HomeMy WebLinkAboutAgenda GEPB 111306City of Palm Beach Gardens
10500 N. Military Trail
Palm Beach Gardens, FL 33410
Please take notice that the Board of Trustees of the City of Palm Beach Gardens will
conduct a meeting of the board at the above location on November 13, 2006 at 2:OOPM in
Council Chambers.
Old Business: Approval of 8/7/06 minutes
New Business:
Adjournment
Report from Rockwood Capital Advisors
Report from Bogdahn Consulting
Report from Foster & Foster
Report from Scott Christiansen
Approval of Money Market Sweep Account
Approval of 2007 meeting dates
Approval of Bills
III LTA laV1 ffil iOTelI.Xi /_rIT[�7 1
In accordance with the Disabilities Act and F.S.S.286.26, persons with disabilities
needing special accommodation to participate in this proceeding should contact the
Human Resource Department no later then seven days subsequent to the proceeding at
(561) 799 — 4223 for assistance, if hearing impaired, telephone the Florida Relay Service
Number at 800 — 955 — 8770 (VOICE) for assistance.
If a person decides to appeal any decision made by the Board, with respect to any matter
considered at such meeting or hearing, he will need to ensure that a verbatim record of
the proceedings is made, which record includes the testimony and evidence upon which
the appeal is to be based.
LAW OFFICES
CHRISTIANSEN & DEHNER, P.A.
63 SARASOTA CENTER BLVD.
SUITE 107
SCOTT R. CHRISTIANSEN SARASOTA, FLORIDA 34240
H. LEE DEHNER
TO: City of Palm Beach Gardens General Employees' Pension Plan
FROM: Nora O'Connor
RE: Revised Tentative 2007 Meeting Dates
DATE: September 28, 2006
PHONE: (941) 377 -2200
FAX: (941) 377 -4848
Listed Below are the tentative 2007 meeting dates based on the previous years'
schedule. Should they meet with the Board's approval, please let us know and we will put
them on our calendar.
ALL MEETINGS WILL BE HELD AT 2:00 PM
February 12, 2007
May 14, 2007
August 13, 2007
November 12, 2007
Thank you.
f
S
V.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
AN INVESTMENT IN A FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY. ALTHOUGH A FUND SEEKS TO
PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN A FUND.
FST
Administration
Shares
April 28, 2006
• Prime Obligations Fund
• Money Market Fund
• Treasury Obligations Fund
• Treasury Instruments Fund
■ Government Fund
■ Federal Fund
■ Tax -Free Money
Market Fund
I 1
Asset
Management
NOT FDIC - Insured May Lose Value No Bank Guarantee
General Investment
Management Approach
Goldman Sachs Asset Management, L.P. ( "GSAM° ") serves as Investment
Adviser to the Financial Square Funds (the "Funds "). GSAM is referred to in this
Prospectus as the "Investment Adviser."
Goldman Sachs' Money Market Investment Philosophy:
The Money Market Funds are managed to seek preservation of capital, daily
liquidity and maximum current income. With each Fund, the Investment Adviser
follows a conservative, risk - managed investment process that seeks to:
■ Manage credit risk
■ Manage interest rate risk
■ Manage liquidity
Since 1981, the Investment Adviser has actively managed the
Goldman Sachs Money Market Funds to provide investors with the
greatest possible preservation of principal and income potential.
INVESTMENT PROCESS
1. Managing Credit Risk
The Investment Adviser's process for managing risk emphasizes:
■ Intensive research —The Credit Department, a separate operating entity of
Goldman, Sachs & Co. ( "Goldman Sachs "), approves all money market fund
eligible securities for the Funds. Sources for the Credit Department's analysis
include third -party inputs, such as financial statements and media sources,
ratings releases and company meetings, as well as the Investment Research,
Legal and Compliance departments of Goldman Sachs.
■ Timely updates —A Credit Department- approved list of securities is continuously
communicated on a "real- time" basis to the portfolio management team via
computer link.
The Result. An "approved" list of high - quality credits —The Investment Adviser's
portfolio management team uses this approved list to construct portfolios which
offer the best available risk -return tradeoff within the "approved" credit universe.
Z Managing Interest Rate Risk
Three main steps are followed in seeking to manage interest rate risk:
IN Establish weighted average maturity ( "WAM ") target —WAM (the weighted
average time until the yield of a portfolio reflects any changes in the current
interest rate environment) is constantly revisited and adjusted as market
conditions change. An overall strategy is developed by the portfolio management
team based on insights gained from weekly meetings with both Goldman Sachs
economists and economists from outside the firm.
■ Implement optimum portfolio structure — Proprietary models that seek the
optimum balance of risk and return, in conjunction with the Investment
Adviser's analysis of factors such as market events, short-term interest rates and
each Fund's asset volatility, are used to identify the most effective portfolio
structure.
■ Conduct rigorous analysis of new securities —The Investment Adviser's five -
step process includes legal, credit, historical index and liquidity analysis, as well
as price stress testing to determine suitability for money market mutual funds.
3. Managing Liquidity
Factors that the Investment Adviser's portfolio managers continuously monitor and
that affect liquidity of a money market portfolio include:
■ Each Fund's investors and factors that influence their asset volatility;
■ Technical events that influence the trading range of federal funds and other
short-term fixed - income markets; and
IN Bid -ask spreads associated with securities in the portfolios.
Benchmarks for the Money Market Funds are the iMoneyNet, Inc.
Indices. Each Fund uses the iMoneyNet Index which best
corresponds to the Fund's eligible investments.
References in this Prospectus to a Fund's benchmark are for informational
purposes only, and unless otherwise noted are not an indication of how a particular
Fund is managed.
GENERAL INVESTMENT MANAGEMENT APPROACH
■ The Funds: Each Fund's securities are valued by the amortized cost method as
permitted by Rule 2a -7 under the Investment Company Act of 1940, as amended
(the "Act "). Under Rule 2a -7, each Fund may invest only in U.S. dollar -
denominated securities that are determined to present minimal credit risk and
meet certain other criteria, including conditions relating to maturity, diversifica-
tion and credit quality. These operating policies may be more restrictive than the
fundamental policies set forth in the Statement of Additional Information (the
"Additional Statement ").
• Taxable Funds: Prime Obligations, Money Market, Treasury Obligations and
Government Funds.
• Tax - Advantaged Funds: Treasury Instruments and Federal Funds.
• Tax- Exempt Fund: Tax -Free Money Market Fund.
IN The Investors: The Funds are designed for institutional investors seeking a high
rate of return, a stable net asset value ( "NAV ") and convenient liquidation
privileges. The Funds are particularly suitable for banks, corporations and other
financial institutions that seek investment of short-term funds for their own
accounts or for the accounts of their customers. Shares of the Government Fund
are intended to qualify as eligible investments for federally chartered credit
unions pursuant to Sections 107(7), 107(8) and 107(15) of the Federal Credit
Union Act, Part 703 of the National Credit Union Administration ( "NCUA ")
Rules and Regulations and NCUA Letter Number 155. The Fund intends to
review changes in the applicable laws, rules and regulations governing eligible
investments for federally chartered credit unions, and to take such action as may
be necessary so that the investments of the Fund qualify as eligible investments
under the Federal Credit Union Act and the regulations thereunder. Shares of the
Government Fund, however, may or may not qualify as eligible investments for
particular state - chartered credit unions. A state - chartered credit union should
consult qualified legal counsel to determine whether the Government Fund is a
permissible investment under the law applicable to it.
• NAV. Each Fund seeks to maintain a stable NAV of $1.00 per share. There can
be no assurance that a Fund will be able at all times to maintain a NAV of
$1.00 per share.
• Maximum Remaining Maturity of Portfolio Investments: 13 months (as
determined pursuant to Rule 2a -7) at the time of purchase.
• Dollar - Weighted Average Portfolio Maturity: Not more than 90 days (as
required by Rule 2a -7).
■ Investment Restrictions: Each Fund is subject to certain investment restrictions
that are described in detail under "Investment Restrictions" in the Additional
Statement. Fundamental investment restrictions of a Fund cannot be changed
without approval of a majority of the outstanding shares of that Fund. The
Treasury Obligations Fund's policy of limiting its investments to U.S. Treasury
Obligations (as defined in Appendix A) and related repurchase agreements is
also fundamental. All investment objectives and policies not specifically
designated as fundamental are non - fundamental and may be changed without
shareholder approval.
■ Diversification: Diversification can help a Fund reduce the risks of investing. In
accordance with current regulations of the Securities and Exchange Commission
(the "SEC "), each Fund may not invest more than 5% of the value of its total
assets at the time of purchase in the securities of any single issuer. However, a
Fund may invest up to 25% of the value of its total assets in the securities of a
single issuer for up to three business days. These limitations do not apply to
cash, certain repurchase agreements, U.S. Government Securities (as defined in
Appendix A) or securities of other investment companies. In addition, securities
subject to certain unconditional guarantees are subject to different diversification
requirements as described in the Additional Statement.
Fund Investment Objectives
and Strategies
The Prime Obligations, Money Market, Treasury Obligations, Treasury Instruments,
Government, Federal and Tax -Free Money Market Funds seek to maximize current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity by investing exclusively in high quality money market
instruments.
Taxable and Tax- Advantaged Funds: The Prime Obligations and Money Market
Funds pursue their investment objectives by investing in U.S. Government
Securities, obligations of U.S. banks, commercial paper and other short-term
obligations of U.S. companies, states, municipalities and other entities and
repurchase agreements. The Money Market Fund may also invest in U.S. dollar -
denominated obligations of foreign banks, foreign companies and foreign govern-
ments. The Treasury Obligations Fund pursues its investment objective by investing
only in securities issued by the U.S. Treasury and repurchase agreements relating
to such securities. The Government Fund pursues its investment objective by
investing, directly or indirectly, only in U.S. Government Securities and repurchase
agreements relating to such securities. The Treasury Instruments and Federal Funds
pursue their investment objectives by limiting their investments only to certain U.S.
Treasury Obligations and U.S. Government Securities, respectively, the interest
from which is generally exempt from state income taxation. You should consult
your tax adviser to determine whether distributions from the Treasury Instruments
and Federal Funds (and any other Fund that may hold such obligations) derived
from interest on such obligations are exempt from state income taxation in your
own state.
In order to obtain a rating from a rating organization, the Prime Obligations,
Money Market, Treasury Obligations, Treasury Instruments, Government and
Federal Funds will observe special investment restrictions.
Tax- Exempt Fund: The Tax -Free Money Market Fund pursues its investment
objective by investing in securities issued by or on behalf of states, territories, and
possessions of the United States and their political subdivisions, agencies,
authorities and instrumentalities, and the District of Columbia, the interest from
which, if any, is in the opinion of bond counsel excluded from gross income for
federal income tax purposes, and generally not an item of tax preference under the
federal alternative minimum tax ( "AMT ").
The table below identifies some of the investment techniques that may (but are not required
to) be used by the Funds in seeking to achieve their investment objectives. The table also
highlights the differences among the Funds in their use of these techniques and other
investment practices and investment securities. Numbers in this table show allowable usage
only; for actual usage, consult the Funds' annual and semi - annual reports. For more
information see Appendix A. The Funds publish their complete portfolio holdings on their
website (http: / /www.gs.com/funds). The Prime Obligations and Money Market Funds publish
their holdings as of the end of each month subject to a thirty calendar -day lag between the
date of the information and the date on which the information is disclosed. The other Funds
publish their holdings as of the end of each calendar quarter subject to a thirty calendar -day
lag between the date of the information and the date on which the information is disclosed.
This information will be available on the website until the date on which a Fund files its next
quarterly portfolio holdings report on Form N -CSR or Form N -Q with the SEC. In addition, a
description of the Funds' policies and procedures with respect to the disclosure of a Fund's
portfolio securities is available in the Funds' Additional Statement.
Investment Policies Matrix
Fund
U.S. Treasury
Obligations
U.S. Government
Securities
Bank
Obligations
Commercial
Paper
Prime Obligations
■I
■
■
U.S. banks only2
■
Money Market
■t
■
■
Over 25% of total assets
must be invested in U.S.
and foreign (US$) banks3
■
U.S. and foreign
(US$) commercial
paper
Treasury Obligations
111114
Treasury Instruments
■`t
Government
■t
■
Federal
■t
■
Tax -Free Money
Market
■
Tax- exempt only
Note: See AppendU A,lbr a description of and certain criteria applicable to, each of these categories of
investments.
' Issued or guaranteed by the U.S. Trvasur•.
' Including,fareign branches of U.S. banks.
' If adverse economic conditions prevail in the banking industry (such as substantial losses an loans, increases in non -
perfarming acmes and charge -offs and declines in total deposits), the Fund may. for temporary defensive purposes, inest less
than 15% of its total assets in bank obligations.
c Issued by the U.S. Treasury.
To the extent required by Rule 1a -7, asset- backed and receivables- backed securities will be rated by the requisite number
of nationally recognized statistical rating organizations ( "NRSROs' ).
" The Money Market Fund may invest in U.S. dollar - denominated obligations (limited to commercial paper and other
notes) issued or guaranteed by a.forrign government. The Fund may also invest in US dollar - denominated
obligations issued or guaranteed by am• entity located or organized in a foreign country that maintains a short -term
,foreign currency rating in the highest short-term ratings category by the requisite number of NRSROs. The Fund may
not invest more than 15% of its total assets in the securities of any one foreign government.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Short -Term
Foreign
Obligations of
Asset - Backed and
Government
Corporations and
Repurchase
Receivables- Backed
Obligations
Other Entities
Agreements
SecuritiesS
(USS)
■
■
■
U.S. entities only
■
■
■
■6
U.S. and foreign
(US$) entities
■
■
(Does not intend
to invest)
Investment Policies Matrix continued
Custodial Unrated Investment
Fund Municipals Receipts Securities9 Companies
Prime Obligations 07 ■ IN ■
Up to 10% of total
assets in other
investment companies
Money Market ■t ■ ■ ■
Up to 10% of total
assets in other
investment companies
Treasury Obligations
Treasury Instruments
Government ■
Up to 10% of total
assets in other
investment companies
Federal
Tax -Free Money Market ■ ■ ■ ■
At least 80% of net assets in Up to 10% of total
tax - exempt municipal assets in other
obligations (except in investment companies
extraordinary circumstances)8
Note: See Appendix A for a description of, and certain criteria applicable to, each of these
categories of Investments.
' Will only make such investments when yields on such securities are attractive compared to
other taxable investments.
" Ordinarily expect that 100% of the Fund's assets will be invested in municipal obligations,
but the Fund may, for temporary defensive purposes, hold cash or invest in short -term taxable
securities.
v To the extent permitted by Rule 2a -7, securities without short -term ratings may be purchased
if they are deemed to be of comparable quality to First Tier Securities. In addition, a Fund
holding a security supported by a guarantee or demand feature may rely on the credit quality
of the guarantee or demand feature in determining the credit quality of the investment.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Private
Summary of
Activity Credit
Taxation for
Bonds Quality9
Distributions13
Miscellaneous
■ First Tierl2
Taxable federal and state14
Reverse repurchase agreements not permitted.
■ First Tierl2
Taxable federal and state14
May invest in obligations of the International
Bank for Reconstruction and Development.
Reverse repurchase agreements not permitted.
First Tier12
Taxable federal and state14
Reverse repurchase agreements not permitted.
First Tier12
Taxable federal and
Reverse repurchase agreements not permitted.
generally exempt from state
taxation
First Tier12
Taxable federal and state14
Reverse repurchase agreements not permitted.
First Tier12
Taxable federal and
Under extraordinary circumstances, may hold
generally exempt from state
cash, U.S. Government Securities subject to state
taxation
taxation or cash equivalents. Reverse repurchase
agreements not permitted.
■
Does not First Tier12
Tax - exempt We%and
May (but does not currently intend to) invest up
intend to
taxable state
to 20% of net assets in securities subject to
invest if
AMT and may temporarily invest in the taxable
subject t?
money market instruments described herein.
AMT
Reverse repurchase agreements not permitted.
If such policy should change, private activity bonds subject to AMT would not exceed 10% of
the Fund's net assets under normal market conditions.
No more than 15% of the value ol'the Fund's total assets may be invested in industrial
development bonds or similar obligations where the non - governmental entities supplying the
revenues firom which such bonds or obligations are to be paid are in the same industry.
First Tier Securities are (a) rated in the highest short -term rating category by at least two
NRSROs, or if only one NRSRO has assigned a rating, by that NRSRO; or (b) issued or
guaranteed by, or otherwise allow a Fund under certain conditions to demand paymem from.
an entity with such ratings. U.S. Government Securities are considered First Tier Securities-
,3 See "Taxation " jor an explanation of the tax consequences summarized in the table above.
Taxable in many states except for distributions from U.S. Treasury Obligation interest income
and certain U.S. Government Securities interest income.
" Taxable except, for distributions from interest on obligations of an investor's state of residence
in certain states.
Principal Risks of the Funds
Loss of money is a risk of investing in each Fund. An investment in a Fund is not a
deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. The following summarizes important
risks that apply to the Funds and may result in a loss of your investment. None of the
Funds should be relied upon as a complete investment program. There can be no
assurance that a Fund will achieve its investment objective.
• Appfutle
— Not zppkkl,
Tax -Free
Prime Money Treasury Treasury Money
Obligations Market Obligations Instruments Government Federal Market
Fund Fund Fund Fund Fund Fund Fund
NAV
Interest Rate
CrediUDefault
Liquidity
U.S. Government Securities
— — —
Concentration
Foreign
— — — —
Banking Industry
— — — — —
Tax
— — —
Risks that apply to all Funds:
• NA Risk —The risk that a Fund will not be able to maintain a NAV per share of
$1.00 at all times.
• Interest Rate Risk —The risk that during periods of rising interest rates, a Fund's
yield (and the market value of its securities) will tend to be lower than prevailing
market rates; in periods of falling interest rates, a Fund's yield will tend to be
higher.
• Credit/Default Risk —The risk that an issuer or guarantor of a security, or a bank
or other financial institution that has entered into a repurchase agreement, may
default on its payment obligations. In addition, with respect to the Tax -Free Money
Market Fund, this risk includes the risk of default on foreign letters of credit,
guarantees or insurance policies that back municipal securities.
• Liquidity Risk —The risk that a Fund will be unable to pay redemption proceeds
within the time period stated in this Prospectus, because of unusual market
conditions, an unusually high volume of redemption requests, or other reasons.
to
PRINCIPAL RISKS OF THE FUNDS
Risk that applies to the Prime Obligations, Money Market, Government and
Federal Funds:
■ U.S. Government Securities Risk —The risk that the U.S. government will not
provide financial support to U.S. government agencies, instrumentalities or
sponsored enterprises if it is not obligated to do so by law. Although many
U.S. Government Securities purchased by the Funds, such as those issued by the
Federal National Mortgage Association ( "Fannie Mae "), Federal Home Loan
Mortgage Corporation ( "Freddie Mac ") and Federal Home Loan Banks may be
chartered or sponsored by Acts of Congress, their securities are neither issued nor
guaranteed by the United States Treasury and, therefore, are not backed by the full
faith and credit of the United States. The maximum potential liability of the issuers
of some U.S. Government Securities held by a Fund may greatly exceed their
current resources, including their legal right to support from the U.S. Treasury. It is
possible that these issuers will not have the funds to meet their payment obligations
in the future.
Risks that apply to the Money Market Fund:
• Foreign Risk —The risk that a foreign security could lose value as a result of
political, financial and economic events in foreign countries, less publicly available
financial and other information, less stringent foreign securities regulations and
accounting and disclosure standards, or other factors. The Money Market Fund may
not invest more than 25% of its total assets in the securities of any one foreign
government.
• Banking Industry Risk —The risk that if the Fund invests more than 25% of its
total assets in bank obligations, an adverse development in the banking industry
may affect the value of the Fund's investments more than if the Fund's investments
were not invested to such a degree in the banking industry. Normally, the Money
Market Fund intends to invest more than 25% of its total assets in bank obligations.
Banks may be particularly susceptible to certain economic factors such as interest
rate changes, adverse developments in the real estate market, fiscal and monetary
policy and general economic cycles.
EE
Risks that apply to the Tax -Free Money Market Fund:
■ Concentration Risk —The risk that if the Fund invests more than 25% of its total
assets in issuers within the same state, industry or economic sector, an adverse
economic, business or political development may affect the value of the Fund's
investments more than if its investments were not so concentrated.
■ Tax Risk —The risk that future legislative or administrative changes or court
decisions may materially affect the value of the Fund's portfolio and/or the ability
of the Fund to pay federal tax - exempt dividends. This Fund would not be a suitable
investment for IRAs, other tax - exempt or tax - deferred accounts or for other
investors who are not sensitive to the federal, state or local tax consequences of
their investments.
More information about the Funds' portfolio securities and investment techniques, and
their associated risks, is provided in Appendix A. You should consider the investment
risks discussed in this section and in Appendix A. Both are important to your
investment choice.
12
Fund Performance
The bar chart and table below provide an indication of the risks of investing in a
Fund by showing: (a) changes in the performance of a Fund's Administration
Shares from year to year for up to the last ten years (with respect to the bar
charts); and (b) the average annual total returns of a Fund's Administration Shares.
Investors should be aware that the fluctuation of interest rates is one primary factor
in performance volatility. The bar chart (including "Best Quarter" and "Worst
Quarter" information) and table assume reinvestment of dividends and distribu-
tions. A Fund's past performance is not necessarily an indication of how the Fund
will perform in the future. Performance reflects expense limitations in effect. If
expense limitations were not in place, a Fund's performance would have been
reduced. You may obtain a Fund's current yield by calling 1 -500- 621 -2550.
13
Prime Obligations Fund
TOTAL RETURN
Best Quarter`
Q3 '00 1.59%
Worst Quarter"
Q1 '04 0.11%
5.14% 5.34% 5.29%
CALENDAR YEAR
6.18%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 2005 1 Year 5 Years 10 Years Since Inception
Administration Shares (Inception
11/9/92) 2.88% 2.01% 3.68% 3.80%
• Please note that " Besv Quarter'' and "Won't Quarter- figures are applicable only to the lime
period covered by the bar chart.
Money Market Fund
TOTAL RETURN
Best Quarter*
Q3 '00 1.59%
Worst Quarter*
Q3 '03 0.17%
5.19% 5.37% 5.29%
n o�*c
FUND PERFORMANCE
CALENDAR YEAR
6.18%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
For the period ended December 31, 2005 1 Year 5 Years 10 Years Since Inception
Administration Shares (Inception
5/20/94) 2.88% 2.01% 3.69% 3.92%
* Please note that "Best Quarter" and "Worst Quarter" figures are applicable only to the time
period covered by the bar chart.
15
Treasury Obligations Fund
TOTAL RETURN
Best Quarter'
Q4 '00 1.54%
Worst Quarter'
Q3 '03 0.14%
5.92%
5.09% 5.24% 5,14%
CALENDAR YEAR
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
For the period ended December 31, 2005 1 Year 5 Years 10 Years Since Inception
Administration Shares
(Inception 1/21/93) 2.75% 1.86% 3.52% 3.66%
"Please note that "Best Quarter" and "Worst Quarter" figures are applicable only to the time
period covered br the bar chart.
16
FUND PERFORMANCE
Treasury Instruments Fund
TOTAL RETURN
Best Quarter"
Q4 '00 1.48%
Worst Quarter'
Q1 '04 0.13%
CALENDAR YEAR
5.64%
For the period ended December 31, 2005
1998 1999 2000 2001 2002 2003 2004 2005
1 Year 5 Years Since Inception
Administration Shares (Inception 4/1/97) 2.58% 1.77% 3.12%
* Please note that "Best Quarter" and "Worst Quarter'' figures are applicable only to the time
period covered by the bar chart.
17
Government Fund
TOTAL RETURN
Best Quarter'
Q4 '00 1.56%
Worst Quarter'
Q1 '04 0.16%
5.12% 5.28% 5.20%
CALENDAR YEAR
6.05%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
For the period ended December 31, 2005 1 Year 5 Years 10 Years Since Inception
Administration Shares (Inception 9/1/93) 2.85% 1.97% 3.61% 3.80%
' Please note that ''Beet Quarter" and "N4nst Quarter' figures are applicable only to the time
period covered by the bar chart.
18
Federal Fund
TOTAL RETURN
Best Quarter`
Q4 '00 1.55%
Worst Quarter'
Q1 '04 0.15%
FUND PERFORMANCE
CALENDAR YEAR
6.00%
For the period ended December 31, 2005
1998 1999 2000 2001 2002 2003 2004 2005
1 Year 5 Years Since Inception
Administration Shares (Inception 411/97) 2.78% 1.92% 3.36%
• Please note that ''Best Quarter" and "Worst Quarter'' figures are applicable only to the lime
period covered by the bar chart.
19
Tax -Free Money Market Fund
TOTAL RETURN CALENDAR YEAR
Best Quarter'
Q4 '00 0.97%
Worst Quarter'
Q3 '03 0.11%
3.69%
3.13 % 3.28%3.08%
2.88%
2.34
2.01%
0.64% 0.79 %.
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 2005 1 Year 5 Years 10 Years Since Inception
Administration Shares (Inception 8/1/94) 2.01% 1.36% 2.28% 2.43%
• Please tune that "Bent Quarter" rind "Nbrst Quarter" ftatres are applicable only to the lime
period covered by the bar chart.
20
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Fund Fees and Expenses (Administration Shares)
This table describes the fees and expenses that you would pay if you buy and hold
Administration Shares of a Fund.
See page 241iu' till other jimmote.,
As a result of waivers and expense limitations, "Other Expenses" and "Total Fund Operating
Expenses" of the Funds which are actually incurred are as set forth below. The waivers and
expense limitations may be modified or terminated at any time at the option of the Investment
Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase
without shareholder approval.
Prime
Obligations
Fund
Money
Market
Fund
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases
None
None
Maximum Deferred Sales Charge (Load)
None
None
Maximum Sales Charge (Load) Imposed on
0.25%
0.25%
Reinvested Dividends
None
None
Redemption Fees
None
None
Exchange Fees
None
None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):t
Management Fees
0.21%
0.21%
Other Expenses'
0.27%
0.27%
Administration Fees
0.25%
0.25%
All Other Expenses
0.02%
0.02%
Total Fund Operating Expenses'
0.48%
0.48%
See page 241iu' till other jimmote.,
As a result of waivers and expense limitations, "Other Expenses" and "Total Fund Operating
Expenses" of the Funds which are actually incurred are as set forth below. The waivers and
expense limitations may be modified or terminated at any time at the option of the Investment
Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase
without shareholder approval.
22
Prime
Obligations
Fund
Money
Market
Fund
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):I
Management Fees2
0.16%
0.16%
Other Expenses
0.27%
0.27%
Administration Fees
0.25%
0.25%
All Other Expenses4
0.02%
0.02%
Total Fund Operating Expenses (after
waivers and expense limitations)
0.43%
0.43%
22
FUND FEES AND EXPENSES
Treasury
Treasury
Tax -Free
Obligations
Instruments
Government
Federal
Money Market
Fund
Fund
Fund
Fund
Fund
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
0.21%
0.21%
0.21%
0.21%
0.21%
0.28%
0.29%
0.28%
0.27%
0.27%
0.25%
0.25%
0.25%
0.25%
0.25%
0.03%
0.04%
0.03%
0.02%
0.02%
0.49%
0.50%
0.49%
0.48%
0.48%
Treasury
Treasury
Tax -Free
Obligations
Instruments
Government
Federal
Money Market
Fund
Fund
Fund
Fund
Fund
0.18%
0.18%
0.16%
0.18%
0.16%
0.27%
0.17%
0.27%
0.27%
0.27%
0.15%
0.25%
0.15%
0.25%
0.25%
0.02%
0.02%
0.02%
0.02%
0.02%
0.45%
0.45%
0.43%
0.45%
0.43%
23
Fund Fees and Expenses continued
The Funds' annual operating expenses have been restated to reflect the imposition of a trans %r agency
lee equal to 0.015% oj'the average dailv net assets of each Fund effective July 1, 2005. Prior to
July 1, 1005, Goldman Sachs received no separate fee as transfer agent. In addition, "Total Fund
Operating Expenses q %per waivers and expense (imitations" have been restated to reflect that effective
.fitly 1, 2005, GSAM increased its management fee waiver to 0.05% of the average daily net assets of
Prime Obligations, Money Market, Government and Tax -Free Money Market Funds and 0.03% of the
average daily net assets of the Treasury Obligations, Treasury Instruments and Federal Funds. Prior to
July 1, 2005, GSAM had agreed to waive a portion of its management fees equal annually to 0.035%
of the average daily net assets of'Prime Obligations, Money Market, Government and Tax -Free Money
Market Funds and 0.015% gl'the average daily net assets of the Treasury Obligations, Treasury
Instruments and Federal Funds.
The contractual management fee of each Fund is 0.1050% of each Fund's average daily net assets. The
Investment Adviser has voluntarily agreed not to impose a portion of the management fee equal to
0.030° /a of the Treasury Obligations, Treasury Instruments and Federal Funds' average daily net assets
and equal to 0.050% of all other Funds' average daily net assets. As a result of fee waivers, the
current management fees of the Treasury Obligations Fund, Treasury Instruments Fund, Federal
Fund and all other Funds are 0.175 %, 0.175 %, 0.175% and 0.155 %, respectively, of such Funds'
average daily net assets. The waivers may be terminated at any time at the option of the Investment
Adviser.
,Service Organi_ation.s may charge other fees direct/v to their customers who are hencfic•ial owners of
Administration Shares in connection with their customers' accounts. Such fees may affect the return
customers realize with respect to their investments.
4 All Other Expenses include transfer agency fees and expenses equal on an annualized basis to 0.015%
of the average daily net assets of each Fund's Administration Shares, plus all other ordinary expenses
not detailed above. The Investment Adviser has voluntarily agreed to reduce or limit "All Other
Expenses " of each Fund (excluding management fees, transfer agency fees and expense, administration
fees. taxes, interest, brokerage fi•es and litigation, indemnification, shareholder meeting and other
extraordinary expenses exclusive of any expense offset arrangements) to 0.014% of each Fund's
average daily net assets.
FUND FEES AND EXPENSES
Example
The following Example is intended to help you compare the cost of investing in a
Fund (without the waivers and expense limitations) with the cost of investing in other
mutual funds. The Example assumes that you invest $10,000 in Administration Shares
of a Fund for the time periods indicated and then redeem all of your shares at the end
of those periods. The Example also assumes that your investment has a 5% return
each year and that a Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 Year 3 Years 5 Years 10 Years
Prime Obligations $49 $152 $266 $598
Money Market $49 $152 $266 $598
Treasury Obligations $50 $156 $271 $610
Treasury Instruments $51 $159 $277 $622
Government $50 $156 $271 $610
Federal $49 $152 $266 $598
Tax -Free Money Market $49 $152 $266 $598
Service Organizations that invest in Administration Shares on behalf of their customers
may charge other fees directly to their customer accounts in connection with their
investments. You should contact your Service Organization for information regarding
such charges. Such fees, if any, may affect the return such customers realize with
respect to their investments.
Certain Service Organizations that invest in Administration Shares may receive other
compensation in connection with the sale and distribution of Administration Shares or
for services to their customers' accounts and/or the Funds. For additional information
regarding such compensation, see "Shareholder Guide" in the Prospectus and
"Payments to Intermediaries" in the Additional Statement.
25
Service Providers
Goldman Sachs Asset Management, L.P. ( "GSAM "), 32 Old Slip, New York,
New York 10005, has been registered as an investment adviser with the SEC since
1990 and is an affiliate of Goldman Sachs. As of December 31, 2005, GSAM had
assets under management of $496.1 billion.
The Investment Adviser provides day -to -day advice regarding the Funds' portfolio
transactions. The Investment Adviser also performs the following services for the
Funds:
■ Continually manages each Fund, including the purchase, retention and disposi-
tion of securities and other assets
■ Administers each Fund's business affairs
■ Performs various recordholder servicing functions (to the extent not provided by
other organizations)
Pursuant to SEC orders, certain Funds may enter into principal transactions in
certain money market instruments, including repurchase agreements, with Goldman
Sachs.
SERVICE PROVIDERS
MANAGEMENT FEES
As compensation for its services and its assumption of certain expenses, the
Investment Adviser is entitled to the following fees, computed daily and payable
monthly, at the annual rates listed below (as a percentage of each respective Fund's
average daily net assets):
Actual Rate
For the Fiscal
Year Ended
Fund Contractual Rate December 31, 2005
Prime Obligations 0.205% 0.162%
Money Market 0.205% 0.162%
Treasury Obligations 0.205% 0.182%
Treasury Instruments 0.205% 0.182%
Government 0.205% 0.162%
Federal 0.205% 0.182%
Tax -Free Money Market 0.205% 0.162%
The difference, if any, between the stated fees and the actual fees paid by the
Funds reflects that the Investment Adviser did not charge the full amount of the
fees to which it would have been entitled. The Investment Adviser may discontinue
or modify any such voluntary limitations in the future at its discretion.
A discussion regarding the basis for the Board of Trustees' approval of the
Management Agreement in 2005 for the Funds is available in the Funds' semi-
annual report dated June 30, 2005.
DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 85 Broad Street, New York, New York 10004, serves as the
exclusive distributor (the "Distributor ") of each Fund's shares. Goldman Sachs,
71 S. Wacker Dr., Suite 500, Chicago, Illinois 60606, also serves as each Fund's
transfer agent (the "Transfer Agent ") and, as such, performs various shareholder
servicing functions.
From time to time, Goldman Sachs or any of its affiliates may purchase and hold
shares of the Funds. Goldman Sachs reserves the right to redeem at any time some
or all of the shares acquired for its own account.
27
The involvement of the Investment Adviser, Goldman Sachs and their affiliates in
the management of, or their interest in, other accounts and other activities of
Goldman Sachs may present conflicts of interest with respect to a Fund or limit a
Fund's investment activities. Goldman Sachs is a full service investment banking,
broker dealer, asset management and financial services organization and a major
participant in global financial markets. As such, it acts as an investor, investment
banker, research provider, investment manager, financer, advisor, market maker,
trader, prime broker, lender, agent and principal, and has other direct and indirect
interests, in the global fixed income, currency, commodity, equity and other
markets in which the Funds directly and indirectly invest. Thus, it is likely that the
Funds will have multiple business relationships with and will invest in, engage in
transactions with, make voting decisions with respect to, or obtain services from
entities for which Goldman Sachs performs or seeks to perform investment banking
or other services. Goldman Sachs and its affiliates engage in proprietary trading
and advise accounts and funds which have investment objectives similar to those of
the Funds and/or which engage in and compete for transactions in the same types
of securities, currencies and instruments as the Funds. Goldman Sachs and its
affiliates will not have any obligation to make available any information regarding
their proprietary activities or strategies, or the activities or strategies used for other
accounts managed by them, for the benefit of the management of the Funds. The
results of a Fund's investment activities, therefore, may differ from those of
Goldman Sachs, its affiliates, and other accounts managed by Goldman Sachs and
it is possible that a Fund could sustain losses during periods in which Goldman
Sachs and its affiliates and other accounts achieve significant profits on their
trading for proprietary or other accounts. In addition, the Funds may, from time to
time, enter into transactions in which Goldman Sachs or its other clients have an
adverse interest. Furthermore, transactions undertaken by Goldman Sachs, its
affiliates or Goldman Sachs advised clients may adversely impact the Funds.
Transactions by one or more Goldman Sachs advised clients or the Investment
Adviser may have the effect of diluting or otherwise disadvantaging the values,
prices or investment strategies of the Funds. A Fund's activities may be limited
because of regulatory restrictions applicable to Goldman Sachs and its affiliates,
and/or their internal policies designed to comply with such restrictions. As a global
financial services firm, Goldman Sachs also provides a wide range of investment
banking and financial services to issuers of securities and investors in securities.
Goldman Sachs, its affiliates and others associated with it may create markets or
specialize in, have positions in and affect transactions in, securities of issuers held
by the Funds, and may also perform or seek to perform investment banking and
28
SERVICE PROVIDERS
financial services for those issuers. Goldman Sachs and its affiliates may have
business relationships with and purchase or distribute or sell services or products
from or to distributors, consultants or others who recommend the Funds or who
engage in transactions with or for the Funds. For more information about conflicts
of interest, see the Additional Statement.
On April 2, 2004, Lois Burke, a plaintiff identifying herself as a shareholder of the
Goldman Sachs Internet Tollkeeper Fund, filed a purported class and derivative
action lawsuit in the United States District Court for the Southern District of New
York against The Goldman Sachs Group, Inc. ( "GSG "), Goldman Sachs Asset
Management, L.P. ( "GSAM "), the Trustees and Officers of the Goldman Sachs
Trust (the "Trust "), and John Doe Defendants. In addition, certain investment
portfolios of the Trust were named as nominal defendants. On April 19 and May 6,
2004, additional class and derivative action lawsuits containing substantially similar
allegations and requests for redress were filed in the United States District Court
for the Southern District of New York. On June 29, 2004, the three complaints
were consolidated into one action, In re Goldman Sachs Mutual Funds Fee
Litigation, and on November 17, 2004, the plaintiffs filed a consolidated amended
complaint against GSG, GSAM, Goldman Sachs Asset Management International
( "GSAMI "), Goldman, Sachs & Co., Goldman Sachs Variable Insurance Trust
( "GSVIT "), the Trustees and Officers of the Trust and GSVIT and John Doe
Defendants (collectively, the "Defendants ") in the United States District Court for
the Southern District of New York. Certain investment portfolios of the Trust and
GSVIT (collectively, the "Goldman Sachs Funds ") were also named as nominal
defendants in the amended complaint. Plaintiffs filed a second amended consoli-
dated complaint on April 15, 2005.
The second amended consolidated complaint, which is brought on behalf of all
persons or entities who held shares in the Goldman Sachs Funds between April 2,
1999 and January 9, 2004, inclusive (the "Class Period "), asserts claims involving
(i) violations of the Act and the Investment Advisers Act of 1940; (ii) common law
breaches of fiduciary duty; and (iii) unjust enrichment. The complaint alleges,
among other things, that during the Class Period, the Defendants made improper
and excessive brokerage commission and other payments to brokers that sold shares
of the Goldman Sachs Funds and omitted statements of fact in registration
statements and reports filed pursuant to the Act which were necessary to prevent
such registration statements and reports from being materially false and misleading.
In addition, the complaint alleges that the Goldman Sachs Funds paid excessive
and improper investment advisory fees to GSAM and GSAMI. The complaint also
29
alleges that GSAM and GSAMI used Rule 12b -I fees for improper purposes and
made improper use of soft dollars. The complaint further alleges that the Trust's
Officers and Trustees breached their fiduciary duties in connection with the
foregoing. The plaintiffs in the cases are seeking compensatory damages; rescission
of GSAM's and GSAMI's investment advisory agreements and return of fees paid;
an accounting of all Goldman Sachs Funds - related fees, commissions and soft
dollar payments; restitution of all unlawfully or discriminatorily obtained fees and
charges; and reasonable costs and expenses, including counsel fees and expert fees.
On January 13, 2006, all claims against the Defendants were dismissed by the
U.S. District Court. On February 22, 2006, the plaintiffs appealed this decision.
Based on currently available information, GSAM and GSAMI believe that the
likelihood that the pending purported class and derivative action lawsuit will have a
material adverse financial impact on the Goldman Sachs Funds is remote, and the
pending action is not likely to materially affect their ability to provide investment
management services to their clients, including the Goldman Sachs Funds.
Dividends
Dividends will be distributed monthly. You may choose to have dividends paid in:
■ Cash
■ Additional shares of the same class of the same Fund
You may indicate your election on your Account Application. Any changes may be
submitted in writing to Goldman Sachs at any time. If you do not indicate any
choice, dividends and distributions will be reinvested automatically in the
applicable Fund.
All or substantially all of each Fund's net investment income will be declared as a
dividend daily. Dividends will normally, but not always, be declared as of the
following times:
Dividend Declaration Time
Fund (New York Time)
Prime Obligations 5:00 p.m.
Money Market 5:00 p.m.
Treasury Obligations 5:00 p.m.
Treasury Instruments 4:00 p.m.
Government 5:00 p.m.
Federal 4:00 p.m.
Tax -Free Money Market 4:00 p.m.
Dividends will be reinvested as of the last calendar day of each month. Cash
distributions normally will be paid on or about the first business day of each
month. Net short-term capital gains, if any, will be distributed in accordance with
federal income tax requirements and may be reflected in a Fund's daily
distributions.
Each Fund may distribute at least annually other realized capital gains, if any, after
reduction by available capital losses. In order to avoid excessive fluctuations in the
amount of monthly capital gains distributions, a portion of any net capital gains
realized on the disposition of securities during the months of November and
December may be distributed during the subsequent calendar year. The realized
gains and losses are not expected to be of an amount which would affect a Fund's
NAV of $1.00 per share.
31
The income declared as a dividend for the Prime Obligations, Money Market,
Treasury Obligations and Government Funds is based on estimates of net
investment income for each Fund. Actual income may differ from estimates, and
differences, if any, will be included in the calculation of subsequent dividends.
Shareholder Guide
The following section will provide you with answers to some of the most often
asked questions regarding buying and selling the Funds' Administration Shares
How Can I Purchase Administration Shares Of The Funds?
Generally, Administration Shares may be purchased only through institutions that
have agreed to provide shareholder administration services to their customers who
are the beneficial owners of Administration Shares. These institutions are called
"Service Organizations." Customers of a Service Organization will normally give
their purchase instructions to the Service Organization, and the Service Organiza-
tion will, in turn, place purchase orders with Goldman Sachs. Service Organiza-
tions will set times by which purchase orders and payments must be received by
them from their customers. Generally, Administration Shares may be purchased
from the Funds on any business day at their NAV next determined after receipt of
an order by Goldman Sachs from a Service Organization. No sales load is charged.
Service Organizations are responsible for transmitting purchase orders and
payments to Goldman Sachs in a timely fashion. Service Organizations should
place a purchase order in writing or by telephone.
By Writing: Goldman Sachs Funds
P.O. Box 06050
Chicago, IL 60606 -6306
By Telephone: 1- 800 - 621 -2550
Before or immediately after placing an initial purchase order, a Service
Organization should complete and send to Goldman Sachs the Account
Application.
Service Organizations may send their payments as follows:
■ Wire federal funds to The Northern Trust Company ( "Northern "), as sub -
custodian for State Street Bank and Trust Company ( "State Street ") (each
Fund's custodian); or
■ Send a check or Federal Reserve draft payable to Goldman Sachs Funds -
(Name of Fund and Class of Shares), P.O. Box 06050, Chicago, IL 60606 -6306.
The Funds will not accept checks drawn on foreign banks, third party checks,
cashier's checks or official checks, temporary checks, electronic checks, drawer
33
checks, cash, money orders, travelers' cheques or credit card checks. In limited
situations involving the transfer of retirement assets, the Funds may accept
cashier's checks or official bank checks.
It is strongly recommended that payment be effected by wiring federal funds
to Northern.
It is expected that Federal Reserve drafts will ordinarily be converted to federal
funds on the day of receipt and that checks will be converted to federal funds
within two business days after receipt.
When Do Shares Begin Earning Dividends?
If a wire purchase order is received on a business day by the deadline specified
below and payment in federal funds is received by the Fund by the close of the
Federal Reserve wire transfer system (normally, 6:00 p.m. New York time), then
dividends will begin to accrue on the same business day that the wire purchase
order is received:
Treasury Instruments and Federal Funds:
■ By 3:00 p.m. New York time
Prime Obligations, Money Market, Treasury Obligations and
Government Funds:
■ By 5:00 p.m. New York time
Tax -Free Money Market Fund:
■ By 2:00 p.m. New York time
If a wire purchase order is received on a business day after the deadline specified
above, you will not earn dividends on the day the purchase order is received. Also,
in the event an order is placed by the deadline specified above but an anticipated
wire payment is not received by the Fund by the close of the Federal wire transfer
system that same day, your purchase will be cancelled and you will be liable for
any resulting losses or fees incurred by the Fund, Goldman Sachs, or the Fund's
custodian. For purchase orders accompanied by check, dividends will normally
begin to accrue within two business days of receipt.
What Do I Need To Know About Service Organizations?
Service Organizations may provide the following services in connection with their
customers' investments in Administration Shares:
• Acting, directly or through an agent, as the sole shareholder of record
• Maintaining account records for customers
• Processing orders to purchase, redeem or exchange shares for customers
• Processing confirmation statements and payments for customers
34
SHAREHOLDER GUIDE
• Facilitating the inclusion of the Funds in customer accounts, products or services
• Processing dividend payments on behalf of customers
Some (but not all) Service Organizations are authorized to accept, on behalf of the
Trust, purchase, redemption and exchange orders placed by or on behalf of their
customers, and may designate other intermediaries to accept such orders, if
approved by the Trust. In these cases:
• A Fund will be deemed to have received an order in proper form when the order
is accepted by the authorized Service Organization or intermediary on a business
day, and the order will be priced at the Fund's NAV per share next determined
after such acceptance.
• Service Organizations or intermediaries will be responsible for transmitting
accepted orders and payments to the Trust within the time period agreed upon
by them.
You should contact your Service Organization directly to learn whether it is
authorized to accept orders for the Trust.
Pursuant to an administration plan adopted by the Trust's Board of Trustees,
Service Organizations are entitled to receive payment for their services from the
Trust of up to 0.25% (on an annualized basis) of the average daily net assets of the
Administration Shares of the Funds, which are attributable to or held in the name
of the Service Organization for its customers.
The Investment Adviser, Distributor and/or their affiliates may also make additional
payments to Service Organization and other financial intermediaries
( "Intermediaries ") from time to time to promote the sale, distribution and /or
servicing of shares of the Funds and other Goldman Sachs Funds. These payments
are made out of the Investment Adviser's, Distributor's and /or their affiliates' own
assets, and are not an additional charge to the Funds. The payments are in addition
to the administration fees described in this Prospectus. Such payments are intended
to compensate Intermediaries for, among other things: marketing shares of the
Funds and other Goldman Sachs Funds, which may consist of payments relating to
Funds included on preferred or recommended fund lists or in certain sales
programs from time to time sponsored by the Intermediaries; access to the
Intermediaries' registered representatives or salespersons, including at conferences
and other meetings; assistance in training and education of personnel; marketing
support; and/or other specified services intended to assist in the distribution and
marketing of the Funds and other Goldman Sachs Funds. The payments may also,
to the extent permitted by applicable regulations, contribute to various non -cash
and cash incentive arrangements to promote the sale of shares, as well as sponsor
various educational programs, sales contests and/or promotions. The additional
payments by the Investment Adviser, Distributor and/or their affiliates may also
35
compensate Intermediaries for subaccounting, administrative and/or shareholder
processing services that are in addition to the fees paid for these services by the
Funds. The amount of these additional payments is normally not expected to
exceed 0.50% (annualized) of the amount sold or invested through the
Intermediaries. Please refer to the "Payments to Intermediaries" section of the
Additional Statement for more information about these payments.
The payments made by the Investment Adviser, Distributor and/or their affiliates
may be different for different Intermediaries. The presence of these payments and
the basis on which an Intermediary compensates its registered representatives or
salespersons may create an incentive for a particular Intermediary, registered
representative or salesperson to highlight, feature or recommend Funds based, at
least in part, on the level of compensation paid. You should contact your Service
Organization or other Intermediary for more information about the payments it
receives and any potential conflicts of interest.
In addition to Administration Shares, each Fund also offers other classes of shares
to investors. These other share classes are subject to different fees and expenses
(which affect performance), and are entitled to different services than Administra-
tion Shares. Information regarding these other share classes may be obtained from
your sales representative or from Goldman Sachs by calling the number on the
back cover of this Prospectus.
What Is My Minimum Investment In The Funds?
Minimum initial investment $10 million
(may be allocated among the Funds)
Minimum account balance $10 million
Minimum subsequent investments None
A Service Organization may, however, impose a minimum amount for initial and
subsequent investments in Administration Shares and may establish other require-
ments such as a minimum account balance. A Service Organization may redeem
Administration Shares held by non - complying accounts, and may impose a charge
for any special services.
What Else Should I Know About Share Purchases?
The Trust reserves the right to:
■ Modify or waive the minimum investment and minimum account balance
requirement.
■ Reject any purchase order for any reason.
36
SHAREHOLDER GUIDE
The Board of Trustees of the Trust has not adopted policies and procedures with
respect to frequent purchases and redemptions of Fund shares in light of the nature
and high quality of the Funds' investments. As stated, however, each Fund reserves
the right to refuse a purchase or exchange order, and may do so, for example, if
management of the Trust believes that the transaction may not be in the best
interests of the Fund. The Trust and Goldman Sachs will not be liable for any loss
resulting from rejected purchase or exchange orders. In addition, restrictions on
frequent transactions may apply with respect to other investment portfolios of the
Trust.
Generally, the Funds will not allow non -U.S. citizens and certain U.S. citizens
residing outside the United States to open an account directly with the Funds.
The Funds may allow Service Organizations to purchase shares with securities
instead of cash if consistent with a Fund's investment policies and operations and
if approved by the Fund's Investment Adviser.
The minimum investment requirement may be waived for current and former
officers, partners, directors or employees of Goldman Sachs or any of its affiliates.
Customer Identification Program. Federal law requires the Funds to obtain,
verify and record identifying information, which may include the name, residential
or business street address, date of birth (for an individual), Social Security Number
or taxpayer identification number or other identifying information, for each investor
who opens an account with the Funds. Applications without the required
information may not be accepted by the Funds. After accepting an application, to
the extent permitted by applicable law or their customer identification program, the
Funds reserve the right to: (i) place limits on transactions in any account until the
identity of the investor is verified; (ii) refuse an investment in the Funds; or
(iii) involuntarily redeem an investor's shares and close an account in the event that
the Funds are unable to verify an investor's identity. The Funds and their agents
will not be responsible for any loss in an investor's account resulting from the
investor's delay in providing all required identifying information or from closing an
account and redeeming an investor's shares pursuant to the customer identification
program.
37
How Are Shares Priced?
The price you pay or receive when you buy, sell or exchange Administration
Shares is the Fund's next determined NAV for a share class. The Funds calculate
NAV as follows:
(Value of Assets of the Class)
NAV = — (Liabilities of the Class)
Number of Outstanding Shares of the Class
Fund NAV Calculated
Treasury Instruments, Federal and
As of the close of regular trading of
Tax -Free Money Market
the New York Stock Exchange
(normally 4:00 p.m. New York time
or such later time as the New York
Stock Exchange or the NASDAQ
market may officially close) on each
business day
Prime Obligations, Money Market,
As of 5:00 p.m. New York time
Treasury Obligations and
on each business day
Government
• NAV per share of each class is generally calculated by the accounting agent on
each business day. Fund shares will be priced on any day the New York Stock
Exchange is open, except for days on which Chicago, Boston or New York
banks are closed for local holidays.
• On any business day when the Bond Market Association ( "BMA ") recommends
that the securities markets close early, each Fund reserves the right to close at
or prior to the BMA recommended closing time. If a Fund does so, it will cease
granting same business day credit for purchase and redemption orders received
after the Fund's closing time and credit will be given to the next business day.
• The Trust reserves the right to advance the time by which purchase and
redemption orders must be received for same business day credit as otherwise
permitted by the SEC.
Note: The time at which transactions and shares are priced and the time by
which orders must be received may be changed in case of an emergency or if
regular trading on the New York Stock Exchange is stopped at a time other than
4:00 p.m. New York time. In the event the New York Stock Exchange does not
open for business because of an emergency, the Trust may, but is not required to,
open one or more Funds for purchase, redemption and exchange transactions if
the Federal Reserve wire payment system is open. To learn whether a Fund is
open for business during an emergency situation, please call 1- 800 - 621 -2550.
38
SHAREHOLDER GUIDE
To help each Fund maintain its $1.00 constant share price, portfolio securities are
valued at amortized cost in accordance with SEC regulations. Amortized cost will
normally approximate market value. There can be no assurance that a Fund will be
able at all times to maintain a NAV of $1.00 per share.
In addition, if an event that affects the value of a security occurs after the
publication of market quotations used by a Fund to price its securities but before
the close of trading on the New York Stock Exchange, the Trust in its discretion
and consistent with applicable regulatory guidance may determine whether to make
an adjustment in light of the nature and significance of the event.
How Can I Sell Administration Shares Of The Funds?
Generally, Administration Shares may be sold (redeemed) only through Service
Organizations. Customers of a Service Organization will normally give their
redemption instructions to the Service Organization, and the Service Organization
will, in turn, place redemption orders with the Funds. Generally, each Fund will
redeem its Administration Shares upon request on any business day at their
NAV next determined after receipt of such request in proper form. Redemption
proceeds may be sent to recordholders by check or by wire (if the wire instructions
are on record). A Service Organization may request redemptions in writing or by
telephone if the optional telephone redemption privilege is elected on the Account
Application.
By Writing: Goldman Sachs Funds
P.O. Box 06050
Chicago, IL 60606 -6306
By Telephone: If you have elected the telephone redemption
privilege on your Account Application:
■ 1 -800- 621 -2550
Any redemption request that requires money to go to an account or address other
than that designated on the Account Application must be in writing and signed by
an authorized person designated on the Account Application. Other information
may also be required. Please contact the Funds. The written request may be
confirmed by telephone with both the requesting party and the designated bank
account to verify instructions.
Certain Service Organizations are authorized to accept redemption requests on
behalf of the Funds as described under "What Do I Need To Know About Service
39
Organizations ?" A redemption may also be made with respect to certain Funds by
means of the check redemption privilege described in the Additional Statement.
When Do I Need A Medallion Signature Guarantee To Redeem Shares?
A Medallion signature guarantee may be required if:
■ You would like the redemption proceeds sent to an address that is not your
address of record; or
■ You would like to change your current bank designation.
A Medallion signature guarantee must be obtained from a bank, brokerage firm or
other financial intermediary that is a member of an approved Medallion Guarantee
Program or that is otherwise approved by the Trust. A notary public cannot provide
a Medallion signature guarantee. Additional documentation may be required for
executors, trustees or corporations or when deemed appropriate by the Transfer
Agent.
What Do I Need To Know About Telephone Redemption Requests?
The Trust, the Distributor and the Transfer Agent will not be liable for any loss
you may incur in the event that the Trust accepts unauthorized telephone
redemption requests that the Trust reasonably believes to be genuine. In an effort to
prevent unauthorized or fraudulent redemption and exchange requests by telephone,
Goldman Sachs employs reasonable procedures specified by the Trust to confirm
that such instructions are genuine. If reasonable procedures are not employed, the
Trust may be liable for any loss due to unauthorized or fraudulent transactions. The
following general policies are currently in effect:
• All telephone requests are recorded.
• Any redemption request that requires money to go to an account or address
other than that designated on the Account Application must be in writing and
signed by an authorized person designated on the Account Application. Other
information may also be required. Please contact the Funds. The written request
may be confirmed by telephone with both the requesting party and the
designated bank account to verify instructions.
• For the 30 -day period following a change of address, telephone redemptions will
only be filled by a wire transfer to the bank account designated in the Account
Application (see immediately preceding bullet point). In order to receive the
redemption by check during this time period, the redemption request must be a
letter with a signature Medallion guaranteed.
• The telephone redemption option may be modified or terminated at any time.
Note: It may be difficult to make telephone redemptions in times of drastic
economic or market conditions.
40
SHAREHOLDER GUIDE
When Will Redemption Proceeds Be Wired?
Redemption proceeds will normally be wired to the domestic bank account
designated on a Service Organization's Account Application as follows:
Redemption Request Received Redemption Proceeds Dividends
Treasury Instruments and Federal
Funds:
• By 3:00 p.m. New York time Wired same business day Not earned on day
request is received
• After 3:00 p.m. New York time Wired next business day Earned on day
request is received
Prime Obligations, Money Market,
Treasury Obligations and
Government Funds:
■ By 5:00 p.m. New York time Wired same business day Not earned on day
request is received
■ After 5:00 p.m. New York time Wired next business day Earned on day
request is received
Tax -Free Money Market Fund:
■ By 1:00 p.m. New York time Wired same business day Not earned on day
request is received
■ After 1:00 p.m. New York time Wired next business day Earned on day
request is received
• Although redemption proceeds will normally be wired as described above, under
certain circumstances, (i) redemption proceeds may be paid the next business
day following receipt of a properly executed wire transfer redemption request (or
up to three business days later with respect to the Tax -Free Money Market
Fund) and (ii) redemption requests or payments may be postponed or suspended
as permitted pursuant to Section 22(e) of the Act. Generally, under that section,
redemption requests or payments may be postponed or suspended if (i) the New
York Stock Exchange is closed for trading or trading is restricted; (ii) an
emergency exists which makes the disposal of securities owned by a Fund or the
fair determination of the value of a Fund's net assets not reasonably practicable;
or (iii) the SEC by order permits the suspension of the right of redemption.
• If you are selling shares you recently paid for by check, the Fund will pay you
when your check has cleared, which may take up to 15 days. If the Federal
Reserve Bank is closed on the day the redemption proceeds would ordinarily be
wired, wiring the redemption proceeds may be delayed one additional business
day.
41
■ Neither the Trust nor Goldman Sachs assumes any responsibility for the
performance of intermediaries or your Service Organization in the transfer
process. If a problem with such performance arises, you should deal directly
with such intermediaries or Service Organizations.
What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
• Additional documentation may be required when deemed appropriate by the
Transfer Agent. A redemption request will not be in proper form until such
additional documentation has been received.
• Service Organizations are responsible for the timely transmittal of redemption
requests by their customers to the Transfer Agent. In order to facilitate the
timely transmittal of redemption requests, Service Organizations may set times
by which they must receive redemption requests. Service Organizations may also
require additional documentation from you.
The Trust reserves the right to:
• Redeem your shares in the event a Service Organization's relationship with
Goldman Sachs is terminated and you do not transfer your account to another
Service Organization with a relationship with Goldman Sachs. The Trust will
not be responsible for any loss in an investor's account resulting from the
redemption.
• Subject to applicable law, redeem your shares in other circumstances determined
by the Board of Trustees to be in the best interest of the Trust.
• Pay redemptions by a distribution in -kind of securities (instead of cash). If you
receive redemption proceeds in -kind, you should expect to incur transaction
costs upon the disposition of those securities.
• Reinvest any dividends or other distributions which you have elected to receive
in cash should your check for such dividends or other distributions be returned
to a Fund as undeliverable or remain uncashed for six months. In addition, that
distribution and all future distributions payable to you will be reinvested at the
NAV on the day of reinvestment in additional Administration Shares of the Fund
that pays the distributions. No interest will accrue on amounts represented by
uncashed distribution or redemption checks.
SHAREHOLDER GUIDE
Can 1 Exchange My Investment From One Fund To Another?
A Service Organization may exchange Administration Shares of a Fund at NAV for
shares of the corresponding class of another Goldman Sachs Fund. The exchange
privilege may be materially modified or withdrawn at any time upon 60 days'
written notice.
Instructions For Exchanging Shares:
By Writing: ■ Write a letter of instruction that includes:
■ The recordholder name(s) and signature(s)
■ The account number
■ The Fund names and Class of Shares
■ The dollar amount to be exchanged
■ Mail the request to:
Goldman Sachs Funds
P.O. Box 06050
Chicago, IL 60606 -6306
By Telephone: If you have elected the telephone exchange privilege
on your Account Application:
■ 1- 800 - 621 -2550
You should keep in mind the following factors when making or considering an
exchange:
■ You should obtain and carefully read the prospectus of the Goldman Sachs Fund
you are acquiring before making an exchange.
■ All exchanges which represent initial investments into the Fund need not meet
the traditional minimum initial investment requirements for that Fund if the
entire balance of the original Goldman Sachs Fund account is exchanged.
■ Telephone exchanges normally will be made only to an identically registered
account.
■ Exchanges are available only in states where exchanges may be legally made.
■ It may be difficult to make telephone exchanges in times of drastic economic or
market conditions.
■ Goldman Sachs may use reasonable procedures described under "What Do 1
Need To Know About Telephone Redemption Requests ?" in an effort to prevent
unauthorized or fraudulent telephone exchange requests.
■ Exchanges into Goldman Sachs Funds that are closed to new investors may be
restricted.
■ Exchanges into a Fund from another Goldman Sachs Fund may be subject to
any redemption fee imposed by the other Goldman Sachs Fund.
For federal income tax purposes, an exchange from one Goldman Sachs Fund to
another is treated as a redemption of the shares surrendered in the exchange, on
which you may be subject to tax, followed by a purchase of shares received in the
43
exchange. You should consult your tax adviser concerning the tax consequences of
an exchange.
What Types Of Reports Will I Be Sent Regarding Investments In
Administration Shares?
Service Organizations will receive from the Funds annual shareholder reports
containing audited financial statements and semi - annual shareholder reports.
Service Organizations will also be provided with a monthly account statement.
Service Organizations are responsible for providing these or other reports to their
customers who are the beneficial owners of Administration Shares in accordance
with the rules that apply to their accounts with the Service Organizations. In
addition, Service Organizations and other financial intermediaries will be respon-
sible for providing any communications from a Fund to the shareholders, including
but not limited to prospectuses, prospectus supplements, proxy materials, and
notices regarding the sources of dividend payments pursuant to Section 19 of the
Investment Company Act. The Funds do not generally provide sub - accounting
services.
Taxation
As with any investment, you should consider how your investment in the Funds
will be taxed. The tax information below is provided as general information. More
tax information is available in the Additional Statement. You should consult your
tax adviser about the federal, state, local or foreign tax consequences of your
investment in the Funds.
Unless your investment is through an IRA or other tax - advantaged account, you
should consider the possible tax consequences of Fund distributions.
Taxes on Distributions: Each Fund contemplates declaring as dividends each year all
or substantially all of its net investment income. Fund distributions of investment
income are generally taxable as ordinary income for federal tax purposes, and may also
be subject to state or local taxes. This is true whether you reinvest your distributions in
additional Fund shares or receive them in cash. Distributions of short-term capital gains
are taxable to you as ordinary income. Any long -term capital gain distributions are
taxable as long -term capital gains, no matter how long you have owned your Fund
shares.
It is anticipated that substantially all of the distributions by the Funds, other than
the Tax -Free Money Market Fund, will be taxable as ordinary income. You should
note that these distributions will not qualify for the reduced tax rate currently
applicable to certain qualified dividends because the Funds' investment income will
consist generally of interest income rather than corporate dividends.
Although distributions are generally treated as taxable to you in the year they are
paid, distributions declared in December but paid in January will be taxable as if
they were paid in December. The Funds will inform shareholders of the character
and tax status of all distributions promptly after the close of each calendar year.
To the extent that Fund distributions are attributable to interest on certain federal
obligations or interest on obligations of your state of residence or its municipalities
or authorities, they will in most cases be exempt from state and local income taxes.
Distributions from the Tax -Free Money Market Fund that are designated as
"exempt interest dividends" are generally not subject to federal income tax.
However, you should note that, while the Fund intends to avoid such investments, a
portion of the exempt- interest dividends paid by the Tax -Free Money Market Fund
may be attributable to investments in securities, the interest on which will be a
preference item when determining your federal alternative minimum tax liability.
Exempt- interest dividends are also taken into account in determining the taxable
portion of social security or railroad retirement benefits. Any interest on
indebtedness incurred by you to purchase or carry shares in the Tax - Exempt Funds
generally will not be deductible for federal income tax purposes.
45
Other Information: When you open your account, you should provide your social
security or tax identification number on your Account Application. By law, each
Fund must withhold 28% of your taxable distributions and any redemption
proceeds if you do not provide your correct taxpayer identification number, or
certify that it is correct, or if the IRS instructs the Fund to do so.
Non -U.S. investors may be subject to U.S. withholding and estate tax. However,
withholding is generally not required on properly designated distributions of short-
term capital gains and qualified interest income paid to non -U.S. investors after
November 1, 2005 and before October 31, 2008. Currently, only the Government
Fund, Federal Fund, Treasury Obligations Fund and Treasury Instruments Fund
anticipate designating distributions from short-term capital gains and qualified
interest income.
Appendix A
Additional Information on Portfolio
Risks, Securities and Techniques
This section provides further information on certain types of securities and
investment techniques that may be used by the Funds, including their associated
risks. Additional information is provided in the Additional Statement, which is
available upon request. Among other things, the Additional Statement describes
certain fundamental policies and investment restrictions that cannot be changed
without shareholder approval. You should note, however, that all investment policies
not specifically designated as fundamental are non - fundamental and may be
changed without shareholder approval. If there is a change in a Fund's investment
objective, you should consider whether that Fund remains an appropriate investment
in light of your then current financial position and needs. A Fund may purchase
other types of securities or instruments similar to those described in this section if
otherwise consistent with the Fund's investment objective and policies.
U.S. Treasury Obligations and U.S. Government Securities. U.S. Treasury
Obligations include securities issued or guaranteed by the U.S. Treasury ( "U.S.
Treasury Obligations "). Payment of principal and interest on these obligations is
backed by the full faith and credit of the U.S. government. U.S. Treasury
Obligations include, among other things, the separately traded principal and interest
components of securities guaranteed or issued by the U.S. Treasury if such
components are traded independently under the Separate Trading of Registered
Interest and Principal of Securities program ( "STRIPS "). U.S. Treasury Obliga-
tions may also include Treasury inflation - protected securities which are fixed
income securities whose principal value is periodically adjusted according to the
rate of inflation.
U.S. Government Securities are obligations issued or guaranteed by U.S.
government agencies, authorities, instrumentalities or sponsored enterprises ( "U.S.
Government Securities "). Unlike U.S. Treasury Obligations, U.S. Government
Securities can be supported by either (a) the full faith and credit of the U.S.
Treasury (such as the Government National Mortgage Association ( "Ginnie
Mae ")); (b) the right of the issuer to borrow from the U.S. Treasury; (c) the
discretionary authority of the U.S. government to purchase certain obligations of
the issuer; or (d) only the credit of the issuer.
U.S. Government Securities are deemed to include (a) securities for which the
payment of principal and interest is backed by an irrevocable letter of credit issued
by the U.S. government, its agencies, authorities or instrumentalities; and
(b) participations in loans made to foreign governments or their agencies that are
47
so guaranteed. Certain of these participations may be regarded as illiquid. U.S.
Government Securities also include zero coupon bonds.
Some Funds invest in U.S. Treasury Obligations and certain U.S. Government
Securities the interest from which is generally exempt from state income taxation.
Securities generally eligible for this exemption include those issued by the U.S.
Treasury and certain agencies, authorities or instrumentalities of the U.S.
government, including the Federal Home Loan Banks, Federal Farm Credit Banks
and Tennessee Valley Authority.
U.S. Government Securities have historically involved little risk of loss of principal
if held to maturity. However, no assurance can be given that the U.S. government
will provide financial support to U.S. government agencies, authorities, instrumen-
talities or sponsored enterprises if it is not obligated to do so by law.
Bank Obligations. Bank obligations include certificates of deposit, commercial
paper, unsecured bank promissory notes, bankers' acceptances, time deposits and
other debt obligations. Certain Funds may invest in obligations issued or backed by
U.S. banks when a bank has more than $1 billion in total assets at the time of
purchase or is a branch or subsidiary of such a bank. In addition, certain Funds
may invest in U.S. dollar- denominated obligations issued or guaranteed by foreign
banks that have more than $1 billion in total assets at the time of purchase, U.S.
branches of such foreign banks (Yankee obligations), foreign branches of such
foreign banks and foreign branches of U.S. banks having more than $1 billion in
total assets at the time of purchase. Bank obligations may be general obligations of
the parent bank or may be limited to the issuing branch by the terms of the specific
obligation or by government regulation.
If a Fund invests more than 25% of its total assets in bank obligations (whether
foreign or domestic), it may be especially affected by favorable and adverse
developments in or related to the banking industry. The activities of U.S. and most
foreign banks are subject to comprehensive regulations which, in the case of U.S.
regulations, have undergone substantial changes in the past decade. The enactment of
new legislation or regulations, as well as changes in interpretation and enforcement
of current laws, may affect the manner of operations and profitability of domestic
and foreign banks. Significant developments in the U.S. banking industry have
included increased competition from other types of financial institutions, increased
acquisition activity and geographic expansion. Banks may be particularly susceptible
to certain economic factors, such as interest rate changes and adverse developments
in the real estate markets. Fiscal and monetary policy and general economic cycles
can affect the availability and cost of funds, loan demand and asset quality and
thereby impact the earnings and financial conditions of banks.
Commercial Paper. A Fund may invest in commercial paper, including variable
amount master demand notes and asset - backed commercial paper. Commercial paper
normally represents short-term unsecured promissory notes issued in bearer form by
48
APPENDIX A
banks or bank holding companies, corporations, finance companies and other issuers.
The commercial paper purchased by a Fund consists of direct U.S.
dollar- denominated obligations of domestic or, in the case of certain Funds, foreign
issuers. Asset - backed commercial paper is issued by a special purpose entity that is
organized to issue the commercial paper and to purchase trade receivables or other
financial assets. The credit quality of asset - backed commercial paper depends
primarily on the quality of these assets and the level of any additional credit support.
Short -Term Obligations. A Fund may invest in other short-term obligations,
including master demand notes and short-term funding agreements payable in U.S.
dollars and issued or guaranteed by U.S. corporations, foreign corporations or other
entities. A master demand note typically permits the investment of varying amounts
by a Fund under an agreement between the Fund and an issuer. The principal
amount of a master demand note may be increased from time to time by the parties
(subject to specified maximums) or decreased by the Fund or the issuer. A funding
agreement is a contract between an issuer and a purchaser that obligates the issuer
to pay a guaranteed rate of interest on a principal sum deposited by the purchaser.
Funding agreements will also guarantee a stream of payments over time. A funding
agreement has a fixed maturity date and may have either a fixed rate or variable
interest rate that is based on an index and guaranteed for a set time period.
Because there is normally no secondary market for these investments, funding
agreements purchased by a Fund may be regarded as illiquid.
Repurchase Agreements. Certain Funds may enter into repurchase agreements with
securities dealers and banks. Repurchase agreements are similar to collateralized
loans, but are structured as a purchase of securities by a Fund, subject to the
seller's agreement to repurchase the securities at a mutually agreed upon date and
price. The difference between the original purchase price and the repurchase price
is normally based on prevailing short -term interest rates. Under a repurchase
agreement, the seller is required to furnish collateral at least equal in value or
market price to the amount of the seller's repurchase obligation.
If the seller under a repurchase agreement defaults, a Fund could suffer a loss to
the extent that the proceeds from the sale of the underlying securities and other
collateral held by the Fund are less than the repurchase price and the Fund's cost
associated with delay and enforcement of the repurchase agreement. In addition, in
the event of bankruptcy or insolvency proceedings concerning the seller, a Fund
could suffer additional losses if the collateral held by the Fund is subject to a court
"stay" that prevents the Fund from promptly selling the collateral. If this occurs,
the Fund will bear the risk that the value of the collateral will decline below the
repurchase price. Furthermore, a Fund could experience a loss if a court determines
that the Fund's interest in the collateral is not enforceable.
In evaluating whether to enter into a repurchase agreement, the Investment Adviser
will carefully consider the creditworthiness of the seller. Distributions of the
49
income from repurchase agreements will be taxable to a Fund's shareholders. In
addition, certain Funds, together with other registered investment companies having
advisory agreements with the Investment Adviser or any of its affiliates, may
transfer uninvested cash balances into a single joint account, the daily aggregate
balance of which will be invested in one or more repurchase agreements.
Asset - Backed and Receivables- Backed Securities. Certain Funds may invest in
asset - backed and receivables - backed securities whose principal and interest
payments are collateralized by pools of assets such as auto loans, credit card
receivables, leases, mortgages, installment contracts and personal property. Asset -
backed and receivables - backed securities are often subject to more rapid repayment
than their stated maturity date would indicate as a result of the pass- through of
prepayments of principal on the underlying loans. During periods of declining
interest rates, prepayment of loans underlying asset - backed and receivables- backed
securities can be expected to accelerate. Accordingly, a Fund's ability to maintain
positions in such securities will be affected by reductions in the principal amount
of such securities resulting from prepayments, and its ability to reinvest the returns
of principal at comparable yields is subject to generally prevailing interest rates at
that time. In addition, securities that are backed by credit card, automobile and
similar types of receivables generally do not have the benefit of a security interest
in collateral that is comparable in quality to mortgage assets. If the issuer of an
asset - backed security defaults on its payment obligation, there is the possibility
that, in some cases, a Fund will be unable to possess and sell the underlying
collateral and that a Fund's recoveries on repossessed collateral may not be
available to support payments on the securities. In the event of a default, a Fund
may suffer a loss if it cannot sell collateral quickly and receive the amount it is
owed.
Foreign Government Obligations and Related Foreign Risks. Certain Funds may
invest in foreign government obligations. Foreign government obligations that the
Funds invest in are U.S. dollar- denominated obligations (limited to commercial
paper and other notes) issued or guaranteed by a foreign government or other entity
located or organized in a foreign country that maintains a short-term foreign
currency rating in the highest short-term ratings category by the requisite number
of NRSROs.
Investments by a Fund in foreign securities, whether issued by a foreign
government, bank, corporation or other issuer, may present a greater degree of risk
than investments in securities of domestic issuers because of less publicly - available
financial and other information, less securities regulation, potential imposition of
foreign withholding and other taxes, war, expropriation or other adverse govern-
mental actions. Foreign banks and their foreign branches are not regulated by U.S.
banking authorities, and generally are not bound by the accounting, auditing and
financial reporting standards applicable to U.S. banks. The legal remedies for
50
APPENDIX A
investors may be more limited than the remedies available in the United States. In
addition, changes in the exchange rate of a foreign currency relative to the U.S.
dollar (e.g., weakening of the currency against the U.S. dollar) may adversely affect
the ability of a foreign issuer to pay interest and repay principal on an obligation.
Municipal Obligations. Certain Funds may invest in municipal obligations.
Municipal obligations are issued by or on behalf of states, territories and
possessions of the United States and their political subdivisions, agencies,
authorities and instrumentalities, and the District of Columbia. Municipal obliga-
tions in which a Fund may invest include fixed rate notes and similar debt
instruments; variable and floating rate demand instruments; tax - exempt commercial
paper; municipal bonds; and unrated notes, paper, bonds or other instruments.
Municipal Notes and Bonds. Municipal notes include tax anticipation notes
( "TANs "), revenue anticipation notes ( "RANs "), bond anticipation notes
( "BANs "), tax and revenue anticipation notes ( "TRANs ") and construction loan
notes. Municipal bonds include general obligation bonds and revenue bonds.
General obligation bonds are backed by the taxing power of the issuing
municipality and are considered the safest type of municipal obligation. Revenue
bonds are backed by the revenues of a project or facility such as the tolls from a
toll bridge. Revenue bonds also include lease rental revenue bonds which are issued
by a state or local authority for capital projects and are secured by annual lease
payments from the state or locality sufficient to cover debt service on the
authority's obligations. Industrial development bonds ( "private activity bonds ") are
a specific type of revenue bond backed by the credit and security of a private user
and, therefore, have more potential risk. Municipal bonds may be issued in a
variety of forms, including commercial paper, tender option bonds and variable and
floating rate securities.
Tender Option Bonds. A tender option bond is a municipal obligation (generally
held pursuant to a custodial arrangement) having a relatively long maturity and
bearing interest at a fixed rate substantially higher than prevailing short-term, tax -
exempt rates. The bond is typically issued in conjunction with the agreement of a
third party, such as a bank, broker- dealer or other financial institution, pursuant to
which the institution grants the security holder the option, at periodic intervals, to
tender its securities to the institution. As consideration for providing the option, the
financial institution receives periodic fees equal to the difference between the
bond's fixed coupon rate and the rate, as determined by a remarketing or similar
agent, that would cause the securities, coupled with the tender option, to trade at
par on the date of such determination. Thus, after payment of this fee, the security
holder effectively holds a demand obligation that bears interest at the prevailing
short-term, tax - exempt rate. An institution will normally not be obligated to accept
tendered bonds in the cvcnt of certain defaults or a significant downgrading in the
credit rating assigned to the issuer of the bond. The tender option will be taken
51
into account in determining the maturity of the tender option bonds and a Fund's
average portfolio maturity. There is a risk that a Fund will not be considered the
owner of a tender option bond for federal income tax purposes, and thus will not
be entitled to treat such interest as exempt from federal income tax. Certain tender
option bonds may be illiquid or may become illiquid as a result of a credit rating
downgrade, a payment default or a disqualification from tax- exempt status.
Revenue Anticipation Warrants. Revenue Anticipation Warrants ( "RAWs ") are
issued in anticipation of the issuer's receipt of revenues and present the risk that
such revenues will be insufficient to satisfy the issuer's payment obligations. The
entire amount of principal and interest on RAWs is due at maturity. RAWs,
including those with a maturity of more than 397 days, may also be repackaged as
instruments which include a demand feature that permits the holder to sell the
RAWs to a bank or other financial institution at a purchase price equal to par plus
accrued interest on each interest rate reset date.
Industrial Development Bonds. Certain Funds may invest in industrial develop-
ment bonds (private activity bonds). Industrial development bonds are a specific
type of revenue bond backed by the credit and security of a private user, the
interest from which would be an item of tax preference when distributed by a Fund
as "exempt- interest dividends" to shareholders under the AMT.
Other Municipal Obligation Policies. Certain Funds may invest 25% or more of
the value of their respective total assets in municipal obligations which are related
in such a way that an economic, business or political development or change
affecting one municipal obligation would also affect the other municipal obligation.
For example, a Fund may invest all of its assets in (a) municipal obligations the
interest of which is paid solely from revenues from similar projects such as
hospitals, electric utility systems, multi - family housing, nursing homes, commercial
facilities (including hotels), steel companies or life care facilities; (b) municipal
obligations whose issuers are in the same state; or (c) industrial development
obligations. Concentration of a Fund's investments in these municipal obligations
will subject the Fund, to a greater extent than if such investment was not so
concentrated, to the risks of adverse economic, business or political developments
affecting the particular state, industry or other area of concentration.
Municipal obligations may also include municipal leases, certificates of participa-
tion and "moral obligation" bonds. A municipal lease is an obligation issued by a
state or local government to acquire equipment or facilities. Certificates of
participation represent interests in municipal leases or other instruments, such as
installment contracts. Moral obligation bonds are supported by the moral
commitment but not the legal obligation of a state or municipality. Municipal
leases, certificates of participation and moral obligation bonds present the risk that
the state or municipality involved will not appropriate the monies to meet
scheduled payments under these instruments.
52
APPENDIX A
Municipal obligations may be backed by letters of credit or other forms of credit
enhancement issued by domestic banks or foreign banks which have a branch,
agency or subsidiary in the United States or by other financial institutions such as
insurance companies which may issue insurance policies with respect to municipal
obligations. The credit quality of these banks, insurance companies and other
financial institutions could, therefore, cause a loss to a Fund that invests in
municipal obligations. Letters of credit and other obligations of foreign banks and
financial institutions may involve risks in addition to those of domestic obligations
because of less publicly available financial and other information, less securities
regulation, potential imposition of foreign withholding and other taxes, war,
expropriation or other adverse governmental actions. Foreign banks and their
foreign branches are not regulated by U.S. banking authorities and generally are not
bound by the accounting, auditing and financial reporting standards applicable to
U.S. banks.
In order to enhance the liquidity, stability or quality of a municipal obligation, a
Fund may acquire the right to sell the obligation to another party at a guaranteed
price and date.
In purchasing municipal obligations, the Funds intend to rely on opinions of bond
counsel or counsel to the issuers for each issue as to the excludability of interest
on such obligations from gross income for federal income tax purposes. A Fund
will not undertake independent investigations concerning the tax - exempt status of
such obligations, nor does it guarantee or represent that bond counsels' opinions
are correct. Bond counsels' opinions will generally be based in part upon covenants
by the issuers and related parties regarding continuing compliance with federal tax
requirements. Tax laws contain numerous and complex requirements that must be
satisfied on a continuing basis in order for bonds to be and remain tax - exempt. If
the issuer of a bond or a user of a bond - financed facility fails to comply with such
requirements at any time, interest on the bond could become taxable, retroactive to
the date the obligation was issued. In that event, a portion of a Fund's distributions
attributable to interest the Fund received on such bond for the current year and for
prior years could be characterized or recharacterized as taxable income.
Custodial Receipts. Certain Funds may invest in custodial receipts (including
tender option bonds) representing interests in U.S. Government Securities,
municipal obligations or other debt instruments held by a custodian or trustee.
Custodial receipts evidence ownership of future interest payments, principal
payments or both on notes or bonds issued or guaranteed as to principal or interest
by the U.S. government, its agencies, instrumentalities, political subdivisions or
authorities, or by a state or local governmental body or authority, or by other types
of issuers. For certain securities law purposes, custodial receipts are not considered
obligations of the underlying issuers. In addition, if for tax purposes a Fund is not
considered to be the owner of the underlying securities held in the custodial
53
account, the Fund may suffer adverse tax consequences. As a holder of custodial
receipts, a Fund will bear its proportionate share of the fees and expenses charged
to the custodial account.
Other Investment Companies. A Fund may invest in securities of other investment
companies subject to statutory limitations prescribed by the Act. These limitations
include a prohibition on any Fund acquiring more than 3% of the voting shares of
any other investment company, and a prohibition on investing more than 5% of a
Fund's total assets in securities of any one investment company or more than 10%
of its total assets in securities of all investment companies. A Fund will indirectly
bear its proportionate share of any management fees and other expenses paid by
such other investment companies. Such other investment companies will have
investment objectives, policies and restrictions substantially similar to those of the
acquiring Fund and will be subject to substantially the same risks. Although the
Funds do not expect to do so in the foreseeable future, each Fund is authorized to
invest substantially all of its assets in a single open -end investment company or
series thereof that has substantially the same investment objective, policies and
fundamental restrictions as the Fund. Pursuant to an exemptive order obtained from
the SEC, other investment companies in which a Fund may invest include money
market funds for which the Investment Adviser or any of its affiliates serves as
investment adviser, administrator or distributor.
Floating and Variable Rate Obligations. The Funds may purchase floating and
variable rate obligations, including tender option bonds. The value of these
obligations is generally more stable than that of a fixed rate obligation in response
to changes in interest rate levels. Subject to the conditions for using amortized cost
valuation under the Act, a Fund may consider the maturity of a variable or floating
rate obligation to be shorter than its ultimate stated maturity if the obligation is a
U.S. Treasury Obligation or U.S. Government Security, if the obligation has a
remaining maturity of 397 calendar days or less, or if the obligation has a demand
feature that permits the Fund to receive payment at any time or at specified
intervals not exceeding 397 calendar days. The issuers or financial intermediaries
providing demand features may support their ability to purchase the obligations by
obtaining credit with liquidity supports. These may include lines of credit, which
are conditional commitments to lend, and letters of credit, which will ordinarily be
irrevocable, both of which may be issued by domestic banks or foreign banks. A
Fund may purchase variable or floating rate obligations from the issuers or may
purchase certificates of participation, a type of floating or variable rate obligation,
which are interests in a pool of debt obligations held by a bank or other financial
institution.
When - Issued Securities and Forward Commitments. The Funds may purchase
when- issued securities and make contracts to purchase or sell securities for a fixed
price at a future date beyond customary settlement time. When- issued securities are
54
APPENDIX A
securities that have been authorized, but not yet issued. When- issued securities are
purchased in order to secure what is considered to be an advantageous price and
yield to a Fund at the time of entering into the transaction. A forward commitment
involves entering into a contract to purchase or sell securities for a fixed price at a
future date beyond the customary settlement period.
The purchase of securities on a when- issued or forward commitment basis involves
a risk of loss if the value of the security to be purchased declines before the
settlement date. Conversely, the sale of securities on a forward commitment basis
involves the risk that the value of the securities sold may increase before the
settlement date. Although a Fund will generally purchase securities on a when -
issued or forward commitment basis with the intention of acquiring the securities
for its portfolio, a Fund may dispose of when- issued securities or forward
commitments prior to settlement if the Investment Adviser deems it appropriate.
Illiquid Securities. Each Fund may invest up to 10% of its net assets in illiquid
securities which cannot be disposed of in seven days in the ordinary course of
business at fair value. Illiquid securities include:
■ Both domestic and foreign securities that are not readily marketable
■ Certain municipal leases and participation interests
■ Certain stripped mortgage- backed securities
■ Repurchase agreements and time deposits with a notice or demand period of
more than seven days
■ Certain restricted securities, unless it is determined, based upon a review of the
trading markets for a specific restricted security, that such restricted security is
liquid because it is so- called 4(2) commercial paper" or is otherwise eligible
for resale pursuant to Rule 144A under the Securities Act of 1933.
Investing in restricted securities may decrease the liquidity of a Fund's portfolio.
Borrowings. Each Fund may borrow up to 331/3% of its total assets from banks for
temporary or emergency purposes. A Fund may not make additional investments if
borrowings exceed 5% of its net assets. For more information, see the Additional
Statement.
Downgraded Securities. After its purchase, a portfolio security may be assigned a
lower rating or cease to be rated. If this occurs, a Fund may continue to hold the
security if the Investment Adviser believes it is in the best interest of the Fund and
its shareholders.
ss
Appendix B
Financial Highlights
The financial highlights tables are intended to help you understand a Fund's financial
performance for the past five years. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that an investor would
have earned or lost on an investment in a Fund (assuming reinvestment of all dividends
and distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with a Fund's financial statements, is included in the Fund's annual
report (available upon request).
PRIME OBLIGATIONS FUND
FST Administration Shares
For the Years Ended December 31,
2005 2004 2003 2002 2001
Net asset value, beginning of year ...........
S 1.00 S
1.00 S
1.00 $
1.00 $
1.00
Net investment income(a) ..................
0.028
0.010
0.008
0.01
0.04
Distributions to shareholders ................
(0.028)
(0.010)
(0.008)
(0.01)
(0.04)
Net asset value, end of year ............ ...
S 1.00 S
1.00 $
1.00 S
1.00 S
1.00
Total return(b) ...........................
2.88%
1.00%
0.81%
1.50%
3.89%
Net assets, end of year (in 000's) ............
$3,421,363 52,765,553
53,080,780
52,927,767 $2,803,798
Ratio of net expenses to average net assets ....
0.43%
0.43%
0.43%
0.43%
0.43%
Ratio of net investment income to average
net assets ............................
2.88%
0.99%
0.80%
1.48%
3.64%
Ratios assuming no expense reductions
Ratio of total expenses to average net assets ...
0.47%
0.47%
0.47%
0.47%
0.48%
Ratio of net investment income to average
net assets ............................
2.84%
0.95%
0.76%
1.44%
3.59%
See page 63 fin- all f nanoles.
MONEY MARKET FUND
APPENDIX 8
FST Administration Shares
For the Years Ended December 31,
2005 2004 2003 2002 2001
Net asset value, beginning of year........ ...
$ 1.00
$ 1.00
$ 1.00
$ 1.00
$ 1.00
Net investment income (a) .....................
0.029
0.010
0.008
0.01
0.04
Distributions to shareholders ..................
(0.029)
(0.010)
(0.008)
(0.01)
(0.04)
Net asset value, end of year ..................
$ 1.00
$ 1.00
S 1.00
$ 1.00
S 1.00
Total retum( b ) ..............................
2.88%
1.01%
0.81%
1.50%
3.91%
Net assets, end of year (in 000's) ..............
$609,847
$626,210
$447,290
$480,359
$645,588
Ratio of net expenses to average net assets ......
0.43%
0.43%
0.43%
0.43%
0.43%
Ratio of net investment income to average
net assets ...............................
2.85%
1.05%
0.81%
1.50%
3.72%
Ratios assuming no expense reductions
Ratio of total expenses to average net assets .......
0.47%
0.47%
0.47%
0.47%
0.48%
Ratio of net investment income to average
net assets ...............................
2.81%
1.01%
0.77%
1.46%
3.67%
See page 63 fqr all foutnotes.
57
TREASURY OBLIGATIONS FUND
FST Administration Shares
For the Years Ended December 31,
2005 2004 2003 2002 2001
Net asset value, beginning of year ......
S 1.00
S 1.00
S 1.00
S 1.00
S 1.00
Net investment income(a) ....... I .....
0.027
0.009
0.007
0.01
0.04
Distributions to shareholders .............
(0.027)
(0.009)
(0.007)
(0.01)
(0.04)
Net asset value, end of year ............
S 1.00
S 1.00
S 1.00
$ 1.00
$ 1.00
Total return(b) ...
0.89%
0.71%
1.40%
3.61%
Net assets, end of year (in 000's) .......
$1,856,730
$1,581,650
$1,199,363
$1,396,765
$1,515,737
Ratio of net e)penses to average net assets ..
0.45%
0.45%
0.45%
0.45%
0.45%
Ratio of net investment income to average
net assets .......................
2.78%
0.90%
0.67%
1.31%
3.54%
Ratios assuming no expense reductions
Ratio of total eq)enses to average net assets
0.48%
0.47%
0.47%
0.47%
0.48%
Ratio of net investment income to average
net assets .......................
2.75%
0.88%
0.65%
1.29%
3.51%
See pave 63 lbw all liuunates.
`H
TREASURY INSTRUMENTS FUND
APPENDIX B
FST Administration Shares
For the Years Ended December 31,
2005 2004 2003 2002 2001
Net asset value, beginning of year ..............
$ 1.00
$ 1.00
$ 1.00
$ 1.00
$ 1.00
Net investment income(a) .....................
0.026
0.008
0.006
0.01
0.03
Distributions to shareholders ..................
(0.026)
(0.008)
(0.006)
(0.01)
(0.03)
Net asset value, end of year ..................
S 1.00
S 1.00
$ 1.00
S 1.00
S 1.00
Total retum( b ) ..............................
2.58%
0.83%
0.64%
1.31%
3.53%
Net assets, end of year (in 000's) ..............
$537,912
$236,848
$187,685
5208,186
$117,089
Ratio of net expenses to average net assets ......
0.45%
0.45%
0.45%
0.45%
0.45%
Ratio of net investment income to average
net assets ...............................
2.67%
0.84%
0.59%
1.14%
3.22%
Ratios assuming no expense reductions
Ratio of total expenses to average net assets .......
0.49%
0.49%
0.50%
0.50%
0.51%
Ratio of net investment income to average
net assets ...............................
2.63%
0.80%
0.54%
1.09%
3.16%
Sec page 63 Jor all footnotes.
59
GOVERNMENT FUND
FST Administration Shares
For the Years Ended December 31,
2005 2004 2003 2002 2001
Net asset value, beginning of year ._.
S 1.00
S 1.00
$ 1.00
$ 1.00
S 1.00
Net investment income(a) ..... .......
0.028
0.010
0.008
0.01
0.04
Distributions to shareholders ...........
(0.028)
(0.010)
(0.008)
(0.01)
(0.04)
Net asset value, end of year ...........
$ 1.00
1 1.00
S 1.00
S 1.00
$ 1.00
Total return(b) ......................
2.85%
0.98%
0.79%
1.44%
3.83%
Net assets, end of year (in 000's) .........
51,163,046
$1,072,788
S 934,764
S 944,400
51,169,694
Ratio of net expenses to average net
assets ...........................
0.43%
0.43%
0.43%
0.43%
0.43%
Ratio of net investment income to average
net assets ........ ..............
2.86%
0.99%
0.78%
1.40%
3.52%
Ratios assuming no expense
reductions
Ratio of total expenses to average
net assets .. .... ..............
0.48%
0.47%
0.47%
0.47%
0.49%
Ratio of net investment income to average
net assets .......................
2,81%
0.95%
0.74%
1.36%
3.46%
.See page 63 Jiw a!! /iminnres
FEDERAL FUND
APPENDIX B
FST Administration Shares
For the Years Ended December 31,
2005 2004 2003 2002 2001
Net asset value, beginning of year ...........
f 1.00
f 1.00
$ 1.00
$ 1.00
f 1.00
Net investment income(a) ................
0.028
0.009
0.007
0,01
0.04
Distributions to shareholders ..............
(0.028)
(0.009)
(0.007)
(0.01)
(0.04)
Net asset value, end of year ..............
$ 1.00
$ 1.00
f 1.00
$ 1.00
S 1.00
Total retum(b) .........................
2.78%
0.93%
0.74%
1.40%
3.79%
Net assets, end of year (in 000's) ..........
$696,899
$679,050
$ 419,747
S 685,582
$1,134,424
Ratio of net expenses to average net assets ..
0.45%
0.45%
0.45%
0.45%
0.45%
Ratio of net investment income to average
net assets ..........................
2.78%
1.00%
0.75%
1.39%
3.75%
Ratios assuming no expense reductions
Ratio of total expenses to average net assets ..
0.47%
0.47%
0.47%
0.47%
0.47%
Ratio of net investment income to average
net assets ..........................
2.76%
0.98%
0.73%
1.37%
3.73%
See page 63 fir all Jiminutes.
61
TAX -FREE MONEY MARKET FUND
FST Administration Shares
For the Years Ended December 31,
2005 2004 2003 2002 2001
Net asset value, beginning of year ..............
S 1.00
$ 1.00
S 1.00
$ 1.00
$ 1.00
Net investment income(a) .....................
0.020
0.008
0.006
0.01
0.02
Distributions to shareholders ... . ..............
(0.020)
(0.008)
(0.006)
(0.01)
(0.02)
Net asset value, end of year ..................
S 1.00
$ 1.00
$ 1.00
S 1.00
S 1.00
Total return (b) ......................... .....
2.01%
0.79%
0.64%
1.05%
2.34%
Net assets, end of year (in 000's) ..............
S349,087
S345,968
S273,661
$206,792
$146,621
Ratio of net expenses to average net assets ......
0.43%
0.43%
0.43%
0.43%
0.43%
Ratio of net investment income to average
net assets .... . ... ............... .....
1.98%
0.81%
0.61%
1.04%
2.27%
Ratios assuming no expense reductions
Ratio of total expenses to average net assets .....
0.47%
0.47%
0.47%
0.47%
0.48%
Ratio of net investment income to average
net assets ...............................
1.94%
0.77%
0.57%
1.00%
2.22%
.See /rage 63 lin' all laatnote.c.
APPENDIX B
Footnotes:
a Calculated based on the average shares outstanding methodology.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption oJ'the investment at the net asset value at the end of the
period Returns do not rgflect the deduction of tares that a shareholder would pay on fiord
distributions.
[This page intentionally left blank]
Index
1 General Investment
Management Approach
5 Fund Investment Objectives
and Strategies
10 Principal Risks of the Funds
13 Fund Performance
22 Fund Fees and Expenses
33 Shareholder Guide
33 How to Buy Shares
39 How to Sell Shares
45 Taxation
47 Appendix A
Additional Information on
Portfolio Risks, Securities
and Techniques
26 Service Providers 56 Appendix B
31 Dividends Financial Highlights
Financial Square Funds
Prospectus (FST Administration Shares)
Annual /Semi - annual Report
Additional information about the Funds' investments is available in the Funds'
annual and semi - annual reports to shareholders.
Statement of Additional Information
Additional information about the Funds and their policies is also available in the
Funds' Additional Statement. The Additional Statement is incorporated by
reference into this Prospectus (is legally considered part of this Prospectus).
The Funds' annual and semi - annual reports, and the Additional Statement, are
available free upon request by calling Goldman Sachs at 1- 800 -621 -2550. You can
also access and download the annual and semi - annual reports and the Additional
Statement at the Funds' website: http: / /www.gs.com/funds.
To obtain other information and for shareholder inquiries:
■ By telephone: 1- 800 -621 -2550
■ By mail: Goldman Sachs Funds, P.O. Box 06050
Chicago, IL 60606 -6306
■ On the Internet: SEC EDGAR database — http: / /www.sec.gov
Goldman Sachs — http: / /gs.com/funds
You may review and obtain copies of Fund documents (including the Additional
Statement) by visiting the SEC's public reference room in Washington, D.C. You
may also obtain copies of Fund documents, after paying a duplicating fee, by
writing to the SEC's Public Reference Section, Washington, D.C. 20549 -0102 or by
electronic request to: publicinfo @sec.gov. Information on the operation of the
public reference room may be obtained by calling the SEC at (202) 942 -8090.
The Funds' investment compan� registration number is 811 -5349.
Goldman Sachs Financial Square Fundss is a service mark of Goldman, Sachs & Co.
GSAM" is a registered service mark of Goldman, Sachs & Co.
FSPROADMM
0
Asset
Management
Palm Beach Gardens
General Employees'
Pension Plan
Third Quarter 2006
' 7 ROCKW OOD CAPITAL ADVISORS
1401 S. Brentwood Blvd. Suite 400 • St. Louis, Missouri 63144 • (888) 962 -8336 (toll -free) (314) 962 -1254 (fax)
Doves vs. Hawks: Who will win?
1
1
1
ROCKWOOD CAPITAL ADVISORS
1
Palm Beach Gardens General Em
Third Quarter 2006
Total Fund
Portfolio Summary
Pension Plan I
Equities
93%
Change in Market Value
Net Dividends /Interest
Contributions
Disbursements
Net Realized & Unrealized (G /L)
Portfolio Summary
Short -Term
Funds
7%
R 0 C K W 0 0 D CAPITAL ADVISORS
$4,677
$117,789
($39,390)
$72,991
Total Fund Performance
Palm Beach Gardens General Employees' Pension Plan
Equity - Third Quarter 2006
Market Environment
The third quarter of 2006 was a robust one for most equity investors, as stocks
appreciated across all market -caps. The most popular measuring stick, the S &P 500
Index, increased 5.7% while the average diversified equity fund gained a less stellar
2.0 %. Bond investors too had something to smile about as the Lehman Brothers
Aggregate Bond Index jumped 3.8 %. The Balanced Composite Index increased 4.9 %.
i Despite the positive performance of major market indices, market breadth continued to
deteriorate and leadership continued to shift noticeably as summer progressed into fall,
like the changing colors of trees. For the past several years, asset class leadership was
predominantly confined to small to mid - capitalization stocks. In fact, small -cap funds have
been Wall Street's leaders since the bear market of 2000 to 2002. While we still feel
money can be made in this segment of the market, opportunities may be more limited
relative to their large -cap brethren. We are responding to this leadership change by
increasing core holdings within the large -cap segment of the market.
: Portfolios have benefited from a decreased allocation in the "tired" energy sector, and
from a buildup in holdings within the consumer staples and financials sectors over the
past several months. We continue to monitor portfolios, looking to take advantage of
opportunities that become evident during the upcoming months.
Contravisory Research & Management Corp. is a registered investment adviser and equity sub - adviser to Rockwood Capital
Advisors, LLC.
18%
15%
12%
9%
6%
3%
0%
3rd Qr.
2006
Performance
8.5%
7.0%
YTD
N Palm Beach Gardens GE
R 0 C K W 0 0 D CAPITAL ADVISORS
14.1% 14.1%
Since Inception
(10/25/05)
❑ S &P 500
3
Equity Portfolio
Third Quarter 2006
Characteristics
Top Ten Holdings
1. Apartment Invt. & Mgmt.
3.4%
2. T. Rowe Price Group
3.3%
3. Volvo
3.2%
4. Seagate Technology
3.1%
5. Safeway Inc.
3.1%
6. VCA Antech Inc.
3.1%
7. Canadian Pacific RR
3.1%
8. Ryanair Holdings
3.1%
9. Precision Castparts
3.0%
10. Simon Property Group
3.0%
Five Best Impact
1. T. Rowe Price +26.7%
2. Apartment Invt. & Mgmt. +26.0%
3. Volvo +21.3%
4. Ryanair Holdings Plc. +19.7%
5. Lockheed Martin Corp. +19.6%
R 0 C K W 0 0 D CAPITAL ADVISORS
Style Box t
Val Cr Grw
Large Cap - 35.1 %
Mid Cap - 60.6%
Small Cap - 4.3%
Average Market Cap $22.7 billion
Median Market Cap $12.5 billion
Healtl
1'
Finance
30%
Sector Allocation
Materials Energy
Producer
3% 5%
Durables
ire
7% Technology
-13.9%
11%
-12.4%
Utilities
3%
A DR's
6%
Transportation
7%
Cons. Staples
Cons. Discr.
14%
3%
Five Worst Impact
1. Pacer Intl. Inc.
-15.1%
2. J2 Global Communication
-14.7%
3. CIT Group Inc.
-14.3%
4. IndyMac Bancorp
-13.9%
5. Halliburton Co.
-12.4%
4
Equity Transactions
Third Quarter 2006
Sold
July
Fair Isaac Corp.
July
Medimmune Inc.
July
TD Ameritrade Holding
Aug
THQ Inc.
Aug
Sunrise Senior Living
Sep
Halliburton Co.
Sep
Indymac Bancorp Inc.
Sep
CIT Group Inc.
Bought
July
BRIE Properties
July
NYSE Group Inc.
July
Pacer International Inc.
Aug
McCormick & Co.
Aug
Kraft Foods Inc.
Sep
HJ Heinz Co.
Sep
Sears Holdings Corp.
1
1
1
1
R 0 C K W 0 0 D CAPITAL A D V I S 0 R S
Proxy Voting Record
I Loews Corp. LTR
I McKesson Corporation MCK
I Precision Castnarts Corp. PCP I
THQ Inc. THQI
R 0 C K W 0 0 D CAPITAL A D V I S 0 R S 6
Equity Holdings - Third Quarter 2006
urrent Annual Avg Total ISS
'Id ( "I Income Cost Cost CGC
--
Cash
136,389
1.00
136,389
7.5
4.2
5,769
1.00
136,389
NA
AFL
Aflac Inc
925
45.76
42,328
2.3
1.1
407
47.23
43,691
0.30
AN
Apartment Invt & Mgm
1,040
54.41
56.586
3.1
4.4
3,120
36.91
38,391
0.49
BA
Boeing Co
520
78.85
41,002
2.2
1.5
624
64.47
33,525
0.91
BF.B
Brown Forman Dst'b'
590
76.65
45,223
2.5
1.5
-
74.52
43,967
0.03
BRE
Bre Properties Inc
600
59.73
35,838
2.0
3.4
1,200
57.15
34,289
0.96
CAT
Caterpillar Inc
620
65.80
40,796
2.2
1.8
620
49.83
30,895
0.89
CHK
Chesapeake Energy Co
1,195
28.98
34,631
1.9
0.8
239
31.29
37,392
0.97
CID
Canadian Pac Ry Ltd
1,040
49.74
51,730
2.8
1.3
542
44.05
45,814
NA
EP
El Paso Corp
3,240
13.64
44,194
2.4
1.2
518
11.72
37,973
0.77
FISV
Fisery Inc
920
47.09
43,323
2.4
0.0
-
43.76
40,259
0.39
HCC
Hoc Ins Hldgs Inc
1,355
32.88
44,552
2.4
1.2
407
28.00
37,945
0.83
HNZ
Heinz H J Cc
1,015
41.93
42,559
2.3
3.3
1,218
42.21
42,842
0.95
HPQ
Hewlett Packard Cc
1,345
36.69
49,348
2.7
0.9
430
32.33
43,477
0.83
HSIC
Schein Henry Inc
970
50.14
48,636
2.7
0.0
-
45.52
44,158
0.91
JCOM
J2 Global Communicat
1,580
27.17
42,929
2.3
0.0
23.18
36,618
0.22
KFT
Kraft Foods Inc
1,265
35.66
45,110
2.5
2.8
1,164
32.61
41,249
0.53
LMT
Lockheed Martin Corp
510
86.06
43,891
2.4
1.4
612
60.12
30,663
0.51
LSTR
Landstar Sys Inc
1,105
42.70
47,184
2.6
0.3
111
37.15
41,046
0.38
LTR
Loews Corp
1,275
37.90
48,323
2.6
0.7
255
29.94
38,172
0.24
MCK
Mckesson Hboc Inc
860
52.72
45,339
2.5
0.5
206
45.92
39,489
0.64
MKC
Mccormick & Co Inc
1,170
37.98
44,437
2.4
1.9
749
3529
41,292
0.34
NYX
Nyse Group Inc
515
74.75
38,496
2.1
0.0
66.09
34,037
NA
PACK
Pacer Intl Inc Tenn
1,045
27.76
29,009
1.6
2.2
627
32.35
33,803
0.65
PCG
Pg &E Corp
1,075
41.65
44,774
2.4
3.2
1,419
35.89
38,584
0.87
PCP
Precision Castparts
815
63.16
51,475
2.8
0.2
98
46.03
37,510
0.65
PL
Protective Life Corp
935
45.75
42,776
2.3
1.9
729
41.74
39,022
0.96
PRU
Prudential Finl Inc
565
76.25
43,081
2.4
1.0
441
78.05
44,095
0.71
RYAA.Y
Ryanair Hldgs Plc
815
63.29
51,581
2.8
0.0
55.22
45,007
NA
SHLD
Sears Hldgs Corp
284
158.09
44,898
2.5
0.0
151.84
43,123
0.20
SPG
Simon Ppty Group Inc
560
90.62
50,747
2.8
3.4
1,568
68.08
38,125
0.13
SRCL
Stericycle Inc
655
69.79
45,712
2.5
0.0
63.44
41,555
0.31
STX
Seagate Technology
2,265
23.09
52,299
2.9
1.4
13.97
31,642
NA
SWY
Safeway Inc
1,720
30.35
52,202
2.9
0.8
344
22.29
38,342
0.81
TROW
T.Rowe Price Group 1
1,150
47.85
55,027
3.0
1.2
644
33.76
38,819
0.05
TXN
Texas Instrs Inc
1,340
33.25
44,555
2.4
0.5
161
33.48
44,861
0.52
VOLV
Volvo Aktiebolaget
915
59.70
54,625
3.0
3.1
2,046
40.65
37,194
NA
WOOF
I Vca Antech Inc
1,445
1 36.06
1 52,107
1 2.9
1 0.0
1 -
28.86
41,707
1 0.06
Portfolio Total
175,628
S1,827,712
100
r
.0
1 R 0 C K W 0 0 D CAPITAL ADVISORS
Economic Environment & Outlook
Third Quarter 2006
A For the first time in over two years, the Fed refrained from hiking the funds rate
this quarter. The federal funds rate target remains at 5.25 %. A couple of weak
employment reports gave the Fed the opening they needed to pause after
seventeen consecutive rate hikes.
A Employment growth has slowed from an average of 176,000 jobs per month in
the first quarter of 2006 to 120,000 in Q3. However, other labor market
indicators are painting a different picture. The unemployment rate, for example,
dropped to 4.6% in September, a level not seen since mid -2001.
A To complicate matters, the Bureau of Labor Statistics just released benchmark
payroll revisions for the 12 months ended March 2006. An astounding 810,000
jobs were added, an average of 67,000 per month. This is the largest revision
ever, pushing job growth 45% higher than previously reported.
A The Fed must remain on guard against the prospect of rising inflation
expectations. The core CPI has risen 2.8% over the past 12 months, its highest
level since 2001. A tightening labor market has put upward pressure on wages.
In September 2005, average hourly earnings were rising at a modest 2.7% year -
over -year rate; but by September 2006 the rate had climbed to 4.0 %.
A With the recent slowing in housing and monthly job growth, some analysts have
discussed the possibility of the Fed reducing the funds rate in the near future.
However, can the Fed really begin to ease with the unemployment rate at multi-
year lows, while inflation and wage growth are at multi -year highs?
A Most of those predicting a near term Fed ease are basing their argument on a
substantial housing slowdown. However, we are skeptical that this down shift in
housing alone will be sufficient to derail the economy. Former Fed Chairman
Greenspan shares our pessimism. Greenspan very recently stated that the
"worst may well be over" for the U.S. housing industry.
A We have become less defensive from a duration standpoint, and our portfolios
maintain durations near their respective benchmarks. Market sentiment has
changed dramatically, with many analysts anticipating a Fed ease in 2007. We
feel that the economy maintains a good deal of vigor, while inflation remains
above the upper bound of the Fed's comfort zone.
R0CKWOOD CAPITAL ADVISORS 8
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UC�U�C�UC�H C1
CITY OF PALM BEACH GARDENS
RETIREMENT PLAN FOR EMPLOYEES
ACTUARIAL VALUATION REPORT
AS OF OCTOBER 1, 2004
(Revised November 10, 2006)
CONTRIBUTIONS APPLICABLE TO THE
PLAN /FISCAL YEAR ENDED SEPTEMBER 30, 2006
Section
Title
TABLE OF CONTENTS
I Introduction
a. Summary of Report
b. Requirements of Chapter 112,
Part VII, Florida Statutes
II Valuation Information
a. Derivation of Unfunded
Actuarial Accrued Liability
b. Actuarial Assumptions and
Funding Methods
c. Valuation Notes
III
IV
V
VI
Trust Fund
Member Statistics
a. Eligibility for Retirement
b. Statistical Data
c. Age and Service Distribution
d. Member Reconciliation
Summary of Plan Provisions
Governmental Accounting Standards
Board Statements No. 25 and No. 27
Disclosure Information
Page
1
4
D
10
11
12
16
17
18
19
20
22
SECTION I
INTRODUCTION
1
SUMMARY OF REPORT
The regular annual actuarial valuation of the City of Palm Beach Gardens
Retirement Plan For Employees, performed as of October 1, 2004, has been
completed, and the results are presented in this Report. The results of this valuation
are applicable to the plan /fiscal year ended September 30, 2006.
The funding requirements, compared with the amounts developed in the August
25, 2004 Actuarial Impact Statement (determined as of October 1, 2003), are as
follows:
Valuation Date
10/1/2003
10/1/2004
Applicable Plan /Fiscal Year End
9/30/2005
9/30/2006
Total Required Contribution
$126,148
$95,220
% of Total Annual Payroll
32.5%
37.0%
Member Contributions (Est.)
23,285
15,425
Balance from City
102,863
79,795
% of Total Annual Payroll
26.5%
31.0%
During the past year the actuarial experience has been less favorable than
expected. The primary components of unfavorable experience included average salary
increases that exceeded the assumed rate and a 1.8% investment return (Actuarial
Asset Basis) that was less than the 8.0% assumption. These losses were partially
offset by the effects of a decrease in the level of non - investment expenses.
Additionally, certain Plan Members experienced a substantial amount of hurricane -
related overtime. Because this was an unusual event and because it is unlikely that
0a
future reported salaries will reflect this compensation component, for the purposes of this
valuation, projected plan liabilities and the current valuation payroll were reduced in
proportion to each Member's hurricane - related overtime, in order to more closely reflect
anticipated experience. The "Old Method" in the Comparative Summary illustrates the
liabilities and costs associated with not removing hurricane - related overtime for each
Member's pay. The "New Method" column shows the costs and liabilities associated with
removing hurricane - related overtime from the pay for those Members not in the three year
averaging period. Please note that this revised treatment of the hurricane - related overtime
resulted in an increased City contribution requirement of $403.00. Because the books for
fiscal 2006 have closed as of this revision, a $435.24 ($403.00 adjusted for one year of
interest) additional one time contribution will be required by the City during the fiscal year
ending September 30, 2007. This additional contribution will serve to reduce future City
funding requirements.
In connection with this valuation of the Fund, the actuarial cost method was
changed from the Aggregate Actuarial Cost Method to the Entry Age Normal
Actuarial Cost Method, with a level dollar amortization assumption for the Unfunded
Actuarial Accrued Liability. These changes are designed to produce contribution amounts
that are more stable and predictable. Details of the impact of the changes on plan costs
are presented in the "Comparative Summary" beginning on page 3 of the report.
The balance of this Report presents additional details of the actuarial valuation and
the general operation of the Fund. The undersigned would be pleased to meet with the
Board of Trustees in order to discuss the Report and any pending questions concerning its
contents.
3
Respectfully submitted,
FOSTER & FOSTER, INC.
, MA
"1
By:
Patrick T. Donlan, MAAA
n
IComparative Summary of Principal Valuation Results
' New Method Old Method Old Method
10/1 /2004' 10/1/2004 10/1/2003
' A. Participant Data
Number Included
Actives
5
5
7
'
Service Retirees
9
9
7
Beneficiaries
2
2
3
Terminated Vested
3
3
3
'
Disability Retirees
1
1
1
Total
20
20
21
' Total Annual Payroll
$243,023
$245,168
$364,394
Payroll Under Assumed Ret. Age
243,023
245,168
364,394
Annual Rate of Payments to:
Service Retirees
198,286
198,286
95,764
'
Beneficiaries
20,033
20,033
29,463
Terminated Vested
29,817
29,817
29,817
Disability Retirees
6,873
6,873
6,873
B. Assets
Actuarial Value
2,585,580
2,585,580
2,607,935
Market Value
2,691,410
2,691,410
2,534,283
' C. Liabilities
Present Value of Benefits
Active Members
Retirement Benefits
896,685
909,475
1,691,943
Disability Benefits
13,517
13,753
18,245
Death Benefits
10,732
10,933
13,841
' Vested Benefits
130,673
141,503
108,606
Refund of Contributions
9,404
4,889
18,172
Service Retirees
1,843,103
1,843,103
811,622
' Beneficiaries
209,642
209,642
212,577
Terminated Vested
58,528
58,528
54,081
Disability Retirees
73,163
73,163
74,122
' Total
3,245,448
3,264,989
3,003,209
C. Liabilities - (Continued)
Liabilities Due and Unpaid
Present Value of Future
Salaries (Attained Age)
Present Value of Future
Salaries (Entry Age)
Present Value of Future
Member Contributions
Present Value of Future
Normal Costs (Entry Age)
Actuarial Accrued Liability
Unfunded Actuarial Accrued
Liability (UAAL)
D. Actuarial Present Value of Accrued Benefits
Vested Accrued Benefits
New Method
10/1/2004
$0
1,401,945
2,373,232
84,117
125,942
3,119, 506
533,926
Old Method
110/11/2004
$0
1,425,729
2,392,455
85,544
128,483
2,585,580
0
5
Old Method
10/1/2003
$0
1,459,432
3,683,841
87,566
135,139
2,607,935
0
Inactives
2,184,436
2,184,436
1,152,402
Actives
439,708
447,508
983,321
Member Contributions
178,138
178,138
332,853
Total
2,802,282
2,810,082
2,468,576
Non - vested Accrued Benefits
0
0
8,893
Total Present Value Accrued
2,802,282
2,810,082
2,477,469
Benefits
Increase (Decrease) in Present Value of
Accrued Benefits Attributable to:
Plan Amendments
0
0
Assumption Changes
(7,800)
0
New Accrued Benefits
0
288,889
Benefits Paid
0
(148,532)
Interest
0
192,256
Other
0
0
Total:
(7,800)
332,613
51
F. Past Contributions
Plan Years Ending: 9/30/2004
Total Required Contribution 92,016
City Requirement 67,027
Actual Contributions Made:
Members 24,655
City 67,027
Total 91,682
G. Net Actuarial Gain (Loss) N/A
* Contributions developed as of 10/1/04 are expressed as a percentage of projected
annual payroll at 10/1/05 of $257,091.
New Method
Old Method
Old Method
10/1/2004
110/11/2004
10/1/2003
E. Pension Cost
Normal Cost (with interest)
$46,581
$142,361
$126,148
% of Total Annual Payroll*
18.1
54.5
32.5
Payment Required to Amortize
Unfunded Actuarial Accrued
Liability over 30 years
(as of 10/1/04)
48,639
0
0
% of Total Annual Payroll*
18.9
0.0
0.0
Total Required Contribution
95,220
142,361
126,148
% of Total Annual Payroll*
37.0
54.5
32.5
Expected Member Contributions
15,425
15,666
23,285
% of Total Annual Payroll*
. 6.0
6.0
6.0
Expected City Contrib.
79,795
126,695
102,863
% of Total Annual Payroll*
31.0
48.5
26.5
F. Past Contributions
Plan Years Ending: 9/30/2004
Total Required Contribution 92,016
City Requirement 67,027
Actual Contributions Made:
Members 24,655
City 67,027
Total 91,682
G. Net Actuarial Gain (Loss) N/A
* Contributions developed as of 10/1/04 are expressed as a percentage of projected
annual payroll at 10/1/05 of $257,091.
H. Schedule Illustrating the Amortization of the Total Unfunded Actuarial Accrued
Liability as of:
(ii) 3 Year Comparison of Investment Return on Actuarial Value
Actual
Projected Unfunded
Year Ended 9/30/2004 1.8%
Year
Accrued Liability
8.0%
2004
533,926
(d) Average Annual Rate
2005
529,213
2006
524,123
2016
444,488
2026
272,561
2031
122,245
178138
0
I. (i) 3 Year Comparison of Actual and Assumed Salary Increases
Actual
Assumed
Year Ended
9/30/2004. 11.2%
6.5%
Year Ended
9/30/2003 3.2%
6.5%
Year Ended
9/30/2002 11.5%
6.5%
(ii) 3 Year Comparison of Investment Return on Actuarial Value
Actual
Assumed
Year Ended 9/30/2004 1.8%
8.0%
Year Ended 9/30/2003 2.4%
8.0%
Year Ended 9/30/2002 -7.0%
8.0%
(iii) Average Annual Payroll Growth
(a) Payroll as of:
10/1/2004 $243,023
10/1/1995 685,535
(b) Total Increase
-64.5%
(c) Number of Years
9.00
(d) Average Annual Rate
-10.9%
n
Statement by Enrolled Actuary
This actuarial valuation was prepared and completed by me or under my direct
supervision, and I acknowledge responsibility for the results. To the best of my knowledge,
the results are complete and accurate, and in my opinion, the techniques and assumptions
used are reasonable and meet the requirements and intent of Part VII, Chapter 112, Florida
Statutes. There is no benefit or expense to be provided by the plan and /or paid from the
plan's assets for which liabilities or current costs have not been established or otherwise
taken into account in the valuation. All known events or trends which may require a material
increase in plan costs or required contribution rates have been taken into account in the
valuation.
Q 0A,- U19106
Patrick T. Gonlan, EA, MAAA
Enrolled Actuary #05 -6595
A copy of this Report is to be furnished to the Division of Retirement within 60 days
of receipt from the actuary at the following address:
Mr. Charles Slavin, Actuary
Bureau of Local
Retirement Systems
Cedars Executive Center, Bldg. C
2639 North Monroe Street
Tallahassee, FL 32303
SECTION II
VALUATION INFORMATION
Derivation of Unfunded Actuarial Accrued Liability
(1) Total Present Value of Benefits
(2) Present Value of Future Normal Costs
(3) Accrued Liability: (1) - (2)
(4) Actuarial Value of Assets
(5) Unfunded Accrued Liability as of October 1, 2004
(3) -(4)
Date
Established
"A" 10/1/2004
Years
Remaining
30
10/1/2004
Amount
533,926
3,245,448
125,942
3,119, 506
2,585,580
533,926
Amortization
Amount
43,914
9
10
ACTUARIAL ASSUMPTIONS AND COST METHODS
Assumptions
Mortality Rates
1983 Group Annuity Mortality Table.
Termination Rates
See Tables below.
Disability Rates
See Tables below.
Retirement Age
Age 62. Also, any member who has
40
reached Normal Retirement is assumed to
' 50
continue employment for one additional
60
year.
Early Retirement
Commencing upon eligibility for Early
Retirement (age 55 with 10 years of
service), members are assumed to retire
with an immediate benefit at the rate of 2%
per year.
Interest Rate
8% per year, compounded annually, net of
investment related expenses.
Salary Increases
Payroll Increase
Administrative Expenses
'
% Terminating
Age
During the Year
20
17.2%
30
15.0
40
8.2
' 50
1.7
60
0.5
6.5% per year until the assumed retirement
age; see Table below. in addition,
projected salary in the year of retirement is
increased 20% to account for non - regular
compensation.
None.
$11,700 added to Normal Cost.
% Becoming Disabled
During the Year
0.03%
0.04
0.07
0.18
0.90
' Funding Method
' Entry Age Normal Actuarial Cost Method.
Current Salary as %
of Salary at ape 65
5.9%
11.0
20.7
38.9
73.0
11
VALUATION NOTES
Total Annual Payroll is the projected annual rate of pay for the year following the
valuation date of all covered members.
Present Value of Benefits is the single sum value on the valuation date of all future
benefits to be paid to current Members, Retirees, Beneficiaries, Disability Retirees
and Vested Terminations.
Normal (Current Year's) Cost is the current year's cost for benefits yet to be funded.
Unfunded Actuarial Accrued Liability (UAAL) is a liability which arises when a pension
plan is initially established or improved and such establishment or improvement is
applicable to all years of past service. Under the Entry Age Normal Actuarial Cost
Method, there is also a new UAAL created each year equal to the actuarial gain or
loss for that year.
Total Required Contribution is equal to the Normal Cost plus an amount sufficient to
amortize the Unfunded Accrued Liability over no more than 30 years. The required
amount is adjusted for interest according to the timing of contributions during the
year.
Entry Age Normal Actuarial Cost Method is the method used to determine required
contributions under the Plan. The use of this method involves the systematic funding of
the Normal Cost (described above) and the Unfunded Accrued (Past Service) Liability.
SECTION III
TRUSTFUND
City of Palm Beach Gardens
12
' General Employees' Pension Plan (DB)
BALANCE SHEET
'
September 30, 2004
ASSETS
COST VALUE
MARKET VALUE
' Cash and Cash Equivalents:
Money Market
26,604.41
26,604.41
' Total Cash and Equivalents
26,604.41
26,604.41
Receivable:
Member Contributions
786.58
786.58
'
City Contributions
16,756.75
16,756.75
' Total Receivable
17,543.33
17,543.33
Investments:
Mutual Funds:
' International Equity
106,612.34
107,606.89
Pooled /Common /Commingled Funds:
Fixed Income
964,731.38
1,031,474.85
' Equity
1,338,018.61
1,508,180.39
Total Investments
2,409,362.33
2,647,262.13
' TOTAL ASSETS
2,453,510.07
2,691,409.87
LIABILITIES AND NET ASSETS
Total Liabilities
0.00
0.00
Net Assets:
Active and Retired Members' Equity
2,453,510.07
2,691,409.87
' Total Net Assets
2,453,510.07
2,691,409.87
TOTAL LIABILITIES AND NET ASSETS
2,453,510.07
2,691,409.87
City of Palm Beach Gardens
General Employees' Pension Plan (DB)
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
September 30, 2004
Market Value Basis
INCOME
Contributions:
Member
City
Total Contributions
Earnings from Investments
Interest & Dividends
Net Realized Gain (Loss)
Unrealized Gain (Loss)
Total Earnings and Investment Gains
EXPENSES
Administrative Expenses:
Investment Related*
Other
Total Expenses
Distributions to Members:
Benefit Payments
Return of Contributions
Total Distributions
Change in Net Assets for the Year
Net Assets Beginning of the Year
Net Assets End of the Year
"Investment Related expenses include investment advisory,
custodial and performance monitoring fees.
24,655.39
67,027.00
270.23
169,357.20
82,038.05
26, 008.02
11,680.13
148,532.40
0.00
13
91,682.39
251,665.48
37,688.15
148, 532.40
157,127.32
2,534,282.55
2,691,409.87
City of Palm Beach Gardens
General Employees' Pension Plan (DB)
ACTUARIAL ASSET VALUATION
September 30, 2004
Actuarial Assets for funding purposes are developed by increasing the Actuarial Assets used
in the most recent actuarial valuation of the Fund by the average annual market value rate of
return (net of investment related expenses) for the past four years, but are limited to 120% of
Market Value, if less.
Details of the derivation are set forth as follows:
Plan Year End
9/30/01
9/30/02
9/30/03
9/30/04
Annualized Rate of Return
Rate of Return*
-4.09%
-7.03%
10.46%
9.03%
14
for prior four (4) years: 1.79%
(A) 10/01/03 Actuarial Assets:
$2,607,935.35
(1) Net Investment Income:
1. Interest and Dividends
270.23
2. Realized Gains (Losses)
169,357.20
3. Change in Actuarial Value
(97,444.53)
4. Investment Related Expenses
26,008.02
Total
46,174.88
(B) 10/01/04 Actuarial Assets:
$2,585,580.09
Actuarial Asset Rate of Return = 21 /(A +B -1):
1.79%
10/01/04 Limited Actuarial Assets:
$2,585,580.09
(Lesser of Actuarial Assets or 120% of Market Value)
*Market Value Basis, net of investment related expenses
City of Palm Beach Gardens 15
' General Employees' Pension Plan (DB)
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
September 30, 2004
' Actuarial Asset Basis
INCOME
' Contributions:
Member 24,655.39
City 67,027.00
' Total Contributions 91,682.39
Earnings from Investments
Interest & Dividends 270.23
Net Realized Gain (Loss) 169,357.20
Change in Actuarial Value (97,444.53)
' Total Earnings and Investment Gains 72,182.90
EXPENSES
Administrative Expenses:
Investment Related*
26,008.02
Other
11,680.13
Total Administrative Expenses
37,688.15
Distributions to Members:
Benefit Payments
148,532.40
Return of Contributions
0.00
Total Distributions
148,532.40
Change in Net Assets for the Year
(22,355.26)
Net Assets Beginning of the Year
2,607,935.35
Net Assets End of the Year **
2,585,580.09
*Investment Related expenses include investment advisory,
custodial and performance monitoring fees.
* *Net Assets may be limited for actuarial consideration
SECTION IV
MEMBER STATISTICS
ELIGIBILTY FOR RETIREMENT
Members are eligible for Normal Retirement based upon the following criteria:
1) Attained Age 62
Members are eligible for Early Retirement based upon the following criteria:
1) Attained Age 55 with 10 Years of Credited Service
As of the date of this valuation, the following list of Members are eligible for:
Normal Retirement
' Martin, S.
Sigler, W.
Early Retirement
West, D.
16
17
STATISTICAL DATA
(Averages are salary weighted)
10/11/2001
10/1/2002
10/1/2003
10/11/2004
Number
8
8
7
5
Average Current Age
52.1
53.6
55.8
52.4
Average Age at Employment
34.5
34.5
35.8
35.6
Average Past Service
17.5
19.1
20.0
16.7
Average Annual Salary
$43,838
$48,882
$52,056
$48,605
W.*
AGE AND SERVICE DISTRIBUTION
PAST SERVICE
AGE
0
1
2
3
4
5 -9
10 -14
15 -19
20 -24
25 -29
30+
Total
15 -19
0
0
0
0
0
0
0
0
0
0
0
0
20 -24
0
0
0
0
0
0
0
0
0
0
0
0
25 -29
0
0
0
0
0
0
0
0
0
0
0
0
30 -34
0
0
0
0
0
0
0
0
0
0
0
0
35 -39
0
0
0
0
0
0
1
0
0
0
0
1
40 -44
0
0
0
0
0
0
0
0
0
0
0
0
45-49
0
0
0
0
0
0
1
0
0
0
0
1
50 -54
0
0
0
0
0
0
0
0
0
0
0
0
55-59
0
0
0
0
0
0
1
0
0
0
0
1
60-64
0
0
0
0
0
0
0
1
0
0
1
2
65+
0
0
0
0
0
0
0
0
0
0
0
0
Total
0
0
0
0
0
0
3
1
0
0
1
5
VALUATION PARTICIPANT RECONCILIATION
1. Active lives
a. Number in prior valuation 10/1/03
b. Terminations
i. Vested (partial or full) with deferred
benefits
ii. Non - vested or full lump sum distribution
received
c. Deaths
i. Beneficiary receiving benefits
ii. No future benefits payable
d. Disabled
e. Retired
f. DROP Retired
g. Voluntary withdrawal
h. Continuing participants
i. New entrants
j. Total active life participants in valuation
2. Non - Active lives (including beneficiaries receiving benefits)
Service
0
0
Retirees,
0 1
0
Vested
Receiving
Receiving
Receiving
Death
Disability
Benefits
Benefits
Benefits
a. Number prior 7
3
1
valuation
b. In
c. Out
d. Number current
valuation
19
7
0
0
2
0
0
5
0
5
Vested
Deferred DROP Total
3 0 14
2 0
0
0
0
2
0 1
0
0
0
1
9 2
1
3
0
15
SECTION V
SUMMARY OF PLAN PROVISIONS
20
Effective Date
Original Plan
Latest Amendment
SUMMARY OF PLAN PROVISIONS
(Through Ordinance 11, 2004)
December 20, 1982
April 15, 2004
Eligibility Full -time Employees who were members of the Plan
on 2/6/97 who are not classified as full -time Police
Officers or Firefighters.
Salary W -2 compensation, plus all tax deferred, tax
sheltered, and tax exempt items of income.
Average Final Compensation 1/12th of average Salary for the 3 best consecutive
years of the 5 years immediately preceding
retirement or termination.
Credited Service Total years and completed months of service with
the City as a General Employee. Members receive
credit only for years during which Member
Contributions were made.
Normal Retirement
Date Age 62.
Benefit 2.5% of Average Final Compensation times
Credited Service.
Form of Benefit 10 Year Certain and Life Annuity (options
available).
Early Retirement
Date Age 55 and completion of 10 years of
Credited Service.
Benefit Accrued benefit, reduced 1/15th for each of the first 5
and 1 /30th for each of the next 5 years that early
retirement precedes normal retirement.
21
Death Benefit
Pre - Retirement
Vested Accrued benefit payable to designated
beneficiary for 10 years at the Member's Normal
Retirement Date (unreduced) or on a reduced basis
at the otherwise Early Retirement Date.
Not Vested Refund of accumulated Member Contributions.
Post - Retirement According to optional form of benefit
Selected at retirement.
Vesting
Schedule Years of Service Vested %
Less than 5 0%
5 25
6 40
7 55
8 70
9 85
10 or more 100
Benefit Member will receive the vested portion of his (her)
accrued benefit at the otherwise Early or Normal
Retirement Date.
Member Contributions
Amount 6.0% of Salary.
Interest 6.0% per year.
Disability
Eligibility Total and permanent (as determined by the Board).
Benefit Benefit accrued to date of disability, payable for life
(with a 10 year guarantee) or until recovery (as
determined by the Board).
SECTION VI
GOVERNMENTAL ACCOUNTING STANDARDS
BOARD STATEMENT NO. 25 AND No. 27 INFORMATION
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23
DISCLOSURE INFORMATION PER STATEMENT NO. 27 OF THE
GOVERNMENTAL ACCOUNTING STANDARDS BOARD
ANNUAL PENSION COSTS AND RELATED INFORMATION
Contribution rates as of 9/30/04
City 16.3%
Plan Members 6.0%
Annual pension cost 67,027
Contributions made 67,027
Actuarial valuation date 101112002
Actuarial cost method Aggregate
Amortization method N/A
Remaining amortization period N/A
Asset valuation method Market
Actuarial assumptions:
Investment rate of return 8.0%
Projected salary increase* 6.5%
* Includes inflation at 3.0%
Post Retirement COLA 0.0%
THREE YEAR TREND INFORMATION
Actuarially
Percentage of
Net
Year
Determined
Actuarially Determined
Pension
Endinq
Contribution
Contribution
Obligation
9/30/04
67,027
100%
0
9/30/03
18,154
100%
0
9/30/02
17,046
100%
0
Performance Evaluation
for
Palm Beach Garden
General Employees Pension Plan
Rockwood & Sawgrass
For the Period Ending
September 30, 2006
Presented
by:
Bogdahn Consulting, LLC
Palm Beach Gardens General Employees'
General Employees Pension Plan
Executive Summary Report Explanation
The Executive Summary provides an overview of the fund's performance. It shows the performance in dollars, percent,
and relative to the investment policy. These are provided over different time periods including up and down markets. All
rates of return are annualized if the period for which they are calculated exceeds one year.
Account Reconciliation: This section shows the performance of the account in dollars, during the most recent quarter,
the calendar year, and since the inception date. The Beginning Value is the value at the start of each period. The Ending
Value shows the value as of the date of the report. Net contributions are the total contributions less the total withdrawals
during the period. The Investment G/L is the gain or loss resulting from the investments. It is the difference between the
beginning and ending values that cannot be explained by the net contributions. Positive investment G/L figures represent
a profit, and negative values represent a loss.
Investment Policy: This section defines the benchmark against which the fund is being compared. Generally, this is the
most important objective for a fund to achieve. The performance of the fund relative to this measure over longer periods of
time, such as market cycles, is the strongest indicator of the success or failure of the investment strategy. This objective
should be reasonable, and the performance of the fund should be measured against the investment policy after adjusting
for risk.
Trailing Returns: This section shows the cumulative time weighted returns over the last 1 year, 2 years, and so on up
through 10 years if available, as well as since the inception date. A positive difference indicates the fund has exceeded
the policy's returns. The investor would prefer that this difference be positive for all time periods; however, it is more
important for it to be positive for the longer periods rather than the shorter periods.
Calendar Year Returns: This section gauges the consistency of performance over one year time periods. Each calendar
year of performance represents the return from January 1st through December 31st. Watch out for a trend of declining
relative performance in recent periods.
Returns In Up /Down Markets: This section shows how the fund performed in both up and down markets. The
methodology is to segregate the performance for each time period into the quarters in which the market, as defined by the
policy, was positive and negative. Quarters with negative policy returns are treated as down markets, and quarters with
positive policy returns are treated as up markets. Thus, in a 3 year or 12 quarter period, there might be 4 down quarters
and 8 up quarters. Up market returns are calculated for the fund and the policy based on the up quarters. Down market
returns are calculated for the fund and the policy based on the down quarters. The ratio of the fund's return in up markets
to the policy's is the up market capture ratio. The ratio of the fund's return in down markets to the policy's is the down
market capture ratio. Ideally, the fund would have a greater up market capture ratio than down market capture ratio.
Palm Beach Gardens General Employees'
General Employees Pension Plan
Executive Summary
Account Reconciliation
09/30/2006 2006 09/30/1994
Qtr YTD Incept
.....................................
......................................
13e it?ri?ri :Value :::
...............................
...............................
GS ::::
7..::::.1;D
9:
N6t�Flows ::::::::::::::::
:::: - 34:::::::;:::::
=9T:::
-3.72
ar ostrrlent G/L `:1
}Z :::
1; 2::::::
1 Yr
Erwiri ::
:
2;8 4:
2; 33
Trailing Returns through September 30, 2006
Investment Policy
Index
Weight
Calendar Year Returns
09/30/2006
2006
...............................
< .............
,x..._...........16,7.
::: , .. :
.
cy ....
1 .
. . , _
... .. . ...
. . .
..2.......,.....
. ..... .. . ,..
.19 . .o .
09/30/1994
1 Yr
2 Yr
3 Yr
4 Yr
5 Yr
6 Yr
7 Yr
8 Yr
9 Yr
10 Yr
Incept
............................................................................................................
:......:.:::::5::::::7
:97::::::8:40:......
. .........
........ .......
4:::::::
5:53::::::3:83::::::4
,90: >:::::0.8r
...9.......
:96::::::
5....::......::::......
...............................
}
::::::::.... :
_.__
............................................................................................................
....
...... ...............................
r � 7 ....................:78..:
_..
3.87...
_.
..8.25.
._.........................................
.:6:4 _ ..
314.
9> :
':: ..
........_...._.................
...............................
:.:... .......
T ....
.:: :9.. .
...
a ` ;:< :.; :1�4:.....
.....
0.20;:%
........
.: A` :.
X1.84
_0.94
,..
#3:T3:.
. .
1�. 7
0.27.
0.90..
0,84
Calendar Year Returns
09/30/2006
2006
...............................
< .............
,x..._...........16,7.
::: , .. :
.
cy ....
1 .
. . , _
... .. . ...
. . .
..2.......,.....
. ..... .. . ,..
.19 . .o .
t. .............8....
Qtr
YTD
2005
2004
2003
2002
2001
2000
1999
1998
1997
1=
..............................................................................................................
3,9$........
..............................................................................................................
6 ..
. .........
........ .......
......3:
, ...........8.
.......
,90: >:::::0.8r
...9.......
::
............
;: 5; , .:
.........8...................2.
............I..................
...............................
: >. . . 1.
}
Doti... . . . . ....:::::::::::
. Y ...... ........ .4:92......
>::::::
G.34......
_..
3.87...
_.
..8.25.
1$::76:.:
- 9:53...
...............
, , 3 67
- 0 �92
... .....
:.1:1::4(f:
...................
2'f 3 ...23:68;
......... . . : . . .. ::.- :${#74
.. ..... ....
.
.bt.
.
E} 0
. . .....
. 389
. . ...... ..
...
0
..
. .
. . 6 .6
9
3=..0$
. :
1::9.:
Returns in Up Markets
09/30/1994
3 Yr 5 Yr 10 Yr Incept
.....................................
l"i�itid:::
S.
.....12S.. .._........33..7
...............................
< .............
,x..._...........16,7.
::: , .. :
.
cy ....
1 .
. . , _
... .. . ...
. . .
..2.......,.....
. ..... .. . ,..
.19 . .o .
t. .............8....
>:93: `:::::91::2::::
$ ..................
........
;: >:88:4::::::::::
........................
..
Inception date is September 30, 1994
All dollar values are shown in thousands.
Returns for periods exceeding one year are annualized.
Returns are net of fees.
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
2
Returns in Down Markets
09/30/1994
3 Yr 5 Yr 10 Yr Incept
... _ . _.
fiu�tl...
. ...............................
... >2.5.
- ........
......................
� ... .. .:.....x.
.
Po[i : ::::
......................._............
r2:7: ::
4a2:3
........_......................
> F3:9
;:.:31:3:9:
Ratio::::::.::
>:93: `:::::91::2::::
$ ..................
;: >:88:4::::::::::
........................
tit3:U?
Palm Beach Gardens
General Employees Pension Plan
Asset Allocation Through September 30, 2006
Equit}
61%
At Market
Cash & Equiv
6%
Equity
58%
At Cost
Cash & Equiv
6%
3
Fixed Income
33%
So
Fixed Income
36%
Equity Limitations
65 @ Cost
70 @ Market
Palm Beach Gardens General Employees'
General Employees Pension Plan
Universe Comparison Report Explanation
The universe compares the fund's returns to a group of other investment portfolios, called a universe. Ideally the universe
is comprised of many other investment funds with similar investment profiles. Comparisons are provided over many
different time periods.
Trailing Returns: This section focuses on longer term returns. It shows the cumulative time weighted returns and
percentile rankings for the last 1 year, 2 years, 3 years, and so on up through 10 years if available. The returns for the
fund, the policy and the universe percentiles are displayed. A percentile ranking of 1 is the best, and 100 is the worst. For
example, a ranking of 50 means that the fund outperformed half of the universe. A ranking of 25 means the fund was in
the top 25% of the universe, outperforming 75 %. Above 50 is acceptable. Above 25 is excellent. High rankings over all
time periods are ideal; however, it is more important to rank highly over the longer periods rather than the shorter periods.
Calendar Year Returns: This section focuses on shorter periods and gauges the consistency of performance over time.
It shows the calendar year returns for the fund, the investment policy and the universe percentiles. Each full year of
performance represents the return from January 1st through December 31st. Ideally the fund has performed well in the
earlier years and in the most recent years. Watch out for a trend toward underperformance in recent periods. Note the
performance in different market environments. A high policy return indicates a bull market, and a low policy return
indicates a bear market.
All rates of return are annualized if the period for which theyare calculated exceeds one year.
4
Palm Beach Gardens General Employees'
General Employees Pension Plan
Universe Comparisons
60% Pure Lg Cap Core & 40% High Quality Bond
i railing Ketums through September 3u, zuu6
Calendar Year Returns
1 Yr
I 2 Yr
I 3 Yr
I 4 Yr
I 5 Yr
I 6 Yr
I 7 Yr
I 8 Yr
I 9 Yr
1 10 Yr
.............................................................................................................. ...............................
............................................................................................................. ...............................
Fund.. : > :::::' ::::::::::::...
... ............................. ............................... .
............................................................................................................ ...............................
.......................................................................................................... ...I,..........................
Return
7.79
7.97
8.40
8.94
5.53
3.83
4.96
5.80
5.24
7.26
% -tile
41
55
55
82
61
20
17
21
54
49
.......................... ........... I............................. . . ....._....I ............. ....... ... ...............................
P 4�IIC}► ........... ............................... . ........ ........_.......... ..........
Return
7.93
8.17
8.67
10.78
6.47
3.10
4.19
5.53
6.14
8.10
% -tile
33
45
44
34
26
28
30
27
15
12
n...
5th % -tile
9.89
10.22
10.69
12.16
8.00
6.74
6.67
7.21
6.78
8.68
25th % -tile
8.09
8.73
9.23
11.07
6.52
3.33
4.39
5.58
5.80
7.72
50th % -tile
7.57
8.05
8.49
10.30
5.78
2.41
3.62
4.95
5.32
7.22
75th % -tile
5.97
7.20
7.61
9.36
5.07
0.98
2.89
4.40
4.79
6.56
95th % -tile
2.00
4.86
4.89
6.95
3.09
-2.33
0.96
2.75
3.67
4.99
Calendar Year Returns
Returns are in percent. "% -tile" is the percentile ranking within the universe.
Returns for periods exceeding one year are annualized.
Incept is September 30, 1994 to September 30, 2006
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
+1
I Qtr
YTD
1 2005
2004
2003
2002
2001
2000
1999
1998
................... . .
t =iItid
Return
3.95
5.60
3.98
8.33
14.87
-9.90
0.84
5.74
7.81
11.27
% -tile
66
56
49
28
90
45
9
16
84
92
:.. ... . . .
Pony. .
Return
4.92
6.34
3.97
8.25
18.76
-9.53
-3.67
-0.92
11.40
21.35
% -tile
17
30
49
30
38
36
38
53
57
14
:. ..... ...
Unlvers .. .. .... .... .. ..
5th % -tile
5.32
8.51
7.78
10.61
22.15
-6.02
2.49
12.89
21.77
23.85
25th % -tile
4.79
6.44
5.07
8.43
19.57
-8.97
-2.72
3.21
13.94
20.05
50th % -tile
4.30
5.91
3.95
7.53
18.17
-10.15
-4.10
-0.70
11.87
18.01
75th % -tile
3.64
4.12
3.31
6.43
16.73
-11.58
-5.12
-2.41
9.72
14.49
95th % -tile
1.36
-1.15
1.46
4.31
13.99
-13.58
-8.55
-5.23
3.84
10.59
Returns are in percent. "% -tile" is the percentile ranking within the universe.
Returns for periods exceeding one year are annualized.
Incept is September 30, 1994 to September 30, 2006
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
+1
Palm Beach Gardens General Employees'
Total Fixed Income
Executive Summary
Account Reconciliation
09/30/2006 2006 09/30/1994
Qtr YTD Incept
............................
ii?iirtg' Value .:.:..:::::::
....................I..........
#i3::::::
3:47$:
::::::::::::
..::/.4 .::..
.. ........
.....................................
...............................
...............................
.........11+f................�0
9.....:.
..........I..................
.....................................
.....................................
.....................................
it vestrY.....:f3fC : :::::::.:::::::......::
.....................................
.....................................
...............................
...............................
...............................
...............................
...............................
:::......::::::::....
.
.....................................
.....................................
.....................................
..... ~lg .......::.::. ::
...............................
...............................
. :966::......9fi
....
::;::.:.. .
Trailing Returns through September 30, 2006
Investment Ho
Index
Weight
Calendar Year Returns
09130/2006
2006
:: 9:
::::::::::::
..::/.4 .::..
.. 8.
o11e.......
.... .................................
.........11+f................�0
9.....:.
..........I..................
............,............1.....
... . .
09/30/1994
1 Yr
2 Yr
3 Yr
4 Yr
5 Yr
6 Yr
7 Yr
8 Yr
9 Yr
10 Yr
Incept
............................................................................................................
............................................................
Find:..... .: 4 ? .
.............................................................................................................
3:20
2::8 :.::.:......5
.
..:...... ...:5.;56
...............................
.: 5:.5 ..
.:4.25. .:
...............................
.. ...............................
:.5:.1:7 :.:
...............................
.....I.........................
�:15a
.::::::::6:0 ::
........ ...............................
.............................................................................................................
............................................................................................................
s7
.....::::::
:1.
- .......................................................
::.....
::::5:fl .....:6::3i4:::::
'I't:fl2
fi 40::::::..
.......
.............I.................
...............................
s:�r:
...............................
�:
::::::::..: .
.. ...... ........ .:
# �N` P:::::::::::0:85::::::0;19:::::
..............
:.... :::::
�t1.:37 ::::
..I.....::
<?0:76:::::c1:05:::::
........
..
}. .....
.. .:
X1::25......
-' -, ......1.00
:: ;:::�?i�3q...........
... ......
:9$
. 93.
Calendar Year Returns
09130/2006
2006
:: 9:
::::::::::::
..::/.4 .::..
.. 8.
o11e.......
.... .................................
.........11+f................�0
9.....:.
..........I..................
............,............1.....
... . .
.....................................
Qtr
YTD
2005
2004
2003
2002
2001
2000
1999
1998
1997
.............................................................................................................
.............................................................................................................
nd... ...... 3,$ .:..
.............................................................................................................
............................................................................................................
0.:::::::.
... .....
F5.............
g::g :::::::
3:::::::
...2,$.......9
.. :;:::;:::9::
rt ::::::6:
2 ......
...............................
...............................
..50.....1,3........99.........
...............................
...............................
�.: 7:::::8;
8:7 .
.............................................................................................................
............................................................................................................
.............................................................................................................
Poli .::.::: ::...: ::::3:8'1:::::::3:06:
Gy .... ............................................................
2:34
:4:21: ::::4:8$::
...............................
'I't:fl2
8:51::
...............................
...............................
...............................
: 't1::$l.:_:::::
-2A6:
......................
:9:47.::::9:75
":
..
��it: .: ::::
G 0. �..::::
......... ............
-i#:b5
b::t
.......... ..
...... ....
1: >
.......... .......................
:7
a:7
....... ........................
:
:a:07:]
Returns in Up Markets
09/30/1994
3 Yr 5 Yr 10 Yr Incept
....................................................................
Lsici: . ..
... .. ......
.. ...92
:: 9:
::::::::::::
..::/.4 .::..
.. 8.
o11e.......
.... .................................
.........11+f................�0
9.....:.
..........I..................
............,............1.....
... . .
.....................................
7:D::::::::
:8::::.:
...............................
b .:.:
:.. 1 .
Inception date is September 30, 1994
All dollar values are shown in thousands.
Returns for periods exceeding one year are annualized.
Returns are net of fees.
Returns in Down Markets
09/30/1994
3 Yr 5 Yr 10 Yr Incept
.....................................
..
3:: .:.
...............................
... :
.... .
Piifi ::::
py..
X3:7' :
... ...............................
X3:3:::
X3:3::::::::
......
=::: <3:8:
......
Ratio :
.........
:::88:'#::::::::.::98:$:
.......
.. ::
::::9'1::9:::::::::::91::
........$.
Sawgrass assumed fixed- 10 -26-05 $1,043,932.60 - Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
n
Palm Beach Gardens General Employees'
Total Fixed Income
Universe Comparisons
High Quality Bond
I railing Ketums through September 3U, ZUU6
Calendar Year Returns
1 Yr
I 2 Yr
I 3 Yr
I 4 Yr
5 Yr
I 6 Yr
I 7 Yr
I 8 Yr
I 9 Yr
1 10 Yr
... .... ....
;:.::::.. ...., . ....
find . _ . . .
Return
4.52
3.20
2.82
3.25
3.98
5.56
5.15
4.25
5.17
5.50
% -tile
18
57
72
73
79
68
80
93
81
79
............ ..... ....... .....
PS)11Cy .:....:....::.. . ....
Return
3.67
3.11
3.19
4.01
5.03
6.34
6.40
5.36
6.17
6.50
% -tile
73
63
57
43
37
35
36
49
35
36
>.... ... .. ..
5th % -tile
5.28
5.32
5.73
7.30
7.45
8.13
8.10
6.77
7.28
7.85
25th % -tile
4.28
3.76
3.98
4.65
5.26
6.55
6.59
5.68
6.33
6.69
50th % -tile
3.93
3.30
3.33
3.83
4.70
6.03
6.13
5.34
5.94
6.26
75th % -tile
3.63
2.88
2.77
3.19
4.12
5.30
5.43
4.86
5.38
5.60
95th % -tile
2.66
2.38
2.26
2.50
3.18
4.18
4.47
4.09
4.57
4.73
Calendar Year Returns
Returns are in percent. "% -tile" is the percentile ranking within the universe.
' Returns for periods exceeding one year are annualized.
Incept is September 30, 1994 to September 30, 2006
Sawgrass assumed fixed- 10 -26-05 $1,043,932.60 - Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
FA
Qtr
YTD
2005
2004
2003
2002
2001
2000
1999
1998
i=il d .: : % ::.: :: :.:.:.::: : :
s1
Return
3.34
3.01
2.65
3.16
2.83
9.23
9.24
6.50
-1.37
8.99
% -tile
50
77
17
61
77
28
10
92
73
13
.
Ptificy
Return
3.81
3.06
2.34
4.21
4.68
11.02
8.51
11.84
-2.15
9.47
% -tile
28
74
29
34
35
4
21
10
84
5
Untvers� ....:.... .. .
5th % -tile
4.67
4.60
3.37
6.19
11.51
10.87
9.85
12.37
4.61
9.45
25th % -tile
3.84
3.55
2.41
4.54
5.34
9.37
8.40
10.90
1.75
8.34
50th % -tile
3.34
3.28
2.00
3.69
4.04
7.98
7.81
9.56
-0.45
7.26
75th % -tile
2.70
3.04
1.57
2.13
2.90
5.51
7.00
7.70
-1.46
6.33
95th % -tile
1.60
2.28
1.09
0.98
1.63
1.50
4.93
5.78
-3.67
4.50
Returns are in percent. "% -tile" is the percentile ranking within the universe.
' Returns for periods exceeding one year are annualized.
Incept is September 30, 1994 to September 30, 2006
Sawgrass assumed fixed- 10 -26-05 $1,043,932.60 - Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
FA
Palm Beach Gardens General Employees'
Fixed Income & Cash - Sawgrass
Executive Summary
Account Reconciliation
Trailing Returns through September 30, 2006
Investment Policy
Calendar Year Returns
09/30/2006 2006
Qtr YTD 2005 2004 2003 2002 2001 2000 1999 1998 1997
....
.............................................................................................................
end..
.............................................................................................................
09/30/2006
2006
10/26/2005
3:_81:
Qtr
YTD
Incept
.....................................
fie.{�....... yam... \�.�s� ................
in ValtaQ :.
......................
...............................
''.''}}..(f�...'}.. ......''}}..(r.��...............}�.
. .: : :': : !714r !. ....
...............................
!JY.�
.
...............
......... ...............................
let F lows ::::::::::::
.....................................
.....................................
.....................................
........
:; 120::::::::=
...............................
...............................
..........I....................
.......
14t}:::::::::
.......... ...
124
.....................................
.....................................
...... tr......:GlL :: ::::::::4::::::
...............................
...............................
-:3: t :::::::::::::46
E6din' Value :
::::: 6fi ::::::::::9
:::::::::
6
Trailing Returns through September 30, 2006
Investment Policy
Calendar Year Returns
09/30/2006 2006
Qtr YTD 2005 2004 2003 2002 2001 2000 1999 1998 1997
....
.............................................................................................................
end..
.............................................................................................................
_ .. ........................................................................................
3, 34..
...............................I
...............................
0. 1 ............................... .......................... ............................... .........
_. -- . . . . .. . ........... ...............................
Policy.
3:_81:
:.3.06 :..•: .
.
::.:.
0.�.......b5
. .: .... .. . ..:
..... _ ..... _ ............. ................... ............................... .................. .
Returns in Up Markets
10/26/2005
Incept
. ... ... .
..............
. ....
Piilicy :::::::::: :::::::::::::::: :
: `: ` ::::::::::
Inception date is October 26, 2005
All dollar values are shown in thousands.
Returns for periods exceeding one year are annualized.
Returns are net of fees.
Index change effective 1/1/2006 from LB Gov /Credit to LB Aggregate
Returns in Down Markets
10/26/2005
Incept
...... _ .......................
fiud -0:3
.py ... ............. ..... .......... .............. ...... ....7:
... .
...... ....•.
:Rabb .. .....:....:.::..........:.. :...:::...:.......::. :: :: : : ::::4A-;4:.
Palm Beach Gardens General Employees'
Fixed Income & Cash - Sawgrass
Universe Comparisons
High Quality Bond
i idnrtly Mew1115 ttitvuyn OUPLUInuei Ou, e-uuu
Calendar Year Returns
12 Qtrs
13 Qtrs
I 1 Yr
I 2 Yr
3 Yr
I 4 Yr
I 5 Yr
I 6 Yr
l 7 Yr
l 8 Yr
............................................................................................................. ...............................
............................................................................................................. ...............................
Fud ............... .......I....................... ........... ......... .
............................................................................................................. ...............................
............................................................................................................. ...............................
Return
3.44
3.01
% -tile
59
77
............................................................................................................. ...............................
............................................................................................................. ...............................
PQ ICy.
Return
3.72
3.06
% -tile
35
74
............................................................................................................. ...............................
........................ .......................................... ...............................
n' . s .
tJ t ...... .:.:. ..:. :::..:::........:.:...:..:...:.:.:..:.:.:.:.:...:.:.:.....:....:..:.:.:.:.::.:..:....:.:.:.:.:.:.:.:.:.:.:.:.:.:.:... :..:.:..:.:.....:.:..:.::.::::: : :
...... .... ...... ........... ......... ............... ..... ....................... .... .......................
............................................................................................................. ...............................
5th % -tile
4.51
4.60
5.28
5.32
5.73
7.30
7.45
8.13
8.10
6.77
25th % -tile
3.84
3.55
4.28
3.76
3.98
4.65
5.26
6.55
6.59
5.68
50th % -tile
3.56
3.28
3.93
3.30
3.33
3.83
4.70
6.03
6.13
5.34
75th % -tile
3.11
3.04
3.63
2.88
2.77
3.19
4.12
5.30
5.43
4.86
95th % -tile
2.53
2.28
2.66
2.38
2.26
2.50
3.18
4.18
4.47
4.09
Calendar Year Returns
Returns are in percent. "% -tile" is the percentile ranking within the universe.
Returns for periods exceeding one year are annualized.
Incept is October 26, 2005 to September 30, 2006
Index change effective 1/1/2006 from LB Gov /Credit to LB Aggregate
J
Qtr
YTD
1 2005
2004
2003
2002
2001
2000
1999
1998
Return
3.34
3.01
% -tile
50
77
.. .......... . ._
PoliGji ...... ....... . .
Return
3.81
3.06
% -tile
28
74
.:.:.::::::::: ` :.::...........:::::::::::::: : :::::: :::::::::::::: :::::::::::::::::::::;:;:; :;
tln verse ... ...... ............ .
5th % -tile
4.67
4.60
3.37
6.19
11.51
10.87
9.85
12.37
4.61
9.45
25th % -tile
3.84
3.55
2.41
4.54
5.34
9.37
8.40
10.90
1.75
8.34
50th % -tile
3.34
3.28
2.00
3.69
4.04
7.98
7.81
9.56
-0.45
7.26
75th % -tile
2.70
3.04
1.57
2.13
2.90
5.51
7.00
7.70
-1.46
6.33
95th % -tile
1.60
2.28
1.09
0.98
1.63
1.50
4.93
5.78
-3.67
4.50
Returns are in percent. "% -tile" is the percentile ranking within the universe.
Returns for periods exceeding one year are annualized.
Incept is October 26, 2005 to September 30, 2006
Index change effective 1/1/2006 from LB Gov /Credit to LB Aggregate
J
1
Palm Beach Gardens General Employees'
Total Equity
q Y
r Executive Summary
Account Reconciliation
09/30/2006 2006 09/30/1994
Qtr YTD Incept
.....................................
Be 8e$ci�r)?rf�. Value ... .....-
.............I.................
1 J 1 .'.......
3Aw
622
Ot Flaws:
.
.....................................
.....................................
:::$1 :::::::::::
...............................
...............................
...............................
=269
.....................................
.....................................
invoi ti'n fG /L::::
...........................I...
...............................
:3::
:::: ::1:21:: :::::::'1:;5x5:
.............
Eitdirig v�IU6 ::::::::::::::::::4
;888::
:::1;8fr.8:::::
1:;868
I railing Keturns through September 3u, Zuub
Investment Policy
Index
Weight
09/30/1994
1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr Incept
............................................................................................................
.......................
.. ....::::::':..72:::::1......::
............................................................................................................
.............................................................................................................
............................................................................................................
.................................................
:1:T:::::::
>: g .. .....
::......::......
::::2......::::
...............................
4:5:':......
..........................
':':':':':
....I..........................
5:04::::::7:97.::::::::9:96
...............................
...............................11—
...2.89
.............
...................................................................
y
567:
....... .. ..
1...5 .'.....2
30. '.:
'. 6 .
.....
....................................
,. f�.46
2.20
5.1ft
...............................
...............................
5:53
:8:59.` :
:. 11.3,fi
. ......
I..: .....
I .......
-'1f 7''''''
..} 6 .......
. 4'''''.
.;.:.
-tl fi8....
;.::Y ..
2.6.......Oa.........
..
..
1 :
...............................
;:36 ....:
36.::.
.'.
�Q:.. .....0,
".'.'t 2 .
2.
... :1 :.0 .
Calendar Year Returns
09/30/2006 2006
Qtr YTD 2005 2004 2003 2002 2001 2000 1999 1998 1997
ft td: ::: `
.............................................................................................................
::::::: L: $::::::
:1:T:::::::
4 :5 :::....
.....
22c83::
'.::0 ........
2'f
......
.. ..
....
b 29 ............
...............................
......... ...............................
1.11;26
...2.89
.........
Poti :
cy
567:
....... .. ..
8:53 :::::::::4a�'t
..
.............................
.. .
18.88::
.. ... ....
:28:68:
..........................................
...............................
-22:14
= 1:1:88:::
:= 9:1:1:::::21::04
...............................
_ ..... . ...............................
..............
:'28:5
:36
' iff
#�
::: _ .. .
1....'.':'
.'.'.'.'.'.'.'.'.' .....
':':'- :..6::::.:::::;
'.'..'.'.'.'.'.'.'...'..
..:....
......
...........
:.........::::::
'..'.'.' .... '....
5 ......::..
.'... ;.'.'.'.'.'.'.'.'.'.'.'.'.'
...:::::::7:46.......
.:.:.:.:.:.:.:..
:.:..'.:.:.:.:.:.'.'.'.'.'.'.'.
I ....::::::......::=
.............................
..8...::.:::.:33
'.'........'..'.'.'.'.'.'.'.'
:x..::19:::::::
=4:. ;8::
Returns in Up Markets
09/30/1994
3 Yr 5 Yr 10 Yr Incept
...
.iP . . .:.: .
...... . . .
. ...
....:. :1:7 ..:.:.:.:.:
::
.
:3..:...:. :............
.... ; ::
..
X:3.. :
obey...
; :
....19 6 .....
X .................:..
. .. ...
. ....:
.
.. .
30:6 :
R " tin:::::.
. ..... .'.'.'...
.'..96.6.: '...
......
.. ...
.............
Sb 2.:'
85 :2
Inception date is September 30, 1994
All dollar values are shown in thousands.
Returns for periods exceeding one year are annualized.
Returns are net of fees.
Rockwood assumed account 10 -26-05 $ 1,565,898.88
10
Returns in Down Markets
09/30/1994
3 Yr 5 Yr 10 Yr Incept
................
Fu ►d ....
'. .'.'.'
....5.7....
.'.'.'........ .. ................ ............. .
......
.'.'.'.'� .'
. ......
... 2 .......
I.............
.. -22 #: >: >'
..........................
'.'.'.'.4' . .'. '.
....X1.4.
Poficy.
:
.:... . .`...
''' :..............
X26:3:..:::.
`.:> ? .7:
:R '.
a5..
106.5
931E _
>
.
.
:. >:':'::
Palm Beach Gardens General Employees'
Total Equity
Universe Comparisons
Pure Large Cap Core
Trailing Keturns tnrougn 5eptemder su, zuun
Calendar Year Returns
1 Yr
2 Yr
3 Yr
4 Yr
5 Yr
6 Yr
7 Yr
8 Yr
9 Yr
10 Yr
F n: ...
Return
9.72
10.88
11.67
12.52
6.20
2.39
4.56
6.46
5.04
7.97
% -tile
60
63
61
78
62
20
16
17
52
54
Pp.ICY. ... .....
Return
10.79
11.52
12.30
15.21
6.97
0.46
2.20
5.10
5.53
8.59
% -tile
24
39
37
30
35
39
42
37
28
26
:' :::::::::::: : :::::::::::::::: :::::::::::::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::::
I .......................... ...............................
5th % -tile
13.68
14.67
15.38
17.36
9.96
6.99
6.87
8.39
7.22
10.28
25th % -tile
10.74
12.22
13.00
15.42
7.46
1.23
3.25
5.86
5.63
8.60
50th % -tile
10.26
11.27
12.01
14.82
6.67
0.22
1.95
4.78
5.08
8.08
75th % -tile
7.24
9.63
10.25
13.07
5.30
-2.79
0.78
3.77
4.08
6.82
95th % -tile
0.56
5.70
5.83
8.69
1.93
-7.95
-2.28
1.02
2.30
4.37
Calendar Year Returns
Retums are In percent. "% -tile" is the percentile ranking within the universe
'
Returns for periods exceeding one year are annualized.
Incept is September 30, 1994 to September 30, 2006
Rockwood assumed account 10 -26-05 $ 1,565,898.88
11
Qtr
YTD
2005
2004
2003
2002
2001
2000
1999
1998
...... . ... .
...
. .... ..
,>,a::.:: ..
Return
4.24
7.17
4.52
11.44
22.83
-21.03
-4.42
5.29
14.26
12.39
% -tile
71
59
67
26
87
34
9
12
81
97
........ ::
..
Pofliy. . . .... ...... .....
.. .. .. .. .. .. . .. ..... ....: . ..
Return
5.67
8.53
4.91
10.88
28.68
-22.10
-11.88
-9.11
21.04
28.58
% -tile
20
21
55
34
29
46
48
60
38
24
Universe . ......... . ...
5th % -tile
6.53
11.78
11.33
15.14
33.34
-15.55
-1.49
13.61
35.03
34.74
25th % -tile
5.61
8.43
7.20
11.51
28.99
-20.13
-9.35
-0.20
22.80
28.47
50th % -tile
5.29
7.95
5.09
10.39
27.83
-22.23
-12.08
-7.39
20.27
25.44
75th % -tile
3.77
4.49
4.22
8.38
24.97
-23.39
-13.51
-9.63
16.39
18.85
95th % -tile
0.04
-4.23
1.07
5.14
20.58
-26.60
-19.10
-14.67
6.13
13.04
Retums are In percent. "% -tile" is the percentile ranking within the universe
'
Returns for periods exceeding one year are annualized.
Incept is September 30, 1994 to September 30, 2006
Rockwood assumed account 10 -26-05 $ 1,565,898.88
11
Palm Beach Gardens General Employees'
Equity & Cash - Rockwood
Executive Summary
Account Reconciliation
09/30/2006 2006 10/26/2005
Qtr YTD Incept
...........I
............... ...............................
8e........ Value `::
..................
;::: # 1 >: >
_ .....................
:::: # fi39
....1;5s6:
..... lgws:.
:: .:....
.:. .:.5A :.:.:::::.:.:.:::75.:
..... ......................
fi#�iestiYieii : G .. .::.:.:.::::.:::
:::::.:.....::::::.::'i
1:::::::
2 ;:
Endit�4#:llalue ...
X868 .:.::
f:;a�58::
Trailing Returns through September;3U, luub
Investment Policy
Index
Weight
10/26/2005
1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr Incept
.....
uiid
....
... .
. .
...
Calendar Year Returns
..... .......... .................. . ..... .......................
.. .. .
.
1:2.37
.. 1:99.
09/30/2006 2006
Qtr YTD 2005 2004 2003 2002 2001 2000 1999 1998 1997
.. ......
Find ; :
..
a. 24 :
............ ........ .. .. . . .. ...
7.17 ' :.::
.Policy
567.....:
. .. ...
.
.... ; ': . ... .: >
tiiif<
..... ......................
,.. .....
136
Returns in Up Markets
10/26/2005
Incept
.....................................
Irs;a ::::. .. ..:. >.:
...............................
Policy.
1.4.0
Ratui...
11 7:5
Inception date is October 26, 2005
All dollar values are shown in thousands.
Returns for periods exceeding one year are annualized.
Returns are net of fees.
12
Returns in Down Markets
10/26/2005
Incept
......................................
>:
..................I............
.... .
,P4ifi�y
...
.... .
ratio.
Palm Beach Gardens General Employees'
Equity & Cash - Rockwood
Universe Comparisons
Pure Large Cap Core
Trailing Returns through September 30, 2006
Calendar Year Returns
2 Qtrs
3 Qtrs
1 Yr
2 Yr
3 Yr
4 Yr
5 Yr
6 Yr
7 Yr
8 Yr
....... ............................... ................................................................ I ....... I............. ...... .
............................................................................................................. ...............................
Un:,. .
Return
2.36
7.17
% -tile
62
59
QICy.. ....................... ..
Return
4.14
8.53
% -tile
20
21
... ............................... . . ............................... ............ ............ ....... ...............................
n.... s ...............
i� _.. .
............................................................................................................. ...............................
............................................................................................................. ...............................
5th % -tile
6.08
11.78
13.68
14.67
15.38
17.36
9.96
6.99
6.87
8.39
25th % -tile
4.06
8.43
10.74
12.22
13.00
15.42
7.46
1.23
3.25
5.86
50th % -tile
3.67
7.95
10.26
11.27
12.01
14.82
6.67
0.22
1.95
4.78
75th % -tile
0.65
4.49
7.24
9.63
10.25
13.07
5.30
-2.79
0.78
3.77
95th % -tile
-6.24
-4.23
0.56
5.70
5.83
8.69
1.93
-7.95
-2.28
1.02
Calendar Year Returns
Returns are in percent. "% -tile" is the percentile ranking within the universe.
Returns for periods exceeding one year are annualized.
Incept is October 26, 2005 to September 30, 2006
13
Qtr
YTD
I 2005
2004
2003
[ 2002
2001
I 2000
l 1999
1998
:: ...................... ` :::: >:: ` :: >:: ::::
Return
4.24
7.17
% -tile
71
59
:Policy ..
Return
5.67
8.53
% -tile
20
21
Uhlver : >..:
5th % -tile
6.53
11.78
11.33
15.14
33.34
-15.55
-1.49
13.61
35.03
34.74
25th % -tile
5.61
8.43
7.20
11.51
28.99
-20.13
-9.35
-0.20
22.80
28.47
50th % -tile
5.29
7.95
5.09
10.39
27.83
-22.23
-12.08
-7.39
20.27
25.44
75th % -tile
3.77
4.49
4.22
8.38
24.97
-23.39
-13.51
-9.63
16.39
18.85
95th % -tile
0.04
-4.23
1.07
5.14
20.58
-26.60
-19.10
-14.67
6.13
13.04
Returns are in percent. "% -tile" is the percentile ranking within the universe.
Returns for periods exceeding one year are annualized.
Incept is October 26, 2005 to September 30, 2006
13
Palm Beach Gardens General Employees'
General Employees Pension Plan
25.00% Up Market Returns
20.00% -----------------------------------
15.00% ------ - - - - -- -- - --
10.00% - -- -- - -- -
5.00% - -- -- - -- -
0 00°/
°
3 Yr
5 Yr
10 Yr
Incept
Fund ( %)
12.61
13.67
16.91
16.67
Policy ( %)
13.06
15.73
19.20
19.05
Difference ( %)
-0.45
-2.06
-2.29
-2.38
Ratio
96.55
86.90
88.07
87.51
# Up Qtrs
9.00
14.00
28.00
36.00
Down Market Returns
0.00%
- 5.00%
- - - -- --
--
- --
-
- 10.00% - - - - -- --
- 15.00% 3 Yr 5 Yr 10 Yr Incept
Fund ( %) -2.49 -11.26 -12.27 -12.27
Policy ( %) -2.66 -12.35 -13.94 -13.94
Difference ( %) 0.17 1.09 1.67 1.67
Ratio 93.61 91.17 88.02 88.02
# Down Qtrs 3.00 6.00 12.00 12.00
❑ Fund ( %) 0 Policy ( %)
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
14
Palm Beach Gardens General Employees'
General Employees Pension Plan
' Objective Comparison
v
a
' u
e
JV 1 UV I IVIVG JVG JVL VVL [VIVO JVJ JVJ VVJ IVIVY JVY JVY VVY InVV JVV VVV vvv YVV vvv vvv
Quarter Ending
❑ Fund X Policy
Q Nominal 8% ❑ CPI + 4%
' Inception date is September 30, 1994
All dollar values are shown in thousands.
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
15
Palm Beach Gardens General Employees'
General Employees Pension Plan
Attributions of Returns Report Explanation
Performance attribution concentrates on evaluating the effect of the manager's decisions on asset allocation and security
selection. This allows the investor to see whether the manager is adding value by adjusting the actual asset allocation or
by picking individual securities. This information is valuable in helping determine the amount of freedom that might be
given to the manager in regard to asset allocation ranges. The result of these skills are shown for multiple time periods.
The top section shows the returns for both the account and the investment policy and the results of the manager's
contribution. The fund's return is thus attributed to the policy and the manager.
The bottom section divides the manager's contribution into two components: asset allocation and security selection. The
asset allocation effect measures the value that was added by varying the actual asset allocation from the target allocation.
This is done by assuming investments, in amounts equal to the actual asset allocation weights, were made in the policy's
indices so that security selection has no effect. The difference between this return and the policy's return is the asset
allocation effect. The security selection is the remainder of the manager's contribution that is not explained by asset
allocation.
16
Palm Beach Gardens General Employees'
General Employees Pension Plan
Attribution of Returns
Attribution of Performance to show Manager Contribution
Policy + Manager Contribution = Fund
Attribution of Manager Contribution between Asset Allocation and Security Selection
Policy
...................
...
....
...
....
...
_.
...............................
...............................
...............................
...............................
...............................
Mah6d6i r:0 aritribi',ti6i h::
Fund
Current Quarter
4.92
= 11;97::
3.95
Year to Date
6.34
: ...
........... :::::::::- 4;�4::
:` :::::..:.:
5.60
3 Years
8.67
X0:27 :
:::::::::::::
8.40
5 Years
6.47
...
....
...
....
...
: =0:9
...............................
...............................
...............................
...............................
...............................
5.53
10 Years
8.10
::
-0:8
> :::
..
....
...
7.26
Incept
9.78
::
= 1::1:4::
8.64
Policy + Manager Contribution = Fund
Attribution of Manager Contribution between Asset Allocation and Security Selection
Asset Allocation + Security Selection = Manager Contribution
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
17
Asset Allocation
Security Selection
1vltageE Caritrifri:
Current Quarter
-2.29
1.32
:9
Year to Date
-2.80
2.06
:` :::::..:.:
...... :: ;T4
3 Years
-3.66
3.39
:::::::::::::
>::: <: r0;27
5 Years
-2.95
2.01
10 Years
-3.58
2.74
> :::
..
....
...
<0:$4
.... _....... _ .............
.................... _ .........
...............................
...............................
Incept
-4.35
3.21
: =1:`i 4
Asset Allocation + Security Selection = Manager Contribution
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
17
1
Palm Beach Gardens General Employees'
General Employees Pension Plan
' Asset Allocation Effect
'
5.00%
'
4.00%
' p
3.00%
e
r
2.00%
c
e
1.00%
n
t
0.00%
E
-1.00%
f
f
- 2.00%
'
e
c
- 3.00%
t
'
-4.00%
-500%
D01 M02 J02 S02 D02 M03 J03 S03 D03 M04 J04 SO4 D04 M05 J05 S05 D05 M06 J06 SI
Quarter Ending
Security Selection Effect
t5.00 °
' D01 M02 J02 S02 D02 M03 J03 S03 D03 M04 J04 SO4 D04 M05 J05 S05 D05 M06 J06 SI
Quarter Ending
' Quarterly Effect Cumulative Effect
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
1 18
/o
'
4.00%
p
3.00%
e
'
r
2.00%
c
e
1.00%
n
'
t
0.00%
E
- 1.00%
f
f
- 2.00%
e
c
- 3.00%
t
- 4.00%
-500%
' D01 M02 J02 S02 D02 M03 J03 S03 D03 M04 J04 SO4 D04 M05 J05 S05 D05 M06 J06 SI
Quarter Ending
' Quarterly Effect Cumulative Effect
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
1 18
Palm Beach Gardens General Employees'
General Employees Pension Plan
Asset Allocation vs Targets
80.00%
70.00% ---------------------------------------------
60.00°/ -------------------------------------------
50.00°/ ---------------------------------------------
40.00°/ -------------------------------------------
30.00°/ -------------------------------------------
20.00°/ ------------------------------------------
10.00°/ ---------------------------------------------
0.00% --, - .. --+- ..,. .
80
70
60
50
40
30.
20,
10,
0.
Quarter Ending
Cash & Equiv Target
UUl MUZ JUZ SUZ UUZ MU3 JU3 5U3 LM MU4 JU4 5U4 UU4 MU5 JU9 SU5 UU5 M06 J06 506
Quarter Ending
Equity Target
80.
70.
60.
50.
40.
30.
20.
10.
0
D01 M02 J02 S02 D02 M03 J03 S03 D03 M04 J04 SO4 D04 M05 J05 S05 D05 M06 J06 S06
Quarter Ending
❑ Fixed Income -X- Target
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
19
1
4.00%
3.00%
' 2.00°/
0
' R 1.00%
e
t
' u 0.00%
r
n
- 1.00%
- 2.00%
-3.00%
i
$
$
V
a $
1
' u
e
$
1
Palm Beach Gardens General Employees'
General Employees Pension Plan
Manager Contribution
-------------------
-- ---- - - - - -- -- -------
- - - - --
_
----------------------------- - --------------- - - - - -- ------------------- --- ------------------------------------ -----------------
- - - - - -- --------------------- - - - - -- ------------------------------------------------------------------------------------------
--------------------------- - - - - -- -----------------
11
)1 M02 J02 S02 D02 M03 J03 S03 D03 M04 J04 SO4 D04 M05 J05 S05 D05 M06 J06 S
Quarter Ending
Quarterly - - Cumulative
Growth of $100 Fund VS Policy
OUl UUl MUZ JUZ SUZ UVZ MU3 JV3 0U6 UU3 MU4 JV4 JU4 UV4 MUD JUD JVD UUO MUO JUO AVO
Quarter Ending
❑ Fund -�. Policy
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
20
Palm Beach Gardens General Employees'
General Employees Pension Plan
Quarterly Comparison Analysis ($)
Period
Fund
Policy
Diff
Nominal 8%
Diff
CPI + 4%
Diff
Ending
Sep 1994
1,079
1,079
0
1,079
0
1,079
0
Dec 1994
1,059
1,078
-20
1,098
-39
1,090
-31
Mar 1995
1,211
1,240
-29
1,194
17
1,188
23
Jun 1995
1,369
1,421
-51
1,294
75
_ 1,286
84
Sep 1995
1,432
1,495
-63
1,316
116
1,301
131
Dec 1995
1,533
1,600
-67
1,365
168
1,338
195
Mar 1996
1,634
1,697
-62
1,452
182
1,431
203
Jun 1996
1,688
1,752
-64
1,486
202
1,461
227
Sep 1996
1,728
1,800
-72
1,518
210
1,488
240
Dec 1996
1,820
1,916
-96
1,551
270
1,514
306
Mar 1997
1,927
2,045
-118
1,685
242
1,647
280
Jun 1997
2,141
2,284
-144
1,717
424
1,664
477
Sep 1997
2,328
2,423
-94
1,752
576
1,691
637
Dec 1997
2,375
2,530
-155
1,820
556
1,741
635
Mar 1998
2,568
2,756
-188
1,856
712
1,769
799
Jun 1998
2,550
2,842
-291
1,893
657
1,797
753
Sep 1998
2,385
2,730
-345
1,928
456
1,818
566
Dec 1998
2,679
3,106
427
2,001
678
1,874
805
Mar 1999
2,642
3,168
-526
2,025
617
1,888
753
Jun 1999
2,790
3,256
466
2,033
757
1,890
900
Sep 1999
2,647
3,131
-484
2,063
584
1,917
730
Dec 1999
2,821
3,391
-570
2,095
726
1,934
887
Mar 2000
2,907
3,490
-583
2,149
758
1,999
907
Jun 2000
2,843
3,432
-589
2,167
675
2,010
833
Sep 2000
2,926
_
3,436
-510
_
2,192
734
2,027
899
Dec 2000
2,945
3,324
-380
2,225
719
2,042
903
Mar 2001
2,846
3,104
-258
2,243
603
2,061
785
Jun 2001_
2,927
3,183
-256
2,251
676
2,068
859
Sep 2001
2,675
2,893
-218
2,229
446
2,028
648
Dec 2001
2,827
3,062
-234
2,256
571
2,013
814
Mar 2002
2,824
3,046
-222
2,283
541
2,040
783
Jun 2002
2,621
2,805
-184
2,290
331
2,038
583
Sep 2002
2,397
2,540
_
-144
2,305
92
_
2,041
356
Dec 2002
2,434
2,655
-221
2,313
121
2,024
410
Mar 2003
2,385
2,609
-224
2,345
41
2,068
318
Jun 2003
2,534
2,852
-317
2,358
176
2,050
484
Sep 2003
2,5331
2,861
-329
2,373
160
2,056
477
All dollar values are shown in thousands.
Index change effective 1/1106 from LB Gov /Credit to LB Aggregate
21
' Palm Beach Gardens General Employees'
General Employees Pension Plan
Quarterly Comparison Analysis ($)
Period
Ending
Fund
Policy
Diff
Nominal 8%
Diff
CPI + 4%
Diff
Dec 2003
2,680
3,036
-356
2,388
292
2,035
645
Mar 2004
2,741
3,094
-352
2,424
317
2,077
664
Jun 2004
2,717
3,068
-351
2,453
263
2,105
611
Sep 2004
2,674
3,045
-371
2,469
205
2,096
578
Dec 2004
2,805
3,188
-383
2,483
321
2,088
717
Mar 2005
2,745
3,112
-367
2,504
240
2,115
630
Jun 2005
2,717
3,117
400
2,490
228
2,087
630
Sep 2005
2,740
3,148
408
2,513
227
2,129
611
Dec 2005
2,779
3,177
-398
2,541
238
2,109
671
Mar 2006
2,812
3,206
-394
2,549
264
2,121
691
Jun 2006
2,7651
3,162
-3961
2,581 1
184
2,1591
606
Sep 2006
2,8341
3,276
442
2,591 1
242
2,141
692
1 All dollar values are shown in thousands.
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
22
' Palm Beach Gardens General Employees'
General Employees Pension Plan
Quarterly Comparison Analysis ( %)
Period
Fund
Policy
Diff
Nominal 8%
Diff
CPI + 4%
Diff
Ending
Dec 1994
-1.67
0.16
-1.83
1.94
-3.61
1.22
-2.89
Mar 1995
7.15
7.82
-0.67
1.94
5.21
2.12
5.03
Jun 1995
6.68
8.32
-1.64
1.941
4.74
1.71
4.97
Sep 1995
4.85
5.52
-0.67
1.94
2.91
1.45
3.40
Dec 1995
5.46
5.49
-0.03
1.94
3.52
1.08
4.38
Mar 1996
2.64
2.24
0.40
1.94
0.70
2.39
0.25
Jun 1996
2.91
2.88
0.03
1.94
0.97
1.69
1.22
Sep 1996
2.22
2.61
-0.39
1.94
0.28
1.69
0.53
Dec 1996
5.12
6.23
-1.11
1.94
3.18
1.49
3.63
Mar 1997
0.17
1.30
-1.13
1.94
-1.77
1.89
-1.72
Jun 1997
11.16
11.79
-0.63
1.94
9.22
1.09
10.07
Sep 1997
8.66
5.95
2.71
1.94
6.72
1.49
7.17
Dec 1997
0.59
3.06
-2.47
1.94
-1.35
0.99
-0.40
Mar 1998
8.07
8.90
-0.83
1.94
6.13
1.59
6.48
Jun 1998
-0.75
3.05
-3.80
1.94
-2.69
1.49
-2.24
Sep 1998
-6.44
-3.89
-2.55
1.94
-8.38
1.29
-7.73
Dec 1998
10.89
12.51
-1.62
1.94
8.95
1.09
9.80
Mar 1999
-0.83
2.50
-3.33
1.94
-2.77
1.59
-2.42
Jun 1999
6.80
3.77
3.03
1.94
4.86
1.69
5.11
Sep 1999
-4.78
-3.56
-1.22
1.94
-6.72
1.99
-6.77
Dec 1999
6.89
8.60
-1.71
1.94
4.95
1.29
5.60
Mar 2000
2.62
2.57
0.05
1.94
0.68
2.69
-0.07
Jun 2000
-1.42
-1.02
-0.40
1.94
-3.36
1.69
-3.11
Sep 2000
3.54
0.63
2.91
1.94
1.60
1.69
1.85
Dec 2000
0.95
-3.01
3.96
1.94
-0.99
1.19
-0.24
Mar 2001
-2.54
-5.93
3.39
1.94
-4.48
2.19
-4.73
Jun 2001
4.11
3.69
0.42
1.94
2.17
2.09
2.02
Sep 2001
1 -6.53
-7.20
0.67
1.94
-8.47
1.18
-7.71
Dec 2001
6.32
6.41
-0.09
1.94
4.38
0.09
6.23
Mar 2002
0.47
0.03
0.44
1.94
-1.47
2.19
-1.72
Jun 2002
-5.93
-6.75
0.82
1.94
-7.87
1.69
-7.62
Sep 2002
-7.51
-8.45
0.94
1.94
-9.45
1.59
-9.10
Dec 2002
3.08
5.95
-2.87
1.94
1.14
0.98
2.10
Mar 2003
-1.47
-1.24
-0.23
1.94
-3.41
2.80
-4.27
Jun 2003
7.62
10.56
-2.94
1.94
5.68
0.69
6.93
Sep 2003
1.161
1.44
-0.28
1.94
-0.781
1.79
-0.63
Dec 2003
7.081
7.21
-0.13
1.941
5.141
0.491
6.59
IReturns for periods exceeding one year are annualized.
Index change effective 1/1106 from LB Gov /Credit to LB Aggregate
23
Palm Beach Gardens General Employees'
General Employees Pension Plan
Quarterly Comparison Analysis ( %)
Period
Fund
Policy
Diff
Nominal 8%
Diff
CPI + 4%
Diff
Ending
Mar 2004
2.67
2.25
0.42
1.94
0.73
2.59
0.08
Jun 2004
-0.24
-0.25
0.01
1.94
-2.18
2.19
-2.43
Sep 2004
-0.38
0.30
-0.68
1.94
-2.32
1.08
-1.46
Dec 2004
6.17
5.82
0.35
1.94
4.23
1.18
4.99
Mar 2005
-1.19
-1.54
0.35
1.94
-3.13
2.59
-3.78
Jun 2005
1.32
2.21
-0.89
1.94
-0.62
1.69
-0.37
Sep 2005
1.75
1.79
-0.04
1.94
-0.19
3.20
-1.45
Dec 2005
2.07
1.50
0.57
1.94
0.13
-0.01
2.08
Mar 2006
2.71
2.25
0.46
1.94
0.77
2.59
0.12
Jun 2006
-1.09
-0.89
-0.20
1.94
-3.03
2.59
-3.68
Sep 2006
3.95
4.92
-0.97
1.94
2.01
0.98
2.97
Incept.
8.64
9.78
-1.14
8.00
0.64
_
6.57
2.07
IReturns for periods exceeding one year are annualized.
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
24
Palm Beach Gardens General Employees'
General Employees Pension Plan
Risk Measures Report Explanation
The evaluation of a fund's performance should extend beyond return to encompass measures of risk. The next two pages
are used to determine the level of risk to which the fund has been exposed, and whether the return has been
commensurate with the risk taken. All measures are calculated for both the fund and the policy as well as the difference
between the two. Up to four time periods are evaluated depending on the age of the fund.
# Of Negative Qtrs /# Of Positive Qtrs: Number of negative quarters shows the number of quarters in which the return
was less than zero, and the number of positive quarters is the number of quarterly returns which were greater or equal to
zero.
Batting Average: The batting average is a measure of consistency. It shows the percent of the quarters the fund has
beaten the policy and the percent of the quarters the policy has beat the fund. A high average for the fund (e.g. over 50) is
desirable, indicating the fund has beaten the policy frequently.
Worst Quarter /Best Quarter /Range: The worst quarter is the lowest quarterly return experienced during the period, a
measure of downside risk. The best quarter is the highest quarterly return, and the range is the difference of the high and
low, and indicates dispersion.
Standard Deviation: Standard deviation measures the total volatility of the fund, by measuring dispersion. Higher
standard deviation indicates higher risk. If the quarterly or monthly returns are all the same the standard deviation will be
zero. The more they vary from one another, the higher the standard deviation. Thus, it measures uncertainty, which is a
measure of risk.
Alpha/Beta/R- Squared: If the policy is appropriate, then the alpha should be positive, the beta close to one, and the
r- squared should be high. Beta measures risk relative to the policy. A beta of 1 suggests risk equivalent to the policy.
Higher betas indicate higher relative risk. A beta of 1.2 indicates 20% more risk than the policy. The alpha measures the
return adjusting for beta. The higher the alpha, the better. R- squared measures the relationship between the policy and
the fund. A high r- squared means the returns of the fund can largely be explained by movements of the policy. The
higher the r- squared, the more reliable the alpha and the beta. R- squared may range from 0 to 100. Beta, alpha and
r- squared are derived from regression analysis using the fund and policy returns as the dependent and independent
variables respectively. Roughly, one would expect the fund's performance to equal the return of the policy multiplied by
1 the beta plus the alpha.
Sharpe Ratio/Treynor Ratio: The Sharpe and Treynor ratios are similar. The Sharpe ratio is the excess return per unit
of total risk as measured by standard deviation. The Treynor ratio is the excess return per unit of market risk as
1 measured by beta. Both of these should be compared against the corresponding value for the policy. Higher numbers
are better, indicating more return for the level of risk that was experienced.
25
Palm Beach Gardens General Employees'
General Employees Pension Plan
Risk Measures
Yr............ ...............................
..................
ur.........P
... �'
......
........... .
# of Negative Qtrs
4.00
3.00
1.00
# of Positive Qtrs
8.00
9.00
-1.00
Batting Average
50.00
50.00
0.00
Worst Qtr
-1.19
-1.54
0.35
Best Qtr
7.08
7.21
-0.13
Range
8.27
8.75
-0.48
Worst 4 Qtrs
3.98
3.97
0.01
Standard Deviation
5.42
4.80
0.62
Beta
1.07
1.00
0.07
Annualized Alpha
-0.62
0.00
-0.62
R- Squared
0.90
1.00
-0.10
Sharpe Ratio
1.06
1.25
-0.19
Treynor Ratio
5.37
6.02
-0.65
Tracking Error
1.77
0.00
1.77
Information Ratio
-0.15
............................
10'lr ..uric
........................
Po)ic ::
............
13if
# of Negative Qtrs
14.00
12.00
2.00
# of Positive Qtrs
26.00
28.00
-2.00
Batting Average
42.50
57.50
-15.00
Worst Qtr
-7.51
-8.45
0.94
Best Qtr
11.16
12.51
-1.35
Range
18.67
20.96
-2.29
Worst 4 Qtrs
-11.63
-12.21
0.58
Standard Deviation
8.23
9.32
-1.09
Beta
0.81
1.00
-0.19
Annualized Alpha
-0.01
0.00
-0.01
R- Squared
0.85
1.00
-0.15
Sharpe Ratio
0.43
0.47
-0.04
Treynor Ratio
4.42
4.42
0.00
Tracking Error
3.65
0.00
3.65
information Ratio
-0.23
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
26
.............................
:.:::..:.:.:.:...:.........::::
.............
.........................
: Pol t
.........
# of Negative Qtrs
7.00
6.00
1.00
# of Positive Qtrs
13.00
14.00
-1.00
Batting Average
45.00
55.00
-10.00
Worst Qtr
-7.51
-8.45
0.94
Best Qtr
7.62
10.56
-2.94
Range
15.13
19.01
-3.88
Worst 4 Qtrs
-11.63
-10.68
-0.95
Standard Deviation
6.36
7.29
-0.93
Beta
0.82
1.00
-0.18
Annualized Alpha
-0.15
0.00
-0.15
R- Squared
0.88
1.00
-0.12
Sharpe Ratio
0.52
0.58
-0.06
Treynor Ratio
4.04
4.25
-0.21
Tracking Error
2.60
0.00
2.60
Information Ratio
-0.36
......... ...............................
frti e t : :. :
: :: :: Fsnd
.........................
: Pol t
Off:
# of Negative Qtrs
15.00
12.00
3.00
# of Positive Qtrs
33.00
36.00
-3.00
Batting Average
39.58
60.42
-20.84
Worst Qtr
-7.51
-8.45
0.94
Best Qtr
11.16
12.51
-1.35
Range
18.67
20.96
-2.29
Worst 4 Qtrs
-11.63
-12.21
0.58
Standard Deviation
7.87
8.86
-0.99
Beta
0.80
1.00
-0.20
Annualized Alpha
0.01
0.00
0.01
R- Squared
0.83
1.00
-0.17
Sharpe Ratio
0.59
0.65
-0.06
Treynor Ratio
5.83
5.80
0.03
Tracking Error
3.69
0.00
3.69
Information Ratio
-0.31
1
' 13.00%
12.00%
11.00%
10.00%
A
n
' u 9.00%
a
i
' z 8.00%
e
' d
R
e 7.00%
' t
u
r
n
6.00%
i 5.00%
4.00%
3.00%
Palm Beach Gardens General Employees'
General Employees Pension Plan
Return vs Risk through September 30, 2006
' �.00%
i
t
S &P 500
Fun
i
LB Gov /Corp
3 Mo TBill
5.00% 10.00%
Risk (Annualized Std Dev)
Policy
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
27
15.00%
20.00%
20.00%
15.00%
R
t 10.00%
u
r
n
s 5.00%
0.00% 1.00% 3.00% 5.00% 7.00% 9.00%
0.00% 2.00% 4.00% 6.00% 8.00%
Risk (Annualized Std Dev)
Palm Beach Gardens General Employees'
General Employees Pension Plan
Return vs Risk through September 30, 2006
3 Years
10 Years
10.00%
I
9.00%
S &P 500
8.00%
R 7.00% fund
e
t'
t 6.00% LB Go4Corp
r
n
s 5.00%
I
4.00%
3 Mo TBill
3.00% r I I I I I -i
5.00% 15.00% 25.00%
0.00% 10.00% 20.00%
Risk (Annualized Std Dev)
Policy
Index change effective 1/1/06 from LB Gov /Credit to LB Aggregate
28
8.00%
7.00%
6.00%
R
e
t 5.00%
u
r
n
s 4.00%
3.00%
2
5 Years
S &P 500
Fund
LB �ov/Corp
i
.00% 10.00% 15.00% 20.00%
Risk (Annualized Std Dev)
Inception
13.00%
12.00%
11.00% S &P 500
10.00%
R 9.00%
e
t 8.00% liund
u
0
i
n 7 0 LB Gov /(borp
s 6.00%
5.00%
4.00%
3 Mo Mill
3.009/6 5.00% 10.00% 15.00% 20.00%
Risk (Annualized Std Dev)
Palm Beach Gardens General Employees'
General Employees Pension Plan
Policy
First Objective:
Second Objective:
Universe Data:
09/30/1994-12/31/2005
01/0 1 /2006- 09/30/2006
09/30/1994-09/30/2006
09/30/1994-09/30/2006
60.00 S &P 500
40.00 Lehman Gov /Credit Bond
60.00 S &P 500
40.00 Lehman Aggregate Bond
Annual Return of 8.00%
100.00 US Consumer Price Index
+ 4.00 annual adder
60% Pure Lg Cap Core & 40% High Quality Bond
09/30/1994- 09/30/2006 40.00 High Quality Bond
60.00 Pure Large Cap Core
29
Bogdahn Consulting, LLC.
CONTRIBUTIONS /WITHDRAWALS
Palm Beach Garden General Employees'
Combined Account
From 07 -01 -06 To 09 -30 -06
Tran
Trade
Settle
Code
Date
Date Security
Amount
CONTRIBUTIONS
ti
07 -03 -06
07 -03 -06 Cash
11,259.11
Transfer in
ti
07 -03 -06
07 -03 -06 Cash
7,506.07
Transfer in
ti
07 -05 -06
07 -05 -06 Cash
264.35
Transfer for invoice payments
ti
07 -05 -06
07 -05 -06 Cash
176.24
Transfer for invoice payment
ti
07 -06 -06
07 -06 -06 Cash
1,200.00
Transfer to cover invoice payment
ti
07 -06 -06
07 -06 -06 Cash
800.00
Transfer to cover invoice payment
G
07 -14 -06
07 -14 -06 Cash
642.67
EE
ti
07 -14 -06
07 -14 -06 Cash
321.33
Transfer for investment
ti
07 -14 -06
07 -14 -06 Cash
321.34
Transfer for investment
li
07 -28 -06
07 -28 -06 Cash
607.93
EE
li
08 -01 -06
08 -01 -06 Cash
10,894.35
li
08 -01 -06
08 -01 -06 Cash
7,262.90
Transfer from investment accounts to cover benefit payments
li
08 -04 -06
08 -04 -06 Cash
1,373.86
li
08 -04 -06
08 -04 -06 Cash
915.90
Transfer from investment accounts to cover invoice
payments
li
08 -11 -06
08 -11 -06 Cash
563.54
EE
li
08 -11 -06
08 -11 -06 Cash
338.12
Transfer for investment
li
08 -11 -06
08 -11 -06 Cash
225.42
Transfer for investment of contribution
li
08 -25 -06
08 -25 -06 Cash
578.06
EE
G
09 -01 -06
09 -01 -06 Cash
10,905.07
Transfer in to cover benefit payments
li
09 -01 -06
09 -01 -06 Cash
7,270.05
Transfer in to cover benefit payments
li
09 -08 -06
09 -08 -06 Cash
582.48
EE
li
09 -11 -06
09 -11 -06 Cash
104,330.00
Transfer from Sawgrass accuont to rebalance
li
09 -11 -06
09 -11 -06 Cash
349.82
Transfer from R &D account
li
09 -11 -06
09 -11 -06 Cash
233.22
Transfer from R &D account
G
09 -22 -06
09 -22 -06 Cash
599.23
EE
li
09 -25 -06
09 -25 -06 Cash
19,848.00
ER
li
09 -25 -06
09 -25 -06 Cash
359.54
Transfer from R &D account
Broker
Quantity Code Commission
Bogdahn Consulting, LLC.
CONTRIBUTIONS /WITHDRAWALS
Palm Beach Garden General Employees'
Combined Account
From 07 -01 -06 To 09 -30 -06
Tran
Trade
Settle
Code
Date
Date Security
Amount Quantity
li
09 -25 -06
09 -25 -06 Cash
239.69
Transfer from R &D account
li
09 -26 -06
09 -26 -06 Cash
11,908.80
Transfer from R &D account
li
09 -26 -06
09 -26 -06 Cash
7,939.20
Transfer from R &D account
209,816.29
WITHDRAWALS
10
07 -03 -06
07 -03 -06 Cash
16,971.88
Benefit Payments
to
07 -03 -06
07 -03 -06 Cash
1,793.30
Federal w/h tax on benefit payments
to
07 -03 -06
07 -03 -06 Cash
11,259.11
Transfer to R/D account
to
07 -03 -06
07 -03 -06 Cash
7,506.07
Transfer to R/D account
to
07 -054)6
07 -05 -06 Cash
1,088.38
Christiansen & Delmer
to
07 -05 -06
07 -05 -06 Cash
26435
Transfer to R/D account
to
07 -05 -06
07 -05 -06 Cash
176.24
Transfer to R/D account
to
07 -06 -06
07 -06 -06 Cash
2,000.00
Bogdahn Consulting
to
07 -06 -06
07 -06 -06 Cash
1,200.00
Transfer to R/D account
to
07 -06 -06
07 -06 -06 Cash
800.00
Transfer to R/D account
to
07 -12 -06
07 -12 -06 Cash
467.10
Salem Trust Fee
to
07 -12 -06
07 -12 -06 Cash
282.90
Salem Trust Fee
to
07 -14 -06
07 -14 -06 Cash
321.33
Transfer to Rockwood
to
07 -14 -06
07 -14 -06 Cash
321.34
Transfer to Sawgrass
to
08 -01 -06
08 -01 -06 Cash
16,971.88
Benefit payments
10
08 -01 -06
08 -01 -06 Cash
1,793.30
W/H tax on benefit payments
10
08 -01 -06
08 -01 -06 Cash
25.91
Foreign tax on Canadial Pacific Railway dividend
10
08 -01 -06
08 -01 -06 Cash
10,894.35
Transfer to R &D account
to
08 -01 -06
08 -01 -06 Cash
7,262.90
Transfer to R &D account
to
08 -04 -06
08 -04 -06 Cash
2,290.00
Gibson & Wirt for Fiduciary Liability insurance renewal of policy
to
08 -04 -06
08 -04 -06 Cash
1,373.86
Transfer to R &D account
to
08 -04 -06
08 -04 -06 Cash
915.90
Transfer to R &D account
2
Broker
Code Commission
J
Bogdahn Consulting, LLC.
CONTRIBUTIONS /WITHDRAWALS
Palm Beach Garden General Employees'
Combined Account
From 07 -01 -06 To 09 -30 -06
Tran
Trade
Settle
Code
Date
Date Security
Amount Quantity
to
08 -11 -06
08 -11 -06 Cash
338.12
to
08 -11 -06
08 -11 -06 Cash
225.42
Transfer to investment accounts for investment
of contributions
to
09 -01 -06
09 -01 -06 Cash
16,971.88
Benefit payments
to
09 -01 -06
09 -01 -06 Cash
1,793.30
W/H tax on benefit payments
to
09 -01 -06
09 -01 -06 Cash
10,905.07
Transfer to R &D account
to
09 -01 -06
09 -01 -06 Cash
7,270.05
Transfer to R &D account
to
09 -11 -06
09 -11 -06 Cash
349.82
Transfer to equity account
to
09 -11 -06
09 -11 -06 Cash
233.22
Transfer to fixed income account
to
09 -11 -06
09 -11 -06 Cash
104,330.00
Transfer to Rockwood account to rebalance
to
09 -25 -06
09 -25 -06 Cash
359.54
Transfer to Rockwood accouont
to
09 -25 -06
09 -25 -06 Cash
239.69
Transfer to Saygrass account
to
09 -26 -06
09 -26 -06 Cash
11,908.80
Transfer to Rockwood account
to
09 -26 -06
09 -26 -06 Cash
7,939.20
Transfer to Sawgrass account
248,844.21
EXPENSE ACCOUNTS
0.00
AFTER FEE PERFORMANCE EXPENSE ACCOUNTS
dp 07 -11 -06 07 -11 -06 Administration Fee 912.00
Sawgrass Asset Mgmt.
dp 08 -02 -06 08 -02 -06 Administration Fee 3,000.25
Quarterly management fee to Rockwood Capital Advisors
3,912.25
PORTFOLIO NET TOTAL 42,940.17
EXPENSE ACCOUNTS PAID BY CLIENT
AFTER FEE PERFORMANCE EXPENSE
ACCOUNTS PAID BY CLIENT
0.00
0.00
GRAND TOTAL 42,940.17
3
Broker
Code Commission
Quantity
DOMESTIC EQUITIE
Common Stock
Large Cap
925.000
520.000
825.000
620.000
1,015.000
1,345.000
1,265.000
510.000
1,275.000
1,075.000
565.000
1,720.000
1,340.000
Mid Cap
Bogdahn Consulting, LLC.
PORTFOLIO APPRAISAL
Palm Beach Garden General Employees'
Combined Account
September 30, 2006
(Excluding Reinvested Divs.)
Unit Total
Security Cost Cost Price
S
Aflac Inc.
BOEING CO COM
CIT Group
Caterpillar Inc
Heinz H J Company
Hewlett Packard Co
Kraft Foods
Lockheed Martin Corp.
Loews Corp.
PG & E Corp.
Prudential Financial Inc
Safeway Inc. COM
Texas Instruments
1,040.000
Apartment Inventory &
64.53
Management Co - Reit
600.000
BRE Properties
590.000
Brown Forman Corp.
42.21
Class B
1,195.000
Chesapeake Energy
32.61
Corp.
3,240.000
El Paso Corp
920.000
FISERV INC COM
1,355.000
HCC Insurance
78.05
Holdings Inc Com
970.000
Henry Schein Inc.
860.000
MCKESSON HBOC
151.84
INC COM
1,170.000
McCormick &Co Inc
515.000
NYSE Group Inc.
1,150.000
Price T Rowe Assoc Inc
52,202.00
Com
935.000
Protective Life Corp.
2,265.000
Seagate Technology
52,298.85
Holdings
284.000
Sears Holdings Corp
560.000
Simon PPTY Group Inc.
655.000
Stericycle Inc
Small Cap
47.23
43,690.71
64.53
33,556.42
54.92
45,308.26
49.83
30,894.91
42.21
42,842.34
32.33
43,477.39
32.61
41,248.74
60.12
30,662.63
29.94
38,172.27
35.89
38,583.79
78.05
44,095.59
22.29
38,341.72
33.48
44,859.98
515,734.75
36.91 38,390.98
57.15
34,289.46
74.52
43,967.27
31.29
37,391.67
11.72
37,972.80
43.76
40,259.57
28.00
37,945.69
45.52
44,158.09
45.92
39,488.79
35.29
41,292.11
66.09
34,036.66
33.76
38,819.00
41.74
39,022.51
13.65
30,917.25
151.84
43,122.84
68.08
38,124.80
63.44
41,554.44
- 1,014.34
660,753.93
Market Pct.
Value Gain/Loss Assets
45.76
42,328.00
- 1,362.71
78.85
41,002.00
7,445.58
48.63
40,119.75
- 5,188.51
65.80
40,796.00
9,901.09
41.93
42,558.95
- 283.39
36.69
49,348.05
5,870.66
35.66
45,109.90
3,861.16
86.06
43,890.60
13,227.97
37.90
48,322.50
10,150.23
41.65
44,773.75
6,189.96
76.25
43,081.25
- 1,014.34
30.35
52,202.00
13,860.28
33.25
44,555.00
- 304.98
578,087.75 62,353.00
54.41
56,586.40
18,195.42
59.73
35,838.00
1,548.54
76.65
45,223.50
1,256.23
28.98
34,631.10
- 2,760.57
13.64
44,193.60
6,220.80
47.09
43,322.80
3,063.23
32.88
44,552.40
6,606.71
50.14
48,635.80
4,477.71
52.72
45,339.20
5,850.41
37.98
44,436.60
3,144.49
74.75
38,496.25
4,459.59
47.85
55,027.50
16,208.50
45.75
42,776.25
3,753.74
23.09
52,298.85
21,381.60
158.09
44,897.56
1,774.72
90.62
50,747.20
12,622.40
69.79
45,712.45
4,158.01
772, 715.46 111,961.53
1.5
1.4
1.4
1.4
1.5
1.7
1.6
1.5
1.7
1.6
1.5
1.8
1.6
20.4
2.0
1.3
1.6
1.2
1.6
1.5
1.6
1.7
1.6
1.6
1.4
1.9
1.5
1.8
1.6
1.8
1.6
27.3
1,580.000
J2 Global
23.18
36,617.53
27.17
42,928.60
6,311.07
1.5
Communications hie.
1,105.000
Landstar Systems Inc.
37.15
41,046.43
42.70
47,183.50
6,137.07
1.7
1,045.000
Pacer International hie.
32.35
33,802.72
27.76
29,009.20
- 4,793.52
1.0
815.000
Precision Castparts
46.02
37,510.29
63.16
51,475.40
13,965.11
1.8
Corp.
Bogdahn Consulting, LLC.
45,814.52
Corporate Bonds
55.22
PORTFOLIO APPRAISAL
Chase Manhattan Corp
40.65
7.125% Due 02 -01 -07
Palm Beach Garden General Employees'
Caterpillar Financial
29,921.00
Services
Combined Account
4.875% Due 06 -15 -07
45,000
Merrill Lynch & Co.
September 30, 2006
6.560% Due 12 -16 -07
25,000
Wells Fargo & Co
(Excluding Reinvested Divs.)
4.000% Due 08 -15 -08
25,000
IBM
Unit Total
Market
35,000
Pct.
Quantity Security Cost Cost Price
Value
Gain/Loss
Assets
1,445.000 VCA Antech Inc 28.86 41,707.04 36.06
52,106.70
10,399.66
1.8
190,684.01
222,703.40
32,019.39
7.9
1,367,172.68
1,573,506.61
206,333.93
55.5
1,367,172.68
1,573,506.61
206,333.93
55.5
INTERNATIONAL EQUITIES
Foreign Stock
Foreign
1,040.000 Canadian Pacific
Railway Ltd. NEW
815.000 Ryanair Holdings
PLC -SP ADR
915.000 Volvo Aktiebolaget
ADR CL B
FIXED INCOME
45,814.52
Corporate Bonds
55.22
25,000
Chase Manhattan Corp
40.65
7.125% Due 02 -01 -07
50,000
Caterpillar Financial
29,921.00
Services
157,936.45
4.875% Due 06 -15 -07
45,000
Merrill Lynch & Co.
29,921.00
6.560% Due 12 -16 -07
25,000
Wells Fargo & Co
97.92
4.000% Due 08 -15 -08
25,000
IBM
96.51
4.250% Due 09 -15 -09
35,000
John Deere Cap Corp
340.35
Ser MTN
100.10
5.650% Due 07 -25 -11
25,000
Lehman Brothers
520.70
Holdings
105.39
6.625% Due 01 -18 -12
40,000
Morgan Stanley
164.25
4.750% Due 04 -01 -14
25,000
Goldman Sachs Group
95.10
Inc
269.60
5.125% Due 01 -15 -15
20,000
Anheuser Busch Cos Inc.
96.95
4.625% Due 02 -01 -15
50,000
BellSouth Capital
95.58
Funding
95.30
6.040% Due 1 I -15 -26
44.05
45,814.52
49.74
55.22
45,006.91
63.29
40.65
37.194.02
59.70
128,015.45
128,015.45
51,729.60
5,915.08
1.8
51,581.35
6,574.44
1.8
54,625.50
17,431.48
1.9
157,936.45
29,921.00
5.6
157,936.45
29,921.00
5.6
157,936.45
29,921.00
5.6
102.76
25,688.75
100.53
25,131.55
- 557.20
0.9
99.99
49,992.50
99.67
49,834.05
- 158.45
1.8
103.41
46,536.30
101.63
45,731.52
- 804.78
1.6
97.50
24,375.25
97.92
24,480.13
104.88
0.9
96.51
24,126.50
97.87
24,466.85
340.35
0.9
100.10
35,036.05
101.59
35,556.75
520.70
1.3
105.39
26,348.25
106.05
26,512.50
164.25
0.9
94.42
37,769.60
95.10
38,039.20
269.60
1.3
94.23
23,558.50
96.95
24,237.43
678.93
0.9
95.58
19,115.80
95.30
19,060.52
-55.28
0.7
102.25
51,125.00
100.03
50,015.40
- 1,109.60
1.8
2
FHLMC
FNMA
53,919 FHLMC Pool 002621
5.000% Due 10 -01 -20
Accrued Interest
45,886 FNMA Pool #256060
6.000% Due 01 -01 -36
74,922 FNMA Pool #896494
6.000% Due 08 -01 -36
Accrued Interest
98.86 53,303.70 98.27
53,303.70
101.39 46,523.99
100.14 75,027.66
121,551.65
121,551.65
924,449.72
3
52,985.37
- 318.33 1.9
Bogdahn Consulting, LLC.
0.0
53,210.03
- 318.33 1.9
121,377.01
- 174.64
4.3
PORTFOLIO APPRAISAL
0.0
121,981.05
- 174.64
4.3
Palm Beach Garden General Employees'
575.77
33.1
Combined Account
September 30, 2006
(Excluding Reinvested Divs.)
Unit Total
Market
Pct.
Quantity
Security
Cost Cost
Price
Value
Gain/Loss
Assets
40,000
First Union Corp
107.09 42,834.40
106.48
42,590.12
- 244.28
1.5
6.180% Due 02 -15 -36
406,506.90
405,656.01
- 850.90
14.3
Accrued Interest
5,580.38
0.2
406,506.90
411,236.39
- 850.90
14.5
Government Bonds
0
FNMA
0.00 0.00
98.34
0.00
0.00
0.0
3.800% Due 01 -18 -08
40,000
FNMA
96.95 38,780.80
98.03
39,212.50
431.70
1.4
3.875% Due 08 -15 -08
150,000
FNMA
97.88 146,826.50
98.25
147,375.00
548.50
5.2
6.500% Due 06 -01 -10
50,000
FHLLMC Series MTN
98.86 49,431.00
100.23
50,114.40
683.40
1.8
5.250% Due 02 -24 -11
25,000
US Treasury Note
95.25 23,813.48
97.28
24,319.33
505.85
0.9
4.250% Due 08 -15 -15
25,000
UNITED STATES
114.72 28,679.69
114.41
28,603.53
-76.17
1.0
TREAS BDS
6.000% Due 02 -15 -26
50,000
Tennessee Valley
111.11 55,556.00
110.76
55,382.35
- 173.65
2.0
Authority
5.880% Due 04 -01 -36
343,087.47
345,007.10
1,919.63
12.2
Accrued Interest
5,900.46
0.2
343,087.47
350,907.56
1,919.63
12.4
FHLMC
FNMA
53,919 FHLMC Pool 002621
5.000% Due 10 -01 -20
Accrued Interest
45,886 FNMA Pool #256060
6.000% Due 01 -01 -36
74,922 FNMA Pool #896494
6.000% Due 08 -01 -36
Accrued Interest
98.86 53,303.70 98.27
53,303.70
101.39 46,523.99
100.14 75,027.66
121,551.65
121,551.65
924,449.72
3
52,985.37
- 318.33 1.9
224.66
0.0
53,210.03
- 318.33 1.9
100.49 46,109.17
414.82
1.6
100.46 75,267.85
240.19
2.7
121,377.01
- 174.64
4.3
604.04
0.0
121,981.05
- 174.64
4.3
937,335.04
575.77
33.1
Bogdahn Consulting, LLC.
PORTFOLIO APPRAISAL
Palm Beach Garden General Employees'
Combined Account
September 30, 2006
(Excluding Reinvested Divs.)
Unit Total
Quantity Security Cost Cost Price
CASH & EQUIV.
Money Markets
164,862 Goldman Sachs
Fin.Sq.Treasury Oblib.
Admin
TOTAL PORTFOLIO
1.00 164,861.52 1.00
164,861.52
2,584,499.37
4
Market Pct.
Value Gain /Loss Assets
164,861.52 0.00 5.8
164,861.52 0.00 5.8
164,861.52 0.00 5.8
2,833,639.62 236,830.70 100.0
October 1, 2006
PALM BEACH GARDENS GENERAL EMPLOYEES' PENSION PLAN (DB)
SUMMARY PLAN DESCRIPTION
INTRODUCTION
The Board of Trustees of the Palm Beach Gardens General Employees' Pension Plan (DB)
is pleased to present this booklet which briefly explains the provisions of your General Employees'
Pension Plan. As a participant in the Fund, you are included in a program of benefits to help you
meet your financial needs at retirement, or in the event of disability or death.
This booklet can assist you in preparing for your retirement and financial future. If you need
further information on any of the topics presented in this booklet, please contact any member of the
Board of Trustees. They will either answer questions you might have to help you understand your
benefits or otherwise get you an answer to your questions. We urge you to read and understand this
booklet in order to become familiar with the benefits of the plan and how they contribute to your
financial security and how they will enrich your retirement years.
The information presented is only a summary of the pension plan ( "Plan ") as provided in the
ordinances of the City of Palm Beach Gardens. If there are any conflicts between the information
in this booklet and the ordinances of the City of Palm Beach Gardens, the ordinances shall govern.
The provisions of this Summary Plan Description shall not constitute a contract between the Member
and the Board of Trustees. The plan shall be administered in accordance with state and federal law,
notwithstanding any provisions in this booklet or ordinances to the contrary. A copy of the
ordinance establishing the Plan can be obtained from the City Clerk's office, which is located at
10500 North Military Trail, Palm Beach Gardens, Florida 33410.
Board of Trustees, Palm Beach Gardens
General Employees' Pension Plan (DB)
Date
1. BOARD OF TRUSTEES AND PLAN ADMINISTRATION
A. Administration. The Palm Beach Gardens General Employees' Pension Plan
(DB) is a defined benefit pension plan administered by a Board of Trustees which acts as the
administrator of the Plan. The Board consists of 5 Trustees, 2 of whom are legal residents of the
City who are appointed by the City Council, 2 of whom are members of the System who are elected
by a majority of the General Employees who are members of the System and a fifth Trustee who is
chosen by a majority of the first 4 Trustees. Each Trustee serves a three year term.
B. The names and addresses ofthe current Trustees are attached to this Summary
Plan Description as Exhibit "A ". The Chairman of the Board of Trustees is designated as agent for
the service of legal process.
2. ELIGIBILITY FOR PLAN MEMBERSHIP
All General Employees who are Members of the System as of February 6, 1997 shall
remain Members of the System and are therefore eligible for plan benefits as provided for in the plan
document and by applicable law. All General Employees who are not Members of the System as
of February 6, 1997, and all future new General Employees shall be ineligible to become Members
of this System.
3. PLAN BENEFITS
All claims for benefits under the Plan shall be made in writing to the Board of
Trustees.
A. Normal Retirement Eli ig bilitX. You are eligible for retirement upon the
attainment of age 62, regardless of years of credited service.
B. Amount ofNormal Retirement Benefits. The amount of the normal retirement
benefit is based on your credited service and average final compensation:
"Credited Service" is generally your period of employment as a General
Employee with the City measured in years and parts of years. Credited service will include a break
in employment for military service, pursuant to conditions that are required or permitted under state
or federal law, as amended from time to time, provided that you are reemployed within 1 year of
discharge under honorable conditions. Additional credited service time may also be available (See
subsection J. below).
"Average Final Compensation" is 1/12 of your average salary of the 3 best
consecutive years of the last 5 years of credited service prior to your termination, retirement or death,
or your career average as a full -time General Employee, whichever is greater. A year is defined as
12 consecutive months.
"Salary" is the total compensation for services rendered to the City reportable
on your W -2 form, plus all tax deferred, tax sheltered or tax exempt items of income derived from
elective employee payroll deductions or salary reductions.
Normal and early retirement payments will commence on the first day of the
month following your last day of employment. The normal retirement benefit is calculated by
multiplying 2.5% times years of credited service times your average final compensation: (2.5% x
CS x AFC = normal retirement benefit).
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The benefit is paid to you for your life, but you or your beneficiary shall
receive at least 120 monthly benefit payments in any event.
C. Early Retirement. You are eligible for early retirement upon the of age 5 5 and
the completion of 10 years of credited service.
D. Amount of Early Retirement Benefits. The amount of the early retirement
benefit is calculated in the same manner as for normal retirement and is available as follows:
(1) Beginning on the date on which you would have qualified for normal
retirement; or
(2) Beginning immediately upon retirement, but if beginning
immediately, the amount of the monthly benefit is reduced by 1/1 5th
for each of the first 5 years, and 1 /30th for each of the next 5 years by
which the commencement of benefits precedes the date which would
have been your normal retirement date had you continued
employment as a General Employee.
E. Optional Forms of Retirement. In lieu of the amount and form of retirement
income payable under normal and early retirement, you may elect to receive a retirement benefit in
a different form so long as the form you elect is of equal actuarial value as the normal benefit. The
optional forms of benefits which are available are:
(1) A retirement income of a monthly amount payable to you for your
lifetime only.
(2) A retirement income of a modified monthly amount, payable to you
during your lifetime and following your death, 100 %, 75 %, 66 2/3%
or 50% of such monthly amount payable to a joint pensioner for his
lifetime.
(3) If you retire prior to the time at which social security benefits are
payable, you may elect to receive an increased retirement benefit until
such time as social security benefits shall be assumed to commence
and a reduced benefit thereafter in order to provide, to as great an
extent as possible, a more level retirement allowance during your
entire period of retirement.
F. Disability Retirement. You are considered disabled when you become totally
and permanently unable to perform useful and efficient service as a General Employee in your
current position or in another position that the City makes available to you. A written application
is made to the Board of Trustees for a disability pension and the Board of Trustees receives evidence
of the disability and decides whether or not the pension is to be granted. If the pension is granted,
the benefit amount shall be 2 %2% of your average final compensation multiplied by your total years
of credited service.
Terminated persons, either vested or non - vested, are not eligible for disability
benefits, except that those terminated by the City for medical reasons may apply for a disability
benefit within 30 days after termination.
Your disability benefit terminates upon the earlier of death, with 120 payments
guaranteed, or recovery. You may, however, select a "life only" or "joint and survivor" optional
form of benefit as described above under "Optional Forms of Retirement ".
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Your benefit will be reduced if you receive worker's compensation benefits,
social security benefits or any other salary continuation program provided by the City, and your
combined benefit exceeds 100% of your final salary. The pension benefit will be reduced so that the
total does not exceed 100 %.
To receive disability benefits, you must establish to the satisfaction of the
Board, that such disability was not occasioned primarily by:
(1) Excessive or habitual use of any drugs, intoxicants or alcohol.
(2) Injury or disease sustained while willfully and illegally participating
in fights, riots or civil insurrections.
(3) Injury or disease sustained while committing a crime.
(4) Injury or disease sustained while serving in any branch of the Armed
Forces.
(5) Injury or disease sustained after your employment as a General
Employee with the City of Palm Beach Gardens shall have
terminated.
(6) Willful, wanton or intentional misconduct or gross negligence.
(7) Injury or disease sustained while working for anyone other than the
City and arising out of such employment.
(8) A condition pre- existing your membership in the system.
As a disabled pensioner, you are subject to periodic medical examinations as
directed by the Board to determine whether a disability continues. You may also be required to
submit statements from your doctor, at your expense, confirming that your disability continues.
G. Death Before Retirement. If you die prior to retirement from the City, your
beneficiary shall receive the following benefit:
(1) Prior to Vesting or r Eli ig bility for Retirement. If you die and were not
receiving benefits or were not yet vested or eligible for early or
normal retirement, your beneficiary shall receive a refund of 100% of
your accumulated contributions, with interest.
(2) Deceased Members Vested or Eligible for Retirement. If you die, and
at the date of your death were vested or eligible for early or normal
retirement, your beneficiary shall be entitled to a benefit as follows:
(a) If you were vested, but not eligible for normal or early
retirement, your beneficiary shall receive a benefit payable for
10 years, beginning on the date that you would have been
eligible for early or normal retirement, at the option of your
beneficiary. The benefit shall be calculated as for normal
retirement based on your vested percentage, credited service
and average final compensation as of the date of your death
and reduced as for early retirement, if applicable. Your
beneficiary may also elect to receive an immediate benefit,
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payable for 10 years, which is actuarially reduced to reflect
the commencement of benefits prior to your early retirement
date.
(b) If you were eligible for normal or early retirement, your
beneficiary shall receive a benefit payable for 10 years,
beginning on the first day of the month following your death
or at your otherwise normal or early retirement date, at the
option of your beneficiary. The benefit shall be calculated as
for normal retirement based on your credited service and
average final compensation as of the date of your death and
reduced as for early retirement, if applicable.
(c) Your beneficiary may elect an optional form of benefit and
the board may elect to make a lump sum payment pursuant to
Section 10 of the plan document.
(d) Your beneficiary may, in lieu of any benefit provided for in
(a) or (b) above, elect to receive a refund of your accumulated
contributions, with interest.
H. Termination of Employment and Vesting. If your employment is terminated,
either voluntarily or involuntarily, the following benefits are payable:
(1) If you have less than 5 years of credited service upon termination, you
shall be entitled to a refund of the money you have contributed, with
interest, or you may leave it deposited with the Fund.
(2) If you have attained your normal retirement date, you shall be fully
vested in your accrued retirement benefit regardless of your years of
credited service. If you are not otherwise fully vested, you shall have
a minimum vested interest in the amount of your accrued benefit
equal to the percentage thereof, as hereinafter indicated, applicable to
the number of your years of Credited Service:
Years of
Credited Service
Vested Interest
in Accrued Benefit
0 -4
0%
5
25%
6
40%
7
55%
8
70%
9
85%
10
100%
(3) You shall at all times and in all events have a fully vested interest in
your accumulated contributions. Your vested interest may not be
reduced as a result of any amendment to this section; however, any
increase in your vested interest will be determined by the vesting
schedule in effect at the time of your separation from service.
(4) If you have 5 or more years of credited service upon termination, you
shall be entitled to a monthly retirement benefit, payable to you
commencing at your otherwise normal or early retirement date,
0
provided you do not elect to withdraw your accumulated
contributions and provided you survive to your otherwise normal or
early retirement date. If you do not withdraw his accumulated
contributions and do not survive to your otherwise normal or early
retirement date, your designated beneficiary or your spouse at the
time of your death shall be entitled to a benefit as provided herein for
a deceased Member under Death Before Retirement.
The Internal Revenue Code provides that certain eligible lump sum
distributions from the pension system maybe directly rolled over into qualified individual retirement
accounts, annuities or certain other pension plans. A 20% withholding shall be required on taxable
portions of such lump sum distributions not directly transferred to a new custodian.
I. Reemployment After Retirement. If you retire under normal or early
retirement and wish to be reemployed by the city, you should be aware that your ability to continue
to receive your pension benefit upon reemployment may be restricted.
J. Additional Credited Service. In addition to credited service actually earned
in the employment of the City, you may also receive credited service as follows:
(1) Family and Medical Leave Act. If you are absent on unpaid leave
under the Family & Medical Leave Act, you may purchase lost
credited service by making an actuarially determined contribution to
the Plan, such that there is no cost to the Plan in allowing such
credited service, within strict time periods provided for in the plan
document.
(2) Military Service Prior To Employment. The years or fractional parts
of years that you serve or have served on active duty in the active
military service of the Armed Forces of the United States, the United
States Merchant Marine or the United States Coast Guard, voluntarily
or involuntarily, honorably or under honorable conditions, prior to
first and initial employment with the City shall be added to your years
of credited service provided that:
(a) You contribute to the Fund a sum equal to:
(i) the amount that you would have contributed to the
plan, based on your salary and the member
contribution rate in effect at the time that the credited
service is requested, had you been a member of the
system for the years or fractional parts of years for
which you are requesting credit, 1p_us
(ii) an additional amount to be determined by the Board's
actuary so that there is no cost to the plan in giving
you the additional years of credited service, plus
(iii) the amount charged by the actuary for determining the
amount you must contribute.
(b) Multiple requests to purchase credited service may be made
at any time prior to retirement.
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(c) Payment of the required amount shall be made within 6
months of your request for credit, but not later than your
retirement date, and shall be made in one lump sum payment
upon receipt of which credited service shall be given.
(d) The maximum credit under this subsection shall be 5 years.
(e) Credited service purchased pursuant to this subsection shall
not count toward vesting.
(3) 'Buy- Back" for Prior Government Service. The years or fractional
parts of years that you were previously a member but terminated
employment and are not otherwise entitled to credited service for
such previous period of employment as a general employee, or the
years or fractional parts of years that you serve or have served as an
employee for any government agency in the United States, including
but not limited to federal, state or local government service, and for
which you do not otherwise qualify for and receive credit under this
system, shall be added to your years of credited service provided that:
(a) You contribute to the Fund a sum equal to:
(i) the amount that you would have contributed to the
plan, based on your salary and the member
contribution rate in effect at the time that the credited
service is requested, had you been a member of the
system for the years or fractional parts of years for
which you are requesting credit, plus
(ii) amounts actuarially determined such that the crediting
of service does not result in any cost to the Fund, plus
(iii) payment of costs for all professional services rendered
to the Board in connection with the purchase of years
of credited service.
(b) Multiple requests to purchase credited service pursuant to this
subsection may be made at any time prior to retirement.
(c) Payment of the required amount shall be made within 6
months of your request for credit, but not later than your
retirement date, and shall be made in one lump sum payment
upon receipt of which credited service shall be given.
(d) There shall be no maximum purchase of credited service
pursuant to this subsection and credited service purchased
shall count for all purposes, including vesting, except that
credited service purchased for prior government service other
than with the City of Palm Beach Gardens shall not count
toward vesting.
(e) In no event may credited service be purchased pursuant to this
subsection for prior service with any other governmental
agency, if such prior service forms or will form the basis of a
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retirement benefit or pension from a different employer's
retirement system or plan.
(4) Rollovers or Transfers of Funds to Purchase Service. In the event you
are eligible to purchase additional credited service as provided above,
you may be eligible to rollover or transfer funds from another
retirement program in which you participate (traditional IRA,
deferred compensation plan maintained by a government employer
(457 plan), 401k plan, profit sharing plan, defined benefit plan,
money purchase plan, annuity plan or tax sheltered annuity) in order
to pay all or part of the cost of purchasing such additional credited
service.
K. Contributions and Funding. The City is paying the portion of the cost of the
pension plan over and above your contributions. You contribute 6% of your salary to the Plan. Your
contribution will be excluded from your gross income for withholding purposes so you will realize
income tax benefits. Your contributions, with interest, are guaranteed refundable in any event.
L. Minimum Benefits. In no event will the benefits paid from this Plan be any
less than your contributions, with interest.
M. Maximum Benefits. In no event will the annual benefits paid from this Plan
exceed $160,000 annually, subject to certain cost of living adjustments and actuarial reductions for
retirement prior to age 62 as set forth in Section 415 of the Internal Revenue Code.
If you began participation for the first time on and after January 1, 1980, you
cannot receive a benefit in excess of 100% of your average final compensation.
N. Forfeiture of Pension. If you are convicted of the certain crimes listed in the
Plan, or if your employment is terminated by reason of your admitted commission, aid or abetment
of these crimes, you shall forfeit all rights and benefits under the Plan, except for the return of your
contributions as of the date of your termination.
O. Claims Procedure Before the Board. You may request, in writing, that the
Board review any claim for benefits under the Plan. The Board will review the case and enter a
decision as it deems proper within not more than 180 days from the date of the receipt of such
written request, or in the case of a disability claim, from receipt of a medical release and completed
interrogatories. The time period may be extended if you agree to the extension.
The Board's decision on your claim will be contained in an order which will
be in writing and will include:
(1) The specific reasons for the Board's action;
(2) A description of any additional information that the Board feels is
necessary for you to perfect your claim;
(3) An explanation of the review procedure next open to you which
includes a formal evidentiary hearing.
4. NON - FORFEITURE OF PENSION BENEFITS
A. Liquidation of Pension Fund Assets. In the event of repeal, or if contributions
to the Fund are discontinued by the City, there will be a full vesting of benefits accrued to date of
repeal.
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B. Interest of Members in Pension Fund. At no time prior to the satisfaction of
all liabilities under the Plan shall any assets of the Plan be used for any purpose other than for the
General Employees' exclusive benefit. In any event, your contributions to the Plan are non -
forfeitable.
5. VESTING OF BENEFITS
Your retirement benefits are fully vested after 10 years of credited service.
6. APPLICABLE LAW
The Plan is governed by certain federal, state and local laws, including, but not
limited to the following:
Systems ".
A. Internal Revenue Code and amendments thereto.
B. Part VIII, Chapter 112, Florida Statutes, "Actuarial Soundness of Retirement
C. Ordinances of the City of Palm Beach Gardens.
D. Administrative rules and regulations adopted by the Board of Trustees.
7. PLAN YEAR AND PLAN RECORDS
The Plan year begins on October 1 of each year and ends on September 30 of the
following year. All records of the Plan are maintained on the basis of the Plan year.
City.
APPLICABLE PROVISIONS OF COLLECTIVE BARGAINING
AGREEMENTS
There is no collective bargaining agreement between the General Employees and the
9. FINANCIAL AND ACTUARIAL INFORMATION
A report ofpertinent financial and actuarial information on the solvency and actuarial
soundness of the Plan has been prepared by the Pension Plan's actuary, Foster & Foster, Inc., and is
attached as Exhibit "B ".
10. DIVORCE OR DISSOLUTION OF MARRIAGE
Federal and state law provides certain restrictions regarding the payment of your
pension benefits in the event of your divorce or dissolution of marriage. Immediately upon your
involvement in such a legal proceeding, you should provide a member of the Board with the name
and address of your attorney or your name and address if you have no attorney. The Board's attorney
will then provide you or your attorney with information concerning the legal restrictions regarding
your pension benefits.
IS YOUR BENEFICIARY FORM CURRENT? IN THE EVENT YOU DIE, YOUR
BENEFIT OR CONTRIBUTIONS WILL BE DISTRIBUTED TO THE PERSON OR
PERSONS DESIGNATED BY NAME ON THE BENEFICIARY FORM ON FILE WITH
THE PENSION PLAN. NO PROVISION IN YOUR LAST WILL AND TESTAMENT WILL
CHANGE THIS SELECTION. PLEASE BE SURE THAT YOUR BENEFICIARY FORM
DESIGNATES THE PERSON OR PERSONS YOU INTEND TO RECEIVE YOUR
BENEFITS AND THAT YOU REVIEW THIS CHOICE IN THE EVENT OF A MAJOR
LIFE CHANGE SUCH AS A DIVORCE OR THE DEATH OF YOUR BENEFICIARY.
In
EXHIBIT "A"
BOARD OF TRUSTEES
The names and addresses of the members of the Board of Trustees are:
Chairman: Stephen F. Parella
10500 North Military Trail
Palm Beach Gardens, Florida 33410
Secretary: Allan Owens
10500 North Military Trail
Palm Beach Gardens, Florida 33410
Member: Dindial Laljie
10500 North Military Trail
Palm Beach Gardens, Florida 33410
Member: Kenneth Steele
10500 North Military Trail
Palm Beach Gardens, Florida 33410
Member: Jami Smith
10500 North Military Trail
Palm Beach Gardens, Florida 33410
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