the excess rate of return above the risk free rate divided by beta to derive the absolute rate of return per unit of risk. A higher value indicates a product has achieved better historical risk -adjusted performance. Up Market Capture - The ratio of average portfolio performance over the designated benchmark during periods of positive returns. A higher value indicates better product performance. 56 THE r BOGDAHN GROUP' Disclosures The Bogdahn Group compiled this report for the sole use of the client for which it was prepared. The Bogdahn Group is responsible for evaluating the performance results of the Total Fund along with the investment advisors by comparing their performance with indices and other related peer universe data that is deemed appropriate. The Bogdahn group uses the results from this evaluation to make observations and recommendations to the client. The Bogdahn Group uses time -weighted calculations which are founded on standards recommended by the CFA Institute. The calculations and values shown are based on information that is received from custodians. The Bogdahn Group analyzes transactions as indicated on the custodian statements and reviews the custodial market values of the portfolio. As a result, this provides The Bogdahn Group with a reasonable basis that the investment information presented is free from material misstatement. This methodology of evaluating and measuring performance provides The Bogdahn Group with a practical foundation for our observations and recommendations. Nothing came to our attention that would cause The Bogdahn Group to believe that the information presented is significantly misstated. The strategies listed may not be suitable for all investors. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. Past performance is not an indication of future performance. Any information contained in this report is for informational purposes only and should not be construed to be an offer to buy or sell any securities, investment consulting, or investment management services. Additional information included in this document may contain data provided by from index databases, public economic sources and the managers themselves. This document may contain data provided by Barclays. Barclays Index data provided by way of Barclays Live. This document may contain data provided by Standard and Poor's. Nothing contained within any document, advertisement or presentation from S&P Indices constitutes an offer of services in jurisdictions where S&P Indices does not have the necessary licenses. All information provided by S&P Indices is impersonal and is not tailored to the needs of any person, entity or group of persons. Any returns or performance provided within any document is provided for illustrative purposes only and does not demonstrate actual performance. Past performance is not a guarantee of future investment results. This document may contain data provided by MSCI, Inc. Copyright MSCI, 2012. Unpublished. All Rights Reserved. This information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. This information is provided on an "as is" basis and the user of this information assumes the entire risk of any use it may make or permit to be made of this information. Neither MSCI, any of its affiliates or any other person involved in or related to compiling, computing or creating this information makes any express or implied warranties or representations with respect to such information or the results to be obtained by the use thereof, and MSCI, its affiliates and each such other person hereby expressly disclaim all warranties (including, without limitation, all warranties of originality, accuracy, completeness, timeliness, non -infringement, merchantability and fitness fora particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any other person involved in or related to compiling, computing or creating this information have any liability for any direct, indirect, special, incidental, punitive, consequential or any other damages (including, without limitation, lost profits) even if notified of, or if it might otherwise have anticipated, the possibility of such damages. This document may contain data provided by Russell Investment Group. Russell Investment Group is the source owner of the data contained or reflected in this material and all trademarks and copyrights related thereto. The material may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. This is a user presentation of the data. Russell Investment Group is not responsible for the formatting or configuration of this material or for any inaccuracy in presentation thereof. This document may contain data provided by Morningstar. All rights reserved. Use of this content requires expert knowledge. It is to be used by specialist institutions only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied, adapted or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information, except where such damages or losses cannot be limited or excluded by law in your jurisdiction. Past financial performance is not guarantee of future results. 57 THE �BOGDAHN � GRoup THE BOGDAHN GROUP. simplif hki }voter investment and fduciaty rlecidons Orlando 4901 Vineland Road, Suite 600 Orlando, Florida 32811 866.240.7932 Chicago Milwaukee Cleveland S I Gordon & Com, PA Certified Public Accountant American Institute of Certified Public Accountants Florida Institute of Certified Public Accountants June 27, 2014 Board of Trustees Palm Beach Gardens Firefighters' Pension Fund Palm Beach Gardens, Florida I am pleased to confirm my understanding of the services I am to provide for the Palm Beach Gardens Firefighters' Pension Fund for the year ended September 30, 2014. I will audit the statement of fiduciary net position of the Palm Beach Gardens Firefighters' Pension Fund and the related statement of changes in fiduciary net position for the year ended September 30, 2014. Accounting standards generally accepted in the United States of America provide for certain required supplemental information (RSI), such as management's discussion and analysis (MD&A), Schedule of Contributions from Employer and Other Contributors and the Schedule of Funding Progress, to supplement the Palm Beach Gardens Firefighters' Pension Fund's basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economical, or historical context. As part of my engagement, I will apply certain limited procedures to Palm Beach Gardens Firefighters' Pension Fund's RSI in accordance with auditing standards generally accepted in the United States of America. These limited procedures will consist of inquires of management regarding the method of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge I obtained during the audit of the basic financial statements. I will not express an opinion or provide any assurance on the information because the limited procedures do not provide me with sufficient evidence to express an opinion or provide any assurance. Audit Objectives The objective of my audit is the expression of an opinion as to whether your financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. My audit will be conducted in accordance with auditing standards generally accepted in the United States of America and will include tests of the accounting records and other procedures I consider necessary to enable me to express such an opinion. If my opinion on the financial statements is other than unmodified, I will 11555 Heron Bay Blvd. Ste 200 Coral Springs, FL 33076 Voice (954) 485-5788 Fax (954) 485-8988 discuss the reasons with you in advance. If, for any reason, I am unable to complete the audit or am unable to form or have not formed an opinion, I may decline to express an opinion or to issue a report as a result of this engagement. Management Responsibilities Management is responsible for establishing and maintaining effective internal controls, including monitoring ongoing activities; for the selection and application of accounting principles; and for the fair presentation in the financial statements of the fiduciary net position of the City Palm Beach Gardens Firefighters' Pension Fund and the change in net assets available for benefits, in conformity with U.S. generally accepted accounting principles. Management is responsible for making all financial records and related information available to me and for the accuracy and completeness of that information. You are also responsible for providing me with (1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, (2) additional information that I may request for the purpose of the audit, and (3) unrestricted access to persons within the Fund from which I determine it necessary to obtain audit evidence. Your responsibilities include adjusting the financial statements to correct material misstatements and confirming to us in the written representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial both individually and in the aggregate, to the financial statements taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud or illegal acts affecting the government involving (1) management, (2) employees who have significant roles in internal controls, and (3) others where the fraud or illegal acts could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the Fund received in communications from employees, former employees, regulators, or others. In addition, you are responsible for identifying and ensuring that the Fund complies with applicable laws and regulations. You are responsible for the preparation of the supplementary information in conformity with U.S. generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains and indicates that we have reported on the supplementary information. You also agree 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. Your responsibilities include acknowledging to us in the representation letter that (1) you are responsible for presentation of the supplementary information in accordance with GAAP; (2) that you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; (3) that the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information. Audit Procedures -General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, my audit will involve judgment about the number of transactions to be examined and the areas to be tested. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I 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 regulations that are attributable to the Fund or to acts by management or employees acting on behalf of the Fund. Because of the inherent limitations of an audit, combined with the inherent limitations of internal controls, and because I will not perform a detailed examination of all transactions, there is a risk that a material misstatement may exist and not be detected by me, even though the audit is properly planned and performed in accordance with U.S. generally accepted auditing standards. In addition, an audit is not designed to detect immaterial misstatements, or violations of laws or regulations that do not have a direct and material effect on the financial statements. However, I will inform you of any material errors and any fraudulent financial reporting or misappropriation of assets that comes to my attention. I will also inform you of any violations of laws or regulations that come to my attention unless clearly inconsequential. My responsibility as auditor is limited to the period covered by my audit and does not extend to matters that might arise during any later periods for which I was not engaged as auditor. My procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors and financial institutions. I 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 my audit, I will also require certain written representations from you about the financial statements and related matters. Audit Procedures -Internal Controls My audit will include obtaining an understanding of the Fund, including internal controls, sufficient to access the risks of material misstatements of the financial statements and to design the nature, timing, and extent of further audit procedures. An audit is not designed to provide assurance on internal control or to identify deficiencies in internal controls. However, during the audit, I will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards. Audit Administration, Fees and Other My fee for these services will be $7,000 plus out-of-pocket expenses where applicable. You will also be billed for travel and other out-of-pocket costs, if any. Additionally, there would be a charge of $1,200 for preparation of the state annual report, should you engage us to prepare that for you. The fee is based on anticipated cooperation from you, and the assumption that unexpected circumstances will not be encountered during my audit. If significant additional time is necessary, I will discuss it with you and arrive at a new fee estimate before I incur the additional costs. I appreciate the opportunity to be of service to you and believe this letter accurately summarizes the significant terms of my engagement. If you have any questions, please let me know. If you agree with the terms of my engagement as described in this letter, please sign the enclosed copy and return it to me in the enclosed envelope. Sincerely, Z/100-111vlf 6707 S I Gordon & Company, PA Coral Springs, Florida APPROVED: This letter correctly sets forth the erstanding of Palm Beach Gardens Firefighters' Pen . und. ` By. r Date: In PALM BEACH GARDENS FIREFIGHTERS' Reginal Pickens Action: Mike Dunaway Action: PENSION FUND MEETING OF NOVEMBER 5, 2014 RATIFICATION OF BENEFIT PAYMENTS APPLICATION TO ENTER THE DROP Years Of Credited Service: Age at Retirement: Total Monthly Benefit: DROP Entry/Retirement Date: Type Of Benefit: Form Of Benefit: APPLICATION TO EXIT THE DROP Date of Birth: Date of Hire: DROP Entry Date: Date of Termination: Total Monthly Benefit: Form Of Benefit: 25.0027 Years 55 Years & 9 Months $5,486.03 February 1, 2014 DROP 100% J&S Annuity 06/16/1964 10/03/1988 10/03/2013 10/19/2014 $6,968.57 66 2/3% J&S Annuity APPLICATION FOR DISTRIBUTION OF DROP ACCOUNT Mike Dunaway Date of Hire: 10/03/1988 Date of Termination: 10/19/2014 Date of Birth: 08/16/1964 Type of Distribution: Closeout -Cash (1" Distribution) Total Gross Distribution: $58,759.95 Tax Withholding (0%): $ 11,751.99 Total Net Distribution: $47,007.96 Action: APPLICATION FOR DISTRIBUTION OF SHARE ACCOUNT Brandon Zace Date of Hire: 01/05/2004 Date of Termination: 04/15/2010 Date of Birth: 07/02/1976 Type of Distribution: Closeout -cash Total Gross Distribution: $10,114.43 Tax Withholding (20%): $ 2,022.89 Total Net Distribution: $ 8,091.54 Action: Chairman Secretary. Date-1 1/5/2014 THE PENsioN RESOURCE CENTER, 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 DISBURSEMENTS NOVEMBER 5, 2014 • AGINCOURT $ 4,204.97 (Investment Management Fee for QE 9/30/2014) • BOGDAHN GROUP $ 7,500.00 (Consulting Fee for the QE 9/30/2014) • FIDUCIARY MANAGEMENT TRUST $11,187.00 (Investment Management Fee for the QE 9/30/2014) • GARCIA HAMILTON & ASSOCIATES (GH&A) $ 4,287.70 (Investment Management Fee for the QE 9/30/2014) • REGIONS MORGAN KEEGAN TRUST $ 4,118.93 (Custodial Fees for August & September 2014) • RESOURCE CENTERS $ 1,625.00 (Administrator Fee for October 2014) • S I GORDON & COMPANY, PA $ 550.00 (Auditing Services for the FYE 9/30/2014) • SUGARMAN & SUSSKIND $ 3,904.50 (Legal Fees for August & September 2014) Total Disbursements for Approval $37,378.10 (Trustee) (Trustee) Date: 10/20/2014 i 7 Invoice: Ms. Margaret M. Adcock City of Palm Beach Gardens Firefighters' Retirement System The Pension Resource Center, Inc. 4360 Northlake Blvd., Ste. 206 Palm Beach Gardens, FL 33410 Re: City of Palm Beach Garden Firefighters' Retirement System Account #: 3350000104 Per our Investment Management Agreement, the fees to Agincourt Capital Management in payment for investment services rendered from 7/1/2014 - 9/30/2014: Monthly Market Values: 7/31/2014 $6,859,504.47 8/31/2014 $6,682,159,58 9/30/2014 $6,642,208,78 Average Market Value: $6,727,957.61 $6,727,957.61 x 0.2500% = $16,819,89 Total Annual Fee: $16,819.89 Total Quarterly Fee: $4,204.97 * Agincourt Capital Management, LLC Federal Tax ID: 54-1947440 CC: Joe Bogdahn Payment Due Within 30 Days to: Agincourt Capital Management, LLC Wire/ACK Branch Banking Trust (BBT) or Agincourt Capital Management, LLC 901 East Byrd Street ATTN. Laura Haynie Richmond, VA 23219 200 South 10th Street, Suite 800 ABA# 051404260 Richmond, VA 23219 Account# 5131720132 FBO: Agincourt Capital Management, LLC Please let as know if you woultj��J�tigjtt�a��y�� or our Code of Ethics 200 SOUTH LOTH STREET, SUITE 800 ° RICHMOND, VIRGINIA 23219 TELEPHONE (804) 648-1111 ° FAX (804) 864-2611 C � Palm Beach Gardens Firefighters' Pension Email: Audrey Ross Email: Payment Group ®®®® li I UCA Y= o ®� MANAGEMENT, INC. Investment Counsel October 15, 2014 Ms. Audrey Ross Resource Centers, LLC. 4360 Northlake Blvd. Suite 206 Palm Beach Gardens, FL 33410 USA �'F p �`'_ PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND 2850000337 STATEMENT OF MANAGEMENT FEES Fiduciary Management, Inc. For The Period July 1, 2014 to September 30, 2014 Portfolio Valuation as of 09-30-14 5,966,485 @ 0.7500% per annum Quarterly Management Fee TOTAL DUE AND PAYABLE Remit to: Accounts Receivable Fiduciary Management, Inc. 100 East Wisconsin Avenue Suite 2200 Milwaukee, WI 53202 5,966,485 11,187 11,187 1NVOlCE # 25161 ARCIA HAMILTON ASSOCIATES, L.P. 5 HOUSTON CENTER 1401 WKINNEY, SUITE 1600 October 7, 2014 HOUSTON, Tx 77010 TEL: (713) 853-2322,. CITY OF PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND FAX: (713) 853-2308 (3350000097) palmfi WWW.GARCIAHAMILTONASSOCIATES.COM Attn: Margie Adcock 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 OCI o J.4 GARCIA HAMILTON & ASSOCIATES STATEMENT OF MANAGEMENT FEES For The Period July 1, 2014 through September 30, 2014 Portfolio Valuation with Accrued Interest as of 09-30-14 $ 6,860,315.67 6,860,316 @ 0.250%per annum _ _ 4,287.70 Quarterly Management Fee $ 4,287.70-- TOTAL DUE AND PAYABLE $ 4,287.7 none AREGIONS Post Office Box 12385 Birmingham, Alabama 35202-2385 STATEMENT OF TRUSTEES FEES INVOICE DATE 09/10/2014 ACCOUNT # 2850000239 ACCOUNT NAME: PB GARDENS R&D DESCRIPTION/ BASIS J. SCOTT BAUR PENSION RESOURCE CENTER 4360 NORTHLAKE BLVD, SUITE 206 PALM BEACH GARDEN FL 33410 INVOICE NUMBER 91369 SUMMARY OF ACCOUNT PREVIOUS BALANCE PAYMENTS RECEIVED: $ 4,162.78 4,175.82 2,097.51-f CURRENT FEE: 2,084.47 BALANCE DUE $ 4,162.78 FEE CALCULATION DETAIL 08/01/2014 - 08/31/2014 RATE FEE TOTAL MARKET VALUE PERIOD ENDING 08/31/2014 62,534,304.93 0.0000083333 52,111.71 52,111.71 $ 52,111.71 FEE CALCULATION DETAIL 08/01/2014 - 08/31/2014 ITEM AMOUNT DISCOUNT: PERIOD ENDING 08/31/2014 50,027.24- TOTAL $ 50,027.24------------ - SUMMARY OF FEE CALCULATION DETAIL ITEM AMOUNT MARKET VALUE 52,111.71 DISCOUNT 50,027.24- TOTAL AMOUNT DUE FOR CURRENT PERIOD $ 2,084.47 FOR FEE CALCULATION PERIOD 08/01/2014 - 08/31/2014 CONSOLIDATED ACCOUNT PRORATION FOR MASTER ACCOUNT M21485 PALM BCH GARDENS ACCOUNT NAME PERCENTAGE AMOUNT CHARGE/BILL FEE 2850000159 PB GAR FETTERMAN 0.00000000% 0.00 BILL 2850000168 PB GAR OLSEN 0.00000000% 0.00 BILL 2850000220 PB GAR VAZQUEZ 0.00587661% 0.12 BILL TO A/C 2850000239 2850000239 PB GARDENS R&D 34.12474854% 711.32 BILL 2850000266 PB GARDENS RBC 5.63869181% 117.54 BILL TO A/C 2850000239 2850000275 PB GAR MAUSER 0.00000000% 0.00 BILL 2850000284 PB GAR BUSSEY 0.00167278% 0.03 BILL TO A/C 2850000239 STATEMENT OF TRUSTEES FEES INVOICE DATE 09/10/2014 2 FOR FEE CALCULATION PERIOD 08/01/2014 - 08/31/2014 CONSOLIDATED ACCOUNT PRORATION FOR MASTER ACCOUNT M21485 PALM BCH GARDENS ACCOUNT NAME PERCENTAGE AMOUNT CHARGE/BILL FEE 2850000337 PB GAR FMI 9.80451357% 204.37 BILL TO A/C 2850000239 3350000088 PB GARD DANA LC 22.75819166% 474.39 BILL TO A/C 2850000239 3350000097 PB GARD GHA 10.98818779% 229.05 BILL TO A/C 2850000239 3350000104 PB GARD AGN 10.59227947% 220.79 BILL TO A/C 2850000239 3350000113 PB GAR DANA SC 6.08583777% 126.86 BILL TO A/C 2850000239 ACCOUNT NAME PERCENTAGE MARKET VALUE 2850000159 PB GAR FETTERMAN 0.00000000% 2850000168 PB GAR OLSEN 0.00000000% - 2850000220 PB GAR VAZQUEZ 0.00587661% 3,674.90 2850000239 PB GARDENS R&D 34.12474854% 21,339,674.31 2850000266 PB GARDENS RBC 5.63869181% 3,526,116.73 2850000275 PB GAR MAUSER 0.00000000% 2850000284 PB GAR BUSSEY 0.00167278% 1,046.06 2850000337 PB GAR FMI 9.80451357% 6,131,184.41 3350000088 PB GARD DANA LC 22.75819166% 14,231,676.97 3350000097 PB GARD GHA 10.98818779% 6,871,386.86 3350000104 PB GARD AGN 10.59227947% 6,623,808.34 3350000113 PB GAR DANA SC 6.08583777% 3,805,736.35 FEES ARE DUE WITHIN 120 DAYS OF THE INVOICE DATE. ANY FEE NOT PAID WILL BE CHARGED TO THE TRUST. IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT ANDREW SINCLAIR AT 813-639-3328 Post Office Box 12385 Alabama 1 STATEMENT OF TRUSTEES FEES INVOICE DATE 10/08/2014 ACCOUNT # 2850000239 ACCOUNT NAME: PB GARDENS R&D �j J. SCOTT BAUR PENSION RESOURCE CENTER 4360 NORTHLAKE BLVD, SUITE 206 PALM BEACH GARDEN FL 33410 INVOICE NUMBER 91868 $ 4,118.93 _ SUMMARY OF ACCOUNT ***************** *********************** ************* ************* PREVIOUS BALANCE 4,162.78 PAYMENTS RECEIVED: 2,078.31— CURRENT FEE: 2,034.46 BALANCE DUE $ 4,118.93 FEE CALCULATION DETAIL 09/01/2014 — 09/30/2014 ***************** *********************** ************* ************* DESCRIPTION/ RATE FEE TOTAL BASIS MARKET VALUE PERIOD ENDING 09/30/2014 61,034,141.01 0.0000083333 50,861.58 50,861.58 $ 50,861.58 FEE CALCULATION DETAIL 09/01/2014 — 09/30/2014 ITEM AMOUNT DISCOUNT: PERIOD ENDING 09/30/2014 48,827.12— TOTAL $ 48,827.12— SUMMARY OF FEE CALCULATION DETAIL ITEM AMOUNT MARKET VALUE 50,861.58 DISCOUNT 48,827.12— TOTAL AMOUNT DUE FOR CURRENT PERIOD $ 2,034.46 FOR FEE CALCULATION PERIOD 09/01/2014 — 09/30/2014 CONSOLIDATED ACCOUNT PRORATION FOR MASTER ACCOUNT M21485 PALM BCH GARDENS ACCOUNT NAME PERCENTAGE AMOUNT CHARGE/BILL FEE 2850000239 PB GARDENS R&D 34.24992205% 696.80 BILL 2850000266 PB GARDENS RBC 5.77728575% 117.54 BILL TO A/C 2850000239 2850000337 PB GAR FMI 9.77518227% 198.87 BILL TO A/C 2850000239 3350000088 PB GARD DANA LC 22.81796326% 464.22 BILL TO A/C 2850000239 3350000097 PB GARD GHA 11.18031398% 227.46 BILL TO A/C 2850000239 3350000104 PB GARD AGN 10.78467795% 219.41 BILL TO A/C 2850000239 3350000113 PB GAR DANA SC 5.41465474% 110.16 BILL TO A/C 2850000239 Post Office Box 12385 Birmingham, Alabama 35202-2385 STATEMENT OF TRUSTEES FEES INVOICE DATE 10/08/2014 2 ACCOUNT NAME PERCENTAGE MARKET VALUE 2850000239 PB GARDENS R&D 34.24992205% 20,904,145.72 2850000266 PB GARDENS RBC 5.77728575% 3,526,116.73 2850000337 PB GAR FMI 9.77518227% 5,966,198.53 3350000088 PB GARD DANA LC 22.81796326% 13,926,747.87 3350000097 PB GARD GHA 11.18031398% 6,823,808.60 3350000104 PB GARD AGN 10.78467795% 6,582,335.55 3350000113 PB GAR DANA SC 5.41465474% 3,304,788.01 FEES ARE DUE WITHIN 120 DAYS OF THE INVOICE DATE. ANY FEE NOT PAID WILL BE CHARGED TO THE TRUST. IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT ANDREW SINCLAIR AT 813-639-3328 Resource Centers, LLC Palm Beach Gardens, FL 33410 Palm Beach Gardens Firefighters' Pension Fund Invoice -- Date Invoice #` 9/30/2014 13450 Tax ID Financial Resource Center 87-0800465 Pension Resource Center 36-4504183 Resource Centers 87-0800468 Description Qty Rate Amount Palm Beach Gardens Firefighters' Pension Monthly Administrator Fee for October 2014 1,625.00 1,625,00 Total Amount Due $1,625.00 I Mail Payments to: Resource Centers, LLC at Palm Beach Gardens address OR ACH Payment to: First Southern Bank Pension Resource Center ABA #: 067012895 Account #: 8063659206 If you have any questions concerning this invoice, please contact Bonnie Lindberg at Resource Centers, LLC Phone 561.459.2959 or email - Bonnie@ ResourceCenters.com --- S-I Gordon & Company, PA 11555 Heron Bay Blvd. Ste. 200 Coral Springs, FL 33076 US Phone (954) 485-5788 Palm Beach Gardens Firefighters Pension c/o Pension Resources Inc. 4360 N. Lake Blvd., # 206 Palm Beach Gardens, FL 33410 Progress billing in connection with certified audit and preparation of state annual report as of and for the year ended September 30, 2014 Invoice#: 9070 Date: 10/10/2014 Prior Balance (Credit) Before this Invoice Total Balance Due: $550.00 0.00 $550.00 Robert A. Sugarman Howard S. Susskind Kenneth R. Harrison, Sr. D. Marcus Braswell, Jr. Pedro A. Herrera Ivelisse Berio-LeBeau Noah S. Warman Dustin L. Watkins Michael A. Gillman SUGARMAN & SUSSKIND PROFESSIONAL ASSOCIATION ATTORNEYS AT LAW September 8, 2014 City of Palm Beach Gardens Firefighters' Pension Fund c/o Margaret M. Adcock, Administrator The Pension Resource Center, Inc. 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, Florida 33410 CURRENT FEES: CURRENT COSTS: PREVIOUS BALANCE: PAYMENTS RECEIVED: TOTAL AMOUNT DUE: 1,539.00 0.00 3,334.50 712.50-ck#424851 ------------- 4,161.00 100 Miracle Mile Suite 300 Coral Gables, Florida 33134 (305) 529-2801 Broward 763-2566 Toll Free 1-800-329-2122 Facsimile (305) 447-8115 SUGARMAN & SUSSKiND 100 Miracle Mile Suite 300 Coral Gables, Florida 33134 Telephone: 305-529-2801 Fax: 305-447-81 15 www.sugarmansusskind.com City of Palm Beach Gardens Firefighters' Pension Fund September 05, 2014 c/o Margaret M. Adcock, Administrator Invoice # 98574 The Pension Resource Center, Inc. 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 Client:Matter PBGF:CONS In Reference To: Consultant's Agreement Amount Previous balance $228.00 8/20/2014 Payment - Thank You. Check No. 424851 ($228.00) Total payments and adjustments ($228.00) Balance due $0.00 Client:Matter PBGF:ICMA In Reference To: Self Directed Drop Plan Amount Previous balance $228.00 8/20/2014 Payment - Thank You. Check No. 424851 ($228.00) Total payments and adjustments ($228.00) Balance due $0.00 Client:Matter PBGF:INVM City of Palm Beach Gardens Firefighters' Pension Fund In Reference To: Investment Manager Previous balance Balance due Client:Matter PBGF:MEET In Reference To: Meeting Professional Services 8/14/2014 Attend meeting. For professional services rendered Previous balance Balance due Page 2 Amount $171.00 $171.00 Hrs/Rate Amount 5.40 $1,539.00 $285.00/hr 5.40 $1,539.00 $1,995.00 $3, 534.00 Client:Matter PBGF:PLAN In Reference To: Plan Amount Previous balance $513.00 8/20/2014 Payment - Thank You. Check No. 424851 ($256.50) Total payments and adjustments ($256.50) Balance due $256.50 City of Palm Beach Gardens Firefighters' Pension Fund Page 3 Client:Matter PBGF:RSPD In Reference To: Summary Plan Description Amount Previous balance $199.50 Balance due $199.50 Client:Matter PBGF:SECU In Reference To: Securities Monitoring/Litigation Professional Services 8/11/2014 Receipt and review of Memo regarding potential action against Bancorp (Bancorp) For professional services rendered Hrs/Rate Amount 0.80 NO CHARGE $285.00/hr 0.80 $0.00 Balance due $0.00 Robert A. Sugarman Howard S. Susskind Kenneth R. Harrison, Sr. D. Marcus Braswell, Jr. Pedro A. Herrera Ivelisse Berio-LeBeau Noah S. Warman Dustin L. Watkins Michael A. Gillman SUGARMAN & SUSSKIND PROFESSIONAL ASSOCIATION ATTORNEYS AT LAW 100 Miracle Mile Suite 300 Coral Gables, Florida 33134 (305) 529-2801 Broward 763-2566 Toll Free 1-800-329-2122 Facsimile (305) 447-8115 October 7, 2014 City of Palm Beach Gardens Firefighters' Pension Fund c/o Margaret M. Adcock, Administrator The Pension Resource Center, Inc. 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, Florida 33410 CURRENT FEES: CURRENT COSTS: PREVIOUS BALANCE: PAYMENTS RECEIVED: 2,365.50 0.00 4,161.00 0.00 TOTAL AMOUNT DUE: 6,526.50 SUGARMAN & SUSSKiN® 100 Miracle Mile Suite 300 Coral Gables, Florida 33134 Telephone: 305-529-2801 Fax: 305-447-81 15 www.sugarmansusskind.com City of Palm Beach Gardens Firefighters' Pension Fund c/o Margaret M. Adcock, Administrator The Pension Resource Center, Inc. 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 Client:Matter PBGF:ACCT In Reference To: Accountant's Inquiry Letters Professional Services 9/15/2014 Review Engagement letter. For professional services rendered Balance due Client:Matter PBGF:INVM In Reference To: Investment Manager Previous balance Balance due Client:Matter PBGF:MEET In Reference To: Meeting October 07, 2014 Invoice # 99243 Hrs/Rate Amount 0.40 $114.00 $285.00/hr 0.40 $114.00 $114.00 Amount $171.00 $171.00 City of Palm Beach Gardens Firefighters' Pension Fund Professional Services 9/8/2014 Attend meeting. Prepare for meeting. Travel. For professional services rendered Previous balance Balance due Client:Matter PBGF:MISC In Reference To: Miscellaneous Professional Services 9/5/2014 Receipt and review of GASB 67/68 letter from Foster and Foster. For professional services rendered Balance due Client:Matter PBGF:PLAN In Reference To: Plan Professional Services 9/8/2014 Email regarding DROP and Share plan distributions. For professional services rendered Page 2 Mrs/Rate Amount ' 6.90 $1,966.50 $285.00/hr 6.90 $1,966.50 $3,534.00 -;)a,Uvu.ou Hrs/Rate Amount 0.30 $85.50 l , $285.00/hr 0.30 $85.50 $85.50 Hrs/Rate Amount 0.70 $199.50 $285.00/hr 0.70 $199.50 City of Palm Beach Gardens Firefighters' Pension Fund Previous balance Balance due Client:Matter PBGF:RSPD In Reference To: Summary Plan Description Previous balance Balance due Client:Matter PBGF:SECU-BANC In Reference To: Securities (Bancorp) Professional Services 9/4/2014 Review Complaint. 9/12/2014 Review Amended Complaint. For professional services rendered Balance due Page 3 Amount $256.50 $456.00 Amount $199.50 $199.50 Hrs/Rate Amount 2.80 NO CHARGE $285.00/hr 2.20 NO CHARGE $285.00/hr 5.00 $0.00 $0.00 WWW.BOGDAHNGROUP.COM Emerging Markets Review Information as of: September 30, 2014 o7NTHE BOGDAHN GROUP. simplifying your investment and fiduciary decisions Why Invest in Dedicated Emerging Equity Portfolios/Funds? Diversification/Correlation — Dedicated emerging equity managers are typically investing in more consumer -oriented, non -benchmark heavy companies that are less tied to the overall global economy and therefore are less correlated to other equity portfolios. Global and international equity managers that may invest a portion of their portfolios in emerging equities tend to favor the multinational, blue chip companies (e.g., Samsung or Hyundai) that just happen to be domiciled in an emerging country. Strategic Allocation — Having a dedicated emerging equity allocation provides the portfolio with a long- term strategic allocation, as opposed to leaving the allocation up to the developed international equity manager(s). By doing the latter, the portfolio likely will be perpetually underweight emerging equities relative to the MSCI All Country ex U.S. Index. Specialization — Dedicated emerging equity teams tend to have more local market knowledge and/or risk management processes and tools specifically focused on issues inherent to the asset class. History/Definition of Emerging Market Equities The MSCI Emerging Markets Free Index was first developed in 1988. MSCI dropped "Free" from the description in 2004. The index is weighted by capitalization, has a high concentration in a few large countries/regions and is heavily weighted towards cyclical sectors and Financials. Other indices have emerged since then (including ones developed by S&P and FTSE), but MSCI remains the most heavily utilized by institutions. MSCI defines an emerging market country by the number of publicly -traded companies of a certain size and the "free float" (proportion of shares available for ordinary investors to buy) available. In addition, the country's openness to foreign ownership and capital is considered. 21 countries are currently represented in the MSCI EM Index. Emerging market equities make up approximately 15% of the MSCI All Country World ex U.S. Index, while their countries' share of global GDP is over 40% and they house over 80% of the world's population. Institutional investor usage in dedicated emerging market equities really did not begin until the early 1990s. The most recent Greenwich Associate survey data show that 70% of U.S. institutional investors allocate to dedicated emerging equity. Of that 70%, the average allocation is just over 3% of the total portfolio. Pros & Cons of Emerging Equity as Standalone Allocation Pros Cons J Increased Alpha Potential — Emerging market stocks are in typically the fastest growing economies of the world, and we therefore would expect increased return opportunities. Historically over long time periods, this has been the case (see Figure1). Diversification Benefits — Over the long-term and excluding extreme times of market stress (when equity markets correlations tend to converge at 1), emerging equities have demonstrated low correlations of returns compared to developed equities in the U.S. and overseas (see Figure 2). Increased Volatility — Along with a higher return potential, naturally comes an increase in the level of risk. Historically, the standard deviation of the MSCI EM Index has been approximately 25% higher than the MSCI EAFE Index and 50-60% higher than the S&P 500 Index (see Figure 1). Macro Concerns — Less developed countries typically have additional political, social, financial, economic, and structural risks that should be considered prior to investing in local markets. Increased Costs — Transactions costs and investment management fees tend to be higher relative to developed markets. However, the cost disparity has narrowed immensely from 10 years ago. How Best to Implement an Emerging Equity Allocation Active versus Passive Inefficient Asset Class — Active managers have historically added significant value in the emerging equity space. The inherent volatility and limited research coverage provide plenty of opportunities for active managers to outperform. Figure 3 shows that over the long-term, the index ranks near the bottom quartile of the universe. Index Flaws— As mentioned previously, the index is capitalization weighted and thus suffers from the "buy high & sell low" mentality. In addition, emerging equity indexes in particular are overly concentrated in the largest and most liquid countries, which decreases the correlation benefits over time. Vehicle Types Mutual Funds — Funds tend to be the easiest to access for smaller mandate sizes (under $5 million), but are also generally the most expensive. Annual expense ratios for institutional share classes average approximately 1.2%. Mutual funds are daily -valued and have publicly -available information (30-day lag) that investors can access with a ticker symbol. Commingled or Collective Trusts — Collective vehicles tend to only be available to certain types of investors and at larger minimum account sizes (from $2 million to $10 million typically). Fees are generally lower than mutual fund and typically all-inclusive of operating and custody costs. The average collective fee for emerging equity is closer to 1 %. Liquidity varies from daily to monthly. Separately -Managed Accounts — Separately -managed accounts tend to have higher minimum required investments (from $5 million to $100 million) and similar investment manager fees to collective vehicles. Management fees are typically stepped so that fees decrease as investment size increases. The biggest advantage to utilizing a separate account is that the assets are held by the client, at their custodian. The biggest disadvantage is that custody costs are typically high and clients much register in countries where the manager invests directly. Conclusions Allocating to a dedicated emerging market equities portfolio within the broader context of an institutional portfolio has historically enhanced long-term risk -adjusted returns. Investors typically get more direct EM consumer exposure via a dedicated emerging equities strategy, as opposed to the large, multinational emerging market stocks that developed international equity managers tend to hold. While the risks of investing in emerging markets are greater than those in developed markets, they have declined immensely in the past 10 years. For clients that have the appropriate risk tolerance to invest in emerging market equities, we recommend an initial allocation of 3-5% of the total portfolio. We recommend clients implement a dedicated emerging equities allocation via an actively -managed investment strategy, as we believe the benchmark to be structurally flawed. In addition, the asset class is extremely inefficient and the median active manager has added significant alpha over the long-term. Due to the increased volatility of the asset class, rebalancing becomes a crucial element of portfolio management. Asset Class Comparison Investment Growth Time Period: 10/1/2004 to 9/30/2014 320.0 300.0 280.0 260.0 240.0 220.0 200.0 180.0 160.0 140.0 120.0 100.0 80.0 2005 — MSCI ACWI Ex USA NR USD — MSCI EM NR USD 2006 2007 2008 2009 2010 75 ACWI / 25 EM 2011 50 ACWI / 50 EM 2012 2013 2014 9 Returns As of Date: 9/30/2014 Calculation Benchmark: MSCI EM NR USD 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 c -4.0 -5.0 Jill -6.0 Qtr YTD 1 Year 2 Years 3 Years ■ 4 Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years m MSCI ACWI Ex USA NR USD 75 ACWI / 25 EM 50 ACWI / 50 EM m MSCI EM NR USD Trailing Returns As of Date: 9/30/2014 Data Point: Return Calculation Benchmark: MSCI EM NR USD Qtr YTD 1 Year 2 Years 3 Years 4 Years 5 Years 6 Years MSCI ACWI Ex USA NR USD -5.27 0.00 4.77 10.47 11.79 5.65 6.03 6.01 75 ACWI / 25 EM -4.81 0.64 4.70 8.50 10.67 4.47 5.67 6.25 50 ACWI / 50 EM -4.36 1.26 4.60 6.53 9.53 3.27 5.28 6.46 MSCI EM NR USD -3.49 2.43 4.30 2.63 7.19 0.81 4.42 6.73 7 Years 8 Years 9 Years 10 Years -0.16 3.24 4.87 7.06 -0.10 3.93 5.54 8.03 -0.08 4.58 6.17 8.96 -0.18 5.73 7.27 10.68 10 Returns Calculation Benchmark: MSCI EM NR USD 82.5 75.0 67.5 60.0 52.5 45.0 37.5 30.0 22.5 7.5 15,Jill 1 -7. , 7.5 -15.0 -22.5 -30.0 -37.5 -45.0 -52.5 -60.0 2013 2012 2011 m MSCI ACWI Ex USA NR USD m MSCI EM NR USD Calendar Year Returns Data Point: Return Calculation Benchmark: MSCI EM NR USD 2013 2012 MSCI ACWI Ex USA NR USD 15.29 16.83 75 ACWI / 25 EM 10.57 17.22 50 ACWI / 50 EM 6.02 17.58 MSCI EM NR USD -2.60 18.22 2010 2009 2008 2007 75 ACWI / 25 EM 2006 50 ACWI / 50 EM 2005 2004 2011 2010 2009 2008 2007 2006 2005 2004 -13.71 11.15 41.45 -45.53 16.65 26.65 16.62 20.91 -14.84 13.05 50.08 -47.53 22.09 28.10 20.86 22.13 -16.00 14.97 59.12 -49.50 27.70 29.49 25.17 23.31 -18.42 18.88 78.51 -53.33 39.42 32.14 34.00 25.55 Risk -Reward Time Period: 10/1/2004 to 9/30/2014 Calculation Benchmark: MSCI EM NR USD 15.0 10.0 5.0 c m 0.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 Std Dev • MSCI ACWI Ex USA NR USD • MSCI EM NR USD 75 ACWI / 25 EM Time Period: 10/1/2004 to 9/30/2014 Calculation Benchmark: MSCI EM NR USD Return Std Dev MSCI ACWI Ex USA NR USD 7.06 18.94 75 ACWI / 25 EM 8.03 19.92 50 ACWI / 50 EM 8.96 21.09 MSCI EM NR USD 10.68 23.84 50 ACWI / 50 EM Downside Alpha Beta R2 Sharpe Tracking Deviation Ratio Error 6.95 -1.52 0.75 88.91 0.38 8.67 5.21 -1.14 0.81 94.36 0.41 6.50 3.47 -0.76 0.87 97.76 0.44 4.34 0.00 0.00 1.00 100.00 0.49 0.00 12 Up Market / Down Market Time Period: 10/1/2004 to 9/30/2014 Calculation Benchmark: MSCI ACWI Ex USA NR USD 130.0 120.0 110.0 100.0 90.0 Z) 70.0 70.0 80.0 90.0 100.0 Down Capture Ratio • MSCI ACWI Ex USA NR USD 75 ACWI / 25 EM • MSCI EM NR USD Time Period: 10/1/2004 to 9/30/2014 Calculation Benchmark: MSCI ACWI Ex USA NR USD Up Down Capture Capture Ratio Ratio MSCI ACWI Ex USA NR USD 100.00 100.00 75 ACWI / 25 EM 105.21 102.48 50 ACWI / 50 EM 110.34 105.06 MSCI EM NR USD 120.34 110.47 110.0 50 ACWI / 50 EM 120.0 130.0 Max Gain Max Best Worst Drawdown Quarter Quarter 133.38 -57.63 27.59 -22.34 137.28 -58.60 29.36 -23.65 156.99 -59.58 31.14 -24.96 210.42 -61.59 34.73 -27.60 13 14 Investment Manager Comparison 15 Firm Information Firm Name Firm City State Lee Munder(Sep Acct) Lee Munder Capital Group, LLC Boston MA Virtus (Sep Acct) Vontobel Asset Management, Inc. New York NY Wells All Cap (Sep Acct) Wells Capital Management Inc. San Francisco CA Wells Lg/Md (Sep Acct) Wells Capital Management Inc. San Francisco CA Parametric (Sep Acct) Parametric Portfolio Associates LLC Seattle WA MSCI EM NR USD Morgan Stanley Capital Intl (MSCI) New York NY Fund Information Short Product Name Lee Munder Virtus Wells All Cap Wells Lg/Md Parametric MSCI EM NR USD Portfolio Construction Short Product Name Lee Munder(Sep Acct) Virtus (Sep Acct) Wells All Cap (Sep Acct) Wells Lg/Md (Sep Acct) Parametric (Sep Acct) MSCI EM NR USD Semi -Annual Fund Strategy Manager Min Report Max Ticker Inception Inception Tenure Investment Net Management Date Date (Longest) Expense Fee Ratio ALMEX 3/28/2013 1.58 1,000,000 1.40 1.05 HIEMX 10/20/1997 12/1/1992 8.42 100,000 1.32 1.00 EMGNX 7/30/2010 8.08 5,000,000 1.21 1.10 WEMRX 12/2/2013 0.83 0 1.15 1.00 EIEMX 6/30/2006 7/1/1998 7.58 50,000 1.11 0.85 12/31/1998 Firm Assets ($M) 6,902 47,130 338,169 338,169 93,617 Strategy Assets ($M) 28,936 16,312 Fund Size ($M) 4 8,487 4,881 7 4,864 Employee Ownership (%) 47 0 18 Closed to New Inv No No Yes No No No Average Fundamental Technical Quantitative # of Market Turnover Holdings Cap Ratio % (mil) No No Yes 113 11,683.13 73 Yes No No 81 26,242.54 24 126 22,151.39 24 Yes No No 96 24,777.31 16 No No Yes 1,546 8,539.92 4 834 18,511.04 16 Region (% Long Rescaled) 50 - 45 45 41 40 36 35 33 33 31 30 25 24 20 18 18 19 15 15 12 10 9 9 10 9 5 4 0 6 2 , 1 Emerging Europe Emerging Asia Latin America Africa/Middle East Sector(% Long Rescaled) 35 35 30 Holdings -Based Style Map c m 0 31 CM 28 26 ' J 23 22 III cn Developed Deep -Val Core -Val Core Core-Grth High-Grth 26 28 2626 28 25 21 20 16 17 17 15 13 10 10 9 10 9 10 10 10 11 11 10 10 11 10 g g 8 8 7 7 8 8 9 8 5 2 3 2 2 3 4 4 4 3 3 5 3 0 0 IN 0 E 1. 0 0 Consumer Consumer Staples Energy Financials Healthcare Industrials Information Materials Telecom Services Utilities Discretionary Technology Lee Munder Parametric Virtus MSCI EM NR USD —Wells Lg/Md 17 Returns As of Date: 9/30/2014 Calculation Benchmark: MSCI EM NR USD 15.0 14.0 - 13.0 - 12.0 - 11.0 - 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.00 � -2.0 -3.0 -4.0 Qtr YTD 1 Year 2 Years L- 3 Years 4 Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years � Lee Munder(Sep Acct) Virtus (Sep Acct) m Wells All Cap (Sep Acct) m Wells Lg/Md (Sep Acct) Parametric (Sep Acct) m MSCI EM NR USD Trailing Returns As of Date: 9/30/2014 Data Point: Return Calculation Benchmark: MSCI EM NR USD Qtr YTD 1 Year 2 Years 3 Years 4 Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years Lee Munder(Sep Acct) -2.76 2.82 4.00 4.81 10.31 4.18 7.36 10.86 Virtus (Sep Acct) -0.91 9.52 9.83 4.55 10.59 6.75 12.17 12.43 5.68 10.40 11.91 14.68 Wells All Cap (Sep Acct) -2.97 1.86 2.42 3.14 6.28 2.31 6.24 8.91 2.82 8.57 11.04 14.09 Wells Lg/Md (Sep Acct) -3.14 2.03 2.36 3.19 Parametric (Sep Acct) -1.98 5.44 8.53 6.96 10.23 3.48 6.99 8.07 2.38 7.97 9.74 13.23 MSCI EM NR USD -3.49 2.43 4.30 2.63 7.19 0.81 4.42 6.73 -0.18 5.73 7.27 10.68 18 Returns Calculation Benchmark: MSCI EM NR USD 90.0 80.0 70.0 60.0 50.0 - 40.0 30.0 20.0 10.0 ' 0.0 M -10.0 -20.0 -30.0 -40.0 c -50.0 0 Of -60.0 2013 2012 2011 � Lee Munder(Sep Acct) m Wells Lg/Md (Sep Acct) Calendar Year Returns Data Point: Return Calculation Benchmark: MSCI EM NR USD 2013 2012 Lee Munder(Sep Acct) -2.18 25.54 Virtu (Sep Acct) -4.69 22.16 Wells All Cap (Sep Acct) -0.64 14.22 Wells Lg/Md (Sep Acct) -1.10 Parametric (Sep Acct) 2.67 20.63 MSCI EM NR USD -2.60 18.22 2010 2009 2008 2007 Virtus (Sep Acct) Parametric (Sep Acct) 2006 2005 2004 m Wells All Cap (Sep Acct) m MSCI EM NR USD 2011 2010 2009 2008 2007 2006 2005 2004 -14.40 22.30 87.32 -51.06 -1.73 31.10 55.69 -46.34 38.06 37.65 25.67 37.58 -13.40 24.67 75.98 -46.57 36.00 49.13 35.23 19.99 -18.07 24.21 70.08 -50.70 41.30 39.24 35.06 32.84 -18.42 18.88 78.51 -53.33 39.42 32.14 34.00 25.55 19 Performance Relative to Peer Group As of Date: 9/30/2014 Peer Group (5-95%): Open End Funds - U.S. - Diversified Emerging Mkts Calculation Benchmark: MSCI EM NR USD Top Quartile 2nd Quartile 3rd Quartile Bottom Quartile 16.0 14.0 12.0 10.0 • 8.0 - 6.0 4.0 • • • • • 2.0 • •• • • • • 0.0 -2.0 -4.0 E -6.0 a� -8.0 QTR YTD 1 Year 2 Years 3 Years 4 Years 5 Years 6 • Lee Munder(Sep Acct) • Virtus (Sep Acct) • Wells All Cap (Sep Acct) • Wells Lg/Md (Sep Acct) • Parametric (Sep Acct) • MSCI EM NR USD Trailing Returns As of Date: 9/30/2014 Data Point: Return Calculation Benchmark: MSCI EM NR USD Peer Group: Open End Funds - U.S. - Diversified Emerging Mkts Qtr YTD 1 Year 2 Years 3 Years 4 Years 5 Years 6 Years Lee Munder(Sep Acct) -2.76 2.82 4.00 4.81 10.31 4.18 7.36 10.86 Virtus (Sep Acct) -0.91 9.52 9.83 4.55 10.59 6.75 12.17 12.43 Wells All Cap (Sep Acct) -2.97 1.86 2.42 3.14 6.28 2.31 6.24 8.91 Wells Lg/Md (Sep Acct) -3.14 2.03 2.36 3.19 Parametric (Sep Acct) -1.98 5.44 8.53 6.96 10.23 3.48 6.99 8.07 MSCI EM NR USD -3.49 2.43 4.30 2.63 7.19 0.81 4.42 6.73 Median -3.71 1.86 4.29 3.27 7.74 0.63 4.07 5.95 7 Years 8 Years 9 Years 10 Years 5.68 10.40 11.91 14.68 2.82 8.57 11.04 14.09 2.38 7.97 9.74 13.23 -0.18 5.73 7.27 10.68 -1.01 4.75 6.54 9.86 20 Performance Relative to Peer Group Peer Group (5-95%): Open End Funds - U.S. - Diversified Emerging Mkts Calculation Benchmark: MSCI EM NR USD Top Quartile 2nd Quartile 3rd Quartile Bottom Quartile 110.0 100.0 90.0 80.0 • 70.0 60.0 50.0 40.0 30.0 • �� 20.0 10.0 0.0 �� �• -10.0 M -20.0 -30.0 -40.0 -50.0 -60.0 -70.0 2013 2012 2011 2010 2009 2008 • Lee Munder(Sep Acct) • Virtus (Sep Acct) • Wells Lg/Md (Sep Acct) • Parametric (Sep Acct) Trailing Returns Data Point: Return Calculation Benchmark: MSCI EM NR USD Peer Group: Open End Funds - U.S. - Diversified Emerging Mkts 2013 2012 2011 2010 2009 Lee Munder(Sep Acct) -2.18 25.54 -14.40 22.30 87.32 Virtu (Sep Acct) -4.69 22.16 -1.73 31.10 55.69 Wells All Cap (Sep Acct) -0.64 14.22 -13.40 24.67 75.98 Wells Lg/Md (Sep Acct) -1.10 Parametric (Sep Acct) 2.67 20.63 -18.07 24.21 70.08 MSCI EM NR USD -2.60 18.22 -18.42 18.88 78.51 Median -1.36 18.90 -19.26 18.35 72.85 • • 0 2007 2006 2005 2004 • Wells All Cap (Sep Acct) • MSCI EM NR USD 2008 2007 2006 2005 2004 -51.06 -46.34 38.06 37.65 25.67 37.58 -46.57 36.00 49.13 35.23 19.99 -50.70 41.30 39.24 35.06 32.84 -53.33 39.42 32.14 34.00 25.55 -54.10 37.04 32.26 33.18 24.58 21 Risk -Reward Time Period: 10/1/2008 to 9/30/2014 Calculation Benchmark: MSCI EM NR USD 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 c m 0.0 0.0 2.0 Std Dev • Lee Munder(Sep Acct) X Wells Lg/Md (Sep Acct) 4.0 6.0 8.0 10.0 12.0 Virtus (Sep Acct) Parametric (Sep Acct) Time Period: 10/1/2008 to 9/30/2014 Calculation Benchmark: MSCI EM NR USD Return Std Dev Lee Munder(Sep Acct) 10.86 25.24 Virtus (Sep Acct) 12.43 20.02 Wells All Cap (Sep Acct) 8.91 22.57 Wells Lg/Md (Sep Acct) Parametric (Sep Acct) 8.07 23.49 MSCI EM NR USD 6.73 24.62 14.0 16.0 18.0 20.0 22.0 24.0 • Wells All Cap (Sep Acct) MSCI EM NR USD • 26.0 28.0 30.0 Downside Alpha p Beta R2 Sharpe Tracking Deviation Ratio Error 1.61 3.80 1.02 98.41 0.53 3.21 6.78 6.55 0.76 86.24 0.69 9.57 2.59 2.42 0.91 97.65 0.49 4.17 2.72 1.57 0.94 97.28 0.45 4.14 0.00 0.00 1.00 100.00 0.39 0.00 22 Risk -Reward Risk -Reward Time Period: 10/1/2011 to 9/30/2014 Time Period: 10/1/2008 to 9/30/2011 Calculation Benchmark: MSCI EM NR USD Calculation Benchmark: MSCI EM NR USD 14.0 18.0 16.0 12.0 14.0 10.0 • 12.0 8.0 10.0 J 6.0 8.0 6.0 4.0 4.0 2.0 2.0 c c 0 0 m m u� 0.0 0.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 28.0 30.0 32.0 34.0 36.0 38.0 40.0 Std Dev Std Dev • Lee Munder(Sep Acct) Virtus (Sep Acct) • Wells All Cap (Sep Acct) • Lee Munder(Sep Acct) Virtus (Sep Acct) • Wells All Cap (Sep Acct) X Wells Lg/Md (Sep Acct) Parametric (Sep Acct) o MSCI EM NR USD X Wells Lg/Md (Sep Acct) Parametric (Sep Acct) o MSCI EM NR USD Time Period: 10/1/2011 to 9/30/2014 Calculation Benchmark: MSCI EM NR USD Return Std Dev Alpha Beta Lee Munder(Sep Acct) 10.31 16.71 3.17 0.96 Virtus (Sep Acct) 10.59 15.06 4.64 0.78 Wells All Cap (Sep Acct) 6.28 15.61 -0.14 0.88 Wells Lg/Md (Sep Acct) Parametric (Sep Acct) 10.23 14.87 3.73 0.85 MSCI EM NR USD 7.19 17.19 0.00 1.00 Time Period: 10/1/2008 to 9/30/2011 Calculation Benchmark: MSCI EM NR USD R2 Share Return Std Dev Alpha Beta R2 Shar Rape Rape 96.97 0.67 Lee Munder(Sep Acct) 11.42 31.81 4.73 1.04 98.96 0.50 79.74 0.74 Virtus (Sep Acct) 14.30 24.19 8.34 0.75 88.87 0.67 94.74 0.46 Wells All Cap (Sep Acct) 11.61 28.06 5.09 0.91 98.72 0.53 Wells Lg/Md (Sep Acct) 95.81 0.73 Parametric (Sep Acct) 5.96 29.97 -0.14 0.97 98.06 0.34 100.00 0.48 MSCI EM NR USD 6.27 30.56 0.00 1.00 100.00 0.35 23 Batting Average Calculation Benchmark: MSCI EM NR USD 100.0 75.0 50.0 25.0 a� Q rn c m 0.0 10/1/2008 - 9/30/2014 -Lee Munder(Sep Acct) Virtus (Sep Acct) X Wells Lg/Md (Sep Acct) Parametric (Sep Acct) Max Drawdown Calculation Benchmark: MSCI EM NR USD 0.0 -5.0 -10.0 -15.0 -20.0 -25.0 -30.0 c o -35.0 a 3 -40.0 x m 2 -45.0 10/1/2008 - 9/30/2014 •Lee Munder(Sep Acct) Virtus (Sep Acct) X Wells Lg/Md (Sep Acct) Parametric (Sep Acct) 100.0 -Wells All Cap (Sep Acct) mMSCI EM NR USD -40.1 -Wells All Cap (Sep Acct) mMSCI EM NR USD Up Capture Ratio Calculation Benchmark: MSCI EM NR USD 110.0 106.1 100.0 90.0 80.0 70.0 60.0 50.0 40.0 0 30.0 20.0 a v 10.0 � 0.0 10/1/2008 - 9/30/2014 -Lee Munder(Sep Acct) Virtus (Sep Acct) X Wells Lg/Md (Sep Acct) Parametric (Sep Acct) Down Capture Ratio Calculation Benchmark: MSCI EM NR USD 100.0 - 93.7 75.0 50.0 0 0.0 10/1/2008 - 9/30/2014 •Lee Munder(Sep Acct) X Wells Lg/Md (Sep Acct) 24 Virtus (Sep Acct) Parametric (Sep Acct) mWells All Cap (Sep Acct) -MSCI EM NR USD 100.0 88.1 -Wells All Cap (Sep Acct) mMSCI EM NR USD Excess Return Calculation Benchmark: MSCI EM NR USD 6.0 5.7 5.5 5.0 4.5 4.1 4.0 3.5 3.0 2.5 2.0 F- 1.5 R 1.0 0.5 U w 0.0 10/1/2008 - 9/30/2014 -Lee Munder(Sep Acct) Virtus (Sep Acct) X Wells Lg/Md (Sep Acct) Parametric (Sep Acct) Information Ratio Calculation Benchmark: MSCI EM NR USD 1.3 1.3 1.2 1.1 1.0 0.9 0.8 0.7 t0.6 0.5 0 0.4 of 0.3 c 0.2 CO E 0.1 `o 0.0 10/1/2008 - 9/30/2014 0.6 0.5 0.0 -Wells All Cap (Sep Acct) mMSCI EM NR USD 0.3 Sharpe Ratio Calculation Benchmark: MSCI EM NR USD 0.7 0.7 0.6 0.5 0.5 0.4 0.4 0.3 0 0.2 0.1 c`o cn 0.0 10/1/2008 - 9/30/2014 -Lee Munder(Sep Acct) Virtus (Sep Acct) X Wells Lg/Md (Sep Acct) Parametric (Sep Acct) Alpha Calculation Benchmark: MSCI EM NR USD 7.0 6.6 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 r 0.5 CL Q 0.0 10/1/2008 - 9/30/2014 •Lee Munder(Sep Acct) Virtus (Sep Acct) -Wells All Cap (Sep Acct) •Lee Munder(Sep Acct) X Wells Lg/Md (Sep Acct) Parametric (Sep Acct) X MSCI EM NR USD X Wells Lg/Md (Sep Acct) Virtus (Sep Acct) Parametric (Sep Acct) mWells All Cap (Sep Acct) -MSCI EM NR USD 0.0 -Wells All Cap (Sep Acct) mMSCI EM NR USD 25 26 Rolling Excess Returns Time Period: 10/1/2004 to 9/30/2014 Rolling Window: 3 Years 1 Month shift Calculation Benchmark: MSCI EM NR USD 15.0 12.5 10.0 7.5 5.0 2.5 0.0 - - -- - - --------- - - - - - - _.._. Of w an -2.5 U V �a ----------- ---------- - w 12 03 06 09 12 03 06 09 12 03 06 09 12 03 06 09 12 03 06 09 12 03 06 09 12 03 06 09 2008 2009 2010 2011 2012 2013 2014 Lee Munder(Sep Acct) — Virtus (Sep Acct) —Wells All Cap (Sep Acct) X Wells Lg/Md (Sep Acct) — Parametric (Sep Acct) - - MSCI EM NR USD Rolling Excess Returns (Descending Rank) Time Period: 10/1/2004 to 9/30/2014 Peer Group (5-95%): Open End Funds - U.S. - Diversified Emerging Mkts Rolling Window: 3 Years 1 Month shift Calculation Benchmark: MSCI EM NR USD 1st to 25th Percentile 26th to Median 51st to 75th Percentile 76th to 100th Percentile 0.0 25.0 w �i� i .��i ♦ i I ♦ ��_ ---��^ ♦ice- ♦ I ♦ If ♦-�� 75.0 m ai 100.0 w 12 03 06 09 12 03 06 09 12 03 06 09 12 03 06 09 12 03 06 09 12 03 06 09 12 03 06 09 2008 2009 2010 2011 2012 2013 2014 — Lee Munder(Sep Acct) Virtus (Sep Acct) —Wells All Cap (Sep Acct) o Wells Lg/Md (Sep Acct) Parametric (Sep Acct) - - MSCI EM NR USD 27 Lee Munder - Snapshot Name Open for Investment Manager Preferred Index Semi -Annual Report Net Expense Ratio Ticker Fund Size Date Fund Size Inception Date Lee Munder(Sep Acct) - Performance Manager Biography ASTON/LMCG Emerging Markets I Time Period: 10/1/2008 to 9/30/2014 Gordon Johnson since 1/2/2008 Yes Calculation Benchmark: MSCI EM NR USD Shannon Ericson since 1/2/2008 Inv Bmk1 1.40 Return 10.86 6.73 Vikram Srimurthy since 1/2/2008 ALMEX Std Dev 25.24 24.62 10/22/2014 Excess Return 4.13 0.00 3,792,642 Information Ratio (arith) 1.29 3/28/2013 Alpha 3.80 0.00 Beta 1.02 1.00 R2 98.41 100.00 Tracking Error 3.21 0.00 Investment Strategy Risk -Reward The LMCG Emerging Market strategy is based on a Time Period: 10/1/2008 to 9/30/2014 disciplined quantitative process that seeks to add value Calculation Benchmark: MSCI EM NR USD primarily through stock selection. The stock selection model capitalizes on market anomalies that can be 12.0 exploited to generate excess returns. Critical to the strategies are proprietary portfolio construction techniques, 10.0 the use of proprietary risk models and a dynamic investment process that employs tactical shifts to ensure optimal exposure to alpha factors. 8.0 6.0 4.0 2.0 0.0 c N W -z.o 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 28.0 Std Dev *Lee Munder(Sep Acct) *MSCI EM NR USD Investment Growth Time Period: 10/1/2008 to 9/30/2014 zoo.o 190.0 180.0 170.0 160.0 150.0 140.0 130.0 120.0 110.0 100.0 90.0 80.0 70.0 60.0 3/2009 9/2009 3/2010 9/2010 3/2011 9/2011 3/2012 9/2012 3/2013 912013 3/2014 9/2014 -Lee Munder(Sep Acct) -MSCI EM NR USD 28 Lee Munder(Sep Acct) - Equity Super Regions (Long Rescaled) Time Period: 1/1/2008 to 9/30/2014 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2008 2009 2010 —Americas % Greater Asia % Lee Munder(Sep Acct) - Equity Super Sectors (Morningstar) (Long Rescaled) Time Period: 1/1/2008 to 9/30/2014 100.0 90.0 80.0 70.0 60.0 =90pmr-- — 50.0 40.0 30.0 20.0 10.0 0.0 2008 — Cyclical 2009 Sensitive 2010 2011 2011 2012 Greater Europe % 2012 Defensive 2013 2013 2014 2014 29 Virtus - Snapshot Virtus (Sep Acct) - Performance Name Virtus Emerging Markets Opportunities I Time Period: 10/1/2008 to 9/30/2014 Open for Investment Yes Calculation Benchmark: MSCI EM NR USD Manager Preferred Index S&P 500 TR USD Inv Bmk1 Semi -Annual Report Net Expense Ratio 1.32 Return 12.43 6.73 Ticker HIEMX Std Dev 20.02 24.62 Fund Size Date 10/22/2014 Excess Return 5.70 0.00 Fund Size 8,487,194,309 Information Ratio (arith) 0.60 Inception Date 10/20/1997 Alpha 6.55 0.00 Beta 0.76 1.00 R2 86.24 100.00 Tracking Error 9.57 0.00 Investment Strategy Risk -Reward We practice a fundamental bottom -up approach that Time Period: 10/1/2008 to 9/30/2014 integrates elements of growth investing (growth and Calculation Benchmark: MSCI EM NR USD stability of earnings) with a strict valuation discipline in a longer term context. 14.0 I 12.0 10.0 8.0 60 4.0 2.0 0.0 E � -z.o 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 28.0 Std Dev Virtus (Sep Acct) *MSCI EM NR USD Manager Biography Rajiv Jain since 11/1/1994 Investment Growth Time Period: 10/1/2008 to 9/30/2014 220.0 200.0 180.0 1600 I � I I� ` I p / �♦ I♦ I 140.0 1 I / \ 1 / ! it I1 /1 III I 1�� Ill 1I 4� � 1200. 100.0 I! 1 I 1 80.0 L 1 60.0 3/2009 9/2009 3/2010 9/2010 3/2011 9/2011 3/2012 9/2012 3/2013 912013 3/2014 9/2014 Virtus (Sep Acct) -MSCI EM NR USD 30 Virtus (Sep Acct) - Equity Super Regions (Long Rescaled) Time Period: 6/1/2005 to 9/30/2014 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2005 2006 2007 2008 —Americas % Greater Asia % Virtus (Sep Acct) - Equity Super Sectors (Morningstar) (Long Rescaled) Time Period: 6/1/2005 to 9/30/2014 100.0 ■ 90.0 ■ 80.0 70.0 '_ 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2005 2006 2007 2008 — Cyclical Sensitive 2009 2010 2011 2012 Greater Europe % 2009 2010 2011 2012 Defensive 2013 2013 2014 2014 31 Wells Fargo Advantage EMkts Eq Sel R6 - Snapshot Wells All Cap (Sep Acct) - Performance Name Wells Fargo Advantage EMkts Eq Sel R6 Time Period: 10/1/2008 to 9/30/2014 Open for Investment Yes Calculation Benchmark: MSCI EM NR USD Manager Preferred Index Inv Semi -Annual Report Net Expense Ratio 1.15 Return 8.91 Ticker WEMRX Std Dev 22.57 Fund Size Date 10/22/2014 Excess Return 2.18 Fund Size 6,745,159 Information Ratio (arith) 0.52 Inception Date 12/2/2013 Alpha 2.42 Beta 0.91 R2 97.65 Tracking Error 4.17 Investment Strategy Risk -Reward The product's overall process has two separate Time Period: 10/1/2008 to 9/30/2014 components, namely, Quality and Valuation. These are Calculation Benchmark: MSCI EM NR USD analyzed sequentially, and this sequential approach is the key and distinguishing characteristic of our investment 10.0 process. The first stage focuses solely on the maintenance of a `Quality Pool' of approximately 250 L/M cap stocks that best meet our definition of quality: A quality company is one that can generate return on capital greater than cost of 80 capital, for an extended period of time, for reasons we understand. This pool of quality stocks is the source for our portfolio construction decisions, where the trigger for inclusion in the portfolio is valuation. s.o 4.0 2.0 C 7 0.0 IX 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 28.0 Manager Biography Yi (Jerry) Zhang since 12/2/2013 Derrick Irwin since 12/2/2013 Bmk1 6.73 Richard Peck since 5/2/2014 24.62 0.00 0.00 1.00 100.00 0.00 Std Dev • Wells All Cap (Sep Acct) u MSCI EM NR USD Investment Growth Time Period: 10/1/2008 to 9/30/2014 190.0 180.0 170.0 160.0 150.0 140.0 130.0 120.0 110.0 100.0 90.0 80.0 70.0 60.0 3/2009 9/2009 3/2010 9/2010 3/2011 9/2011 3/2012 9/2012 3/2013 912013 3/2014 9/2014 -Wells (Sep Acct) -MSCI EM NR USD 32 Wells All Cap (Sep Acct) - Equity Super Regions (Long Rescaled) Time Period: 3/1/2010 to 9/30/2014 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 9/2010 3/2011 9/2011 3/2012 9/2012 3/2013 9/2013 3/2014 9/2014 —Americas % Greater Asia % Greater Europe % Wells All Cap (Sep Acct) - Equity Super Sectors (Morningstar) (Long Rescaled) Time Period: 3/1/2010 to 9/30/2014 100.0 90.0 80.0 , 70.0 . 60.0 50.0 40.0 30.0 20.0 10.0 0.0 9/2010 3/2011 9/2011 3/2012 9/2012 3/2013 9/2013 3/2014 9/2014 — Cyclical Sensitive Defensive 33 Parametric - Snapshot Parametric (Sep Acct) - Performance Manager Biography Name Parametric Emerging Markets Instl Time Period: 10/1/2008 to 9/30/2014 David M. Stein since 7/1/1998 Open for Investment Yes Calculation Benchmark: MSCI EM NR USD Manager Preferred Index MSCI EM NR USD Inv Bmk1 Thomas C. Seto since 1/1/2003 Semi -Annual Report Net Expense Ratio 1.11 Return 8.07 6.73 Jodi Wong since 1/1/2004 Ticker EIEMX Std Dev 23.49 24.62 Fund Size Date 10/22/2014 Geoff Longmeier since 1/1/2005 Excess Return 1.34 0.00 Fund Size 4,863,589,524 Information Ratio (arith) 0.32 Brian Dillon since 1/1/2008 Inception Date 6/30/2006 Alpha 1.57 0.00 Beta 0.94 1.00 R2 97.28 100.00 Tracking Error 4.14 0.00 Investment Strategy Risk -Reward Each portfolio is built in a top down fashion, starting with Time Period: 10/1/2008 to 9/30/2014 countries, then sectors within countries, and then securities Calculation Benchmark: MSCI EM NR USD within country/sector. Countries are equally weighted within four tiers that are defined by size and liquidity constraints. 10.0 Once a country exposure is determined, sector level target weights in each country are set in an attempt to move closer to an equal representation from each economic sector, while taking into account practical liquidity 80 considerations. Security weights are based on liquidity. The only latitude afforded portfolio managers in the process is in the event liquidity becomes an issue at the individual s.o security level. 4.0 2.0 C 7 0.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 28.0 Std Dev Parametric (Sep Acct) *MSCI EM NR USD Investment Growth Time Period: 10/1/2008 to 9/30/2014 170.0 160.0 150.0 140.0ft 130.0 1if 120.0 11 1 110.0 1! 1 100.0 11 1 90.0 1 1 1 80.0 1 1 70.0 % 1 60.0 50.0 3/2009 9/2009 3/2010 9/2010 3/2011 9/2011 3/2012 9/2012 3/2013 912013 3/2014 9/2014 Parametric (Sep Acct) -MSCI EM NR USD 34 Parametric (Sep Acct) - Equity Super Regions (Long Rescaled) Time Period: 6/1/2006 to 9/30/2014 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2006 2007 2008 2009 —Americas % Greater Asia % Parametric (Sep Acct) - Equity Super Sectors (Morningstar) (Long Rescaled) Time Period: 6/1/2006 to 9/30/2014 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2006 2007 2008 2009 — Cyclical Sensitive 2010 2011 2012 2013 2014 Greater Europe % 2010 2011 2012 2013 2014 Defensive 35 Report Statistics Definitions and Descriptions Active Return - Arithmetic difference between the manager's performance and the designated benchmark return over a specified time period. Alpha - A measure of the difference between a portfolio's actual performance and its expected return based on its level of risk as determined by beta. It determines the portfolio's non -systemic return, or its historical performance not explained by movements of the market. Beta - A measure of the sensitivity of a portfolio to the movements in the market. It is a measure of the portfolio's systematic risk. Consistency - The percentage of quarters that a product achieved a rate of return higher than that of its benchmark. Higher consistency indicates the manager has contributed more to the product's performance. Down Market Capture - The ratio of average portfolio performance over the designated benchmark during periods of negative returns. A lower value indicates better product performance Downside Risk - A measure similar to standard deviation that utilizes only the negative movements of the return series. It is calculated by taking the standard deviation of the negative quarterly set of returns. A higher factor is indicative of a riskier product. Excess Return - Arithmetic difference between the manager's performance and the risk -free return over a specified time period. Excess Risk - A measure of the standard deviation of a portfolio's performance relative to the risk free return. Information Ratio - This calculates the value-added contribution of the manager and is derived by dividing the active rate of return of the portfolio by the tracking error. The higher the Information Ratio, the more the manager has added value to the portfolio. R-Squared - The percentage of a portfolio's performance that can be explained by the behavior of the appropriate benchmark. A high R-Squared means the portfolio's performance has historically moved in the same direction as the appropriate benchmark. Return - Compounded rate of return for the period. Sharpe Ratio - Represents the excess rate of return over the risk free return divided by the standard deviation of the excess return. The result is an absolute rate of return per unit of risk. A higher value demonstrates better historical risk -adjusted performance. Standard Deviation - A statistical measure of the range of a portfolio's performance. It represents the variability of returns around the average return over a specified time period. Tracking Error - This is a measure of the standard deviation of a portfolio's returns in relation to the performance of its designated market benchmark. Treynor Ratio - Similar to Sharpe ratio but utilizes beta rather than excess risk as determined by standard deviation. It is calculated by taking the excess rate of return above the risk free rate divided by beta to derive the absolute rate of return per unit of risk. A higher value indicates a product has achieved better historical risk -adjusted performance. Up Market Capture - The ratio of average portfolio performance over the designated benchmark during periods of positive returns. A higher value indicates better product performance. 36 THE r BOGDAHN GROUP' Disclosures The Bogdahn Group compiled this report for the sole use of the client for which it was prepared. The Bogdahn Group is responsible for evaluating the performance results of the Total Fund along with the investment advisors by comparing their performance with indices and other related peer universe data that is deemed appropriate. The Bogdahn group uses the results from this evaluation to make observations and recommendations to the client. The Bogdahn Group uses time -weighted calculations which are founded on standards recommended by the CFA Institute. The calculations and values shown are based on information that is received from custodians. The Bogdahn Group analyzes transactions as indicated on the custodian statements and reviews the custodial market values of the portfolio. As a result, this provides The Bogdahn Group with a reasonable basis that the investment information presented is free from material misstatement. This methodology of evaluating and measuring performance provides The Bogdahn Group with a practical foundation for our observations and recommendations. Nothing came to our attention that would cause The Bogdahn Group to believe that the information presented is significantly misstated. The strategies listed may not be suitable for all investors. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. Past performance is not an indication of future performance. Any information contained in this report is for informational purposes only and should not be construed to be an offer to buy or sell any securities, investment consulting, or investment management services. Additional information included in this document may contain data provided by from index databases, public economic sources and the managers themselves. This document may contain data provided by Barclays. Barclays Index data provided by way of Barclays Live. This document may contain data provided by Standard and Poor's. Nothing contained within any document, advertisement or presentation from S&P Indices constitutes an offer of services in jurisdictions where S&P Indices does not have the necessary licenses. All information provided by S&P Indices is impersonal and is not tailored to the needs of any person, entity or group of persons. Any returns or performance provided within any document is provided for illustrative purposes only and does not demonstrate actual performance. Past performance is not a guarantee of future investment results. This document may contain data provided by MSCI, Inc. Copyright MSCI, 2012. Unpublished. All Rights Reserved. This information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. This information is provided on an "as is" basis and the user of this information assumes the entire risk of any use it may make or permit to be made of this information. Neither MSCI, any of its affiliates or any other person involved in or related to compiling, computing or creating this information makes any express or implied warranties or representations with respect to such information or the results to be obtained by the use thereof, and MSCI, its affiliates and each such other person hereby expressly disclaim all warranties (including, without limitation, all warranties of originality, accuracy, completeness, timeliness, non -infringement, merchantability and fitness fora particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any other person involved in or related to compiling, computing or creating this information have any liability for any direct, indirect, special, incidental, punitive, consequential or any other damages (including, without limitation, lost profits) even if notified of, or if it might otherwise have anticipated, the possibility of such damages. This document may contain data provided by Russell Investment Group. Russell Investment Group is the source owner of the data contained or reflected in this material and all trademarks and copyrights related thereto. The material may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. This is a user presentation of the data. Russell Investment Group is not responsible for the formatting or configuration of this material or for any inaccuracy in presentation thereof. This document may contain data provided by Morningstar. All rights reserved. Use of this content requires expert knowledge. It is to be used by specialist institutions only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied, adapted or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information, except where such damages or losses cannot be limited or excluded by law in your jurisdiction. Past financial performance is not guarantee of future results. 37 THE �BOGDAHN � GRoup THE BOGDAHN GROUP. simplif hki }voter investment and fduciaty rlecidons Orlando 4901 Vineland Road, Suite 600 Orlando, Florida 32811 866.240.7932 Chicago Milwaukee Cleveland r FOSTER & FOSTER September 4, 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: New GASB Rules and Senate Bill 534 (Section 112.664, Florida Statutes) Compliance for the City of Palm Beach Gardens Firefighters' Pension Fund Dear Board: As you are probably aware, the Governmental Accounting Standards Board (GASB) and the Florida Legislature have recently passed rules/legislation that will dramatically change the accounting and compliance requirements for Florida public pension funds. In our opinion, regardless of intent, GASB Statements No. 67 and 68 as well as Senate Bill 534 (Section 112.664, Florida Statutes) will needlessly increase the costs associated with administering Florida public pension funds and will provide antagonists misleading fodder to attack defined benefit pension plans. While Foster & Foster provided testimony and wrote letters vehemently opposing the new regulations, these rules were ultimately passed, and now we are forced to comply. The purpose of this letter is to provide the Board with information regarding these new rules, offer a timeline for compliance and provide an estimate of anticipated fees associated with the additional work. Brief Overview of GASB 67/68 The GASB 67 reporting requirements are effective for your Plan beginning with the fiscal year that ends on September 30, 2014. This new standard replaces GASB 25, and it pertains to the Plan's financial statements. GASB 68 is required beginning with the fiscal year that ends on September 30, 2015. This standard replaces GASB 27, and it details the calculations of the expense and liability that the City must record on its income statement and balance sheet. Previously, the City would record a liability on its financials that was equivalent to the cumulative differences between the actuarial minimum required contributions and actual contributions made. As you are aware, all Florida sponsors must contribute at least the minimum funding requirement, so your City has been recording either no liability or an asset on their books associated with your Plan. In 2015, they will have to record a liability that will be generally equivalent to the unfunded actuarial accrued liability, which as of October 1, 2013 was $16,802,062. Additionally, the City's accounting pension expense will no longer be equal to the actuarial minimum required contribution. Instead, it will be equal to the expense calculated under GASB 68. In summary, 13420 Parker Commons Blvd., Suite 104 Fort Myers, FL 33912 • (239) 433-5500 • Fax (239) 481-0634 • www.foster-foster.com the financial statements will become dramatically different than those which are currently produced, and the City will be required to book a much larger liability than what was previously recorded. In order to comply with the new accounting standards, substantial amounts of additional actuarial and administrative work will be needed. Attached to this letter is a template for a hypothetical Florida public entity which shows an example of the additional disclosure information required. The new disclosures include detail regarding the plan's asset allocation and the underlying capital market assumptions which support the discount rate being utilized. In order to complete this requirement, we will need input from your investment consultant. We will copy you on any correspondence that we have with your consultant. Our current action plan is to produce these additional disclosures at the same time that we produce the October 1, 2014 actuarial valuation. For those plans where we typically produce the valuations in the second or third quarter of the fiscal year, the City may be accustomed to utilizing the prior year's GASB disclosures for their financial reporting. Many cities need this information in the first or second month of the calendar year, so they typically utilize information from the prior year's actuarial report if a new report has not yet been completed. If this is their current practice, then we will need to prepare GASB 67 disclosure information based upon the October 1, 2013 valuation so that the City will be able to comply with the new rules on September 30, 2014. Please put this topic on an upcoming agenda and ask that a person from the City's finance department be present to address this. It is important to note that the new GASB rules have ZERO impact upon the City's cash funding requirements to the Plan, but instead merely alter both the Plan's and City's financial reporting. Brief Overview of Senate Bill 534 Senate Bill 534 was passed to supposedly increase the disclosure and transparency of Florida's public pension plans. In our view, it will do nothing but increase the Plan's administrative expenses and provide irrelevant and misleading information that may be used by those looking to criticize your Plan's financial health. The requirements of Senate Bill 534 are extremely onerous. In general, they require that we replicate the accounting requirements of GASB 67/68 at least two (2) additional times using more conservative assumptions and then develop hypothetical funding requirements using those same assumptions, detailed below: • The RP-2000 Combined Healthy mortality table with full generational projection (assumes perpetual mortality improvements), • Using the mortality table described above, but pair this with an interest rate that is 2% less than the assumed rate of return. The conservatism in these assumptions may cast a poor light on your Plan and disguise its true funded level. For this reason, we suggest that you consider disclosing the results using an interest rate that is 2% greater than the assumed rate in order to provide a more balanced view. In addition to the above, Senate Bill 534 requires us to calculate the expected number of years that the fund will remain solvent if contributions and benefit accruals cease. In our view, this is akin to calculating how long any particular person would be expected to live without food or water. Of course, 13420 Parker Commons Blvd., Suite 104 Fort Myers, FL 33912 • (239) 433-5500 • Fax (239) 481-0634 • www.foster-foster.com our concern is that the public will misconstrue the results and believe that this is how long the plan is expected to survive before going bankrupt. In reality, we all know that contributions will continue to occur and the unfunded liabilities will eventually be paid off. For this reason, we intend to also add commentary explaining that the plan will never become insolvent as long as the actuarially determined contribution is made each year. Senate Bill 534 results are due 60 days following delivery of the 2014 actuarial valuation report to the Florida State Division of Retirement. Following acceptance of the valuation report, we will provide this document to the Board and, at the same time, submit the information to the State. We have been in constant communication with the Florida Division of Retirement regarding their interpretation of this new law, and while we do not anticipate any great surprises, we do expect that they will release a template and implementation guide within the next 30-60 days. We will keep you posted regarding this issue. Anticipated Fees As you can see from the attached schedules, there is quite a bit of additional work necessary to complete these disclosures. Previously, the GASB 25/27 disclosures took very little time, and we included the minor additional work as part of the actuarial valuation fee. The new GASB rules have exponentially increased the amount of work necessary, and with the addition of the SB 534 compliance, we have been forced to substantially increase our staff to cover the extra workload. Since these disclosures are new, and we are still fine-tuning our approach (in addition to awaiting specific guidance from the State), a definitive fee is unknown at this time. Conservatively, however, we do not anticipate that the fees will exceed the amounts shown below: GASB 67: $1,250 GASB 68: $2,000 (which could be paid by the City instead of the Plan) SB 534: $3,000 or $3,500 (if Board wants numbers at 2% greater than assumed rate as well) We will bill in accordance with the hourly rates which exist in our contract, but the fees shown above should be considered not -to -exceed amounts for budgeting purposes. If you have any questions, concerns, or would like to discuss this further, please do not hesitate to give me a call or to ask that we discuss this at an upcoming Board meeting. Sincerest regards, Bradley R. Heinrichs, FSA, EA President/CEO 13420 Parker Commons Blvd., Suite 104 Fort Myers, FL 33912 • (239) 433-5500 • Fax (239) 481-0634 • www.foster-foster.com SUNSHINE CITY RETIREMENT SYSTEM CURRENT GASB 25/27 REQUIREMENTS FOSTER & FOSTER AC i UARiES AND CONSULTANTS Actuarial Valuation Date Actuarial Value of Assets (a) 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. Actuarial Accrued Liability (AAL) - Entry Age (b) SCHEDULE OF FUNDING PROGRESS Unfunded AAL (UAAL) (b-a) Funded Ratio (alb) Covered Payroll (c) UAAL as a%of Covered Payroll ((b-a)/c) 10/01/13 38,000,000 66,000,000 28,000,000 57.58% 6,300,000 444.44% 10/01/12 33,000,000 62,000,000 29,000,000 53.23% 6,000,000 483.33% 10/01/11 31,000,000 61,000,000 30,000,000 50.82% 6,500,000 461.54% 10/01/10 28,000,000 50,000,000 22,000,000 56.00% 8,000,000 275.00% 10/01/09 26,000,000 43,500,000 17,500,000 59.77% 7,500,000 233.33% 10/01/08 22,500,000 39,500,000 17,000,000 56.96% 7,000,000 242.86% 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 Ended September 30 Annual Required District State Percentage Contribution Contribution Contribution Contributed 2013 3,800,000 3,300,000 500,000 100.00% 2012 3,600,000 3,100,000 500,000 100.00% 2011 3,000,000 2,500,000 500,000 100.00% 2010 3,000,000 2,500,000 500,000 100.00% 2009 2,400,000 2,000,000 550,000 * 106.25% 2008 2,000,000 1,500,000 550,000 * 102.50% * Frozen per Chapter 175, F.S., as amended. 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 District & State 63.0% Plan Members 7.0% Annual Pension Cost 3,900,000 Contributions made 3,800,000 Actuarial valuation date 10/1/2011 Actuarial cost method Entry Age Normal Amortization method Level Percentage of Pay, Closed Remaining amortization period 28 Years (as of I0/l/11) Asset valuation method 4 Year Smooth Actuarial assumptions: Investment rate of return 8.0% Projected salary increase* 6.0% * Includes inflation at 3.0% Post Retirement COLA 3.0% for 17 years THREE YEAR TREND INFORMATION Annual Percentage Net Year Pension of (APC) Pension Ending Cost (APQ Contributed Obli ag tion 9/30/13 3,900,000 97% (511,282) 9/30/12 3,800,000 95% (611,282) 9/30/11 2,600,000 115% (638,506) 9/30/10 2,500,000 120% (666,943) Beginning with the year ending 9/30/12 the APC and contributions made include State Money. 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: 9/30/10 9/30/11 9/30/12 9/30/13 Actuarially Determined Contribution (A) 2,300,000 2,500,000 3,600,000 3,800,000 Interest on NPO (55,732) (53,355) (51,080) (48,903) Adjustment to (A) 85,435 81,792 78,304 74,966 Annual Pension Cost ---------- 2,500,000 ---------- 2,600,000 ---------- 3,800,000 ---------- 3,900,000 Contributions Made 300,000 3,000,000 3,600,000 3,800,000 Increase in NPO ---------- (500,000) ---------- (400,000) ---------- 200,000 ---------- 100,000 NPO Beginning of Year (696,646) (66,943) (638,506) (611,282) NPO End of Year (666,943) (638,506) (611,282) (511,282) Beginning with the fiscal year ending September 30, 2012 the Actuarially Determined Contribution and the Contributions Made include State Money. SUNSHINE CITY RETIREMENT SYSTEM NEW GASB 67/68 REQUIREMENTS (replaces GASB 25/27) omm i�dFOSTER & FOSTER AC i UARiES AND CONSULTANTS SUNSHINE CITY RETIREMENT SYSTEM GASB 67 EXAMPLE FOSTER & FOSTER STATEMENT OF FIDUCIARY NET POSITION GASB 67 SEPTEMBER 30, 2014 ASSETS MARKET VALUE Cash and Cash Equivalents: Short Term Investments 0.00 Checking Account 0.00 Savings Account 0.00 Prepaid Expenses 0.00 Money Market 346,603.00 Cash 22,432.41 Receivables: 0.00 Total Cash and Equivalents 369,035.41 Receivables: Member Buy -Back Contributions 0.00 District Contributions in Transit 0.00 District Contributions for Members 0.00 Additional District Contributions 0.00 State Contributions 0.00 From Police Officers' Trust Fund 0.00 From Firefighters' Trust Fund 0.00 From Broker for Investments Sold 0.00 Tax Reclaims 0.00 Investment Income 120,135.56 Investments: 0.00 Total Receivable 120,135.56 Investments: Federal Agency Guaranteed Securities 0.00 Corporate Bonds 10,209,331.34 Stocks 20,372,850.93 Mutual Funds: 0.00 Fixed Income Equity 6,435,188.46 Fixed Income Equity 0.00 Real Estate 3,561,295.79 Assets Held by Insurance Company 0.00 Total Investments 42,556,364.32 LIABILITIES 0.00 Total Assets 43,045,535.29 STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2014 LIABILITIES Payables: Benefit Payments Investment Expenses Administrative Expenses To Firefighters' Trust Fund To General Employees' Trust Fund To Broker for Investments Purchased Prepaid Member Contribution Prepaid District Contribution RECEIPTS Member Contributions Total Liabilities GASB 67 0.00 0.00 0.00 0.00 0.00 0.00 0.00 63,820.81 0.00 0.00 63,820.81 NET POSITION RESTRICTED FOR PENSIONS 42,981,714.48 GASB 67 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED SEPTEMBER 30, 2014 Market Value Basis ADDITIONS Contributions: Member Buy -Back District State Total Contributions Investment Income: Net Increase in Fair Value of Investments Interest & Dividends Less Investment Expense' Net Investment Income Other Total Additions DEDUCTIONS Total Distributions Administrative Expense Other Total Deductions Net Increase in Net Position NET POSITION RESTRICTED FOR PENSIONS Beginning of the Year End of the Year 431,931.11 5,632.27 3,334,847.58 552,532.41 5,540,131.41 882,699.37 (241,207.39) 'Investment Related expenses include investment advisory, custodial and performance monitoring fees. 4,324,943.37 6,181,623.39 0.00 10,506,566.76 2,474,812.60 33,134.69 0.00 2,507,947.29 7,998,619.47 34,983,095.01 42,981,714.48 GASB 67 NOTES TO THE FINANCIAL STATEMENTS (For the Year Ended September 30, 2014) Plan Description Plan Administration The Plan is administered by a Board Of Trustees comprised of a. Two District appointees b. Two Members of the Department elected by the membership, and c. Fifth Member elected by other 4 and appointed by the District. Plan Membership as of September 30, 2014: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 43 Inactive Plan Members Entitled to but Not Yet Receiving Benefits 2 Active Plan Members 76 121 Benefits Provided The Plan provides retirement, disability and death benefits. Retirement benefits are calculated as 3.58% (3.00% for Firefighters hired after June 1, 2010) of Average Final Compensation times Credited Service. Normal Retirement: Earlier of age 55 and 10 years of Credited Service, or age 50 and 25 years of Credited Service Early Retirement: Age 50 and 10 Years of Credited Service. Disability Retirement: Service Incurred: Covered from Date of Employment Non -Service Incurred: 10 years of Credited Service. Benefit accrued to date of disability but not less than 42% of Average Final Compensation (Service Incurred). Death Benefits: Vested: Monthly accrued benefit payable to designated beneficiary for 10 years. Non -Vested: Refund of accumulated contributions without interest. Cost of Living Adjustment: Normal and Early service Retirees after January 1, 2000 receive 3% annual benefit increases for 17 years (12 years for Firefighters hired after June 1, 2010), commencing 1 year after retirement. Contributions. Remaining amount required in order to pay current costs and amortize unfunded past service cost, if any, as provided in Chapter 112, Florida Statutes. GASB 67 Investments Investment Policy: The following was the Board's adopted asset allocation policy as of September 30, 2014: Asset Class Domestic Equity International Equity Fixed Income Real Estate Cash Other Total Concentrations: Target Allocation 45% 19% 25% 10% 1% 0% 100% The Plan did not hold investments in any one organization that represent 5 percent or more of the Pension Plan's fiduciary net position. Rate of Return: For the year ended September 30, 2014 the annual money -weighted rate of return on Pension Plan investments, net of pension plan investment expense, was 13.9 percent. The money -weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Deferred Retirement Option Program Satisfaction of Normal Retirement requirements (earlier of (1) Age 55 with 10 years of Credited Service, or (2) Age 50 with 25 years of Credited Service). At the Member's election: (1) 6.5% annual rate, or (2) actual net rate of investment return (total return net of brokerage commissions, management fees, and transaction costs). The DROP balance as September 30, 2014 is $1,037,020. GASB 67 NET PENSION LIABILITY OF THE SPONSOR The components of the net pension liability of the sponsor on September 30, 2014 were as follows: Total Pension Liability $ 72,552,197 Plan Fiduciary Net Position $ (42,981,714) Sponsor's Net Pension Liability $ 29,570,483 Plan Fiduciary Net Position as a percentage of 59.24% Total Pension Liability Actuarial Assumptions: The total pension liability was determined by an actuarial valuation as of October 1, 2013 updated to September 30, 2014 using the following actuarial assumptions applied to all measurement periods. Inflation Salary Increases Investment Rate of Return 3.00% 6.00% 8.00% Mortality rates were based on the RP-2000 Table with no projection for Males and Females, as appropriate. The actuarial assumptions used in the October 1, 2013 valuation were based on the results of an actuarial experience study for the period 2003-2013. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of September 30, 2014 are summarized in the following table: Asset Class Long Term Expected Real Rate of Return Domestic Equity 5.4% International Equity 5.5% Fixed Income 1.3% Real Estate 4.5% Cash 0.0% GASB 67 Discount Rate: The discount rate used to measure the total pension liability was 8.00 percent. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sponsor's Net Pension Liability 1% Decrease 7.00% $ 32,533,874 Current Discount Rate 8.00% 6 29,570,483 1 % Increase 9.00% 22,504,126 GASB 67 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS Last 10 Fiscal Years (Dollar Amounts in Thousands) Total Pension Liability Service Cost Interest Changes of Benefit Terms Differences Between Expected and Actual Experience Changes of Assumptions Benefit Payments, Including Refunds of Employee Contributions Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending (a) Plan Fiduciary Net Position Contributions - Employer Contributions- State Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Other Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) 9/30/14 1,736,946 5,415,856 675,546 (2,474,813) 5,353,536 67,198,662 72,552,197 3,334,848 552,532 437,563 6,181,623 (2,474,813) (33,135) 7,998,619 34,983,095 $ 42,981,714 Net Pension Liability - Ending (a) - (b) $ 29,570,483 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 59.24% Covered Employee Payroll $ 6,170,444 Net Pension Liability as a Percentage of covered Employee Payroll 479.23% GASB 67 SCHEDULE OF CONTRIBUTIONS Last 10 Fiscal Years (Dollar Amounts in Thousands) 09/30/14 Actuarially Determined Contribution 4,504,424 Contributions in Relation to the Actuarially Determined Contributions 3,887,380 Contribution Deficiency (Excess) $ 617,044 Covered Employee Payroll $ 6,170,444 Contributions as a Percentage of Covered Employee Payroll 63.00% Notes to Schedule Valuation Date: 10/1/2012 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial Cost Method: Amortization Method: Remaining Amortization Period: Asset Valuation Method: Inflation: Salary Increases: Investment Rate of Return: Normal Retirement: Early Retirement: Disability Retirement: Mortality: Other Information: Entry Age Normal Level Percentage of Pay, Closed 28 Years (as of I0/1/11) 4 Year Smooth 3.0% 6.0% per year until retirement age 8.0% per year, compounded annually, net of investment Earlier of age 55 and 10 years of Credited Service, or age 50 Age 50 and 10 Years of Credited Service. Service Incurred: Covered from Date of Employment Non -Service Incurred: 10 years of Credited Service. Benefit accrued to date of disability but not less than 42% of Average Final Compensation (Service Incurred). RP-2000 Table with no projection - Based on a study of over 650 public safety funds, this table reflects a 10% margin for future morality improvements. (Disabled lives set forward 5 years). GASB 67 SCHEDULE OF INVESTMENT RETURNS 09/30/14 Annual Money -Weighted Rate of Return Net of Investment Expense 13.90% SUNSHINE CITY RETIREMENT SYSTEM GASB 68 EXAMPLE FOSTER & FOSTER GASB 68 NOTES TO THE FINANCIAL STATEMENTS (For the Year Ended September 30, 2014) General Information about the Pension Plan Plan Description The Plan provides pensions for all full-time employees of the District who are classified as full-time Firefighters. The Plan is a single -employer defined benefit pension plan administered by the Plan's Board of Trustees comprised o£ a. Two District appointees b. Two Members of the Department elected by the membership, and c. Fifth Member elected by other 4 and appointed by the District. Plan Membership as of September 30, 2014: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 43 Inactive Plan Members Entitled to but Not Yet Receiving Benefits 2 Active Plan Members 76 121 Benefits Provided The Plan provides retirement, disability and death benefits. Retirement benefits are calculated as 3.58% (3.00% for Firefighters hired after June 1, 2010) of Average Final Compensation times Credited Service. Normal Retirement: Earlier of age 55 and 10 years of Credited Service, or age 50 and 25 years of Credited Service Early Retirement: Age 50 and 10 Years of Credited Service. Disability Retirement: Service Incurred: Covered from Date of Employment Non -Service Incurred: 10 years of Credited Service. Benefit accrued to date of disability but not less than 42% of Average Final Compensation (Service Incurred). Death Benefits: Vested: Monthly accrued benefit payable to designated beneficiary for 10 years. Non -Vested: Refund of accumulated contributions without interest. Cost of Living Adjustment: Normal and Early service Retirees after January 1, 2000 receive 3% annual benefit increases for 17 years (12 years for Firefighters hired after June 1, 2010), commencing 1 year after retirement. Contributions. Remaining amount required in order to pay current costs and amortize unfunded past service cost, if any, as provided in Chapter 112, Florida Statutes. GASB 68 Net Pension Liability The Sponsor's net pension liability was measured as of September 30, 2014. The total pension liaiblity used to calculate the net pension liability was determined as of that date. Actuarial Assumptions: The total pension liability was determined by an actuarial valuation as of October 1, 2013 updated to September 30, 2014 using the following actuarial assumptions applied to all measurement periods. Inflation Salary Increases Investment Rate of Return 3.00% 6.00% 8.00% Mortality rates were based on the RP-2000 Table with no projection for Males and Females, as appropriate. The actuarial assumptions used in the October 1, 2013 valuation were based on the results of an actuarial experience study for the period 2003-2013. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of September, 30 2014 are summarized in the following table: Asset Class Domestic Equity International Equity Fixed Income Real Estate Cash Other Target Allocation 45% 19% 25% 10% 1% 0% 100% Long Term Expected Real Rate of Return 5.4% 5.5% 1.3% 4.5% 0.0% 0.0% Discount Rate: The discount rate used to measure the total pension liability was 8.00 percent. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. GASB 68 CHANGES IN NET PENSION LIABILITY Balances at September 30, 2013 Changes for a Year: Service Cost Interest Differences Between Expected and Actual Experience Contributions - Employer Contributions -State Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Other Changes New Changes Balances at September 30, 2014 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a)-(b) $ 67,198,662 $ 34,983,095 $ 32,215,567 1,736,946 1,736,946 5,415,856 5,415,856 675,546 675,546 3,334,848 (3,334,848) 552,532 (552,532) 437,563 (437,563) 6,181,623 (6,181,623) (2,474,813) (2,474,813) - (33,135) 33,135 5,353,536 7,998,619 (2,645,084) $ 72,552,197 42,981,714 29,570,483 Sensitivity of the net pension liabilty to changes in the discount rate. Current Discount 1% Decrease Rate 7.00% 8.00% 1 % Increase 9.00% Sponsor's Net Pension Liability $ 32,533,874 $ 29,570,483 $ 22,504,126 Pension plan fiduciary net position. Detailed information about the pension plan's fiduciary net position is available in a separately issue Plan financial report. GASB 68 PENSION EXPENSE AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS For the year ended September 30, 2015 ,the Sponsor recognized pension expense of $4,107,206. On September 30, 2015 the Sponsor reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences Between Expected and Actual Experience - (554,913) Changes of Assumptions - - Net Difference Between Projected and Actual Earnings on Pension Plan Investments - 2,648,237 Total $ - $ 2,093,324 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended September 30: 2016 $ (541,426) 2017 $ (541,426) 2018 $ (541,426) 2019 $ (541,426) 2020 $ 72,380 Thereafter $ - GASB 68 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS Last 10 Fiscal Years (Dollar Amounts in Thousands) Total Pension Liability Service Cost Interest Changes of Benefit Terms Differences Between Expected and Actual Experience Changes of Assumptions Benefit Payments, Including Refunds of Employee Contributions Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending (a) Plan Fiduciary Net Position Contributions - Employer Contributions- State Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Other Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) Net Pension Liability - Ending (a) - (b) Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 09/30/14 1,736,946 5,415,856 675,546 (2,474,813) 5,353,536 67,198,662 72,552,197 3,334,848 552,532 437,563 6,181,623 2,474,813 (33,135) 12,948,245 34,983,095 $ 42,981,714 $ 29,570,483 59.24% Covered Employee Payroll $ Net Pension Liability as a Percentage of covered Employee Payroll 6,170,444 479.23% GASB 68 SCHEDULE OF CONTRIBUTIONS Last 10 Fiscal Years (Dollar Amounts in Thousands) Actuarially Determined Contribution Contributions in Relation to the Actuarially Determined Contributions Contribution Deficiency (Excess) Covered Employee Payroll Contributions as a Percentage of Covered Employee Payroll Notes to Schedule 9/30/14 4,504,424 3,887,380 $ 617,044 $ 6,170,444 63.00% Valuation Date: 10/1/2012 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial Cost Method: Amortization Method: Remaining Amortization Period: Asset Valuation Method: Inflation: Salary Increases: Investment Rate of Return: Normal Retirement: Early Retirement: Disability Retirement: Mortality: Other Information: Entry Age Normal Level Percentage of Pay, Closed 28 Years (as of 10/l/I1) 4 Year Smooth 3.0% 6.0% per year until retirement age 8.o% per year, compounded annually, net of investment related expenses Earlier of age 55 and 10 years of Credited Service, or age 50 and 25 years of Credited Service Age 50 and 10 Years of Credited Service. Service Incurred: Covered from Date of Employment Non -Service Incurred: 10 years of Credited Service. Benefit accrued to date of disability but not less than 42% of Average Final Compensation (Service Incurred). RP-2000 Table with no projection - Based on a study of over 650 public safety funds, this table reflects a 10% margin for future morality improvements. (Disabled lives set forward 5 years). GASB 68 COMPONENTS OF PENSION EXPENSE FISCAL YEAR SEPTEMBER 30, 2015 Beginning balance Total pension liability factors: Service cost Interest Changes in benefit terms Differences between expected and actual experience with regard to economic or demographic assumptions Current year amortization Changes in assumptions about future economic d h' f t A, t Net Pension Liability Deferred Inflows (32,215,567) - (1,736,946) (5,415,856) Deferred Outflows Pension Expense 3,334,848 (675,546) (675,546) - 120,633 - or emograp is ac ors or o er mpu s - - Current year amortization - Benefit payments 2,474,813 Net change (5,353,536) (554,913) Plan fiduciary net position: Contributions - employer Contributions - state Contributions - employee Net investment income Difference between projected and actual earnings on pension plan investments Current year amortization Benefit payments Administrative expenses Other Ending Balance 3,334:848 10 (3,334,848) 552532 437,563 21871,327 3,310,296 3,310,296 - 1,736,946 5,415,856 120,633 (2,474,813) 4,798,623 (552,532) (437,563) (2,871,327) (662,059) - 662,059 (2,474,813) 2,474,813 (33,135) 33,135 Net change 7,998,619 2,648,237 (3,334,848) (691,417) (29,570,483) 2,093,324 - 4,107,206 SUNSHINE CITY RETIREMENT SYSTEM SENATE BILL 534 (SECTION 112.664, FLORIDA STATUTES) REQUIREMENTS EXAMPLE 74 FOSTER & FOSTER ACTUARIES AND CONSULTANTS SECTION I - GASB 67 Senate Bill No. 534 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS Last 10 Fiscal Years (Dollar Amounts in Thousands) ACTUAL HYPOTHETICAL 8.00% 8.00% 6.00% 10.00% RP-2000 RP-2000 RP-2000 RP-2000 Static Generational Generational Generational 9/30/14 9/30/14 9/30/14 9/30/14 Total Pension Liability Service Cost 1,736,946 1,834,469 2,941,826 1,176,223 Interest 5,415,856 5,559,050 5,488,531 5,458,949 Changes of Benefit Terms Differences Between Expected and Actual Experience 675,546 675,546 682,240 668,852 Changes of Assumptions Benefit Payments, Including Refunds of Employee Contributions (2,474,813) (2,474,813) (2,474,813) (2,474,813) Net Change in Total Pension Liability 5,353,536 5,594,253 6,637,784 4,829,211 Total Pension Liability - Beginning 67,198,662 68,891,065 89,771,095 54,650,671 Total Pension Liability - Ending (a) $ 72,552,197 $ 74,485,317 $ 96,408,879 $ 59,479,882 Plan Fiduciary Net Position Contributions - Employer 3,334,848 3,334,848 3,334,848 3,334,848 Contributions- State 552,532 552,532 552,532 552,532 Contributions - Employee 437,563 437,563 437,563 437,563 Net Investment Income 6,181,623 6,181,623 6,181,623 6,181,623 Benefit Payments, Including Refunds of (2,474,813) (2,474,813) (2,474,813) (2,474,813) Employee Contributions Administrative Expense (33,135) (33,135) (33,135) (33,135) Other - - - - Net Change in Plan Fiduciary Net Position 7,998,618 7,998,618 7,998,618 7,998,618 Plan Fiduciary Net Position - Beginning 34,983,095 34,983,095 34,983,095 34,983,095 Plan Fiduciary Net Position - Ending (b) $ 42,981,714 $ 42,981,714 $ 42,981,714 $ 42,981,714 Net Pension Liability - Ending (a) - (b) $ 29,570,483 $ 31,503,603 $ 53,427,165 $ 16,498,168 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 59.24% 57.70% 44.58% 72.26% Covered Employee Payroll $ 6,170,444 $ 6,170,444 $ 6,170,444 $ 6,170,444 Net Pension Liability as a Percentage of covered 479.23% 510.56% 865.86% 267.37% Employee Payroll 1 I Foster & Foster SECTION II - ASSET SUSTAINABILITY Senate Bill No. 534 PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS Table 1 Plan's Assumptions: 8.00% and RP-2000 Static Mortality Year Projected Beginning Projected Total Projected Benefit Projected I Projected Investment I Projected Ending I Fiduciary Net Position Contributions Payments* Administrative Expense Earnings Fiduciary Net Position 2014 42,981,714 - 4,124,217 3,273,568 42,131,066 2015 42,131,066 - 3,313,328 3,237,952 42,055,690 2016 42,055,690 - 3,457,595 3,226,151 41,824,247 2017 41,824,247 - 3,616,847 3,201,266 41,408,665 2018 41,408,665 - 3,773,589 3,161,750 40,796,827 2019 40,796,827 - 4,048,090 3,101,823 39,850,559 2020 39,850,559 - 4,602,327 3,003,952 38,252,184 2021 38,252,184 - 4,928,433 2,863,037 36,186,789 2022 36,186,789 - 5,106,615 2,690,679 33,770,852 2023 33,770,852 - 5,245,295 2,491,856 31,017,414 2024 31,017,414 - 5,557,874 2,259,078 27,718,618 2025 27,718,618 - 6,031,821 1,976,217 23,663,013 2026 23,663,013 - 6,417,902 1,636,325 18,881,436 2027 18,881,436 - 7,424,904 1,213,519 12,670,051 2028 12,670,051 - 8,038,956 692,046 5,323,140 2029 5,323,140 - 8,688,923 78,294 (3,287,489) *All DROP Balances paid in 2014. Number of Years Expected Benefit Payments Sustained: 15 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 8.00% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. 2 1 Foster & Foster SECTION II - ASSET SUSTAINABILITY Senate Bill No. 534 PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS Table 2 Bill 534 Assumptions: 8.00% and RP-2000 Generational Mortality Year Projected Beginning Projected Total Projected Benefit Projected I Projected Investment I Projected Ending I Fiduciary Net Position Contributions Payments* Administrative Expense Earnings Fiduciary Net Position 2014 42,981,714 - 4,124,520 3,273,556 42,130,750 2015 42,130,750 - 3,315,046 3,237,858 42,053,563 2016 42,053,563 - 3,460,886 3,225,850 41,818,526 2017 41,818,526 - 3,622,118 3,200,597 41,397,006 2018 41,397,006 - 3,781,236 3,160,511 40,776,280 2019 40,776,280 - 4,058,337 3,099,769 39,817,713 2020 39,817,713 - 4,618,413 3,000,680 38,199,980 2021 38,199,980 - 4,949,084 2,858,035 36,108,931 2022 36,108,931 - 5,134,197 2,683,347 33,658,081 2023 33,658,081 - 5,288,073 2,481,124 30,851,131 2024 30,851,131 - 5,612,714 2,243,582 27,481,999 2025 27,481,999 - 6,106,335 1,954,307 23,329,971 2026 23,329,971 - 6,509,893 1,606,002 18,426,080 2027 18,426,080 - 7,538,230 1,172,557 12,060,407 2028 12,060,407 - 8,176,496 637,773 4,521,684 2029 4,521,684 - 8,857,978 7,416 (4,328,879) *All DROP Balances paid in 2014. Number of Years Expected Benefit Payments Sustained: 15 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 8.00% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. 3 1 Foster & Foster SECTION II - ASSET SUSTAINABILITY Senate Bill No. 534 PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS Table 3 Bill 534 Assumptions: 6.00% and RP-2000 Generational Mortality Year Projected Beginning Projected Total Projected Benefit Projected I Projected Investment I Projected Ending I Fiduciary Net Position Contributions Payments* Administrative Expense Earnings Fiduciary Net Position 2014 42,981,714 - 4,124,520 2,455,167 41,312,361 2015 41,312,361 - 3,315,046 2,379,290 40,376,606 2016 40,376,606 - 3,460,886 2,318,770 39,234,489 2017 39,234,489 - 3,622,118 2,245,406 37,857,777 2018 37,857,777 - 3,781,236 2,158,030 36,234,571 2019 36,234,571 - 4,058,337 2,052,324 34,228,558 2020 34,228,558 - 4,618,413 1,915,161 31,525,306 2021 31,525,306 - 4,949,084 1,743,046 28,319,268 2022 28,319,268 - 5,134,197 1,545,130 24,730,201 2023 24,730,201 - 5,288,073 1,325,170 20,767,298 2024 20,767,298 - 5,612,714 1,077,656 16,232,240 2025 16,232,240 - 6,106,335 790,744 10,916,650 2026 10,916,650 - 6,509,893 459,702 4,866,459 2027 4,866,459 - 7,538,230 65,84t (2,605,930) *All DROP Balances paid in 2014. Number of Years Expected Benefit Payments Sustained: 13 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 6.00% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. 4 1 Foster & Foster SECTION II - ASSET SUSTAINABILITY Senate Bill No. 534 PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS Table 4 Bill 534 Assumptions: 10.00% and RP-2000 Generational Mortality Year Projected Beginning Projected Total Projected Benefit Projected I Projected Investment I Projected Ending I Fiduciary Net Position Contributions Payments* Administrative Expense Earnings Fiduciary Net Position 2014 42,981,714 - 4,124,520 4,091,945 42,949,139 2015 42,949,139 - 3,315,046 4,129,162 43,763,255 2016 43,763,255 - 3,460,886 4,203,281 44,505,650 2017 44,505,650 - 3,622,118 4,269,459 45,152,991 2018 45,152,991 - 3,781,236 4,326,237 45,697,993 2019 45,697,993 - 4,058,337 4,366,882 46,006,538 2020 46,006,538 - 4,618,413 4,369,733 45,757,859 2021 45,757,859 - 4,949,084 4,328,332 45,137,106 2022 45,137,106 - 5,134,197 4,257,001 44,259,910 2023 44,259,910 - 5,288,073 4,161,587 43,133,424 2024 43,133,424 - 5,612,714 4,032,707 41,553,417 2025 41,553,417 - 6,106,335 3,850,025 39,297,107 2026 39,297,107 - 6,509,893 3,604,216 36,391,430 2027 36,391,430 - 7,538,230 3,262,232 32, t 15,432 2028 32,115,432 - 8,176,496 2,802,718 26,741,654 2029 26,741,654 - 8,857,978 2,231,267 20,114,943 2030 20,114,943 - 9,095,751 1,556,707 12,575,899 2031 12,575,899 - 9,980,388 758,570 3,354,081 2032 3,354,081 - 10,742,201 (201,702) (7,589,823) *All DROP Balances paid in 2014. Number of Years Expected Benefit Payments Sustained: 18 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 10.00% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. 5 1 Foster & Foster SECTION III - FUNDING REQUIREMENTS Senate Bill No. 534 ACTUAL AND HYPOTHETICAL CONTRIBUTIONS APPLICABLE TO THE FISCAL YEAR ENDING SEPTEMBER 30, 2016 Valuation Date: 10/1/2014 ACTUAL HYPOTHETICAL 8.00% 8.00% 6.00% 10.00% RP-2000 RP-2000 RP-2000 RP-2000 Static Generational Generational Generational 9/30/14 9/30/14 9/30/14 9/30/14 Total Required Contribution $4,934,719 $5,225,814 $7,466,260 $3,411,059 Expected Member Contribution 472,802 472,802 472,802 472,802 Expected State Money 552,532 552,532 552,532 552,532 Expected Sponsor Contribution (Fixed $) $3,909,385 $4,200,480 $6,440,926 $2,385,725 Expected Sponsor Contribution (% of Payroll) 57.8% 62.1 % 95.4% 35.3% ASSETS Actuarial Value 38,677,586 38,677,586 38,677,586 38,677,586 Market Value 42,981,714 42,981,714 42,981,714 42,981,714 LIABILITIES Present Value of Benefits Active Members Retirement Benefits 37,227,360 39,442,308 62,368,065 26,186,910 Disability Benefits 415,619 435,010 621,682 317,486 Death Benefits 225,054 158,211 219,149 116,628 Vested Benefits 2,035,933 2,135,882 3,540,649 1,343,347 Refund of Contributions 144,183 144,183 144,183 144,183 Service Retirees 30,657,536 31,619,385 39,403,392 26,173,238 Beneficiaries 89,003 91,946 104,872 81,681 Terminated Vested 258,298 269,616 409,650 183,668 Disability Retirees 0 0 0 0 DROP Members 11,734,987 12,188,777 14,811,191 10,318,804 Excess State Monies Reserve 0 0 0 0 Total: 82,787,973 86,485,318 121,622,833 64,865,945 Present Value of Future Salaries 61,538,263 61,624,045 69,784,820 55,044,711 Present Value of Future Member Contributions 4,307,678 4,313,683 4,884,937 3,853,130 Total Normal Cost (Entry Age Method) 1,736,946 1,834,469 2,941,826 1,176,223 Present Value of Future Normal Costs (Entry Age) 15,924,009 16,891,930 31,149,417 9,512,951 Total Actuarial Accrued Liability 66,863,964 69,593,388 90,473,416 55,352,994 Unfunded Actuarial Accrued 28,186,378 30,915,802 51,795,830 16,675,408 Normal Costs (Entry Age) 6 1 Foster & Foster SECTION III - FUNDING REQUIREMENTS Senate Bill No. 534 ACTUAL AND HYPOTHETICAL CONTRIBUTIONS APPLICABLE TO THE FISCAL YEAR ENDING SEPTEMBER 30, 2016 Valuation Date: 10/1/2014 PENSION COST Normal Cost (with interest) Administrative Expenses (with interest) Payment Required To Amortize UAAL Total Required Contribution ACTUAL HYPOTHETICAL 8.00% 8.00% 6.00% 10.00% RP-2000 RP-2000 RP-2000 RP-2000 Static Generational Generational Generational 9/30/14 9/30/14 9/30/14 9/30/14 1,914,809 2,022,319 3,211,886 1,309,136 36,528 36,528 36,177 36,879 2,983,382 3,166,967 4,218,198 2,065,044 $4,934,719 $5,225,814 $7,466,260 $3,411,059 7 1 Foster & Foster CITY OF PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND ENGAGEMENT AGREEMENT FOR PORTFOLIO MONITORING THIS IS AN AGREEMENT between CITY OF PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND ("Client") and the law firm of ROBBINS GELLER RUDMAN & DOWD LLP ("Attorneys"). 1. General Statement of Purpose and Subject of Agreement: Client engages Attorneys to monitor Client's United States -listed securities portfolio in connection with potential claims against such persons, entities, companies and/or associations that may be liable for damages suffered by Client as a result of breaches of fiduciary duties, fraud, misrepresentation or other violations of federal and/or state securities laws. The purpose of this agreement is to facilitate the review of Client's United States -listed securities portfolio in order to ascertain whether Client has suffered a material loss or other damages due to violations of United States law to facilitate the Attorneys' reporting to Client. This is not an engagement agreement to initiate any specific litigation or to provide claims services, and the parties must enter into a separate engagement agreement(s) if Client wishes to engage Attorneys for such other services. 2. Identification and Investigation of Possible Claims: In the course of Attorneys' business, Attorneys become aware of, identify and investigate possible violations of the federal and/or state securities laws, instances of abuse by corporate management, breaches of fiduciary duties, and/or other corporate conduct affecting a company's securities. Upon becoming aware of or identifying such an instance, which Attorneys believe may be remedied through litigation, Attorneys shall review Client's United States -listed investment portfolio of publicly -traded securities to determine whether Client has suffered a material loss due to such possible violations of the federal and/or state securities laws, and/or corporate malfeasance, and will provide legal advice and representation regarding the existence and prosecution of possible claims. It is understood that Attorneys do not undertake to investigate and advise Client with respect to each instance of a loss in value of the securities of a company in Client's securities portfolio. 3. Client's Assistance: For purposes of assisting Attorneys with fulfilling their duties under this agreement, Client will ensure that Client's custodian or individual money managers, as appropriate, provide up to the past five years' statements of monthly transactions in publicly -traded equities and corporate debt securities in electronic format and/or paper or via microfiche copies of such. Additionally, Client will ensure that Client's custodian or fund managers provide monthly updates of Client's securities transactions to Attorneys. Client shall immediately notify Attorneys of any changes or developments in Client's accounts, including, but not limited to, (1) the opening of new accounts; (2) changes in custodial or investment manager address or contact information; and (3) changes in Client address or contact information. The statement of monthly transactions shall be provided, if possible, in electronic format in order to facilitate the transfer of data to the Portfolio Monitoring Programs"' database. 4. Commencement of Services: Attorneys shall commence monitoring Client's portfolio upon Client or Client's custodian providing sufficient transactional data. However, due to delays in transfers of such data to Attorneys for all appropriate accounts by custodians and the different time periods in which relevant data may be available to monitor, Client acknowledges that delays are outside of the Attorneys' control and the monitoring service may only commence when Attorneys receive, transfer and process sufficient data from the custodian(s). 5. Confidentiality of Records: Attorneys agree to maintain all records provided by Client in a secure and confidential manner with access to such records limited to Attorneys and its employees, contractors, and third -party vendors necessary to fulfill Attorneys' obligations herein. 6. Attorneys' Reports to Client: Attorneys agree to provide Client with regular reports of the status of Attorneys' monitoring efforts and to apprise Client of material losses which Attorneys believe should possibly be pursued by litigation, due to possible violations described above, and to make recommendations to Client of options available to recover such losses. Attorneys shall commence providing reports to Client soon after Attorneys are provided with sufficient historical transactions to generate meaningful results. 7. Costs and Expenses: Attorneys shall be responsible for such costs as in their judgment are necessary to fulfill their duties under this agreement, including any expenses associated with obtaining information from Client's custodian. Client shall have no obligation for any such expenses. 8. Client's Pursuit of Liti ag tion: Client understands and Attorneys acknowledge that this agreement does not authorize the initiation of any litigation on Client's behalf. Any litigation initiated will be subject to a separate engagement agreement to be negotiated between Client and Attorneys. Client may choose not to pursue litigation or may engage counsel other than Attorneys to pursue any claim identified pursuant to this agreement. 9. Filing of Settled Claims: The timely filing of any particular claim with respect to any settled or adjudicated case remains the sole responsibility of Client, who must prepare and timely file the Proof of Claim and Release which is necessary to process a claim. Client understands that this agreement does not authorize or require Attorneys to file claims on Client's behalf. Any claims filing services provided by Attorneys to Client shall be subject to a separate engagement agreement to be negotiated between Client and Attorneys. 10. Contact Information: Attorneys and Client each designate the following person (or such other person or address as such party may designate by written notice) as their primary contacts under this agreement: Attorneys: ROBBINS GELLER RUDMAN & DOWD LLP Attention: Sandra D. Stein Laura S. Stein 401 E. City Avenue, Suite 122 Bala Cynwyd, PA 19004 Telephone: 215/98 8-9546 Facsimile: 215/988-9885 E-mail: Istein@rgrdlaw.com 2 Client: CITY OF PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND Attention: Audrey Ross Address: The Pension Resource Center, LLC 4360 Northlake Blvd., Suite 206 Palm Beach Gardens, FL 33410 Telephone: 5 61 /624-3277 Facsimile: 561 /624-3278 E-mail: adrey@resourcecenters.com Fund Tax Identification Number or Employer Identification Number: With a copy to: SUGARMAN & SUSSKIND, P.A. Attention: Robert A. Sugarman, Esq. 100 Miracle Mile, Suite 300 Coral Gables, FL 33134 Telephone: 305/529-2801 Facsimile: 3 05/447-8115 E-mail: sugarman@sugarmansusskind.com 11. Termination of This Agreement: Client may terminate this agreement at any time by sending written notice to the primary contact for Attorneys identified in paragraph 10, supra. Attorneys may terminate this agreement at any time, provided that Attorneys provide Client with 30 days' notice to the primary contact for Client identified in paragraph 10, supra, in order to ensure that Client has a reasonable period of time to avoid any prejudice that could otherwise arise as a result of the termination. 12. Entirety of Terms: This agreement sets forth the entire agreement between the parties with respect to its subject matter, and it may not be altered or modified except by written instrument executed by the contacts identified in paragraph 10, supra. The parties expressly acknowledge that no other agreements, arrangements or understandings relating to portfolio monitoring services and not expressed in this agreement exist among or between them. All parties agree that this agreement was negotiated at arm's length, and that no parol or other evidence may be offered to explain, construe, contradict or clarify its terms, the intent of the parties or their counsel, or the circumstances under which the agreement was made or executed. The parties, their successors and assigns, and their attorneys undertake to implement the terms of this agreement in good faith, and to use good faith in resolving any disputes that may arise in the implementation of the terms of this agreement. 13. Waiver: No waiver, amendment or other modifications of the terms of this agreement shall be binding upon either party unless expressed in writing and signed by both parties hereto. 3 14. Copy Received by Client: Client acknowledges receipt of a copy of this agreement concurrently with Client's execution thereof. This agreement shall be valid if signed in counterparts. FOR: CITY OF PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND By: Date: Print Name: Title: By: Date: Print Name: Title: FOR: ROBBINS GELLER RUDMAN & DOWD LLP By: Date: 09/30/14 Darren J. Robbins By: Date: 09/03/14 Sandra D. Stein, Esq. Of Counsel By: Date: 09/03/14 Laura S. Stein, Esq. Copyright © 2014 by Robbins Geller Rudman & Dowd LLP. Robbins Geller Rudman & Dowd LLP will vigorously defend all of their rights to this writing/publication. All rights reserved — including the right to reproduce in whole or in part in any form. Any reproduction in any form by anyone of the material contained herein without the permission of Robbins Geller Rudman & Dowd LLP is prohibited. 4