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HomeMy WebLinkAboutAgenda Fire Pension 110512THE 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 Monday, November 5, 2012 Location: Unified Services Conference Room, Building Department Palm Beach Gardens City Hall 10500 North Military Trail Palm Beach Gardens, FL 33410 Time: 9:00 A.M. AGENDA 1. Call Meeting to Order 2. Public Comments 3. Investment Manager Report: ICC Capital (Steve Stack) 4. Investment Monitor Report: The Bogdahn Group (Troy Brown) 5. Minutes: • Regular Meeting Held on September 10, 2012 6. Attorney Report: Sugarman & Susskind, P.A. (Pedro Herrera) • Review/Discussion of Proposed Ordinance 7. Administrative Report: Resource Centers (Audrey Ross) • Disbursements • Benefit Approvals • Proposed 2013 Meeting Dates 8. Old Business • Execution of the Foster & Foster Actuarial Agreement • Review of Trustee Terms • DROP Account Fees 9. New Business 10. Other Business 11. Schedule Next Meeting: Wednesday February 6, 2013 at 9:00 A.M. 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 2013 MEETING DATES Wednesday February 6, 2013 @ 9AM Monday March 11, 2013 @ 9AM Wednesday May 1, 2013 @ 9AM Monday July 8, 2013 @ 9AM Wednesday August 7, 2013 @ 9AM Monday September 9, 2013 @ 9AM Wednesday November 6, 2013 @ 9AM PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MEETING OF NOVEMBER 5, 2012 BENEFIT APPROVALS NAME APPLICATIONS TO ENTER THE DROP Catherine Mauser Years Of Credited Service: 10 Years & 5 Months Age at Retirement: 55 Years & 5 Months Total Monthly Benefit: $1,784.19 DROP Entry/Retirement Date: December 1, 2011 Type Of Benefit: DROP Form Of Benefit: Straight Life Annuity Action: ______________________________ Gary Bussey Years Of Credited Service: 19 Years & 1 Month Age at Retirement: 55 Years Total Monthly Benefit: $4,197.17 DROP Entry/Retirement Date: July 30, 2012 Type Of Benefit: DROP Form Of Benefit: 50% Joint & Survivor Ann. (Chairman) (Secretary) City of Palm Beach Gardens Firefighters' Pension Trust Fund Investment Performance Review 3rd Quarter 2012 3r d Q u a r t e r 2 0 1 2 M a r k e t E n v i r o n m e n t Pa g e 2  Wh a t a d i f f e r e n c e a y e a r m a k e s . F o r t h e e q u i t y m a r k e t s , t h e y e a r - t o - d a t e pe r f o r m a n c e t h r o u g h S e p t e m b e r i s t h e b e s t n i n e m o n t h s i n a c a l e n d a r y e a r si n c e 2 0 0 9 . A f t e r t h e n e g a t i v e p e r f o r m a n c e i n t h e s e c o n d q u a r t e r , t h e ma r k e t s r e b o u n d e d i n t h e t h i r d q u a r t e r . Y e a r - t o - d a t e t h r o u g h S e p t e m b e r 30 t h , t h e S & P 5 0 0 , R u s s e l l 1 0 0 0 , R u s s e l l 2 0 0 0 , a n d M S C I E A F E i n d e x e s re t u r n e d + 1 6 . 4 % , + 1 6 . 3 % , + 1 4 . 2 % , a n d + 1 0 . 6 % , r e s p e c t i v e l y . I n g e n e r a l , in v e s t o r s a p p e a r e d t o h a v e o v e r l o o k e d t h e m i x e d e c o n o m i c d a t a d u r i n g t h e qu a r t e r , a n d f o c u s e d m o r e o n t h e p e r c e i v e d p o s i t i v e i m p a c t s f r o m a d d i t i o n a l li q u i d i t y m e a s u r e s f r o m c e n t r a l b a n k p o l i c i e s b o t h i n t h e U n i t e d S t a t e s a n d Eu r o p e . I n e a r l y S e p t e m b e r , t h e P r e s i d e n t o f t h e E u r o p e a n C e n t r a l B a n k (E C B ) , M a r i o D r a g h i , a n n o u n c e d t h a t t h e E C B h a d a g r e e d o n a n e w b o n d bu y i n g p r o g r a m t o h e l p s t a b i l i z e t h e r e g i o n . P r i o r t o t h i s a n n o u n c e m e n t , co m m e n t s f r o m E u r o p e a n o f f i c i a l s m o v e d t h e U S m a r k e t s a r o u n d a l m o s t da i l y d e p e n d i n g o n t h e p e r c e i v e d o u t c o m e . I n a d d i t i o n t o m a r k e t p a r t i c i p a n t s ‘ fo c u s o n t h e c o m m e n t s f r o m E u r o p e , i n v e s t o r s e n t i m e n t f l u c t u a t e d o n t h e an t i c i p a t i o n o f w h a t t h e U S F e d e r a l R e s e r v e ( F e d ) w o u l d d o n e x t . A f t e r s o m e he a d f a k e s , t h e F e d a n n o u n c e d a d d i t i o n a l q u a n t i t a t i v e e a s i n g m e a s u r e s t o su p p o s e d l y h e l p t h e e m p l o y m e n t p i c t u r e . I n a d d i t i o n t o t h e e x t e n s i o n o f Op e r a t i o n T w i s t t h a t w a s a n n o u n c e d i n J u n e , t h e F e d a n n o u n c e d o n Se p t e m b e r 1 3 th th a t i t w i l l b u y $ 4 0 b i l l i o n o f m o r tg a g e - b a c k e d s e c u r i t i e s p e r mo n t h . T h e F e d a l s o s t a t e d t h a t i t w i l l k e e p t h e f e d f u n d s t a r g e t n e a r z e r o un t i l a t l e a s t m i d - 2 0 1 5 i n s t e a d o f l a t e 2 0 1 4 .  In t e r n a t i o n a l e q u i t y m a r k e t s c o n t i n u e d Ju n e ’ s t r e n d o f s t r o n g p e r f o r m a n c e in t o t h e t h i r d q u a r t e r . L i k e t h e U S e q u i t y i n d e x e s , t h e i n t e r n a t i o n a l e q u i t y in d i c e s r e c o r d e d p o s i t i v e p e r f o r m a n c e i n e v e r y m o n t h d u r i n g t h e q u a r t e r . De v e l o p e d m a r k e t s , r e p r e s e n t e d b y t h e M S C I - E A F E I n d e x , w e r e u p + 7 . 0 % fo r t h e q u a r t e r a n d e m e r g i n g m a r k e t s p o s t e d s l i g h t l y b e t t e r r e t u r n s o f + 7 . 9 % . In g e n e r a l , t h e U S D d e p r e c i a t e d , b e n e f i t t i n g U S i n v e s t o r s ’ o v e r s e a s a s s e t s .  Th e B a r c l a y s U . S . A g g r e g a t e B o n d I n d e x f i n i s h e d t h e t h i r d q u a r t e r w i t h a re t u r n o f + 1 . 6 % . H o w e v e r , t h e p o s i t i v e r e t u r n w a s n o t s t r o n g e n o u g h t o re v e r s e t h e d o w n w a r d t r e n d o f t h e t r a i l i n g o n e - y e a r r e t u r n w h i c h f e l l 2 3 0 ba s i s p o i n t s ( b p s ) t o 5 . 2 % . F r o m a s e c t o r p e r s p e c t i v e , c o r p o r a t e b o n d s a n d mo r t g a g e - b a c k e d s e c u r i t i e s ( M B S ) o u t p e r f o r m e d U . S . T r e a s u r i e s d u r i n g t h e qu a r t e r . T h i s h a s b e e n t h e t r e n d f o r 2 0 1 2 a s c o r p o r a t e b o n d s a n d M B S h a v e ou t p e r f o r m e d d u r a t i o n - m a t c h e d T r e a s u r i e s b y 6 0 4 b p s a n d 1 1 5 b p s , re s p e c t i v e l y . So u r c e : M o r n i n g s t a r D i r e c t The Market Environment Major Market Index Performance As of September 30, 2012 0. 0 % 3. 8 % 1. 1 % 2. 1 % 0. 6 % 1. 6 % 5.3%5.6%6.3%6.2%6.4%7.9%7.0%7.5% 0. 0 % 2 . 0 % 4 . 0 % 6 . 0 % 8 . 0 % 1 0 . 0 % 3- M o n t h T - B i l l Ba r c l a y s C o r p I G Ba r c l a y s M B S Ba r c l a y s U S T I P S Ba r c l a y s U S T s y Ba r c l a y s U S A g g Ru s s e l l 2 0 0 0 Ru s s e l l M i d C a p Ru s s e l l 1 0 0 0 Ru s s e l l 3 0 0 0 S& P 5 0 0 MS C I E m e r g M k t s MS C I E A F E MS C I A C W x U S Qu a r t e r P e r f o r m a n c e 0. 1 % 10 . 8 % 3. 7 % 9. 1 % 3. 0 % 5. 2 % 31.9%28.0%30.1%30.2%30.2%17.3% 14 . 3 %15.0% 0. 0 % 5 . 0 % 1 0 . 0 % 1 5 . 0 % 2 0 . 0 % 2 5 . 0 % 3 0 . 0 % 3 5 . 0 % 3- M o n t h T - B i l l Ba r c l a y s C o r p I G Ba r c l a y s M B S Ba r c l a y s U S T I P S Ba r c l a y s U S T s y Ba r c l a y s U S A g g Ru s s e l l 2 0 0 0 Ru s s e l l M i d C a p Ru s s e l l 1 0 0 0 Ru s s e l l 3 0 0 0 S& P 5 0 0 MS C I E m e r g M k t s MS C I E A F E MS C I A C W x U S 1- Y e a r P e r f o r m a n c e Pa g e 3 So u r c e : M o r n i n g s t a r D i r e c t The Market Environment Do m e s t i c E q u i t y S t y l e I n d e x P e r f o r m a n c e As of September 30, 2012  Th e r e w a s n o t a l o t o f v a r i a t i o n i n t h e p e r f o r m a n c e a m o n g t h e d o m e s t i c eq u i t y i n d e x e s f o r t h e q u a r t e r o r t r a i l i n g o n e - y e a r p e r i o d s . T h e l a r g e s t di s p e r s i o n d u r i n g t h e q u a r t e r w a s a m o n g t h e g r o w t h i n d e x e s ( 1 3 0 b a s i s po i n t s ) ; t h e R u s s e l l 1 0 0 0 G r o w t h I n d e x r e t u r n e d + 6 . 1 % a n d t h e R u s s e l l 20 0 0 G r o w t h I n d e x r e t u r n e d + 4 . 8 % . A l a r g e c o n t r i b u t o r t o t h e d i f f e r e n c e i n th e t w o i n d e x e s w a s t h e w e i g h t i n g a n d p e r f o r m a n c e o f t h e I n f o r m a t i o n Te c h n o l o g y s e c t o r . I n t h e R u s s e l l 1 0 0 0 G r o w t h , t h e s e c t o r c o n t r i b u t e d 2 6 7 bp s b a s e d o n a n a v e r a g e w e i g h t i n g o f 3 2 . 1 % c o m p a r e d t o a c o n t r i b u t i o n o f 89 b p s b a s e d o n a n a v e r a g e w e i g h t i n g o f 2 2 % f o r t h e R u s s e l l 2 0 0 0 G r o w t h . Ap p l e h a s b e e n a s i g n i f i c a n t c o n t r i b u t o r t o t h e p e r f o r m a n c e o f t h e R u s s e l l 10 0 0 G r o w t h a n d R u s s e l l 3 0 0 0 G r o w t h I n d e x e s (a s w e l l a s t h e S & P 5 0 0 , Ru s s e l l 1 0 0 0 , a n d R u s s e l l 3 0 0 0 i n d e x e s ) . B a s e d o n A p p l e ’ s 8 . 3 % a n d 7 . 7 % av e r a g e w e i g h t i n g i n t h e R u s s e l l 1 0 0 0 G r o w t h a n d R u s s e l l 3 0 0 0 G r o w t h in d e x e s d u r i n g t h e q u a r t e r , t h e s t o c k c o n t r i b u t e d 1 1 7 b p s a n d 1 0 8 b p s t o th e i n d e x e s , r e s p e c t i v e l y . A p p l e ’ s s t o c k p r i c e h a s g a i n e d + 1 4 . 7 % a n d +7 5 . 7 % f o r t h e t h i r d q u a r t e r a n d t r a il i n g t w e l v e m o n t h s , r e s p e c t i v e l y .  GI C S s e c t o r p e r f o r m a n c e v a r i e d b y c a p i t a l i z a t i o n a n d s t y l e , a n d t h e r e w e r e no b r o a d t h e m e s t o w h i c h s e c t o r s p e r f o r m e d t h e b e s t a s i n p a s t q u a r t e r s . Fi n a n c i a l s o u t p e r f o r m e d i n t h e R u s s e l l 1 0 0 0 V a l u e a n d R u s s e l l 3 0 0 0 V a l u e in d e x e s , w h i l e M a t e r i a l s o u t p e r f o r m e d i n t h e R u s s e l l 2 0 0 0 V a l u e I n d e x . Te l e c o m S e r v i c e s p e r f o r m e d t h e b e s t i n t h e R u s s e l l 2 0 0 0 G r o w t h I n d e x .  In a r e v e r s a l f r o m t h e s e c o n d q u a r t e r , “ v a l u e ” o u t p e r f o r m e d “ g r o w t h ” f o r t h e qu a r t e r a n d t h e o n e - y e a r p e r i o d s , r e g a r d l e s s o f c a p i t a l i z a t i o n . L a r g e c a p ou t p e r f o r m e d s m a l l c a p . A s a c o n t i n u a t i o n f r o m t h e s e c o n d q u a r t e r , “ m e g a ca p ” c o m p a n i e s , w h i c h i s d e f i n e d a s t h o s e c o m p a n i e s w i t h a m a r k e t ca p i t a l i z a t i o n g r e a t e r t h a n $ 1 0 0 b i l l i o n , o u t p e r f o r m e d t h e o t h e r m a r k e t ca p i t a l i z a t i o n s b r e a k p o i n t s i n t h e R u s s e l l 1 0 0 0 a n d R u s s e l l 3 0 0 0 I n d e x e s . Si m i l a r t o t h e r e l a t i v e p e r f o r m a n c e i n t h e l a r g e c a p i n d e x e s , t h e l a r g e r ca p i t a l i z a t i o n c o m p a n i e s i n t h e R u s s e l l 2 0 0 0 I n d e x e s o u t p e r f o r m e d . M i c r o ca p c o m p a n i e s , w h i c h i s d e f i n e d a s t h o s e c o m p a n i e s w i t h a m a r k e t c a p le s s t h a n $ 5 0 0 m i l l i o n , u n d e r p e r f o r m e d a c r o s s a l l i n d e x e s . 4.8%5.3%5.7%5.3%5.6%5.8%6.1%6.3%6.5%6.0%6.2%6.4% 0. 0 % 2 . 0 % 4 . 0 % 6 . 0 % 8 . 0 % 20 0 0 G r o w t h 20 0 0 I n d e x 20 0 0 V a l u e Mid C a p G r o w t h Mid C a p I n d e x Mid C a p V a l u e 10 0 0 G r o w t h 10 0 0 I n d e x 10 0 0 V a l u e 30 0 0 G r o w t h 30 0 0 I n d e x 30 0 0 V a l u e Qu a r t e r P e r f o r m a n c e - R u s s e l l S t y l e S e r i e s 31.2%31.9%32.6%26.7%28.0%29.3%29.2%30.1%30.9%29.3%30.2%31.1% 0. 0 % 5 . 0 % 1 0 . 0 % 1 5 . 0 % 2 0 . 0 % 2 5 . 0 % 3 0 . 0 % 3 5 . 0 % 20 0 0 G r o w t h 20 0 0 I n d e x 20 0 0 V a l u e Mid C a p G r o w t h Mid C a p I n d e x Mid C a p V a l u e 10 0 0 G r o w t h 10 0 0 I n d e x 10 0 0 V a l u e 30 0 0 G r o w t h 30 0 0 I n d e x 30 0 0 V a l u e 1- Y e a r P e r f o r m a n c e - R u s s e l l S t y l e S e r i e s Pa g e 4 The Market Environment GI C S S e c t o r P e r f o r m a n c e & ( Q u a r t e r - E n d S e c t o r W e i g h t ) As of September 30, 2012 So u r c e : M o r n i n g s t a r D i r e c t a n d R u s s e l l . c o m .  Co m p a r e d t o t h e s e c o n d q u a r t e r , m ar k e t v o l a t i l i t y d e c l i n e d . I n t h e Ru s s e l l 1 0 0 0 , t h e r e w e r e t h r e e ( 3 ) d a y s i n w h i c h t h e i n d e x r e t u r n e d gr e a t e r t h a n 2 % a n d t h e r e w e r e n o d a y s w h e r e t h e i n d e x l o s t m o r e th a n 2 % v e r s u s s e v e n a n d s e v e n d a y s , r e s p e c t i v e l y , i n t h e p r i o r qu a r t e r . W h i l e t h e v o l a t i l i t y a p p e a r e d t o d e c l i n e i n t h e q u a r t e r b a s e d o n th e n u m b e r o f d a y s t h a t w e r e + / - 2 % , t h e d i s p e r s i o n f r o m t h e b e s t a n d wo r s t d a i l y r e t u r n w a s s t i l l l a r g e a n d t h e r e p r e s e n t a t i v e d a y s w e r e o n l y th r e e d a y s a p a r t ; t h e w o r s t d a i l y r e t u r n w a s - 1 . 9 % o n J u l y 2 4 th an d t h e be s t d a i l y r e t u r n w a s + 3 . 6 % o n J u l y 2 7 th . A s e x p e c t e d , t h e v o l a t i l i t y f o r th e s m a l l c a p R u s s e l l 2 0 0 0 I n d e x w a s g r e a t e r t h a n t h e o t h e r i n d e x e s du r i n g t h e q u a r t e r . T h e r e w e r e e i g h t d a y s w h e r e t h e i n d e x r e t u r n e d gr e a t e r t h a n 2 % a n d f o u r d a y s i n w h i c h t h e i n d e x r e t u r n e d l e s s t h a n - 2% . T h e b e s t d a y w a s + 3 . 5 % ( o n J u l y 2 7 th ) a n d t h e w o r s t d a y w a s - 3. 0 % ( o n J u l y 2 4 th ).  Fo r t h e q u a r t e r , r e g a r d l e s s o f c a p i t a l i z a t i o n , e a c h G I C S s e c t o r w a s po s i t i v e w i t h i n t h e R u s s e l l 1 0 0 0 a n d R u s s e l l 2 0 0 0 I n d e x e s . E v e n th o u g h e c o n o m i c g r o w t h g l o b a l l y i s e x p e c t e d t o r e m a i n l o w f o r t h e fo r e s e e a b l e f u t u r e , t h e E n e r g y s e c t o r w a s t h e b e s t p e r f o r m e r i n t h e Ru s s e l l 1 0 0 0 I n d e x . A l t h o u g h T e s o r o w a s o n e o f t h e t o p t h r e e pe r f o r m i n g s t o c k s i n t h e i n d e x ( + 6 8 . 4 % ) , i t s c o n t r i b u t i o n t o s e c t o r pe r f o r m a n c e w a s m i n i m a l d u e t o i t s r e d u c e d w e i g h t i n g i n t h e i n d e x . Wh i l e C h e v r o n a n d E x x o n M o b i l r e t u r n e d + 1 1 . 4 % a n d + 7 . 6 % d u r i n g th e q u a r t e r , t h e t w o s t o c k s a c c o u n t e d f o r n e a r l y 3 9 % o f t h e s e c t o r ’ s co n t r i b u t i o n t o t h e i n d e x . A s i n d i c a t e d i n t h e c h a r t , t h e t o p p e r f o r m i n g se c t o r i n t h e R u s s e l l 2 0 0 0 I n d e x d u r i n g t h e q u a r t e r w a s T e l e c o m Se r v i c e s . O f t h e t w e n t y - e i g h t c o m p a n i e s i n t h e s e c t o r , f o u r t e e n n a m e s ge n e r a t e d d o u b l e - d i g i t p e r f o r m a n c e .  Th e t r a i l i n g o n e - y e a r r e t u r n s l o o k s i g n i f i c a n t l y d i f f e r e n t a t t h e e n d o f t h e th i r d q u a r t e r c o m p a r e d t o t h e e n d o f t h e s e c o n d q u a r t e r d u e t o Se p t e m b e r 2 0 1 1 ( l a r g e n e g a t i v e m o n t h ) d r o p p i n g o f f . A t t h e e n d o f t h e th i r d q u a r t e r , e a c h G I C S s e c t o r , i n b o t h t h e i n d e x e s , g e n e r a t e d a do u b l e - d i g i t r e t u r n c o m p a r e d t o s e v e r a l s e c t o r s t h a t h a d n e g a t i v e re t u r n s a t t h e e n d o f t h e s e c o n d q u a r t e r . 18 . 1 % 31.0%21.2%38.5%40.6%22.2%33.9%28.8%34.3% 14 . 7 % 6. 1 % 14 . 0 % 2. 4 % 5. 7 % 4. 8 % 2. 3 % 7. 3 % 3. 5 % 12 . 9 % 7. 5 % 0. 0 % 5 . 0 % 1 0 . 0 % 1 5 . 0 % 2 0 . 0 % 2 5 . 0 % 3 0 . 0 % 3 5 . 0 % 4 0 . 0 % 4 5 . 0 % Ut i l i t i e s ( 3 . 7 % ) Te l e c o m S e r v i c e s ( 0 . 8 % ) In f o T e c h n o l o g y ( 1 7 . 0 % ) Fi n a n c i a l s ( 2 1 . 6 % ) He a l t h C a r e ( 1 3 . 3 % ) Co n s u m e r S t a p l e s (1 3 . 9 % ) Co n s u m e r D i s c ( 3 . 6 % ) In d u s t r i a l s ( 1 4 . 8 % ) Ma t e r i a l s ( 5 . 0 % ) En e r g y ( 6 . 0 % ) Ru s s e l l 2 0 0 0 Quarter1-Year 14 . 1 % 34.4%26.7%33.1%30.0%22.3%31.2%28.1%26.9%25.0% 0. 2 % 7. 9 % 6.9 % 6. 2 % 6. 6 % 3. 8 % 7. 9 % 3. 6 % 6. 1 % 10 . 2 % 0. 0 % 5 . 0 % 1 0 . 0 % 1 5 . 0 % 2 0 . 0 % 2 5 . 0 % 3 0 . 0 % 3 5 . 0 % 4 0 . 0 % Ut i l i t i e s ( 3 . 6 % ) Te l e c o m S e r v i c e s ( 3 . 1 % ) In f o T e c h n o l o g y ( 1 9 . 2 % ) Fi n a n c i a l s ( 1 5 . 5 % ) He a l t h C a r e ( 1 1 . 8 % ) Co n s u m e r S t a p l e s (1 2 . 1 % ) Co n s u m e r D i s c ( 1 0 . 0 % ) In d u s t r i a l s ( 1 0 . 4 % ) Ma t e r i a l s ( 3 . 8 % ) En e r g y ( 1 0 . 5 % ) Ru s s e l l 1 0 0 0 Quarter1-Year Pa g e 5 So u r c e : M o r n i n g s t a r D i r e c t The Market Environment To p 1 0 I n d e x W e i g h t s & Q u a r t e r l y P e r f o r m a n c e f o r t h e R u s s e l l 1 0 0 0 & 2 0 0 0 As of September 30, 2012 To p 1 0 W e i g h t e d S t o c k s To p 1 0 W e i g h t e d S t o c k s Ru s s e l l 1 0 0 0 S y m b o l A v g . W g t R e t u r n S e c t o r R u s s e l l 2 0 0 0 S y m b o l A v g . W g t R e t u r n S e c t o r Ap p l e I n c A A P L 4 . 2 6 % 1 4 . 7 % I n f o r m a t i o n T e c h n o l o g y P h a r m a c y c l i c s I n c P C Y C 0 . 2 9 % 1 8 . 1 % H e a l t h C a r e Ex x o n M o b i l C o r p X O M 2 . 9 2 % 7 . 6 % E n e r g y A t h e n a h e a l t h I n c A T H N 0 . 2 7 % 1 5 . 9 % H e a l t h C a r e Ge n e r a l E l e c t r i c C o G E 1 . 6 4 % 9 . 8 % I n d u s t r i a l s Tw o H b r s I n v t C o r p T W O 0 . 2 7 % 1 6 . 9 % F i n a n c i a l s Ch e v r o n C o r p C V X 1 . 5 7 % 1 1 . 4 % E n e r g y C u b i s t Ph a r m a c e u t i c a l s C B S T 0 . 2 5 % 2 5 . 8 % H e a l t h C a r e In t l B u s i n e s s M a c h i n e s I B M 1 . 5 4 % 6 . 5 % I n f o r m a t i o n Te c h n o l o g y O c w e n F i n a n c i a l C o r p O C N 0 . 2 5 % 4 6 . 0 % F i n a n c i a l s Mi c r o s o f t C o r p M S F T 1 . 5 3 % - 2 . 0 % I n f o r m a t i o n T e c h n o l o g y D r i l - Q u i p I n c D R Q 0 . 2 4 % 9 . 6 % E n e r g y At & T I n c T 1 . 5 1 % 7 . 0 % T e l e c o m m u n i c a t i o n S e r v i c e s Hm s H o l d i n g s C o r p H M S Y 0 . 2 4 % 0 . 4 % H e a l t h C a r e Go o g l e I n c G O O G 1 . 3 3 % 3 0 . 1 % I n f o r m a t i o n T e c h n o l o g y U n i t e d Na t u r a l F o o d s I n c U N F I 0 . 2 4 % 6 . 5 % C o n s u m e r S t a p l e s Pr o c t e r & G a m b l e C o P G 1 . 3 0 % 1 4 . 2 % C o n s u m e r S t a p l es E n e r g y X x i ( B e r m u d a ) L t d E X X I 0 . 2 3 % 1 1 . 9 % E n e r g y Jo h n s o n & J o h n s o n J N J 1 . 2 9 % 2 . 9 % H e a l t h C a r e U l t i m a t e So f t w a r e G r o u p U L T I 0 . 2 3 % 1 4 . 6 % I n f o r m a t i o n T e c h n o l o g y To p 1 0 P e r f o r m i n g S t o c k s To p 1 0 P e r f o r m i n g S t o c k s Ru s s e l l 1 0 0 0 S y m b o l A v g . W g t R e t u r n S e c t o r R u s s e l l 2 0 0 0 S y m b o l A v g . W g t R e t u r n S e c t o r Me t r o p c s C o m m u n i c a t i o n s I n c P C S 0 . 0 2 % 9 3 . 6 % T e l e c o m m u n i c a t i o n S e r v ic e s S u n e s i s P h a r m a c e u t i c a l s In c S N S S 0 . 0 1 % 9 6 . 9 % H e a l t h C a r e Sp r i n t N e x t e l C o r p S 0 . 1 1 % 6 9 . 3 % T e l e c o m m u n i c a t i o n S e r v i c es S u n r i s e S e n i o r L i v i n g I n c S R Z 0 . 0 7 % 9 5 . 7 % H e a l t h C a r e Te s o r o C o r p T S O 0 . 0 4 % 6 8 . 4 % E n e r g y X e n o p o r t I n c X N P T 0 . 0 4 % 8 9 . 7 % H e a l t h C a r e Sh a w G r o u p I n c S H A W 0 . 0 2 % 5 9 . 7 % I n d u s t r i a l s A u t h e n t e c I n c A U T H 0 . 0 3 % 8 5 . 0 % I n f o r m a t i o n T e c h n o l o g y Ra c k s p a c e H o s t i n g I n c R A X 0 . 0 5 % 5 0 . 4 % I n f o r m a t i o n Te c h n o l o g y E n e r n o c I n c E N O C 0 . 0 3 % 7 9 . 3 % I n d u s t r i a l s Ta h o e R e s o u r c e s I n c T A H O 0 . 0 1 % 4 6 . 6 % M a t e r i a l s I n f i n i t y P h a r m a c e u t i c a l s I n c I N F I 0 . 0 5 % 7 3 . 7 % H e a l t h C a r e Fu s i o n - I o I n c F I O 0 . 0 1 % 4 4 . 9 % I n f o r m a t i o n T e c h n o l o g y I r i s I n t e r n a t i o n a l I n c I R I S 0 . 0 3 % 7 2 . 7 % H e a l t h C a r e Co r e l o g i c I n c C L G X 0 . 0 2 % 4 4 . 9 % I n f o r m a t i o n T e c h n o l o g y F si I n t l I n c F S I I 0 . 0 2 % 7 2 . 7 % I n f o r m a t i o n T e c h n o l o g y Pu l t e g r o u p I n c P H M 0 . 0 4 % 4 4 . 9 % C o n s u m e r D i s c r et i o n a r y G e o e y e I n c G E O Y 0 . 0 3 % 7 0 . 7 % I n d u s t r i a l s Ri v e r b e d T e c h n o l o g y I n c R V B D 0 . 0 2 % 4 4 . 1 % I n f o r m a t i o n T e c h n o l o g y G o l de n S t a r R e s o u r c e s L t d G S S 0 . 0 4 % 6 9 . 8 % C o n s u m e r D i s c r e t i o n a r y Bo t t o m 1 0 P e r f o r m i n g S t o c k s Bo t t o m 1 0 P e r f o r m i n g S t o c k s Ru s s e l l 1 0 0 0 S y m b o l A v g . W g t R e t u r n S e c t o r R u s s e l l 2 0 0 0 S y m b o l A v g . W g t R e t u r n S e c t o r Gr o u p o n I n c G R P N 0 . 0 0 % - 5 5 . 2 % C o n s u m e r D i s c r e t i o n a r y A 1 2 3 S y s t e m s I n c A O N E 0 . 0 0 % - 8 0 . 2 % I n d u s t r i a l s Zy n g a I n c - C l A Z N G A 0 . 0 0 % - 4 7 . 8 % I n f o r m a t i o n T e c h n o l o g y K n i g h t C a p i t a l G r o u p I n c - A K C G 0 . 0 2 % - 7 7 . 6 % F i n a n c i a l s It t E d u c a t i o n a l S e r v i c e s I n c E S I 0 . 0 1 % - 4 7 . 0% C o n s u m e r D i s c r e t i o n a r y P r o g e n i c s P h a r m a ce u t i c a l s P G N X 0 . 0 1 % - 7 0 . 7 % H e a l t h C a r e Mo l y c o r p I n c M C P 0 . 0 1 % - 4 6 . 6 % M a t e r i a l s A u d i e n c e I n c A D N C 0 . 0 0 % - 6 7 . 8 % I n f o r m a t i o n T e c h n o l o g y Ad v a n c e d M i c r o D e v i c e s A M D 0 . 0 1 % - 4 1 . 2 % I n f o r m a t i o n T e c h n o l og y E n v i v i o I n c E N V I 0 . 0 0 % - 6 5 . 7 % I n f o r m a t i o n T e c h n o l o g y Fa c e b o o k I n c - A F B 0 . 0 6 % - 3 0 . 4 % I n f o r m a t i o n T e c h n o l o g y Q u e s tc o r P h a r m a c e u t i c a l s Q C O R 0 . 0 8 % - 6 5 . 3 % H e a l t h C a r e Big L o t s I n c B I G 0 . 0 1 % - 2 7 . 5 % C o n s u m e r D i sc r e t i o n a r y G e v o I n c G E V O 0 . 0 1 % - 5 7 . 1 % E n e r g y De v r y I n c D V 0 . 0 1 % - 2 6 . 5 % C o n s u m e r D i s c r e t i o n a r y I d e n i x Ph a r m a c e u t i c a l s I n c I D I X 0 . 0 3 % - 5 5 . 6 % H e a l t h C a r e Tr i p a d v i s o r I n c T R I P 0 . 0 2 % - 2 6 . 3 % C o n s u m e r D i s c r e t i o n a r y E d u c at i o n M a n a g e m e n t C o r p E D M C 0 . 0 1 % - 5 5 . 3 % C o n s u m e r D i s c r e t i o n a r y Wa l t e r E n e r g y I n c W L T 0 . 0 1 % - 2 6 . 2 % M a t e r i a l s S u p e r v a l u I n c S V U 0 . 0 4 % - 5 3 . 5 % C o n s u m e r S t a p l e s Pa g e 6 So u r c e : M S C I ( w w w . m s c i . c o m )  In g e n e r a l , E u r o p e a n e q u i t i e s w e r e u p t h e m o s t o n a r e g i o n a l b a s i s du r i n g t h e t h i r d q u a r t e r , a s t h e r e g i o n ’ s l e a d e r s m a d e s o m e a p p a r e n t he a d w a y i n t h e d e b t c r i s i s . O f a l l E u r o p e a n U n i o n c o u n t r i e s , e q u i t i e s i n Ge r m a n y p e r f o r m e d t h e b e s t .  Th e B a n k o f J a p a n c o n t i n u e d i t s m o n e t a r y e a s i n g p o l i c y i n m i d - Se p t e m b e r b y a n n o u n c i n g a n e x p a n s i o n o f i t s a s s e t p u r c h a s e p r o g r a m fr o m 7 0 t o 8 0 t r i l l i o n y e n . T h e p u r c h a s e s a r e e x p e c t e d t o b e c o m p l e t e d by t h e e n d o f 2 0 1 3 . W e w o u l d e x p e c t t h i s a c t i o n t o l e a d t o y e n de v a l u a t i o n a t s o m e p o i n t .  In U S D t e r m s , I n d i a n ( + 1 5 . 4 % ) a n d N e w Z e a l a n d ( + 1 5 . 8 % ) e q u i t i e s ha d t h e b e s t q u a r t e r l y r e t u r n o f t h e A s i a n c o u n t r i e s . O v e r 4 0 % o f t h e In d i a n e q u i t y r e t u r n w a s d u e t o R u p e e a p p r e c i a t i o n .  Co n v e r s e l y , J a p a n , I r e l a n d a n d G r e e c e w e r e t h e w o r s t - p e r f o r m i n g de v e l o p e d c o u n t r y e q u i t i e s d u r i n g t h e q u a r t e r — J a p a n a n d I r e l a n d we r e i n n e g a t i v e t e r r i t o r y .  Al l s e c t o r s i n t h e d e v e l o p e d m a r k e t s e x h i b i t e d p o s i t i v e p e r f o r m a n c e du r i n g t h e q u a r t e r , w i t h F i n a n c i a l s l e a d i n g t h e p a c k a t + 1 1 . 3 % . I n de v e l o p i n g m a r k e t s , I n f o T e c h n o l o g y , C o n s u m e r D i s c r e t i o n a r y , He a l t h c a r e a n d E n e r g y s e c t o r s w e r e u p d o u b l e d i g i t s , w h i l e U t i l i t i e s st o c k s w e r e m o s t l y f l a t t o s l i g h t l y n e g a t i v e .  US i n v e s t o r r e t u r n s o v e r s e a s w e r e a i d e d s i g n i f i c a n t l y b y c u r r e n c y ef f e c t s d u r i n g t h e q u a r t e r , w i t h t h e e x c e p t i o n o f t h e B r a z i l i a n R e a l wh i c h m o d e s t l y d e p r e c i a t e d .  Th e o n e - y e a r p e r f o r m a n c e r e s u l t s f o r n o n - U S e q u i t i e s r o s e i n t o po s i t i v e t e r r i t o r y a s t h e p o o r p e r i o d f r o m S e p t e m b e r 2 0 1 1 w a s dr o p p e d o f f . The Market Environment In t e r n a t i o n a l a n d R e g i o n a l M a r k e t In d e x P e r f o r m a n c e ( C o u n t r y C o u n t ) As of September 30, 2012 3. 5 % 6.6%6.7%6.1% 1. 6 % 6.5%4.7%5.0%5.2%4.7%8.9%9.8%7.9% 3. 8 % 8.8%7.0%7.4%7.5% 0. 0 % 2 . 0 % 4 . 0 % 6 . 0 % 8 . 0 % 1 0 . 0 % EM L a t i n A m e r ( 5 ) EM A s i a ( 8 ) EM E u r o p e ( 5 ) Em e r g i n g M k t ( 2 1 ) Pa c i f i c ( 5 ) Eu r o p e ( 1 6 ) EA F E ( 2 2 ) WO R L D x U S ( 2 3 ) AC W o r l d x U S ( 4 4 ) Qu a r t e r P e r f o r m a n c e USDLocal Currency 17.0%16.5%15.4%16.8% 6. 3 % 19.0%14.1%13.5%14.2%13.5%18.2%18.1%17.3% 7. 9 % 18.1%14.3%14.4%15.0% 0. 0 % 5 . 0 % 1 0 . 0 % 1 5 . 0 % 2 0 . 0 % EM L a t i n A m e r ( 5 ) EM A s i a ( 8 ) EM E u r o p e ( 5 ) Em e r g i n g M k t ( 2 1 ) Pa c i f i c ( 5 ) Eu r o p e ( 1 6 ) EA F E ( 2 2 ) WO R L D x U S ( 2 3 ) AC W o r l d x U S ( 4 4 ) 1- Y e a r P e r f o r m a n c e USDLocal Currency Pa g e 7 So u r c e : M S C I ( w w w . m s c i . c o m ) The Market Environment U. S . D o l l a r I n t e r n a t i o n a l I n d e x A t t r i b u t i o n & C o u n t r y D e t a i l As of September 30, 2012 MS C I - E A F E S e c t o r W e i g h t Q u ar t e r R e t u r n 1 - Y e a r R e t u r n En e r g y 8 . 3 % 6 . 7 % 1 6 . 3 % Ma t e r i a l s 9 . 6 % 7 . 1 % 8 . 6 % In d u s t r i a l s 1 2 . 4 % 5 . 8 % 1 3 . 0 % Co n s u m e r D i s c r e t i o na r y 1 0 . 1 % 2 . 5 % 1 3 . 0 % Co n s u m e r S t a p l es 1 2 . 0 % 7 . 1 % 2 0 . 9 % He a l t h C a r e 1 0 . 2 % 8 . 9 % 2 2 . 4 % Fi n a n c i a l s 2 3 . 5 % 1 1 . 3 % 1 9 . 8 % In f o r m a t i o n T e c h n o l o g y 4 . 3 % 1 . 4 % - 1 . 4 % Te l e c o m m u n i c a t i o n S e r v i c e s 5 . 4 % 5 . 2 % 6 . 8 % Ut i l i t i e s 4 . 0 % 2 . 5 % - 1 . 8 % To t a l 1 0 0 . 0 % 7 . 0 % 1 4 . 3 % MS C I - A C W I x U S S e c t o r W e i g h t Qu a r t e r R e t u r n 1 - Y e a r R e t u r n En e r g y 1 1 . 0 % 8 . 8 % 1 5 . 4 % Ma t e r i a l s 1 1 . 1 % 7 . 9 % 6 . 7 % In d u s t r i a l s 1 0 . 5 % 5 . 6 % 1 3 . 8 % Co n s u m e r D i s c r e t i o na r y 9 . 1 % 4 . 2 % 1 3 . 4 % Co n s u m e r S t a p l es 1 0 . 4 % 7 . 1 % 2 2 . 2 % He a l t h C a r e 7 . 4 % 9 . 1 % 2 2 . 7 % Fi n a n c i a l s 2 4 . 7 % 1 0 . 0 % 1 9 . 4 % In f o r m a t i o n T e c h n o l o g y 6 . 3 % 6 . 4 % 1 3 . 1 % Te l e c o m m u n i c a t i o n S e r v i c e s 5 . 9 % 6 . 3 % 1 0 . 5 % Ut i l i t i e s 3 . 7 % 1 . 8 % 1 . 4 % To t a l 1 0 0 . 0 % 7 . 5 % 1 5 . 0 % MS C I - E m e r g i n g M k t S e c t o r W e i gh t Q u a r t e r R e t u r n 1 - Y e a r R e t u r n En e r g y 1 3 . 1 % 1 0 . 9 % 1 2 . 3 % Ma t e r i a l s 1 2 . 0 % 5 . 5 % 5 . 2 % In d u s t r i a l s 6 . 7 % 4 . 6 % 1 3 . 4 % Co n s u m e r D i s c r e t i o na r y 8 . 0 % 1 0 . 6 % 1 4 . 4 % Co n s u m e r S t a p l es 8 . 5 % 7 . 0 % 2 8 . 0 % He a l t h C a r e 1 . 3 % 1 1 . 1 % 2 3 . 0 % Fin a n c i a l s 2 4 . 9 % 7 . 3 % 1 9 . 3 % In f o r m a t i o n T e c h n o l o g y 1 4 . 0 % 1 1 . 1 % 3 1 . 1 % Te l e c o m m u n i c a t i o n S e r v i c e s 8 . 1 % 7 . 9 % 1 6 . 0 % Ut i l i t i e s 3 . 6 % - 0 . 4 % 1 4 . 6 % To t a l 1 0 0 . 0 % 7 . 9 % 1 7 . 3 % MS C I - E A F E M S C I - A C W I x U S Q u a r t e r 1 - Y e a r Co u n t r y W e i g h t W e i g h t R e t u r n R e t u r n Un i t e d K i n g d o m 2 3 . 2 % 15.8%7.1%20.8% Ja p a n 2 0 . 1 % 1 3 . 6 % - 0 . 8 % - 1 . 5 % Fr a n c e 9 . 2 % 6 . 2 % 7 . 4 % 1 3 . 8 % Au s t r a l i a 8 . 9 % 6 . 1 % 1 0 . 5 % 2 3 . 0 % Sw i t z e r l a n d 8 . 6 % 5 . 8 % 7 . 8 % 1 7 . 1 % Ge r m a n y 8 . 6 % 5 . 8 % 1 3 . 9 % 2 6 . 5 % Sw e d e n 3 . 2 % 2 . 2 % 1 0 . 6 % 2 7 . 9 % Ho n g K o n g 3 . 1 % 2 . 1 % 1 2 . 5 % 2 9 . 0 % Sp a i n 2 . 9 % 2 . 0 % 1 1 . 5 % - 6 . 5 % Ne t h e r l a n d s 2 . 5 % 1.7%9.2%18.0% It a l y 2 . 2 % 1 . 5 % 7 . 6 % 4 . 7 % Si n g a p o r e 1 . 9 % 1 . 3 % 1 0 . 6 % 2 5 . 7 % De n m a r k 1 . 2 % 0 . 8 % 1 1 . 3 % 3 8 . 2 % Be l g i u m 1 . 2 % 0 . 8 % 1 0 . 1 % 3 5 . 4 % No r w a y 1 . 0 % 0 . 7 % 1 3 . 6 % 2 9 . 8 % Fin l a n d 0 . 8 % 0 . 5 % 1 0 . 6 % 1 . 0 % Is r a e l 0 . 6 % 0 . 4 % 6 . 4 % 4 . 7 % Ir e l a n d 0 . 3 % 0 . 2 % - 1 . 5 % 2 6 . 4 % Au s t r i a 0 . 3 % 0 . 2 % 7 . 3 % 1 . 2 % Po r t u g a l 0 . 2 % 0 . 1 % 1 3 . 1 % - 1 3 . 9 % Ne w Z e a l a n d 0 . 1 % 0 . 1 % 1 5 . 8 % 2 1 . 8 % Gr e e c e 0 . 1 % 0 . 0 % 0 . 3 % - 4 0 . 2 % To t a l E A F E C o u n t r i e s 1 0 0 . 0 % 6 7 . 8 % 7 . 0 % 1 4 . 3 % Ca n a d a 8 . 3 % 1 0 . 6 % 1 4 . 7 % To t a l D e v e l o p e d C o u n t r i e s 7 6 . 1 % 7 . 4 % 1 4 . 4 % Ch i n a 4 . 1 % 4 . 7 % 1 7 . 9 % Ko r e a 3 . 7 % 9 . 9 % 2 2 . 8 % Br a z i l 3 . 0 % 4 . 8 % 5 . 5 % Ta i w a n 2 . 7 % 1 1 . 8 % 1 5 . 4 % So u t h A f r i c a 1 . 9 % 6 . 6 % 1 9 . 8 % In d i a 1 . 7 % 1 5 . 4 % 7 . 5 % Ru s s i a 1 . 4 % 9 . 4 % 1 8 . 5 % Me x i c o 1 . 2 % 6 . 8 % 3 3 . 6 % Ma l a y s i a 0 . 9 % 5 . 3 % 2 3 . 1 % In d o n e s i a 0 . 7 % 7 . 5 % 1 0 . 1 % Th a i l a n d 0 . 5 % 1 1 . 3 % 4 2 . 1 % Ch i l e 0 . 5 % 1 . 3 % 1 7 . 8 % Tu r k e y 0 . 4 % 8 . 2 % 1 7 . 4 % Po l a n d 0 . 4 % 1 3 . 2 % 1 8 . 5 % Co l o m b i a 0 . 3 % 2 . 3 % 2 3 . 4 % Ph i l i p p i n e s 0 . 2 % 4 . 5 % 4 1 . 6 % Pe r u 0 . 2 % 2 . 9 % 2 5 . 9 % Eg y p t 0 . 1 % 2 2 . 6 % 4 5 . 6 % Cz e c h R e p u b l i c 0.1%10.4%4.8% Hu n g a r y 0 . 1 % 9 . 6 % 2 1 . 7 % Mo r o c c o 0 . 0 % - 3 . 3 % - 2 1 . 3 % To t a l E m e r g i n g C o u n t r i e s 2 3 . 8 % 7 . 9 % 1 7 . 3 % To t a l A C W I x U S C o u n t r i e s 1 0 0 . 0 % 7 . 5 % 1 5 . 0 % Pa g e 8 So u r c e : B a r c l a y s C a p i t a l L i v e  Fo r t h e s e c o n d q u a r t e r i n a r o w , i n v e s t o r s w e r e r e w a r d e d f o r o w n i n g ri s k i e r a s s e t s a s a s t r o n g c r e d i t r a l l y l e d t h e B a r c l a y s A g g r e g a t e B o n d In d e x t o a 1 . 6 % q u a r t e r l y r e t u r n . E a c h o f t h e t h r e e k e y s e c t o r s w e r e po s i t i v e f o r t h e q u a r t e r w i t h C o r p o r a t e B o n d s b e s t i n g M B S a n d Tr e a s u r i e s b y 2 7 0 b p s a n d 3 2 0 b p s , r e s p e c t i v e l y . T h e i n v e s t m e n t gr a d e c r e d i t s e c t o r w a s l e d b y B a a - a n d A - r a t e d b o n d s , w h i c h ou t p e r f o r m e d A A A - r a t e d b o n d s b y 2 . 4 % a n d 1 . 9 % . T h e M B S s e c t o r tu r n e d i n a s o l i d s h o w i n g d u e t o s t r o n g m a r k e t t e c h n i c a l s r e s u l t i n g f r o m th e F e d a n n o u n c i n g t h e y w o u l d b u y u p t o $ 4 0 b i l l i o n p e r m o n t h i n p a s s - th r o u g h s e c u r i t i e s . L a s t l y , T r e a s u r i e s l a g g e d a s t h e y i e l d c u r v e , a c r o s s al l m a t u r i t i e s , w a s l i t t l e c h a n g e d . W i t h i n T r e a s u r i e s , T I P S o u t p e r f o r m e d st a n d a r d T r e a s u r y b o n d s .  Du r i n g t h e t h i r d q u a r t e r , i n v e s t o r s s a w l o w q u a l i t y b o n d s c o n t i n u e t o ou t p e r f o r m t h e i r h i g h e r q u a l i t y c o u n t e r p a r t s . F r o m h i g h y i e l d t o A A A - ra t e d b o n d s , t h e t r e n d h e l d . A s i n v e s t o r s m o v e d d o w n t h e q u a l i t y sp e c t r u m , i n v e s t m e n t r e t u r n s w e r e s t r o n g e r i n t h e q u a r t e r . T h e di f f e r e n t i a l b e t w e e n i n v e s t m e n t g r a d e c o r p o r a t e s a n d h i g h y i e l d c r e d i t s wa s 6 0 b a s i s p o i n t s . T h e s p r e a d b e t w e e n t h e B a a - r a t e d b o n d s ( t h e lo w e s t i n v e s t m e n t g r a d e r a t i n g ) a n d A A A - r a t e d c r e d i t w a s 2 . 4 % .  Tr a i l i n g o n e - y e a r r e t u r n s c o n t i n u e d t o b e p o s i t i v e a c r o s s a l l b r o a d a n d se c t o r - f o c u s e d i n d i c e s . H o w e v e r , a b s o l u t e l e v e l s c o n t i n u e t o t r e n d lo w e r a s s p r e a d s a n d n o m i n a l y i e l d s c om p r e s s e d . T h e t r a i l i n g o n e - y e a r fi x e d i n c o m e r e s u l t s w e r e l e d b y t h e 1 8 . 6 % r e t u r n o f H i g h Y i e l d b o n d s , wh i c h b e n e f i t e d f r o m s t r o n g f u n d f l o w s , p o s i t i v e f u n d a m e n t a l s , a n d st r o n g i n v e s t o r a p p e t i t e f o r y i e l d . C o n t i n u i n g w i t h t h e t h e m e o f im p r o v i n g c r e d i t , i n v e s t m e n t g r a d e c r e d i t w a s t h e s e c o n d b e s t pe r f o r m i n g s e c t o r , r e t u r n i n g 1 0 . 8 % .  Fi n a l l y , I n t e r n a t i o n a l b o n d s b e n e f i t t e d f r o m a w e a k d o l l a r g e n e r a t i n g a qu a r t e r l y r e t u r n o f 4 . 4 % , w h i c h w a s 2 8 0 b a s i s p o i n t s b e t t e r t h a n do m e s t i c b o n d s ( 1 . 6 % ) . O n a t r a i l i n g o n e - y e a r b a s i s , t h e r e t u r n g a p be t w e e n t h e t w o a r e a s o f t h e m a r k e t s h r a n k t o a 4 0 b p s a d v a n t a g e f o r do m e s t i c b o n d s . AA A , A A , A , B a a , T r e a s u r y , M o r t g a g e & C o r p o r a t e b e n c h m a r k s a r e s u b - c o m p o n e n t s o f t h e B a r c l a y s A g g r e g a t e I n d e x . The Market Environment Do m e s t i c B o n d S e c t o r & B r o a d / Gl o b a l B o n d M a r k e t P e r f o r m a n c e As of September 30, 2012 4.4% 1. 4 % 1. 6 % 2. 1 % 3.8% 1. 1 % 0. 6 % 4.4%4.3%3.7% 2. 3 % 1. 9 % 0. 0 % 2 . 0 % 4 . 0 % 6 . 0 % Glo b a l A g g x U S In t e r m e d i a t e A g g Ag g r e g a t e TI P S Co r p o r a t e I G Mo r t g a g e Tr e a s u r y Hi g h Y i e l d Ba a AAA AA A Qu a r t e r P e r f o r m a n c e 4. 8 % 4. 3 % 5. 2 % 9.1%10.8% 3. 7 % 3. 0 % 18.6%11.9%10.5% 7. 9 % 5. 7 % 0. 0 % 5 . 0 % 1 0 . 0 % 1 5 . 0 % 2 0 . 0 % Glo b a l A g g x U S In t e r m e d i a t e A g g Ag g r e g a t e TI P S Co r p o r a t e I G Mo r t g a g e Tr e a s u r y Hi g h Y i e l d Ba a AAA AA A 1- Y e a r P e r f o r m a n c e Pa g e 9 So u r c e : U S D e p a r t m e n t o f T r e a s u r y , F R E D - F e d e r al R e s e r v e o f S t . L o u i s , a n d M o r t g a g e - X . c o m  Du r i n g t h e q u a r t e r , t h e m a c r o - e c o n o m i c p i c t u r e w a s d o m i n a t e d b y t h e ag g r e s s i v e m o v e s i n S e p t e m b e r b y t h e F e d e r a l R e s e r v e a n d t h e E C B . I n ea r l y S e p t e m b e r , t h e E C B a p p r o v e d “ o u t r i g h t m o n e t a r y t r a n s a c t i o n s ” (b o n d p u r c h a s e s ) t o h e l p t r o u b l e d s o v e r e i g n n a t i o n s i n t h e E u r o z o n e , sp e c i f i c a l l y I t a l y a n d S p a i n . L a t e r i n t h e m o n t h , C h a i r m a n B e n B e r n a n k e an n o u n c e d t h e F e d e r a l R e s e r v e w o u l d b e g i n a n o t h e r r o u n d o f Qu a n t i t a t i v e E a s i n g ( Q E I I I ) . T h i s t i m e , i n a d d i t i o n t o t h e a n n o u n c e d co n t i n u a t i o n o f O p e r a t i o n T w i s t i n J u n e , t h e F e d a n n o u n c e d p l a n s t o b u y up t o $ 4 0 b i l l i o n o f M B S s e c u r i t i e s e a c h m o n t h . T r e a s u r i e s h a d a m o d e s t re a c t i o n t o t h e n e w s g i v e n t h a t t h e c u r r e n t r o u n d o f q u a n t i t a t i v e e a s i n g wi l l b e f o c u s e d o n t h e m o r t g a g e s e c t o r .  Th e 1 0 - y e a r T r e a s u r y b e g a n t h e q u a r t e r w i t h a y i e l d o f 1 . 6 7 % a n d fi n i s h e d 2 b p s l o w e r a t 1 . 6 5 % . T h e 1 . 6 5 % y i e l d o n t h e 1 0 - y e a r , w h i l e mo d e s t l y b e l o w t h e c l o s i n g y i e l d o n J u n e 3 0 , m a s k e d a g r e a t d e a l o f vo l a t i l i t y f o r t h e q u a r t e r . D u r i n g t h e t h i r d q u a r t e r , t h e 1 0 - y e a r T r e a s u r y tr a d e d i n a 4 5 b a s i s p o i n t r a n g e o f 1 . 4 3 % t o 1 . 8 8 % . T h e l o w w a s r e a c h e d in l a t e J u l y a s c o n c e r n s g r e w t h a t t h e s l u g g i s h g l o b a l e c o n o m y w a s we a k e n i n g f u r t h e r . A s o p t i m i s m g r e w t h a t c e n t r a l b a n k s w o u l d , o n c e ag a i n , u n d e r t a k e f u r t h e r q u a n t i t a t i v e e a s i n g , r a t e s s o l d o f f d r a m a t i c a l l y t o th e i r q u a r t e r l y h i g h o f 1 . 8 8 % o n S e p t e m b e r 1 4 . A f t e r s u c h t i m e , r a t e s mo v e d b a c k t o t h e l e v e l s o f t h e p r e v i o u s q u a r t e r t o e n d a t a y i e l d o f 1. 6 5 % . O n c e a g a i n , s h o r t - t e r m r a t e s r e m a i n a t o r n e a r z e r o g i v i n g e v e n mo r e i n d i c a t i o n f r o m t h e F e d t h a t t h e y i n t e n d t o k e e p r a t e s l o w f o r a co n s i d e r a b l e p e r i o d o f t i m e .  In s p i t e o f a c t i v i t y f r o m c e n t r a l b a n k s i n t h e U n i t e d S t a t e s a n d E u r o p e , t h e Tr e a s u r y y i e l d c u r v e r e m a i n e d m o s t l y u n c h a n g e d d u r i n g t h e 3 rd qu a r t e r . Ho w e v e r , w h e n c o m p a r i n g 2 0 1 0 t o t h e p r e s e n t p e r i o d , t h e y i e l d c u r v e h a s fl a t t e n e d d r a m a t i c a l l y . A t c u r r e n t l e v e l s , i n v e s t o r s m u s t e x t e n d t o 1 0 - y e a r ma t u r i t i e s a n d b e y o n d t o r e a l i z e a y i e l d i n e x c e s s o f t h e r a t e o f i n f l a t i o n . Si n c e 2 0 1 0 , i n v e s t o r s i n l o n g e r - d a t e d b o n d s h a v e b e e n r e w a r d e d a s r a t e s mo v e d l o w e r . G o i n g f o r w a r d , h o w e v e r , t h e f l a t t e r y i e l d c u r v e a n d l o w no m i n a l y i e l d s p r o v i d e i n v e s t o r s w i t h l i t t l e r e t u r n t o c o m p e n s a t e f o r t h e hi g h l e v e l o f i n t e r e s t r a t e r i s k f o u n d i n l o n g - d a t e d T r e a s u r i e s . The Market Environment Ma r k e t R a t e & Y i e l d C u r v e C o m p a r i s o n As of September 30, 2012 0. 0 0 0. 5 0 1. 0 0 1. 5 0 2. 0 0 2. 5 0 3. 0 0 3. 5 0 4. 0 0 4. 5 0 5. 0 0 5. 5 0 1 m o 3 m o 6 m o 1 y r 2 y r 3 y r 5 y r 7 y r 1 0 y r 2 0 y r 3 0 y r Tr e a s u r y Y i e l d C u r v e 12 / 3 1 / 2 0 1 0 12 / 3 0 / 2 0 1 1 6/ 3 0 / 2 0 1 2 9/ 3 0 / 2 0 1 2 -1 . 0 0 -0 . 5 0 0. 0 0 0. 5 0 1. 0 0 1. 5 0 2. 0 0 2. 5 0 3. 0 0 3. 5 0 4. 0 0 4. 5 0 Se p - 1 1 D e c - 1 1 M a r - 1 2 J u n - 1 2 S e p - 1 2 1- Y e a r T r a i l i n g M a r k e t R a t e s Fe d F u n d s R a t e TE D S p r e a d 3-Month Libor BA A / 1 0 y r S p r e a d 10 y r T r e a s u r y 10yr TIPS Pa g e 1 0  Pr i v a t e C o r e R e a l E s t a t e ( C h a r t s l o c a t e d t o t h e r i g h t ) : T h e a s s e t c l a s s (a s r e p r e s e n t e d b y t h e N C R E I F N F I - O D C E a n d t h e N P I ) c o n t i n u e d t o pr o d u c e s o l i d r e s u l t s a c r o s s a l l s e c t o r s a n d g e o g r a p h i e s f o r t h e q u a r t e r , wh i c h d r o v e r e t u r n s f o r m o s t s e c t o r s ( e x c e p t H o t e l s ) a n d g e o g r a p h i e s in t o d o u b l e d i g i t s f o r t h e 1 - Y e a r . T h i s i s t h e f i r s t t i m e i n f i v e q u a r t e r s t h a t th e a p a r t m e n t s e c t o r w a s n o t t h e h i g h e s t p e r f o r m i n g ; w h i l e t h e W e s t re g i o n c o n t i n u e s t o b e t h e s t r o n g e s t p e r f o r m e r . U n d e r l y i n g p r o p e r t y fu n d a m e n t a l s c o n t i n u e t o i m p r o v e w i t h t h e N F I a n d N P I o c c u p a n c y ra t e s i n c r e a s i n g . D u e t o a s s e t a p p r e c i a t i o n , t h e p a y - d o w n o f d e b t , a n d co n t i n u e d i n t e r e s t o f i n v e s t o r s i n C o r e r e a l e s t a t e ( i n v e s t o r s c o n t r i b u t e d $3 . 0 5 b i l l i o n d u r i n g t h e q u a r t e r ) , t h e N F I L T V r e d u c e b y 1 % . F o r t h e br o a d e r u n i v e r s e , r e p r e s e n t e d b y t h e N P I , s a m e s t o r e N O I i n c r e a s e d fo r t h e t h i r d c o n s e c u t i v e q u a r t e r b y 2. 8 % a n d C a p r a t e s s t a y e d a t 6 . 0 % . So u r c e f o r t o p r i g h t t a b l e . : N C R E I F a s o f J u n e 3 0 , 2 0 1 2 ; S o u r c e f o r b o t t o m r i g h t c h a r t : G r e e n S t r e e t A d v i s o r s v i a A E W R e s e a r c h The Market Environment Do m e s t i c P r i v a t e & P u b l i c R e a l E s t a t e M a r k e t M e t r i c s As of September 30, 2012 U. S . M o n t h l y S e c t o r R e s u l t s * M- T - D T o t a l Re t u r n s Y- T - D T o t a l Re t u r n s Di v i d e n d Y i e l d Eq u i t y M a r k e t Ca p i t a l i z a t i o n ( $ M M ) Re t a i l 2 . 5 % 2 6 . 7 % 3 . 1 % $ 1 3 9 , 2 0 9 . 7 Sh o p p i n g C e n t e r 2. 6 % 2 5 . 2 % 3 . 5 % 4 1 , 3 5 9 . 2 Re g i o n a l M a l l 2. 3 % 2 8 . 0 % 2 . 7 % 8 6 , 1 6 2 . 9 Fr e e S t a n d i n g 4. 0 % 2 2 . 9 % 4 . 3 % 1 1 , 6 8 7 . 6 In d u s t r i a l / O f f i c e 1 . 6% 1 7 . 1 % 3 . 5 % 8 5 , 8 3 8 . 0 In d u s t r i a l 4. 5 % 2 1 . 8 % 3 . 4 % 2 1 , 2 0 8 . 7 Of f i c e 0. 4 % 1 4 . 2 % 3 . 3 % 5 1 , 9 4 4 . 8 Mi x e d 2. 2 % 2 3 . 1 % 4 . 8 % 1 0 , 6 8 4 . 5 Re s i d e n t i a l - 3 . 5 % 9.4 % 2 . 9 % 7 7 , 9 5 5 . 6 Ap a r t m e n t -3 . 5 % 9 . 3 % 2 . 9 % 7 3 , 7 2 3 . 6 Ma n u f a c t u r e d H o m e -3 . 4 % 1 1 . 4 % 3 . 6 % 4 , 2 3 1 . 9 Di v e r s i f i e d - 1 . 3 % 12 . 4 % 4 . 0 % 3 6 , 2 0 9 . 3 Lo d g i n g / R e s o r t 3 . 0 % 9.3 % 2 . 9 % 2 7 , 0 9 2 . 9 He a l t h c a r e - 2 . 5 % 1 6 . 8 % 4 . 7 % 6 4 , 0 9 3 . 1 Se l f S t o r a g e - 0 . 7 % 1 5 . 9 % 2 . 9 % 3 1 , 5 1 5 . 0 FT S E N A R E I T E q u i t y R E I T s I n d e x 0 . 0 % 1 7 . 2 % 3 . 4 % $ 4 6 1 , 9 1 3 . 4 So u r c e f o r b o t t o m l e f t t a b l e : * N A R E I T v i a A E W R e s e a r c h a s o f A u g u s t 3 1 , 2 0 1 2 -5 0 % -4 0 % -3 0 % -2 0 % -1 0 % 0% 10 % 20 % 30 % 40 % 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 20022003200420052006200720082009201020112012 RE I T P r e m i u m / D i s c o u n t t o U n d e r l y i n g P r o p e r t y V a l u e Ja n u a r y 1 9 9 0 t o S e p t e m b e r 2 0 1 2 PREMIUM DISCOUNT NC R E I F N P I M a r k e t V a l u e ( $ M M ) Q u a r t e r R e t u r n 1 - Y e a r R e t u r n To t a l R e t u r n $ 3 1 0 , 7 3 8 . 9 2 . 7 % 1 2 . 0 % In c o m e 1 . 5 % 5 . 9 % App r e c i a t i o n 1 . 2 % 5 . 9 % Se c t o r W e i g h t Q u a r t e r R e t u r n 1 - Y e a r R e t u r n Of f i c e 3 5 . 1 % 2 . 3 % 1 0 . 5 % Apa r t m e n t 2 5 . 3 % 2 . 8 % 1 3 . 2 % Re t a i l 2 2 . 7 % 3 . 0 % 1 3 . 4 % In d u s t r i a l 1 4 . 3 % 2 . 9 % 1 2 . 2 % Ho t e l 2 . 6 % 2 . 1 % 8 . 0 % To t a l R e g i o n a l W e i g h t Q u a r t e r R e t u r n 1 - Y e a r R e t u r n We s t 3 4 . 0 % 3 . 1 % 1 3 . 5 % Ea s t 3 3 . 6 % 2 . 4 % 1 0 . 8 % So u t h 2 2 . 2 % 2 . 7 % 1 2 . 2 % Mid w e s t 1 0 . 2 % 2 . 3 % 1 1 . 1 % NC R E I F N F I - O D C E ( C a p W e i g h t e d ) M a r k e t V a l u e ( $ M M ) Q u a r t e r R e t u r n 1 - Y e a r R e t u r n To t a l R e t u r n $ 8 3 , 8 3 0 . 3 2 . 6 % 1 2 . 4 % In c o m e 1 . 3 % 5 . 4 % App r e c i a t i o n 1 . 2 % 6 . 7 % Fu n d C o u n t A v e r a g e L o a n - T o - V a l u e A v e r a g e O c c u p a n c y NC R E I F N F I - O D C E K e y S t a t i s t i c s 1 8 2 3 % 8 9 . 9 %  Pu b l i c R e a l E s t a t e S e c u r i t i e s ( C h a r t s l o c a t e d a t b o t t o m o f t h i s s l i d e ) : Pe r f o r m a n c e f o r A u g u s t 2 0 1 2 w a s m i x e d w i t h r e t a i l , i n d u s t r i a l / o f f i c e , an d l o d g i n g s e c t o r s p r o d u c i n g p o s i t i v e r e s u l t s w h i l e , r e s i d e n t i a l , di v e r s i f i e d , h e a l t h c a r e a n d s t o r a g e e x h i b i t i n g n e g a t i v e r e t u r n s . M o r e br o a d l y , t h e F T S E N A R E I T E q u i t y R E I T s I n d e x ( p r o x y f o r U . S . R E I T s ) ha s p e r f o r m e d v e r y w e l l f o r t h e Y T D p e r i o d . T h e R E I T d i v i d e n d y i e l d wa s u n c h a n g e d i n A u g u s t a t 3 . 4 % a n d t h e p r e m i u m t o N A V w a s re l a t i v e l y u n c h a n g e d a t 1 7 % . H o w e v e r , i t s e e m s t h a t i n v e s t o r s r e m a i n po s i t i v e t h a t R E I T s a r e n o t o v e r v a l u e d , a s R E I T s s p e n t t h e p a s t f e w ye a r s r e f i n a n c i n g i n t o l o w e r c o u p o n d e b t , r a i s i n g c o m m o n e q u i t y a t a pr e m i u m t o t h e i r N A V , l o w e r i n g t h e i r o v e r a l l l e v e r a g e , i m p r o v i n g t h e qu a l i t y o f t h e i r p o r t f o l i o s a n d l o w e r i n g d i v i d e n d p a y o u t r a t i o s . Pa g e 1 1  In a n e f f o r t t o b e t t e r s e r v e y o u r n e e d s , T h e B o g d a h n G r o u p i s co n d u c t i n g i t s a n n u a l c l i e n t s u r v e y .  We s i n c e r e l y t h a n k y o u f o r t a k i n g t h e t i m e t o f i l l o u t t h i s s u r v e y . Th e i n s i g h t s g a i n e d w i l l h e l p T h e B o g d a h n G r o u p c o n t i n u e t o im p r o v e a n d b e t t e r s e r v e y o u . A d d i t i o n a l l y , w e u s e t h e in f o r m a t i o n t o e v a l u a t e o u r c o n s u l t a n t s a n d i d e n t i f y a r e a s o f pr o f e s s i o n a l i m p r o v e m e n t . T h i s s u r v e y i s s h o r t a n d s h o u l d t a k e ap p r o x i m a t e l y f i v e t o t e n m i n u t e s t o c o m p l e t e . T h e B o g d a h n Gr o u p w i l l k e e p a l l i n f o r m a t i o n p r o v i d e d c o m p l e t e l y c o n f i d e n t i a l an d w i l l n e v e r r e l e a s e i n f o r m a t i o n t o t h i r d p a r t i e s . T h i s s u r v e y i s fo r i n t e r n a l u s e o n l y .  If y o u d o n o t r e c e i v e a n i n d i v i d u a l e - m a i l f r o m t h e s u r v e y co m p a n y , p l e a s e p a r t i c i p a t e b y d i r e c t i n g y o u r b r o w s e r t o ht t p s : / / w w w . s u r v e y m o n k e y . c o m / s / T B G S u r v e y 2 0 1 2 .  If y o u h a v e a n y q u e s t i o n s a b o u t t h e s u r v e y , p l e a s e c o n t a c t C h i p Wo o t e n a t ( 8 6 3 ) 9 0 4 - 0 8 6 7 o r ch i p w @ b o g d a h n g r o u p . c o m .  Th a n k y o u a g a i n f o r y o u r h e l p . W e l o o k f o r w a r d t o h e a r i n g w h a t yo u h a v e t o s a y . The Market Environment Th e 2 0 1 2 B o g d a h n C l i e n t S u r v e y How are you doing? How are we doing? Th e B o g d a h n C l i e n t S u r v e y l i n k w i l l b e l i v e t h r o u g h D e c e m b e r 2 4 , 2 0 1 2 . Se l e c t o n e ch o i c e Ve r y P o o r 1 Excellent 10 1. We m a d e a n u m b e r o f e n h a n c e m e n t s t o t h e l o o k a n d f e e l o f y o u r pe r f o r m a n c e r e p o r t s t h i s y e a r ; p l e a s e r a t e y o u r s a t i s f a c t i o n w i t h t h e s e ch a n g e s . 2. Pl e a s e r a t e y o u r s a t i s f a c t i o n w i t h t h e l e v e l o f d e t a i l i n y o u r pe r f o r m a n c e r e p o r t . 3. Pl e a s e r a t e y o u r c o n s u l t a n t ' s a b i l i t y t o e f f e c t i v e l y c o m m u n i c a t e t h e in f o r m a t i o n i n t h e p e r f o r m a n c e r e p o r t . 4. Pl e a s e r a t e y o u r c o n s u l t a n t ' s a b il i t y t o e f f e c t i v e l y c o m m u n i c a t e in v e s t m e n t i n s i g h t s b e y o n d t h o s e i n t h e p e r f o r m a n c e r e p o r t . 5. Pl e a s e r a t e t h e e f f o r t o f y o u r c o n s u l t a n t t o o f f e r s u g g e s t i o n s a n d / o r so l u t i o n s t o e n h a n c e y o u r p o r t f o l i o . 6. Pl e a s e r a t e t h e o u t c o m e s o f y o u r c o n s u l t a n t ' s s u g g e s t i o n s a n d / o r in v e s t m e n t s o l u t i o n s . 7. Pl e a s e r a t e y o u r c o n s u l t a n t ' s l e v e l o f u n d e r s t a n d i n g o f y o u r Pl a n / F u n d ' s u n i q u e n e e d s . 8. Pl e a s e r a t e t h e t i m e l i n e s s o f y o u r c o n s u l t a n t ' s r e s p o n s e s t o r e g u l a r in q u i r i e s . ( O u r f i r m p o l i c y i s t o r e p l y t o a l l i n q u i r i e s w i t h i n 2 4 h o u r s . ) 9. Pl e a s e r a t e t h e d e t a i l p r o v i d e d i n y o u r c o n s u l t a n t ' s f o l l o w u p t o in q u i r i e s . 10 . Pl e a s e r a t e y o u r o v e r a l l s a t i s f a c t i o n w i t h T h e B o g d a h n G r o u p ' s se r v i c e s . 10987654321 23 4 5 6 7 8 9 Pa g e 1 2 September 30, 2012 : $48,843,854 US Cash $1,138,258 2% US Private Real Estate$3,689,668 8% International Fixed Income$1,559,551 3% US Fixed Income$11,773,44824% International Equity$4,388,6329% US Equity$26,294,29754% June 30, 2012 : $44,167,334 US Cash $108,739 0% US Private Real Estate$3,599,267 8% International Fixed Income$1,479,669 3% US Fixed Income$11,466,978 26% International Equity $4,019,8569% US Equity$23,492,82553% Asset Allocation By Asset Class Total Fund As of September 30, 2012 Page 13 September 30, 2012 : $48,843,854 Dana (Large Cap)$14,410,423 30% ICC$9,210,49819% Receipt & Disb. $1,138,258 2% Intercontinental$1,838,080 4% American Core$1,851,588 4% Templeton Glbl Bond$1,559,551 3% Garcia, Hamilton$6,105,381 12% Agincourt $5,668,06712% Manning & Napier$2,070,280 4% RBC International$2,318,352 5% Dana (Small Cap)$2,673,376 5% June 30, 2012 : $44,167,334 Dana (Large Cap)$12,344,12028% ICC$8,647,71820% Receipt & Disb. $108,739 0% Intercontinental$1,789,408 4% American Core$1,809,859 4% Templeton Glbl Bond$1,479,669 3% Garcia, Hamilton$5,921,582 13% Agincourt $5,545,39613% Manning & Napier$1,936,0864% RBC International$2,083,7695% Dana (Small Cap)$2,500,9886% Asset Allocation By Manager Total Fund As of September 30, 2012 Page 14 Asset Allocation vs. Target Allocation Allocation Differences 0.00%2.00%4.00%6.00%8.00%10.00%-2.00 %-4.00 %-6.00 %-8.00 %-10.00 % Cash Equivalent Real Estate Global Fixed Income Fixed Income International Equity Domestic Equity 2.33% -2.45 % -1.81 % 4.10% -1.01 % -1.17 % Asset Allocation vs. Target Allocation Market Value Allocation (%)Target (%) Domestic Equity 26,294,297 53.8 55.0 International Equity 4,388,632 9.0 10.0 Fixed Income 11,773,448 24.1 20.0 Global Fixed Income 1,559,551 3.2 5.0 Real Estate 3,689,668 7.6 10.0 Cash Equivalent 1,138,258 2.3 0.0 Total Fund 48,843,854 100.0 100.0 Asset Allocation vs. Target Allocation Total Fund As of September 30, 2012 Page 15 Asset Allocation Attributes Domestic Equity International Equity Domestic Fixed Income Global Fixed Income Real Estate Cash Equivalent Total Fund ($)%($)%($)%($)%($)%($)%($)% Total Domestic Equity 25,409,106 96.63 --------885,191 3.37 26,294,297 53.83 Dana (Large Cap)14,255,469 98.92 --------154,954 1.08 14,410,423 29.50 ICC 8,505,665 92.35 --------704,833 7.65 9,210,498 18.86 Dana (Small Cap)2,647,972 99.05 --------25,404 0.95 2,673,376 5.47 International Equity --4,388,632 100.00 --------4,388,632 8.99 RBC International Portfolio --2,318,352 100.00 --------2,318,352 4.75 Manning & Napier Overseas (EXOSX)--2,070,280 100.00 --------2,070,280 4.24 Total Fixed Income ----11,483,024 86.12 1,559,551 11.70 --290,424 2.18 13,332,999 27.30 Agincourt Capital Management Fixed ----5,523,754 97.45 ----144,313 2.55 5,668,067 11.60 Garcia, Hamilton & Assoc.----5,959,270 97.61 ----146,112 2.39 6,105,381 12.50 Templeton Global Bond Adv (TGBAX)------1,559,551 100.00 ----1,559,551 3.19 Total Real Estate --------3,689,668 100.00 --3,689,668 7.55 American Core Realty Fund --------1,851,588 100.00 --1,851,588 3.79 Intercontinental Real Estate --------1,838,080 100.00 --1,838,080 3.76 Receipt & Disbursement ----------1,138,258 100.00 1,138,258 2.33 Total Fund Portfolio 25,409,106 52.02 4,388,632 8.99 11,483,024 23.51 1,559,551 3.19 3,689,668 7.55 2,313,874 4.74 48,843,854 100.00 Asset Allocation Total Fund As of September 30, 2012 Page 16 Financial Reconciliation Market Value 07/01/2012 Contributions Distributions Management Fees Other Expenses Return On Investment Market Value 09/30/2012 Total Domestic Equity 23,492,825 1,419,200 --34,200 -1,416,472 26,294,297 Dana (Large Cap)12,344,120 1,404,454 --19,454 -681,303 14,410,423 ICC 8,647,718 10,804 --10,804 -562,781 9,210,498 Dana (Small Cap)2,500,988 3,941 --3,941 -172,388 2,673,376 International Equity 4,019,856 4,584 --4,584 -368,777 4,388,632 RBC International Portfolio 2,083,769 4,584 --4,584 -234,583 2,318,352 Manning & Napier Overseas (EXOSX)1,936,086 ----134,193 2,070,280 Total Fixed Income 12,946,647 7,153 --7,153 -386,352 13,332,999 Agincourt Capital Management 5,545,396 3,453 --3,453 -122,672 5,668,067 Garcia, Hamilton & Assoc.5,921,582 3,701 --3,701 -183,799 6,105,381 Templeton Global Bond Adv (TGBAX)1,479,669 ----79,881 1,559,551 Total Real Estate 3,599,267 ---4,939 -95,339 3,689,668 American Core Realty Fund 1,809,859 ---4,939 -46,668 1,851,588 Intercontinental Real Estate 1,789,408 ----48,672 1,838,080 Receipt & Disbursement 108,739 2,771,041 -1,702,542 --39,056 77 1,138,258 Total Fund Portfolio 44,167,334 4,201,978 -1,702,542 -50,876 -39,057 2,267,016 48,843,854 Financial Reconciliation Total Fund 1 Quarter Ending September 30, 2012 Page 17 Financial Reconciliation Market Value 10/01/2011 Contributions Distributions Management Fees Other Expenses Return On Investment Market Value 09/30/2012 Total Domestic Equity 17,974,548 3,764,357 -387,000 -134,357 -5,076,750 26,294,297 Dana (Large Cap)8,574,010 2,996,982 --66,982 -2,906,413 14,410,423 ICC 7,480,041 752,682 -387,000 -52,682 -1,417,457 9,210,498 Dana (Small Cap)1,920,497 14,694 --14,694 -752,879 2,673,376 International Equity 3,371,437 324,247 --24,247 -717,195 4,388,632 RBC International Portfolio 1,859,887 24,247 --24,247 -458,465 2,318,352 Manning & Napier Overseas (EXOSX)1,511,550 300,000 ---258,730 2,070,280 Total Fixed Income 12,351,582 34,556 -100,000 -34,556 -1,081,417 13,332,999 Agincourt Capital Management 5,399,044 16,690 -100,000 -16,690 -369,023 5,668,067 Garcia, Hamilton & Assoc.5,575,400 17,866 --17,866 -529,981 6,105,381 Templeton Global Bond Adv (TGBAX)1,377,138 ----182,412 1,559,551 Total Real Estate 3,175,378 171,640 -27,812 -40,559 -411,020 3,689,668 American Core Realty Fund 1,505,993 171,640 --19,142 -193,096 1,851,588 Intercontinental Real Estate 1,669,385 --27,812 -21,417 -217,924 1,838,080 Receipt & Disbursement 216,514 6,743,334 -5,678,440 --143,568 418 1,138,258 Total Fund Portfolio 37,089,459 11,038,135 -6,193,252 -233,720 -143,569 7,286,800 48,843,854 Financial Reconciliation Total Fund October 1, 2011 To September 30, 2012 Page 18 Comparative Performance QTR FYTD 1 YR 3 YR 5 YR Inception Inception Date Total Fund Portfolio (Gross)5.02 (36)18.93 (32)18.93 (32)8.93 (64)2.62 (57)4.80 (87)05/01/1998 Total Fund Policy 4.78 (50)19.99 (16)19.99 (16)10.39 (15)2.56 (61)4.61 (90) All Public Plans-Total Fund Median 4.78 18.03 18.03 9.24 2.79 5.39 Total Fund Portfolio (Net)4.90 18.28 18.28 8.42 2.15 4.23 05/01/1998 Total Fund Policy 4.78 19.99 19.99 10.39 2.56 4.61 Total Equity 6.28 25.54 25.54 9.90 N/A 4.31 07/31/2008 Total Equity Policy 6.34 27.76 27.76 11.65 N/A 4.05 Total Domestic Equity 5.80 (73)26.53 (73)26.53 (73)11.06 (77)1.97 (37)6.82 (40)07/01/2002 Russell 3000 6.23 (59)30.20 (46)30.20 (46)13.26 (42)1.30 (57)5.96 (76) IM U.S. Large Cap Core Equity (SA+CF) Median 6.43 29.91 29.91 12.82 1.60 6.66 Total International Equity 9.17 (13)20.29 (18)20.29 (18)5.19 (37)-2.08 (29)4.13 (37)01/01/2006 MSCI EAFE Index 6.98 (50)14.33 (69)14.33 (69)2.59 (66)-4.77 (61)1.80 (64) IM International Equity (SA+CF+MF) Median 6.98 16.59 16.59 3.88 -3.89 2.81 Total Fixed Income 2.98 (5)8.82 (8)8.82 (8)7.11 (14)7.23 (13)5.75 (31)07/01/2002 Barclays Intermediate Aggregate Index 1.36 (86)4.31 (86)4.31 (86)5.34 (78)5.96 (78)5.20 (82) IM U.S. Intermediate Duration (SA+CF) Median 1.74 5.63 5.63 5.83 6.47 5.59 Total Real Estate 2.65 (59)12.41 (43)12.41 (43)10.10 (83)-1.24 (41)2.35 (35)07/01/2006 NCREIF Property Index 2.34 (75)11.00 (81)11.00 (81)10.90 (80)2.27 (5)5.02 (5) IM U.S. Open End Private Real Estate (SA+CF) Median 2.76 12.29 12.29 12.62 -3.01 0.72 Comparative Performance Total Fund As of September 30, 2012 Returns for periods greater than 1 yr. are annualized. Returns are expressed as percentages . Page 19 Comparative Performance Total Fund As of September 30, 2012 QTR FYTD 1 YR 3 YR 5 YR Inception Inception Date Total Domestic Equity Dana (Large Cap)5.18 (85)31.58 (21)31.58 (21)12.82 (51)1.70 (45)6.62 (54)07/01/2002 S&P 500 Index 6.35 (55)30.20 (46)30.20 (46)13.20 (45)1.05 (64)5.83 (82) IM U.S. Large Cap Core Equity (SA+CF) Median 6.43 29.91 29.91 12.82 1.60 6.66 ICC 6.51 (38)17.73 (99)17.73 (99)N/A N/A -7.33 (97)05/01/2011 Russell 3000 Index 6.23 (43)30.20 (28)30.20 (28)13.26 (50)1.30 (57)4.95 (28) IM U.S. All Cap Core Equity (SA+CF) Median 6.22 27.88 27.88 13.00 1.39 2.54 Dana (Small Cap)6.89 (15)39.20 (6)39.20 (6)18.75 (5)2.59 (63)5.89 (83)05/01/2005 Russell 2000 Index 5.25 (52)31.91 (54)31.91 (54)12.99 (76)2.21 (70)6.51 (69) IM U.S. Small Cap Core Equity (SA+CF) Median 5.37 32.36 32.36 14.77 2.87 7.54 Total International Equity RBC International Portfolio 11.26 (1)24.65 (2)24.65 (2)8.46 (5)-0.74 (21)5.19 (20)01/01/2006 MSCI EAFE Index 6.98 (62)14.33 (54)14.33 (54)2.59 (64)-4.77 (73)1.80 (73) IM International Large Cap Value Equity (SA+CF) Median 7.33 15.01 15.01 3.59 -3.28 2.61 Manning & Napier Overseas (EXOSX)6.93 (32)16.04 (32)16.04 (32)1.35 (74)N/A 8.14 (30)06/01/2009 MSCI EAFE Index 6.98 (30)14.33 (58)14.33 (58)2.59 (48)-4.77 (35)7.78 (35) IM International Multi-Cap Core Equity (MF) Median 6.43 14.80 14.80 2.53 -5.65 7.02 Returns for periods greater than 1 yr. are annualized. Returns are expressed as percentages . Page 20 Comparative Performance Total Fund As of September 30, 2012 QTR FYTD 1 YR 3 YR 5 YR Inception Inception Date Total Fixed Income Agincourt Capital Management 2.21 (45)6.96 (44)6.96 (44)7.13 (52)N/A 8.99 (34)10/01/2008 Barclays Aggregate Index 1.58 (91)5.16 (92)5.16 (92)6.19 (92)6.53 (81)7.26 (95) IM U.S. Broad Market Core Fixed Income (SA+CF) Median 2.16 6.70 6.70 7.19 7.15 8.50 Garcia, Hamilton & Assoc.3.10 (4)9.51 (5)9.51 (5)6.85 (16)N/A 7.75 (12)07/01/2008 Barclays Intermediate Aggregate Index 1.36 (86)4.31 (86)4.31 (86)5.34 (78)5.96 (78)5.99 (80) IM U.S. Intermediate Duration (SA+CF) Median 1.74 5.63 5.63 5.83 6.47 6.60 Templeton Global Bond Adv (TGBAX)5.40 (10)13.25 (1)13.25 (1)N/A N/A 13.25 (1)10/01/2011 Citigroup World Government Bond 2.99 (92)3.28 (90)3.28 (90)4.29 (57)6.45 (43)3.28 (90) IM International Fixed Income (MF) Median 4.57 6.60 6.60 4.68 5.77 6.60 Total Real Estate American Core Realty Fund 2.58 (62)11.57 (55)11.57 (55)9.99 (84)-1.30 (41)1.64 (38)07/01/2006 NCREIF Property Index 2.34 (75)11.00 (81)11.00 (81)10.90 (80)2.27 (5)5.02 (5) IM U.S. Open End Private Real Estate (SA+CF) Median 2.76 12.29 12.29 12.62 -3.01 0.72 Intercontinental Real Estate 2.72 (54)13.25 (40)13.25 (40)N/A N/A 14.52 (62)10/01/2010 NCREIF Property Index 2.34 (75)11.00 (81)11.00 (81)10.90 (80)2.27 (5)13.52 (90) IM U.S. Open End Private Real Estate (SA+CF) Median 2.76 12.29 12.29 12.62 -3.01 15.92 Returns for periods greater than 1 yr. are annualized. Returns are expressed as percentages . Page 21 Comparative Performance Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 Oct-2005 To Sep-2006 Oct-2004 To Sep-2005 Total Fund Portfolio (Gross)0.08 (57)8.61 (83)0.00 (66)-11.96 (27)11.67 (90)8.65 (51)14.35 (26) Total Fund Policy 2.54 (14)9.32 (69)-1.86 (82)-14.02 (54)13.39 (69)9.16 (42)9.23 (85) All Public Plans-Total Fund Median 0.25 9.98 1.25 -13.77 14.46 8.68 12.46 Total Fund Portfolio (Net)-0.37 8.14 -0.46 -12.30 10.96 7.92 13.82 Total Fund Policy 2.54 9.32 -1.86 -14.02 13.39 9.16 9.23 Total Equity -4.38 10.56 -1.59 N/A N/A N/A N/A Total Equity Policy -0.89 9.91 -4.90 N/A N/A N/A N/A Total Domestic Equity -2.59 (85)11.15 (29)-3.60 (32)-16.51 (21)14.18 (82)10.21 (57)21.50 (13) Russell 3000 0.55 (56)10.96 (32)-6.42 (57)-21.52 (62)16.52 (58)10.22 (57)12.69 (73) IM U.S. Large Cap Core Equity (SA+CF) Median 0.97 9.48 -5.80 -20.48 16.98 10.76 15.16 Total International Equity -10.51 (43)8.14 (52)11.28 (28)-30.51 (46)24.22 (71)N/A N/A MSCI EAFE Index -8.94 (31)3.71 (75)3.80 (54)-30.13 (42)25.38 (63)19.65 (45)26.32 (56) IM International Equity (SA+CF+MF) Median -11.28 8.55 4.70 -31.03 27.91 19.08 27.04 Total Fixed Income 3.39 (62)9.20 (24)15.33 (9)0.03 (85)5.24 (78)3.64 (83)1.77 (76) Barclays Intermediate Aggregate Index 4.22 (21)7.52 (79)9.69 (82)4.16 (34)5.33 (71)3.84 (59)2.23 (41) IM U.S. Intermediate Duration (SA+CF) Median 3.60 8.26 11.51 3.21 5.50 3.91 2.09 Total Real Estate 15.92 (80)2.44 (79)-32.96 (41)4.98 (36)21.07 (13)N/A N/A NCREIF Property Index 16.10 (79)5.84 (53)-22.09 (5)5.27 (29)17.31 (71)17.62 (56)19.19 (68) IM U.S. Open End Private Real Estate (SA+CF) Median 16.62 6.39 -34.36 3.60 18.73 18.17 19.98 Comparative Performance Total Fund As of September 30, 2012 Returns for periods greater than 1 yr. are annualized. Returns are expressed as percentages . Page 22 Comparative Performance Total Fund As of September 30, 2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 Oct-2005 To Sep-2006 Oct-2004 To Sep-2005 Total Domestic Equity Dana (Large Cap)-0.89 (70)10.10 (42)-13.66 (97)-12.23 (7)15.43 (72)10.93 (45)18.87 (23) S&P 500 Index 1.14 (49)10.16 (41)-6.91 (63)-21.98 (67)16.44 (60)10.79 (49)12.25 (78) IM U.S. Large Cap Core Equity (SA+CF) Median 0.97 9.48 -5.80 -20.48 16.98 10.76 15.16 ICC N/A N/A N/A N/A N/A N/A N/A Russell 3000 Index 0.55 (61)10.96 (49)-6.42 (60)-21.52 (65)16.52 (63)10.22 (37)14.57 (76) IM U.S. All Cap Core Equity (SA+CF) Median 0.93 10.87 -5.96 -21.06 17.67 9.15 17.88 Dana (Small Cap)3.82 (15)15.86 (34)-13.06 (83)-21.93 (80)8.02 (88)5.23 (80)N/A Russell 2000 Index -3.53 (78)13.35 (72)-9.55 (65)-14.48 (25)12.34 (70)9.92 (32)17.95 (82) IM U.S. Small Cap Core Equity (SA+CF) Median -0.24 14.61 -7.80 -17.62 14.69 8.16 21.89 Total International Equity RBC International Portfolio -8.87 (57)12.31 (10)7.72 (38)-29.87 (71)24.22 (49)N/A N/A MSCI EAFE Index -8.94 (57)3.71 (64)3.80 (63)-30.13 (73)25.38 (40)19.65 (68)26.32 (59) IM International Large Cap Value Equity (SA+CF) Median -8.46 4.95 5.67 -27.35 23.99 20.79 26.80 Manning & Napier Overseas (EXOSX)-12.51 (71)2.52 (85)N/A N/A N/A N/A N/A MSCI EAFE Index -8.94 (26)3.71 (71)3.80 (40)-30.13 (35)25.38 (43)19.65 (26)26.32 (32) IM International Multi-Cap Core Equity (MF) Median -11.07 5.13 1.79 -31.56 24.82 17.85 24.95 Returns for periods greater than 1 yr. are annualized. Returns are expressed as percentages . Page 23 Comparative Performance Total Fund As of September 30, 2012 Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 Oct-2005 To Sep-2006 Oct-2004 To Sep-2005 Total Fixed Income Agincourt Capital Management 4.92 (69)9.55 (39)14.76 (19)N/A N/A N/A N/A Barclays Aggregate Index 5.26 (49)8.16 (87)10.56 (80)3.65 (33)5.14 (53)3.67 (76)2.80 (82) IM U.S. Broad Market Core Fixed Income (SA+CF) Median 5.26 9.20 12.31 2.55 5.16 3.85 3.14 Garcia, Hamilton & Assoc.2.32 (91)8.87 (29)15.91 (7)N/A N/A N/A N/A Barclays Intermediate Aggregate Index 4.22 (21)7.52 (79)9.69 (82)4.16 (34)5.33 (71)3.84 (59)2.23 (41) IM U.S. Intermediate Duration (SA+CF) Median 3.60 8.26 11.51 3.21 5.50 3.91 2.09 Templeton Global Bond Adv (TGBAX)N/A N/A N/A N/A N/A N/A N/A Citigroup World Government Bond 4.61 (7)4.98 (64)13.79 (68)5.88 (1)8.69 (40)2.22 (38)3.03 (59) IM International Fixed Income (MF) Median 1.75 6.51 15.98 -0.08 8.27 1.74 3.39 Total Real Estate American Core Realty Fund 16.11 (76)2.72 (75)-32.96 (41)4.98 (36)16.31 (81)N/A N/A NCREIF Property Index 16.10 (79)5.84 (53)-22.09 (5)5.27 (29)17.31 (71)17.62 (56)19.19 (68) IM U.S. Open End Private Real Estate (SA+CF) Median 16.62 6.39 -34.36 3.60 18.73 18.17 19.98 Intercontinental Real Estate 15.80 (80)N/A N/A N/A N/A N/A N/A NCREIF Property Index 16.10 (79)5.84 (53)-22.09 (5)5.27 (29)17.31 (71)17.62 (56)19.19 (68) IM U.S. Open End Private Real Estate (SA+CF) Median 16.62 6.39 -34.36 3.60 18.73 18.17 19.98 Returns for periods greater than 1 yr. are annualized. Returns are expressed as percentages . Page 24 Plan Sponsor Peer Group Analysis - All Public Plans-Total Fund Comparative Performance -22.00 -19.00 -16.00 -13.00 -10.00 -7.00 -4.00 -1.00 2.00 5.00 8.00 11.00 14.00 17.00 20.00 23.00 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁTotal Fund 0.08 (57)8.61 (83)0.00 (66)-11.96 (27)11.67 (90) ŁTotal Policy 2.54 (14)9.32 (69)-1.86 (82)-14.02 (54)13.39 (69) Median 0.25 9.98 1.25 -13.77 14.46 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 22.00 24.00 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁTotal Fund 5.02 (36)18.93 (32)18.93 (32)9.10 (40)8.93 (64)6.63 (75)2.62 (57) ŁTotal Policy 4.78 (50)19.99 (16)19.99 (16)10.92 (4)10.39 (15)7.19 (55)2.56 (61) Median 4.78 18.03 18.03 8.84 9.24 7.28 2.79 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 Total Fund -2.58 (72)9.55 (11)6.11 (50)-11.22 (74)0.32 (85)5.59 (3) Total Policy -1.84 (45)8.54 (38)7.48 (10)-9.39 (37)1.10 (49)4.31 (36) All Public Plans-Total Fund Median -1.95 8.15 6.10 -10.21 1.09 4.07 As of September 30, 2012 Performance Review Total Fund NONE Page 25 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁTotal Fund 20 0 (0%)4 (20%)12 (60%)4 (20%) ŁTotal Policy 20 3 (15%)1 (5%)10 (50%)6 (30%) Over Performance Under Performance Earliest Date Latest Date -6.0 0.0 6.0 12.0 18.0 21.9 Total Fund (%) -9.0 -6.0 -3.0 0.0 3.0 6.0 9.0 12.0 15.0 18.0 21.0 Total Policy (%) Over Performance UnderPerformance 9.00 9.50 10.00 10.50 Return (%) 11.22 11.25 11.28 11.31 11.34 11.37 11.40 11.43 11.45 Risk (Standard Deviation %) Return StandardDeviation ŁTotal Fund 8.93 11.42 ŁTotal Policy 10.39 11.26 ¾Median 9.24 11.23 2.56 2.64 2.72 2.80 Return (%) 12.0 12.3 12.6 12.9 13.2 13.5 13.8 14.1 14.4 14.7 15.0 Risk (Standard Deviation %) Return StandardDeviation ŁTotal Fund 2.62 12.35 ŁTotal Policy 2.56 14.61 ¾Median 2.79 13.67 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk Total Fund 2.20 93.81 105.14 -1.27 -0.60 0.81 1.00 7.22 Total Policy 0.00 100.00 100.00 0.00 N/A 0.94 1.00 6.69 90 Day U.S. Treasury Bill 11.26 0.46 -0.38 0.10 -0.94 N/A 0.00 0.00 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Total Fund 4.15 85.84 83.46 0.41 -0.06 0.21 0.82 8.26 Total Policy 0.00 100.00 100.00 0.00 N/A 0.20 1.00 9.84 90 Day U.S. Treasury Bill 14.83 0.45 -5.79 0.76 -0.20 N/A -0.01 0.00 As of September 30, 2012 Performance Review Total Fund NONE Page 26 Peer Group Analysis - IM U.S. Large Cap Core Equity (SA+CF) Comparative Performance -35.00 -30.00 -25.00 -20.00 -15.00 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 34.74 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁDana LC -0.89 (70)10.10 (42)-13.66 (97)-12.23 (7)15.43 (72) ŁS&P 500 Index 1.14 (49)10.16 (41)-6.91 (63)-21.98 (67)16.44 (60) Median 0.97 9.48 -5.80 -20.48 16.98 -7.00 -4.00 -1.00 2.00 5.00 8.00 11.00 14.00 17.00 20.00 23.00 26.00 29.00 32.00 35.00 38.00 41.00 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁDana LC 5.18 (85)31.58 (21)31.58 (21)14.20 (53)12.82 (51)5.52 (91)1.70 (45) ŁS&P 500 Index 6.35 (55)30.20 (46)30.20 (46)14.76 (45)13.20 (45)7.80 (51)1.05 (64) Median 6.43 29.91 29.91 14.38 12.82 7.86 1.60 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 Dana LC -2.14 (20)13.37 (44)12.76 (22)-16.65 (78)0.99 (38)7.97 (14) S&P 500 Index -2.75 (27)12.59 (61)11.82 (50)-13.87 (30)0.10 (61)5.92 (60) IM U.S. Large Cap Core Equity (SA+CF) Median -3.63 13.07 11.81 -14.84 0.45 6.30 Performance Review (Fiscal Years) As of September 30, 2012 Dana LC NONE Page 27 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁDana LC 20 4 (20%)4 (20%)7 (35%)5 (25%) ŁS&P 500 Index 20 0 (0%)4 (20%)14 (70%)2 (10%) Over Performance Under Performance Earliest Date Latest Date -10.0 0.0 10.0 20.0 29.7 Dana LC (%) -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0 29.7 S&P 500 Index (%) Over Performance UnderPerformance 12.80 13.00 13.20 13.27 Return (%) 16.90 17.00 17.10 17.20 17.30 17.40 17.50 17.60 17.70 17.80 Risk (Standard Deviation %) Return StandardDeviation ŁDana LC 12.82 17.50 ŁS&P 500 Index 13.20 16.97 ¾Median 12.82 17.73 1.20 1.50 1.80 Return (%) 21.33 21.34 21.35 21.36 21.37 21.38 21.39 21.40 21.41 21.42 21.43 Risk (Standard Deviation %) Return StandardDeviation ŁDana LC 1.70 21.41 ŁS&P 500 Index 1.05 21.34 ¾Median 1.60 21.42 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk Dana LC 2.37 96.56 96.06 0.02 -0.16 0.87 0.97 9.00 S&P 500 Index 0.00 100.00 100.00 0.00 N/A 0.88 1.00 9.16 90 Day U.S. Treasury Bill 15.36 0.22 -0.22 0.10 -0.88 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Dana LC 4.33 94.28 91.05 0.73 0.15 0.15 0.97 14.16 S&P 500 Index 0.00 100.00 100.00 0.00 N/A 0.11 1.00 14.04 90 Day U.S. Treasury Bill 19.10 0.65 -2.11 0.72 -0.11 N/A -0.01 0.01 Performance Review (Fiscal Years) As of September 30, 2012 Dana LC NONE Page 28 Peer Group Analysis - IM U.S. All Cap Core Equity (SA+CF) Comparative Performance -35.00 -30.00 -25.00 -20.00 -15.00 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁICC N/A N/A N/A N/A N/A ŁR3000 0.55 (61)10.96 (49)-6.42 (60)-21.52 (65)16.52 (63) Median 0.93 10.87 -5.96 -21.06 17.67 -7.00 -4.00 -1.00 2.00 5.00 8.00 11.00 14.00 17.00 20.00 23.00 26.00 29.00 32.00 35.00 38.00 41.00 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁICC 6.51 (38)17.73 (99)17.73 (99)N/A N/A N/A N/A ŁR3000 6.23 (43)30.20 (28)30.20 (28)14.42 (33)13.26 (50)7.98 (65)1.30 (57) Median 6.22 27.88 27.88 13.59 13.00 8.11 1.39 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 ICC -8.57 (95)13.17 (41)6.83 (95)-18.60 (78)N/A N/A R3000 -3.15 (31)12.87 (50)12.12 (22)-15.28 (41)-0.03 (60)6.38 (56) IM U.S. All Cap Core Equity (SA+CF) Median -4.22 12.86 11.53 -15.77 0.10 6.52 Performance Review (Fiscal Years) As of September 30, 2012 ICC NONE Page 29 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁICC 0 0 0 0 0 ŁR3000 20 0 (0%)4 (20%)16 (80%)0 (0%) No data found. 13.00 13.10 13.20 13.29 Return (%) 17.75 17.80 17.85 17.90 17.95 18.00 18.05 18.10 18.15 18.20 Risk (Standard Deviation %) Return StandardDeviation ŁICC N/A N/A ŁR3000 13.26 17.78 ¾Median 13.00 18.17 1.32 1.35 1.38 1.41 Return (%) 22.12 22.14 22.16 22.18 22.20 22.22 22.24 22.25 Risk (Standard Deviation %) Return StandardDeviation ŁICC N/A N/A ŁR3000 1.30 22.13 ¾Median 1.39 22.24 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk ICC N/A N/A N/A N/A N/A N/A N/A N/A R3000 0.00 100.00 100.00 0.00 N/A 0.85 1.00 9.69 90 Day U.S. Treasury Bill 16.04 0.21 -0.21 0.10 -0.85 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk ICC N/A N/A N/A N/A N/A N/A N/A N/A R3000 0.00 100.00 100.00 0.00 N/A 0.13 1.00 14.58 90 Day U.S. Treasury Bill 19.83 0.62 -2.02 0.72 -0.13 N/A -0.01 0.01 Performance Review (Fiscal Years) As of September 30, 2012 ICC NONE Page 30 Peer Group Analysis - IM U.S. Small Cap Core Equity (SA+CF) Comparative Performance -35.00 -30.00 -25.00 -20.00 -15.00 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁDana SC 3.82 (15)15.86 (34)-13.06 (83)-21.93 (80)8.02 (88) ŁR2000 -3.53 (78)13.35 (72)-9.55 (65)-14.48 (25)12.34 (70) Median -0.24 14.61 -7.80 -17.62 14.69 -7.00 -4.00 -1.00 2.00 5.00 8.00 11.00 14.00 17.00 20.00 23.00 26.00 29.00 32.00 35.00 38.00 41.00 44.00 47.00 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁDana SC 6.89 (15)39.20 (6)39.20 (6)20.21 (3)18.75 (5)9.84 (33)2.59 (63) ŁR2000 5.25 (52)31.91 (54)31.91 (54)12.81 (70)12.99 (76)6.87 (82)2.21 (70) Median 5.37 32.36 32.36 14.62 14.77 8.80 2.87 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 Dana SC -3.46 (26)15.55 (15)16.75 (33)-19.70 (23)0.48 (27)8.55 (58) R2000 -3.47 (26)12.44 (69)15.47 (55)-21.87 (56)-1.61 (80)7.94 (70) IM U.S. Small Cap Core Equity (SA+CF) Median -4.49 13.24 15.72 -21.52 -0.15 8.78 Performance Review (Fiscal Years) As of September 30, 2012 Dana SC NONE Page 31 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁDana SC 18 2 (11%)1 (6%)4 (22%)11 (61%) ŁR2000 20 0 (0%)5 (25%)10 (50%)5 (25%) Over Performance Under Performance Earliest Date Latest Date -22.0 -11.0 0.0 11.0 22.0 33.0 Dana SC (%) -20.0 -10.0 0.0 10.0 20.0 30.0 37.5 R2000 (%) Over Performance UnderPerformance 14.00 16.00 18.00 19.69 Return (%) 21.56 21.58 21.60 21.62 21.64 21.66 21.68 21.70 21.72 21.74 21.75 Risk (Standard Deviation %) Return StandardDeviation ŁDana SC 18.75 21.64 ŁR2000 12.99 21.57 ¾Median 14.77 21.73 2.10 2.40 2.70 2.97 Return (%) 25.20 25.40 25.60 25.80 26.00 26.20 26.35 Risk (Standard Deviation %) Return StandardDeviation ŁDana SC 2.59 25.30 ŁR2000 2.21 25.87 ¾Median 2.87 26.21 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk Dana SC 4.76 97.76 76.38 6.19 1.00 0.97 0.91 11.27 R2000 0.00 100.00 100.00 0.00 N/A 0.68 1.00 12.96 90 Day U.S. Treasury Bill 20.99 0.16 -0.16 0.10 -0.68 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Dana SC 6.03 88.23 86.29 0.48 0.00 0.20 0.91 16.84 R2000 0.00 100.00 100.00 0.00 N/A 0.19 1.00 17.79 90 Day U.S. Treasury Bill 24.65 0.70 -1.36 0.72 -0.19 N/A 0.00 0.01 Performance Review (Fiscal Years) As of September 30, 2012 Dana SC NONE Page 32 Peer Group Analysis - IM International Large Cap Value Equity (SA+CF) Comparative Performance -50.00 -45.00 -40.00 -35.00 -30.00 -25.00 -20.00 -15.00 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 49.25 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁRBC -8.87 (57)12.31 (10)7.72 (38)-29.87 (71)24.22 (49) ŁMSCI EAFE -8.94 (57)3.71 (64)3.80 (63)-30.13 (73)25.38 (40) Median -8.46 4.95 5.67 -27.35 23.99 -13.00 -10.00 -7.00 -4.00 -1.00 2.00 5.00 8.00 11.00 14.00 17.00 20.00 23.00 26.00 29.00 31.30 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁRBC 11.26 (1)24.65 (2)24.65 (2)6.58 (9)8.46 (5)8.27 (16)-0.74 (21) ŁMSCI EAFE 6.98 (62)14.33 (54)14.33 (54)2.04 (59)2.59 (64)2.89 (68)-4.77 (73) Median 7.33 15.01 15.01 2.66 3.59 3.70 -3.28 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 RBC -6.04 (35)17.62 (2)1.38 (91)-21.21 (79)0.62 (73)4.68 (24) MSCI EAFE -6.85 (50)10.98 (50)3.38 (57)-18.95 (55)1.83 (42)3.45 (54) IM International Large Cap Value Equity (SA+CF) Median -6.86 10.89 3.59 -18.76 1.46 3.55 Performance Review (Fiscal Years) As of September 30, 2012 RBC NONE Page 33 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁRBC 16 4 (25%)8 (50%)2 (13%)2 (13%) ŁMSCI EAFE 20 0 (0%)2 (10%)17 (85%)1 (5%) Over Performance Under Performance Earliest Date Latest Date -10.0 0.0 10.0 20.0 RBC (%) -16.0 -12.0 -8.0 -4.0 0.0 4.0 8.0 12.0 16.0 20.0 23.5 MSCI EAFE (%) Over Performance UnderPerformance 2.00 4.00 6.00 8.00 9.40 Return (%) 18.60 18.90 19.20 19.50 19.80 20.10 20.40 20.70 21.00 21.30 21.54 Risk (Standard Deviation %) Return StandardDeviation ŁRBC 8.46 21.20 ŁMSCI EAFE 2.59 19.14 ¾Median 3.59 18.90 -4.20 -2.80 -1.40 -0.09 Return (%) 22.80 23.20 23.60 24.00 24.40 24.80 25.20 25.60 25.99 Risk (Standard Deviation %) Return StandardDeviation ŁRBC -0.74 23.02 ŁMSCI EAFE -4.77 25.51 ¾Median -3.28 24.32 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk RBC 7.03 107.11 85.40 5.99 0.81 0.50 0.96 12.22 MSCI EAFE 0.00 100.00 100.00 0.00 N/A 0.23 1.00 13.31 90 Day U.S. Treasury Bill 19.27 0.17 -0.20 0.10 -0.23 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk RBC 8.95 91.16 80.96 3.25 0.40 0.04 0.83 15.08 MSCI EAFE 0.00 100.00 100.00 0.00 N/A -0.12 1.00 17.73 90 Day U.S. Treasury Bill 23.46 0.57 -1.57 0.69 0.12 N/A 0.00 0.01 Performance Review (Fiscal Years) As of September 30, 2012 RBC NONE Page 34 Peer Group Analysis - IM International Multi-Cap Core Equity (MF) Comparative Performance -50.00 -45.00 -40.00 -35.00 -30.00 -25.00 -20.00 -15.00 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁM & N -12.51 (71)2.52 (85)N/A N/A N/A ŁMSCI EAFE -8.94 (26)3.71 (71)3.80 (40)-30.13 (35)25.38 (43) Median -11.07 5.13 1.79 -31.56 24.82 -13.00 -10.00 -7.00 -4.00 -1.00 2.00 5.00 8.00 11.00 14.00 17.00 20.00 23.00 26.00 29.00 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁM & N 6.93 (32)16.04 (32)16.04 (32)0.76 (56)1.35 (74)N/A N/A ŁMSCI EAFE 6.98 (30)14.33 (58)14.33 (58)2.04 (35)2.59 (48)2.89 (39)-4.77 (35) Median 6.43 14.80 14.80 1.03 2.53 2.00 -5.65 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 M & N -9.28 (90)16.11 (3)3.02 (81)-23.70 (91)1.88 (38)5.41 (3) MSCI EAFE -6.85 (51)10.98 (58)3.38 (78)-18.95 (27)1.83 (39)3.45 (35) IM International Multi-Cap Core Equity (MF) Median -6.85 11.29 4.14 -20.87 1.29 3.02 Performance Review (Fiscal Years) As of September 30, 2012 M & N NONE Page 35 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁM & N 2 0 (0%)1 (50%)1 (50%)0 (0%) ŁMSCI EAFE 20 0 (0%)20 (100%)0 (0%)0 (0%) Earliest Date Latest Date 2.0 4.0 6.0 7.9 M & N (%) 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 7.9 MSCI EAFE (%) Over Performance Under Performance 1.50 2.00 2.50 2.80 Return (%) 18.90 19.20 19.50 19.80 20.10 20.40 20.70 21.00 21.30 21.60 Risk (Standard Deviation %) Return StandardDeviation ŁM & N 1.35 21.34 ŁMSCI EAFE 2.59 19.27 ¾Median 2.53 19.42 -5.70 -5.40 -5.10 -4.80 -4.64 Return (%) 23.30 23.40 23.50 23.60 23.70 23.80 23.90 Risk (Standard Deviation %) Return StandardDeviation ŁM & N N/A N/A ŁMSCI EAFE -4.77 23.34 ¾Median -5.65 23.86 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk M & N 5.41 108.03 112.66 -1.11 -0.14 0.17 1.07 15.22 MSCI EAFE 0.00 100.00 100.00 0.00 N/A 0.23 1.00 13.31 90 Day U.S. Treasury Bill 19.27 0.17 -0.20 0.10 -0.23 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk M & N N/A N/A N/A N/A N/A N/A N/A N/A MSCI EAFE 0.00 100.00 100.00 0.00 N/A -0.12 1.00 17.73 90 Day U.S. Treasury Bill 23.46 0.57 -1.57 0.69 0.12 N/A 0.00 0.01 Performance Review (Fiscal Years) As of September 30, 2012 M & N NONE Page 36 Peer Group Analysis - IM U.S. Broad Market Core Fixed Income (SA+CF) Comparative Performance -10.00 -8.00 -6.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 22.00 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁAgincourt 4.92 (69)9.55 (39)14.76 (19)N/A N/A ŁBC Agg 5.26 (49)8.16 (87)10.56 (80)3.65 (33)5.14 (53) Median 5.26 9.20 12.31 2.55 5.16 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 11.00 12.00 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁAgincourt 2.21 (45)6.96 (44)6.96 (44)5.94 (52)7.13 (52)8.99 (34)N/A ŁBC Agg 1.58 (91)5.16 (92)5.16 (92)5.21 (93)6.19 (92)7.26 (95)6.53 (81) Median 2.16 6.70 6.70 5.97 7.19 8.50 7.15 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 Agincourt 2.03 (71)1.18 (38)1.38 (35)3.04 (62)2.35 (25)0.64 (53) Barclays Agg 2.06 (68)0.30 (89)1.12 (71)3.82 (27)2.29 (38)0.42 (82) IM U.S. Broad Market Core Fixed Income (SA+CF) Median 2.16 1.02 1.26 3.31 2.24 0.67 Performance Review (Fiscal Years) As of September 30, 2012 Agincourt NONE Page 37 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁAgincourt 5 0 (0%)1 (20%)4 (80%)0 (0%) ŁBC Agg 20 0 (0%)5 (25%)7 (35%)8 (40%) Over Performance Earliest Date Latest Date 6.0 7.0 8.0 9.0 10.0 Agincourt (%) 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0 Barclays Agg (%) Over Performance Under Performance 6.40 6.80 7.20 Return (%) 2.50 2.55 2.60 2.65 2.70 2.75 2.80 2.85 Risk (Standard Deviation %) Return StandardDeviation ŁAgincourt 7.13 2.50 ŁBC Agg 6.19 2.80 ¾Median 7.19 2.53 6.60 6.90 7.20 Return (%) 3.20 3.25 3.30 3.35 3.40 3.45 3.50 3.55 3.60 3.65 3.70 3.75 3.79 Risk (Standard Deviation %) Return StandardDeviation ŁAgincourt N/A N/A ŁBC Agg 6.53 3.25 ¾Median 7.15 3.72 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk Agincourt 1.43 117.84 129.57 -0.20 0.64 2.00 1.18 1.91 Barclays Agg 0.00 100.00 100.00 0.00 N/A 2.23 1.00 1.20 90 Day U.S. Treasury Bill 2.67 1.07 -1.29 0.10 -2.23 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Agincourt N/A N/A N/A N/A N/A N/A N/A N/A Barclays Agg 0.00 100.00 100.00 0.00 N/A 1.61 1.00 1.63 90 Day U.S. Treasury Bill 3.55 5.90 -9.56 0.69 -1.61 N/A 0.00 0.01 Performance Review (Fiscal Years) As of September 30, 2012 Agincourt NONE Page 38 Peer Group Analysis - IM U.S. Intermediate Duration (SA+CF) Comparative Performance -6.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁG,H & Assoc 2.32 (91)8.87 (29)15.91 (7)N/A N/A ŁBC Int Agg 4.22 (21)7.52 (79)9.69 (82)4.16 (34)5.33 (71) Median 3.60 8.26 11.51 3.21 5.50 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 11.00 11.67 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁG,H & Assoc 3.10 (4)9.51 (5)9.51 (5)5.85 (10)6.85 (16)9.05 (7)N/A ŁBC Int Agg 1.36 (86)4.31 (86)4.31 (86)4.27 (66)5.34 (78)6.41 (88)5.96 (78) Median 1.74 5.63 5.63 4.57 5.83 7.34 6.47 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 G,H & Assoc 1.35 (68)3.31 (4)1.43 (9)-0.27 (95)1.91 (66)0.95 (19) Barclays Interm Agg 1.32 (70)0.66 (80)0.91 (77)2.30 (32)2.17 (18)0.48 (69) IM U.S. Intermediate Duration (SA+CF) Median 1.46 1.17 1.08 2.01 2.00 0.60 Performance Review (Fiscal Years) As of September 30, 2012 G,H & Assoc NONE Page 39 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁG,H & Assoc 6 5 (83%)1 (17%)0 (0%)0 (0%) ŁBC Int Agg 20 0 (0%)4 (20%)14 (70%)2 (10%) Over Performance Earliest Date Latest Date 6.0 7.0 8.0 9.0 G,H & Assoc (%) 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.2 Barclays Interm Agg (%) Over Performance Under Performance 5.40 6.00 6.60 7.14 Return (%) 1.90 1.95 2.00 2.05 2.10 2.15 2.20 2.25 2.30 2.33 Risk (Standard Deviation %) Return StandardDeviation ŁG,H & Assoc 6.85 2.28 ŁBC Int Agg 5.34 1.94 ¾Median 5.83 2.20 6.00 6.20 6.40 6.55 Return (%) 2.40 2.50 2.60 2.70 2.80 2.90 3.00 3.10 3.20 3.30 3.40 Risk (Standard Deviation %) Return StandardDeviation ŁG,H & Assoc N/A N/A ŁBC Int Agg 5.96 2.48 ¾Median 6.47 3.32 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk G,H & Assoc 2.81 131.48 148.25 1.70 0.52 1.89 0.96 2.07 Barclays Interm Agg 0.00 100.00 100.00 0.00 N/A 2.37 1.00 1.01 90 Day U.S. Treasury Bill 2.17 1.26 -1.77 0.10 -2.37 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk G,H & Assoc N/A N/A N/A N/A N/A N/A N/A N/A Barclays Interm Agg 0.00 100.00 100.00 0.00 N/A 1.82 1.00 1.24 90 Day U.S. Treasury Bill 2.83 7.38 -10.78 0.64 -1.82 N/A 0.01 0.01 Performance Review (Fiscal Years) As of September 30, 2012 G,H & Assoc NONE Page 40 Peer Group Analysis - IM International Fixed Income (MF) Comparative Performance -8.00 -6.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 22.00 24.00 26.00 28.00 29.63 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁTempleton GB N/A N/A N/A N/A N/A ŁCiti WGB 4.61 (7)4.98 (64)13.79 (68)5.88 (1)8.69 (40) Median 1.75 6.51 15.98 -0.08 8.27 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 15.56 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁTempleton GB 5.40 (10)13.25 (1)13.25 (1)N/A N/A N/A N/A ŁCiti WGB 2.99 (92)3.28 (90)3.28 (90)3.94 (46)4.29 (57)6.59 (64)6.45 (43) Median 4.57 6.60 6.60 3.84 4.68 7.54 5.77 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 Templeton GB -0.99 (86)7.20 (1)1.23 (20)N/A N/A N/A Citi WGB 0.92 (18)-0.51 (100)-0.13 (54)2.38 (10)3.33 (57)0.65 (85) IM International Fixed Income (MF) Median 0.21 1.97 0.08 -1.00 3.56 1.59 Performance Review (Fiscal Years) As of September 30, 2012 Templeton GB NONE Page 41 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁTempleton GB 0 0 0 0 0 ŁCiti WGB 20 6 (30%)7 (35%)5 (25%)2 (10%) No data found. 4.40 4.60 4.74 Return (%) 6.30 6.60 6.90 7.20 7.50 7.80 8.10 8.40 8.70 9.00 Risk (Standard Deviation %) Return StandardDeviation ŁTempleton GB N/A N/A ŁCiti WGB 4.29 6.46 ¾Median 4.68 8.69 5.70 6.00 6.30 6.55 Return (%) 7.50 7.80 8.10 8.40 8.70 9.00 9.30 9.60 9.90 Risk (Standard Deviation %) Return StandardDeviation ŁTempleton GB N/A N/A ŁCiti WGB 6.45 7.71 ¾Median 5.77 9.72 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk 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 0.67 1.00 4.50 90 Day U.S. Treasury Bill 6.46 0.70 -0.36 0.09 -0.67 N/A 0.00 0.01 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk 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 0.77 1.00 4.71 90 Day U.S. Treasury Bill 7.66 3.54 -2.78 0.65 -0.77 N/A 0.01 0.01 Performance Review (Fiscal Years) As of September 30, 2012 Templeton GB NONE Page 42 Peer Group Analysis - IM U.S. Open End Private Real Estate (SA+CF) Comparative Performance -70.00 -60.00 -50.00 -40.00 -30.00 -20.00 -10.00 0.00 10.00 20.00 30.00 40.00 44.49 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁAmerican 16.11 (76)2.72 (75)-32.96 (41)4.98 (36)16.31 (81) ŁNCREIF 16.10 (79)5.84 (53)-22.09 (5)5.27 (29)17.31 (71) Median 16.62 6.39 -34.36 3.60 18.73 -12.00 -10.00 -8.00 -6.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 22.00 24.00 26.00 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁAmerican 2.58 (62)11.57 (55)11.57 (55)13.82 (80)9.99 (84)-2.82 (48)-1.30 (41) ŁNCREIF 2.34 (75)11.00 (81)11.00 (81)13.52 (90)10.90 (80)1.53 (9)2.27 (5) Median 2.76 12.29 12.29 15.92 12.62 -3.88 -3.01 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 American 2.72 (66)3.03 (64)2.77 (63)3.20 (44)3.83 (63)4.49 (53) NCREIF 2.68 (67)2.59 (83)2.96 (52)3.30 (41)3.94 (63)3.36 (90) IM U.S. Open End Private Real Estate (SA+CF) Median 2.95 3.55 3.04 3.15 4.32 4.49 Performance Review (Fiscal Years) As of September 30, 2012 American NONE Page 43 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁAmerican 13 0 (0%)7 (54%)3 (23%)3 (23%) ŁNCREIF 20 13 (65%)2 (10%)4 (20%)1 (5%) Under Performance Earliest Date Latest Date -12.0 -8.0 -4.0 0.0 4.0 8.0 12.0 American (%) -12.0 -9.0 -6.0 -3.0 0.0 3.0 6.0 9.0 12.0 13.4 NCREIF (%) Over Performance Under Performance 10.00 11.00 12.00 13.00 Return (%) 3.30 3.60 3.90 4.20 4.50 4.80 5.10 5.40 5.70 5.92 Risk (Standard Deviation %) Return StandardDeviation ŁAmerican 9.99 4.77 ŁNCREIF 10.90 3.41 ¾Median 12.62 5.59 -2.00 0.00 2.00 3.10 Return (%) 7.00 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 Risk (Standard Deviation %) Return StandardDeviation ŁAmerican -1.30 10.30 ŁNCREIF 2.27 7.53 ¾Median -3.01 14.04 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk American 1.73 99.27 200.35 -4.40 -0.46 2.03 1.35 2.47 NCREIF 0.00 100.00 100.00 0.00 N/A 3.07 1.00 1.22 90 Day U.S. Treasury Bill 3.40 0.77 -1.64 0.08 -3.07 N/A 0.00 0.00 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk American 3.89 99.65 161.83 -4.00 -0.85 -0.14 1.30 8.93 NCREIF 0.00 100.00 100.00 0.00 N/A 0.24 1.00 5.74 90 Day U.S. Treasury Bill 7.54 6.34 -3.87 0.70 -0.24 N/A 0.00 0.00 Performance Review (Fiscal Years) As of September 30, 2012 American NONE Page 44 Peer Group Analysis - IM U.S. Open End Private Real Estate (SA+CF) Comparative Performance -70.00 -60.00 -50.00 -40.00 -30.00 -20.00 -10.00 0.00 10.00 20.00 30.00 40.00 44.49 Return Oct-2010 To Sep-2011 Oct-2009 To Sep-2010 Oct-2008 To Sep-2009 Oct-2007 To Sep-2008 Oct-2006 To Sep-2007 ŁIntercontinental 15.80 (80)N/A N/A N/A N/A ŁNCREIF 16.10 (79)5.84 (53)-22.09 (5)5.27 (29)17.31 (71) Median 16.62 6.39 -34.36 3.60 18.73 -12.00 -10.00 -8.00 -6.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 22.00 24.00 26.00 Return QTR FYTD 1 YR 2 YR 3 YR 4 YR 5 YR ŁIntercontinental 2.72 (54)13.25 (40)13.25 (40)14.52 (62)N/A N/A N/A ŁNCREIF 2.34 (75)11.00 (81)11.00 (81)13.52 (90)10.90 (80)1.53 (9)2.27 (5) Median 2.76 12.29 12.29 15.92 12.62 -3.88 -3.01 1 QtrEndingJun-2012 1 QtrEndingMar-2012 1 QtrEndingDec-2011 1 QtrEndingSep-2011 1 QtrEndingJun-2011 1 QtrEndingMar-2011 Intercontinental 2.64 (68)2.96 (74)4.33 (28)3.15 (50)3.34 (82)4.41 (56) NCREIF 2.68 (67)2.59 (83)2.96 (52)3.30 (41)3.94 (63)3.36 (90) IM U.S. Open End Private Real Estate (SA+CF) Median 2.95 3.55 3.04 3.15 4.32 4.49 Performance Review (Fiscal Years) As of September 30, 2012 Intercontinental NONE Page 45 Peer Group Scattergram - 3 Years 3 Yr Rolling Under/Over Performance - 5 Years Peer Group Scattergram - 5 Years 3 Yr Rolling Percentile Ranking - 5 Years Historical Statistics - 3 Years Historical Statistics - 5 Years 0.0 25.0 50.0 75.0 100.0Return Percentile Rank 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 9/12 Total Period 5-25 Count 25-Median Count Median-75 Count 75-95 Count ŁIntercontinental 0 0 0 0 0 ŁNCREIF 20 13 (65%)2 (10%)4 (20%)1 (5%) No data found. 10.80 11.40 12.00 12.60 12.87 Return (%) 3.30 3.60 3.90 4.20 4.50 4.80 5.10 5.40 5.70 5.92 Risk (Standard Deviation %) Return StandardDeviation ŁIntercontinental N/A N/A ŁNCREIF 10.90 3.41 ¾Median 12.62 5.59 -2.00 0.00 2.00 3.06 Return (%) 7.00 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 Risk (Standard Deviation %) Return StandardDeviation ŁIntercontinental N/A N/A ŁNCREIF 2.27 7.53 ¾Median -3.01 14.04 TrackingError UpMarketCapture DownMarketCapture Alpha InformationRatio SharpeRatio Beta DownsideRisk Intercontinental N/A N/A N/A N/A N/A N/A N/A N/A NCREIF 0.00 100.00 100.00 0.00 N/A 3.07 1.00 1.22 90 Day U.S. Treasury Bill 3.40 0.77 -1.64 0.08 -3.07 N/A 0.00 0.00 Tracking Error Up Market Capture Down Market Capture Alpha Information Ratio Sharpe Ratio Beta Downside Risk Intercontinental N/A N/A N/A N/A N/A N/A N/A N/A NCREIF 0.00 100.00 100.00 0.00 N/A 0.24 1.00 5.74 90 Day U.S. Treasury Bill 7.54 6.34 -3.87 0.70 -0.24 N/A 0.00 0.00 Performance Review (Fiscal Years) As of September 30, 2012 Intercontinental NONE Page 46 To t a l F u n d C o m p l i a n c e : YesNoN/A Eq u i t y C o m p l i a n c e : YesNoN/A Fi x e d I n c o m e C o m p l i a n c e : YesNoN/A Pa l m B e a c h G a r d e n s F i r e f i g h t e r s ' P e n s i o n P l a n Co m p l i a n c e C h e c k l i s t a s o f 9 / 3 0 / 2 0 1 2 Th e t o t a l pla n r e t u r n e qua l e d o r e x c e e d e d t h e t o t a l pla n b e n c h m a r k o v e r t h e t r a i l i n g t h r e e a n d f i v e yea r per i o d s . 1. ✔ Th e t o t a l pla n r e t u r n r a n k e d w i t h i n t h e t o p 4 0 t h per c e n t i l e o f i t s pee r gro u p o v e r t h e t r a i l i n g t h r e e a n d f i v e yea r per i o d s . 2. ✔ To t a l d o m e s t i c e qui t y r e t u r n s m e e t o r e x c e e d t h e b e n c h m a r k o v e r t h e t r a i l i n g t h r e e a n d f i v e yea r per i o d s . 1. ✔ To t a l d o m e s t i c e qui t y r e t u r n s r a n k e d w i t h i n t h e t o p 4 0 t h per c e n t i l e o f i t s pee r gro u p o v e r t h e t r a i l i n g t h r e e a n d f i v e yea r per i o d s . 2. ✔ Th e t o t a l e qui t y a l l o c a t i o n w a s l e s s t h a n o r e qua l t o 7 5 % b u t gre a t e r t h a n o r e qua l t o 5 5 % o f t h e t o t a l f u n d v a l u e a t m a r k e t . ✔ 3. Th e t o t a l d o m e s t i c e qui t y a l l o c a t i o n w a s l e s s t h a n o r e qua l t o 6 5 % b u t gre a t e r t h a n o r e qua l t o 4 5 % o f t h e t o t a l f u n d v a l u e a t m a r k e t . ✔ 4. Th e i n t e r n a t i o n a l e qui t y a l l o c a t i o n w a s l e s s t h a n o r e qua l t o 1 5 % b u t gre a t e r t h a n o r e qua l t o 5 % o f t h e t o t a l f u n d v a l u e a t m a r k e t . ✔ 5. To t a l f i x e d i n c o m e r e t u r n s m e e t o r e x c e e d t h e b e n c h m a r k o v e r t h e t r a i l i n g t h r e e a n d f i v e yea r per i o d s . ✔ 1. To t a l f i x e d i n c o m e r e t u r n s r a n k e d w i t h i n t h e t o p 4 0 t h per c e n t i l e o f i t s pee r gro u p o v e r t h e t r a i l i n g t h r e e a n d f i v e yea r per i o d s . ✔ 2. Th e t o t a l f i x e d i n c o m e a l l o c a t i o n w a s l e s s t h a n o r e qua l t o 3 5 % b u t gre a t e r t h a n o r e qua l t o 1 5 % o f t h e t o t a l f u n d v a l u e a t m a r k e t . ✔ 3. All f i x e d i n c o m e i n v e s t m e n t s h a d a m i n i m u m r a t i n g o f i n v e s t m e n t gra d e o r h i ghe r a s d e t e r m i n e d b y a m a jor c r e d i t r a t i n g s e r v i c e . ✔ 4. Re a l E s t a t e C o m pli a n c e : To t a l R e a l E s t a t e a l l o c a t i o n w a s l e s s t h a n 1 5 % o f t h e t o t a l pla n a s s e t s a t m a r k e t . ✔ 1. Pa g e 4 7 Ye s N o N/ A Ma n a g e r C o m p l i a n c e : Ye s N o N/ A Ye s N o N/ A Ye s N o N/AYesNoN/A Pa l m B e a c h G a r d e n s F i r e f i g h t e r s ' P e n s i o n P l a n Co m p l i a n c e C h e c k l i s t a s o f 9 / 3 0 / 2 0 1 2 Da n a L C ✔✔ ✔✔ ✔ Ma n a g e r r a n k e d w i t h i n t h e t o p 40 t h p e r c e n t i l e o v e r t r a i l i n g th r e e a n d f i v e y e a r p e r i o d s . Le s s t h a n f o u r c o n s e c u t i v e qu a r t e r s o f u n d e r p e r f o r m a n c e re l a t i v e t o t h e b e n c h m a r k . Th r e e - y e a r d o w n - m a r k e t ca p t u r e r a t i o l e s s t h a n t h e in d e x . Manager reports compliance with PFIA: 1. Ma n a g e r o u t p e r f o r m e d t h e in d e x o v e r t h e t r a i l i n g t h r e e a n d fi v e y e a r p e r i o d s . IC C ✔✔ ✔ ✔✔ 2. Da n a S C ✔ ✔ ✔✔ ✔ 3. RB C ✔ ✔ ✔✔ ✔ 4. Ma n n i n g & N a pie r ✔✔ ✔✔ ✔ 5. Ag in c o u r t ✔ ✔ ✔✔ ✔ 6. G, H & A s s o c . ✔ ✔ ✔✔ ✔ 7. Te m ple t o n G l o b a l ✔✔ ✔ ✔ ✔ 8. Ame r i c a n R e a l t y ✔✔ ✔✔ ✔ 9. In t e r c o n t i n e n t a l R E ✔✔ ✔ ✔ ✔ 10 . Pa g e 4 8 Total Fund Policy Total Equity Policy Total Fixed Policy Historical Hybrid Composition Allocation Mandate Weight (%) Jul-2008 MSCI EAFE Index 15.00 Russell 3000 Index 85.00 Oct-2011 MSCI EAFE Index 15.00 Russell 3000 Index 85.00 Historical Hybrid Composition Allocation Mandate Weight (%) May-1998 S&P 500 Index 60.00 Barclays U.S. Government/Credit 35.00 Citigroup 3 Month T-Bill Index 5.00 Jan-2001 S&P 500 Index 65.00 Barclays U.S. Government/Credit 30.00 Citigroup 3 Month T-Bill Index 5.00 Apr-2003 S&P 500 Index 65.00 Barclays Intermediate U.S. Gov/Credit Index 30.00 Citigroup 3 Month T-Bill Index 5.00 Jul-2005 S&P 500 Index 55.00 Barclays Intermediate U.S. Gov/Credit Index 30.00 MSCI EAFE Index 10.00 Citigroup 3 Month T-Bill Index 5.00 Oct-2007 Russell 3000 Index 55.00 Barclays Intermediate Aggregate Index 30.00 MSCI EAFE Index 10.00 Citigroup 3 Month T-Bill Index 5.00 Jul-2008 Russell 3000 Index 55.00 Barclays Intermediate Aggregate Index 25.00 MSCI EAFE Index 10.00 NCREIF Property Index 10.00 Oct-2011 Russell 3000 Index 55.00 MSCI EAFE Index 10.00 Barclays Intermediate Aggregate Index 20.00 Citigroup World Government Bond 5.00 NCREIF Property Index 10.00 Historical Hybrid Composition Allocation Mandate Weight (%) May-1998 Barclays U.S. Government/Credit 100.00 Apr-2003 Barclays Intermediate U.S. Gov/Credit Index 100.00 Oct-2007 Barclays Intermediate Aggregate Index 100.00 Oct-2011 Barclays Intermediate Aggregate Index 80.00 Citigroup World Government Bond 20.00 Benchmark History Investment Policy Benchmarks As of September 30, 2012 Prior to 6/1/2011, the data and inception dates for Dana LC and Dana SC were provided by the manager. Page 49 Report Statistics Definitions and Descriptions R e t u r n - Co m p o u n d e d r a t e o f r e t u r n f o r t h e p e r i o d . S t a n d a r d D e v i a t i o n - A s t a t i s t i c a l m e a s u r e o f t h e r a n g e o f a p o r t f o l i o ' s p e r f o r m a n c e. I t r e p r e s e n t s t h e v a r i a b i l i t y o f r e t u r n s a r o u n d t h e a v e r a g e r e tu r n o v e r a s p e c i f i e d t i m e p e r i o d . S h a r p e R a t i o - Re p r e s e n t s t h e e x c e s s r a t e o f r e t u r n o v e r t h e r i s k f r e e r e t u r n d i v i d e d b y t h e s t a n d a r d d e v i a t i o n o f t h e e x c e s s r e t u r n . T h e r e s u lt i s a n a b s o l u t e r a t e o f r e t u r n p e r u n i t o f r i s k . A hi g h e r v a l u e d e m o n s t r a t e s b e t t e r h i s t or i c a l r i s k - a d j us t e d p e r f o r m a n c e . A l p h a - A m e a s u r e o f t h e d i f f e r e n c e b e t w e e n a p o r t f o li o ' s a c t u a l p e r f o r m a n c e a n d i t s e x p e c t e d r e tu r n b a s e d o n i t s l e v e l o f r i s k a s d e t e rmined by beta. It determines the portfolio's no n - s y s t e m i c r e t u r n , o r i t s h i s t o r i c a l p e r f o r m a n ce n o t e x p l a i n e d b y m o v e m e n t s o f t h e m a r k e t . B e t a - A m e a s u r e o f t h e s e n s i t i v i t y o f a p o r t f o l i o t o t h e m o v e m e n t s i n th e m a r k e t . I t i s a m e a s u r e o f th e p o r t f o l i o ' s s y s t e m a t i c r i s k . R - S q u a r e d - Th e p e r c e n t a g e o f a p o r t f o l i o ' s p e r f o r m a n c e t h a t c a n b e e x p l a i ne d b y t h e b e h a v i o r o f t h e a p p r o p r i a t e b e n c h m a r k . A h i g h R - S q u a r e d means the portfolio's performance has hi s t o r i c a l l y m o v e d i n t h e s a m e d i r e ct i o n a s t h e a p p r o p r i a t e b e n c h m a r k . T r e y n o r R a t i o - Sim i l a r t o S h a r p e r a t i o b u t u t i l i z e s b e t a r a t h e r t h a n e x c e s s r i sk a s d e t e r m i n e d b y s t a n d a r d d e v i a t i o n . I t i s c a l c u l a t e d b y t a k i ng t h e e x c e s s r a t e o f r e t u r n a b o v e t h e r i s k f r e e ra t e d i v i d e d b y b e t a t o d e r i v e t h e a b s o l u t e r a t e o f r e t u r n p e r u n i t o f r i s k . A h i g h e r v a l u e i n d i c a t e s a p r o d u c t h a s a c h i e v e d b e tt e r h i s t o r i c a l r i s k - adjusted performance. D o w n s i d e R i s k - A m e a s u r e s i m i l a r t o s t a n d a r d d e v i a t i o n t h a t u t i l i z e s o n l y t h e n e g a t iv e m o v e m e n t s o f t h e r e t u r n s e r i e s . I t i s c a l c u l a t e d b y t a k in g t h e s t a n d a r d d e v i a t i o n o f t h e n e g a t i v e qu a r t e r l y s e t o f r e t u r n s . A h i g h e r f a c t o r i s i n d i c a t i v e o f a r i s k i e r p r o d u c t . T r a c k i n g E r r o r - Th i s i s a m e a s u r e o f t h e s t a n d a r d d e v i a t i o n o f a p o r t f o l i o ' s r e t u r n s i n r e l a t i o n t o t h e p e r f o r m a n c e o f i t s d e s i g n a t e d m a r k e t b e n c h m a r k . I n f o r m a t i o n R a t i o - Th i s c a l c u l a t e s t h e v a l u e - a d d e d c o n t r i b u t i o n o f th e m a n a g e r a n d i s d e r i v e d b y d i v i d i n g t h e a c t i ve r a t e o f r e t u r n o f t h e p o r t f o l i o b y the tracking error. The higher the In f o r m a t i o n R a t i o , t h e m o r e t h e m a n a g e r h a s a d d e d v a l u e t o t h e p o r t f o l i o . C o n s i s t e n c y - Th e p e r c e n t a g e o f q u a r t e r s t h a t a p r o d u c t a c h i e v e d a r a t e o f r e t u rn h i g h e r t h a n t h a t o f i t s b e n c h m ar k . H i g h e r c o n s i s t e n c y i n d i c ates the manager has contributed more to the pr o d u c t ’ s p e r f o r m a n c e . E x c e s s R e t u r n - Ar i t h m e t i c d i f f e r e n c e b e t w e e n t h e m a n a g e r ’ s p e r f o r m a n c e a n d t h e r i s k - f r e e r e t u r n o v e r a s p e c i f i e d t i m e p e r i o d . A c t i v e R e t u r n - Ar i t h m e t i c d i f f e r e n c e b e t w e e n t h e m a n a g e r ’ s p e r f o r m a n c e a n d t h e d e s i g n a t e d b e n c h m a r k r e t u r n o v er a s p e c i f i e d t i m e p e r i o d . E x c e s s R i s k - A m e a s u r e o f t h e s t a n d a r d d e v i a t i o n o f a p o r t f o l i o ' s p e r f o r m a n c e r e l a t i v e t o t h e r i s k f r e e r e t u r n . U p M a r k e t C a p t u r e - Th e r a t i o o f a v e r a g e p o r t f o l i o p e r f o r m a n c e o v e r t h e d e s i g n a t e d b e n ch m a r k d u r i n g p e r i o d s o f p o s i t i v e r e t u r n s . A h i g h e r v a l u e i n d icates better product performance. D o w n M a r k e t C a p t u r e - Th e r a t i o o f a v e r a g e p o r t f o l i o p e r f o r m a n c e o v e r t h e d e s i g n a t e d b e n ch m a r k d u r i n g p e r i o d s o f n e g a t i v e r e t u r n s . A l o w e r v a l u e i n d i cates better product performance Ca l c u l a t i o n s b a s e d o n m o n t h l y p e r i o d i c i t y . Pa g e 5 0 Palm Beach Gardens Firefighters Policy Allocation Worksheet As of October 26, 2012 (1) Value as of September 30, 2012 and not available for most recent time period. Value is carried forward. Investment Structure 10/26/12 Market Value Current Allocation Target Allocation Allowable Range Potential Adjustment Adjusted Market Value Adjusted Allocation Dana Core $14,698,750 30.3%$200,000 $14,898,750 30.7% ICC $9,069,647 18.7%$9,069,647 18.7% Dana Small Cap $2,598,930 5.4%$2,598,930 5.4% Total Domestic Equity $26,367,327 54.4%55.0%45% -65%$200,000 $26,567,327 54.8% RBC International(1)$2,318,352 4.8%$2,318,352 4.8% Manning & Napier $2,269,835 4.7%$2,269,835 4.7% Total International Equity $4,588,187 9.5%10.0%5% -15%$0 $4,588,187 9.5% Agincourt Capital $5,657,479 11.7%$5,657,479 11.7% Garcia, Hamilton $6,138,098 12.7%$6,138,098 12.7% Templeton Global Bond $1,573,915 3.2%$1,573,915 3.2% Total Fixed Income $13,369,491 27.6%25.0%15% -35%$0 $13,369,491 27.6% American Core Realty(1)$1,851,588 3.8%$1,851,588 3.8% Intercontinental(2)$1,838,080 3.8%$1,838,080 3.8% Total Real Estate $3,689,668 7.6%10.0%5% -15%$0 $3,689,668 7.6% Cash & Equivalents $449,972 0.9%0% -5%($200,000)$249,972 0.5% Total Investment Structure $48,464,646 100.0%100.0%$0 $48,464,646 100.0% (2) Estimated value as of September 30, 2012 and not available for most recent time period. Value is carried forward. Palm Beach Gardens Firefighters Preliminary Performance Update As of October 26, 2012 Investment Structure 9/30/2012 Market Value QTD Cash Flow 10/26/12 Market Value QTD Gain / (Loss) QTD Return FYTD Return FYTD Return Dana Core $14,410,423 $600,000 $14,698,750 ($311,673)-2.2%($311,673)-2.2% ICC $9,210,498 $9,069,647 ($140,851)-1.5%($140,851)-1.5% Dana Small Cap $2,673,376 $2,598,930 ($74,446)-2.8%($74,446)-2.8% Total Domestic Equity $26,294,297 $600,000 $26,367,327 ($526,970)-2.0%($526,970)-2.0% RBC International(1)$2,318,352 $2,318,352 $0 0.0%$0 0.0% Manning & Napier $2,070,280 $200,000 $2,269,835 ($445)0.0%($445)0.0% Total International Equity $4,388,632 $200,000 $4,588,187 ($445)0.0%($445)0.0% Agincourt Capital $5,668,067 $5,657,479 ($10,588)-0.2%($10,588)-0.2% Garcia, Hamilton $6,105,381 $6,138,098 $32,717 0.5%$32,717 0.5% Templeton Global Bond $1,559,551 $1,573,915 $14,364 0.9%$14,364 0.9% Total Fixed Income $13,332,999 $0 $13,369,491 $36,492 0.3%$36,492 0.3% American Core Realty(1)$1,851,588 $1,851,588 N/A N/A $0 N/A Intercontinental(1)$1,838,080 $1,838,080 N/A N/A $0 N/A Total Real Estate $3,689,668 $0 $3,689,668 N/A N/A $0 N/A Cash & Equivalents $1,138,258 ($688,286)$449,972 $0 N/A $0 N/A Total Investment Structure $48,843,854 $111,714 $48,464,646 ($490,922)-1.0%($490,922)-1.0% (1) Value as of September 30, 2012 and not available for most recent time period. Value is carried forward. (2) Estimated value as of September 30, 2012 and not available for most recent time period. Value is carried forward. October 31, Board of Tru City of Palm Palm Beach Board of Tru This engage referred to a nature and support of o attached he professiona SUMMARY OF We will prov Audit service We will aud Accounting supplement schedules o statements. These limite measureme representati an opinion o Supplement We will subj basic financ Accounting a 1. Assi 2012 ustees m Beach Gar h Gardens, F ustees: ement letter as the “Plan scope of th our services ereto and in l services an F SERVICES vide the follo es it the financi standards tary informa of funding p As part of ed procedure ent and pre ion letter. Un on it. tary informa ject such su cial statemen and other se st in the pre rdens Firefig Florida r between C n”) and Che e services w s, the relate ncorporated nd to achiev owing service ial statemen generally ation (“RSI”) rogress and our engage es will consi esentation, nless we en ation, other t upplementary nts and will p rvices paration of t ghters' Pensi City of Palm rry, Bekaert we will provi ed fee arran by this refe e the mutua es to the Pla ts of the Pla accepted i , such as m d employer c ement, we w st principally which man counter prob than RSI, als y informatio provide an o the financial ion Fund Beach Gar t & Holland, ide, the Plan gements an erence, des ally agreed u an as of and an as of and n the Unit managemen contributions will apply ce y of inquiries nagement is blems with t so accompa n to the aud opinion on it statements rdens Firefig L.L.P. (the n’s required nd other Ter signed to fa upon objectiv for the year for the year ted States nt’s discuss s, to accom rtain limited s of manage s responsib the presenta anies the Pla diting proced in relation to and footnot ghters' Pens “Firm” or “C involvemen rms and Co cilitate the ves of the Pl r ended Sep r ended Sep provide fo ion and an mpany the P d procedures ement regard ble for affir ation of the R an’s basic fi dures applie o the basic f tes. sion Fund (h CBH”) sets f nt and assis onditions, w performance an. ptember 30, 2 tember 30, 2 or certain alysis (MD& lan’s basic f s to the Pla ding the me rming to us RSI, we will inancial stat ed in our aud inancial stat hereafter forth the stance in hich are e of our 2012: 2012. required &A) and financial n’s RSI. ethods of s in its disclaim tements. dit of the tements. City of Palm Beach Gardens Firefighters' Pension Fund October 31, 2012 Page 2 YOUR EXPECTATIONS As part of our planning process, we will discuss with you your expectations of CBH, concerns about any changes in the benefit plan arena, your views on risks facing the Plan, any relationship issues with CBH, and specific engagement arrangements and timing. Our service plan, which includes our audit plan, is designed to provide a foundation for an effective, efficient, and quality-focused approach to accomplish the engagement objectives and meet or exceed your expectations. Our service plan will be reviewed with you periodically and will serve as a benchmark against which you will be able to measure our performance. Any additional services that you may request, and that we agree to provide, will be the subject of separate written arrangements. The engagement will be led by James Burdick, who will be responsible for assuring the overall quality, value, and timeliness of the services provided to you. AUDIT SERVICES The objective of our audit is the expression of opinions as to whether your basic financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the additional information referred to in the Summary of Services section when considered in relation to the basic financial statements taken as a whole. The objective also includes reporting on:  Internal control related to the financial statements and compliance with the provisions of applicable laws, regulations, contracts, agreements and grants, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. The reports on internal control and compliance will each include a statement that the report is intended solely for the information and use of the audit committee, management, and specific legislative or regulatory bodies and is not intended to be and should not be used by anyone other than these specified parties. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; Government Auditing Standards, issued by the Comptroller General of the United States; and will include test of accounting records and other procedures as deemed necessary to enable us to express such an opinion and to render the required reports. If any of our opinions resulting from the procedures described above are other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or issue a report as a result of this engagement. City of Palm Beach Gardens Firefighters' Pension Fund October 31, 2012 Page 3 ACCOUNTING AND OTHER SERVICES Accounting services We will advise Management about the application of appropriate accounting principles, and may propose adjusting journal entries to the Plan’s financial statements. Management is responsible for reviewing the entries and understanding the nature of any proposed entries and the impact they have on the Plan’s financial statements. If, while reviewing the journal entries, Management determines that a journal entry is inappropriate, it will be Management’s responsibility to contact us to correct it. Financial statement preparation We will assist in the preparation of the Plan’s financial statements and notes, based on information in the Plan’s accounting records. However, the responsibility for the Plan’s financial statements and notes remains with Management. This responsibility includes establishing and maintaining adequate records and effective internal controls over financial reporting, the selection and application of accounting principles, the safeguarding of assets, and adjusting the financial statements for any material misstatements as well as reviewing and approving for publication the draft financial statements prepared with our assistance. Management’s responsibilities related to accounting and other services For all nonattest services we perform in connection with the engagement, you are responsible for designating a competent employee to oversee the services, make any management decisions, perform any management functions related to the services, evaluate the adequacy of the services, and accept overall responsibility for the results of the services. Prior to the release of the report, Management will need to sign a representation letter acknowledging your responsibility for the results of these services. FEES The estimated fee contemplates only the services described in the Summary of Services section of this letter. If Management requests additional services not listed above, we will provide an estimate of those fees prior to commencing additional work. The following summarizes the fees for the services described above: Description of Services Estimated Fee Audit services Audit of the financial statements $13,750 The fees will be billed periodically. Invoices shall be payable on a quarterly basis. City of Palm October 31, 2 Page 4 If the forego provided an Sincerely, CHERRY, BEK ATTACHME City of Palm ACCEPTED TITLE: ___ m Beach Gard 2012 oing is in acc d return it to KAERT & HO ENT – Engag m Beach Gar D BY: _____ ___________ ens Firefight cordance wit o us. If you h LLAND, L.L.P gement Lett rdens Firefig __________ __________ ters' Pension th your unde have any que P. er Terms an ghters' Pensi ___________ __________ n Fund erstanding, p estions, plea nd Condition ion Fund __________ __________ please sign a ase call Jam s __________ DATE: a copy of thi mes Burdick a ___________ __________ is letter in th at (407) 423 __________ ___________ he space 3-7911. _______ ______ Cherry, B Engagem The follo should be Limitatio Should th report th permissio However certain p such as securities statemen written p to provid Limitatio In condu procedur our opini significan presenta Our aud misstatem assuranc fraud. Fo selective material is not de audit con detect ill result in internal c reporting Projectio future pe in conditi Similarly occurred acts gen and mate inform yo course o Plan’s co incurred necessar Bekaert & Hol ment Letter T owing terms e read in the ons of the aud he Plan wish hereon into on to includ r, we may b rocedures b an annual r s, etc. You nts and our ermission. In e us with tim ons of the aud ucting the a res as we c on on the fin nt estimates tion. dit will inclu ments due ce is not atta or example, e testing of t misstateme esigned to de nducted in a egal acts h fines or pen control audi g that, indiv ons of any e eriods are su ions, or that , in perform . However, erally will be erial effect o ou with resp f our audit u ounsel or co may be bille ry to perform lland, L.L.P erms and Co and conditio eir entirety in dit report h to include any other de our repo be required before we ca eport, privat agree that y report ther n addition, to mely notice o dit process audit, we w onsider nec nancial state made by M ude procedu to errors or ainable beca audits perfo the data be nts due to e etect matters ccordance w aving an in nalties being t is not des vidually or i evaluation of ubject to the the degree ing our aud it should be e detected, n the determ pect to errors unless clearl ounsel of our ed to the Pla m with respe onditions ons are an n conjunction or incorpora document ort into ano by generally an give our p te placemen you will not reon, or our o avoid unne of your intent will perform cessary in th ements. We Management ures design r fraud that ause of the ormed in ac ing examine errors or frau s that are im with GAAS d direct effect g imposed on signed to dis in combinat f the effectiv risk that co of complianc it we will be e recognize and only rea mination of fi s and fraud, ly inconsequ r choosing r an. You agr ct to these m integral part n with your r ate by refere at some f other such y accepted a permission to nt, regulator include or i r report into ecessary de tion to issue tests of th he circumsta also will ass t, as well as ned to obta are materia nature of a ccordance w ed and are, ud, if they ex mmaterial to does not inc t (e.g., viola n the Plan) o sclose defic tion, are le veness of in ntrols may b ce with the p e aware of t d that our a asonable as inancial stat or illegal ac uential. In th egarding an ee to coope matters. t of the atta review of the ence these future date, document a auditing sta o include ou filing, officia incorporate o any other elay or misun e any such d he accountin ances to pro sess the acc evaluate th ain reasona al to the fin audit evidenc with GAAS a therefore, xist, may no the financia clude proced ations of fra on the finan iencies in in ss severe nternal contr become inad policies or p the possibilit audit provide ssurance tha tement amou cts that com e event that ny illegal act erate fully wi Attac ched engag e letter. financial sta we will c at the time andards (“GA r report in a al statement by referenc document w nderstanding ocument. ng records ovide a reas counting pri he overall fin ble assuran nancial state ce and the c are based o subject to t ot be detecte al statement dures specifi aud and abu ncial stateme nternal cont than a ma rol over finan dequate bec rocedures m ty that illega es no assu at illegal act unts will be d me to our atte t we have to ts we identify ith any proc chment - Pa gement lette atements an onsider gra of the req AAS”) to pe nother docu t, offering of ce these fina without our gs, it is impo and such sonable bas nciples used nancial state nce of dete ements. Abs characteristi on the conce he limitation ed. Also, an ts. In additio cally design use statutes ents. Furthe rol over fina terial weak ncial reporti cause of cha may deteriora al acts may rance that i ts having a d detected. W ention durin o consult wit y, additional edures we d age 1 r and d our anting quest. rform ument f debt ancial prior ortant other sis for d and ement ecting solute ics of ept of n that audit on, an ned to s that r, our ancial ness. ng to anges ate. have llegal direct We will g the th the l fees deem Attachment - Page 2 If, for any reason, we are unable to complete the audit, or are unable to form, or have not formed an opinion on the financial statements, we may decline to express an opinion or decline to issue a report as a result of the engagement. We will notify the appropriate party within your organization of our decision and discuss the reasons supporting our position. Management’s responsibilities related to the audit Management is responsible for the fair presentation of the financial statements in conformity with GAAP or such other basis of accounting consistently applied as described above, for making all financial records and related information available to us, for ensuring that all material information is disclosed to us, and for identifying and ensuring that the Plan complies with the laws and regulations applicable to its activities and with the provisions of contracts and grant agreements. Management is responsible for the preparation of the supplementary information in conformity with GAAP. Management agrees to include our report on the supplementary information in any document that contains and indicates that we have reported on the supplementary information. Management also agrees to include the audited financial statements with any presentation of the supplementary information that includes our report thereon or make the audited financial statements readily available to users of the supplementary information no later than the date the supplementary information is issued with our report thereon. Management is also responsible for adjusting the financial statements to correct material misstatements, informing us of events that occurred subsequent to the balance sheet date until the date of the auditors’ report that might affect the financial statements or related disclosures and informing us of any discovery of facts related to items that existed at the financial statement date that might affect the financial statements or related disclosures. Management is responsible for informing us of its views regarding the risk of fraud at the Plan. Management must inform us of their knowledge of any allegations of fraud or suspected fraud affecting the Plan received in communications from employees, former employees, regulators, or others and for informing us about all known or suspected fraud affecting the Plan involving (a) Management, (b) employees who have significant roles in internal control, and (c) others where the fraud could have a material effect on the financial statements. Management is responsible for the design and implementation of programs and controls over financial reporting and to prevent and detect fraud. Appropriate supervisory review procedures are necessary to provide reasonable assurance that adopted policies and prescribed procedures are adhered to and to identify errors and fraud or illegal acts. As a part of our audit, we will consider the Plan’s internal control structure, as required by GAAS, sufficient to plan the audit and to determine the nature, timing, and extent of auditing procedures necessary for expressing our opinion concerning the financial statements. An audit is not designed to provide any assurance on internal controls. As part of our consideration of the Plan’s internal control structure, we will inform you of matters that come to our attention that represent significant deficiencies or material weaknesses in the design or operation of the internal control structure. Management is responsible for establishment and maintenance of a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying to us previous audits or other engagements or studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits or other engagements or studies. You are also responsible for providing management’s views Attachment - Page 3 on our current findings, conclusions and recommendations, as well as your planned corrective actions, and the timing and format related thereto. At the conclusion of the engagement, Management will provide to us a representation letter that, among other things, addresses (1) Management’s responsibilities related to the audit and confirms certain representations made to us during the audit, including, Management’s acknowledgement of its responsibility for the design and implementation of programs and controls to prevent and detect fraud; (2) Management’s responsibilities related to the monitoring of internal control over financial reporting; and (3) Management’s knowledge, directly or from allegations by others, of fraud or suspected fraud affecting the Plan. The representation letter will also affirm to us that Management believes that the effects of any uncorrected misstatements, if any, pertaining to the financial statements are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. The Firm will rely on Management providing these representations to us, both in the planning and performance of the audit, and in considering the fees that we will charge to perform the audit. AUDIT PROCEDURES – GENERAL An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve professional judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the Plan or to acts by management or employees acting on behalf of the Plan. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or major programs. However, we will inform you of any material errors and fraud, or illegal acts that come to our attention during the course of our audit. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also require certain written representations from you about the financial statements and related matters. Attachment - Page 4 AUDIT PROCEDURES – INTERNAL CONTROLS Our audit will include obtaining an understanding of the Plan and its environment, including internal controls, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. An audit is not designed to provide assurance on internal control or to identify significant deficiencies. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under professional standards, and Government Auditing Standards. AUDIT PROCEDURES - COMPLIANCE As part of obtaining reasonable assurance about whether the basic financial statements are free of material misstatement, we will perform tests of the Plan's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. Communications At the conclusion of the audit engagement, we may provide Management and those charged with governance a letter stating any significant deficiencies or material weaknesses which may have been identified by us during the audit and our recommendations designed to help the Plan make improvements in its internal control structure and operations related to the identified matters discovered in the financial statement audit. As part of this engagement we will ensure that certain additional matters are communicated to the appropriate members of the Plan. Such matters include (1) our responsibility under GAAS; (2) the initial selection of and changes in significant accounting policies and their application; (3) our independence with respect to the Plan; (4) the process used by Management in formulating particularly sensitive accounting estimates and the basis for our conclusion regarding the reasonableness of those estimates; (5) audit adjustments, if any, that could, in our judgment, either individually or in the aggregate be significant to the financial statements or our report; (6) any disagreements with Management concerning a financial accounting, reporting or auditing matter that could be significant to the financial statements; (7) our views about matters that were the subject of Management’s consultation with other accountants about auditing and accounting matters; (8) major issues that were discussed with Management in connection with the retention of our services, including, among other matters, any discussions regarding the application of accounting principles and auditing standards; and (9) serious difficulties that we encountered in dealing with Management related to the performance of the audit. Government Auditing Standards require that we provide you with a copy of our most recent quality control review report. Our most recent peer review report was previously provided. Attachment - Page 5 OTHER MATTERS Access to working papers The working papers and related documentation for the engagement are the property of the Firm and constitute confidential information. We have a responsibility to retain the documentation for a period of time to satisfy legal or regulatory requirements for records retention. Except as discussed below, any requests for access to our working papers will be discussed with you prior to making them available to requesting parties. We may be requested to make certain documentation available to regulators, governmental agencies (e.g., SEC, PCAOB, HUD, DOL, etc.) or their representatives (“Regulators”) pursuant to law or regulations. If requested, access to the documentation will be provided to the Regulators. The Regulators may intend to distribute to others, including other governmental agencies, our working papers and related documentation without our knowledge or express permission. You hereby acknowledge and authorize us to allow Regulators access to and copies of documentation as requested. In addition, our Firm, as well as all other major accounting firms, participates in a “peer review” program covering our audit and accounting practices as required by the American Institute of Certified Public Accountants. This program requires that once every three years we subject our quality assurance practices to an examination by another accounting firm. As part of the process, the other firm will review a sample of our work. It is possible that the work we perform for you may be selected by the other firm for their review. If it is, they are bound by professional standards to keep all information confidential. If you object to having the work we do for you reviewed by our peer reviewer, please notify us in writing. Electronic transmittals During the course of our engagement, we may need to electronically transmit confidential information to each other, within the Firm, and to other entities engaged by either party. Although email is an efficient way to communicate, it is not always a secure means of communication and thus, confidentiality may be compromised. You agree to the use of email and other electronic methods to transmit and receive information, including confidential information between the Firm, the Plan and other third party providers utilized by either party in connection with the engagement. Subpoenas In the event we are requested or authorized by you or required by government regulation, subpoena, or other legal process to produce our working papers or our personnel as witnesses with respect to our engagement for you, you will, so long as we are not a party to the proceeding in which the information is sought, reimburse us for our professional time and expense, as well as the fees and expenses of our counsel, incurred in responding to such a request at standard billing rates. TERMS AND CONDITIONS SUPPORTING FEE The estimated fees set forth above are based on anticipated full cooperation from your personnel, timely delivery of requested audit schedules and supporting information, timely communication of all significant accounting and financial reporting matters, the assumption that unexpected circumstances will not be encountered during the audit, as well as working space and clerical assistance as mutually agreed upon and as is normal and reasonable in the circumstances. We strive to ensure that we have the right professionals scheduled on each engagement. As a result, sudden Plan requested scheduling changes or scheduling changes Attachment - Page 6 necessitated by the agreed information not being ready on the agreed upon dates can result in expensive downtime for our professionals. Any last minute schedule changes that result in downtime for our professionals could result in additional fees. Our estimated fee does not include assistance in bookkeeping or other accounting services not previously described. If for any reason the Plan is unable to provide such schedules, information and assistance, the Firm and the Plan will mutually revise the fee to reflect additional services, if any, required of us to achieve these objectives. The estimated fees contemplate that the Plan will provide adequate documentation of its systems and controls related to significant transaction cycles and audit areas. In providing our services, we will consult with the Plan with respect to matters of accounting, financial reporting or other significant business issues as permitted by professional standards. Accordingly, time necessary to effect a reasonable amount of such consultation is reflected in our fee. However, should a matter require research, consultation or audit work beyond that amount, the Firm and the Plan will agree to an appropriate revision in our fee. The estimated fees set forth in this letter are based on auditing and accounting standards effective as of the date of this engagement letter and known to apply to the Plan at this time, but do not include any time related to the application of new auditing or accounting standards that impact the Plan for the first time. If new auditing or accounting standards are issued subsequent to the date of this letter and are effective for the period under audit, we will estimate the impact of any such standard on the nature, timing and extent of our planned audit procedures and will communicate with you concerning the scope of the additional procedures and the estimated fees. In the event of nonpayment of any invoice rendered by us, we retain the right to (a) suspend the performance of our services, (b) change the payment conditions under this engagement letter, or (c) terminate our services. If we elect to suspend our services, such services will not be resumed until your account is paid. If we elect to terminate our services for nonpayment, the Plan will be obligated to compensate us pro rata based on agreed upon fee as set forth herein for all time expended through the date of termination. This engagement letter sets forth the entire understanding between the Plan and the Firm regarding the services described herein and supersedes any previous proposals, correspondence, and understandings whether written or oral. Any subsequent changes to the terms of this letter, other than additional billings, will be rendered in writing and shall be executed by both parties. Should any portion of this engagement letter be ruled invalid, it is agreed that such invalidity will not affect any of the remaining portions. 1 ORDINANCE NO. , 2011 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM BEACH GARDENS, FLORIDA RELATING TO THE FIREFIGHTERS’ PENSION PLAN; PROVIDING FOR A SELF-DIRECTED DROP OPTION; PROVIDING FOR COMPLIANCE WITH THE INTERNAL REVENUE CODE; PROVIDING FOR CODIFICATION; PROVIDING FOR THE REPEAL; PROVIDING FOR SEVERABILITY AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, recent changes to federal laws and regulations require that various amendments be made to the Plan in order to maintain its status as a qualified plan under Section 401(a) of the Internal Revenue Code; and WHEREAS, an amendment to the city code is necessary to permit such new obligations and conditions; and WHEREAS, amending the DROP to provide an option of a self-directed participant individual account administered by a designated service provider will provide participants with direct control of the investment of their assets while reducing the administrative costs to the Retirement System and City; and WHEREAS, the trustees of the City of Palm Beach Gardens Firefighters’ Pension Fund have requested and approved such an amendment as being in the best interests of the participants and beneficiaries as well as improving the administration of the plan; and WHEREAS, the City Council has received, reviewed and considered an actuarial impact statement describing the actual impact of the amendments provided for herein; NOW THEREFORE, BE IT ORDAINED by the City Council of the City of Palm Beach Gardens, Florida, that: 2 SECTION 1. The foregoing WHEREAS clauses are hereby ratified and confirmed as being true and correct and are hereby made a specific part of this Ordinance upon adoption hereof. SECTION 2. Section 38-51 of the Code of Ordinances, entitled “Definitions”, is amended as follows by adding the underlined language and deleting the stricken language: … Salary means the total compensation for services rendered to the city as a firefighter reportable on the member's W-2 form plus all tax deferred, tax-sheltered or tax exempt items of income derived from elective employee payroll deduction or salary reduction. Compensation in excess of limitations set forth in Section 401 (a)(17) of the code shall be disregarded. The limitation on compensation for an "eligible employee" shall not be less than the amount which was allowed to be taken into account hereunder as in effect on July 1, 1993. "Eligible employee" is an individual who was a member before the first plan year beginning after December 31, 1995. For the purpose of applying the limitations set forth in Sections 401(a)(17) and 415 of the Internal Revenue Code, Salary shall include any elective deferral (as defined in Code Section 402(g)(3) of the Internal Revenue Code), and any amount which is contributed or deferred by the employer at the election of the Member and which is not includible in the gross income of the Member by reason of Section 125 or 457 of the Internal Revenue Code. For limitation years beginning on and after January 1, 2001, for the purposes of applying the limitations described in Subsection (a) of Section 38-65 hereof, compensation paid or made available during such limitation years shall include elective amounts that are not includible in the gross income of the Member by reason of Section 132(f)(4) of the Internal Revenue Code. SECTION 3. Section 38-56 of the Code of Ordinances, entitled “Benefit Amounts and Eligibility,” is amended as follows by adding the underlined language and deleting the stricken language: … g. DROP account earnings. Earnings of each DROP account shall be credited or debited at the end of each fiscal year quarter at the actual rate of investment return achieved by the fund for that fiscal year quarter net of expenses and costs. As an alternative, each current member of the DROP and each future member of the DROP may elect, instead of receiving the "net investment return" as set forth above, to direct a one-time irrevocable election, at any time during the DROP period, that his or her DROP account be invested in a fixed rate money market Comment [P1]: No such vehicle exists 3 fund as may be made available from time to time by the board. The electing member's DROP account shall be credited or debited at a rate equal to the net rate of investment return realized by such money market fund. Furthermore, the board of trustees may implement a self-directed account option for members who participate in the deferred retirement option plan. Prior to implementing the self-directed account option, the board of trustees must adopt a separate investment policy for such accounts, and approve such investment managers and products for the self-directed account option that the board of trustees determines to be prudent. The board of trustees may change such investment managers and products from time to time, as it deems prudent to do so. Members may elect the self-directed account option as follows: (a) members who are participating in the DROP as of the effective date of Ordinance No. ????, may elect in writing to the Board the self-directed account option within 90 days following the enactment of Ordinance No.????; (b) members who enter the DROP after the effective date of Ordinance No.????, may elect the self-directed account option prior to entering the DROP; or (c) any DROP participant who does not elect the self-directed account option in accordance with (a) or (b), above, may elect the self-directed account option one time only at any time prior to the fourth anniversary of entering the DROP. A member who elects the self- directed account option may revoke that election at any time after one year following election of the self-directed account option, but shall not thereafter be eligible for the self-directed account option. Members who elect the self-directed account option shall direct the board of trustees to invest their self-directed DROP account in any of the managers and products approved by the board, in accordance with an agreement between the member and the investment manager or product provider. A member's self-directed DROP account shall be credited with earnings or debited with losses based on the performance of the investments selected by the member. Neither the board of trustees nor the city shall be liable for the performance of investment managers or products selected, and the performance of self-directed DROP accounts shall not result in any increased costs to the plan or increased contributions by the City. SECTION 4. Section 38-65 of the Code of Ordinances entitled “Maximum pension“ is hereby amended as follows by adding the underlined language and deleting the stricken language: Sec. 38-65. Maximum pension Internal Revenue Code Compliance. (1) Basic limitation. Subject to the adjustments hereinafter set forth, the maximum amount of annual retirement income payable with respect to a member under this system shall not exceed $90,000. For purposes of applying the above limitation, benefits payable in any form other than a straight life annuity with no ancillary benefits shall be adjusted, as provided by treasury regulations, so that such benefits are the Comment [p2]: Insert proposed ordinance number here. Comment [p3]: Insert proposed ordinance number here. Comment [p4]: Insert proposed ordinance number here. 4 actuarial equivalent of a straight life annuity. For purposes of this section, the following benefits shall not be taken into account: (a) Any ancillary benefit which is not directly related to retirement income benefits; (b) Any other benefit not required under subsection 415(b)(2) of the code and regulations thereunder to be taken into account for purposes of the limitation of section 415(b)(1) of the code. (2) Participation in other defined benefit plans. The limitation of this section with respect to any member who at any time has been a member in any other defined benefit plan (as defined in section 414(j) of the code) maintained by the city shall apply as if the total benefits payable under all defined benefit plans in which the member has been a member were payable from one plan. (3) Adjustments in limitations. a. In the event the member's retirement benefits become payable before age 62, the $90,000 limitation prescribed by this section shall be reduced in accordance with regulations issued by the secretary of the treasury pursuant to the provisions of section 415(b) of the code, but not less than $75,000, if the benefit begins at or after age 55. In the event the member's retirement benefit becomes payable before age 55, the $75,000 limitation shall be reduced from age 55 in accordance with regulations issued by the secretary of the treasury pursuant to the provisions of section 415(b) of the code. b. In the event the member's benefit is based on at least 15 years of credited service, the adjustments provided for in A. above shall not apply. c. The reductions provided for in a. above shall not be applicable to disability benefits paid pursuant to section 38-58, or pre- retirement death benefits paid pursuant to section 38-57. d. In the event the member's retirement benefit becomes payable after age 65, for purposes of determining whether this benefit meets the limitation set forth in subsection (1) herein, such benefit shall be adjusted so that it is actuarially equivalent to the benefit beginning at age 65. This adjustment shall be made using an assumed interest rate of five percent and shall be made in accordance with regulations promulgated by the secretary of the treasury or his delegate. 5 (4) Less than ten years of service. The maximum retirement benefits payable under this section to any member who has completed less than ten years of credited service with the city shall be the amount determined under subsection (1) of this section multiplied by a fraction, the numerator of which is the number of the member's years of credited service and the denominator of which is ten. The reduction provided for in this subsection shall not be applicable to disability benefits paid pursuant to section 38-58, or pre-retirement death benefits paid pursuant to section 38-57. (5) $10,000 limit. Notwithstanding the foregoing, the retirement benefit payable with respect to a member shall be deemed not to exceed the limitations set forth in this section if the benefits payable, with respect to such member under this system and under all other qualified defined benefit pension plans to which the city contributes, do not exceed $10,000 for the applicable plan year and for any prior plan year and the city has not at any time maintained a qualified defined contribution plan in which the member participated. (6) Member in defined contribution plan. In any case where a member under this System is also a member in a "defined contribution plan" as defined in section 414(i) of the code, maintained by the city, the sum of the "defined benefit plan fraction" and the "defined contribution plan fraction" (both as defined in section 415(e) of the code) shall not, subject to the restrictions and exceptions contained in section 2004 of the Act, exceed 1.0. This limitation is repealed effective January 1, 2000. (7) Reduction of benefits. Reduction of benefits and/or contributions to all plans, where required, shall be accomplished by first reducing the member's benefit under any defined benefit plans in which member participated, such reduction to be made first with respect to the plan in which member most recently accrued benefits and thereafter in such priority as shall be determined by the board and the plan administrator of such other plans, and next, by reducing or allocating excess forfeitures for defined contribution plans in which the member participated, such reduction to be made first with respect to the plan in which member most recently accrued benefits and thereafter in such priority as shall be established by the board and the plan administrator for such other plans provided, however, that necessary reductions may be made in a different manner and priority pursuant to the agreement of the board and the plan administrator of all other plans covering such member. (8) Cost-of-living adjustments. The limitations as stated in subsections (1), (2), (3) and (6) herein shall be adjusted to the time payment of a benefit begins in accordance with any cost-of-living adjustments prescribed by the secretary of the treasury pursuant to section 415(d) of the code. 6 (9) Additional limitation on pension benefits. Notwithstanding anything herein to the contrary: a. The normal retirement benefit or pension payable to a retiree who becomes a member of the system and who has not previously participated in such system, on or after January 1, 1980, shall not exceed 100 percent of his average final compensation. However, nothing contained in this section shall apply to supplemental retirement benefits or to pension increases attributable to cost-of- living increases or adjustments. b. No member of the system shall be allowed to receive a retirement benefit or pension which is in part or in whole based upon any service with respect to which the member is already receiving, or will receive in the future, a retirement benefit or pension from a different employer's retirement system or plan. This restriction does not apply to social security benefits or federal benefits under 10 USC ch. 67. (a) Maximum Pension. Notwithstanding any provision of this Plan to the contrary, the Annual Pension that is accrued by or paid to a participant shall not exceed the Dollar Limitation set forth below. If the benefit the participant would otherwise accrue in a Limitation Year would produce an Annual Pension in excess of the Dollar Limitation, the benefit shall be limited to a benefit that does not exceed the Dollar Limitation. (1) Definitions Used in this Section: (A) “Annual Pension” means the benefits received by a participant under this Plan expressed in the form of a straight life annuity. In determining whether benefits payable exceed the Dollar Limitation set forth below, benefits payable in any form other than a straight life annuity shall be adjusted to the larger of: (i) The annual amount of the straight life annuity (if any) payable to the participant under the plan commencing at the same annuity starting date as the form of benefit payable to the participant; or (ii) The annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the form of benefit payable to the participant, computed using a 5 7 percent interest assumption and the applicable mortality table described in §1.417(e)-1(d)(2) for that annuity starting date. No actuarial adjustment to the benefit shall be made for benefits that are not directly related to retirement benefits (such as a qualified disability benefit, preretirement incidental death benefits, and postretirement medical benefits); or the inclusion in the form of benefit of an automatic benefit increase feature, provided the form of benefit is not subject to §417(e)(3) of the Internal Revenue Code and would otherwise satisfy the limitations of this Subsection (a), and the amount payable under the form of benefit in any Limitation Year shall not exceed the limits of this Subsection (a) applicable at the annuity starting date, as increased in subsequent years pursuant to § 415(d) of the Code. For this purpose, an automatic benefit increase feature is included in a form of benefit if the form of benefit provides for automatic, periodic increases to the benefits paid in that form. (B) “Dollar Limitation” means $160,000 (subject to the annual adjustments provided under Section 415(d) of the IRC). Said amount shall be adjusted based on the age of the participant when benefits begin, as follows: (i) Except with respect to a participant who is a “Qualified Participant” as defined in Section 415(b)(2)(H) of the Code, for benefits (except survivor and disability benefits as defined in Section 415(b)(2)(I) of the Code) beginning before age 62 the Age-Adjusted Dollar Limitation is equal to the lesser of-- (I) the actuarial equivalent of the annual amount of a straight life annuity commencing at the annuity starting date that has the same actuarial present value as a deferred straight life annuity commencing at age 62, where annual payments under the straight life annuity commencing at age 62 are equal to the Dollar Limitation (as adjusted pursuant to section 415(d) for the limitation year), and where the actuarially equivalent straight life annuity is computed using a 5 percent interest rate and the applicable mortality table under §1.417(e)- 1(d)(2) that is effective for that annuity starting 8 date (and expressing the participant’s age based on completed calendar months as of the annuity starting date); and (II) the Dollar Limitation (as adjusted pursuant to section 415(d)) multiplied by the ratio of the annual amount of the straight life annuity under the plan to the annual amount of the straight life annuity under the plan commencing at age 62, with both annual amounts determined without applying the rules of section 415. (ii) For benefits beginning after the age of 65, the age-adjusted Dollar Limitation is equal to the lesser of: (I) the actuarial equivalent of the annual amount of a straight life annuity commencing at the annuity starting date that has the same actuarial present value as a straight life annuity commencing at age 65, where annual payments under the straight life annuity commencing at age 65 are equal to the dollar limitation of section 415(b)(1)(A) (as adjusted pursuant to section 415(d) for the limitation year), and where the actuarially equivalent straight life annuity is computed using a 5 percent interest rate and the applicable mortality table under §1.417(e)-1(d)(2) that is effective for that annuity starting date (and expressing the participant’s age based on completed calendar months as of the annuity starting date); and (II) the section 415(b)(1)(A) Dollar limitation (as adjusted pursuant to section 415(d) and §1.415(d)-1 for the limitation year) multiplied by the ratio of the annual amount of the adjusted immediately commencing straight life annuity under the plan to the adjusted age 65 straight life annuity. The adjusted immediately commencing straight life annuity means the annual amount of the immediately commencing straight life annuity payable to the participant, computed disregarding the participant’s accruals after age 65 but including actuarial 9 adjustments even if those actuarial adjustments are applied to offset accruals. For this purpose, the annual amount of the immediately commencing straight life annuity is determined without applying the rules of section 415. The adjusted age 65 straight life annuity means the annual amount of the straight life annuity that would be payable under the plan to a hypothetical participant who is 65 years old and has the same accrued benefit (with no actuarial increases for commencement after age 65) as the participant receiving the distribution (determined disregarding the participant’s accruals after age 65 and without applying the rules of section 415). (iii) There shall be no age adjustment of the Dollar Limitation with respect to benefits beginning between the ages of 62 and 65. (2) The limitations set forth in this Subsection (a) shall not apply if the Annual Pension does not exceed $10,000 provided the participant has never participated in a Defined Contribution Plan maintained by the City. (3) Cost-of-living adjustments in the Dollar Limitation for benefits shall be limited to scheduled annual increases determined by the Secretary of the Treasury under Section Subsection 415(d) of the Code. (4) In the case of a participant who has fewer than 10 years of participation in the Plan, the Dollar Limitation set forth in Paragraph (1)(B) of this Subsection (a) shall be multiplied by a fraction - (i) the numerator of which is the number of years (or part thereof) of participation in the Plan, and (ii) the denominator of which is 10. (5) Any portion of a participant’s benefit that is attributable to mandatory employee contributions (unless picked-up by the City) or rollover contributions, shall be taken into account in the manner prescribed in the regulations under Section 415 of the Code. (6) Should any participant participate in more than one defined benefit plan maintained by the City, in any case in which the participant’s benefits under all such defined benefit plans (determined as of the same age) would exceed the Dollar Limitation 10 applicable at that age, the accrual of the participant’s benefit under this Plan shall be reduced so that the participant’s combined benefits will equal the Dollar Limitation. (7) For a participant who has or will have distributions commencing at more than one annuity starting date, the Annual Benefit shall be determined as of each such annuity starting date (and shall satisfy the limitations of this Section as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other annuity starting dates. For this purpose, the determination of whether a new starting date has occurred shall be made without regard to § 1.401(a)-20, Q&A 10(d), and with regard to § 1.415(b)1(b)(1)(iii)(B) and (C) of the Income Tax Regulations. (8) The determination of the Annual Pension under Paragraph (a)(1) of this Subsection (a) shall take into account (in the manner prescribed by the regulations under Section 415 of the Code) social security supplements described in § 411(a)(9) of the Internal Revenue Code and benefits transferred from another defined benefit plan, other than transfers of distributable benefits pursuant § 1.411(d)-4, Q&A-3(c) of the Income Tax Regulations. (9) The above limitations are intended to comply with the provisions of Section 415 of the Code, as amended, so that the maximum benefits provided by plans of the City shall be exactly equal to the maximum amounts allowed under Section 415 of the Code and regulations thereunder. If there is any discrepancy between the provisions of this Subsection (a) and the provisions of Section 415 of the Code and regulations thereunder, such discrepancy shall be resolved in such a way as to give full effect to the provisions of Section 415 of the Code. The value of any benefits forfeited as a result of the application of this Subsection (a) shall be used to decrease future employer contributions. (b) Required Beginning Date: Notwithstanding any other provision of the Plan, payment of a participant’s retirement benefits under the Plan shall commence not later than the participant’s Required Beginning Date, which is defined as the later of: -April 1 of the calendar year that next follows the calendar year in which the participant attains or will attain the age of 70½ years; or 11 -April 1 of the calendar year that next follows the calendar year in which the participant retires. (c) Required Minimum Distributions. (1) Required Beginning Date. The participant’s entire interest will be distributed, or begin to be distributed, to the participant no later than the participant’s Required Beginning Date as defined in Subsection (b) of this Section 38-65. (2) Death of participant Before Distributions Begin. (A) If the participant dies before distributions begin, the participant’s entire interest will be distributed, or begin to be distributed, no later than as follows: (i) If the participant's surviving spouse is the participant’s sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the participant died, or by December 31 of the calendar year in which the participant would have attained age 70½, if later. (ii) If the participant’s surviving spouse is not the participant’s sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the participant died. (iii) If there is no designated beneficiary as of September 30 of the year following the year of the participant’s death, the participant’s entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the participant's death. (B) The participant’s entire interest shall be distributed as follows: (i) participant Survived by Designated Beneficiary. If the participant dies before the date distribution of his or her interest begins and there is a designated beneficiary, the participant’s entire interest will be 12 distributed, beginning no later than the time described in Subparagraph (2)(A) above, over the life of the designated beneficiary or over a period certain not exceeding: (I) unless the annuity starting date is before the first distribution calendar year, the life expectancy of the designated beneficiary determined using the beneficiary’s age as of the beneficiary’s birthday in the calendar year immediately following the calendar year of the participant’s death; or (II) if the annuity starting date is before the first distribution calendar year, the life expectancy of the designated beneficiary determined using the beneficiary’s age as of the beneficiary’s birthday in the calendar year that contains the annuity starting date. (ii) No Designated Beneficiary. If the participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the participant’s death, distribution of the participant's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the participant's death. (C) Death of Surviving Spouse Before Distributions to Surviving Spouse Begin. In any case in which (i) the participant dies before the date distribution of his or her interest begins, (ii) the participant’s surviving spouse is the participant’s sole designated beneficiary, and (iii) the surviving spouse dies before distributions to the surviving spouse begin, Subparagraphs (2)(A) and 2(B) above shall apply as though the surviving spouse were the participant. (3) Requirements For Annuity Distributions That Commence During participant’s Lifetime. (A) Joint Life Annuities Where the Beneficiary Is Not the participant’s Spouse. If the participant's interest is being distributed in the form of a joint and survivor annuity for the joint lives of the participant and a nonspousal beneficiary, 13 annuity payments to be made on or after the participant's Required Beginning Date to the designated beneficiary after the participant's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the participant using the table set forth in Q&A-2 of Section 1.401(a)(9)-6T of the Treasury regulations. If the form of distribution combines a joint and survivor annuity for the joint lives of the participant and a nonspousal beneficiary and a period certain annuity, the requirement in the preceding sentence will apply to annuity payments to be made to the designated beneficiary after the expiration of the period certain. (B) Period Certain Annuities. Unless the participant’s spouse is the sole designated beneficiary and the form of distribution is a period certain and no life annuity, the period certain for an annuity distribution commencing during the participant’s lifetime may not exceed the applicable distribution period for the participant under the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations for the calendar year that contains the annuity starting date. If the annuity starting date precedes the year in which the participant reaches age 70, the applicable distribution period for the participant is the distribution period for age 70 under the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations plus the excess of 70 over the age of the participant as of the participant’s birthday in the year that contains the annuity starting date. If the participant’s spouse is the participant’s sole designated beneficiary and the form of distribution is a period certain and no life annuity, the period certain may not exceed the longer of the participant’s applicable distribution period, as determined under this Subparagraph (3)(B), or the joint life and last survivor expectancy of the participant and the participant’s spouse as determined under the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations, using the participant’s and spouse’s attained ages as of the participant’s and spouse’s birthdays in the calendar year that contains the annuity starting date. (4) Form of Distribution. Unless the participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first distribution calendar year distributions will be 14 made in accordance with Subparagraphs (4)(A), (4)(B) and (4)(C) below. If the participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Section 401(a)(9) of the Code and the Treasury regulations. Any part of the participant's interest which is in the form of an individual account described in Section 414(k) of the Code will be distributed in a manner satisfying the requirements of Section 401(a)(9) of the Code and the Treasury regulations that apply to individual accounts. (A) General Annuity Requirements. If the participant's interest is paid in the form of annuity distributions under the Plan, payments under the annuity will satisfy the following requirements: (i) the annuity distributions will be paid in periodic payments made at intervals not longer than one year; (ii) the distribution period will be over a life (or lives) or over a period certain, not longer than the distribution period described in Paragraphs 2 or 3 above, whichever is applicable, of this Subsection (c); (iii) once payments have begun over a period certain, the period certain will not be changed even if the period certain is shorter than the maximum permitted; (iv) payments will either be non-increasing or increase only as follows: (I) by an annual percentage increase that does not exceed the annual percentage increase in a cost-of-living index that is based on prices of all items and issued by the Bureau of Labor Statistics; (II) to the extent of the reduction in the amount of the participant's payments to provide for a survivor benefit upon death, but only if the beneficiary whose life was being used to determine the distribution period dies or is no longer the participant’s beneficiary pursuant to a qualified domestic relations order within the meaning of Section 414(p) of the Code; 15 (III) to provide cash refunds of employee contributions upon the participant's death; or (IV) to pay increased benefits that result from a Plan amendment. (B) Amount Required to be Distributed by Required Beginning Date. The amount that must be distributed on or before the participant's Required Beginning Date (or, if the participant dies before distributions begin, the date distributions are required to begin under Subparagraph (2)(A)(i) or (2)(A)(ii), whichever is applicable) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bi-monthly, monthly, semi-annually, or annually. All of the participant’s benefit accruals as of the last day of the first distribution calendar year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the participant’s Required Beginning Date. (C) Additional Accruals After First Distribution Calendar Year. Any additional benefits accruing to the participant in a calendar year after the first distribution calendar year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues. (5) For purposes of this Subsection (c), distributions are considered to begin on the participant’s Required Beginning Date. If annuity payments irrevocably commence to the participant (or to the participant’s Surviving Spouse) before the participant’s Required Beginning Date (or, if to the participant’s Surviving Spouse, before the date distributions are required to begin in accordance with Subparagraph (2)(A) above), the date distributions are considered to begin is the date distributions actually commence. (6) Definitions. (A) Designated beneficiary. The individual who is designated as the beneficiary under the Plan and is the designated beneficiary under Section 401(a)(9) of the Code 16 and Section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations. (B) Distribution calendar year. A calendar year for which a minimum distribution is required. For distributions beginning before the participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the participant's Required Beginning Date. For distributions beginning after the participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Paragraph (2) of this Subsection (c). (C) Life expectancy. Life expectancy as computed by use of the Single Life Table in Section 1.401(a)(9)-9 of the Treasury regulations. (d) (1) Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. (2) Definitions The following definitions apply to this Section: (A) Eligible rollover distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of 10 years or more; (ii) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; 17 (iii) the portion of any distribution that is a hardship distribution described in Section 401(k)(2)(B)(i)(IV) of the Code; and (iv) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities), provided that a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax Employee contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Section 408(a) or (b) of the Code, or to a qualified defined contribution plan described in Section 401(a) or 403(a) of the Code that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible. (3) Eligible retirement plan: An eligible retirement plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, an annuity contract described in Section 403(b) of the Code, a qualified trust described in Section 401 (a) of the Code, an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan, or, with respect to distributions on or after January 1, 2008, a Roth IRA (subject to the limitations of Code Section 408A(c)(3)) that accepts the distributee's eligible rollover distribution. (4) Distributee: A distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. Furthermore, effective January 1, 2007, a surviving designated beneficiary as defined in Section 401(a)(9)(E) of the 18 Code who is not the surviving spouse and who elects a direct rollover to an individual retirement account described in Section 408(a) of the Code or an individual retirement annuity described in Section 408(b) of the Code shall be considered a distributee. (5) Direct rollover: A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. (e) Notwithstanding any other provision of this Plan, the maximum amount of any mandatory distribution, as defined in Section 401(a)(31) of the Code, payable under the Plan shall be $1000. (f) Compensation Limitations Under 401(a)(17): In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, the annual compensation of each participant taken into account under the Plan shall not exceed the EGTRRA annual compensation limit for limitation years beginning after December 31, 2001. The EGTRRA annual compensation limit is $200,000, as adjusted by the Commissioner for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the EGTRRA annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12. Any reference in the Plan to the limitation under Section 401 (a)(17) of the Code shall mean the EGTRRA annual compensation limit set forth in this provision. SECTION 5. Section 38-66 of the Code of Ordinances, entitled “Distribution of Benefits”, is hereby repealed/deleted in its entirety and all following sections relettered/renumbered accordingly: Sec. 38-66. Distribution of benefits. Notwithstanding any other provision of this system to the contrary, a form of retirement income payable from this system after the effective date of this division, shall satisfy the following conditions: (1) If the retirement income is payable before the member's death: 19 a. It shall either be distributed or commence to the member not later than April 1 of the calendar year following the later of the calendar year in which the member attains age 70 1/2, or the calendar year in which member retires, b. The distribution shall commence not later than the calendar year defined above; and a), shall be paid over the life of the member or over the lifetimes of the member and spouse, issue or dependent, or b), shall be paid over the period extending not beyond the life expectancy of the member and spouse, issue or dependent. Where a form of retirement income payment has commenced in accordance with the preceding paragraphs and the member dies before his entire interest in the system has been distributed, the remaining portion of such interest in the system shall be distributed no less rapidly than under the form of distribution in effect at the time of the member's death. 2. If the member's death occurs before the distribution of his interest in the system has commenced, member's entire interest in the system shall be distributed within five years of member's death, unless it is to be distributed in accordance with the following rules: a. The member's remaining interest in the system is payable to his spouse, issue or dependent; b. The remaining interest is to be distributed over the life of the spouse, issue or dependent or over a period not extending beyond the life expectancy of the spouse, issue or dependent; and c. Such distribution begins within one year of the member's death unless the member's spouse shall receive the remaining interest in which case the distribution need not begin before the date on which the member would have attained age 70 1/2 and if the spouse dies before the distribution to the spouse begins, this section shall be applied as if the spouse were the member. SECTION 6. Section 38-74 of the Code of Ordinances, entitled “Direct transfers of eligible rollover distributions”, is hereby repealed/deleted in its entirety and all following sections relettered/renumbered accordingly: Sec. 38-74. Direct transfers of eligible rollover distributions. (1) General. This section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the system to the contrary that would otherwise limit a distributee's election under this section, a distributee may elect, at the time and in the manner prescribed 20 by the board, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. (2) Definitions. a. Eligible rollover distribution means any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the code; and the portion of any distribution that is not includable in gross income. b. Eligible retirement plan means an individual retirement account described in section 408(a) of the code, an individual retirement annuity described in section 408(b) of the code, an annuity plan described in section 403(a) of the code, or a qualified trust described in section 401(a) of the code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. c. Distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse is a distributee with regard to the interest of the spouse. d. Direct rollover means a payment by the plan to the eligible retirement plan specified by the distributee. SECTION 7. Section 38-78(8) and (9) of the Code of Ordinances, entitled “Supplemental benefit; F.S. ch. 175 share accounts” are hereby repealed/deleted in their entirety and any and all following subsections relettered/renumbered accordingly: Sec. 38-78. Supplemental benefit; F.S. ch. 175 share accounts. There is hereby established an additional supplemental retirement, termination, death and disability benefit to be in addition to the benefits provided for in the previous sections of this division, such benefit to be funded solely and entirely by the premium tax monies received pursuant to F.S. Chapter 175. 21 (1) Individual member share accounts. The board shall create individual member share accounts and maintain appropriate books and records showing the respective interest of each member hereunder. Each member shall have a member share account for his share of the Chapter 175 tax revenues, forfeitures and income and expense adjustments relating thereto. The board shall maintain a separate membership share account for each member, however, the maintenance of separate accounts is for accounting purposes only and a segregation of the assets of the trust fund to each account shall not be required. (2) Share account funding. a. Individual member share accounts shall be created with all of the monies received from Chapter 175, Florida Statutes, tax revenues in June 1999, plus any supplemental tax revenue amounts received in fiscal year 98-99 and all similar tax revenues received in subsequent fiscal years. Commencing with the payment received in fiscal year 2004 and each year thereafter, two percent of the total salaries for all members during the prior plan year shall be deducted from the monies received from Chapter 175, Florida Statutes, tax revenues and credited as additional member contributions under section 38-55(1) hereof for said prior plan year. b. In addition, any forfeitures as provided in subsection (4), shall be allocated to the individual Member share accounts in accordance with the formula set forth in subsection (4). (3) Allocation of monies to share accounts. a. Allocation of Chapter 175 contributions. 1. Upon receipt of the first premium tax monies attributable to the previous calendar year (beginning with calendar year 1998), an amount of money equal to the amount determined under F.S. § 175.122, Limitation of Disbursement, shall be allocated to individual member share accounts in an amount directly proportionate to the salary which the member was paid compared to the total fire department payroll (as determined under F.S. § 175.122) in the calendar year preceding the date for which F.S. Chapter 175, tax revenues were received. In addition, any amount of money described in subsection (2)a. above attributable to the previous calendar year and not otherwise distributed pursuant to the previous sentence, shall be allocated to each individual member account in an amount directly proportionate to the number of pay periods for which the member was paid 22 compared to the total number of pay periods for which all members were paid, counting the pay periods in the calendar year preceding the date for which the F.S. Chapter 175, tax revenues were received. 2. Effective October 1, 2000 (only as to funds received on or after the effective date of the ordinance adopting this section), the allocation method in subsection 3.a.1. above shall be discontinued and premium tax monies received on or after that date after the deduction of the two percent total compensation which commences in FY 2004, shall be allocated as provided for in this paragraph 2. All monies received from Chapter 175, Florida Statutes, premium tax rebates, including any supplemental payments, shall be allocated to individual member share accounts at the end of each fiscal year on September 30 (a "valuation date") in an amount determined as follows: (i) On each valuation date, each current member of the plan and each retiree, beneficiary, or terminated vested person who is otherwise eligible for an allocation as of the valuation date shall receive a share allocation in accordance with the following schedule: TABLE INSET: Years of Credited Service Share Allotment 1--3 4 4--6 5 7--9 6 10--12 7 13--15 8 16--18 9 19--21 10 21--24 11 25 or more 12 Members with less than one year of credited service on a valuation date shall receive no allotment. Periods 23 of unpaid leave or purchased credited service for family and medical leave (section 38-77) or purchased credited service for military service prior to employment (section 38-75) shall not be used in calculating credited service for purposes of share allotment. Credited service received as a result of a separation from employment for military service shall be used in calculating credited service for purposes of share allotment. Members (or their beneficiary) who retire, die or terminate employment other than on a valuation date shall receive a share allotment based on their years of credited service, determined as of the date of retirement, death or termination, multiplied by the following applicable fraction based upon the month in which the retirement, death or termination occurred: TABLE INSET: October .083 April .583 November .166 May .666 December .250 June .750 January .333 July .833 February .417 August .917 March .500 September 1.00 (ii) The total funds subject to allocation on each valuation date shall be allocated to each share account of those eligible for an allocation in an amount equal to a fraction of the total amount with the individual share allotment for the year as the numerator of the fraction and the sum of the total share allotments for the year as the denominator of the fraction. b. Allocation of investment gains and losses. On each valuation date, each individual share account shall be adjusted to reflect the earnings or losses resulting from investment during the year. The investment earnings or losses allocated to the individual member share accounts shall be in the same percentage as are earned or 24 lost by the total investment earnings or losses of the fund as a whole, unless the board dedicates a separate investment portfolio for the Chapter 175 Florida Statutes share accounts, in which case the investment earnings or losses shall be measured by the investment earnings or losses of the separate investment portfolio. c. Allocation of costs, fees and expenses. On each valuation date, each individual share account shall be adjusted to allocate the costs, fees and expenses of administration of the fund. Costs, fees, and expenses of administration shall be allocated to each individual member share account on a proportionate basis taking the costs, fees and expenses of administration of the fund as a whole multiplied by a fraction, the numerator of which is the total assets in each individual member share account (after adding the annual investment gain or loss) and the denominator of which is the total assets of the fund as a whole. d. No right to allocation. The fact of allocation or credit of an allocation to a member's share account by the board shall not vest in any member, any right, title, or interest in the assets of the trust or in the Chapter 175 tax revenues except at the time or times, to the extent, and subject to the terms and conditions provided in this section. e. Members shall be provided annual statements setting forth their share account balance as of the end of the plan year. (4) Forfeitures. Any member who has less than five years of service credit and who is not otherwise eligible for payment of benefits after termination of employment with the city as provided for in subsection (5) shall forfeit his individual member share account or the non-vested portion thereof. Forfeited amounts shall be redistributed to the other individual member accounts on each valuation date in an amount determined in accordance with subsection (3)a.2. (5) Eligibility for benefits. Any member who terminates employment as a firefighter with the city, upon application filed with the board, shall be entitled to be paid the value of his individual member share account, subject to the following criteria: a. Retirement benefit. 1. A member shall be entitled to 100 percent of the value of his share account upon normal or early retirement pursuant to section 38-56. 25 2. Such payment shall be made as provided in subsection (6). b. Termination benefit. 1. In the event that a member's employment as a firefighter is terminated by reason other than retirement, death or disability, he shall be entitled to receive an amount equal to the vested portion of his share account balance. The vested portion shall be determined in accordance with the schedule in section 38-59, subsection (3). 2. Such payment shall be made as provided in subsection (6). c. Disability benefit. 1. In the event that a member is determined to be eligible for either an in-line of duty disability benefit pursuant to section 38-58, subsection (1) or a not-in-line of duty disability benefit pursuant to section 38-58, subsection (3), he shall be entitled to 100 percent of the value of his share account. 2. Such payment shall be made as provided in subsection (6). d. Death benefit. 1. In the event that a member dies while actively employed as a firefighter, 100 percent of the value of his share account shall be paid to his designated beneficiary as provided in section 38-61. (6) Payment of benefits. If a member terminates employment and is otherwise entitled to receive all or a portion of the balance in the member's share account, the member's share account shall be valued on the next valuation date as provided for in subsection (3) above, following termination of employment. Payment of the calculated share account balance or the vested portion thereof shall be payable not later than 30 days following the valuation date and shall be paid in one lump sum payment. No optional forms of payments shall be permitted. (7) Benefits not guaranteed. All benefits payable under this section 38-78 shall be paid only from the assets allocated to individual member share accounts. Neither the city nor the board shall have any duty or liability to furnish any additional funds, securities or other assets to fund share account benefits. Neither the board nor any trustee shall be liable for the 26 making, retention, or sale of any investment or reinvestment made as herein provided, nor for any loss or diminishment of the share account balances, except due to his or its own negligence, willful misconduct or lack of good faith. All investments shall be made by the board subject to the restrictions otherwise applicable to fund investments. (8) Maximum additions. Notwithstanding any other provision of this section 38-78, the "annual additions" to a member's account for any limitation year shall not exceed the maximum permissible amount, which shall be the lesser of: (i) $30,000.00, or, if greater, 1/4 of the defined benefit dollar limitation set forth in section 415(b)(1) of the Code as in effect for the limitation year; or (ii) 25 percent of the member's compensation for the limitation year. If there is a short limitation year because of a change in limitation year, the board will multiply the $30,000.00 limitation (or larger limitation) by the following fraction: Number of months in the short year/12 The term "annual additions" means the amount allocated to a member's account during the limitation year that is comprised of: a. The allocable share of the employer contributions (F.S. ch. 175 monies) for the limitation year; b. The allocable share of forfeitures for the limitation year; c. All employee contributions made during the limitation year. If the annual additions exceed the limitation described above, the annual additions to the member's account shall be reduced by a corrective adjustment made in the following order of precedence: a. By allocating and reallocating under subsection (3) of this section, employer contributions and forfeitures for the plan year to the member share accounts of those members to whom the limitations of this subsection do not apply for the limitation year but only to the extent that such allocations or reallocations do not cause the annual additions to any member's account to exceed the limitations of this subsection. b. To the extent there remains an amount that cannot be allocated under subsection a above, such remaining amount shall be held in a "suspense account" as a forfeiture and shall be held therein until the next succeeding date or dates that forfeitures are allocated. Suspense accounts shall not share in trust income under subsection 27 (3)b. In the event of termination of the plan, the suspense account shall be allocated and reallocated to the member share accounts of the members under the formula provided in subsection (3), but shall revert to the employer in the event that it cannot be fully allocated to the member share account of any member without violating the provisions of this subsection. (9) Participation in both defined contribution and defined benefits plans. Since each member is a participant (or has been a participant) in both a defined benefit plan or plans and a defined contribution plan, benefits under the defined benefit plan shall be reduced to the extent necessary to prevent the sum of the defined benefit plan fraction and the defined contribution plan fraction, computed as of the close of the limitation year from exceeding 1.0. For purposes of this subsection (9), the defined benefit plan fraction is: The sum of the projected annual benefit of the member under all defined benefit plans (whether or not terminated) maintained by the employer. The lesser of: (i) 125 percent of the dollar limitation in effect under code section 415(b)(1)(A) for the limitation year; or (ii) 140 percent of his average compensation for his high three consecutive calendar years of service. If the employee was a member in one or more defined benefit plans maintained by the employer which were in existence on July 1, 1982, the denominator of this fraction will not be less than 125 percent of the sum of the annual benefits under such plans which the employee had accrued as of the end of the 1982 limitation year (the last limitation year beginning before September 1, 1983), or, if later, June 30, 1983. The preceding sentence only applies if the defined benefit plans individually and in the aggregate satisfied the requirements of code section 415 as in effect at the end of the 1982 limitation year. For purposes of this paragraph, a master or prototype plan with an opinion letter issued before January 1, 1983 shall be treated as a plan in existence on July 1, 1982. For purposes of this subsection (9), the defined contribution plan fraction is: The sum of the annual additions (determined as of the close of the limitation year) to the member's account under all defined contribution plans (whether or not terminated) maintained by the employer for the current and all prior limitation years (including the annual additions attributable to the member's employee contributions to this plan and all other defined contribution or defined benefit plans, whether or not terminated, maintained by the employer). 28 The sum of the lesser of the following amounts determined for the limitation year and for each prior limitation year of service with the employer: (i) 125 percent of the dollar limitation in effect under section 415(c)(1)(A) of the code for the limitation year (determined without regard to special dollar limitations for employee stock ownership plans); or, (ii) 35 percent of the member's compensation for the limitation year. If the employee was a member in one or more defined contribution plans maintained by the employer which were in existence on July 1, 1982, the board will adjust the numerator of this fraction if the sum of this fraction and the defined benefit plan fraction otherwise would exceed 1.0 under the terms of this plan. Under the adjustment, the board will subtract permanently an amount equal to the product of: (1) the excess of the sum of the fractions over 1.0, times (2) the denominator of this fraction, from the numerator of this fraction. The board shall calculate the adjustment using the fractions as they would be computed under this section as of the end of the 1982 limitation year (the last limitation year beginning before September 1, 1983), or if later, June 30, 1983. The board shall make the same adjustment as of the end of the 1983 limitation year (the last limitation year beginning before January 1, 1984) if the sum of the fractions exceed 1.0 because of accruals or additions that were made before the limitations of this article became effective to any plans of the employer in existence on July 1, 1982. The board also may use any transitional rules provided by law which are applicable in computing the member's defined contribution plan fraction. For purposes of this paragraph, a master or prototype plan with an opinion letter issued before January 1, 1983, which was adopted by the employer on or before June 30, 1983, shall be treated as a plan in existence on July 1, 1982. Definitions. For purposes of this subsection (9) and subsection (8), the following terms shall have the meanings shown below: Compensation shall mean a member's wages, salaries, and fees for services and other amounts received for services actually rendered in the course of employment with the employer maintaining the plan, but excluding the following: (a) Employer contributions to a plan of deferred compensation which are not includable in the employee's gross income for the taxable year in which contributed, or employer contributions under a simplified employee pension plan to the extent such contributions are deductible by the employee, or any distributions from a plan of deferred compensation; (b) Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by the employee 29 either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (c) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (d) Other amounts which received special tax benefits, or contributions made by the employer (whether or not under a salary reduction agreement) towards the purchase of an annuity described in section 403(b) of the code (whether or not the amounts are actually excludable from the gross income of the employee). For the purposes of applying the limitations of subsections (8) and (9), compensation for a limitation year is the compensation actually paid or includable in gross income during such year unless otherwise specified in writing by the employer. Defined benefit plan shall mean a retirement plan that does not provide for individual accounts for employer contributions. The board shall treat all defined benefit plans (whether or not terminated) maintained by the employer as a single plan and the trustees shall treat all defined contribution plans (whether or not terminated) maintained by the employer a single plan. Employer contributions , for purposes of applying the limitations in these subsections (8) and (9), shall mean insurance premium tax rebate monies received from the State of Florida pursuant to F.S. ch 175. Projected annual benefit shall mean a member's annual benefit (adjusted to an actuarially equivalent straight life annuity if the plan expresses such benefit in a form other than a straight life annuity or qualified joint and survivor annuity) under the defined benefit plan provided by employer contributions based on the assumptions that: (i) the member will continue employment until his normal retirement age as stated in the defined benefit plan, (or current age, if later); (ii) the member's compensation for the current limitation year will continue at the same rate as in effect for the limitation year under consideration until his normal retirement age; and, (iii) all other relevant factors used to determine benefits under the defined benefit plan will remain constant as of the current limitation year for all future limitation years. Limitation year shall be the same as the plan year. Limitation year of service shall mean a plan year during which a member completes a complete plan year of service. 30 Member's account or member’s share account shall mean the account established pursuant to this section 38-78 in which employer contributions (as defined in this section 38-78) are deposited and maintained as provided for herein. If the plan satisfied the applicable requirements of section 415 of the code as in effect for all limitation years beginning before January 1, 1987, an amount shall be subtracted from the numerator of the defined contribution plan fraction (not exceeding such numerator) as prescribed by the secretary of the treasury so that the sum of the defined benefit plan fraction and defined contribution plan fraction computed under section 415(e)(1) of the code does not exceed 1.0 for such limitation year. This shall only be effective until January 1, 2000. SECTION 8. Codification of this Ordinance is hereby authorized and directed. SECTION 9. All Ordinances or parts of Ordinances in conflict herewith be and the same are hereby repealed. SECTION 10. If any section, subsection, sentence, clause, phrase of this ordinance, or the particular application thereof shall be held invalid by any court, administrative agency, or other body with appropriate jurisdiction, the remaining section, subsection, sentences, clauses, or phrases under application shall not be affected thereby. SECTION 11. This Ordinance shall take effect upon adoption. PASSED this day of , 2011, upon first reading. PASSED AND ADOPTED this day of , 2011, upon second and final reading. CITY OF PALM BEACH GARDENS FOR AGAINST ABSENT BY: David J. Levy, Mayor Bert Premuroso, Vice Mayor Joseph R. Russo, Council Member 31 Eric Jablin, Council Member Marcie Tinsley, Council Member ATTEST: BY: Patricia Snider, City Clerk APPROVED AS TO FORM AND LEGAL SUFFICIENCY BY: City Attorney