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06-14-2004r1 ° Clear�water ; � - "• . . _, .. ;=;:� =�.-, Call to Order Approvat of Minutes 05-17-2004 Pension Trustees Aqenda Date: 06/14/2004 1:00 PM Location: Council Chambers - City Hall Pension Trustee Items Robert Sebek, Pubiic Services Department; Geri Doherty, Development & Neighborhood Services Department; Rowland Herald. Fire Department: Paui McCann, Fire Department; and Craig McGarry, Police Department, be granted regular pensions under Section(s) 2.393 and 2.397 of the Employees' Pension Plan as approved by the Pension Advisory Committee. 2 Michael N. Anderson, Public Utilities Department, be allowed to vest I�is pension under Section(s) 2.397 and 2.398 of the Employees' Pension Plan as approved by the Pension Advisory Committee. Accept the employees listed below into membership in the City of Clearwater's Employees' Pension Plan. 4 Accept the Actuary's Report for the Employees' Pension Plan for the plan year beginning 1/1t2004. Approve the changes to the Investment policy for the Employee's Pension Plan. Other Business Adjourn - Cleanti-�ter Tr�ckiny �Juiliber: 605 Pension Trustee Cover Me m orandu m Subject / �ecommendation: �enSit�n � Actu��_I D�-�_te_ 06, 1�1/�004 Robert Sebek, Public Services Department; Geri Doherty, Development � Neic�hborhood Services Department; Rowland Herald, Fire Department; Paul hlcCann, Fire Department; and Craig McGarry, Police Department, be granted regular pensions under Section(s) z.393 and 2.397 of the Empioyees' Pension Plan as approved by the Pension Advisory Con�mittee. SummarY_ Robert N. Sebek, Construction Inspector II, Public Services Department, �vas employed by the City on September 5, 1973, and his pension service credit is effective on tf�at date. His pension wili l�e effective May 1, 2004. Based on an average salary of approxi►nately 545,913 per year over tl�e past five years, tfie formula for computing regular pensions, �nd htr. Sebek's selection of the 100% Joint � Survivor Annuity, this pension will approximate �31,721 annually. Geri Dol�erty, Inspection Specialist, Development & Neigl�borhood Services Department, was eiT�ployed by the City on December 12, 1973, and her pension service credit is effective on June 29, 1974. Her pension will be effective July 1, �004. Basecl on an average salary of approximately �4S,300 per year over the past five years, the formula for computing regular pensions, and N1s. Doherty's selection of the Joint & Survivor Annuity, tl�is pension will appr•oximate $40,2G4 annually. Rowland E. Heralcl, Fire Cf�ief, Fire Department, 4vas employed by tlie City on August G, 1979, and his pension service credit is effective on that ciate. His pe:�sion �vill be effective September 1, 2004. Based on an average salary of approxiir�tely 583,362 per year over tf��e past five years, the formul� for computing regular pensions, and �1r. Herald's selection of the 100% Joint �C Survivor Annuity, this pension will approximate $60,323 annually. Paul D. McCann, Firefight.er, Fire Department, 4vas employecl by tfie City on August 28, 1978, and I�is pension service creclit is effective on tl�at clate. His pension will be effective May 1, 2004. Based on an average salary of approximately $47,339 per year over tf�e past five years, the formula for computing regular pensions, and Mr. N1cCann's selection of the 75% Joint & Survivor Annuity, this pension will approximate $33,G30 annually. Oric inab.nq: Human Resources Rey.iew Approval C:vnrliP C;niirlp��ii OS-19-2004 07:54:20 Regular Pensions Page 2 June 14, 2004 Craig McGarry, Potice Officer, Potice Department, was employed by the City on September 29, 1990, and his pension service credit is effective on that date. His pension will be effective May 1, 2004. Based on an average salary of approximately S52,905 per year over the past five years, the formula for computing regular pensions, and Mr. McGarry's sefection of the Joint & Survivor Annuity, this pension will approximate $17,267 annually. These pensions were approved by the Pension Advisory Committee on May 13, 2004. Section 2.393 (p) provides for normal retirement eligibility when a participant has reached age 55 and completed twenty years of credited service, has completed thirty years of credited service, or has reached age 65 and completed ten years of credited service. Section 2.393 also (p) provides for normal retirement eligibility when a participant has completed twenty years of service in a hazardous duty position regardless of age or ten years of service in a hazardous duty position and at least age 55. It also provides for early retirement for hazardous duty employees who have at least ten years of service and are at least age 50 with a 3% per year reduction for each year under the age of 55. It further specifically defines service as a Fire Chief, Firefighter, and Police O�cer as meeting the hazardous duty criteria. Mr. Sebek qualifies under the age 55 and 20 years of service criteria. Ms. Doherty qualifies under the 30 years of service criteria. Mr. Herald and Mr. McCann qualify under the hazardous duty criteria. Mr. McGarry qualifies under the early retirement criteria. Clear�tirater Tr�-�ckinq Numl�zr_ 606 Pension Trustee Cover Memorandum Subject j Recommendation: htichael h�. Anderson, Section(s) 2,397 and Committee. SummarY: ��Sivt1 �, Actu��l D�te._ O6/14/?004 Public Utilities Departc��ent, be ailowed to vest his pensiori uncicr 2.398 of the Employees' Pension Plan as approvecl by the Pension Advisory Michael �l, Anderson, PubVic Utilities Technician II, Public Utilities Department, was employed by tlie City on February 7, 1994, and began participating in tl�e Pension Plan on that date. h1r. Anderson terminated from City employment on April Z3, 2004. The Employees' Pension Plan provides that should an employee cease to be an employee of the City of Clearwater after completing ten or more years of creditable service (pension participation), then such employee shall acquire a vested interest in the retir-ement benefits. Vested E�ension payments commence on the first of the month following the month in which the employee normally would fiave been eligible for retirement. Section 2.393 (p) provides for normal retirement eligibi{ity when a participant has reached age 55 �nci completed twenty years of credited service, f�as coilipleted 30 years of credited service, or has reached age G5 and completed ten years of u-edited service. Mr. Anderson would have completed 10 years of service and reaclied age 65 on April 29; 2011. His E�ension will be effective May 1, 2011. Tf�is pension w�s approvecl by the Pension Advisory Committee on May 13, 2004. Ori inatin _ Human Resources Review Approval C:vncli� C;�ucie�u OS-19-200� 07;55:43 : Clear�jrater Tri_cking_ Nurlil�er_ 607 ��5 � �� 3 Pension Trustee Cover Mem orandu m Actuai D��te:. 06/1-�/2004 Subj�ct /._Recommendation:. Accept ti�e employees listed belo�v into merl�bersi�iE� in thc City of Clearwater's Employees' Pension Plan. Summa� •. Pension Elig. Name, Job. Class, & Dept./Div. Hire Date Date Carl Freeman, Tradesworker/General Services 3/Z2/0�1 3/22/04 Laui�a Tearney, TV Specialist/Public Communications 3/22/04 3/22/04 Veronica Josef, Staff Assistant/Engineering 4/2/04 4/2/04 Denise Alvarado, Parks Service Technician I/Parks & Recreatior�/5/04 4/5/04 Josepf� Ryan, Parks Service Teclinician I/Parks & Recreation 4/5/04 4/S/04 Gordon Murphy, Custodial Worker/Library �/S/04 4/5/04 Shannon Lee, Recreation Leader/Parks & Reci�eation 9/3/03 4/3/04 � Jabri Jenkins, Public Services Technician I/Public Services 4/S/04 4/5/04 Marianne McBain, Accounting Technician/Fire 10/20/03 4/5/04 "' Ronald Tliiesen, Farks Service Technician I/Parks & Recreatioil 4/5/04 4/5/04 James DeLuca, Solid Waste Worker/Solid Waste 4/S/04 4/5/04 Rof�er-to Almonte, Custodial Worker/Marine & Aviation 4/12/04 4/12/04 Car-ol Greenfelci, Recreation Programmer/Parks & Recreation 4/19/04 4/19/04 Daniel Brown, Parks Service Technician I/Parks 4� Recreation 4/19/04 4/19/04 '� originally hired �s part-time on 9/8/03; transferred to permanent and pension eli�ible as of 4/2/04 "'� origin�lly hired as temporary on 10/ZO/03; transferreci to permanent and pension eligible as of 4/4/04 O�inatin�: Human Resources Reyiew_Approval C'vnrlip (;niiriP�ii 05-19-2004 07:56:52 : Clean�rater Tr�ckin�_ Number_ 613 ��v�5 i C� � �C Pension Trustee Cover Mem orandu m Actual Date, 06/14/2004 Subject / Recommencl�tion: Accept the Actuary's Report for the Employees' Pension Plan for the plan year beginning 1/1/2004, SummarYY The 1/1/2004 actuarial report for the Employees' Pension Plan indicates that a City contribution of �3,414,873, equivalent to 12% of covered payroll, is required for fiscal year 2004/2005. This is an increase from the 2003 valuation, which reqiiired a contribution of 57,153,190. Tfiis actuarially-required contribution per Florida Statutes exceeds the minimum City contribution per the ordinance governing the plan of 7°!0 of the compensation of all employees participating in tl�e plan, currently estimated at �4,893,523. Tl�e required City contribution was affected by the following factors: (1) Actuarial investment return of 7.45% versus an assumed rate of 7.5°!o for plan year 2003 (2002 actuarial investment return was (1.85)%); (2) Actual salary increases of 6.4% in comparison to an assumed rate of 6% for plan year 2003 (2002 actual salary increases were 5.8%); (3) Actual expei�ses for the plan year were $36,975 less tfi�n expecteci. The difference between the actuarially deten�ined contribution of $8,414,378 and the ordinance-required contribution of approximately �4,S93,523 can be funded f►rorli the existing credit balance, whicf� is currently 525,459,838. Tlie remai►�ing credit balance can continue to Ue used to pay actuarially-required City contributions above the ordinance-required 7% in future years until it is exhausted. Please see the attacfied WORD docurnent for additional infor•rnation on tfiis agenda item (exceeded text/character li�rits for tt�e Pension Agenda form). A copy of the draft Actuary's Report is available for review in the Official Records and Legislative Services Department. Origin�ting_ Finance Re_v_ie�y. Ap�royal M�-�rniP Simmnns Cvndie C;a,�de,u Bill Norne Tin�i Wil��n r�irrv Firiiinh��ck 05-20-2004 15:40:17 OG-07-2004 08:02:41 06-05-2004 13:06:05 05-20-2004 OG-02-200�1 t5:52:18 13:35:36 �\zen�la Itcin li�►• I-1-U-� i�ctuarv It�l,��rt,_(_Ir;ir��_nt�r I:i»��c�s' I'�nsic�ii I'I.�n, c��ntinu��l: The Plan uses a phase-in approach of prior asset gains and losses via a rolling five- year average used to "smooth" investmerit performance. The market value basis performance for the last five years (calendar 1999, 2000, 2001, Z002, and 2003, respectively) has been 18.61%, (3.43)%, (5.16)%, (8.83)% and 20.08%. As a result of the three years of poor investment market performance, partiaily negated by two years of very good performance, the actuarial value of the plan assets exceeds the market value by almost �36 million. Over the next four years this deficit will be included in the actuarial value and will gradually increase the funding requirements. Future actuarially-required contributions are expected to continue to exceed the ordinance-required 7% contributions, resulting in a significant reduction in the credit balance over the next few years. Due primarily to excellent investment performance over the past year (investment return of 20.08%), the funded status of the plan (ratio of assets at market value to the actuarial present value of accumulated plan benefits} has increased from 112% at January 1, 2003 to 122% at January 1, 2004. However the funded status is still substantially below the funded status in prior years (162% @ 1/1/00; 148% @ 1/1/01; and 137% @ 1/1/02). A copy of the draft Actuary's Report is available for review in the Official Records and Legislative Services. _ ._� �� : p�� s, an � The City of Clearwater Employees' Pension Plan Actuary's Report As of January 1, 2004 to determine annua) contribution for the Plan Year: 01/01/2004 —12i31/2004 to be paid in the Fiscal Year: 10/01/2004 - 09/30I2005 Prepared by PricewaterhouseCoopers, LLP April 2004 p�eic�r�ous�PE�s � SECI'lON 1 SECTION II SECTION lll. SECTION IV SECTION V SECTION VI S ECTION V l I CONTE\tTS SUMMARY FUNDING ASSETS ACCOUN�'II�G CENSUS DAT.A ASSUMP'I'10\S AND METHODS SUMMARY OF PLAN PROVISIONS �� Pa�es I-6 7- ll 12= IS lG- 17 IR-22 23 - 25 2G - 28 �IC�l1/ATERHOUS�C�PERS ,, ,•��I'll 13, ?f►U.} Pri��utc S Confidcntial Cit1' ofC.'le•wr��ater 100 S. ;�tvric flvenue Clcc�r�v�itcr, I�L 337�5-47�S I_adies and Gentlrmcn: Pricc�vatrrhuuseCoopers LlF' T�:u (�ununcii e S��u�iic. �u:tr 1 70U 20(11 \larkt�t tiUe��t Phi„ulelphia i';\ 1910t lel��phime l_'�i:'1 i;0 il1l�U fac.imik� 1?GI� t iU i i1�U 'I�his rcpurt presents thc results of the Januarv 1. ?UU�I acwarial valuation of the Cit,y of Clear��ater Employces' Pension f'lan. It has becn prepared orimaril�� to present to man��em�nt thc contribution requirements for 2004 and also the current statu� c�f funding of accumulc:ted plan benetits. Section IV of this r�Port includes a presentation of the informntion required by the Government .Accountin� Standards I3oard (GASE3) Statement \o. 25. Our calculations �vere based on (inancial data and enl�loyee data furnishcd b}� the Cit�� of Clearwater. "I'hc valuation was based upon ge►ierally accc�tcd actuarial methods, and ��e performed such tcsts as we considered necessary to assure the accuracy of the resulls. To our knowledge therc are ilU benefi�S or e�penses to he �rovided by the plan for which a liabilitv or current cost �vas not established. We certif,y that the amounts presented in the accornpanyin� report h,ive been appropriately determined according to the actuarial assumptions stated herein. Stateinent hy I?nrulle�l Actuary '�his actuarial valuation and/or cost determinatiun was prepared and comple;ted hy nie or under my direct supervision, and I acknow�ied�e respc,nsibility for the results. To the bcst of n�y kno�vledge, the results are complete and accurate, and in my opinion, the techniques and assutnptions used are reasonablc and mcet the requirements and intent of Part VII, Chapter 1 12, Florida Statutcs. '1'here is no benefit or expensc to these provided hy the plan or paid from the plan's asscls for which liabilities or current costs ha��e not been establishcd or other�vise taken into account irl the valuation. ��11 known evcnts or trends which may rcquire a m::terial increase in plan costs or required contribution rates have been taken into account in the valuation. Rcspectfiilly submittcd, � - -� --- �x�� Stephe � M. Mctz Associatc of the Society of Actuaries Enrollcd Actuary Nwnber 02-0�342 -� v......�_ -�- -. __,___. ___ _. Ucrck Ts Fellow o the Society ot'Actuaries Enrolled Actuary Numbcr 02-OGO&U CITY nF Ct.EARWATER F.��1P1.n1'Ei;S' PEN�ION P[,AN SEC'7'ION 1 — til'�1MAFtl' A. Actuan�'s ('nmments 'I�his rr.p�rt }�rc:sents the hi�hli�hts of the Januaiy l.'_O0� actuarial vai��t��, ��tna��d c�, �i��,,,►�,� tn� contribution requircments i��r the 20(14-?(1O5 liscal year. Since thc last actuc�rial valuation �f'the rlan �n January l, 2003, there have hecn n�i chan�es in the actuarial assumE,ti��ns, the �lan �irc,visions or the actuarial cost methcid. I�c�r a detailccl d�srri��ti�n ��t'the ��lan �ruvisi��ns, �lease see Sectiun VII and f��r a dct��z��i �i��r;��;�,,, ��r�� actuarial .jssumptiuns and methcids, plcasc: scc Scction VI �if this rcport. 'I'he mini►nunt required City C�ntrihuti��n purtivant to Florida St.itutcs f�,r thc �'OO�t plan ycar is �5,414,57$ (excludin5 the credit bzlance of� S2�,459,8 �S), compare�l to $7, I 53,190 fi�r 2003. Althoubh St.�te la�� allo��s thc City t�� usc cn� «�asc nziance to entirely fiind the actuarially required City c�►►itrihuti��n, tl�e Cit,y c�r�iinance e�tahlishin� the Plan reyuires elte City t� c:ontrihute c�t Ieast 7�;, oF payroll. "i'hc minimum rcquircd contrihution was at�fcctcd by thc followin� f'actors: • The investmei�t return on actu.�rial v,ilue of assets was 7.=3i'�o, c�mpared to an assumed rate of' %.$�io; • The actua) avera�e salar_y increase �vas fi.4°/u, compared to an ass�imed ratc of G.U�;%; • Actual expenses for the ycar �ve;re $3G,97S less than expected. The plan's credit balance is cun•cntly equal ro 525,459,8�S, providing a cushion a�;ainst lutw•c contributions. C)n the nebative sidc, huwevcr, the actuarial valuc of assets of the rlan exceeeis the �t�arkct value by approximatc:ly S3G millirn�. Over the ncxt f�ur years this deficit �vill be included in thc actuarial value and ��ill �radually incrcasc thc fimdinb requiremcnts. The fundcd status of the plzn incrcascd compared to the prior year, primarily due to �reatcr-than- e�Pectee) retuiT�s un !he markel value c�f astiet5. Thc; ratio of assets at market value Iu Ihe actu;irial prescnt valuc of accumulatcd Iilan bcnctits incrcascd fi•om I 12%� at January I, 2003 to 122% at January I, 2004. CI'Cl' OF CLEAR��'A'I'ER E?1TPL01'EES' PE�ISIUN PL:�N SECTION I — SUNIMARY (continued) f3. Contribution Reguiremcnts for the Plan Ycar �ndin� December 3 I, 200�# Minimum Required Emplc��er Contril�ution Florida Statutes 7°'u of Payrall S8.4I4,875* s�,s�3,s� � The employer contribution is assumed to be made unifarnily durin�; the first two qua��tcrs oF the fiscal year be�inning on October 1, 200�. Differences in the investment return due to contributions actually bcing made at any othcr time "�ill be reco�nized �s an actu�rial �:ain c�r lutis in thc; fc�llu��in� v�iluatie�n. The miitimum required contribution represents a funding Icvcl ��'I11CI1 �VIII SQ(IS}y lI1C I111I11111UI11 �UI1CI111�' re�uirements under Part VII, Chapter I 12, Flarida Statutes, f'lease refer to Sccticm VI and VII of the rcport for a summary of the actuarial assumptions and plan provisions, respectively, * Cxcludin� the credit balance (currently $25,�59,838) C CITY OF CLEARVVATER E11PL01'EES' PE�SION PLAN SEC'I'ION 1 — SUMn�If1RY (continued) C�tt�arative Summarv of Principal Valuation Results Actuarial Valuation I'repared as of: - �- - --- --�------ - ----_— (a) I'articipant Data Number Included Acti��e Members Retirees and Beneficiaries Tenninated \le�ted Participants Annual Payroll of Actives Annualized Benefits Rctirccs and Iicncficiarics Temtinated Vested Participants (b) Actuarial Reser��es Market Value Actuarial Value (c) Liabilitics Pres�nt Value of Expected Benefits: Active Participants: Jan.l, 200-1 I ,633 Cr'36 �1 S 569,9Q7,=373 S I �1,772,610 $961,774 ��71, I 10.205 S507,256,663 Jan.1.2003 I,(,19 i90 53 Sfi�,150,R20 S I3,7S I,479 �9I2,349 S397,951,216 5477,54I,459 .lan, l , 2UO2 I,S9? 566 47 S�SR,929,582 $ I I ,R I 3,227 �SR?.207 g�a2,0=12,923 $491,859,015 Retirement I3er�efits $327,392,044 S321,G0?,739 $30(,539,097 Tennination Benefits S+29,943,370 $29,19fi,714 $2G,CCS,457 Disability Bcnefits $17,019,2G6 S I 5,744, I 54 $ I 5,394,Q22 Deatl� f3enefits $3,970,903 S3,G39,7R7 $3,5�13,OSR Refund of F.mployee Contributions $2,556,148 $2,212,h5C, $2,064,71R Total Active S3SO,R81,731 5372,396,0_50 $354,209,752 Tern�inated Vested Partici�ants b9,890,62i �9,4� I,373 $8,264,408 Retirec.� and Benef ciaries � I 97, I 99,51 S S I G5,9S4, I I G , I 50 28�) 355 Total Present Valuc of Expccted Benefits �587,971,R74 ��47,gfi I,539 t�5 I 2,763,515 Liabilitics l�ue and Unpaid $524,524 $3Rn,6R6 $456,150 3 CI7'Y OF CLEAR�V:�TER EI11Pl.0YEES' PENSION PL:�N SECTION I — Sl'�1�7AR1' (continued) C. Com�arati��c S�mmaiti� of Princi�al Valuation Resuits (c�ntinued) ,-\ctuarial V��luati�n 1're��arcd asof: .lan.l, �f)�l�} Jan.l, 2003 - -- -- .. . __. .._...- (c) I.iabilitics (continued) . . Unfundcd Actuarial Accrued Liability I�rozen Initial Liab. (}�IL) - i/li1�79 Supplcmc:ntal F1L - I/I!1979 Supplcmcntal f�ll. - 1/I/I�)41 Suppicmental FII. - 1/I!19S2 tiuppletncntal FI[_ - 1/I/1987 Supplcmcntal FIL - I/I!19S8 Su��Irmentall�Il. - I/Il19S9 /\ssct Valuation MGhod - 1/I!1994 Chan�e 1'lan ilmcndment - 1/I/III6 Plan An�cndment - I/1/2000 Assumption Ch, n�cs - I/i/20U2 '1'otal (d) Funding r�ccount Credit l3alancc Prior 1'ear .4mount Prior Year: Kequircd t:mploycr Contributions Em��luyc;r Cuntriliutions lvtadc lntcrest on Credit Ralancc Total (e) Actuarial Present Value of Accrued Benetits Chan�±cs During Prior 1'car: Valuc from Prior Ycar ��►,�r�s i��sa Interest, A�ing and Benetits Accrued Change in Assumntions Change in Plan ['rovisions Nct Chanb� SO 79i,j 1 S I>5,124 (2,064,101) 1,026.�132 1.1 S:i.23E I.f�03.210 3,1S7.fil4 I �i,4S9,39�i 50,537,01 f (3(1,2�7.�350) g3J,6�:�,9G� $25,S32,535 (7, I i3, I 90) 4,543,053 I .9 ; 7.440 $25,qS9,g3S $385,29g, I 67 $354,(��3,3R7 �(14,325,fi91) 45,020,471 0 U $3U,694,780 SU q2�.y�0 174. S G3 (3,2�17.�I0(,1 1,072,324 t ,230, ;�3 I ,C�60,3 I 0 3,256,OS 7 I 3,G99,G?-1 51,171,(�9 (30,�43, I 7S ) �fi4U,393.03h $21,3G0,�25 (1,766,0��) �,63G,029 I,C�02,039 $25.83?.,;35 $354,603,357 �322.794,259 g( I 3,003. I fi 1) 44,81 ?,289 0 0 $3 I ,809. I 24 Jan. I , 2Q02 C25C,509 i ,oa i ,a3� I 90,434 (2.� I S,fiS7) I.I I5,015 I ,274, I fi3 I .713,42G 3,319,753 I 3,923,090 5 I .7C2,U05 �30.R46,502) S41,332,472 5 I i, I 5�,006 0 5,143,599 I .0(0.920 C21,3h0,525 S322,79�1,259 S317,((3,113 S( I I,4 I C,392) 39,57 I ,449 ('_2,G23,91 I ) 0 �5,131.14G Value at Current 1'ear $3g5,298,IG7 $354,6U3,3S7 S3?2,7�)4,259 � C' CIT1' OF CLE:�R«'ATEI2 E��IPLOYEES' PENSION PI,AN SECTIOi�' I — SU111�1.�ftY (�ontinued) C'c�m�arative Summarv �f Princinal Valuation Results (continued) Actuaria) Valu�tion Prcpareci as of: Jan.l, 2004 Jan.l,'003 ----_—_�_�.----_--- .---__________�__ �_.__. _. ---_-- -. _ _.__ .— (f� Pcnsion Cast fc,r l'ear - - -- -- - - - \om�al Cost Amoni�,�tion c,f Unfunded Frozcn Initial Liabilitv Administr.�live ExEx:nsc.� Shartfall f'or Nepenses in f'rior l'ear Interest AdjustTnent Total Requircd Contribution As a Nercentage of Payroll Anticipated L•rn�loyee Contri�iutions As a !'ercentaze of PayT011 Anticipated State Contributions As a Percenta�e of Payroll City Requircd Contribution As a Percer�tage of 1'ayroll (g) Prior Ycar Actual Contributions made by Statc Emplo��ees City S7.F�a3,G I 8 ?.�199,97 i �,001,370 ( 3C,.97S ) 711,459 S I �,019,476 20.05% �i,592,59S 5.00% $12,000 0.0?'% S�,414,R7S I 2.04"/� S I 2,UU0 �,353,573 �,R43,053 S6.-ib9; �7fi ;,-199,977 ?,Oj�,3�15 ('-.�',�?�) 602.07i $12.�77,25G I 9.00"�� 5�.3! �.066 S.U"/„ S I 2,OU0 U.02';'0 �7, I S3, I 90 I U.9S'%, � 1 ?,000 5, I I S,S50 4.636.029 .lan.l . 2()b2 �iuo,t�o 3,7jC,q$6 2,270,�)(i�i 239,57R 123,21 ± g6,49?,a?s I I .02%� $4,714.3G7 SAO% 512,000 0.02"/� $I,7fi6,0.5F� 3.00'% S 12,279 4,905,521 5,1-i3,S99 Total S 10,20g,626 $9,7GF,879 $ I 0,061,399 (h) Gains and Losses N/A N�A N/A (i) Otl�er Present Values E'resent Valuc of Future Salaries A.t attained abe $592,SR8,035 $SC l,764,999 SSS2,303, I I 1 Present Value of Future Emplovee Cont�ibutions At attained age �-#7,�07,043 5�14.941,200 q44,1 Q4,?49 5 CI'i'1' nF CI.EAR�1'A�'ER El��1PL01'EES' PE\�ION PL:�V tiECTf01 1 - Sl'1�111:\Rl' (cc�ntinucci) C. Comp:�rativc Stimmarv nf Princi�al Valu;itinn 1Zcsultti (cc►n�inuc'ci) :�ctuarial ��uluati�n t'rrE�ar�d as of: Jan.l. '_'O04 .lan. I, 20(l3 -- -. _.... _.._ - - . . . (i) C�thcr }'rescnt Valucs �continucd) - I'res�nt Valuc ��f ruture Nc�r7n.il C�sts (j) Cc�mPari��n of nccual and ns�umcd Salaty lncrcases l'ear f?ncted 1�ctu,�l Ass��ti�e�l __ .---•-.--• --.--.--_.__ _._.._..____�._ _..... _ }2I31/1986 7.-�0O10 1?/31/l�)S7 5.�)U°� 1?/3l/1935 �I.10",/0 l�/31/1��59 K.70°a I 2/ i 1/ 1990 5.30�:0 I 2/31 / I 99 I G. I 0'%, 12/31/19�)2 G.SU';'o 12J31 / 19��3 1.2U° o 1?/3I/I99� 4.�30°ii 12/31/199� G.�U% I 2/3 I/ I 9)G 6.70% I2/3I/I997 S.GO°,'o 12/311199ti 7.�U`:o 12! i 1/ I 9�)9 4.2U% 12t3 ! /2(►UO S. SO°!o 12t3 I /1.OU I 5.9(1`;% 12/31/20Q? S.SO"o I 2/3 I /2uc)3 6.aU�,'o 5.00�% �- S.QO% 5.00"/0 5.00'% S.UU°,� 5.00",% 5.00�% 5.00� o 5.00°, <, 5.00%� 5.00°,/0 5.00% 5.00'% 5.00% 5.00% 5.00% G.00"/„ G.UU°% Jaii.l, 200? S�G6.�IC,Ofi$ �jS,7G(1.�7�) C(4.SG7,�3�37) In�'esttnent Retui7� Actua{ � Assumrd �larket Valuc :1ctu;irial ��nluc: . . . . .-13.2 j � �" . ._.. _. I O.7S°,'o 9.12q% 20.S4°/a G.2 l % 28.52°�0 6.-�9`;'0 9.29t% Q. R 9°,'0 23. �(�o 14.50% I 7.�39% 16.74��0 1 S.61% (3.�13%) (S. I C%) (B.S�"/�) 2U.US",'o b �l//� V//� \(A \/A yin N/A NiA 7.42% (i.2S°/� �).l4% I l .��1%, � �.%=�°/n 1�.2S"/� 17.9G'% I 2.42°/� 7.�10°io ( l .SS°�t�l 7.45`% 7.00°,�0 7.00% 7.00% 7.0�°,/0 �,00�% 7.UU"/o 7.U0°,'o 7.00° � 7.00° n 7.00°ro 7.00% 7.00% 7.00°,�u 7.OU°,/o 7.00°,/a 7.0O% 7.SU°/, 7.50" o A. ? 3 � C11'Y OF CLEARWA7'LI2 H:n�]PLO�'EES' PENSION 1'Lf1N SEC1'ION 11— FUNDI\'G Devel�pment c�f the linfunded Frazen �ctuariai �lccrued I_iahilitv Llnfunded Fro•r_en Actuarial ,Accruccl Liabilit�- as of January 1, 2003 Interest to Uecember 31, 2003 [:mpinycr Norma) Cost'' for Ycar with intcrest to Dcccmbcr 31, 2UU; Rcquircd l�mploycr Contributions for Period Unfun�ied �rozen Actuarial Accrued Liability as of'Deccmber 31, 2003 �` Includes Lxpenses and Adjustments � Sa0,392,036 S3.029.•10 i 543,421,439 S3.390,71 � S7.153,190 S39,G53,964 CI'['l' OF CLEAR�V:�TrR E�IPLO1'EES' PENSIOn' PL:\N tiEC7'IUN 11 — FUNUING (c.cmtinucd I E3. Uc��clo�mcnt of' Normal ('c�st Th� �4�r�nal ('��tit is the n��rti�►n c�f the c��st ��f �,rr�jecte;cl hcr�clils ��hi�h is .illc��.at�d to the ctn'rent 1'c:.lr hy the actual•ial cost rneth�,d. "1'he Nc�nn:il C�st ti�r thr i�lan }'f':11'S f)Crilliltll� .l:►nu��r�� I, ?O0-1. .lanuaiy I.'_O(13. anci January 1. �OU2 arc determinerl as fc�U��vs: '1'ot:+l Projcctc�i Actuarial Li:�bility: .lan. !, 2U0-3 J,�n. 1.'_UOi Jan. l. 2UO2 "1'he Eiresent value .is nf the he�innin� c�f the ��I:�n year uf all henc;fits expccted to be paid in the futurc to currcnt E�ariicipants. • ,Active partici�ants • Tc��n�inatcd vcstecl �arlicipants • Rctircd and disahlcd par-ticipants • Total Participants CrcJit Balunce: Em��lc�yer contributions f'runi pric>r ycars reservcd t��r tuturc usc. Fund: Thc actuarial value oi' ft�nd asscts as of the beginning ofthe plan year. Exces� of Total Projected Actiiarial Li�bility Over the f und Minus the Credit Balance: Thc portian of thc projcctcd total actuarial liability to be funded in the fi�ture. This po►�tion is divided into t�vo components: a. Unfundeci frozen achiarial accrucd liability b. Present valuc of future service liability (.fi�nded aver the expccted f'uture se»�ice years of curYent participants) S3S0.8SI.731 $i72,39G,050 b354.209,752 9.S��0,62� 9,45 I ,37 ; F.2G�.4U8 197.199,51 S 1Gj,9S�4.1 1G 150?S9.355 �iS7.97 I,S7� �+5=47,8G I,; ;9 �5 I 2.763,5 l � �25.-3�9,�35 �25,532,535 421.360,525 �507.25G,GG3 �477,5�1,-3�9 $491,559,01� $106,175,049 �39,G58.9G4 $GG,S 1G,OS5 $IG, I j2,ti I S ��30,39?,03G �Sa,7�i0,�79 b42.2fi5.025 S�� 1.332.47Z ��32,553 Nresent Valucof NutureCavered Pavroll ��9?,5:{8,035 ,SS(,1,7C�,999 $552.303,1 I I � Ei CIT1' OF CLEARWATER E��IPLOY'EES' PENSION PLAN SECTIO\' II — FUNDINC: (continurd) l�e��clop►ncnt of Nonnal Cost (continued) Norm�l Cost Rate: The ratio of the present value of future service liability to the present value of fiiture covcred payroll. Annual Covered Payroll: The reported �ayroll for plan particiPants who have not attained the assumed retirement age. .lan. 1, 200� Jan. I, 2003 Jan. I, 2002 11.2Z% 9.93% U.17% �G9,907,473 $f �, I 50,820 $53,929,SS2 Narmai Cost: The annual cost as of the Ueginning of the plan year to fund.thc future scrvicc liability over the expecled future years of se��-ice of the cun•ent pa��ticipants. �7,S43,C 1 S �6,4fi9,47G $100, I 80 G� Cl't'1' OF CLEAR��`:1TEI2 E�iPL01'EES' PENSION PL:�N fiEC"I'ION I I — FUNDING (continued) C. Schedule �f Amortization Pavments Initial .lan. l. ?0�4 Annual Uatc lnitiai ��moi�tization Unamortized Amortization Established Reason .Arnount Pe�7od (1'ears) Am�unt Payment - - ._ ._...... .. _ -- - - - _ _ . _ . . . .. . _.. _. .. . 1 i 1/ 1979 * Frozen Initial Liability(FIL) S9.%2G,�19 25 �0 $0 I / I / 1979 Supplemental t� I L 2. %07,9fi2 �Q 795,515 I R2,90fi l l l/ l 931 Supplemental FIL �90,�321 30 1 SS, I 24 27,77 I I i 1/ I 982 Supplemental F1L (4,�?l;9SS) 30 (2,06=�,101) (327,812) I/1/1987 Supplemental FIL 1,� 19,142 30 1,026.432 l 17,504 ! / 1 / 198S Supplemental FIL I,673,738 30 1, I 53.236 129,658 I/1/19R9 Supplemcntal F1L 2,177,772 3U I,G03,210 IG8,952 l/ l/ 199� Asset V aluation Ivtethod Cl�anbe 3,724,29G 30 3, I S7,G 14 290,565 U I/ 1996 Plan Amendment I 5.063,542 30 I 3,459,398 I, I 79,25� 111 i2000 Plan Amcndmcnt 5?,92 l,724 30 50,537,016 4, I C0,47 I 1!1l20U2 . Assumption Changes (30.S46,SU2) 30 (30,227,4S01 �2,-�29,592, Total Chargcs $71,950.�45 �6,257,35 I Total Crcdits �32,291,58 I ) (2,757,404) Total ��,8.9b4 � q9 � * E�tablished .luly I, 1963 and bcing amortircd ovc;r a Corty ycar �eriod hc�innin� e�n lhat el��ic. 10 (;l'I'Y OF CLEARVI'�1"fEft E19PLOl"F.ES' PE\SION PLaN tiECTION 11 — T'UtiDItiC (conlinucd) ll. t�ntici��tcd A►��rtiiatic�n Scheciiile s}1l1\1'Il �)C�(��' IS I}1C QIl[IC1(IAICCI 111101il7.1I1011 Sl'I1�l1UIC i(11' fll� UI1�UIIC�CC{ Ff0"l.Cll ACIl13i'lAI .ACCfIICCI LIAEil�lly takin� into accc,unt thc: plan's funding policy. tlnticiratcd .\m�►�tization Schcdulc Unf'unded t'rozen Datc r�ctuarial Accrucd l.iability _ _ _ . . - - -� ---- ---�-- � -• . .. . . ... .... . 2004 ---- - - - - $39,G�S.9G4 2005 $38,S70,91 I 200G $3$,023,7�4 2007 $37.1 13.OGU 2032 �0 On .luly I, 19G3, thc Unfunded Frozen Actuarial Accn�ed Liability was establisheci equal to thc differ�nce betwcen the retirement plan's accrued liability, dete��niined under the Ent►-y :�gc nornial f=undin�; Methoci and the actuarial valuc of plan assets. According t�� the plan's (iindin� policy, the initial liability is to he amc�rtizeci by a scrics of icvel payments over a forty-year E�eri�d. tiuhsequcnt chan�e� in the icvcl of thc Frc�zcn Actuarial Accrucd Liability due to plan amendments or chan�es in actuarial assumptions are to be amurti•r_ed on a strai�Ili-III1C I�AS1S OYCr a period of thirty years. t3�� cot�tributin�� mc�re tha�� the siated fiindin�; policy, the amortization of the Unfunded Fro-r.en Actuarial .�cc►Z�ed Liahilitv can he accelerateci. m CI'1'1' OF CLEARVVATER E�1PL.01'EES' PENSION PLAN SEC"I'ION I II — .ASSETS C011lrarative Balance Sheet As ol' Dccentber 31. 2003 _ASSF_TS ____�__.� ----.----- Cash Moncy Market Accounts lntemationzl Equity Securities Uomestic Corporate Equity Securities Domcslic I3�nds Total InvesUnents iteceivnbleti: li�terest — !'ooled Cash Commission Reca��wre Cmploycr Contributions 'I�atal Assets L[AE3ILITICS AND ACTUARIAL RESERVES Liabilities: Accounts Payahle '1'otal Liabilities Actuarial Reserves: Accumulated Member Contributiotis E3alancc of Actuarial Reserves Market �'alue Dec. 31, 2003 _ �U 3,5��,�32 41,43S.71 b 229,024.857 I R9,S�5,7�7 �a�s,SC�,764 2S,049 109.248 �,G32,GG8 $471,G34,729 5524,524 5�24,524 43,846,975 427,2G3,230 Market �%alue Dc:c, 3 I , 2002 SO I G,6GS,205 31,637,3G0 171,233,IQ3 17G.253,9>2 $395,792,620 2�1.921 0 2,514,361 S:i9R,33 I ,902 $38U,GS6 �;:iR0,636 42,237,450 355,713,766 Total Actuari�l Resen�es �47 I, I I 0,205 $397,95 l,216 TO'I'f1L LIAT31L1TIES ANU ACTIJARIAL Rf;SL'RVES S471.G��Z2Q $32�.��.1..9� I2 CITI' OF CL,EAR�VA7'ER E11P1.O1'EES' PE\'S10N PLAN SEC7'101 ll I – :1SSE7'S (continucd) Schedule of Chan�es in /lctuarial Resen�es For the Plan Year Ended Dccember 31, 2003 _.._.._._.. _. .... - ------- -- - ----- __ _.._. _- — ._........._ ....__._ . ... .. Re��enucs: .._... Employec Contributions $5,3�3,�73 Employer Contributions 4,S43,053 State Contributions 1?,OC)0 Earnings on Invcstrncnts: Interest Dividends Reali-r_ed Net Gains on Securities Transactions Unrealiz�d .4Ppr�ciatic►n (De}�rec:iaticm) on [nvcstmcnts Expenscs: Benefits Paid Refunds aCContributions Pmfessional Fees Other Expenses �;et Change in r\ctuarial Reserves Actuari��l Rescrves at Beginning of Plan �"ear �7,U23. I U2 1,87S,72S 30,927,732 $(13,924,071) (40 I ,620) (2,U01,370) (0) M�irkct Value $ I U,20S,G?_G $39,829,5�9 $39,�47,SC5 $( I 6.327.UG I ) $73, I SR,9S9 �397,951,2 I C Actuarial Rcscrves at End of Plan Ycar $47 l, I I 0,205 13 C17'1' OH CLEAlt1'1'11'1'ER E�11'LOY'1;ES' YENSIUN PLAN SEC'I'lON III — AS�E'tS (cc►ntinu�d) Develcirmcnt uf .Actuarial Value of Assets l. Actuarial Rcscrves at Bc�;inning oC I'lan 1'cnr �397,9� 1,216 2. 'fime Wci�htccl I:rnplc�ycc Ccmtrihutions (.5 a $5,353,i73) 3 4. 5 � 7. 'I'ime Wcighlcd Employcr Contributions �.S X . I ZJ C �+=�.�'�i,n53� Time Wcibhted State Contributions (.S x � I 2,000) 'fime Weigfltcd Benefit I'ayments ( (1 1 /24) x S 14,325,G91) Time Wei�hted Expenses (.5 x $2,001,370) Timc Wcibhted Value of Actuarial Reseives (Items 1 +2+3-+-4-5-6) 8. Expected Astiet Return (ltcm 7 x 7.�U%) �,676.7R7 ;02.G91 C,,00� G,5G5,942 1.OQQ,h85 $393,370,OG7 $29,502,755 9. Actual Asset Retu►�n 79,277,424 10. Difference of Expected Ctcturn over Actu.�l Return . $(49,774,GG9) 1 1. Actuarial Rescives at End of Plan Year 471, I 10,205 12. Fxpccted Actuarial Rcserves at End of Plan Year `] $421,335,53G (Items 10 -+- I 1) l3. Uifference Between Actual and Expected nsset Return $49,774,GG9 (ltems 1 1 - 12) 14 CI'tY OF CLEaR��ATER Eti•iPLOYEES' PENSION PLAN SEC'I'10\ 111 — ASSETS (continued) De��elo�ment of Actuarial �'alue of �ssets (continued) Date Initial Annual Amount Amount Exc;ludcd Amount Exclucfcd Established Amount _Reco�nized ___ ___ Pri�r �ialuation Cuirent Valuation -------------...____..__..__._�___._._ _.. _. . _ _ . O1/0 I /2000 $45,32�,707 $9,GG5,141 $(9.665,14 I ) �0 O1/01/2001 S(50,971,92=�) S(10,194,38�) �?0,38S,770 $10,194,355 01/O 1/2002 $(56,938,003) S(1 1,387,60 O $��, I 62,802 �22,775,201 O1/01/2003 $(71,6G1,013) S(14,332,203) ��i,32S,81� $4?,9)G,G07 01/UI/2004 $49,774,669 �9,95a,93-3 $0 (39,819,735) Total �3G,14G,�58 Actuarial Rcscrvcs �471, I 10,205 Actuarial Value of Assets, f3�:fore Apply�ing Limits $.507,25Ca,C63 80°�0 of Actuarial Rcscrvcs $376,588, I G4 I 20% of Actuarial Reserves �SC5,332,24G Actuarial Value of Asscts, Aftcr Applying Limits $SQ7,256,6G3 li CITI' OF CLEAR��'t1TER E�IPLOYEES' PENStON PLAN SECTION 1�' — ACCOUNTING A. Plan Description and Contribution [nforn�ation Membersltip of thc plan consitited �f thc follo�vinb at ,ianuary 1, 2003, the date of thc latest actuarial valuation: Retirees and beneficiaries recciving benefits 590 Tern�inated plan me►nbers cntitled to but not yet i•eceiving bencfits Active plan members Total 53 1,619 �_.�� Number of participating employers I 1 fi � CI'I'1' UF CLEAR��':1'I'Elt N:�1Pl,O1'N:N;ti' PI?1�101 PLAti SEC�'ION I�' — :1('C'Oliti'1'IN(: (c��nt�iiurcl) Reqtiired Su��lcrnentai�� Inforrn�itic�n �chr�iul,ii�,� ul' I�ini�linb_I'r�►�;rr�, Actuarial Valuation Datc QI/01/1991 U�%��i�? Ol/Ol/1993 01/01/1994 O VO V 199 � O 1/0 I/ I 996 Ol/Ol/1997 01/Ol/1993 O1/01/1999 O 1 /0 l /2000 Actuarial Valuc of Assets � ��!_.._ _�_ $141,SG5,764 � � ��,%��6,�� $195,315,690 �2 I 3.0 l �3,�174 $2?5,4S2,72f $2�14,74=1.�88 $272,34G,200 �305,>96,133 $354,085,751 $414,826,422 Actuarial Accn�e�i Liability (:�:�L) Fmzen Enuy A:;c (b) ---- _�_._..__._.. . S 1 i?. I I S.(17> � � �%-�.11��, � ��) �207,fi;9,7OI �'25.�-39.3�G $237.-1?�,7�)G $271.1?-�,351 $297,S92,502 $333.?SU,4��? $377,7S3,73I $490.-32fi,94f1 t �ntiuul��l :�Al. I l IAAl.1 (h-�i1 � I (1,2,i2,3 I I ��,�U t,;►57 ��1.�''�J.(► I I $I, Si,i h�' S I 1,`��{(,,(171) M�(�,17�),;;�)3 52$,S-I(►.i()2 �;�a,r,s.�,zs�, $? z,G��),�atiO 575.h(1().5 I �i I�un�lr�l Il;iliu (;i;hl ,j�o �� 5°�� '!(�° o ,�� 15° n ')(1"�� I ° �� .��„ ��J'! �� !i.ri" o ('��r�cl I'a��rull 1�1 �;�•j,1Z?,7S i M {(�,h?(,, i Z? ti t;�,7 � I ,IIZ�) ti1ti,7I11,�)7a �•1I,.;7I.ti? M•1•I,?.O�,�)l�a �.�.1��5S,3a� ��17,25 I. I �)R '��1,(�(�b,5?3 ti51),�)t7,�11)1 Uf�,AL 1S � Percentage of C��'ered Payr��ll ( (h-a) i c) _ -- f'��io.. ? 7",-4� ?-�"/o 32%� � C�o,o i)�°�n J 7°./0 52°,�� £% 1=�5% 01/Ol/2001 $461.724.610 $535.G72?OS �73,�)�17,5�)�i �{(,°�� ,S.I,t;t,�l,�� l:�j°,�� 01/Ol/2002 $491,359,015 $533,I91,�S7 �+41,33Z,a72 ')�o,� �,,5�,�),�)�5�, 70'% Ol/01/2003 �477,541,459 $517,9; �.495 ��3(1,;��2.U3G ��Z°„ tic�5,l 511,�1.(► fi2_"„ 01/O1/2004 $507,2�fi,66i $546,915,627 $i�),6SR.9li� �)3'!�� ti1��1,�)U7,•171 >7'%� The information presented in thc reyuired supplementary sche�lules was ciricrn�i�ircl us �r,irt ��I'thc actuarial valuations at the dates indicatcd. ��dditional iniorn�ation as c�f thc latrst ;ic�u;irial ��nluillll111 (l1�Il1Wti; VFi�UaUOIt (�Ilt� Actuarial cost method Amortization mcthod Rcmaining amortization periods Asset valuation mcthod Actuarial assumptions: Investmcnt rate of rctu��n Projected s�ilary increases Include mcrit increases Cost-of-livin� adjustments n � /n � ��n� Fmzcn Entry A�;c Lcvc) Dollar Glosc�i Various Five Year Avera�c * 7.J% 6.0% 3.0% 3.0°io * 1?ffrctive Janua�y I, 1994, the asset t�aluatiun method ��as changed Gtm� m��l:rt v;tluc 1�� ;i �ivc ��ar avcra�e mcthod. �, CI'I'1' OF CLEARVI':1"I'Elt Is�9PL01'EES' !'ENSIUh' PL:�N �EC'1•�o� v - cr.NSt1S DA'I'A A. Rcconciliation of Emplovee Data A sununary ofchan�es in the employee data t��m .lanuary l, ?003 thmu�h January 1, 2004 follo�vs. Employees wh� do not participate in the plflll ;lfc` Il(ll IIICIUCIc:(�. Participants included in the January 1, 2003 valuation Nom�ested tet�ninations Data revisions Vcstcd tci�nlinations Deaths without elir�ihle bcneficia�y Retirements Cash sctticmcnts Rehires New participants fZcIICCi� Tcr►ninatccl ('ar�tici��ants Activc Veslcd ��nd Et��plovccs rml�lov�cs Rcnc(iciarir. Total 1,619 53 �91 ?.�G3 _...---_.. _---. . ._ ... . _ ...._ .. . . _ _. .. ... . _ _ _._.. __...._ - - �13� _ ._.--- - �----- �13) 5 5 (6) G 0 (�) (9) (13) (50) (f) 5( 0 (7�) (51 (�S) 2� 25 132 � 3 135 Participants included in tlie January 1,2004valuation _ 1,633 _---__._._.._._`�S__.___.,_---_-• __.C4G 2.327 Active Participants: FuUy vcsted 750 Non-vested 883 'I'otal 1,633 IR CITY OF CLEAR�i'A"I'Elt H;1�1PL01'EES' PEti'SION Pl,:�N SF.C'I'lON V — CENSU� DATA (continucd) B. A�e — Service [�i�trihuticm c�f AciiVe P;1fiiCijlants �is of Januarv I 2��)=� Years of Service Attaincd 0— d 5— 9 t 0— 14 I S— 19 20 — 24 25 -� Total A��c No. No. No. No. 1�'0. No. No. Under 2� 58 0 0 0 0 0 SS 2S tu 29 I 12 l 7 0 0 0 0 129 �0 to 34 104 79 17 0 0 0 200 35 to 39 93 81 4R 21 0 0 243 �0 to 44 75 SS 47 79 ?5 0 2�4 4.5 to 49 64 5� 43 G7 S� 20 303 50 to 54 44 33 �3 41 41 3S 230 SSto �9 13 23 20 30 12 19 117 60 to 64 I 3 9 1 I 7 5 � 49 GS -+- 3 5 10 0 ? 0 20 Total 579 3G0 229 245 139 81 1,633 Active Pai�ticipant Statistics Average Age �3293 years Average Seiti�ice 10.14 ycars 19 CITY OF CLEAR«'ATCR E�IPLOYEES' PENSIUN NLAN SEC'I'ION V — CENSUS [)ATA (continued) C. �c � Scn�ice Distribution of Acti��e Hazard�us Dutv Partici�ants a� �,f.i�n�,a►y i, 2004 Ycars of Servicc Attaincd 0— 4 5— 9 1 U— l4 15 — l9 20 — 24 25 + Z'otal A�c __ __ No. No. No. No. No. _ No. No. Llndcr 2S o 0 0 0 0 0 6 ZS to 2�) 38 9 0 0 O 0 47 30 to 34 4S 43 9 0 0 0 100 35 to 39 17 33 3l I! 0 0 92 40 to 4-� i 5 22 34 14 0 80 45 ta 49 1 2 5 I I 17 6 42 SQ to 54 ! 0 5 4 10 1 1 3! 55 to 59 0 0 1 0 3 G 10 GO to G4 0 0 0 0 0 I 1 G5+ 0 0 0 0 0 0 0 Total 116 92 73 60 44 24 409 Active Participant Statistics Average A6c 38.74 years Averagc Servicc l 1.34 ycars 20 ❑� CITY OF CLEARI�':�TER [:1�IPLOYTCS' PI?NSION PI.AN sF cT�o� v- �ENSUS n.�•ra (continucd) A�c — Sen�icc Distribution of Active Non-f-lazardcius Duty Particil�ants as of J.inuarv I, 2004 Ycars of Scrvice Attaincd 0— 4 5— 9 .qQe 1�'0. No. io— ia �s— i� ?o--?a ?s-F- �r�t�� Nc►. N�►. N�i. �Io. hTO. Undcr 25 S2 0 U 0 0 0 52 25 to 29 7� 8 0 0 0 0 82 30 to 34 56 36 8 0 0 0 100 35 to 39 76 48 17 10 0 0 I51 40 to 44 70 53 25 =�5 1 I 0 204 45 to 49 63 53 3$ 5G 37 14 261 SU ta 54 43 33 28 37 3 I 27 199 SS l0 59 13 23 l9 30 9 13 107 f0 to G4 I 3 9 I 1 7 5 3 48 GS +- 3 5 10 0 2 0 20 "I'otal 463 2G8 15G I 85 95 57 1,224 Acti��e Participant Statistics Avera�;e Age 4�.33 ycars Averabe Service 9.74 ye��rs 21 CI't'l' Ol� CLE:�R�'VATEft E�'iPLOYEES' PENSION PLAN SECT10\' �' — CCtiSUS DATA (continued) E. Inactive Participant Count and R�nefits as of Januarv I. 200�1 I�'u►nber of' Particia�ants '1'cnninatccl Vcstcd Pa►-ticipants 4S Annual Benefit �9G I ;774 Retired Paiticipants and Qeneficiaries 64G �14,772,61Q 22 CITY OF CLEARIVATER EA1PLOl'EES' PENSION PLA\ SECTION VI - AS�l��9PTIONS AND 19ETIIODS r1. Actuarial Mcthods In��zstment l'icici The investment rate of'carninbs is assumed to be 7.�°�o per annum. ��fortalitv �Vithdra��al M�rtality is based on the 199-3 Group �nnuity Reserving Tab1e. Pre-retirement �ti•ithdra«�als are assumed to occur in accordance with the tollo��ing table: Rate of V�'ithdrawal Gencral General Ilazardous --------- --------._. _ .. .__.. _.._. ._ --- _._...__-- . . _._ _�.- -.. -----• - A�c----.. .... _ Malc _ Fcmalc Duty- - ._.. _ -- �-�-- . ._._. _...-- - - ... 25 �� I$% I S% .. 5% 30 lU% l5% 3% 35 5% 10% 3% 4U 5°/� I 0% 2°/a 45 50 55 5% 5% 2% 2% �°.�0 0% 0% 0°% 0% Disabilih� Pre-retirement incidence of disability is assumcd to occur in accordance with a standard scale of moderate disability rates (Class 1, 1952 Inter-Cornpany). Rates for fcmales are assumed ta bc double that for males. S�implc rates for males are shown bclo�v: A�e, __ Incidence of Disabilitv __ 20 .17% -� 25 .17% 30 .17% 35 .18% 40 .20% 45 .23% 50 .29% 55 .�9% 60 .59% 65 1.04"/0 70 l .74°/u Service vs. Non-service All pre-retiremen� dcaths are assumed to be non-service rel�ited. All incidence of disability is assumed to be scrvice rClated. Salzry Scale T'uture salaries are assumed te� incrcase at the iate e►f ti"/, per year - 3% due tc► cost-of-living, and 3°'o due to mcrit increases. 23 CITY OF CLEARVI'ATER EMPL01'EES' PENSION PLAv SECTIOh V1— ASSU�iPT10NS AND 11ET1inDS (continued) II. Actuarial.4ssumotions Valuation Salarv Compensation durin� the plan year is assu►ncd to be tl�c breater of'( I) and (2). ( I) Compensation earned during the priar plan Year, increased by salaiy scale; (2) Pay rate for the cwYent plan year. Retirement Rates Retirement is assumed to occur in accordance with the follo��•ing table: General Hazardous _ ___N� ._�__ , .Em�lc�yccs . _ _ . _D�_ -- <45 0% 20°l0 45 0% 2U% 46 0% 20% 47 0% 20% 48 0% 20% 49 0% 20% 50 20% 50% Sl 20% 50% 52 2�% 75% 53 2�% 75% 54 2i% 7S% 55 50% !00% 56 SU°io 1 UO% 57 50% ]00% 58 50% 100% 59 �0% !OU% 60+ 100% 100% "I'iming ofContribution The employer contribution is assumed to be made unifom�ly durinb thc first two quarters of the fiscal year bebinning on the October I following thc valuation date. Em�loyees Covercd All participants as of the actuarial valuation date. S ouscs Eighty-fi��e percent (85%} of the active p�rticipants are assume:d ta be man7ed (or have dependents eligible for Survivor's Benefits). Female spouses are atisumcd to be five years younger than male spouses. St:�tc Contributions J�cnscs The state coniributions are assumed to equal $ l 2,000 per year. Expcnses arc assumcd to equal last year's actuai expcnses. za C17'Y OF CLEAR«`:�'TER 1:1�IPLOYEES' PENSIUN YLA\' SF:CTln1� VI — .aS�lJl1-1PT1nNS A\D 17ET}InDS (c�ntinued) B. Actuarial Assumptions (continucd) Comj�lc:tc:nc:ss of All ben�fits and expenses to be provided by the Plan are recognized in the valuation. Assum�tions Afl kno��n events are taken into account; no cun•cnt trends ,►re assumed to di5continue in tl�e future. C. .�sset Valiiation Mcthod The Actu�rial ��aluc of Assets is based on a fi��c-ycar moving avcrage of asscts �•alued at staterncnt valuc. Th� statentent value rellects an amortized value for bonds and market value for equity investments. Frotn the state:ment value, actual and expected retum on investments is derived. Any difference between the actual return cm invcstmcnts for a given ycar and the expected return is spread ovcr (i��e years. Aftcr Gve ycars thc enticr: amou►tt is fully reco�nized. However, ttle Actuarial Value of� Assets �vill never exceed 120% nor ta{1 below 80% of'the market valuc of asscts. The use o('a derived value of plan assets rather than current market valuc �vill prc�ciuce a mc�re stahle fundin� pattern t�ir the plan by partially eliminaling the effect ��f unusuc�l markct tluctuations. D. Actuarial Cos1 Mctt�od '1'he actuarial cost method is the Froz.en Entry ��c Actuarial Cost Method. Llnder this Tt�ethod tl�e excess af thc actuarial present ��aluc of prujected bencfits over the surn of the actuarial value of assets plus the Untimdecl Frozen Actuaiial Accnied Liability is fi�nded on a level basis over the fiittire compensation of active employecs. The portion of this cxcess allocated to the current year is caUed the Normal Cost. "I'he Frozen Actuaiial Accrued Liability is determined using the Entry Age Actuarial Cost Method. This Fro•r.en /lctuarial Accn�ed Liability is adjusted from time to time to retlect changes in the f'lan or in the actuarial assumplions. "I'he Unfun�leel Fre��c:n Acwarial Acerued Liability is srparately �unortirCCl uver a �xecl nun�Uer of years. ?$ CI'I'1' OF CLE:�Rti�':�'I'EIt E;��1PLU1'EES' PE\tiION PL:�V SEC�TION ��II — tit►i�1l�t:�Rl� oF PI,.aN PRO�'l�IO�S �'his summary is intencicel �is an uutline of plan provisi�,ns and does not alter the intent �r meanin� �f� tl�e provisions Cl�Il11111CC� 111 lI1C C1111lCIICl and ! or plan d�cument. F'lan Y��ar �.�l�,i'l�ll�l�}' Current EmEilc�ycc C.'c�ntrihutions A��erabc �t�nthly Cor�cnsation .�ccnicd E3enc:tit Rctiremcnt i3cnctit �1 l3. C' .II111U31'Y I to Deccmber :i I . Ally �t'Ili1QilClli f:I11�I0}'CC Sllall particirate in the }�lan immediately. S.0% of��abcs and salarics actually 1iaid to a participant. "I'hc total Cornpcnsation rcccivcd durin� the highcsl li��e ycars nfscrvicc c�f thc; la�t tcn ycars divicicc3 by sixty. A nu�nthly bc:nefit c:qual to ?.?j°,�o of Averabe Monthly Compensaticm multij�licei hy the number of ye��rs c►f serviee tc� clate;. Eli�ibility (N�rnial Retirernent Date • Non-Hazarclous Duty: Completion of 30 ��ears af ser: ice, completion of at least 20 years of �er��ice and the aUainment of a�c SS, ar cornpletion c�f at Icast ten years of scr��ice anci the attainmcnt of� age G5. • }-1<iiardous Duty: Completion of 20 years of service or completion af at Ieast ten years of service and the attainmcnt of age 55. Nonnal Retirement I3enefit The participant's Accrued [3enefit payable ,is of his actual retire�tzei�t date an or after his Normal Re;tir-crncnt Date. No adjustmcnt applics t��r defen�ed retirement heyond his N��7nal Retir�ment Datc. Noi�nal Forn� of [3cnefit � monthly annuily fi�r the life c►f the �articipant. After the participant's dcatii, 100°,0 �f the No►7nal Retircment E3e►�efit shall Ue paid as a Survivor Annuity to the spouse for five vears. rltier tive ye;ars, such Su�vivor nnnuity is reduccd to 50% of the original amount. '1'hr Survi��or Aru�uity ceases i�pon de��Ih c�r remarriage oCthc spouse. 120 monthly payments are guarantccd in any case ti►r ��olice and fire fi�;htcrs. 2�, CI'I'�' OF CLEARI�'ATER E�1PLU1'EES' PLNSION PLAN SECTION VII —�Ui�1�1AR1' OF PL:�N PROVI�IONS (c��ntinued) D. Earlv RetiT•cmcnt I3cncfit Far police .111C� �II'C fi�hters, an earlv retirrmrnt bcnefit is pa�•able to thc�se rarticipants ��lho have c�mpleted t�n years of'sen�ice and the attainment ��f :�Se �0. Thc hcnefit is cqual to thc rctircment Ucncfit calculatcd as of thc date ��f early retirement, rcduced b�� ;';�� prr ycar t��r carh year helo�� a�c S5. E. Cost �f Livin�; lncrease All �artici}�ants cammcncin� annuity benelit ��a��mcnts shall be entitled to a l.S% increase in their henciit amount �ach vear. Disabilit�� f3enefit A. Elic;ibilitv Total and �crn�anent disability. If thc disability 1S T10[1-SCI'1'ICC COi111CCIt',d, there is an additional requiremcnt of thc completion of tcn years of service. B. Disabilitv I3enetit The partici��ant's .�ccn�ed Benefit, payable immcdiately. If the disability is service cc�nnected, the Disability l3enefit must be at least Cfi.67% c►f Averagc M��nthly Cotnpensation. C. I`�oi7nal {�c»7n af Bcnctit A monthly annuity for the life of the pailicipant. Attcr the pa�ticipant's death, a Su�vivor flnnuity is ��rovidcd as dcscribed undc:r the Normal Fom� ��f Benefit for retircment beneiits. 1?0 monthly payments arc �uaranteed in any case for police and fire fightcrs. D. Cost of' I..ivin� Inerease All pai�ticipants commencing annuity benefit pa�•ments shall be entitled to a I.5`% incre;ase in thcir bcnert atnount each ycar. Dcath Bcnc�t A. [�li�ibilitv Any actively employed participant. B. Dcath Benelit "I'he �ailicii�ant's Accrued Benefit, payable imtnediatelS�. If death is service connected, the Death Bcnefit must he at lcast CG.<7% of Average Monthly Con��ensati�n. �7 C[TY O� CI.EAR�VATER E1�iPL01'EES' PENSION PL.aN S[:CTI01�' �'ll — S1.11�In�1:�RV OF PL:�\ PRn�'ISIO\S (continued) C. FncTn of Benetit :1 montl�ly Survivor Annuity as describcd undcr thc Noti»al Form of Bcncfit. D, Cost of�Li��in� Incrcase .All participants commencing annuity benefit payments shall be entitled tn a I.�°o increase in their Ucnefit amc�unt each vear. Vestcd Termination Benefit A. r:l,��b��►cv Corn�letion of ten years of service E�. Tennination Bcncfits The participant's Accrued Benefit payable as of his I`'o�mal Retirement Date, provided Employee Contributions are not refunded. C. Fo►�ii ot' Pavment A monthly annuity for the life of thc particiE�ant. Aftcr the partici}�ant's death, a Survivor :�nnuity is provided as describcd un�ler the No►-►nal Forn� of Bcnc(it, heginning at the latter oC the pill'llCl�):lili's Noi�►i�al Retircment Date or date of death. D. Cost c�f L,i��irb Incrcasc All participants cammencing annuity benefit pa�7nents shall be entitled to a I.5% increase in their bencfit amount cach vear. Non-\'ested Tern�inatian IIcnefit t1. Eligibility Any activcly cmrloyc�i rartici�ant. i3. C3enctit Refiind of Em��l�ycc ConU•ibuti�ns ��►�ith 5% sim�le inlerest. C. l�o►7n c�f 13cncfit l..Utll� SUIII. �. 11 S Ilrs RI T•t Y•rw�a�r hll Y��;�llJ�i!Rq.vt J.�t Z�C : Clear��Tater Trackii� Nurt�ber: 614 ��s i an � Pension Trustee Cover Mem orandu m Actual Date: 06/14/2004 Subject /,Reconimendation ; AE�prove tlie cfianges to tlie Investment policy for the Employee's Pension Plan. Summary; Tl�e Pension Investment Advisory Committee reviews the Investment policy on a regular basis. Tl�e biygest changes relate to a reduction in the amount of a security or equity in a company tliat a money manager may hold. In the case of international equity the amount a manager may hold in any one company has been reduced from 10% to 5%. For fixed incorne the amount f�as been reduced form 10% to S% for non-government backed securities and from 15% to 10°Jo for government back securities. The rest of the cfianges are of a fiousekeeping nature. Tl�e clianges comply with Florida Statutes 218.415. Stua�t Kaufman, the plan's attorney worked �vith tl�e committee on the changes. He has reviewed and appproved all of tl�e changes. �rigin�ting;_ Finance Rev_iew Approval M�r�iP �immnn� Cvndie Goude�u Bill Horne Tina Wi{son rarrv Brumh��k OS-26-2004 11:39:15 OG-07-2004 08:1Z:33 06-05-2004 12:53:02 OS-26-2004 11:58:57 06-04-2004 09:16:01 : � �ter :�s; , .: i City c�f Clcac-«xat�r E mploye e s' . ension J��t,�� i-�, Zr�o:� Plan �('f llllilUll� � a l .. . ' -�. Value Stock: � Grot��th Stock: Under-priced Appreciation stoCks tfirough gro�vth or dividends � Peer R��nkinc�: 1 to 100 scale Large Cap: Large 1 = best corporations � Inv�stment Restrictions �� Up to 65% equity on a cost basis �°� Corporate bonds: investment grade credit rating �= Security must trade on a recognized exchange :y No more than 10% International Equity �,OIl�ll It�lI1 iti :� Investment Advisor - John Wiltoughby ' _ Performance Measure and Guidance — Paul Troup, Callan Associates s�rf��re�I�N'for i�vi:s�r��r:�v�r . o�3.i�,c��ivi:s ntin c�uti��:�_i�r:s CI'11' 01� CLE��ItW��l:lt 1:N11'I_QYI�IsS' I'f��SlO\{ 1=UND :1d�iitions in bold and undcrliiud Dcictic�ns in strike thraugh Prouoscd 200�t �e..:. Pen�ion � . I'l'RI'O�I: �I�h� ��urE��s� uf this Statrmrnt ��f In��cstm�nt Ohj�rti��« ,�►��1 Guiclrlin�s hcrcin.�f'tcr rcf'crred to as ihc .•Pulic�• Statcmcnt" ��r •.P�ilic��., i: tu .�ssi,t th� C'it� �,f ('l�ar�v��t�r f:m��luy��s' 1'�nsi��n l�uncl (h�r�alt�r r�ii:rrr�1 tc� as th� I�un�l) in m��r� rt1�rti�tl�� sti�,�n i.in�s �iiuf �»�,nit��rin�� thc in��stmrnt ��I th� I�wul's as.�ts. In thr �•ari��us scrtiuns ��fthis ��licy �I��rumcnt, th� I�uncl �f�tin�s its in��cstm�nt ��r��ram hy: • statin�� in a��•ritt�n �lc�cwn�nt thc E�unc1's attitu�lc::, rx��crtatiui�s an�l uhj�rti��s in th� in��c�tii�cnt ��I'l�un�l ;�,s�t.. • scttin�� li�rth .in in��stm�nt ",tnirtiur" ti�r inan:��.:in� assct.. �fhis stnirttu•c incluci�s \';11'Il1Uti .ltial`1 C�iltiti�ti ,lll({ IIl\'��1111�I1I Il111I1:1��I11Clll Sl\'�Ca (�l.11. I11 .l`�`�('C��illC. :ll'l: cxE,�ctr�i t�� r��clucc a�►1ulcnt I��•cl ul' cli��r,iticatic�n :in�1 iiirestm�nt rcturn �►��r timr. • ��ro��it�111�� `�ui�lc;linc:ti ii�r cac1� in�•estm�nt �ui�tli►li�� that cc�ntr��l thc l��cl c�t� risk assumr�l in thc ��ortfi�liu ancl cn:ur� th.�t as.�ts arc m,ina��cc1 in arr�,rcl.incc ��ith slat�ci uhjecti��cs. • cncoura�in�� critcria t�� m�mitur and ��aluatc thc ��crti�nnanc� rcaults achir��c�i hy thc in��csti»cnt mana�;crs. 'l�his Statcmcnt rc}�rescnts thc I�un�l's currc:nt �hil��:��phy rc��arclin�� thc in�•c:ti��cnt ul� t�un�1 asscts. In aciclition, althou��h thc I�und shall utilizc this I'��licv Statrm�nt in makin�� cl�cisic�ns c��nccrnin�� thc Func1, it tihal{ n��t ncccssarily hc b�nuui sulciy by its content.. ('RIJI)I:N('f: ANI) I;'I'FIIC'AI. �'I'��NI)r�RDS "I'hc st.inclarcl ut��nicicncc t�� bc a��nlic�l by thc tnistc�s shall be thc "I't1i�lciu P�iscm" i�il�. which statcs: "In��cstmcnts shall hc macic �vitli jucl�;ment anc� carc, un�lc:rcircum�tanccs tlicn prc��ailiti�. ��hich ��crtiunti uf��nicicncc:, di�crctic�n and intclli�enc� c�rrci�c in thc mana�_c:mcnt ��f th�ir ��n allairs. nc�t li�r s�rcul.ition, hut fin• im�c�tmcnt, amsicfcring thc E,roh,tihlc safety ��f thcir ca�iital as ��cll ��s thc {�rc�bahlc incamc dc►•ivccl." 'I�hc "('ilidcnt Pcrsun" nilc shal) bc a��liccl in thc ��ntcxt c�l' mana�in�; Ihc ��•crall {�urtli�lio. 'I'hc Ii-�istccs sh��il alsc� bc �c�vcrnal by thc: ticiuciary stanciard s�t li�r�h in thc Fm��lc�yce Rrtircmcnt liicuii�� Sccurity ��cl ��I� 197�1 at 3�)I.I.S.C'. s. I 10�1(a) (1) (��) -- (C'). In Ihc cvcnt of .i r�►ntlict bch�'ccn Ihc Pulic�� and Florid.� Statules ��r C'ih- m•din.inccs thc st.�tutcs :ind ��rdin.►nrrs shall ��rc�•ail. I� un�liny�. I�II I Il11U11I1�� 'I�hc i'uti�l's liin�lin� ��hjcrti��cs �i�r th� I�un�l is tu h� ns liill�� tui��i�c1 as ��u;sihl� sc� that: • th� ahility t�� uy all hc:nrfits ancf cx��cns� ��hli��ati�ms t�rnn thc I�un�1 ��hcn �1uc is cnsurc�l: • thcrc ��•ill hc n�� E�rinri�al �r��siun uf «,�,t�,t��►��i i��►,�i. �►r thc ��urchasin�� u��•cr �i,��,i: • a"tiin�lin�� rushicm" is maii�t.�inccf ��•ithin the l�un�l li�r ui�c�E�rctccl cl��•cla��mcnts an�l (lll' �1l1StilI�IC IUIUI'C Illl'CC:15Cti Ifl htIlClli tiU'UCiUI'C ancl c��,�ns� lcvcls; • thc Ilin�l asscts shuulcl carn sullicicnt tc�tal ratc uf rctuni uvcr tinu t�� rcdure thc I��in�l's clr��cnciciicy un emplo�•er contrihutic�ns tc► m�c:t all hcn�tit cincl �xr�ntic ��hli�ati�ms. In�•cstmcnt results �vithin thc I�unc1 are cansid�reci tc� hc thc mi1�01' CI'Itll'IlI c',�t:I11C11� 111 achie;vin�� thcsc tiindin� c�hjcrtives statccl abo��c while relianec on contrihutions is a sccondary cicme:nt. Lic�ui�iitv I'usturc '1'he Inveslment Purtfolio shal! bc sh•uctured in such a manner ��s to nro�•ide sul'ficient liquidih� ti► pa�� oblibatiuns as thev come due. Liquidit�r consicicratiuns are lo�v in the short-tcnn ancl llllCl'Il1C(Il�1lC-ICI'lll resultin� in an inunat�rial im��art upun im�cstment ��olicy, ohjcctivcs and Lui�lclincs. ��ttth��rizcd Invcstn�cnts 'I'hc ti�llowin� is a list c�f authorizcd invcstmcnts: • Invcst and rein��cst thc asscts of�thc pcnsion liind in annuity (inrluclin� �roup annuity ccmU•acts ol'th� pcnsiun in��cst�l�cnt type) anci litc insurancc cc�ntracts ��t� Ir`�al resci��c lifc II1tiUfilllCC Clllllj)IIIIICti IICCIISC(� IO (IO �USIIICSS I11 IIIC Siatc ��f Fluricia. in anwunts sul'ticicnt to providc, in ��holc or in pai1. bcnefits to �vhich all of thc �r�rtici�ants shal) bc on c�cumc cntiticd uncfcr thc provisions ot�thc ��und, and {�ay thc initial ancl subsc��urnt ��rcmiums thcrcon. Nrovided that the amount in�•estecl ��ith a life insur:�nce companv shall not cxcccd 3'%► �►f thc instu•ancc companics .�ssets. • Invcst ancl rcinvcst thc atiscts ��f thc ��cn�ion tiind in: a. 'fimc cic�xisits, saviit�s accounts, moncy markct arcc�unls, tiincls, ccrtilicatcs ol� , �1��sits. �,r m�,n�)' inark�t ��rtitirat�• ��I�;t natiunal h.�nk, a:tat� hanh. ur a;<<��in��. huilclin�� an�1 lu��n ass��iati��n in,tu��cl h�• thc I�«1cr;►I Cu��crnmcnl �►r .�n�� agenc�� thcrcof I)e��sit-4nstir;�i�� ('��t��urt►ti�>i� ��r rull,it�ralii�cl h�� l'i�it�cl titut�s Ciu��rrnm�i�t :\��ciicv s�rurili�s, h. \��utiahl� �lircct ��hli��ati��ns ul; ur uhli��ati��ns th� ��rinriE�,�l an�1 int�r�.t ul' �� hirl� ;ir� unrc�n�liti��nall�� uarant��ci hv. ,uu1 ��hirh rarr�� th� I'ull liiith aii�i crr�lit ut�th� l!nit��1 �tat�s C��rnm�nt an�l its a�_cncirs. I��cstmrnts in this c;it<<��rv ��u1�1 inrlu�l� hut tiut h� limitc�l tu the li�llu��in��: l.)nit�cl �tatc, "I�r�;i�w�� 13i11�. \utcs ,in�) 13��ii�ls. an�l s��uriti�s issuc�l hv thc timall 13usii��:s :��lmiiiistr.�tic�n. G��•�rnmcnt \,tti�►nal ��l��rt��a�� :�.suriali��n 1(�innic \lac). �'ctcr,�ns :\�lminislrati��n. ancl I��i�ral I luusin�� ;��lininistr;iti��n. c. I�ully rull.�t�ralii�cl Unitrcl Statcs :��rncy uhli�.:ati��n� �� hinc �nrrv ai� in��ilic�i ��uarati��c an�l thc; in��li��1 tiill taith ancl crc�lit ��t�th� U►iit��l titatcs ��u��rnti�ci�t. In��stm�nt� in this ratc��urv ��u1�1 inclucl� hut nut hr limitrcl tu th� li�ll��in��: �,hli�ati��ns ��I�thr I�c�lrrcil ! Ic�iiic I.��an 13anks ti��stcm (I�I11.13) ��r its �listinct hcink� an�1 I�iiianciii,� ('nr��►r;iti�,n (l�l('O). �i. Oth�r llnitc�l titat�s �1�cncy ��hli��atiuiis ��hich �arry aii ini�ilic�l ��►iarantr� (Ci��•crnmcnt 5��nsurc�l I:ntitics) ;inc1 thc im��lic�1 liill laith ,�n�1 crc�lit ul�th� Lli�it��i �tates G��rnmcnt. In��cstments iii this ratc��ry ��ul�l inrlu�lc hut nut hc III1111�(I lll lI1C fi�ll��in�: c,hli��ati��ns uf'thc I�c�lcral f=.u•ni ('r�clit 13ank. 1��lcral Natiuncil �-1ur��;�L� :\ssuciaticm (l�annic \-1,�c), f�r�l�rttl Ilc�tnc I.u;iti �l��rt��,i�� C'��rE�ur.�li��ii (I�rr�l�lic \lac). �tucicnt l.uan �1ark�tii�� ns�uriali��ii (tiallic 11ac). I�iii�inrial :�ssi�laiir� ('��r��urati��ii ancl l��cl�ral ��ri�ulturc ��1c�rt�.�n�c ('ur��ratiuii (I�a►•ii�cr �l�ic). c. ('��llatcralir.��1 ��t��rl��a��c Ohli�.�tiuns (CN10) ancl/��r Itcal I:,tatc ��l��rt��a��r lii��cstm�nt ('��n�luits (Itl:��11(.'), ratccl in��ctitmcnt �.:racic ��r «�uiv;ilcnt h�� Stanclarcl ancl I'��r'�, \•1��cx1y's I�itch. ��r ��thcr rccc��nizc�i nati��nal ratin� a�cncics ��•hich arc hack��l by sccuritirs ��th�r�risc auth��rirccl in this ��rciinaticc cin�l ��hirh arc �uaraiitcccl as tu thc timcly ��a�+nicnt ut'E�rinci��al anci intcrc:st hy thc U.S. (i��vernmcnt ��r its a��ciicirs. f'. C'uu►ity hun�ls (r.�tcd in an�� of'thc thrcc hidhcsl r.�tcd catcgorics h�� cithcr of thc Ihree nutiunall�� reco�_nizecl rating ser��ices: pro��i�lecl that if Ihe hunds are split r.�ted tli.�l Ihe hond must he r:itrcl in une ol'the t��o hi��hest cl:�ssitic.�tiuns bv one uf thc firms) that c��ntainin� a nlccl��c uf�thc tiill taith ancl crcclit c�t'thc a�unty invul��e�1. huncls ul'thc I�Ic�rida I)c�-clo��i�icnt (�1�I111111SS11)Il, or ol�ai�y ��th�r stalc a`�cncy, ��hich h��vc h�rn a�i��r��•c�1 as tu I��al and liscal sufticicncv by thc statc boarcl ��I'a�lministrati��n. �. Ohli�ati��n� ul'any muni�i��al authurity issuc�l �w•suant to thc laws ��1'this statc; {,ru��idc�1, ho��rc��cr, that tor cach c�t'thc livc yrars nc�t ��rccc;din� thc date ot'invcsUncnt, thc incumc; c�fsuch authurity availahlc li�r fixcci char�cs shall havc bccn n��t Ictis than onc anci unc-h.ilf'timcs its avcra�;c annunl lixccl char�c rcc�uircments ovcr thc lilc of� its e�bli�ations.'1'hc h��nds of thc municipul authorit�� shall lie ratcd in .�n�� of thc threc (ll��ll`S� 1'il�l'(� l'll�l'�OI'll`S �)V l'1��11'1' Il` (�ll' ��II'l'C Ilil�1011il��' 1'l'l'llZlll%C(� I'il�llla SCI'�'ll'l'S� pro�•i�lcd that ii'the h�►nds .�re s��lit r:�ted that thc bond musl bc r.�ted in m�e of thc t��o hi�hcst classiticutions h�' unc of thc lirms. 3 h. ('uinm��i� st��rks. ��r�f�rrr�l at��k, ancl h��ncls an�l ��th�rc��i�lcnr� ��t�in�lrht��lnca. i,su�c1 ��r ��u,u�antr��l hy a rc�r��urnti��n ��►•,�,�nii«I tin�l�r thc la��s uf'lh� l!nit�ci �I�it�s. ,�i�� ,tat�, ��r ��r��cinirccl t�rritur�• ��t�th� l�nit��1 tit<<t�� r th� l)istrirt ��t'('i�lwnhia ur nn�� iiun-U.�. rur��r:tlt��tl. )�ru�'i�1c�1: I. I �ll' l'l1f�lUf:lUl111 Iti Ilti(l'l) llll �iii�� ,n� ��r m��iv ��I'thc rcc��_�nii«I nati��nal ��r int�rn;�ti��ii:il stuck �zrh,in��s ,in�l��r in lhr �asc: �,t'huti�ls aii�l ii�urt��a�� hark��) s�ruriti�s. u�uciccl ain�,i�� cl�:�lcrs ancl in��sturs in ,� rcc��nir��i an�1 a��r�ccl u��n cun��enti��i�al li�rm.�t; ?. r�ll ��►rE,��rat� h��n�lti ,h.ill carr�� ;iii in��s�inrnt ��ra�ic rcitin�� as �stahlish��1 cithcr hy Stlillliar�l �� f'u��r's. �1��,�iy's. I�itrh ��r c�lhcr r�ru��nirc�i r;itii�� a��i�ri�s: .�ncl �. �lll Il1l1CC lll.ul thrcc i 1i�-e ��cs•ccnt ��i�thc ec�,it�� asscts ul�thc ��nsi��n tiin�l shall h� in��cstr�l in th� rumnx�n �t��ck ur ra��ital st��ck ��I'an�• ��ii� issuin�� it1��r►�i�t corporati��n cxcc��t to thc cxtcnt a hiehcr �crccntabc of thc sumc issuc is includcd in .� nationall�� reco��niicd nu�rkrt indcx basrd un market ��alucs. at Ic.�st ��s hr�►a�l as thc tit��nd.�rd.�nd Po�►r's C��mpusitc li�dcx �►f;llll Com��:�nics, or exccpt upon a sperit=ic tindin�� h�� thc in��rstmcnl commiltcc th.�t such hisher��ercent.�be is in the best inter��st of the fund n��r-shr►Il-lhr- r�`��r��r�i�-i�lr�st��z��t-t1�1r-c»»-istiE�r�t�•-c��tli��t�tt�-r«�e�l-1 i�-r-f�ree�lt-ul=thr- ��titstt►n�#itt��-e.�t►ritftl-siu�=lc-��E=tltf►t-�c�ttt�t3n}t; nc�r shall thc n��n-U.�. in��stm�i�ls cxcccci tcn 4�crcc�it ��Cth� {,cnsi��n tunci's .iss�ts ��t cc�st; n��r .ha{1 thc a��zrc��at� ul' thc; in�•�stm�ntti unci�r this suh�iara�zraE�h at cc�st ��cc;c�i si�t�--li��c ��crccnt ul'thc ��cn,iun liincl's ass�ts at ru�t: In��cstmrnts nut listed ahu��e in Ihis scction are prohihited. l3id Rcc�uircments :VI securities shall be com��eliti��elv hicl ��here f'easible and a��pro��ri.Ue. l:xcept as other��•ise rec�uired t�� la��, the most economic.�llv ucl�•.�nta��eous bid must he selected. Cxerulions must be riia�le on .� hest-executiun hasis. 1lli�lui�l ln��cstmrnts "I'h� l�un�1 �rill nut inrest in illic�ui�1 in�'CtilIllClllti. IIIII�UI(I in��cstmcnts hci�i� �lctinccl �is an ii��stmcnt li�r ��hich th�rc iti ti�� uncrally rcru�:ni�ecl niat�l:c:t ur �cncrally acrc��tu�1 ��ririn� 111CCEl:ltlltilll. Oncc an im�cstmc�it bccc►�»�s illi��uic1 thc muncy m��na�cr ��i11 nutify th� ��lan u1� thc illiquid invc,tmcnt. Inclu�lcci in th��t nutilicati��n �vill hc hc�� thc nwiicy inan�i�cr will hancllc Ihc illiqui�l in�Jcstmci�t. In��esti»cnt Mana�cmcnt Structurc 'I'he I�uix1 has rc��ie��c�i thc inves�mciit rrc��ran� li�r thc C'ity ��I' C'Icai�vatcr I:m��l��yccs' I'ciisiun f�imcf. '{'hc resuU ��f�thc rc��icw i� an u�xiatccl. l��i��-tci7n stralc�ic assct all��r:iti�►n I�unc1. � Initic�ll�•. 1i�ur clistinrt a..�t rl,�ss�, ��r� runsi�l�r«1 li,r inrlu:i�,n in th� �,urtli�liu: l�umcstic f:��uiti�s I)�,m�stic I�ix«I li��►i»c Int�rnati��nal%\'c�n 11� I:��uiti�. (';�:h :�t't�r :i th��ruu��h r��•i��•, a ��ri»an�nt ��►inmin»rnt t�� th�.c ti�ur assct rlass�� •ill h� mac1� t�� ns�n-� �1i��cr:itirati�m .�t thc f�un�1 1cr�l. �1-hc 1=u�xf m:n� runtiicl�r in��csttii�nts in c�ther asact riassc, ��hich utl�r E��t�ntial cnhanrcmcnt t�� tc�t:i) I'l'lUl'll at risk, iu� �rr;�t�r thcin th� �x�x�stu•�s un�lcr th� initi;ill�• s�l«tc�i a..�t classcs. It i• nut thc itit�ntiun uf�the: l�un�l tu h�c��me in�'��I�«1 in cic��-tu-clay in�•�stii��nt �lrrisi�ms. �I�her��i�r�. thc ;�.s�ts ��•ill bc all��catccl tu ��r��ii:ssi��nal in��c:tmcnt Illana��crs in a manncr runsistcnt ��ith th� 1'��lir��'s uhjccti�•c:s. I:;�ch assc:t rlciss ��•ill h.i��c: its u��n in�•�stmcnt nian;��rs. C)i�•c;rsitic,ui��n ��f thc: l.!.S. ��larkut L��uity l'UlllllUlllll'lll ��'lII i1t achic��c1 thruu��h th� cm��l�,�•mcnl ul' mana��rs ul� cum��lcmc:ntary in��cstnunt st��l�s. C�r��th and Valuc. In thc 11.5. I�ixccl Inrumc markct a c��rc hc�ncl mana��cn will hc utilii��l tc► stahilizc thc iiind. ln th� Intcrn:lUttll.11 L'l,ll{I�� markc:t a�iivcrtiitiecf nc�n-U.S. mana`�crs ��•ill bc hirc:cl an�1 achi��c cii��crsilicati��n. Cash ancl r:�sh cqui�•alcnts ��•ill bc nruu��cl cithcr hv thc In��stm�nt Man.i��rs c�r th� custodian. In aciclitic�n th� C'ity uscs th� �oc�lin� runrc��t tu me�t thv imm��liat� rash n�eds ot� the city and to m.l\Itlll"I.0 thc intc:rest carnin;�s. �VI cash pl��ced in the Cit�•'s puoled cash account shall be separ.�teh• �ucountecl fur and listed as an .�ssct of' the f und. "I'hc l�und ��ill kce�� sut�ticicnt tiincls in the City's �oulcd ca�h accaui�t t�� nurt thc: curr�nt 11flllLill1011ti l)f�Illt', Fun�i. "('he �uidclincs ti�r the all��ratiun of assc;ts, at ce�st. t�� invcsunc;nt mana��e:rs are as fi�llc��s: � -- -- - - -- -- ` Lu�vcr I.imit U�per Limit C'u.t or �larkct � U.S. �-farket L'yuitics -30"� 6>'%� C'c�st i �„ �30° �� Cust Gro��'th l O,�, Valuc 10"�� 40'%, C'ust l�ixed lncc�mc 3O°/� SQ.O",;, C'c�tit Intcrnational �quity �.0".� 10.0'Y� C��st E3ccausc thc assct classes c10 not mo��e in conr�i�t, dcviations ti-um thc nurm,�l cummitmcnts �t�ill accur thruugh namial markct acti��ity. '1'hc Uprcr ancl Lo��er Limitti dcGnc thc ran��cs within ��hich markct acti��ity will be allo��e�t to shift thc allcxations. 'I�hc r��n�e:� arc �1csi�;ti��i t�� allc��v ti�r a rc:asonablc ��criod of timc to c{Ilj1SC ht�C)1'C 1'C��il{:itll'lll� 1i1C �Oflil)I10. �Vlicn thc in��slmcnts arc ��ut of� �lic;y thc asscts ��ill be mei��ed ti-om thc o��cr-all��catecl to the undcr-alluratrcl in a��ilulcnt manar. �Vh�n in markct cquilibrium, cash (lc��s ��•ill bc d�F,l��ycd in a man��cr that rctur��s thc ��,rtti�li�� t�� its nunnal commitmcnts. Internal Control� ; :1, ��art ul'th� rity's annual lii�;in�ial ,�uclit thc �xt�rnal ('I':� lirm ��ill r��i�� th� int�i7�al cuntr�,ls �,I' th� {�uii�l. �f�h� hirin�� ur t�rniinati�,►� ��f all munc�� i�r,ina�s�n. c��nsultants c�r sal�k��,in�� cu�t�,�iians must h� ma�1� h�� th� tilis�r�s. \'u in�1i�•i�lual a�s��ri:U��l ��ith thc I�un�l nui��;�uthurir.� ,in�� i»u��ii��nt �,t� m�»�i�s ��r s�ruriti�s ��ith uut th� a��ru�:�l ��f' th� U•u�tc��, it� rr��uin�4. ��r hv th� aE��ru��al �,C th� I'�nsi�►i� In�•�stm�nt ('��n�milt�� it�trust�� .��ru��al is n�►t r«�uircci. ��n in::tuncc nut r�c�uirin� U�ust�� a��Eir��al is r�hal,��rin�� th� ��urtli�liu. Int�rnal c�,ntruls ��ill hr �Irsi��i t�� F�r��•�nt 1�,��cs �,C ti�n�i� ��•hirh i»i�.:ht arisu li•��ti� ti•au�L �rr��r. an�l misr��r�s�iilatiuii hv thir�l ��arti�s ur im4,i�i�l�nt arti�,r�s h�� lllt U'IISI�� lll' l'll\' Clll�llll�'��. . �-tah�u��t"I�h� li��t_mciit ('uminitt�� I'h� I'cnsiuti li��•�slnicnt C'ummitwc: sh.ill hc nr,ul� u�� (at :� miiiinium) ul� thc ti�ll��in`�: I�inanr� I)irc�tur ('I'rc��surc�• li�r thc "{'rustc�s). r�,sist;uit I�i»arnc f)ir�ctur, an�1 th� ('ash �L Im��stmcnts �-tan:i��r. "fhc 'I'rcasurcr li►r thc; �I'rustce� �hall ,►�i�u�int. r�i�u��c ��th�r I�inanc� ��r�►fcssi��nals �1� ii�rcls ��•arrai�t. Oiic; rc��rescnlati��c fi►r �ach c�l� thc uniun. ��iU .il.�� scr��c ��n th� ln��cstn��nt ('��m»>ittr�. 'I'hc I�iii��ncial I)ir�rt��r c�r their �i�si��n�c ��ill chair lh� c�,mmitt�c. 'I�hc ('it�-'I'rrasurcr ��•ill mc�kc a r�c��min�ncl,iti��n t�► thu �I�rustc�s a� tu ;iny chan��cs in thc ii�ak�uE� uf�th� c��mmiucu. ('��ntiiiuin ��. I:cluratiun 'I'h� annual hucl�ct fi�r thc ��cnsi�+n I�un�l ��ill inclucl� sut'liri�nt liinciin� fi�r thc U'ust�c:s anci i�umhcrs ul� thc I'cnsion Invcstmcnt C'��mmittec tu ��arliri��atv in �,�nsiuii c�turitiun oE�4�urtuniticti. "I'h�sc cciuratic�nal ��Ei�x►ilunitics ��ill inclucic cclucatiun nn Ihc inJi��i�lual's dutics ancl res��unsihiliti�a as ��cU .lti III�'CSlllll`Illti I(1 �CI1Cfill. I Ill' CI11C� III�'l'tiUlll'lll OI'lir�r ��-ill cumE�l�tc nu Icss tl�an ti huurs ��f cc►ntinuin� cclucatiunal c��E��rtunitius ��n ��cnsi��ii in�•cslmcnts cach li�ral y�ar. ln�•cstm�nt 12�tw•n Ohjccti��cs l►i li�riiit►latii�� invcst�»cnt rcttu•n c►hjcctivcti ti�r thc I�tmcl uhjcctivcs ti�r thc f�ttnd assrts, thc {=unc1 �ilacccl Eirimary ct»��hasis ��n thc li�llc��vin� zuals: • ��chic�� in��cstm�nt perli�rmancc that cxccc�ls thc rUc ut� inllalion u��r timc th�rehy ��r��iclin� a rcal ratc c�f return. • ��chic��c in��cstnunt results ul�at Ica�t thc actunrial ratc ��1'r�turn. • �lchiu��c in��cstmcnt ��crli�r��t�uicc that iti matcrially aba��c tt��cia��c ��hcn cum��arccl t�i: - Othcr invrshncnl in;tna�crs - nllll:C 111\'CtiU1lClll Ill�ltlagcr ��rs ol'rclatcd invcstt»ent stylc - Othcr public rctircmcnt ��laiis - Scvcral ca��ital markrt inclic�s (, I�c�r ea�h actual ��aluatiun thc'I�ru•t��s ��•ill �i�tcrmin� �i,� �.r��i ratc ufr�turn ��i'thc currcnt ��car. n�xt .c�•rr.il yc:��rs ancl the I�m�� t�r7n. I�asccl u��c�n th� .lh�� .ii��1 thc li�llu��in�� thc cx��crtr�l annual r;�t� ut� rcturn ti�r thc ctu•rrnt �'car is 7.>��,�,. �I'hc �xE��rt«1 ratc �►I� r�turn ti�r th� li�r�scrabl� tuturc is alsu 7.;`� ��. 'f��tal I�un�l IZcttu•n Ohj�rti��cs 'I�hc li�ll��'111� I111I11111U111 Clllll(lar�iti�� ,hjccti��s ha�•c h�cn �stahlish��f li,r th� tut;il I�unc1: •'I�hc t��tal tiuui shc�ulci r,�nk in th� uE��rr fifticth (�Uth) ��r4cntilc cc�in�,arr�1 tu a rcr��niz�cl �crfi�rmanc� m�asur� rc�mr.11l)�'� t��t,�l �nihlic ��lan ��ums�,r clatahcisc mcasurtcl u�•er a minimum ��rri��i ��Cthrcc (;) ��r ma�inuun li��c (i) ycars. •'I'hc I�unil's c�vvral{ annu.�lizril t�,t:il rcturn shc�ulcf ��r1i►ri» at ir.�,l at th� u��icr iifticth (�Oth) �crccntil� c�m��iarecl to in��cstm�nt stylc ��crs ��t� simil,ir t��ic a� li�uncl in rcco��ni�cci {,crlur►►�anc� m�asurc cum4�any's st��lc �latah.isc fi�r c.�ch assct class sc�nu:nt. •'1'hc I�und's u��crall annualizc�l tut:il rctiu•n (��•hirh is ciciin�cl ;is all ��rirc chan��cs �lus all ina�mc and/ur cli��icicncls) �n��i�i �.««i �i,� actuarial assum��ti�m ��vc:r a rollin�� thrrc: �j ar maximum ut�ti�•c 5 yrar E��riuci. •'fhc I�un�1'ti a��cra{1 c�nnualirc�i tatal r�turn sh��ul�i c�ccccl thc rcturns th��t ��oulci ha��c collccti��cly becn achicv�cf il� th� I�un�1 hac! hcrn liilly invcst�c� in thc a��propriatc �crccnta��c ot': - St��nciarcl �l I'��ur's >UO 5tuc:k In�1cx - [_chman 13r��thc;r� n�`�r�_.;atc [3��n�1 Incicx - I��1ar�an 5tanl�y C'a��ital Intcrnationa) t:Al�l� Incicx 'I'his is a custom bcnchmark that ��ill bc ralculatr�l rclati��c tc� thc actu�il c:��lircti�•c assct rlass mix ��I�the l�uncl mcasurccl c��cr a minimut» c►fthr�c (3) or nu1X1111U111 /l j' I i��r (> ) yc;irs. 2. f:quity Sc�mcnt Itcturn Uhjcctivcs A. "I�hc ti�llowin3 minimum ��crli�rmancc ��c►alti hc�� hrcn cstahlishr�l fi�r thc I�und's dcm�c�tir ec�uity tir�mcnt: • 'I�hc cic�ii�c�tic c��uity sc��mcnt t��tal r�turn �h��ul�1 ��rli�rm at Icast �it thc urE�cr iit'ticth (�Oth) percrntilc cum��arcd t�� tl�e c� rccu�i�ir.c�1 E��rti�ni�ancc mcatitu•cmcnt a�n��r,iny'� t��tal U.S. cquity �intahasc 7 m�asur�cl cn�cr a minimum I�criod ��f threc (;) or ma�imum c�l' (� l vtcirs. • 'fhc incli��i�ival �iomcstic �yuity mana�_�r, tc�tal r�turn ;h��ulcl E��rfi�rm at Icast at thc: upprr fifth (SOth) �crr�ntilc c��m}�arcd tu in�•c:stmrnt stvlc pcc:rs ��t� similar t�•}k: as li�und in a rrcc��nincl }��rli�nnanrc m�asurc cc�m�zny"s tu►al U.S. c;��uit�� datal�as� m�asur«I c��cr a �nini��jum peri�� of thrcc: (�) ur ma�imum ��f' (�l yrars. • 'I�h� tat�il dc�me•tic cquity sc�_IllCili IOlal rcturn sh��ulci cxrc�d thc tutal rcturn ��t'thc: Standard & Poor's �O0 St��ck Inci�� by at Icast onc (1) �crcc:nta�c �c�int per ��c:ar m��isured avcr a I111I11I11UI71 �criod of threc; (3) c�r ma�imum of�(�) ycarti. b. "1'hc li�ll��win� minimum rcrturniancc ��oals havc h«n cstablishccl li�r thc I�und's intcrnational c��iity sc�,�mcnt: • 'l�he int�rnational e��uity se��mcnt total r�turn shut►Id perii��7n at Icast at the upper litticttt (�Qth) percentile ccm��artd tci reco��►iizcd E�crlorniance measure company's total nc�n U.S. equity datahasc il�easured ovcr a minimum period of thre:e (�) ar ma�imum of (�) vcars. • 'l�he individual international equity mana�crs total r�turn shuuld perti�nn at Icast at the upper tiftieth (>Oth) ��crccntilc c��m�arrd tu thc im�estmcnl style peers uf similar t�•pe as i0U11(S in a reco��nizcd rc:rfonnancc mcasure company's tc�tal nc�n U.S. cquity databasc mcasurcd ovcr a minimu�n pericxi of thrcc (3) or il�axinuu» uC {�) ycars. • 'I'he international equity se�.:illClll ll�ial return should c�cccd thc total rctun� ot�thc I�lorgan Stanlev Capital lntcniational Euronc, Ausiralia, f�ar East lndcx (LAFE) by at Icast t��•o (2) F�crcenta��c E�uints per ycar u��c:r a minimum of thrcc (i) or maximum ol�(�) ycar�. 3. Fixed Incomc Sc�;ment Retuni Objectives A. 'fh� fi�llo�ving minimum perfonnancc �oals havc tx:cn cstabli�hrd fi�r thc Fund's damcstic lixcd-incomc sc�mcnt: • Thc domcstic fixed-income sc�mcnt total rctui7� shc�uld F�crt�i7i� at Icast at thc upper IiRicth (SOth) perccntilc; cc�►n�iarcd to thc rcco�nizcd perfonnancc measurc campany's total cf��mcstic: fixcd incomc dalnl�asc mcasurcd over a minimum perioci c�i' ihrrc (3) c�r � I11�lXiI11U111 t�� (J� \'tACS. • �I�h� ��i��i��:�i c1��ni�atir fiz��1 in��mu m;�i�a��r. t��tal r�t�u•n :h��ul�1 E,c;rli�i7n at I�ast at th� u��r titti�th (iOthl �,�r��iitil� Ct�ill��.irrci tu in��csttncnt �t��lc �ic�r� tl�� ti11111Iar t��c as ti�tin�i in a r�r��niir�i �,�rti�i7i�,mre mcasur� c��m��any'; tc�tal ci��m�;ti� �ixr�1 inrum� �latah.l�l' Illt:i,wrcl c�� r .l I111111111U111 j�tl'll1ll l�� II11'�� (;) ur niaximum �� 1' ( � ) ��rars. • �I�hc �i��mc.tic tixcci inromc sc��mcnt t��tal r�turns sl��wl�1 rxc�c�l thc tc�tal rctui-�� c�f thc Lc:hman 13r��th�r, ��,:rc�.:�it� l;�mci In�1rx hv at I�ast ��nc-half (.>) E�crccntc��c E�uint Eicr ��.ir incasurcci ��r �i miniiiium E��ri�,�1 ��t�thr« (i) or ma�imum ��1�(� 1��rars. -�. Rc.��ot�sitiilities ��1'thc'I�hir�1 {'a�1�• ('ust�ulian :\ thircf ��art�� custocii�ui ��ill h��l�i all Fund ass�ts ��thcr th.11l l'Clllllll111`�lcc� accc,unta. In ��rcicr to maximize thc I�unc1': r�turn, nu moncy sh�,uld bc all��ci lu r�main ic11c. [)i��i�i�n�is. int�r�st, rruree�ls fr��ii� �.�Ics, nc��• conU•ihuti��ns ancl all ��thcr m�mics ar� tc� be in�•cstccl ur r�in�•cstc�i ��r��m��tly. It� tiincls arc nut rcin��cstc:�l, thrn the�� ill hc E�lacecl in muncy markct instnnncnts or .l I1lltilc:V market tiincl ii»nucliatcly h�� th� �Irsi��natc�i c.�tih mana��cr ��c,rkin�� in c�mccrt ��•ith th� custuclian. 'fhc custa�lian ��ill hc res}��nsihlc ti�r ��crli�nttin�� thc fi�llo��•in�� liuictic,n.: • ��crc��t drllly lll�lfllCUCIIlS (CCl{ll lI1C IllvcsUn�nt ma►tia4�crs: • r�ci��isc in�•�stmcnt mzna�crs claily ut��han��cs in cash r��uivalcnt balanc�s; • Immcciiatcly aclvisc: in�'CSU11Cilf [17illla�;c►s uf� acl�litic�ns ��r �vithdra��•als f�om .ICI'(lUlll; • \utity in�•estmcnt 111311114;CCti c�t' tcncicrs, ri��hts, li-artional shares ��r ��thcr dis��ositions �►I�h��lclin��s: • Rcs��l�•c any ��r��hl�ms that in��cstmcnt Ill�ltlil��ci:� n�a}r har•c rcl,�tin�� tu cu�tuciial ��ccounl: • Satckcc��in� uf�sccuritics; • Intcrrst an�l di�ricicncl collcctic�n: c) • [)aily cash s�ti�ccE, �,f� i�ll� F�rii�ci��nl ancl i��c�,m� ca,h halanrc: • I'rc�r�s� all in� �,tm�nt i�iai�:i��r tran..irti�,�is ��n .i �i�li��t�� •s. �i;l�'lll�(ll Il;isis; • Cullcct ��rc,r��1s tr��i» maturin�� scruritir:: • 1'r��ic1c in�,nthl�• ;tat�nunts h�� in��.tn�rnt iii�u�a��r ;ircc►unt: • ��II sccw•iti�s �,urcha:�cl hy th� {�unci ,hall h� ��r��rl�• �1csi�ii;it��l .�s ;iii assct ��f thc Fund: • \o ��ith�ir:��:�1 «t�:c�uriti�s. in ��liul� ur iti ��art shall hc macic cxc�{�t h�� an auth��riz�cl m�i�it,�r ��f�thc r�m�iiiitt�< <�r ih� r��nimiucc's �1�si��i�c�. RI:SI'(�\SI131(_I"I�IFti C)l� IN�'I:ti'I'�11:\"I' �1:�N��G}:itti "l�he duti�s an�i resExmsibilitics ��t� �ach «t� thc r��ist�rrcl in��cstm�nt acl�•is�,rs rctaincci hv th� I�unc1 includc:: ��tana��in�� thc assrt, un�i�r its mana��m�nt in acc��rcianr� ��ith thc �wlic�� uicl�lincs and ��bjccti��cs cx4�r�ss�ci her�in. ��r cx�resse:d in a se��a►��te ��•rittcn �i��PCI`I11Ctli �\�hcn d��li.iti�m is dc�m«i ��ilui�nt ancl �lcsirahlc:. ?. Exerci�in�� liill iii�•�stm�nt �liscrctiun ��ithin th� ��ui�lclin�. ancf ��hjcc�i�•rs st�itcd hcrcin. Such cliurc:ti�m inrlucics clrcisi��i�s tc� hu�•, holci ur .tll scctu�itics in cinu�unts ancl prupoi�tic�ns r�ticrti�� ot� thc maiia�.:cr's currcnt in�•�stmcnt sU•atc��y and COI11j�1Illlll' \Vith in�•cs�mc:nt c�hjccti�•ts. 3. Prumptly inli�nnin�� thc I�uncl rc��ar�iin�� all si�;nilirant m:ittct:ti �ici7ainin;� lc� thc invl`SU11CIli Oi'thc liinci as,ct,. li�r cxam��lc: • ch.11l`��s in in�•cstiii�nt .tratcs:y. �c�rtfi�lio stnirturc ancl markct ��aluc ��r �,,.��,.1L't(I .��.; • thc manay�crs pru�ress in tncctin�� thc invcst�rniit uhjccti�•cs sct li�tlh in this cluctui�cnt: and • si�nifirant chan�cs in thc o��nershi��, alliliatic►ns, or�anization�il s�ilicturc. financi.�l c��nclitic�n. ��rofcssional pc:rsonncl staflin� and clicntcic c�l�thc in��rstmcnt tn.ina�cmcnt orz:�nizatiuns. =1. Na c1c��ialioii li•��tn �uiciclincs uncl ��hjccti��cs cstablishr�i in thc Slatctncnt ,hauld ucrur until aftcr such a,i�imunicati�m has uccurr�d an�) thc 1=und has ��ra��ccl such I (1 C�l'\'{:111U11 111 �\'1'IUII��. �. 'I'hc I�uii�1 ti�t7�r�ll�• �I�I��atcs tiill autlic�rit�� tu carli in��cstm�nt ►i1a�i:��cr li�r cxrrrisin�� ,ill �,r��x�� an�l rcicitr�i ill'Ullli` 11I'th� I�wui's in�•�stmcni ass�ts assi��ii�c1 t�� it. I:;��h mana��r shall E�r��in��ll�� „ic ,ill ��r��xi�s aticl rclatc�l arti��ns in a nr,►nnrr r��nsistcnt ��ith th� lun��-tci7n iiu�r�sts ��f thc I�un�1 aixl its f'c�i�tici��ants an�i [�cncliciarics. I:ach in��stm�nt m:in,��cr shall k�c�� clrtailc�l rcr��r�1s ��C all sai�l ��in_� ut�E�r��xi�s ancl r�latccl actiuna an�l ��•ill �c,m�,l�� •ith aU rc:�zulatoi-�• �,hli��ati��ns rclat�d thcrct��. "fhc I�un�i shall ��riu�lirall�• ,�u�1it an�1 rc��i��ti� rarh in��r,tmrnt mana��r's �,��liri�. arn1 �ictiuns ii� this ar�a. (►. l:ach In�•csti»cnt ��tana�.:�r sh�ill utilizc th� .:►ili� �1u� carc, skill. 4�rti�l�ncc aiul clili��ncc uncicr the rirctimstanccs thcn ��rc�:iilin�� that cx��ricncccl, in��cstmcnt ��rufcssi��nals ,�rtin�� in a likc ca��,�cit��. �is c� ti�luciary, anci tiilly fainiliar ��ith surh matt�i:� ��•uulci usc: iii likc acti�-itir, fi�r (ikc I�unci. ��ith likc: aims. ��hilc maintainiii�� a��E�ru�riatc clircrsilirati��n tc� .��i�i th� riska ��I' lar�� I��sscs, in ;icrurclnn�c ancl c��m�licincc �rith all a��licahlr la��s. t-�il�s c�iicl r��ulati��ns fi•��m I��c:�l. atatr, tccicral ancl intci7iati��nal ��ulitiral cntiti�s as it ��i�t.�ins t�� ti�luciai�� clutics an�1 res{�o�isibi{itics. 7. Notif�•in� thc �und ot' thc filin� of a la��•suit 1�� a clicnt :it;ainst thc managcr allc��in� brrach of Fiduciar�� dutv or uthcr ��illful conduct. l:Vf�LUr�'i'ION ��\D RI;VII:��' On a ti�}�cly hnsis, l�ut nut I�ss than (i�ur tii»cti a yrar, the Fun�1 ��-ill rcvic�� actual invcstmcnt resuits achic��c�1 hy cach mana��cr (��•ith a ��crs�icctivc tu��'ard ,i fi�•c:-}�car timc hc�ri-r.��n) tc� �1ct�ri»inc whcthcr: • thc im�cstm�nt mana��crs {�crli�rmc�1 in aclhcrc�ic� tu thc in��ctitmcnt ��hilus��rhy aiui F�olicy �.;UI(ICII(1Cti tiCl �tll'lIl I1C1'CI11: ancl • thc in��cstmcnt mana�crs ��crii�rtnr�i satistacturilv ��hcn com��arcd ��ith: - th� ��hjccti�'cs s�t li�rih in r�i��n�lix "r\", as a ��rint.�r}' cunsicici�tlic�n. - thcir o��n {�rcviuusly �tatai in��ctitmcnt stylc, - c�thcr in�'CtiUlll'lll Illana�crs, huth in assct class ancl iii styl� �ruuF�, - othcr rctiremcnt I�uncls, � sc��cr,�l �liffc��cn1 mark�t indiccs. I►i acl�liti�m tu rc;vic��•in�� c;ach in��rstmcnt manti��cr's rc:sults, th� l�unci ��ill r�-��:iluatc, li•��►n tii»c tu timc, its ��rc��r�ss in achic��in�� thc t��tal li�n�l, cc�uit��. tixrcl-incc►i»c, ii�tcrnatic�nal, ancl rash an�l r��ui�•alcnts s��:mcnt ��hjc;cti��c:s ��r��iuusly uutlinccl. 'I�hc ��cri�ulir r�-cvaluati�m alsu ��ill in��,lvc an r��alu;�tiun ot�thc c��ntinuccl a��r�i��riatc�icss ��f�: ( I) th� nu�nazrr st�-�irturc tict f��rth in �1��cnclix ��n��. (?1 thr all��c►tiun uC assrts atrn�nz thc man.��rs: an�1 (;) tlt� iii��cstmcnt ��bjcrti�•�s ti�r thc I�uncl's 11�sClti. '1'hc Fu��l Illay aE�}��i»t inv�stt»cnt umsullant� t�� assist in thc i�n-��in�� vc�luatiun ��rc�rc::s. 'i'hc r��nsultants scicctc�l hy thc 1=unci arc cxF��ct�d to b� Ii1I111I1.u• ��ith thc invcstm�nt E�racticcs of ath�r sintilc�r rctircmciri ��lanti �in�l ��•ill f�c res�i�msihlc ti�r su��cstin�� ;i�S»•u��riatc chan��cs ii� thc; F�u�d's in�•cshi�cnt E�n��ram o��cr timc. I�ilin�� Ittvrstitt�nt I'��IicY ll�,cm adu��ti�►i� hy thc Utist�cs, thc invcstincnt ��licy shall hc ��rcm�E�tly lilccl ��'IIII 1�1C I)C�1ill'II11CIll Oi' �-lana��mcnt ti�r��iccs, thc C'ity Clc:rk, an�i thc contiultin�� actuary. 'fhc: �ticctivc clatc of'chan��cs to the Im��stmciu p��licy will bc i l da`�s altcr thc filin� �1atr ��ith thr city. 12 f�PPE\'DIX t�: [=UND SEG�IEN"I' t�NU INU1�� IDUt�L `ir\Nt\GrR C;UII�I:LI\�l:S 1� J C'I'l'Y Ol� C'l.l::�lZ\t':�'t'l:R l:\-ll'l.OYl:(:S 1't:\SIO\ 1�[�1\l) I\�'I:�'I'��ll:v'I' �'I�Rl1C"l�l)IZI� Januai��. ?003 In��stmcnt \lai�a�_�r D��m�stic E��uity 5��:cialist ��lana�sc:r VlIIUC OCICIIIation [)umcatic i��uity tiE�ccialist �1;�naLer C;r��•th Orientati��n Iiucrn.11l011.1� I:c�uit�� S4�ccialist �lana��cr Domcstic Fixcci Inrcm�� S��rcialist �-lana��er Corc f�ixcd Inrumc Uricntati��n I -1 'I'�ir�,ct f\Iluratiun I 0'%, - =10°,�, I 0'%� -- �3U"!,� >'%, - 10" �� 30'%� - �0°.4� :�I'I'l:\1)1\ ��: I�11\I) SI:Ci\11�.\ I�:�\l) I\I)I�'ll)l�:�l. �1:�\;1(iI�:IZ (il�ll)I:I.I\I•.ti 1. \lana��cr Strurtur� �I�h� l�un�l ��•ill r�tain in��,tn��nt mancr��rs thut .E��ialiic in thc u�c ul� E�.u•ticular a„ct rlass�s. 'I�I�� tar��rt«1 �li�trihuti�►i� ul� I�un�i ;is,�t. amun� ��,��icilist m;ina��rs ��ill l,� ;►s illusU•atccl �►n th� E�r��iuus E,a��c. 'I�hc I�inul h�lic��. that thc rstahlish�cl sU�u�tur�: • is r��nsi;t�iit ��ith th� �,r:�rtir�s ufuth�r �imilar-,ii«I r�tir�in�nt liin�lti: ;►n�l • c��lcrs an .i��E�ru��riatc "hlcn�f" c�f' in��sUncnt ;h�lrs thc►� ��ill E,r�uluc� a aul�ticicnt Ic:��l ut��1i��rsiticati��ii vxi in��stm�nt r�turn u��r tiiii�. ?. ('t�ah I�I��v :�II�►r.�ti��n 'I�h� alluc.►tiun �,I� ass�ts i; ccrosist�nt ��•ith th� I�unc1's cl�sir� t�� c1i��rrsil�� its ii��c,1ii��i�t I11.1I1i1��CI11C111 �lfl1`�I'(llll. 'I�hr f�uncl i►itc:n�ls tu rr��ir�� x� a F�rriu�lic ha,is the all��raticm ufasscts am��n�� its ii��cstmciit mana�;crs. �1�� thc c�trnt that it ia ��rartirall�� ussihlr. it is c��c:ct��l that an�• r;►sh Ilu�� ill hc: all��catc�i tc� ur t.ikrn fi-um th� mana��rs in th� SllI11C E�ru�,u►�tiuii, that �ach mana�s�i's c�sscts rcF�res�nt tu tutal ti�n�1 asscts in th� tar��ct �issct allocati��n c�utlin��1 ��rc��iuusl��. :. 'I�nistcc t.)tiliiatic�n Rcstrirtiuns All clomcstic I�unc1 .�ss�ts. in any ti�rm, shall hc s��lrly and cxclusi��l��: (,i) srttic�i at. (h) h�lc1 in cutittxiv at. .inc1 (r) tiafc-k�rt �,nl}' at cu�tcxlianti cirsi��natc�i h�� thc l�uncl at its sulc �liscrctiun. Int�i7�atiuna) I�unc1 as�cts may bc; h�lc1 in ccmm�in��l�c1 �icc��uiits �,r��vicic�l that �ill ��I�thc n��r•tnal Eirotccti�m ��i'th� I�un�i's assrts is ��rc��•icicd ti�r. 4. "f�.1lltiilClll)Il t��nt ��ssi��nmcnt Itrsh•icti��tis �1ssi�nm�nt �►f�s��ccitir hrukcra��c tii7i�s, cic,�l�rs, li►�ancial intitituti�►ns, an�l uthcr U•aiisacliut� ex�cutic►n a�cnts t�� all in�•�stm�nt mana��i-� shall be the s��l� res��itsihility ut� thc I�unc1. I'I'l)Ill hI11C lc) IIl11C, thc f�uncl at its sulc disrr�tion nr�y s�ccily ccrtain U•aiisartic►n a�riits that invc:stmc�it trantiactic�ns sh.ill hc; �xcculccl thrc�u�h. j. Sh��rt Scllin�ancl Itcl,tt��l R�sU'icticros 'I�hcre sht►II hc nci: �hc►rt scllin�;, it�iit-c��lla�craliicd an�l/or non-��cli�•�r��l rc��urchasc a��r��mciris, usc c�l� financi.�l fiitures ur uptiuns, ii�m-markclablc �lircct in��cstmcnts in c��uity ��i• cicht ��ri��at� �ilacrmcnts c�r leasahac:ks c►r any othcr srcrializal in��cstmciit acti��ity ��ithoul lhc ��riar �vritt��n cunscnt c�f'thc f�un�1. I> (,. I,iyuiclitv_cincl �larkctahilitv_It�strirtic�nti l.i��ui�iity a►xl markctal,ilitv I�rc��u�ntly ar� E��rcci��i tc� bc: a tiu�rti��n uf th� ��ualit�� ancl th� inark�t ca��italizatiun ��I� �ach s�cw•ity hulclin�.:. I�r��m thc: I�unc1's E��rspccti�•�, li��ui�fity aiul m.►rkctahi{it�� alsc� Ill��y h� a �Llill'lil�ll ut� a mana��cr's a��rc��atc h��lciin��s in a railirufar sccuritv. 'I�he I'I.III ��t:Ilt'�'l:S lllill 1Il Ill��cstiiirr�t mana�_�r should nc�t buy or hul�1 a sc�urity li�r th� I�uncis ��rtli�liu iCth� aL��cc��atc: hul�lin�� amu�i�� .ill c�Cthat mana`�cr's uthcr ac«�uiits i�� Ihat s�unc: scrtn•ity wc�ulci rc:strict thc mana�_�r's ahilit�• tu c:xrcclitic�usly lic�uiciatc thc ��siti��n .11 :It1V llllll'. I�r��m a tc�t.il l=und ��crsE�crti��c. thc I�und h�li��cs th� r��ll�cti�•c holclin�s am��n�� all I�un�1 I11�1I1�1�.;CC5 ilCl'C)UIl1S I11 t�lil� tillllll' til'Clll'I�i' \�'011�(� fl.'ti(Cll'� il�� Ill�lll:l`�l'1'ti Cll��l'l'�I�'l' �l�II�I�V �ll cxE�cclitic�u�ly li��uiclatc thcir res��crti�•c ��c�sitiuns in th.�t samc sccurity. "I'h�rcfi�rc, th� I�un�l r�tains th� sul� ri�ht to limit anv mana��cr's hulclin�; c�t� any s�c�n•it�r in Ihc I�uiui at any timc in orcicr tc� prc:vcnt thc pc►tcntial lur said l�un�1's rc�llccti�•c li��ui�lati��n ancl mark�t risk. 7. Usaec c�1'C'ustc�clian �'I�I I� ��n .�II Icilc ('ash It�strictic�ns Any i�ilc cash not invcstecl by thr invcstment mana��crs shall hc in��cstc�l c1�►ily via ,in automatic s��ccp S'I'IF inana4�c;d by thc ('ustc�clian c�r by othcrs in bchalf��f cach in�•csUnrnt mana��cr. It is thc l�un�i's uhjrcti��c tu ha��c nu icll� rash at an�• timc in �►ny mana��cr's ��urtti�lic�s. � - �. l)sa�e ��t'Cru�� Assct Sc�mcnt In��cstnwnt (�uiciclinc IZ�stricticros Whcn a mana�cr's holdin�s inclucic I�unc1 asscls ��utsi�lc c�l' thcir ��rimary assi�nc�1 ,issrt tit;f;I11C111 :1titilfLtlllll'lll (l`.4:. .l (�I'1I111U7� c�UI11c:SlIC Cl�Ull�' I11.lIl.l!!CC il�ti(1 �lcl�c�ti ti11111C Cilti�l cc�ui��,�lcnts ur tixcci inccm�c sccuritics as ��•c:ll ��s c��uities) thc ��uiciclincti statccl th�rcin li�r thc nc�n E�rimary assct sc�:mcnt shall fiilly a��ly t�� thc i�iana�cr, in aci�lition tu thc ��rinuu'Y assct ��ssi�n�d sc�mcnt �uiciclincs. �). l)i��crsificatiun Itestrictiuns l:�ccpt fi�r critcria nc�tc�i clsc��•hcrc: in this l'olicy an�i in sE�ccitic ��-t•iticn ccmU•t�cts ��ith each mana�cr, th� aprruF�riat� an�1 rrasunahlu cli��crsilicatiun ut' sccurilics by such tact��rs as �:��r��hy, rr�ion, sc��erci�n risk, nativc currrncy, ��uality, cuu��n. �uunUy risk, maturity. iiulusUy. duration, ancl scctor is ��ithin thc fiill cliscrctiun an�l res��onaibility c�l� thc in�'CSU11CI11 I11�Ili1�CfS. 1l?. Othci• (�bjcctivcs, Guiciclincs ancl Itctitriclicros I�urlhc��inin,� I l, 'I'hc I�unc1 may ��-ill �1��r1�� a�ciiti��nal �,hjccti�•�s. __uiciclincs ancl restricti��ns and ma�• umcnd thc P�►lic�• frorn timc to timc. {-tit-{}�-Ittttti�rc�fir��ihet-ttt��t��-t�ti-iE-tic�e��t�-H(��tt��rit�f�-) I I. I�un�1 Sr��mrnt Gui�lclincs I��IIu��in�; ,trc ��uiclrlin�� ancl ��l,jcrti��c� �stahlishc�l ti�r thc tiin�l s��mcnts ,in�1 li�r rc�rh in��stmcnt mana��cr rctain�cl h�� thc I�unc1. Incli��icival man.i��r ��ui�l�lin�s ar� �1�si��nccl tu h� r�msist�nt, in az��rr��atc:, ��ith th� t��t[lI f1111(I as,�t all�►rati�m ��ui�l�lincs ancf in��sUncnt ��hj�cti��cs sct fi�rth in thc �tat�m�nt uf� In��;tmcnt Ohj��ti��cs ;in�l Guici�lin�s. 1 I A. Uumestic I:��uity Sc�,mc:nt I:anc ��uity m,u�a��cr is c:��ctccl tu ,ulhcrc tc� Ihc ti�ll�►��•in� ��ui�i�lin�s: • I:c�uity h��lclin�.;s in any un� cc�m��an�• (incluclin�� cc�ii�mun and E�rcfcrrcd stc�rk, cun�•crtihlc s�curiti�. anc) cicht )�h��uld n��t cxccrcl IO';�� f� thc markct valuc cii�thc mana`�cr's ponion ��I�thc Func1 �vith��ut thc cunscnt ��t'thc I�unc1. • I:��uity hulclin��s in any un� inclusti�• (as dcfin�ci hy St�indarci & Pc�or's) shuuld n��t c�cccd �0'% of thc markct ��aluc ��t' Ihe mana��cr's ��ortion of the Funcl. • C'ash cc�ui��alcnts an�1 ti�c�l II1CC1111c; ��c��itions sh��ulci n��t c�rccci t��•c:nty ti�•c r�rrcnt (2A�'%) c�l� th� mana��cr's ��ortfolio tx�irtt��ir��l�il��--l�tttx#-tns�ts. A n�ana�cr may invest in ti��d incumc s�rin•itics Fi:c�-�e�tiriti�:;-��-+i}rttt��r�i#�Nt�- Ni`E?-j`eHf�-EtNllflittfiij'-� li��)fO�tl'll`(I I'l'lUlllti OIl tiIICII til'CUI'111Cti arc }�crccivcd to bc cc�mpetiti��c ��•ith potcntic�l cc�uit�� rcturns. Ilc��vcvcr, tizcd 111COI11C sccuritics ��ill sl3ett�e#-not r�prrscnt m��re than t��•cnty-livc percent (2�`%�) uf il Illilllil��cr's pot1fi�lio �t�ithout thc ��ri��r ��rittcn cunsent ��1'thc l�und. • NO j)UI'C�I�tiC ti�l£l�� hC Ill:l(�t; �)j� illl 1I1\'c:tilI11C111 I11A11.1L�1'�Ilil� ii�}it�il \VOU�(� causc a holdin� to cxccecl j°4� ul'thc: istiuc: outst.indin��. 1 11�. Intcrnational l�quity Sc��mcnt I:ach intci7�ational cc�uity m�tna�,cr is c��ccicd tc� adhcrc tu thc fi�ll��in�� minimum �ui�lclincs: • I��uity holciin�s in any c�nc c��mpai�y and all uf its subsidi�rics and at7iliatcs (inclu�lin� cc�uitics, cunvcrtiblc sccuriti�s ancl cicht) sh��uld n��t cxcccd tivc te�� perccnt ;'%� -�3�- ��f thc; markct �•:�lue uf� llll` Ill(llla�cr's E��,rti��n of thc �und �ortti�lio �vithutU thc {�ric�r writtcn conscnt ��I�thc I�und. 17 • l:c�uit�- h�,l�lin��s in an�� un� II1lIltSll')' S�1l1UIlI Illtl l'\Cl'�lI �I�l�' �lt;l'CCill (�U°��) �►I' thc nr.�rk�t �;ilu� ut' th� mana��r': ��rti�m �,t� thc I�un�1 �i„i�ii�liu. I�.��uity hc�lcli»��s in �in�• ��n� .crt��r (�.�,.. r��nsum�r ��ciical. �i��r��•, t�rhtx�l��•. �tr.) •hc�ulcl n�,t �zr��cl tilt�• (�O°��) c,fthr i»;irkrt �:ilu� �►I�ih� n�aiia��ri's �,��rtti�li�� ithuut th� ��ri��r ��ritt�n cunsc��t �,t�ih� I�un�1. • ('ash «�ui��alcnts an�1 lixc�l inr��m� E,�,siti��n: ;h��ul�l n��t c�r�c�l litt�• �irr�ri�t (iO"��) ut�th� mana��r's ��urtiun ut�th� I�un�1 a;>�ts. ;� i»;�na��r ii�,�� in�rsl in ii��cf inrumc scruriti« (i.r. scc�n-iti�s ��•ith i»�,r� than t��c� ��ars lu nr�tw•ily) iC ��rc�j�ct«1 r�turn� un surh s�curiti�� ,u•� ��rrri��1 t�� hr rum��ctiti�•� ��•ith �i��t�ntial ��uity r�turns. • �1'h� n�cina��cr mav cnt�r intu ti,r�i��n cxrh.u��c rc�iur,irts �m rurrcnry ��r��•i�f�c1 that: (:i) �Ul'Il l'ltllll.irts ha�•c a maturit�� c�f ��nc ��c:�r �,r Icss, an�1 (h) usc ��f� sunc �u►�h•acts is limitccl s�,lrlv an�l �xrlusi��cly t�� hc�l��ii�� cw•rciiry �x��usurc rxistin�� •ithin th� mai�n��c►'s ��rtti�li��. 'I'hc intrnt is t�� 1am��cn },urtti�li�i �•�,latilit�� ancl ��rc��cnt curr�nry I�,;s. �I�h�re shall hu n�� li►•cct ti�rci��n cun•cncv s��cculilll(111 l)f :u�y r�l:llt:ll Itl�'t'titlllCllt acti� it�'. • �l'hc mana��r ma�� {�urch:�sc ��r scll run•cn�y c,n a s��t hasis tu acr��mnu��latc s}�ccitic s�curitic:s scttlemcnts. 1 I('. 1=ixccl Inrumc ti��mrnt l:ach tixc�l irc�►i»c nr.in,��cr is cz��cctcd tu aclhc:ru ta thc li�llc��•in� �suidclin�s: • ��II I�ixrd Incum� Sccuritics hcl�l in cach ��onlolio shc�ul�f ha�•e a ��laody's, ur Stcinclar�l << Pcu�r's quality r�lllll`� c�1' nu Icss than In��cstmcnt Gracic frum any ��f thcsr r.�tinz sc��:ccs. ( F��r an issuc. ��•hirh is s{�lit-ratcd, thc I��cr quality clrsi��nati��n ��ill �c�vc�7�. Oncc a sectn•ity lalls bclu�v in��cstm�nt ��ra�1c th� nxm�y mana�cr ��ill notif'y the ��lan of thr c1��n��racic c» soc�n as �irartical. Inc:luclrcl in that notification ��•iU hc how thc m��ncy mana��cr will handlc thc hcic+��r in��cstmcnt �radc s�curitv. • 'l�hc di��crsification of sccu►-ities hv maturitv. quality, scrtur, ccxiEu�n ancl �zruzr��hy is thc: resrunsibility c�f�thc mana�cr. • 'I'hu cx�x�surc c►t'cach mana;��r's ��urtti�li�� t�� any singlc srcurity ��ther than a sccurity hackcd hy thc tiill taith an�i crcciit ufthe U.S. G��ci7u»cnt c�r any oi' its instnimcntalitics sh��uld bc limit�ci tc� fi�•c 5-1-0'�=��f thc mana�cr's �x�►-tic�n of'thc Fund mcasurrd at market �-aluc. • Nu ��urchasc; sh��ll bc macic hy a Fi�cd Incc�mc ,ytilllil�Cl' \1'IIIC�I Wl1UIlI C�iusc 1` a h��lclin�� t�� rr��l tcn 10 -1 �';4� ul�th� i;,ur uutst.lilt{III��. • �fh�r� sh,�l) h� nu us� �,t� ��ti��ns. tinancial liitur<<. �irri�ati��s ��r uth�r s��ri.ilir��i in��•tm�nt arti�•ity ��•ith��ut th� ��ri��r ��ritic�� a��4�r��•al ��I� th� i��,�i. • N�►t m��r� than 1O"�� ul':lil IIl\'CtiII1lCill Illcurr��r's �i�,rtli�lic�, ralu�ci at ii�,�rkrt. shall bc in��st�c1 in r�riificatcs ��t� �lc��sit. tim� �1��,:its. hank�rs ac�c�itanc�., r��mm�rrial E�a��cr, ur r�l.�tc�l in��.tm�nts c�l' a si►r�ir issucr tinaticial in.tituti��n ��r fin;�neial instituti��n h��lclin�� rumE�an�� lamil��. I 1 U. (':�sh an�1 I:�lui�_,il�nts ti��mcnt :�Ithuu��h in�•cstmcnt m.�n�i��crs ��ill h� r�tain�d li�r their cx�irilisc in :i ccrt.�in in��c�tmcnt tiLLIllClll, it is ��,�rt��1 that fi•c�m timr-t��-time rach ��•ill ha�•c s�►mc ca;h anci c��ui��;il�iit� iti thcir ��rtli�li��s as .� r�sult ��I'clisrr�ti��nar�� ass�t allc�ratiun clrcisiuiis. r�ny icllc ra.h nut in��cstr�i hy thc in��cstm�nt n�nn.��crs shall be invcstc�l cic�ily ��ia an aut��matic s��cr�� S'I'll� mana��ccl hy thc custoclian. It is thc I�uncl'. objc:cti��c tu h�i��c no ic11c: rash �it an�� timc in any mana��cr's �x�i�tfi�liu. 1 I l:. I'��ulccl V�hiclrs "f�� thc cxtcnt Ihat thc I�unci in�•�sts a�x�i�ti��n ��fthc I�unci's asscts in commin;:,lcd ��chicl�s ur institutiuna) mutual lun�is, thcn thc in��cstmc:nt �uid�lincs c,l'thc I�unci's �,rus�icrtus �vill hc a�lapt�cl as this liii�d's ��uicf�linc:s. 1 1 F. ��tastcr ftc��urchati� ��r�cmcnt I I1C lllllllCy manci��crs and salckcenin;� custc�dian ��•ill us� a mast�r rc�wrchasc ,►��rccmcnt whcncvcr a��ru��ri��tc. t�ll rcpin•chase a��l'CCI11CIllti transacti�ms shall .uih�rc tu thc rcc�uircmcnls c�f�thc mastcr ir��urch.�sc a:��:emcnt. I �) 1?. Incii�•iclual ��i.in.��cr Ihs�ril�ti�►ns nn�1 1=i��c-1'�ar I:xlicctatiun� r\II �x��crtati��ns .lfl' IllII11111U111ti. t��I IIl\'l'tiUlltlll I11ilIlA��rs �hall �xc��f thc statc�l CX�)CClitllllil�, --- ---- - — - --------� Imr.hn.nl \I.in.i_rt I'rri�nUlr I'rrrrnlil� � i ��rrt.uion li��rrt.u��n � h�l.ui�r lu It�l.ui�r In i � �th��r \I:in;iern �i� Ir Pr�•i� � Uumr.ui I yum ��k•ri.ili.� \Lui:i��r >nih �uU� 1 �';ilur 1 �nrnt:ih�m i I)�nnr.ur Lyuit� `�kri.ili.t �t.�n.ic�r >oth �uth � I l �iu�� th � �nrntaUun Imrrn.ih�m:J I ��wi� �I4h �o' `��tiiah.� \t,�naer� I)��mr.ur I ��rd Inr�nnr ti�kt i.ih.t \I.m;icrr >I lih >I1. ('��rc I ��rJ Inrumr l )nrntah��n (';i�h .irnl I qw�:drnt..uid ;Illh �Ilih ' � I 11' Pun�idiu� In adc�iti��n, cach clam�stic cc�uity and tixed incom� mana`��r is cx��ctr�1 t�� .irhicvc E�ositi��e risk-acljustccl (al��ha) ��crti�r�lilnc< <�vcr a threc (3) or ma�imum ��1� (�) ycar {�criocis. I 3. Rc��artin�� Ra uircii�cnts: Cc�nsultant Rct�oi�tin� 'l�hc Prnsion Ilincl's Consult.�nt will �rovidc qu:irterly rcEiorts tu thc Pcnsiun I�unc1 �,�hich, at a minimtm�. ��ill rcvicw the ti�lluwin� inti�nnation abuut c.ich Im��tmcnt Mana��cr ancl the 'I�otal Funci: • �1'C11'IC��' (li lI1C Ill(ltil I'CCCiII C�Uill'Itl' FI11(J )'l`alf-10-(��l�l' II1VCtii111C11� IIl(�ll'i1�01'ti • 'fotal Pund assct allocati��n • Cc�m��ariscm ol't��ta) I�unc1 rcturn ��crsu� thc customirccl l,cnchmark • Pcrti�rmancc results Uy in�ii�•idual Mana;�c:r and "I�c�tal I�un�1 Ctlill�l�l1'l'lI l0 appro��riatc bcnchmarks. ?0 lii��stm�nt Itcnc�rtin��: 1'r��xv Vulin�: • Ui� n��t I�ss that an annu,il hasis th� 'I'rust�es �+�il) r�rci��c a r��urt ,h�►��iii� a li.t c�fall c�l�thu srruritic, h�lcl hy ii��•cstmci�t manu��cr. �I�his rc�u�i1 ��•ill hc ��n��•i�l��f hy th� sat�kcc��inL rust��lians an�l shal) inrltul� lh� rui�tli�lic� h�� cL•��s ��r ty��. ho��k �•aluc, iiu��mc �;irn��l. .�n�l markct �•alu� .�s uf thc �latc �►f th� r��urt. 'I�his ►•c��i�t ��ill hc lilr�l ��ith Ih� rit��. •On nut Ictis that a��uart�rly hasis, mun�y mana��cr ��il) rc��ui�t tu thc I'lan thcir ��r�►�y vutin�; clurin�� thc Icisl ��criuci. lZc��i�� uf� I'ulicv 'I'his Statcmcnt ��f lii��cstnunt I'ulicy nn�st hr rc��ic�rccf aniivall�� by thc i'c:nsiun Im�csU»cnt ('��mmiucc ��ith �� rcc��mmcndatiun I�� r��iti� ��r c��iilirm t�� the't'ni�tccs. ��lcctin� /�L�nda ��t cach mcctin�, thc �vrittcn ancl ot-�I ��rescntations shall co��cr thc follo��in�� points: • A rc�x�rt of ��crti�nn�inrc ti�r ��ast rcri��ds. Standard timc periads fi�r �ach rcport will bc; last qu�ii�cr, last y�ar, yc:ar to datc, latcst hvclvc (12) m�mths, twc� ycars, thrcc �rcars, ctc.. ��nd sincc inccption and by calcndar yc.ir. Rcturns shc�ul�1 hc annualiied ancl c:.tict►latecl on a timc-wcighted basis tor thc total Ex�rtti�liu. r�ll rcturns sh�xtld includc �ricc changc rlus incc�mc anci/ur �1i��icicnds. • Discussion of thc rationalc; lor �crfi�rn�ancc results t>y r�latin�.: tli�m spccilically to in�•cstmcnt str�tc��y anci tactical ciccisic�ns implcmentccl clurin� thc ctu-rcnt rc��ic�� ncriod. • I)iscussion of thc invcstmcnt managers specific stratc:�y ti�r thc �ortti�lic� u��cr thc ncxt six tc� t�vclvc nu�nths with spccilic rcicrcncc to assct allocation and sccto�' WCIL!IlUfl�, as ar�ru��riatc. • Suppc�rtin� cliscussion af thc next period's s[r�tc��y with rcicrcncc to invcstmcnt mana��cr's ca{�ital I11�1f�C1 and reonomic assumptiuns, il' arplicablc. �� 'f�n (12) c��ic:s ui'thc ��rittcn summary shuuld bc rccci��c�1 hy thc I�unc1 at Icast li�•� (i) husincss cl�iys ��ric�r tu thc mcctin��. "I�hc f�uncl is intcr�st��l in li�stcrin�.: an cilcrti��c ��►rkin�� rclatic�nshi�� with its ii�vcstmcnt maiia��crs thru�i��h a�lisci��lin� uf ��u��c1 cc�mmunicati��ii. 'fhc cstahlishmcnt c�f C)hjr�ti��s. I'crti�rm,ii�c� Stanciar�ls. Puli�ics ancl Guiclrlincs, cin�l (Z�puiliii�� Itr��uircmcnts is inlriul�d t�� ru�•i�1c: thc I�unci ��-itl� a��u��1 li�un�l��li�iii li•��m ��hirh to un�1��:�tnn�1 s��c:c:itic mai�a�em�nt st��lcs an�l .tratc��ics, c��aluatc results and ��crscc ��ru��ress t��•;u'cl ��'crall in�•cslntent ohjccliv��. 'I�hc I�uncl shc�ll bc utiin�� a thicci ��at�t�� c:��nsultai�t scl�ctr�1, hir��l .incl �iircctcci by thc I�unci lu: ( I) assist in a��praisin�, ��rfi�rn�anc�. (2) tu ��ru��icic F�crli�rmancc cumE�:u-is�m clata ��ith ��thcr rctirrm�nt �ilans. se��ral ca��itcil iiiarkct ituliccs, ancl tu O��1C1' II1Vl`ti(Illl'll� I11�lIl�l�C1'�. �� ilStilti( I11 l`,�'il�Uil�llll� Illilllil�`!l'C tii�'�C I�ItiCl�l�llll' illll� �)l`CI' cum��aris��ns. (-�) assist in sU•atc�ic tiin�iinL .�nc1 I11IlI1ilLl'lllc'lll ��f thc I�unc1. .incl (>) othrr lactc��s thc I�un�l d�cros a��ruF�riatc. In�•csU�icnt managcrs arc: rcc��iircd to su��E��i�t ancl assist thc rc�nsultant ��•ith Ihcir liill�at ax��wr.iti�,n. ��