The URL can be used to link to this page

05/18/2009 PENSION TRUSTEES AGENDA Location: Council Chambers - City Hall Date: 5/18/2009- 9:00 AM 1. Call to Order 2. Approval of Minutes 2.1 Approve the minutes of the April 13, 2009 Pension Trustees Meeting as submitted in written summation by the City Clerk. Attachments 3. Pension Trustee Items 3.1 Employees listed below be accepted into the City of Clearwater's Employees' Pension Plan. Attachments 3.2 Gary Costa, Fire Department; Wayne Andrews, Police Department; Daniel Higgins, Police Department; Ronald Flanery, Police Department; Coral Lakin, Public Communications Department; Raymond Pelote, Public Communications Department; Nita Frazier, Finance Department; Mary Youngblood, Solid Waste/General Services Department; Salvatore Ventura, Public Utilities Department; Jesse Johnson, Public Utilities Department; Linda Hamrell, Library Department; Patricia Rice, Library Department; Patricia Lafferty, Gas Department; John Henry, Gas Department; Thomas Findley, Parks and Recreation Department; and Howard Selig, Parks and Recreation 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. Attachments 3.3 Accept the Actuary's Report for the Employees' Pension Plan for the plan year beginning January 1, 2009. Attachments 3.4 Discussion of Pension Plan Alternatives Attachments 3.5 Review of the pension investment performance for the year ended December 31, 2008. Attachments 3.6 Approve staff’s recommendation to move the money from Independence Investments to a Northern Trust small cap growth index fund and to terminate the contract with Independence Investments. Attachments 3.7 Approve the recommended administrative expenditures totaling $321,500 for fiscal year 2009-10. Attachments 4. Other Business 5. Adjourn Pension Trustees Agenda Council Chambers - City Hall Meeting Date:5/18/2009 SUBJECT / RECOMMENDATION: Approve the minutes of the April 13, 2009 Pension Trustees Meeting as submitted in written summation by the City Clerk. SUMMARY: Review Approval:1) Clerk Cover Memo Item # 1 Attachment number 1 Page 1 of 2 Item # 1 Attachment number 1 Page 2 of 2 Item # 1 Pension Trustees Agenda Council Chambers - City Hall Meeting Date:5/18/2009 SUBJECT / RECOMMENDATION: Employees listed below be accepted into the City of Clearwater's Employees' Pension Plan. SUMMARY: Pension Name, Job Classification, and Department/Division Hire Date Elig. Date Jacqueline Calder, WWTP Operator C/Public Utilities 3/16/09 3/16/09 Benjamin Gibbs, WWTP Operator Trainee/Pub. Util. 3/16/09 3/16/09 Review Approval:1) Clerk Cover Memo Item # 2 Pension Trustees Agenda Council Chambers - City Hall Meeting Date:5/18/2009 SUBJECT / RECOMMENDATION: Gary Costa, Fire Department; Wayne Andrews, Police Department; Daniel Higgins, Police Department; Ronald Flanery, Police Department; Coral Lakin, Public Communications Department; Raymond Pelote, Public Communications Department; Nita Frazier, Finance Department; Mary Youngblood, Solid Waste/General Services Department; Salvatore Ventura, Public Utilities Department; Jesse Johnson, Public Utilities Department; Linda Hamrell, Library Department; Patricia Rice, Library Department; Patricia Lafferty, Gas Department; John Henry, Gas Department; Thomas Findley, Parks and Recreation Department; and Howard Selig, Parks and Recreation 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. SUMMARY: Gary Costa, Firefighter/Driver-Operator, Fire Department, was employed by the City on April 2, 1979, and his pension service credit is effective on May 6, 1980. His pension will be effective May 1, 2009. Based on an average salary of approximately $71,253 per year over the past five years, the formula for computing regular pensions, and Mr. Costa’s selection of the 100% Joint & Survivor Annuity, this pension will approximate $55,779 annually. Wayne Andrews, Police Lieutenant, Police Department, was employed by the City on October 13, 1980, and his pension service credit is effective on that date. His pension will be effective April 1, 2009. Based on an average salary of approximately $91,712 per year over the past five years, the formula for computing regular pensions, and Mr. Andrews’ selection of the 100% Joint & Survivor Annuity, this pension will approximate $70,550 annually. Daniel Higgins, Police Officer, Police Department, was employed by the City on January 17, 1987, and his pension service credit is effective on that date. His pension will be effective May 1, 2009. Based on an average salary of approximately $67,609 per year over the past five years, the formula for computing regular pensions, and Mr. Higgins’ selection of the Joint & Survivor Annuity, this pension will approximate $41,368 annually. Ronald Flanery, Police Communications Operator Trainee, Police Department, was employed by the City on August 9, 1993, and his pension service credit is effective on that date. His pension will be effective July 1, 2009. Based on an average salary of approximately $43,229 per year over the past five years, the formula for computing regular pensions, and Mr. Flanery’s selection of the 100% Joint & Survivor Annuity, this pension will approximate $18,852 annually. Coral D. Lakin, Graphics Designer, Public Communications Department, was employed by the City on December 15, 1986, and her pension service credit is effective on that date. Her pension will be effective June 1, 2009. Based on an average salary of approximately $39,265 per year over the past five years, the formula for computing regular pensions, and Ms. Lakin’s selection of the Joint & Survivor Annuity, this pension will approximate $24,230 annually. Raymond Pelote, Graphics Technician, Public Communications Department, was employed by the City on August 7, 1989, and his pension service credit is effective on that date. His pension will be effective September 1, 2009. Based on an average salary of approximately $36,431 per year over the past five years, the formula for computing regular pensions, and Mr. Pelote’s selection of the 100% Joint & Survivor Annuity, this pension will approximate $19,654 annually. Nita Frazier, Accounting Clerk, Finance Department, was employed by the City on May 30, 1983, and her pension service credit is effective on October 1, 1985. Her pension will be effective June 1, 2009. Based on an average salary of approximately $32,319 per year over the past five years, the formula for computing regular pensions, and Ms. Frazier’s selection of the 100% Joint & Survivor Annuity, this pension will approximate $20,710 annually. Cover Memo Item # 3 Mary Youngblood, Transfer Station Operator, Solid Waste/General Services Department, was employed by the City on August 27, 1979, and her pension service credit is effective on that date. Her pension will be effective June 1, 2009. Based on an average salary of approximately $36,527 per year over the past five years, the formula for computing regular pensions, and Ms. Youngblood’s selection of the Joint & Survivor Annuity, this pension will approximate $29,870 annually. Salvatore Ventura, Public Utilities Technician II, Public Utilities Department, was employed by the City on December 27, 1983, and his pension service credit is effective on that date. His pension will be effective April 1, 2009. Based on an average salary of approximately $42,614 per year over the past five years, the formula for computing regular pensions, and Mr. Ventura’s selection of the Joint & Survivor Annuity, this pension will approximate $29,610 annually. Jesse Johnson, Public Utilities Supervisor II, Public Utilities Department, was employed by the City on December 27, 1983, and his pension service credit is effective on that date. His pension will be effective June 1, 2009. Based on an average salary of approximately $52,942 per year over the past five years, the formula for computing regular pensions, and Mr. Johnson’s selection of the Joint & Survivor Annuity, this pension will approximate $36,988 annually. Linda Hamrell, Librarian II, Library Department, was employed by the City on May 5, 1986, and her pension service credit is effective on August 4, 1989. Her pension will be effective October 1, 2009. Based on an average salary of approximately $55,955 per year over the past five years, the formula for computing regular pensions, and Ms. Hamrell’s selection of the Joint & Survivor Annuity, this pension will approximate $30,472 annually. Patricia Rice, Library Assistant, Library Department, was employed by the City on August 4, 1988, and her pension service credit is effective on that date. Her pension will be effective May 1, 2009. Based on an average salary of approximately $31,196 per year over the past five years, the formula for computing regular pensions, and Ms. Rice’s selection of the Joint & Survivor Annuity, this pension will approximate $17,847 annually. Patricia Lafferty, Senior Service Dispatcher, Gas Department, was employed by the City on October 26, 1988, and her pension service credit is effective on October 1, 1994. Her pension will be effective June 1, 2009. Based on an average salary of approximately $42,324 per year over the past five years, the formula for computing regular pensions, and Ms. Lafferty’s selection of the Joint & Survivor Annuity, this pension will approximate $17,439 annually. John Henry, Service Dispatcher, Gas Department, was employed by the City on March 8, 1993, and his pension service credit is effective on December 13, 1993. His pension will be effective June 1, 2009. Based on an average salary of approximately $36,486 per year over the past five years, the formula for computing regular pensions, and Mr. Henry’s selection of the Joint & Survivor Annuity, this pension will approximate $15,496 annually. Thomas Findley, Recreation Programmer, Parks & Recreation Department, was employed by the City on April 22, 1991, and his pension service credit is effective on that date. His pension will be effective May 1, 2009. Based on an average salary of approximately $33,351 per year over the past five years, the formula for computing regular pensions, and Mr. Findley’s selection of the Joint & Survivor Annuity, this pension will approximate $16,514 annually. Howard Selig, Parks Support Specialist, Parks & Recreation Department, was employed by the City on September 5, 1973, and his pension service credit is effective on March 11, 1978. His pension will be effective June 1, 2009. Based on an average salary of approximately $57,369 per year over the past five years, the formula for computing regular pensions, and Mr. Selig’s selection of the Joint & Survivor Annuity, this pension will approximate $49,223 annually. These pensions were approved by the Pension Advisory Committee on April 9, 2009. Section 2.393 provides for normal retirement eligibility when a participant has completed twenty years of credited service or has reached age 55 and completed ten years of credited service in a type of employment described as “hazardous duty” and further defines service as a Firefighter Driver/Operator, Police Lieutenant, and Police Officer as meeting the hazardous duty criteria. Section 2.393 also 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. Mr. Costa, Mr. Andrews, and Mr. Higgins qualify under the hazardous duty criteria. Ms. Lakin, Mr. Pelote, Ms. Frazier, Ms. Youngblood, Mr. Ventura, Mr. Johnson, Ms. Hamrell, and Ms. Rice qualify under the age 55 and 20 years of service criteria. Mr. Selig qualifies under the thirty years of service criteria. Mr. Flanery, Ms. Lafferty, Mr. Henry, and Mr. Findley qualify under the age 65 and 10 years of service criteria. Cover Memo Item # 3 Review Approval:1) Clerk Cover Memo Item # 3 Pension Trustees Agenda Council Chambers - City Hall Meeting Date:5/18/2009 SUBJECT / RECOMMENDATION: Accept the Actuary's Report for the Employees' Pension Plan for the plan year beginning January 1, 2009. SUMMARY: The January 1, 2009 actuary report for the Employees' Pension Plan indicates a minimum City employer contribution of $23,948,586, equivalent to 29.17% of covered payroll, is required for fiscal 2010. This is an increase from the fiscal 2009 required contribution of $10.1 million, or 12.54% of pay. The actuarially required minimum contribution, per State Statute, of $23.95 million exceeds the minimum required contribution per the plan ordinance of $5.75 million (7% of covered payroll). The increase in the required employer contribution is primarily due to a negative actuarial investment return (5-year moving weighted average) of (10.61) percent versus the prior year's positive 5-year weighted average return of 10.68 percent. The plan's expected investment return was 7.5 percent. Partially offsetting the increase due to investment performance were decreases due to: a decline in the number of active employees from 1,641 to 1,628; and actual salary increases of 4.25% versus an expected rate of 6.0% and a rate of 6.62% for the prior year valuation. The decline in the actuarial investment return is primarily the result of a negative (27.01) percent return for calendar year 2008. While the simple arithmetic five-year average investment return for calendar years 2004 through 2008 equals a positive 1.70 percent, the asset valuation method limits the actuarial value of the assets to 120 percent of the market value of the assets. Consequently the adjusted five- year average per this constraint is a negative (10.61) percent. The plan has a current "credit balance" of $15.3 million, which can be used to subsidize future City employer contributions. Staff recommends funding the employer contribution for fiscal 2010 at 20% of covered payroll, versus the current required contribution of 29.17%, which would decrease the credit balance by an estimated $7.5 million. Staff projects funding the plan at 27% of covered payroll for fiscal 2011, increased to 30% for fiscal year 2012. This is consistent with the actuary's projection that contribution rates will be near 30% of covered pay for the next few years. Review Approval: 1) Financial Services 2) Office of Management and Budget 3) Clerk 4) Assistant City Manager 5) Clerk 6) City Manager 7) Clerk Cover Memo Item # 4 The City of Clearwater Employees’ Pension Plan Actuary’s Report As of January 1, 2009 to determine annual contribution for the Plan Year: 01/01/2009– 12/31/2009 to be paid in the Fiscal Year: 10/01/2009 – 09/30/2010 Prepared by PricewaterhouseCoopers, LLP May 2009 Attachment number 1 Page 1 of 31 Item # 4 May 4, 2009 City of Clearwater 100 S. Myrtle Avenue Clearwater, FL 33756-5520 This document was not intended or written to be used, and it cannot be used, for the purpose of avoiding U.S. federal, state or local tax penalties. Ladies and Gentlemen: This report presents the results of the January 1, 2009 actuarial valuation of the City of Clearwater Employees’ Pension Plan. It has been prepared primarily to present to management the contribution requirements for 2009 and also the current status of funding of accumulated plan benefits. Section IV of this report includes a presentation of the information required by Government Accounting Standards Board (GASB) Statement No. 25. Our calculations were based on financial data and employee data furnished by the City of Clearwater. The valuation was based upon generally accepted actuarial methods, and we performed such tests as we considered necessary to assure the accuracy of the results. To our knowledge, there are no benefits or expenses to be provided by the plan for which a liability or current cost was not established. We certify that the amounts presented in the accompanying report have been appropriately determined according to the actuarial assumptions stated herein. Statement by Enrolled Actuary This actuarial valuation and/or cost determination was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate, and in my opinion, the techniques and assumptions used are reasonable and meet the requirements and intent of Part VII, Chapter 112, Florida Statutes. There is no benefit or expense to these provided by the plan or paid from the plan’s assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Respectfully submitted, Donna K. White Associate of the Society of Actuaries Enrolled Actuary Number 08-05071 Howard L. Marsh Associate of the Society of Actuaries PricewaterhouseCoopers LLP 10 Tenth Street, Northwest Suite 1400 Atlanta, GA 30309-3851 Telephone (678) 419 1000 Facsimile (678) 419 1239 www.pwc.com Attachment number 1 Page 2 of 31 Item # 4 C O N T E N T S Pages SECTION I SUMMARY 1 – 6 SECTION II FUNDING 7 – 11 SECTION III ASSETS 12 – 15 SECTION IV ACCOUNTING 16 – 17 SECTION V CENSUS DATA 18 – 22 SECTION VI ASSUMPTIONS AND METHODS 23 – 25 SECTION VII SUMMARY OF PLAN PROVISIONS 26 – 28 Attachment number 1 Page 3 of 31 Item # 4 1 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION I – SUMMARY A. Actuary’s Comments This report presents the highlights of the January 1, 2009 actuarial valuation prepared to determine the contribution requirements for the 2009–2010 fiscal year. Since the last actuarial valuation of the plan on January 1, 2008, there have been no changes to the actuarial assumptions, the actuarial cost method or the asset valuation method. For a detailed description of the assumptions and methods, please see Section VI. Since the last actuarial valuation of the plan, there have been no changes in the plan provisions. For a detailed description of the plan provisions, please see Section VII. The minimum required City contribution pursuant to Florida Statutes for the 2009 plan year is $23,948,586 or 29.17% of pay (excluding the credit balance of $15,327,127), compared to $10,074,978 (or 12.54% of pay) for 2008. Although State law allows the City to use the credit balance to entirely fund the actuarially required City contribution, the City ordinance establishing the Plan requires the City to contribute at least 7% of payroll. The minimum required contribution was affected by the following factors: x While the investment return on the market value of assets was -27.01%, the return on the actuarial value of assets was -10.61% (due to prior years’ gains), compared to an assumed rate of 7.5%. x The number of active employees declined this year from 1,641 to 1,628. The City's funded status, along with the funded status of most public and private pension plans, suffered considerably as a result of the poor asset performance during 2008. A couple of issues that should be kept in mind: x If the City contributes 20% of payroll for the 2009-2010 fiscal year (as planned per management), it will decrease the credit balance by roughly $7,500,000 to approximately $7,500,000. x Due to the Plan’s large asset pool and the impact of the employee contributions, the City’s cost is highly leveraged, which means that changes in the assets and liabilities can change the City’s funding requirements dramatically. x If assets return at the assumed level of 7.50%, it is anticipated that the projected contribution for the next few years will be near 30% of pay. The funded status of the accumulated benefits decreased considerably compared to the prior year. The ratio of assets at market value to the actuarial present value of accumulated plan benefits is 87.4% at January 1, 2009, compared to 131% at January 1, 2008. Attachment number 1 Page 4 of 31 Item # 4 2 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION I – SUMMARY (continued) B. Contribution Requirements for the Plan Year Ending December 31, 2009 Minimum Required Employer Contribution Florida Statutes $23,948,586* 7% of Payroll $ 5,747,339 The employer contribution is assumed to be made uniformly during the first two quarters of the fiscal year beginning on October 1, 2009. Differences in the investment return due to contributions actually being made at any other time will be recognized as an actuarial gain or loss in the following valuation. The minimum required contribution represents a funding level which will satisfy the minimum funding requirements under Part VII, Chapter 112, Florida Statutes. Please refer to Section VI and VII of the report for a summary of the actuarial assumptions and plan provisions, respectively. * Excluding the credit balance (currently $15,327,127) Attachment number 1 Page 5 of 31 Item # 4 3 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION I – SUMMARY (continued) C. Comparative Summary of Principal Valuation Results Actuarial Valuation Prepared as of: Jan. 1, 2009 Jan. 1, 2008 Jan. 1, 2007 (a) Participant Data Number Included Active Members 1,628 1,641 1,692 Retirees and Beneficiaries 835 802 758 Terminated Vested Participants 68 76 61 Annual Payroll of Actives $82,104,837 $80,371,617 $79,385,090 Annualized Benefits Retirees and Beneficiaries $23,538,145 $21,755,799 $19,847,421 Terminated Vested Participants $66,717 $1,352,582 $1,011,310 (b) Actuarial Reserves Market Value $447,362,061 $624,560,675 $590,066,492 Actuarial Value $536,834,473 $610,979,087 $559,830,590 (c) Liabilities Present Value of Expected Benefits: Active Participants: Retirement Benefits $367,664,709 $352,350,615 $341,955,028 Termination Benefits* $45,209,129 $45,117,190 $45,977,610 Disability Benefits $22,250,192 $21,738,241 $22,026,650 Death Benefits $5,486,160 $5,348,974 $5,326,021 Total Active $440,610,190 $424,555,020 $415,285,309 Terminated Vested Participants $11,130,388 $10,379,208 $9,801,171 Retirees and Beneficiaries $292,767,168 $272,750,105 $250,792,752 Total Present Value of Expected Benefits $744,507,746 $707,684,333 $675,879,232 Liabilities Due and Unpaid $540,888 $695,234 $667,685 *Refund of Employee Contributions included in Termination Benefits. Attachment number 1 Page 6 of 31 Item # 4 4 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION I – SUMMARY (continued) C. Comparative Summary of Principal Valuation Results (continued) Actuarial Valuation Prepared as of: Jan. 1, 2009 Jan. 1, 2008 Jan. 1, 2007 (c) Liabilities (continued) Unfunded Actuarial Accrued Liability Supplemental FIL - 1/1/1979 $0 $182,903 $353,049 Supplemental FIL - 1/1/1981 53,604 77,635 99,990 Supplemental FIL - 1/1/1982 (916,419) (1,180,295) (1,425,761) Supplemental FIL - 1/1/1987 739,880 805,764 867,052 Supplemental FIL - 1/1/1988 889,101 956,728 1,019,638 Supplemental FIL - 1/1/1989 1,246,676 1,328,650 1,404,906 Asset Valuation Method - 1/1/1994 2,760,066 2,858,368 2,949,812 Change Plan Amendment - 1/1/1996 11,959,418 12,304,297 12,625,111 Plan Amendment - 1/1/2000 46,574,358 47,485,455 48,332,987 Assumption Changes - 1/1/2002 (28,225,036) (28,685,438) (29,113,721) Assumption Changes - 1/1/2007 (14,400,618) (14,553,402) (14,695,526) Total $20,681,030 $21,580,666 $22,417,537 (d) Funding Account Credit Balance Prior Year Amount $14,031,276 $15,046,922 $18,817,573 Prior Year: Required Employer Contributions (10,074,978) (12,520,399) (15,438,360) Employer Contributions Made 10,318,483 10,376,234 10,256,391 Interest on Credit Balance 1,052,346 1,128,519 1,411,318 Total $15,327,127 $14,031,276 $15,046,922 (e) Actuarial Present Value of Accrued Benefits $511,915,925 $477,391,012 $445,702,880 Changes During Prior Year: Value from Prior Year $477,391,012 $445,702,880 $440,674,422 Benefits Paid $(23,549,897) $(21,862,629) $(20,187,167) Interest, Aging and Benefits Accrued 58,074,810 53,550,761 51,050,794 Change in Assumptions 0 0 (25,835,169) Change in Plan Provisions 0 0 0 Net Change $338,422,469 $31,688,132 $5,028,458 Value at Current Year $511,915,925 $477,391,012 $445,702,880 Attachment number 1 Page 7 of 31 Item # 4 5 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION I – SUMMARY (continued) C. Comparative Summary of Principal Valuation Results (continued) Actuarial Valuation Prepared as of: Jan. 1, 2009 Jan. 1, 2008 Jan. 1, 2007 (f) Pension Cost for Year Normal Cost $23,752,929 $10,319,716 $12,415,828 Amortization of Unfunded Frozen Initial Liability 2,159,593 2,342,499 2,342,499 Administrative Expenses 2,909,975 2,999,254 2,968,095 Shortfall for Expenses in Prior Year (89,279) 31,159 159,291 Interest Adjustment 1,795,755 824,079 997,493 Total Required Contribution $30,528,973 $16,516,707 $18,883,206 As a Percentage of Payroll 37.18% 20.55% 23.79% Anticipated Employee Contributions $6,568,387 $6,429,729 $6,350,807 As a Percentage of Payroll 8.00% 8.00% 8.00% Anticipated State Contributions $12,000 $12,000 $12,000 As a Percentage of Payroll 0.01% 0.01% 0.02% City Required Contribution 23,948,586 10,074,978 12,520,399 As a Percentage of Payroll 29.17% 12.54% 15.77% (g) Prior Year Actual Contributions made by State $12,000 $12,000 $12,000 Employees 6,293,755 6,265,404 6,060,134 City 10,318,483 10,376,234 10,256,391 Total $16,624,238 $16,653,638 $16,328,525 (h) Gains and Losses N/A N/A N/A (i) Other Present Values Present Value of Future Salaries At attained age $699,382,118 $694,577,683 $694,770,240 Present Value of Future Employee Contributions At attained age $55,950,569 $55,566,215 $55,581,619 Attachment number 1 Page 8 of 31 Item # 4 6 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION I – SUMMARY (continued) C. Comparative Summary of Principal Valuation Results (continued) Actuarial Valuation Prepared as of: Jan. 1, 2009 Jan. 1, 2008 Jan. 1, 2007 (i) Other Present Values (continued) Present Value of Future Normal Costs $202,319,370 $89,155,856 $108,678,027 (j) Comparison of Actual and Assumed Investment Return Salary Increases Actual Year Ended Actual Assumed Market Value Actuarial Value Assumed 12/31/1986 7.40% 5.00% 13.21% N/A 7.00% 12/31/1987 5.90% 5.00% 10.78% N/A 7.00% 12/31/1988 9.10% 5.00% 9.12% N/A 7.00% 12/31/1989 8.70% 5.00% 20.84% N/A 7.00% 12/31/1990 5.30% 5.00% 6.21% N/A 7.00% 12/31/1991 6.10% 5.00% 28.52% N/A 7.00% 12/31/1992 6.80% 5.00% 6.49% N/A 7.00% 12/31/1993 1.20% 5.00% 9.29% 7.42% 7.00% 12/31/1994 4.40% 5.00% 0.89% 6.28% 7.00% 12/31/1995 6.40% 5.00% 23.36% 9.14% 7.00% 12/31/1996 6.70% 5.00% 14.80% 11.54% 7.00% 12/31/1997 5.60% 5.00% 17.49% 13.74% 7.00% 12/31/1998 7.40% 5.00% 16.74% 15.28% 7.00% 12/31/1999 4.20% 5.00% 18.61% 17.96% 7.00% 12/31/2000 5.80% 5.00% (3.43%) 12.42% 7.00% 12/31/2001 5.90% 5.00% (5.16%) 7.40% 7.00% 12/31/2002 5.80% 6.00% (8.83%) (1.85%) 7.50% 12/31/2003 6.40% 6.00% 20.08% 7.45% 7.50% 12/31/2004 6.38% 6.00% 9.73% 2.18% 7.50% 12/31/2005 5.49% 6.00% 6.67% 4.58% 7.50% 12/31/2006 5.15% 6.00% 11.80% 7.87% 7.50% 12/31/2007 6.62% 6.00% 7.29% 10.68% 7.50% 12/31/2008 4.25% 6.00% (27.01%) (10.61%) 7.50% Attachment number 1 Page 9 of 31 Item # 4 7 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION II – FUNDING A. Development of the Unfunded Frozen Actuarial Accrued Liability 1. Unfunded Frozen Actuarial Accrued Liability as of January 1, 2008 $21,580,666 Interest to December 31, 2008 $1,618,550 $23,199,216 2. Employer Normal Cost* for Year with interest $7,556,792 to December 31, 2008 3. Required Employer Contributions for Period $10,074,978 4. Increase/(Decrease) Due to Assumption Changes $0 5. Unfunded Frozen Actuarial Accrued Liability at December 31, 2008 $20,681,030 * Includes Expenses and Adjustments Attachment number 1 Page 10 of 31 Item # 4 8 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION II – FUNDING (continued) B. Development of Normal Cost The Normal Cost is the portion of the cost of projected benefits which is allocated to the current year by the actuarial cost method. The Normal Cost for the plan years beginning January 1, 2009 and January 1, 2008 are determined as follows: Total Projected Actuarial Liability: Jan. 1, 2009 Jan. 1, 2008 Jan. 1, 2007 The present value as of the beginning of the plan year of all benefits expected to be paid in the future to current participants. x Active participants $440,610,190 $424,555,020 $415,285,309 x Terminated vested participants 11,130,388 10,379,208 9,801,171 x Retired and disabled participants 292,767,168 272,750,105 250,792,752 x Total Participants $744,507,746 $707,684,333 $675,879,232 Credit Balance: Employer contributions from prior years reserved for future use. $15,327,127 $14,031,276 $15,046,922 Fund: The actuarial value of fund assets as of the beginning of the plan year. $536,834,473 $610,979,087 $559,830,590 Excess of Total Projected Actuarial Liability Over the Fund Minus the Credit Balance: The portion of the projected total actuarial liability to be funded in the future. $223,000,400 $110,736,522 $131,095,564 This portion is divided into two components: a. Unfunded frozen actuarial accrued liability $20,681,030 $21,580,666 $22,417,537 b. Present value of future service liability (funded over the expected future service years of current participants) $202,319,370 $85,155,856 $108,678,027 Present Value of Future Covered Payroll $699,382,118 $694,577,683 $694,770,240 Attachment number 1 Page 11 of 31 Item # 4 9 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION II – FUNDING (continued) B. Development of Normal Cost (continued) Jan. 1, 2009 Jan. 1, 2008 Jan. 1, 2007 Normal Cost Rate: The ratio of the present value of future service liability to the present value of future covered payroll. 28.93% 12.84% 15.64% Annual Covered Payroll: The reported payroll for plan participants who have not attained the assumed retirement age. $82,104,837 $80,371,617 $79,385,090 Normal Cost: The annual cost as of the beginning of the plan year to fund the future service liability over the expected future years of service of the current participants. $23,752,929 $10,319,716 $12,415,828 Attachment number 1 Page 12 of 31 Item # 4 10 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION II – FUNDING (continued) C. Schedule of Amortization Payments Date Established Reason Initial Amount Initial Amortization Period (Years) Jan. 1, 2009 Unamortized Amount Annual Amortization Payment 1/1/1979 Supplemental FIL $2,707,962 30 $0 $0 1/1/1981 Supplemental FIL 390,421 30 53,604 27,771 1/1/1982 Supplemental FIL (4,521,985) 30 (916,419) (327,812) 1/1/1987 Supplemental FIL 1,519,142 30 739,880 117,504 1/1/1988 Supplemental FIL 1,673,738 30 889,101 129,658 1/1/1989 Supplemental FIL 2,177,772 30 1,246,676 168,952 1/1/1994 Asset Valuation Method Change 3,724,296 30 2,760,066 290,865 1/1/1996 Plan Amendment 15,063,842 30 11,959,418 1,179,254 1/1/2000 Plan Amendment 52,921,724 30 46,574,358 4,160,471 1/1/2002 Assumption Changes (30,846,502) 30 (28,225,036) (2,429,592) 1/1/2007 Assumption Changes (14,695,526) 30 (14,400,618) (1,157,478) Total Charges $64,223,103 $6,074,475 Total Credits (43,542,073) (3,914,882) Total $20,681,030 $2,159,593 Attachment number 1 Page 13 of 31 Item # 4 11 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION II – FUNDING (continued) D. Anticipated Amortization Schedule Shown below is the anticipated amortization schedule for the Unfunded Frozen Actuarial Accrued Liability taking into account the plan’s funding policy. Anticipated Amortization Schedule Date Unfunded Frozen Actuarial Accrued Liability 2009 $20,681,030 2010 $19,910,545 2011 $19,082,273 2012 $18,191,881 2037 $0 On July 1, 1963, the Unfunded Frozen Actuarial Accrued Liability was established equal to the difference between the retirement plan’s accrued liability, determined under the Entry Age Normal Funding Method and the actuarial value of plan assets. According to the plan’s funding policy, the initial liability is to be amortized by a series of level payments over a forty-year period. Subsequent changes in the level of the Frozen Actuarial Accrued Liability due to plan amendments or changes in actuarial assumptions are to be amortized on a straight-line basis over a period of thirty years. By contributing more than the stated funding policy, the amortization of the Unfunded Frozen Actuarial Accrued Liability can be accelerated. Attachment number 1 Page 14 of 31 Item # 4 12 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION III – ASSETS Comparative Balance Sheet As of December 31, 2008 ASSETS Market Value Dec. 31, 2008 Market Value Dec. 31, 2007 Cash and Cash Equivalents $13,193,809 $9,799,417 International Equity Securities 39,564,288 109,243,339 Domestic Corporate Equity Securities 189,668,575 251,655,562 Preferred Stock 325,462 737,836 Domestic Bonds Commodities 200,039,712 283,451 248,410,419 494,760 Total Investments $443,075,297 $620,341,333 Receivables: Interest – Pooled Cash 17,077 41,200 Commission Recapture 34,056 25,809 Employer Contributions 4,776,519 4,847,567 State Contributions 0 0 Total Assets $447,902,949 $625,255,909 LIABILITIES AND ACTUARIAL RESERVES Liabilities: Accounts Payable $540,888 $695,234 Total Liabilities $540,888 $695,234 Actuarial Reserves: Accumulated Member Contributions $55,587,769 $53,183,617 Balance of Actuarial Reserves 391,774,292 571,377,058 Total Actuarial Reserves $447,362,061 $624,560,675 TOTAL LIABILITIES AND ACTUARIAL RESERVES $447,902,949 $625,255,909 Attachment number 1 Page 15 of 31 Item # 4 13 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION III – ASSETS (continued) Schedule of Changes in Actuarial Reserves For the Plan Year Ended December 31, 2008 Market Value Revenues: Employee Contributions $6,293,755 Employer Contributions 10,318,483 State Contributions 12,000 $16,624,238 Earnings on Investments: Interest Dividends Realized Net Gains on Securities Transactions $10,611,539 3,823,690 (22,032,435) ($7,597,206) Unrealized Appreciation (Depreciation) on Investments ($159,765,774) Expenses: Benefits Paid Refunds of Contributions Professional Fees Other Expenses $(22,797,429) (752,468) (2,909,975) 0 ($26,459,872) Net Change in Actuarial Reserves Actuarial Reserves at Beginning of Plan Year Actuarial Reserves at End of Plan Year ($177,198,614) $624,560,675 $447,362,061 Attachment number 1 Page 16 of 31 Item # 4 14 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION III – ASSETS (continued) Development of Actuarial Value of Assets 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Actuarial Reserves at Beginning of Plan Year Time Weighted Employee Contributions (0.5 x $6,293,755) Time Weighted Employer Contributions (0.5 x .125 x $10,318,483) Time Weighted State Contributions (0.5 x $12,000) Time Weighted Benefit Payments ( (11/24) x $23,549,897) Time Weighted Expenses (0.5 x $2,909,975) Time Weighted Value of Actuarial Reserves (Items 1 + 2 + 3 + 4 – 5 – 6) Expected Asset Return (Item 7 x 7.50%) Actual Asset Return Difference of Expected Return over Actual Return Actuarial Reserves at End of Plan Year Expected Actuarial Reserves at End of Plan Year (Items 10 + 11) Difference Between Actual and Expected Asset Return (Item 11 – 12) $624,560,675 3,146,878 644,905 6,000 10,793,703 1,454,988 $616,109,767 46,208,233 (167,362,980) $213,571,213 447,362,061 $660,933,274 $(213,571,213) Attachment number 1 Page 17 of 31 Item # 4 15 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION III – ASSETS (continued) Development of Actuarial Value of Assets (continued) Date Established Initial Amount Annual Amount Recognized Amount Excluded Prior Valuation Amount Excluded Current Valuation 01/01/2005 $10,516,067 $2,103,213 $(2,103,213) $0 01/01/2006 $(4,010,976) $(802,195) $1,604,390 $802,195 01/01/2007 $23,101,409 $4,620,282 $(13,860,845) $(9,240,563) 01/01/2008 $(972,600) $(194,520) $778,080 $583,560 01/01/2009 $(213,571,213) $(42,714,243) N/A $170,856,970 Total $163,002,162 Actuarial Reserves $447,362,061 Actuarial Value of Assets, Before Applying Limits $610,364,223 80% of Actuarial Reserves $357,889,649 120% of Actuarial Reserves $536,834,473 Actuarial Value of Assets, After Applying Limits $536,834,473 Attachment number 1 Page 18 of 31 Item # 4 16 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION IV – ACCOUNTING A. Plan Description and Contribution Information Membership of the plan consisted of the following at January 1, 2008, the date of the latest actuarial valuation: Retirees and beneficiaries receiving benefits Terminated plan members entitled to but not yet receiving benefits Active plan members 802 76 1,641 Total Number of participating employers 2,519 1 Attachment number 1 Page 19 of 31 Item # 4 17 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION IV – ACCOUNTING (continued) B. Required Supplementary Information Scheduling of Funding Progress Actuarial Valuation Date Actuarial Value of Assets (a) Actuarial Accrued Liability (AAL) Frozen Entry Age (b) Unfunded AAL (UAAL) (b-a) Funded Ratio (a/b) Covered Payroll (c) UAAL as a Percentage of Covered Payroll ( (b-a) / c) 01/01/1991 $141,865,764 $152,118,075 $10,252,311 93% $34,532,753 30% 01/01/1992 $184,746,269 $194,550,126 $9,803,857 95% $36,626,332 27% 01/01/1993 $198,315,690 $207,639,701 $9,324,011 96% $38,731,039 24% 01/01/1994 $213,014,474 $225,549,346 $12,534,872 94% $38,710,974 32% 01/01/1995 $225,482,726 $237,428,796 $11,946,070 95% $41,371,332 29% 01/01/1996 $244,744,488 $271,124,381 $26,379,893 90% $44,208,964 60% 01/01/1997 $272,346,200 $297,892,502 $25,546,302 91% $44,955,348 57% 01/01/1998 $308,596,133 $333,250,492 $24,654,359 93% $47,281,198 52% 01/01/1999 $354,088,751 $377,788,731 $23,699,980 94% $49,666,523 48% 01/01/2000 $414,826,422 $490,426,940 $75,600,518 85% $50,937,403 148% 01/01/2001 $461,724,610 $535,672,208 $73,947,598 86% $54,864,584 135% 01/01/2002 $491,859,015 $533,191,487 $41,332,472 92% $58,929,582 70% 01/01/2003 $477,541,459 $517,933,495 $40,392,036 92% $65,150,820 62% 01/01/2004 $507,256,663 $546,915,627 $39,658,964 93% $69,907,473 57% 01/01/2005 $510,265,274 $549,136,184 $38,870,910 93% $73,836,304 53% 01/01/2006 $525,573,824 $563,597,580 $38,023,756 93% $76,010,269 50% 01/01/2007 $559,830,590 $582,248,127 $22,417,537 96% $79,385,090 28% 01/01/2008 $610,979,087 $632,559,753 $21,580,666 97% $80,371,617 27% 01/01/2009 $536,834,473 $557,515,503 $20,681,030 96% $82,104,837 25% The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation follows: Valuation date 01/01/2009 Actuarial cost method Frozen Entry Age Amortization method Level Dollar Closed Remaining amortization periods Various Asset valuation method Five Year Average * Actuarial assumptions: Investment rate of return 7.5% Projected salary increases 6.0% Include merit increases 3.0% Cost-of-living adjustments 3.0% * Effective January 1, 1994, the asset valuation method was changed from market value to a five year average method. Attachment number 1 Page 20 of 31 Item # 4 18 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION V – CENSUS DATA A. Reconciliation of Employee Data A summary of changes in the employee data from January 1, 2008 through January 1, 2009 follows. Employees who do not participate in the plan are not included. Participants included in the January 1, 2008 valuation Active Employees 1,641 Terminated Vested Employees 76 Retired Participants And Beneficiaries 802 Total 2,519 Nonvested terminations (7) (7) Data revisions 1 1 Vested terminations (4) 4 0 Deaths without eligible beneficiary (10) (10) Retirements (32) (11) 43 0 Cash settlements (61) (61) Rehires 6 (1) 5 New participants 84 84 Participants included in the January 1, 2009 valuation 1,628 68 835 2,531 Active Participants: Fully vested 1,116 Non-vested 512 Total 1,628 Attachment number 1 Page 21 of 31 Item # 4 19 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION V – CENSUS DATA (continued) B. Age – Service Distribution of Active Participants as of January 1, 2009 Years of Service Attained Age 0 – 4 No. 5 – 9 No. 10 – 14 No. 15 – 19 No. 20 – 24 No. 25 + No. Total No. Under 25 80 1 0 0 0 0 81 25 to 29 112 22 0 0 0 0 134 30 to 34 87 73 14 0 0 0 174 35 to 39 67 68 65 9 0 0 209 40 to 44 50 63 70 44 17 0 244 45 to 49 46 52 44 42 56 18 258 50 to 54 31 42 40 40 57 47 257 55 to 59 22 25 27 25 29 25 153 60 to 64 15 9 19 18 22 8 91 65 + 2 8 4 8 1 4 27 Total 512 363 283 186 182 102 1,628 Active Participant Statistics Average Age 43.88 years Average Service 10.90 years Attachment number 1 Page 22 of 31 Item # 4 20 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION V – CENSUS DATA (continued) C. Age – Service Distribution of Active Hazardous Duty Participants as of January 1, 2009 Years of Service Active Participant Statistics Average Age 38.71 years Average Service 10.51 years 0 – 4 5 – 9 10 – 14 15 – 19 20 – 24 25 + Total Attained Age No. No. No. No. No. No. No. Under 25 20 0 0 0 0 0 20 25 to 29 44 6 0 0 0 0 50 30 to 34 41 35 8 0 0 0 84 35 to 39 17 39 41 4 0 0 101 40 to 44 10 14 31 29 8 0 92 45 to 49 2 5 6 21 17 7 58 50 to 54 1 1 2 5 6 8 23 55 to 59 3 1 0 3 1 6 14 60 to 64 1 0 0 1 0 0 2 65 + 0 0 0 0 0 0 0 Total 139 101 88 63 32 21 444 Attachment number 1 Page 23 of 31 Item # 4 21 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION V – CENSUS DATA (continued) D. Age – Service Distribution of Active Non-Hazardous Duty Participants as of January 1, 2009 Years of Service 0 – 4 5 – 9 10 – 14 15 – 19 20 – 24 25 + Total Attained Age No. No. No. No. No. No. No. Under 25 60 1 0 0 0 0 61 25 to 29 68 16 0 0 0 0 84 30 to 34 46 38 6 0 0 0 90 35 to 39 50 29 24 5 0 0 108 40 to 44 40 49 39 15 9 0 152 45 to 49 44 47 38 21 39 11 200 50 to 54 30 41 38 35 51 39 234 55 to 59 19 24 27 22 28 19 139 60 to 64 14 9 19 17 22 8 89 65 + 2 8 4 8 1 4 27 Total 373 262 195 123 150 81 1,184 Active Participant Statistics Average Age 45.82 years Average Service 11.04 years Attachment number 1 Page 24 of 31 Item # 4 22 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION V – CENSUS DATA (continued) E. Inactive Participant Count and Benefits as of January 1, 2009 Number of Participants Annual Benefit Terminated Vested Participants Retired Participants and Beneficiaries 68 835 $1,222,583 $23,538,145 Attachment number 1 Page 25 of 31 Item # 4 23 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION VI – ASSUMPTIONS AND METHODS A. Actuarial Assumptions Investment Yield The investment rate of earnings is assumed to be 7.5% per annum. Mortality Mortality is based on the RP 2000 Combined Healthy Mortality Table. Withdrawal Employees are assumed to terminate according to the following schedules, depending upon whether or not the employee is deemed "Hazardous Duty": Hazardous Duty Withdrawal Age All Years 20 30 40 50 55 7.5% 3% 3% 3% 0% Non-Hazardous Duty Withdrawal Age First Year of Service Second Year of Service Third Year of Service More than 3 Years of Service 20 30 40 50 60 25% 15% 15% 15% 0% 25% 12.5% 12.5% 5% 0% 25% 10% 10% 5% 0% 20% 8% 5% 4% 0% Disability Pre-retirement incidence of disability is assumed to occur in accordance with a standard scale of moderate disability rates (Class 1, 1952 Inter- Company). Rates for females are assumed to be double that for males. Sample rates for males are shown below: Age Incidence of Disability 20 30 40 50 60 70 .17% .17% .20% .29% .59% 1.74% Attachment number 1 Page 26 of 31 Item # 4 24 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION VI – ASSUMPTIONS AND METHODS (continued) A. Actuarial Assumptions (continued) Service vs. Non-service All pre-retirement deaths are assumed to be non-service related. All incidence of disability is assumed to be service related. Salary Scale Future salaries are assumed to increase at the rate of 6% per year – 3% due to cost-of-living, and 3% due to merit increases. Valuation Salary Compensation during the plan year is assumed to be the greater of (1) and (2): (1) Compensation earned during the prior plan year, increased by salary scale; (2) Pay rate for the current plan year. Retirement Rates Employees are assumed to retire according to the following schedules, depending upon whether or not the employee is deemed "Hazardous Duty": Hazardous Duty Retirement Age 10 to 19 Years of Service 20 or More Years of Service 45 50 55 60+ 15% 20% 20% 100% 15% 20% 35% 100% Non-Hazardous Duty Retirement Age 10 to 19 Years of Service 20 to 29 Years of Service 30 or More Years of Service 50 55 60 65 70+ 0% 0% 10% 35% 100% 0% 30% 30% 75% 100% 20% 25% 25% 75% 100% Timing of Contribution The employer contribution is assumed to be made uniformly during the first two quarters of the fiscal year beginning on October 1 following the valuation date. Employees Covered All participants as of the actuarial valuation date. Attachment number 1 Page 27 of 31 Item # 4 25 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION VI – ASSUMPTIONS AND METHODS (continued) A. Actuarial Assumptions (continued) Spouses Eighty-five percent (85%) of the active participants are assumed to be married (or have dependents eligible for Survivor’s Benefits). Female spouses are assumed to be five years younger than male spouses. State Contributions The state contributions are assumed to equal $12,000 per year. Expenses Expenses are assumed to equal last year’s actual expenses. Completeness of All benefits and expenses to be provided by the Plan are recognized in the Assumptions valuation. All known events are taken into account; no current trends are assumed to discontinue in the future. B. Asset Valuation Method The Actuarial Value of Assets is based on a five-year moving average of assets valued at statement value. The statement value reflects an amortized value for bonds and market value for equity investments. From the statement value, actual and expected return on investments is derived. Any difference between the actual return on investments for a given year and the expected return is spread over five years. After five years the entire amount is fully recognized. However, the Actuarial Value of Assets will never exceed 120% nor fall below 80% of the market value of assets. The use of a derived value of plan assets rather than current market value will produce a more stable funding pattern for the plan by partially eliminating the effect of unusual market fluctuations. C. Actuarial Cost Method The actuarial cost method is the Frozen Entry Age Actuarial Cost Method. Under this method the excess of the actuarial present value of projected benefits over the sum of the actuarial value of assets plus the Unfunded Frozen Actuarial Accrued Liability is funded on a level basis over the future compensation of active employees. The portion of this excess allocated to the current year is called the Normal Cost. The Frozen Actuarial Accrued Liability is determined using the Entry Age Actuarial Cost Method. This Frozen Actuarial Accrued Liability is adjusted from time to time to reflect changes in the Plan or in the actuarial assumptions. The Unfunded Frozen Actuarial Accrued Liability is separately amortized over a fixed number of years. Attachment number 1 Page 28 of 31 Item # 4 26 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION VII – SUMMARY OF PLAN PROVISIONS This summary is intended as an outline of plan provisions and does not alter the intent or meaning of the provisions contained in the contract and / or plan document. Plan Year January 1 to December 31. Eligibility Any permanent employee shall participate in the plan immediately. Current Employee 8.0% of wages and salaries actually paid to a participant. Contributions Average Monthly The total Compensation received during the highest five years of service of the last ten Compensation years divided by sixty. Accrued Benefit A monthly benefit equal to 2.75% of Average Monthly Compensation multiplied by the number of years of service to date. Retirement Benefit A. Eligibility (Normal Retirement Date) x Non-Hazardous Duty: Completion of 30 years of service, completion of at least 20 years of service and the attainment of age 55, or completion of at least ten years of service and the attainment of age 65. x Hazardous Duty: Completion of 20 years of service or completion of at least ten years of service and the attainment of age 55. B. Normal Retirement Benefit The participant’s Accrued Benefit payable as of his actual retirement date on or after his Normal Retirement Date. No adjustment applies for deferred retirement beyond his Normal Retirement Date. C. Normal Form of Benefit A monthly annuity for the life of the participant. After the participant’s death, 100% of the Normal Retirement Benefit shall be paid as a Survivor Annuity to the spouse for five years. After five years, such Survivor Annuity is reduced to 50% of the original amount. The Survivor Annuity ceases upon death or remarriage of the spouse. 120 monthly payments are guaranteed in any case for police and fire fighters. Attachment number 1 Page 29 of 31 Item # 4 27 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION VII – SUMMARY OF PLAN PROVISIONS (continued) D. Early Retirement Benefit For police and fire fighters, an early retirement benefit is payable to those participants who have completed ten years of service and the attainment of age 50. The benefit is equal to the retirement benefit calculated as of the date of early retirement, reduced by 3% per year for each year below age 55. E. Cost of Living Increase All participants commencing annuity benefit payments shall be entitled to a 1.5% increase in their benefit amount each year. Disability Benefit A. Eligibility Total and permanent disability. If the disability is non-service connected, there is an additional requirement of the completion of ten years of service. B. Disability Benefit The participant's Accrued Benefit, payable immediately. If the disability is service connected, the Disability Benefit must be at least 66.67% of Average Monthly Compensation. C. Normal Form of Benefit A monthly annuity for the life of the participant. After the participant's death, a Survivor Annuity is provided as described under the Normal Form of Benefit for retirement benefits. 120 monthly payments are guaranteed in any case for police and fire fighters. D. Cost of Living Increase All participants commencing annuity benefit payments shall be entitled to a 1.5% increase in their benefit amount each year. Death Benefit A. Eligibility Any actively employed participant. B. Death Benefit The participant’s Accrued Benefit, payable immediately. If death is service connected, the Death Benefit must be at least 66.67% of Average Monthly Compensation. Attachment number 1 Page 30 of 31 Item # 4 28 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN SECTION VII – SUMMARY OF PLAN PROVISIONS (continued) C. Form of Benefit A monthly Survivor Annuity as described under the Normal Form of Benefit. D. Cost of Living Increase All participants commencing annuity benefit payments shall be entitled to a 1.5% increase in their benefit amount each year. Vested Termination Benefit A. Eligibility Completion of ten years of service. B. Termination Benefits The participant’s Accrued Benefit payable as of his Normal Retirement Date, provided Employee Contributions are not refunded. C. Form of Payment A monthly annuity for the life of the participant. After the participant’s death, a Survivor Annuity is provided as described under the Normal Form of Benefit, beginning at the latter of the participant’s Normal Retirement Date or date of death. D. Cost of Living Increase All participants commencing annuity benefit payments shall be entitled to a 1.5% increase in their benefit amount each year. Non-Vested Termination Benefit A. Eligibility Any actively employed participant. B. Benefit Refund of Employee Contributions with 5% simple interest. C. Form of Benefit Lump sum. Attachment number 1 Page 31 of 31 Item # 4 Pension Trustees Agenda Council Chambers - City Hall Meeting Date:5/18/2009 SUBJECT / RECOMMENDATION: Discussion of Pension Plan Alternatives SUMMARY: Donna White and Howard Marsh from PriceWaterhouseCoopers (the Pension Plan actuary) will make a presentation on Retirement Benefits Strategies and Plan Design Alternatives. Robert Klausner and Stu Kaufman from Klausner and Kaufman will be availble to answer any legal questions. Staff from Human Resources, Finance and City Management will be available to provide infomation as needed. I have attached the PowerPoint handout that will be used during the presentation as well as a memo from Klauner and Kaufman on the legal aspects. Following discussion by the Trustees', staff would like direction from the Trustees' on any further action that they wish staff to pursue. Review Approval: 1) Financial Services 2) Office of Management and Budget 3) Clerk 4) Assistant City Manager 5) Clerk 6) City Manager 7) Clerk Cover Memo Item # 5 City of Clearwater Retirement Benefits Strategy and Plan Design Analysis May 2009 PwC May 2009 Item # 5 Agenda Comparison of Defined Benefit and Defined Contribution Plans Current Plan Projections Plan Alternatives Item # 5 A General Comparison DB vs DC Plans – General Comparison Category Defined Benefit Defined Contribution Investment Control Employer controls investments Employee controls investments Investment Risk Employer bears risk/reward Employee bears risk/reward Funding Flexibility/ Variability in funding Consistent funding - not flexible Employee Understanding Employee may not be able to appreciate value Easier for employee to understand Retirement benefit Benefit determinable at retirement for remainder of lifetime (usually paid in the form of an annuity) -guaranteed benefit Benefit is amount of DC balance (paid in a lump sum ) PricewaterhouseCoopers May 2009 Slide 3 -guaranteed benefit Employees attracted and/or most benefited Longer tenure and/or older employees Shorter tenure and/or younger employees Job Tenure Patterns Encouraged Longer tenure because employees receive greatest benefit accruals at end of long-time service. May lock people into jobs they would otherwise leave. Although employees receive benefits based on salary, not tenure, may encourage employees to change jobs in order to receive access to lump-sum distribution from retirement accounts. Inflation Risk Employer assumes preretirement inflation risk when the formula is based on final average earnings.Employee assumes all inflation risk. Mortality Risk Annuity form of payment results in employer bearing longevity risk. Lump sum results in employee bearing longevity risk. Item # 5 Defined Benefit Plan Pros/Cons Guaranteed Retirement Income for Participants • The guaranteed nature provides income and financial planning security • Enhanced by Cost of Living Adjustments (currently 1.5%) • More important for the City which does not participate in Social Security • Responsibilities of the employees are few Investment Efficiencies DB vs. DC – Summary of Key Ideas PricewaterhouseCoopers May 2009 Slide 4 • Money managers generally consult on plan assets • Additional asset classes are available (private real estate, commodities, etc.) for better diversification • More important for the City’s employees, which do not participate in Social Security Flexibility in plan design • The Plan can protect participants (and spouses) against disability and death • The Plan can increase benefits through various ways: increasing COLA’s or benefit percentages; providing additional early retirement windows and subsidies Item # 5 Defined Benefit Plan Pros/Cons Funding • The City assumes all investment risk; in periods of poor asset or demographic performance contributions can increase considerably Portability • Particularly for younger employees who change jobs more frequently DB vs. DC – Summary of Key Ideas PricewaterhouseCoopers May 2009 Slide 5 Complexity • The general nature and regulatory requirements of DB plans are more complex from an administration standpoint • Participants may struggle with the idea when compared to the cash balance nature of DC plans Item # 5 Defined Contribution Plan Pros/Cons Guaranteed Retirement Income • Responsibility is shifted to the employees • While the possibility of superior returns exists for certain individuals, the majority of participants will experience returns less than that of a professional managing DB funds, with a higher chance of employees being less financially prepared for retirement Inflation Risk DB vs. DC – Summary of Key Ideas PricewaterhouseCoopers May 2009 Slide 6 Investment Risk • Passing investment risk to the employees may lead to employees being less prepared to retire • Consistently managing and allocating personal accounts appropriately requires diligence Item # 5 Defined Contribution Plan Pros/Cons Funding • Required contributions are predictable and easy to calculate • Unfunded liabilities do not exist given the pay-as-you-go nature Portability • Benefits vest after a minimum of three years (employee contributions are always vested) DB vs. DC – Summary of Key Ideas PricewaterhouseCoopers May 2009 Slide 7 Complexity • Inherently easier to administer and understand Item # 5 Current City of Clearwater Retirement Plan Plan Characteristics Current and Historical Funding Needs Projected Funding RequirementsProjected Funding Requirements Participant Examples Item # 5 City of Clearwater Employees’ Pension Plan The current defined benefit plan is a 2.75% of Average Monthl y Compensation multiplied by Years of Service Current employee contributions are 8% of wages and salaries actually paid to a participant Retirement, disability, and death benefits are all paid; vesting occurs after 10 years of service Eligibility varies –Hazard duty: Current City of Clearwater Retirement Plan PricewaterhouseCoopers May 2009 Slide 9 –Hazard duty: - 20 years of service, or - age 55 with 10 years of service; – Non-Hazard: - 30 years of service, or - age 55 with 20 years of service Item # 5 Current and Historical Funding Needs -The city required contribution for the fiscal year beginning October 1, 2009 is approximately $24 million, or 29% of payroll. -This large increase is primarily the result of poor asset performance over the last year. Current City of Clearwater Retirement Plan PricewaterhouseCoopers May 2009 Slide 10 performance over the last year. (in millions)Fiscal year beginning 2006 2007 2008 2009 Total contribution $15.4 $12.5 $10.0 $23.9 As a percentage of payroll 20.3% 15.77% 12.54% 29.17% Historical City Contributions Item # 5 Projected Funding Requirements - Future city contribution requirements are very much dependent on asset return and demographic experience. - Barring unexpected returns, the large asset loss that occurred during 2008 (27%) will take years to recover from. It would take a gain of approximately 48% during 2009 to approach the values from January 1, 2008. Current plan projections have the following assumptions: • Current population will remain static, with exiting employees replaced by new actives with appropriate gender, age and jobs (hazard vs. non-hazard). • Salaries are assumed to continue to increase at 6% Current City of Clearwater Retirement Plan PricewaterhouseCoopers May 2009 Slide 11 • Mortality tables do not change (the state has considered updating mortality as a requirement) • Discount rate remains 7.5% (in millions)Fiscal year beginning 2010 2011 2012 2013 Total contribution – assets return 7.5% $23.1 $24.6 $30.6 $35.3 As a percentage of payroll – assets return 7.5% 27.8%29.2% 35.6% 40.4% Projected City Contributions Item # 5 Projected Funding Requirements Current City of Clearwater Retirement Plan 2009 2010 2011 2012 If current assumptions are met (7.5% asset return)23,949,000 23,139,140 24,682,239 30,566,895 Estimated percent of payroll 29.17%27.82%29.19%35.57% At 0% asset return 23,949,000 28,082,000 32,085,000 36,236,000 Estimated percent of payroll 29.17%33.76%37.95%42.16% At 15% asset return 23,949,000 18,813,000 22,298,000 24,925,000 Estimated percent of payroll 29.17%22.62%26.37%29.00% Estimated City Required Contribution PricewaterhouseCoopers May 2009 Slide 12 As seen above, future city contribution requirements are very much dependent on asset returns. These estimates incorporate asset information through December 31, 2008. Item # 5 Defined Benefit Retirement Benefits Participant Illustrations – Hazard Employee Current City of Clearwater Retirement Plan Age 45 values: Expected FAE $113,000 Defined Benefit $62,000 401(k) Not applicable Total $62,000 Hire Age - 25, Salary - $42,000 50000 60000 70000 efitPricewaterhouseCoopers May 2009 Slide 13 Normal retirement is 20 years of service or age 55 with 10 years of service. In this example, the participant’s NRD is age 45. Includes employee contributions of 8% per year. 0 10000 20000 30000 40000 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 AgeAccrued BenefitEmployer provided accrued benefit Employee provided defined benefit Item # 5 Defined Benefit Retirement Benefits Participant Illustrations – Non-Hazard Employee Current City of Clearwater Retirement Plan Age 55 values: Expected FAE $121,000 Defined Benefit $100,000 401(k) Not applicable Total $100,000 Hire Age - 25, Salary - $25,000 80000 100000 120000 efitPricewaterhouseCoopers May 2009 Slide 14 Normal retirement is 30 years of service, age 55 with 20 years of service, or age 65 with 10 years of service. In this example, the participant’s NRD is age 55. 0 20000 40000 60000 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 AgeAccrued BenefitEmployer provided accrued benefit Employee provided accrued benefit Item # 5 Plan Alternatives Freeze Defined Benefit and replace with Defined Contribution Creation of a second tier plan Decreasing the multiplier in the current plan Other plan changes/options Item # 5 Freeze Defined Benefit replace with Defined Contribut ion Two options – A complete freeze of the DB plan or closing the plan to new entrants. Option 1 represents the most savings; the City’s contribution requirements would drop from the current percent of pay to the Plan Alternatives PricewaterhouseCoopers May 2009 Slide 16 requirements would drop from the current percent of pay to the proposed DC contribution rate plus continued funding of the plan’s UAL (when applicable). Option 2 would create small savings initially, with the full impact of the change not recognized for an estimated 30 years (until the current DB plan is reduced to inactives). Item # 5 Current benefit costs may or may not provide equivalent benefits for a career employee if provided solely by a defined contribution arrangement. Much depends on individual asset returns. Expected benefits for the average and late career employee Plan Alternatives Freeze Defined Benefit replace with Defined Contribution PricewaterhouseCoopers May 2009 Slide 17 Expected benefits for the average and late career employee would most likely be significantly lower. Item # 5 Freeze Defined Benefit replace with Defined Contribut ion - Projected Contributions Freezing the current defined benefit plan will lower the costs for the City – although only a “total freeze” would see any immediate savings. Savings associated with freezing the plan to new entrants would not be recognized until years down the road. The following projections have the following assumptions: • Current population will remain static • Salaries are assumed to continue to increase at 6% • Mortality tables do not change (the state has considered updating mortality as a requirement) Plan Alternatives PricewaterhouseCoopers May 2009 Slide 18 • Discount rate remains 7.5% • Employee contributions continue at 8.0% (allowing for equivalence with the current defined benefit plan) • Employee contributions earn 6% per year • Lump sum values are converted to annuities using funding mortality and interest, with the same form of benefit provided by the defined benefit plan. Males are married to a spouse 5 years younger. • The plan’s funding method after the freeze is unit credit Item # 5 Freeze Defined Benefit replace with Defined Contribut ion - Projected Contributions Plan Alternatives Option 2010 2011 2012 I No plan change (7.5% asset return)23,139,140 24,682,239 30,566,895 Estimated percent of payroll 27.82% 29.19% 35.57% II Defined Benefit plan contribution - DB frozen to new actives 22,440,219 23,373,512 28,962,965 Estimated percent of payroll 28.86% 31.50% 40.97% Hazard - Defined Contribution plan contribution 410,965 782,814 1,155,413 Hazard - Estimated percent of payroll 20.00% 20.00% 20.00% Non-Hazard - Defined Contribution plan contribution 337,055 642,029 947,618 Non-Hazard - Estimated percent of payroll 10.00% 10.00% 10.00% Projected City Required Contribution PricewaterhouseCoopers May 2009 Slide 19 DC plan contribution - total 748,020 1,424,844 2,103,032 Total contribution with a DC plan for new actives 23,188,239 24,798,355 31,065,996 Estimated percent of payroll 27.87% 29.33% 36.15% III Defined Benefit plan contribution - with total plan freeze 3,190,788 3,254,603 3,907,495 Estimated percent of payroll 3.84% 3.85% 4.55% Hazard - Defined Contribution plan contribution 6,301,289 6,404,054 6,510,213 Hazard - Estimated percent of payroll 20.00% 20.00% 20.00% Non-Hazard - Defined Contribution plan contribution 5,168,037 5,252,320 5,339,387 Non-Hazard - Estimated percent of payroll 10.00% 10.00% 10.00% DC plan contribution - total 11,469,326 11,656,374 11,849,600 Total contribution with a defined benefit plan freeze 14,660,114 14,910,977 15,757,095 Estimated percent of payroll 17.62% 17.64% 18.33% Item # 5 Freeze Defined Benefit replace with Defined Contribut ion – Impact Comparison Participant Illustrations – Hazard Employee Plan Alternatives Age 45 values: Expected FAE $113,000 Defined Benefit only $62,000 401(k)only $54,000 Hire Age - 25, Salary - $42,000 50000 60000 70000 PricewaterhouseCoopers May 2009 Slide 20 Frozen DB $17,000 New 401(k) $27,000 Total $44,000 Normal retirement is 20 years of service or age 55 with 10 years of service. In this example, the participant’s NRD is age 45. DC contributions total 28%; 20% from the City and 8% from the employee. 0 10000 20000 30000 40000 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 AgeAccrued BenefitCurrent Plan - no change New hire after Freeze Participant with 10 YoS at Freeze Item # 5 Freeze Defined Benefit replace with Defined Contribut ion – Impact Comparison Participant Illustrations – Non-Hazard Employee Plan Alternatives Age 55 values: Expected FAE $121,000 Defined Benefit only $100,000 401(k)only $59,000 Frozen DB $12,000 Hire Age - 25, Salary - $25,000 80000 100000 120000 PricewaterhouseCoopers May 2009 Slide 21 Frozen DB $12,000 New 401(k) $39,000 Total $51,000 Normal retirement is 30 years of service, age 55 with 20 years of service, or age 65 with 10 years of service. In this example, the participant’s NRD is age 55. DC contributions total 18%; 10% from the City and 8% from the employee. 0 20000 40000 60000 80000 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 AgeAccrued BenefitCurrent Plan - no change New hire after Freeze Participant with 10 YoS at Freeze Item # 5 Creation of a second tier plan •Current employees keep current plan •New employees receive reduced benefits •No noticeable changes in funding for several years Plan Alternatives PricewaterhouseCoopers May 2009 Slide 22 •Impact of reducing benefit multiplier to 2% for new employees would be a reduction in underlying long-t erm normal cost of 5% of payroll of the new employees. Item # 5 Creation of a second tier plan Participant Illustrations – Hazard Employee - Impact of a decrease in accrual Plan Alternatives Age 45 values: Expected FAE $113,000 Original DB Plan $62,000 New DB Plan $45,000 Hire Age - 25, Salary - $42,000 50000 60000 70000 PricewaterhouseCoopers May 2009 Slide 23 Normal retirement is 20 years of service or age 55 with 10 years of service. In this example, the participant’s NRD is age 45. 0 10000 20000 30000 40000 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 AgeAccrued BenefitCurrent Plan 2% Accrual Plan Item # 5 Creation of a second tier plan Participant Illustrations – Non-Hazard Employee - Impact of a decrease in accrual Plan Alternatives Age 55 values: Expected FAE $121,000 Original DB Plan $100,000 New DB Plan $73,000 Hire Age - 25, Salary - $25,000 100000 120000 PricewaterhouseCoopers May 2009 Slide 24 Normal retirement is 30 years of service, age 55 with 20 years of service, or age 65 with 10 years of service. In this example, the participant’s NRD is age 55. 0 20000 40000 60000 80000 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 AgeAccrued BenefitCurrent Plan 2% Accrual Plan Item # 5 Decreasing the multiplier in the current plan An alternative to creating a second tier plan would be to decrease the current multiplier for all years of service. •Current accrued benefits would be a minimum. •Most participants would see no accruals for the next 3-4 years. •The exhibit below shows the impact on funding of this change; no other assumption changes from our initial projection. Plan Alternatives PricewaterhouseCoopers May 2009 Slide 25 2009 2010 2011 2012 If current assumptions are met (7.5% asset return)4,823,000 5,650,329 7,717,930 14,655,507 Estimated percent of payroll 5.87%6.79%9.13%17.05% Estimated City Required Contribution Item # 5 Decreasing the multiplier in the current plan Participant Illustrations – Hazard Employee Plan Alternatives Age 45 values: Expected FAE $113,000 Original DB Plan $62,000 New DB Plan $45,000 Hire Age - 25, Salary - $42,000 50000 60000 70000 efitPricewaterhouseCoopers May 2009 Slide 26 Normal retirement is 20 years of service or age 55 with 10 years of service. In this example, the participant’s NRD is age 45. 0 10000 20000 30000 40000 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 AgeAccrued BenefitCurrent Plan - no change Decreased multiplier Item # 5 Creation of a second tier plan Participant Illustrations – Non-Hazard Employee - Impact of a decrease in accrual Plan Alternatives Age 55 values: Expected FAE $121,000 Original DB Plan $100,000 New DB Plan $73,000 Hire Age - 25, Salary - $25,000 80000 100000 120000 PricewaterhouseCoopers May 2009 Slide 27 Normal retirement is 30 years of service, age 55 with 20 years of service, or age 65 with 10 years of service. In this example, the participant’s NRD is age 55. 0 20000 40000 60000 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 AgeAccrued BenefitCurrent Plan - no change Decreased multiplier Item # 5 Other Plan Changes/Options to Consider Increasing employee contributions from the current 8% Eliminate/decrease the COLA Service limit Elimination of overtime pay in excess of 300 hours Eliminate the “Twenty and Out” provision for new hiresEliminate the “Twenty and Out” provision for new hires Increase normal retirement age to a minimum of 55 and 10 Modify the normal form of payment to a life annuity Voluntary reduction in force FRS Item # 5 Increased Participant Contribution Rates Current participant contribution rate – 8% Increasing the percentage to 9% would decrease the City’s contribution by approximately 1% of pay, or $800,000. Other Plan Changes PricewaterhouseCoopers May 2009 Slide 29 2009 2010 2011 2012 Participants contribute 8% (7.5% asset return)23,949,000 23,139,140 24,682,239 30,566,895 Estimated percent of payroll 29.17%27.82%29.19%35.57% Participants contribute 9% (7.5% asset return)23,949,000 22,276,077 23,811,057 29,687,036 Estimated percent of payroll 29.17%26.78%28.16%34.54% Participants contribute 10% (7.5% asset return)23,949,000 21,413,014 22,939,876 28,807,178 Estimated percent of payroll 29.17%25.74%27.13%33.52% Estimated City Required Contribution Item # 5 COLA changes Current cost of living adjustment – 1.5% Decreasing the percentage .5% (to 1.0%) would decrease t he City’s contribution by approximately $600,000 in 2010, with the impact increasing in future years. Other Plan Changes PricewaterhouseCoopers May 2009 Slide 30 impact increasing in future years. 2010 2011 2012 If current assumptions are met (7.5% asset return) 23,139,140 24,682,239 30,566,895 Estimated percent of payroll 27.82% 29.19% 35.57% If COLA is reduced to 1% in 2010 22,456,065 23,960,571 29,808,020 Estimated percent of payroll 26.99% 28.34% 34.68% Estimated City Required Contribution Item # 5 This document was not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state or local tax penalties. © 2009 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as the context requires, other member firms of PricewaterhouseCoopers International Ltd., each of which is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP. PwC Item # 5 Attachment number 2Page 1 of 10 Item # 5 Attachment number 2Page 2 of 10 Item # 5 Attachment number 2Page 3 of 10 Item # 5 Attachment number 2Page 4 of 10 Item # 5 Attachment number 2Page 5 of 10 Item # 5 Attachment number 2Page 6 of 10 Item # 5 Attachment number 2Page 7 of 10 Item # 5 Attachment number 2Page 8 of 10 Item # 5 Attachment number 2Page 9 of 10 Item # 5 Attachment number 2Page 10 of 10 Item # 5 Pension Trustees Agenda Council Chambers - City Hall Meeting Date:5/18/2009 SUBJECT / RECOMMENDATION: Review of the pension investment performance for the year ended December 31, 2008. SUMMARY: It is well known, the economy struggled during the last year. It is hoped the economy will soon begin to recover and the plan will begin to recoup the losses suffered. The following is the performance for the Pension Plan for the period ending December 31, 2008: Last Year Last 3 Years Total Fund (27.10%) (4.41%) Benchmark (28.70%) (5.30%) These numbers show the plan has beaten its benchmark (which is based upon the allowable investments for which were invested in during these time periods). The Investment Committee continues to meet quarterly to monitor the performance of the plan and the individual managers. During the last calendar year the following investment styles/managers were added: Emerging Markets Eaton Vance Emerging Markets Wellington Trust Company REITs Security Capital Active EAFE Earnest Partners Active EAFE Wentworth Hauser Completing a new asset allocation study is currently in process. The results of this study will be brought to the Trustees in June for discussion and approval. In addition, selecting a performance measurement consultant is also currently underway. As part of these two processes, the pros and cons of strategic verses tactical asset allocation processes are being discussed and trustees' input is requested. Strategic Asset Allocation involves periodically rebalancing the portfolio to a stated asset allocation model in order to maintain a long-term goal for asset allocation. Tactical Asset Allocation uses a shorter time horizon and involves making changes to the asset allocation model on a more frequent basis to try to take advantage of changes in the financial markets. Lastly, an update on the plan's securities lending process is provided. Securities lending is where an entity will loan securities to another entity in exchange for cash collateral and then invest that collateral during the loaning period to provide additional income. 1. The city does not participate in securities lending with its operating cash. 2. The pension plan does participate in securities lending of pension assets with Northern Trust managing the process. 3. The pension plan has made $1,883,223 in additional income due to the securities lending program. Currently there is an unrealized loss of $1,556,260 in the securities lending portfolio due to the economy. This still leaves this program with a positive benefit to the plan of $326,963. Review Approval:1) Office of Management and Budget 2) Legal 3) Clerk 4) Assistant City Manager 5) Clerk 6) City Manager 7) Clerk Cover Memo Item # 6 City of ClearwaterCity of Clearwater Employees Employees Employees Pension Plan Employees Pension PlanMay 18, 2009May 18, 2009 Item # 6 Last Calendar Years Performance Last Calendar Years Performance Total Fund (27.10%) Total Fund (27.10%) Benchmark (28.70%) Plus 160 bp Benchmark (28.70%) Plus 160 bp Item # 6 Last Calendar Years Performance Last Calendar Years Performance Domestic Equity (37.76%) Domestic Equity (37.76%) Inter. Equity (47.95%) Dom. Fix Inc. 2.54% Inter. Equity (47.95%) Dom. Fix Inc. 2.54% Item # 6 Last Three CY Years Last Three CY Years Total Fund (4.41%) Benchmark (5.30%) Total Fund (4.41%) Benchmark (5.30%)Benchmark (5.30%) Plus 89 bp Benchmark (5.30%) Plus 89 bp Item # 6 Performance for YR 3/31/09 Performance for YR 3/31/09 Total Fund (27.57%) Benchmark (31.46%) Total Fund (27.57%) Benchmark (31.46%)Benchmark (31.46%) Plus 389bp Benchmark (31.46%) Plus 389bp Item # 6 Individual Manager Performance Individual Manager Performance Aletheia LCV (37.98%) 68th Indep. SCG (46.26%) 69th Aletheia LCV (37.98%) 68th Indep. SCG (46.26%) 69th ING LCG (33.17%) 7th Artisan MCV (42.86%) 44th Wedge MCG (34.87%) 24th ING LCG (33.17%) 7th Artisan MCV (42.86%) 44th Wedge MCG (34.87%) 24th Item # 6 Individual Manager Performance Individual Manager Performance Dodge & Cox FIX 1.37% 45th WAMCO FIX 3.91% 40th Dodge & Cox FIX 1.37% 45th WAMCO FIX 3.91% 40th Atlanta LCV (19.51%) 1st System LCV (40.70%) 92nd Atlanta LCV (19.51%) 1st System LCV (40.70%) 92nd Item # 6 Changes In ProgressChanges In Progress Add managers in stages Earnest Partners EAFE Wentworth EAFE Add managers in stages Earnest Partners EAFE Wentworth EAFEWentworth EAFE Eaton Vance EM Wellington EM Security Capital REITS Wentworth EAFE Eaton Vance EM Wellington EM Security Capital REITS Item # 6 Changes In ProgressChanges In Progress Asset Allocation StudyAsset Allocation Study Item # 6 Strategic Asset Allocation Strategic Asset Allocation VSVS Tactical Asset Allocation Tactical Asset Allocation Item # 6 Strategic AllocationStrategic Allocation Involves periodically rebalancing the portfolio in order to maintain a long-term goal for asset Involves periodically rebalancing the portfolio in order to maintain a long-term goal for asset a long-term goal for asset allocation Efficient Frontier a long-term goal for asset allocation Efficient Frontier Item # 6 2009 Efficient Frontier2009 Efficient Frontier 8.5 9.0 9.5 Efficient Frontier tric Mean Return4 5 6 Target12/31/08 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 7.0 7.5 8.0 Projected Standard Deviation10 Yr. Geometric Me1 2 3 4 Item # 6 Tactical Asset Allocation Tactical Asset Allocation Takes advantage for anomalies and quirks in the financial markets Takes advantage for anomalies and quirks in the financial marketsmarkets Shorter term horizon markets Shorter term horizon Item # 6 QuestionQuestion Strategic or Tactical?Strategic or Tactical? Authority to Modify PortfolioAuthority to Modify Portfolio Item # 6 Securities LendingSecurities Lending None in pooled cash.None in pooled cash.None in pooled cash.None in pooled cash. Item # 6 Securities LendingSecurities Lending Northern Trust Northern Trust Lehman bonds $345,337.27 Cash $345,337.27 Lehman bonds $345,337.27 Cash $345,337.27 Item # 6 Securities LendingSecurities Lending Invested collateral pool Unrealized market to market loss of $1,556,260.37 Invested collateral pool Unrealized market to market loss of $1,556,260.37of $1,556,260.37 Earned $1,883,223.92 Plus $326,963.55 of $1,556,260.37 Earned $1,883,223.92 Plus $326,963.55 Item # 6 City of Clearwater Employees Pension Plan City of Clearwater Employees Pension Plan Questions?Questions? Item # 6 Investment Manager Returns and Peer Group Rankings The table below details the rates of return and peer group rankings for the Sponsor’s investment managers over various time periods ended December 31, 2008. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. Returns and Rankings for Periods Ended December 31, 2008 Market Last Last Last Value Ending Last Last 3 5 21 $(mm) Weight Quarter Year Years Years Years Domestic Equity $166 37.25%(23.59%) (37.76%) (8.98%) (1.60%)9.38%80 60 55 37 19 S&P 500 - -(21.94%) (37.00%) (8.36%) (2.19%)8.80%17 44 35 64 49 Public Fund - Dom Equity - -(23.03%) (37.16%) (8.85%) (1.82%)8.79%50 50 50 50 50 Aletheia Research & Mgmt. 11 2.57%(26.26%) (37.98%)- - -97 68 NTGI Russell 1000 Value 31 6.90%(22.12%) (36.85%)- - -59 59 Russell 1000 Value - -(22.18%) (36.85%) (8.32%) (0.79%)9.70%60 59 58 57 58 CAI Large Cap Value Style - -(21.39%) (36.20%) (7.71%) (0.25%)9.91%50 50 50 50 50 ING Investment Management 42 9.52%(18.51%) (33.17%) (5.70%)0.71% 10.21%3 7 7 4 21 Russell 1000 Growth - -(22.79%) (38.44%) (9.11%) (3.42%)7.61%52 39 52 67 89 CAI Lrg Cap Growth Style - -(22.66%) (39.75%) (8.95%) (2.72%)9.35%50 50 50 50 50 Artisan Partners 15 3.38%(27.54%) (42.86%) (8.13%) (0.16%)-70 44 32 40 Russell Mid Cap Growth - -(27.36%) (44.32%) (11.79%) (2.33%)8.42%68 53 76 73 99 CAI Mid Cap Growth Style - -(26.44%) (44.14%) (9.59%) (0.96%)11.49%50 50 50 50 50 WEDGE Capital Management 19 4.32%(26.40%) (34.87%)- - -75 24 Russell Midcap Value - -(27.19%) (38.44%) (9.98%)0.33% 10.80%80 62 64 60 67 CAI Mid Cap Value Style - -(23.95%) (37.25%) (8.95%)1.19% 11.51%50 50 50 50 50 Independence Investments 22 4.94%(30.88%) (46.26%)- - -85 69 Russell 2000 Growth - -(27.45%) (38.54%) (9.32%) (2.35%)5.89%57 15 41 45 98 CAI Sm Cap Growth Style - -(26.96%) (43.24%) (10.38%) (3.27%)10.65%50 50 50 50 50 Atlanta Capital Management 15 3.30%(16.61%) (19.51%) (0.00%)5.01% -1 1 1 5 Systematic Financial Management 10 2.33%(25.13%) (40.70%) (10.93%) (3.15%)-36 92 74 87 Russell 2000 Value Index - -(24.89%) (28.92%) (7.49%)0.27% 10.81%33 17 28 38 70 CAI Small Cap Value Style - -(25.73%) (32.90%) (9.41%) (0.39%)11.90%50 50 50 50 50 International Equity $52 11.63%(26.42%) (47.95%) (9.65%) (0.37%)-99 96 99 97 Public Fund - Intl Equity - -(20.60%) (43.56%) (6.42%)2.81% 5.75%50 50 50 50 50 EARNEST Partners 16 3.68%(23.55%)- - - -86 MSCI EAFE Index - -(19.95%) (43.38%) (7.35%)1.66% 4.22%53 69 66 81 99 CAI Broad Vl Intl Eq Sty - -(19.81%) (42.16%) (6.57%)2.53% 9.54%50 50 50 50 50 NTGI-QM Enhanced EAFE 7 1.62%(19.66%) (43.67%) (7.03%)- -35 56 54 MSCI EAFE Index - -(19.95%) (43.38%) (7.35%)1.66% 4.22%43 53 60 72 99 CAI Non-U.S. Equity Style - -(20.47%) (43.17%) (6.71%)2.61% 7.58%50 50 50 50 50 Wentworth, Hauser and Violich 15 3.38%(32.79%)- - - -100 MSCI EAFE Index - -(19.95%) (43.38%) (7.35%)1.66% 4.22%24 38 56 61 100 CAI Broad Gr Intl Eq Sty - -(21.85%) (45.57%) (6.92%)2.31% 6.12%50 50 50 50 50 Eaton Vance Management 4 0.95%(27.96%)- - - -47 Wellington Management Co. 9 2.00%(25.33%)- - - -22 MSCI Emerging Mkts Idx - -(27.56%) (53.18%) (4.62%)8.02% 11.41%37 48 54 57 97 CAI Emerging Mkts Equity - -(28.01%) (53.25%) (4.33%)8.45% 14.39%50 50 50 50 50 Total Fund $446 100.00%(14.45%) (27.10%) (4.41%)0.48% 8.10%79 72 84 91 58 Composite Benchmark - -(16.08%) (28.70%) (5.30%) (0.59%)7.81%91 89 94 96 75 Public Fund Sponsor DB - -(13.08%) (25.27%) (2.33%)2.27% 8.20%50 50 50 50 50 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 12City Of Clearwater Employees Pension Fund Attachment number 2 Page 1 of 3 Item # 6 Investment Manager Returns and Peer Group Rankings The table below details the rates of return and peer group rankings for the Sponsor’s investment managers over various time periods ended December 31, 2008. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. Returns and Rankings for Periods Ended December 31, 2008 Market Last Last Last Value Ending Last Last 3 5 21 $(mm) Weight Quarter Year Years Years Years Domestic Fixed-Income $200 44.97% 4.22% 2.54% 4.51% 4.01% 6.73%22 36 43 51 67 Public Fund - Dom Fixed - - 1.95% 0.22% 3.90% 4.01% 7.22%50 50 50 50 50 Dodge & Cox, Inc. 98 22.02% 3.35% 1.37% 4.14% - -41 45 47 Western Asset Management Co. 100 22.36% 5.23% 3.91% 5.02% - -4 40 41 BC Aggregate Index - - 4.58% 5.24% 5.51% 4.65% 7.45%16 21 26 34 52 CAI Core Bond Style - - 2.12% 0.52% 3.90% 3.87% 7.46%50 50 50 50 50 Real Estate $27 6.15%(37.93%)- - - -83 Security Capital 27 6.15%(37.93%)- - - -83 Dow Jones Wilshire RESI - -(40.39%) (39.83%) (12.40%)0.62% 6.82%97 84 98 96 64 Public Fund - Real Estate - -(11.04%) (12.57%)5.74% 10.52% 8.11%50 50 50 50 50 Total Fund $446 100.00%(14.45%) (27.10%) (4.41%)0.48% 8.10%79 72 84 91 58 Composite Benchmark - -(16.08%) (28.70%) (5.30%) (0.59%)7.81%91 89 94 96 75 Public Fund Sponsor DB - -(13.08%) (25.27%) (2.33%)2.27% 8.20%50 50 50 50 50 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 13City Of Clearwater Employees Pension Fund Attachment number 2 Page 2 of 3 Item # 6 Investment Manager Returns and Peer Group Rankings The table below details the rates of return and peer group rankings for the Sponsor’s investment managers over various time periods. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. 2008 2007 2006 2005 2004 Domestic Equity (37.76%)7.17% 13.03% 8.12% 13.17%60 20 91 21 34 S&P 500 (37.00%)5.49% 15.79% 4.91% 10.88%44 49 21 95 84 Public Fund - Dom Equity (37.16%)5.35% 14.61% 6.56% 12.61%50 50 50 50 50 Aletheia Research & Mgmt.(37.98%)- - - -68 NTGI Russell 1000 Value (36.85%)- - - -59 Russell 1000 Value (36.85%) (0.17%)22.25% 7.05% 16.49%59 61 18 66 24 CAI Large Cap Value Style (36.20%)1.12% 19.23% 8.24% 14.68%50 50 50 50 50 ING Investment Management (33.17%)17.11% 7.14% 12.02% 10.28%7 45 46 13 28 Russell 1000 Growth (38.44%)11.81% 9.07% 5.26% 6.30%39 70 25 67 65 CAI Lrg Cap Growth Style (39.75%)16.01% 6.70% 7.02% 7.18%50 50 50 50 50 Artisan Partners (42.86%)22.32% 10.95% 10.20% 16.08%44 33 34 76 25 Russell Mid Cap Growth (44.32%)11.43% 10.66% 12.10% 15.48%53 85 39 57 29 CAI Mid Cap Growth Style (44.14%)19.47% 8.33% 12.92% 12.15%50 50 50 50 50 WEDGE Capital Management (34.87%)- - - -24 Russell Midcap Value (38.44%) (1.42%)20.22% 12.65% 23.71%62 76 9 25 24 CAI Mid Cap Value Style (37.25%)1.99% 16.80% 9.87% 19.55%50 50 50 50 50 Independence Investments (46.26%)- - - -69 Russell 2000 Growth (38.54%)7.05% 13.35% 4.15% 14.31%15 75 30 80 33 CAI Sm Cap Growth Style (43.24%)14.07% 12.49% 7.24% 12.28%50 50 50 50 50 Atlanta Capital Management (19.51%)6.90% 16.21% 6.21% 20.24%1 6 59 65 72 Systematic Financial Mgmt.(40.70%)0.47% 18.60% 8.25% 11.40%92 16 50 57 95 Russell 2000 Value Index (28.92%) (9.78%)23.48% 4.71% 22.25%17 59 12 83 56 CAI Small Cap Value Style (32.90%) (8.60%)18.75% 9.23% 22.78%50 50 50 50 50 International Equity (47.95%)11.01% 27.63% 13.14% 17.66%96 83 21 82 81 Public Fund - Intl Equity (43.56%)14.59% 26.44% 15.89% 19.59%50 50 50 50 50 NTGI-QM Enhanced EAFE (43.67%)11.01% 28.49% 12.81% -56 63 34 80 MSCI EAFE Index (43.38%)11.17% 26.34% 13.54% 20.25%53 62 48 78 37 CAI Non-U.S. Equity Style (43.17%)13.17% 26.00% 15.70% 18.88%50 50 50 50 50 Domestic Fixed-Income 2.54% 5.94% 5.07% 2.61% 3.92%36 72 34 62 91 Public Fund - Dom Fixed 0.22% 6.61% 4.67% 2.82% 4.83%50 50 50 50 50 Dodge & Cox, Inc. 1.37% 5.47% 5.62% 2.39% -45 77 5 89 Western Asset Management Co. 3.91% 6.51% 4.65% 2.78% -40 49 42 48 BC Aggregate Index 5.24% 6.97% 4.33% 2.43% 4.34%21 22 80 86 67 CAI Core Bond Style 0.52% 6.46% 4.54% 2.77% 4.49%50 50 50 50 50 Total Fund (27.10%)7.22% 11.76% 6.72% 9.89%72 65 81 67 80 Composite Benchmark (28.70%)6.30% 12.05% 4.72% 9.18%89 87 79 87 82 Public Fund Sponsor DB (25.27%)8.20% 14.04% 7.54% 11.47%50 50 50 50 50 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 14City Of Clearwater Employees Pension Fund Attachment number 2 Page 3 of 3 Item # 6 Investment Manager Returns and Peer Group Rankings The table below details the rates of return and peer group rankings for the Sponsor’s investment managers over various time periods ended December 31, 2008. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. Returns and Rankings for Periods Ended December 31, 2008 Market Last Last Last Value Ending Last Last 3 5 21 $(mm) Weight Quarter Year Years Years Years Domestic Equity $166 37.25%(23.59%) (37.76%) (8.98%) (1.60%)9.38%80 60 55 37 19 S&P 500 - -(21.94%) (37.00%) (8.36%) (2.19%)8.80%17 44 35 64 49 Public Fund - Dom Equity - -(23.03%) (37.16%) (8.85%) (1.82%)8.79%50 50 50 50 50 Aletheia Research & Mgmt. 11 2.57%(26.26%) (37.98%)- - -97 68 NTGI Russell 1000 Value 31 6.90%(22.12%) (36.85%)- - -59 59 Russell 1000 Value - -(22.18%) (36.85%) (8.32%) (0.79%)9.70%60 59 58 57 58 CAI Large Cap Value Style - -(21.39%) (36.20%) (7.71%) (0.25%)9.91%50 50 50 50 50 ING Investment Management 42 9.52%(18.51%) (33.17%) (5.70%)0.71% 10.21%3 7 7 4 21 Russell 1000 Growth - -(22.79%) (38.44%) (9.11%) (3.42%)7.61%52 39 52 67 89 CAI Lrg Cap Growth Style - -(22.66%) (39.75%) (8.95%) (2.72%)9.35%50 50 50 50 50 Artisan Partners 15 3.38%(27.54%) (42.86%) (8.13%) (0.16%)-70 44 32 40 Russell Mid Cap Growth - -(27.36%) (44.32%) (11.79%) (2.33%)8.42%68 53 76 73 99 CAI Mid Cap Growth Style - -(26.44%) (44.14%) (9.59%) (0.96%)11.49%50 50 50 50 50 WEDGE Capital Management 19 4.32%(26.40%) (34.87%)- - -75 24 Russell Midcap Value - -(27.19%) (38.44%) (9.98%)0.33% 10.80%80 62 64 60 67 CAI Mid Cap Value Style - -(23.95%) (37.25%) (8.95%)1.19% 11.51%50 50 50 50 50 Independence Investments 22 4.94%(30.88%) (46.26%)- - -85 69 Russell 2000 Growth - -(27.45%) (38.54%) (9.32%) (2.35%)5.89%57 15 41 45 98 CAI Sm Cap Growth Style - -(26.96%) (43.24%) (10.38%) (3.27%)10.65%50 50 50 50 50 Atlanta Capital Management 15 3.30%(16.61%) (19.51%) (0.00%)5.01% -1 1 1 5 Systematic Financial Management 10 2.33%(25.13%) (40.70%) (10.93%) (3.15%)-36 92 74 87 Russell 2000 Value Index - -(24.89%) (28.92%) (7.49%)0.27% 10.81%33 17 28 38 70 CAI Small Cap Value Style - -(25.73%) (32.90%) (9.41%) (0.39%)11.90%50 50 50 50 50 International Equity $52 11.63%(26.42%) (47.95%) (9.65%) (0.37%)-99 96 99 97 Public Fund - Intl Equity - -(20.60%) (43.56%) (6.42%)2.81% 5.75%50 50 50 50 50 EARNEST Partners 16 3.68%(23.55%)- - - -86 MSCI EAFE Index - -(19.95%) (43.38%) (7.35%)1.66% 4.22%53 69 66 81 99 CAI Broad Vl Intl Eq Sty - -(19.81%) (42.16%) (6.57%)2.53% 9.54%50 50 50 50 50 NTGI-QM Enhanced EAFE 7 1.62%(19.66%) (43.67%) (7.03%)- -35 56 54 MSCI EAFE Index - -(19.95%) (43.38%) (7.35%)1.66% 4.22%43 53 60 72 99 CAI Non-U.S. Equity Style - -(20.47%) (43.17%) (6.71%)2.61% 7.58%50 50 50 50 50 Wentworth, Hauser and Violich 15 3.38%(32.79%)- - - -100 MSCI EAFE Index - -(19.95%) (43.38%) (7.35%)1.66% 4.22%24 38 56 61 100 CAI Broad Gr Intl Eq Sty - -(21.85%) (45.57%) (6.92%)2.31% 6.12%50 50 50 50 50 Eaton Vance Management 4 0.95%(27.96%)- - - -47 Wellington Management Co. 9 2.00%(25.33%)- - - -22 MSCI Emerging Mkts Idx - -(27.56%) (53.18%) (4.62%)8.02% 11.41%37 48 54 57 97 CAI Emerging Mkts Equity - -(28.01%) (53.25%) (4.33%)8.45% 14.39%50 50 50 50 50 Total Fund $446 100.00%(14.45%) (27.10%) (4.41%)0.48% 8.10%79 72 84 91 58 Composite Benchmark - -(16.08%) (28.70%) (5.30%) (0.59%)7.81%91 89 94 96 75 Public Fund Sponsor DB - -(13.08%) (25.27%) (2.33%)2.27% 8.20%50 50 50 50 50 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 12City Of Clearwater Employees Pension Fund Attachment number 3 Page 1 of 3 Item # 6 Investment Manager Returns and Peer Group Rankings The table below details the rates of return and peer group rankings for the Sponsor’s investment managers over various time periods ended December 31, 2008. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. Returns and Rankings for Periods Ended December 31, 2008 Market Last Last Last Value Ending Last Last 3 5 21 $(mm) Weight Quarter Year Years Years Years Domestic Fixed-Income $200 44.97% 4.22% 2.54% 4.51% 4.01% 6.73%22 36 43 51 67 Public Fund - Dom Fixed - - 1.95% 0.22% 3.90% 4.01% 7.22%50 50 50 50 50 Dodge & Cox, Inc. 98 22.02% 3.35% 1.37% 4.14% - -41 45 47 Western Asset Management Co. 100 22.36% 5.23% 3.91% 5.02% - -4 40 41 BC Aggregate Index - - 4.58% 5.24% 5.51% 4.65% 7.45%16 21 26 34 52 CAI Core Bond Style - - 2.12% 0.52% 3.90% 3.87% 7.46%50 50 50 50 50 Real Estate $27 6.15%(37.93%)- - - -83 Security Capital 27 6.15%(37.93%)- - - -83 Dow Jones Wilshire RESI - -(40.39%) (39.83%) (12.40%)0.62% 6.82%97 84 98 96 64 Public Fund - Real Estate - -(11.04%) (12.57%)5.74% 10.52% 8.11%50 50 50 50 50 Total Fund $446 100.00%(14.45%) (27.10%) (4.41%)0.48% 8.10%79 72 84 91 58 Composite Benchmark - -(16.08%) (28.70%) (5.30%) (0.59%)7.81%91 89 94 96 75 Public Fund Sponsor DB - -(13.08%) (25.27%) (2.33%)2.27% 8.20%50 50 50 50 50 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 13City Of Clearwater Employees Pension Fund Attachment number 3 Page 2 of 3 Item # 6 Investment Manager Returns and Peer Group Rankings The table below details the rates of return and peer group rankings for the Sponsor’s investment managers over various time periods. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. 2008 2007 2006 2005 2004 Domestic Equity (37.76%)7.17% 13.03% 8.12% 13.17%60 20 91 21 34 S&P 500 (37.00%)5.49% 15.79% 4.91% 10.88%44 49 21 95 84 Public Fund - Dom Equity (37.16%)5.35% 14.61% 6.56% 12.61%50 50 50 50 50 Aletheia Research & Mgmt.(37.98%)- - - -68 NTGI Russell 1000 Value (36.85%)- - - -59 Russell 1000 Value (36.85%) (0.17%)22.25% 7.05% 16.49%59 61 18 66 24 CAI Large Cap Value Style (36.20%)1.12% 19.23% 8.24% 14.68%50 50 50 50 50 ING Investment Management (33.17%)17.11% 7.14% 12.02% 10.28%7 45 46 13 28 Russell 1000 Growth (38.44%)11.81% 9.07% 5.26% 6.30%39 70 25 67 65 CAI Lrg Cap Growth Style (39.75%)16.01% 6.70% 7.02% 7.18%50 50 50 50 50 Artisan Partners (42.86%)22.32% 10.95% 10.20% 16.08%44 33 34 76 25 Russell Mid Cap Growth (44.32%)11.43% 10.66% 12.10% 15.48%53 85 39 57 29 CAI Mid Cap Growth Style (44.14%)19.47% 8.33% 12.92% 12.15%50 50 50 50 50 WEDGE Capital Management (34.87%)- - - -24 Russell Midcap Value (38.44%) (1.42%)20.22% 12.65% 23.71%62 76 9 25 24 CAI Mid Cap Value Style (37.25%)1.99% 16.80% 9.87% 19.55%50 50 50 50 50 Independence Investments (46.26%)- - - -69 Russell 2000 Growth (38.54%)7.05% 13.35% 4.15% 14.31%15 75 30 80 33 CAI Sm Cap Growth Style (43.24%)14.07% 12.49% 7.24% 12.28%50 50 50 50 50 Atlanta Capital Management (19.51%)6.90% 16.21% 6.21% 20.24%1 6 59 65 72 Systematic Financial Mgmt.(40.70%)0.47% 18.60% 8.25% 11.40%92 16 50 57 95 Russell 2000 Value Index (28.92%) (9.78%)23.48% 4.71% 22.25%17 59 12 83 56 CAI Small Cap Value Style (32.90%) (8.60%)18.75% 9.23% 22.78%50 50 50 50 50 International Equity (47.95%)11.01% 27.63% 13.14% 17.66%96 83 21 82 81 Public Fund - Intl Equity (43.56%)14.59% 26.44% 15.89% 19.59%50 50 50 50 50 NTGI-QM Enhanced EAFE (43.67%)11.01% 28.49% 12.81% -56 63 34 80 MSCI EAFE Index (43.38%)11.17% 26.34% 13.54% 20.25%53 62 48 78 37 CAI Non-U.S. Equity Style (43.17%)13.17% 26.00% 15.70% 18.88%50 50 50 50 50 Domestic Fixed-Income 2.54% 5.94% 5.07% 2.61% 3.92%36 72 34 62 91 Public Fund - Dom Fixed 0.22% 6.61% 4.67% 2.82% 4.83%50 50 50 50 50 Dodge & Cox, Inc. 1.37% 5.47% 5.62% 2.39% -45 77 5 89 Western Asset Management Co. 3.91% 6.51% 4.65% 2.78% -40 49 42 48 BC Aggregate Index 5.24% 6.97% 4.33% 2.43% 4.34%21 22 80 86 67 CAI Core Bond Style 0.52% 6.46% 4.54% 2.77% 4.49%50 50 50 50 50 Total Fund (27.10%)7.22% 11.76% 6.72% 9.89%72 65 81 67 80 Composite Benchmark (28.70%)6.30% 12.05% 4.72% 9.18%89 87 79 87 82 Public Fund Sponsor DB (25.27%)8.20% 14.04% 7.54% 11.47%50 50 50 50 50 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 14City Of Clearwater Employees Pension Fund Attachment number 3 Page 3 of 3 Item # 6 Callan Associates Inc. Investment Measurement Service Quarterly Review City of Clearwater Employees Pension Fund March 31, 2009 The following report was prepared by Callan Associates Inc. ("CAI") using information from sources that include the following: fund trustee(s); fund custodian(s); investment manager(s); CAI computer software; CAI investment manager and fund sponsor database; third party data vendors; and other outside sources as directed by the client. CAI assumes no responsibility for the accuracy or completeness of the information provided, or methodologies employed, by any information providers external to CAI. Reasonable care has been taken to assure the accuracy of the CAI database and computer software. In preparing the following report, CAI has not reviewed the risks of individual security holdings or the compliance/non-compliance of individual security holdings with investment policies and guidelines of a fund sponsor, nor has it assumed any responsibility to do so. Copyright 2009 by Callan Associates Inc. Attachment number 4 Page 1 of 108 Item # 6 Active Management OverviewActive Management Overview Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Domestic Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Domestic Fixed-Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 International Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 International Fixed-Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Asset Allocation and PerformanceAsset Allocation and Performance Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Cost vs Target Asset Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Actual vs Target Asset Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Investment Manager Asset Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Investment Manager Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Investment Manager Returns - Net of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Quarterly Total Fund Attribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Cumulative Total Fund Attribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Cumulative Performance Relative to Target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Actual vs Target Historical Asset Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Total Fund Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Asset Class Rankings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Domestic EquityDomestic Equity Domestic Equity Composite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Large Cap Composite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Aletheia Research and Management, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 ING Investment Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 NTGI - Russell 1000 Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Mid Cap Composite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Artisan Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 WEDGE Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Small Cap Composite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Atlanta Capital Management Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Independence Investments LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Systematic Financial Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 International EquityInternational Equity International Equity Composite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 EARNEST Partners, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Eaton Vance Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 NTGI-QM Enhanced EAFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Wellington Management Company, LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Wentworth, Hauser and Violich . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Domestic Fixed-IncomeDomestic Fixed-Income Domestic Fixed-Income Composite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Dodge & Cox, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Western Asset Management Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Real EstateReal Estate Security Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Attachment number 4 Page 2 of 108 Item # 6 DefinitionsDefinitions Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Callan Associates Databases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Equity Management Style Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 International Equity Management Style Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Fixed-Income Management Style Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Risk/Reward Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Common Stock Portfolio Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Fixed-Income Portfolio Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 DisclosuresDisclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Callan Research/EducationCallan Research/Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Attachment number 4 Page 3 of 108 Item # 6 Active Management ‘Overview ‘ Attachment number 4 Page 4 of 108 Item # 6 MARKET OVERVIEW ACTIVE MANAGEMENT VS INDEX RETURNS Market Overview The charts below illustrate the range of returns across managers in Callan’s Separate Account database over the most recent one quarter and one year time periods. The database is broken down by asset class to illustrate the difference in returns across those asset classes. An appropriate index is also shown for each asset class for comparison purposes. As an example, the first bar in the upper chart illustrates the range of returns for domestic equity managers over the last quarter. The triangle represents the S&P 500 return. The number next to the triangle represents the ranking of the S&P 500 in the domestic equity manager database. Range of Separate Account Manager Returns by Asset Class One Quarter Ended March 31, 2009 Returns(25%) (20%) (15%) (10%) (5%) 0% 5% 10% Domestic Non-US Domestic Non-US Real Cash Equity Equity Fixed-Income Fixed-Income Estate Equivalents vs vs vs vs vs vs S&P 500 MSCI EAFE BC Aggr Bd Citi Non-US Gov NCREIF Index 3 Mon T-Bills (64) (69) (71) (48)(56) (92) 10th Percentile (2.95) (9.39)5.37 (3.29) (0.08)1.35 25th Percentile (5.98) (10.94)1.91 (5.19) (3.16)0.98 Median (9.76) (12.26)0.81 (5.75) (6.28)0.39 75th Percentile (12.47) (14.17)0.06 (6.56) (12.22)0.26 90th Percentile (15.35) (15.22) (1.29) (6.92) (18.99)0.07 Index (11.01) (13.94)0.12 (5.74) (7.33)0.05 Range of Separate Account Manager Returns by Asset Class One Year Ended March 31, 2009 Returns(60%) (50%) (40%) (30%) (20%) (10%) 0% 10% 20% Domestic Non-US Domestic Non-US Real Cash Equity Equity Fixed-Income Fixed-Income Estate Equivalents vs vs vs vs vs vs S&P 500 MSCI EAFE BC Aggr Bd Citi Non-US Gov NCREIF Index 3 Mon T-Bills (59) (60) (32) (31) (32) (83) 10th Percentile (30.63) (39.64)5.18 (4.23) (5.58)3.60 25th Percentile (34.04) (41.90)3.64 (5.49) (12.82)2.72 Median (37.29) (45.33)1.16 (8.16) (21.37)2.25 75th Percentile (39.99) (47.92) (4.47) (9.23) (31.93)1.62 90th Percentile (43.38) (49.74) (12.66) (22.16) (42.59) (2.31) Index (38.09) (46.51)3.13 (6.44) (14.68)1.21 2City Of Clearwater Employees Pension Fund Attachment number 4 Page 5 of 108 Item # 6 DOMESTIC EQUITY Active Management Overview Active vs. the Index Domestic equity markets were highly event driven in the first quarter of 2009. Government policies and mixed economic data dictated the behavior of U.S. stocks. The S&P 500 began the year plunging over 35% through the beginning of March to a low of 666.79, only to rebound on strong volume and close the quarter down 11.01%. The White House began 2009 by passing a $789 billion stimulus bill and proposing a new budget with a $1.75 trillion deficit. Unemployment rose to 8.5% as industrial production dropped, but a surprise increase in consumer sentiment and several other positive economic indicators may signal that the decline in GDP may be slowing. Active managers were very effective in limiting their losses as the median manager of each style group outperformed its benchmark. The median Small Cap Growth manager beat the S&P 600 Growth index by 751 basis points. The median Large Cap Core manager turned in a 9.25% loss, besting the S&P 500 by 176 basis points. Large Cap vs. Small Cap Financial services and Small Cap stocks led the downturn at the start of the year but paced Consumer Discretionary stocks which led the March rally. Large Caps were polarized in the Financials Sector, where numerous bailout participants came under fire for extravagant bonuses paid to executives with bailout funds. However, the largest banks, including Bank of America, JP Morgan, and Wells Fargo, surprised Wall Street by turning a profit in the first quarter. The auto industry took another hit when the administration’s Auto Recovery Panel rejected initial restructuring proposals by GM and Chrystler, and laid down specific mandates for improved plans. By the end of the quarter, Large Cap and Small Cap managers turned in very similar results. The median Large Cap Core manager reported a 9.25% loss, compared to the median Small Cap Broad manager’s loss of 12.26%. Large Cap Value beat Small Cap Value by 346 basis points, while the median Mid Cap Growth manager turned in the best results of the quarter with a 3.11% loss. Growth vs. Value At the start of 2009, managers appeared to make an aggressive rotation towards growth stocks, helping growth outpace value through the early downturn. March brought a broad rally across all sectors and style groups, as a tentative optimism benefited all equities. Historically, it is believed that growth leads the recovery out of a recession, but the low price-to-book ratio of value stocks has made for an attractive bargain. No one can say if the floor has been reached for the broad market, but put/call ratios have declined and shorts are no longer going unchecked. Small Cap Growth managers beat Small Cap Value managers by 975 basis points, while Large Cap Growth beat Large Cap Value by 1,045 basis points. Every style group was down over 30% for the year ended March 31, 2009. Separate Account Style Group Median Returns for Quarter Ended March 31, 2009 (25%) (20%) (15%) (10%) (5%) 0% (7.34%) Small Cap Growth (17.09%) Small Cap Value (12.26%) Small Cap Broad (3.11%) Mid Cap Growth (11.14%) Mid Cap Value (6.97%) Mid Cap Broad (3.18%) Large Cap Growth (13.63%) Large Cap Value (9.25%) Large Cap CoreReturnsS&P 500:(11.01%) S&P 500 Growth:(6.18%) S&P 500 Value:(16.11%) S&P Mid Cap:(8.66%) S&P 600:(16.84%) S&P 600 Growth:(14.85%) S&P 600 Value:(18.78%) Separate Account Style Group Median Returns for One Year Ended March 31, 2009 (50%) (40%) (30%) (20%) (10%) 0% (37.58%) Small Cap Growth (40.35%) Small Cap Value (38.32%) Small Cap Broad (37.96%) Mid Cap Growth (39.30%) Mid Cap Value (38.53%) Mid Cap Broad (33.89%) Large Cap Growth (39.86%) Large Cap Value (36.05%) Large Cap CoreReturnsS&P 500:(38.09%) S&P 500 Growth:(32.22%) S&P 500 Value:(44.00%) S&P Mid Cap:(36.09%) S&P 600:(38.06%) S&P 600 Growth:(37.60%) S&P 600 Value:(38.79%) 3City Of Clearwater Employees Pension Fund Attachment number 4 Page 6 of 108 Item # 6 DOMESTIC FIXED-INCOME Active Management Overview Active vs. the Index With the Fed Funds interest rate still between 0% and 0.25% through the first quarter in 2009, the Federal Reserve followed a plan for aggressive monetary and fiscal stimulus. On March 18th, the Federal Open Market Committee committed the Federal Reserve to buying up to $300 billion worth in long-term Treasuries and increasing its commitment to buy mortgage-backed securities from $500 billion to $1.25 trillion. The equity market stabilized a bit over the quarter, drawing more investors back to stocks. The Barclays Capital Aggregate Bond index (formerly Lehman Brothers) returned 0.12% for the quarter due to market stabilization. The median Core Bond fund’s return for the quarter was 50 basis points higher at 0.62%. Despite the stabilization of the markets, even a relatively non-volatile investment class such as fixed-income was affected over the course of the year. The BC Aggregate index returned 3.13% for the twelve months ending March 31, 2009, while the median Core Bond fund lost 0.23%. Short vs. Long Duration The end of the first quarter of 2009 brought positive returns across a number of asset classes. After continuing in negative numbers through January, three-month Treasury bills had positive returns in February and March. With a rebound in the equity markets, investors’ risk appetite is beginning to come back, creating an influx of cash into stocks and riskier assets at quarter end. During the first quarter of 2009, the median Intermediate fund outperformed Extended Maturity with a 0.91% return versus a 5.39% loss. For the year ended March 31, 2009 Extended Maturity underperformed Intermediate with returns of -0.32% and 2.49%, respectively. Mortgages and High Yield After housing prices through January were down 29% from their all-time peak, housing sales rose in February and continued to stabilize through the quarter. Still, relative to incomes, houses are 10% undervalued. Fannie Mae and Freddie Mac received $46 billion from the government in March alone. For the first quarter of 2009, the BC Mortgage index returned 2.20% while the median Mortgage Backed fund underperformed the index with a return of 2.15%. High-yield debt performed well during the quarter with the median fund posting a 5.79% return (versus 5.98% for its index), although it was still the worst performer for the year with a loss of 15.15%. Separate Account Style Group Median Returns for Quarter Ended March 31, 2009 (10%) (5%) 0% 5% 10% 0.89% Active Cash 0.87% Defensive 0.91% Intermed 0.62% Core Bond 1.08% Core Plus (5.39%) Extended Maturity 0.48% Active Duration 2.15% Mortgage Backed 5.79% High YieldReturnsBC Universal: 0.39% BC Aggregate: 0.12% BC Govt/Credit:(1.28%) BC Mortgage: 2.20% BC High Yield: 5.98% Separate Account Style Group Median Returns for One Year Ended March 31, 2009 (20%) (15%) (10%) (5%) 0% 5% 10% 2.15% Active Cash 2.13% Defensive 2.49% Intermed (0.23%) Core Bond (3.91%) Core Plus (0.32%) Extended Maturity 4.55% Active Duration 5.11% Mortgage Backed (15.15%) High YieldReturnsBC Universal: 1.11% BC Aggregate: 3.13% BC Govt/Credit: 1.78% BC Mortgage: 8.09% BC High Yield:(19.31%) 4City Of Clearwater Employees Pension Fund Attachment number 4 Page 7 of 108 Item # 6 INTERNATIONAL EQUITY Active Management Overview Active vs. the Index The International markets have continued to perform poorly. The big economic news happened at the end of the first quarter with the beginning of the G-20 summit in London. The G-20 consists of the world’s 19 largest economies and the European Union. The MSCI EAFE posted a 13.94% loss falling below the median Core International fund which lost 13.26% of its value in the first quarter of 2009. For the twelve months ended March 31, 2009, the median Core International fund outperformed the MSCI EAFE index by 156 basis points. Europe In Europe, the financial crisis led to significant setbacks to the creation of a single EU financial market, focusing instead on the financial stability arrangements. Lead by France and Germany, Europe insisted on more international financial regulation, as opposed to U.S. supported stimulus spending. This would allow European Union policymakers to set limits on the budget deficits member countries can run. For the first quarter, the median Europe fund had a -13.35% return, better than the MSCI Europe index of -14.56%. The one-year median Europe fund posted a -48.20% return, which was 171 basis points better than its index. Pacific The Pacific basin, an export laden region, has not been spared by the current financial crisis in which demand for goods is down. The median Pacific Basin fund outperformed the median Japan Only fund by 765 basis points in the first quarter of 2009. The Organization for Economic Co-Operation and Development now predicts that Japan’s gross domestic product will drop by 6.6% in 2009. This is a sharp revision from the contraction of 0.1% the OECD predicted for 2009 in November. The median Pacific Basin fund outperformed its MSCI Pacific benchmark by 342 basis points in the first quarter of 2009 while the median Japan Only fund was 423 basis points behing the index. The one-year return for the median Pacific Basin fund was 21 basis points below the MSCI Pacific index, while the median Japan Only fund was 60 basis points ahead of the MSCI Pacific index. Emerging Markets Due to the drag of falling export demand and tighter external financing constraints, growth in the emerging economies is expected to slow sharply, from 6.25% in 2008 to 3.50% in 2009. China has been questioning the dominance of the U.S. dollar and suggesting the creation of a new currency reserve to replace the dollar. The median Emerging Market fund posted the best return for the first quarter with a -0.57% return, while the MSCI Emerging Markets index posted a 1.02% return. The twelve months through March 31, 2009 ended with the median Emerging Markets fund falling 125 basis points below its benchmark returning -48.15% and -46.90%, respectively. Separate Account Style Group Median Returns for Quarter Ended March 31, 2009 (25%) (20%) (15%) (10%) (5%) 0% (13.35%) Europe (13.26%) Core Int’l (11.64%) Core Plus (9.35%) Pacific Basin (17.00%) Japan Only (0.57%) Emerging Markets (10.53%) Global EquityReturnsMSCI AC World Index (10.57%) MSCI ACW ex US Free:(10.62%) MSCI EAFE:(13.94%) MSCI Europe:(14.56%) MSCI Pacific:(12.77%) MSCI Emerging Markets: 1.02% Separate Account Style Group Median Returns for One Year Ended March 31, 2009 (60%) (50%) (40%) (30%) (20%) (10%) 0% (48.20%) Europe (44.95%) Core Int’l (45.82%) Core Plus (38.88%) Pacific Basin (38.07%) Japan Only (48.15%) Emerging Markets (41.71%) Global EquityReturnsMSCI AC World Index (42.74%) MSCI ACW ex US Free:(46.18%) MSCI EAFE:(46.51%) MSCI Europe:(49.91%) MSCI Pacific:(38.67%) MSCI Emerging Markets:(46.90%) 5City Of Clearwater Employees Pension Fund Attachment number 4 Page 8 of 108 Item # 6 INTERNATIONAL FIXED-INCOME Active Management Overview Active vs. the Index After a significant rally to finish out 2008, most international fixed-income markets reverted back to negative territory in the first quarter of 2009. However, massive government intervention in most developed nations led to increased stability in the global economy. The G-20 summit in London also gave investors reason to be optimistic as progress was made in increasing global cooperation among financial regulators, combating protectionism and removing toxic assets from bank’s balance sheets. For the first quarter of 2009, the median Non-U.S. fund underperformed its benchmark by 1 basis point posting a loss of 5.75% while the median Global Fixed Income manager outperformed the Citi World Govt index returning -4.27% versus the index’s loss of 4.81%. Emerging Markets Emerging Debt was the best performing group for the first quarter of 2009 as it reversed its 2008 downward trend by posting a positive return. The median Emerging Debt manager returned 2.91% outperforming the JP Morgan Emerging Market index which finished with a loss of 3.96%. The global economy as a whole saw a rebound in March and emerging markets were a beneficiary of this as commodity prices began to rise again after last quarter’s precipitous fall. However, even with a positive return in the first quarter of 2009, the median Emerging Market Debt fund was still down 12.92% for the latest twelve months, 113 basis points lower than its index. Separate Account Style Group Median Returns for Quarter Ended March 31, 2009 (8%) (6%) (4%) (2%) 0% 2% 4% 6% (5.75%) Non-US Fixed-Income (4.27%) Global Fixed-Income 2.91% Emerging Debt 0.62% Domestic Core BondReturnsCiti World Govt:(4.81%) Citi Non-US Govt:(5.74%) Citi Non-US Hedged: 0.05% JP Morgan Emerging Mkt:(3.96%) Separate Account Style Group Median Returns for One Year Ended March 31, 2009 (16%) (14%) (12%) (10%) (8%) (6%) (4%) (2%) 0% (8.16%) Non-US Fixed-Income (5.64%) Global Fixed-Income (12.92%) Emerging Debt (0.23%) Domestic Core BondReturnsCiti World Govt:(3.75%) Citi Non-US Govt:(6.44%) Citi Non-US Hedged: 5.80% JP Morgan Emerging Mkt:(11.79%) 6City Of Clearwater Employees Pension Fund Attachment number 4 Page 9 of 108 Item # 6 Asset Allocation ‘and Performance ‘ Attachment number 4 Page 10 of 108 Item # 6 ASSET ALLOCATION AND PERFORMANCE Asset Allocation and Performance This section begins with an overview of the fund’s asset allocation at the broad asset class level. This is followed by a top down performance attribution analysis which analyzes the fund’s performance relative to the performance of the fund’s policy target asset allocation. The fund’s historical performance is then examined relative to funds with similar objectives. Performance of each asset class is then shown relative to the asset class performance of other funds. Finally a summary is presented of the holdings of the fund’s investment managers, and the returns of those managers over various recent periods. 8City Of Clearwater Employees Pension Fund Attachment number 4 Page 11 of 108 Item # 6 Actual vs Target Cost Allocation The top left chart shows the Fund’s asset allocation as of March 31, 2009. The top right chart shows the Fund’s target asset allocation as outlined in the investment policy statement. The bottom chart ranks the fund’s asset allocation and the target allocation versus the CAI Public Fund Sponsor Database. Actual Cost Allocation Domestic Equity 40% International Equity 19% Domestic Fixed-Income 34% Real Estate 8% Target Cost Allocation Domestic Equity 42% International Equity 18% Domestic Fixed-Income 30% Real Estate 10% $000s Percent Percent Percent $000s Asset Class Actual Actual Target Difference Difference Domestic Equity 217,460 39.9% 42.0%(2.1%) (11,295) International Equity 101,562 18.6% 18.0% 0.6% 3,524 Domestic Fixed-Income 184,440 33.9% 30.0% 3.9% 21,044 Real Estate 41,191 7.6% 10.0%(2.4%) (13,274) Total 544,653 100.0% 100.0% Asset Class Weights vs CAI Public Fund Sponsor Database Weights0% 10% 20% 30% 40% 50% 60% Domestic Domestic Short Real International Intl Alternative Equity Fixed-Income Term-Cash Estate Equity Fixed-Inc (41)(26) (50) (66) (56) (40) (13)(14) 10th Percentile 49.27 52.26 5.46 16.26 20.56 12.75 17.61 25th Percentile 42.51 42.89 2.28 11.43 17.04 7.21 15.40 Median 38.01 33.84 1.32 8.38 14.35 5.33 9.69 75th Percentile 31.76 28.86 0.30 6.00 11.41 3.88 4.93 90th Percentile 15.47 21.66 0.09 3.59 6.99 0.91 0.96 Fund 39.93 33.86 - 7.56 18.65 - - Target 42.00 30.00 - 10.00 18.00 - - % Group Invested 97.37% 100.00% 60.81% 56.76% 94.59% 18.92% 40.54% * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 9City Of Clearwater Employees Pension Fund Attachment number 4 Page 12 of 108 Item # 6 Actual vs Target Asset Allocation The top left chart shows the Fund’s asset allocation as of March 31, 2009. The top right chart shows the Fund’s target asset allocation as outlined in the investment policy statement. The bottom chart ranks the fund’s asset allocation and the target allocation versus the CAI Public Fund Sponsor Database. Actual Asset Allocation Domestic Equity 39% International Equity 14% Domestic Fixed-Income 42% Real Estate 5% Target Asset Allocation Domestic Equity 42% International Equity 18% Domestic Fixed-Income 30% Real Estate 10% $000s Percent Percent Percent $000s Asset Class Actual Actual Target Difference Difference Domestic Equity 160,001 38.5% 42.0%(3.5%) (14,490) International Equity 59,326 14.3% 18.0%(3.7%) (15,456) Domestic Fixed-Income 174,839 42.1% 30.0% 12.1% 50,202 Real Estate 21,289 5.1% 10.0%(4.9%) (20,256) Total 415,455 100.0% 100.0% Asset Class Weights vs CAI Public Fund Sponsor Database Weights0% 10% 20% 30% 40% 50% 60% Domestic Domestic Short Real International Intl Alternative Equity Fixed-Income Term-Cash Estate Equity Fixed-Inc (47) (26)(27) (66) (81) (40) (52) (14) 10th Percentile 49.27 52.26 5.46 16.26 20.56 12.75 17.61 25th Percentile 42.51 42.89 2.28 11.43 17.04 7.21 15.40 Median 38.01 33.84 1.32 8.38 14.35 5.33 9.69 75th Percentile 31.76 28.86 0.30 6.00 11.41 3.88 4.93 90th Percentile 15.47 21.66 0.09 3.59 6.99 0.91 0.96 Fund 38.51 42.08 - 5.12 14.28 - - Target 42.00 30.00 - 10.00 18.00 - - % Group Invested 97.37% 100.00% 60.81% 56.76% 94.59% 18.92% 40.54% * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 10City Of Clearwater Employees Pension Fund Attachment number 4 Page 13 of 108 Item # 6 Investment Manager Asset Allocation The table below contrasts the distribution of assets across the Fund’s investment managers as of March 31, 2009, with the distribution as of December 31, 2008. The change in asset distribution is broken down into the dollar change due to Net New Investment and the dollar change due to Investment Return. Asset Distribution Across Investment Managers March 31, 2009 December 31, 2008 Market Value Percent Net New Inv. Inv. Return Market Value Percent Domestic Equity $160,000,736 38.51% $10,000,034 $(15,994,061)$165,994,763 37.25% Aletheia Research 10,267,221 2.47%(0) (1,171,503)11,438,724 2.57% Artisan Partners 20,661,236 4.97% 5,000,352 596,730 15,064,154 3.38% Atlanta Capital Management 13,093,563 3.15%(0) (1,595,155)14,688,718 3.30% Denver Investment Advisors - -(319)0 318 0.00% ING Investment Management 38,785,969 9.34% 0 (3,630,253)42,416,223 9.52% Independence Investments LLC 26,227,756 6.31% 5,000,000 (808,089)22,035,845 4.94% NTGI Russell 1000 Value 25,639,366 6.17% 0 (5,111,213)30,750,580 6.90% Systematic Financial Mgmt. 9,083,295 2.19% 0 (1,278,790)10,362,085 2.33% WEDGE Capital Management 16,242,328 3.91% 0 (2,995,788)19,238,116 4.32% International Equity $59,325,985 14.28% $9,981,268 $(2,478,640)$51,823,357 11.63% EARNEST Partners 15,042,187 3.62%(1,975) (1,347,441)16,391,603 3.68% Eaton Vance Management 9,322,252 2.24% 4,983,243 94,780 4,244,229 0.95% NTGI-QM Enhanced EAFE 6,141,120 1.48% 0 (1,060,897)7,202,017 1.62% Wellington Management Co. 14,240,289 3.43% 5,000,000 337,917 8,902,372 2.00% Wentworth, Hauser and Violich 14,580,137 3.51% 0 (502,998)15,083,135 3.38% Domestic Fixed-Income $174,838,926 42.08%$(25,157,597) $(414,018)$200,410,540 44.97% Dodge & Cox, Inc. 87,766,863 21.13%(10,000,000) (351,482)98,118,345 22.02% NTGI-QM Collective Agg Bd Idx - -(34) ()34 0.00% Western Asset Management Co. 84,589,885 20.36%(15,000,000) (64,701)99,654,586 22.36% Secs. Lending Income Account -328,940 (0.08%) 115,897 2,165 -447,002 (0.10%) In-House Account 2,811,117 0.68%(273,460)0 3,084,577 0.69% Real Estate $21,289,205 5.12% $5,000,000 $(11,127,135)$27,416,339 6.15% Security Capital 21,289,205 5.12% 5,000,000 (11,127,135)27,416,339 6.15% Total Fund $415,454,851 100.0%$(176,295) $(30,013,854)$445,644,999 100.0% 11City Of Clearwater Employees Pension Fund Attachment number 4 Page 14 of 108 Item # 6 Investment Manager Returns and Peer Group Rankings The table below details the rates of return and peer group rankings for the Sponsor’s investment managers over various time periods ended March 31, 2009. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. Returns and Rankings for Periods Ended March 31, 2009 Market Last Last Last Value Ending Last Last 3 5 21-1/4 $(mm) Weight Quarter Year Years Years Years Domestic Equity $160 38.51%(9.51%) (36.90%) (13.93%) (4.29%)8.75%34 35 57 42 17 S&P 500 - -(11.01%) (38.09%) (13.06%) (4.76%)8.10%78 65 33 60 43 Public Fund - Dom Equity - -(10.29%) (37.58%) (13.70%) (4.53%)8.05%50 50 50 50 50 Aletheia Research & Mgmt. 10 2.47%(10.24%) (42.20%)- - -7 72 NTGI Russell 1000 Value 26 6.17%(16.62%) (42.30%)- - -85 72 Russell 1000 Value - -(16.77%) (42.42%) (15.40%) (4.94%)8.64%86 75 75 69 68 CAI Large Cap Value Style - -(13.63%) (39.86%) (14.31%) (3.91%)9.04%50 50 50 50 50 ING Investment Management 39 9.34%(8.56%) (32.48%) (9.63%) (1.56%)9.62%95 39 23 17 28 Russell 1000 Growth - -(4.12%) (34.28%) (11.28%) (4.38%)7.30%64 53 47 67 90 CAI Lrg Cap Growth Style - -(3.18%) (33.89%) (11.32%) (3.60%)9.13%50 50 50 50 50 Artisan Partners 21 4.97% 1.86%(33.40%) (9.86%) (0.84%)-1 21 16 33 Russell Mid Cap Growth - -(3.36%) (39.58%) (14.89%) (3.91%)8.15%56 64 71 71 98 CAI Mid Cap Growth Style - -(3.11%) (37.96%) (13.03%) (2.08%)11.20%50 50 50 50 50 WEDGE Capital Management 16 3.91%(15.57%) (39.75%)- - -99 59 Russell Midcap Value - -(14.67%) (42.51%) (16.68%) (3.81%)9.85%96 82 79 73 70 CAI Mid Cap Value Style - -(11.14%) (39.30%) (14.80%) (2.81%)10.73%50 50 50 50 50 Independence Investments 26 6.31%(4.77%) (36.11%)- - -29 41 Russell 2000 Growth - -(9.74%) (36.36%) (16.20%) (5.37%)5.31%78 42 47 54 97 CAI Sm Cap Growth Style - -(7.34%) (37.58%) (16.50%) (5.26%)10.38%50 50 50 50 50 Atlanta Capital Management 13 3.15%(10.86%) (24.54%) (6.87%)1.76% -14 1 1 3 Systematic Financial Management 9 2.19%(12.34%) (40.88%) (18.29%) (6.64%)-19 51 54 72 Russell 2000 Value Index - -(19.64%) (38.89%) (17.54%) (5.30%)9.55%84 37 47 47 72 CAI Small Cap Value Style - -(17.09%) (40.35%) (17.63%) (5.44%)10.99%50 50 50 50 50 International Equity $59 14.28%(5.21%) (45.99%) (14.13%) (1.98%)-2 56 71 80 Public Fund - Intl Equity - -(11.76%) (45.68%) (13.07%) (0.92%)5.18%50 50 50 50 50 EARNEST Partners 15 3.62%(8.22%)- - - -1 MSCI EAFE Index - -(13.94%) (46.51%) (14.47%) (2.18%)3.44%61 77 80 82 100 CAI Broad Vl Intl Eq Sty - -(13.12%) (44.42%) (13.29%) (0.87%)8.68%50 50 50 50 50 NTGI-QM Enhanced EAFE 6 1.48%(14.73%) (47.42%) (14.75%)- -83 72 75 MSCI EAFE Index - -(13.94%) (46.51%) (14.47%) (2.18%)3.44%69 60 71 79 99 CAI Non-U.S. Equity Style - -(12.26%) (45.33%) (13.36%) (0.94%)6.78%50 50 50 50 50 Wentworth, Hauser and Violich 15 3.51%(3.33%)- - - -2 MSCI EAFE Index - -(13.94%) (46.51%) (14.47%) (2.18%)3.44%90 46 63 75 100 CAI Broad Gr Intl Eq Sty - -(11.00%) (46.66%) (13.41%) (1.23%)5.61%50 50 50 50 50 Eaton Vance Management 9 2.24%(5.87%)- - - -96 Wellington Management Co. 14 3.43% 0.08%(43.31%)- - -35 12 MSCI Emerging Mkts Idx - - 1.02%(46.90%) (7.88%)6.25% 11.32%19 36 39 48 96 CAI Emerging Mkts Equity - -(0.57%) (48.15%) (8.59%)6.15% 14.32%50 50 50 50 50 Total Fund $415 100.00%(6.74%) (27.57%) (8.07%) (1.54%)7.65%72 57 87 88 48 Composite Benchmark - -(9.29%) (31.46%) (9.15%) (2.95%)7.22%100 94 94 97 79 Public Fund Sponsor DB - -(6.01%) (26.90%) (6.53%)0.16% 7.59%50 50 50 50 50 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 12City Of Clearwater Employees Pension Fund Attachment number 4 Page 15 of 108 Item # 6 Investment Manager Returns and Peer Group Rankings The table below details the rates of return and peer group rankings for the Sponsor’s investment managers over various time periods ended March 31, 2009. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. Returns and Rankings for Periods Ended March 31, 2009 Market Last Last Last Value Ending Last Last 3 5 21-1/4 $(mm) Weight Quarter Year Years Years Years Domestic Fixed-Income $175 42.08%(0.23%)0.72% 4.52% 3.49% 6.64%86 34 40 46 70 Public Fund - Dom Fixed - - 0.70%(2.07%)3.80% 3.40% 7.19%50 50 50 50 50 Dodge & Cox, Inc. 88 21.13%(0.43%) (0.26%)3.98% 3.23% -86 51 59 59 Western Asset Management Co. 85 20.36%(0.03%)1.91% 5.21% - -81 41 45 BC Aggregate Index - - 0.12% 3.13% 5.78% 4.13% 7.37%77 24 33 40 56 CAI Core Bond Style - - 0.62%(0.23%)4.23% 3.39% 7.39%50 50 50 50 50 Real Estate $21 5.12%(36.65%)- - - -97 Security Capital 21 5.12%(36.65%)- - - -97 Dow Jones Wilshire RESI - -(33.85%) (61.02%) (27.23%) (9.45%)4.68%94 94 96 99 93 Public Fund - Real Estate - -(12.24%) (23.30%)0.09% 7.04% 7.19%50 50 50 50 50 Total Fund $415 100.00%(6.74%) (27.57%) (8.07%) (1.54%)7.65%72 57 87 88 48 Composite Benchmark - -(9.29%) (31.46%) (9.15%) (2.95%)7.22%100 94 94 97 79 Public Fund Sponsor DB - -(6.01%) (26.90%) (6.53%)0.16% 7.59%50 50 50 50 50 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 13City Of Clearwater Employees Pension Fund Attachment number 4 Page 16 of 108 Item # 6 Investment Manager Returns and Peer Group Rankings The table below details the rates of return and peer group rankings for the Sponsor’s investment managers over various time periods. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. 12/2008- 3/2009 2008 2007 2006 2005 Domestic Equity (9.51%) (37.76%)7.17% 13.03% 8.12%34 63 20 91 21 S&P 500 (11.01%) (37.00%)5.49% 15.79% 4.91%78 44 49 21 95 Public Fund - Dom Equity (10.29%) (37.26%)5.35% 14.61% 6.56%50 50 50 50 50 Aletheia Research & Mgmt.(10.24%) (37.98%)- - -7 69 NTGI Russell 1000 Value (16.62%) (36.85%)- - -85 60 Russell 1000 Value (16.77%) (36.85%) (0.17%)22.25% 7.05%86 60 61 18 66 CAI Large Cap Value Style (13.63%) (35.97%)1.12% 19.21% 8.24%50 50 50 50 50 ING Investment Management (8.56%) (33.17%)17.11% 7.14% 12.02%95 7 45 46 13 Russell 1000 Growth (4.12%) (38.44%)11.81% 9.07% 5.26%64 38 70 25 67 CAI Lrg Cap Growth Style (3.18%) (39.78%)16.01% 6.70% 7.02%50 50 50 50 50 Artisan Partners 1.86%(42.86%)22.32% 10.95% 10.20%1 44 33 34 76 Russell Mid Cap Growth (3.36%) (44.32%)11.43% 10.66% 12.10%56 54 85 39 57 CAI Mid Cap Growth Style (3.11%) (44.14%)19.47% 8.33% 12.92%50 50 50 50 50 WEDGE Capital Management (15.57%) (34.87%)- - -99 27 Russell Midcap Value (14.67%) (38.44%) (1.42%)20.22% 12.65%96 62 76 9 25 CAI Mid Cap Value Style (11.14%) (37.25%)1.99% 16.80% 9.87%50 50 50 50 50 Independence Investments (4.77%) (46.26%)- - -29 69 Russell 2000 Growth (9.74%) (38.54%)7.05% 13.35% 4.15%78 15 75 30 80 CAI Sm Cap Growth Style (7.34%) (43.24%)14.07% 12.49% 7.24%50 50 50 50 50 Atlanta Capital Management (10.86%) (19.51%)6.90% 16.21% 6.21%14 1 6 59 65 Systematic Financial Mgmt.(12.34%) (40.70%)0.47% 18.60% 8.25%19 89 16 50 57 Russell 2000 Value Index (19.64%) (28.92%) (9.78%)23.48% 4.71%84 19 59 12 83 CAI Small Cap Value Style (17.09%) (32.95%) (8.60%)18.75% 9.23%50 50 50 50 50 International Equity (5.21%) (47.95%)11.01% 27.63% 13.14%2 94 83 21 82 Public Fund - Intl Equity (11.76%) (43.30%)14.59% 26.44% 15.89%50 50 50 50 50 EARNEST Partners (8.22%)- - - -1 MSCI EAFE Index (13.94%) (43.38%)11.17% 26.34% 13.54%61 74 29 71 51 CAI Broad Vl Intl Eq Sty (13.12%) (41.04%)9.70% 28.14% 13.77%50 50 50 50 50 NTGI-QM Enhanced EAFE (14.73%) (43.67%)11.01% 28.49% 12.81%83 57 63 34 80 MSCI EAFE Index (13.94%) (43.38%)11.17% 26.34% 13.54%69 55 62 48 78 CAI Non-U.S. Equity Style (12.26%) (42.87%)13.17% 26.00% 15.70%50 50 50 50 50 Wentworth, Hauser and Violich (3.33%)- - - -2 MSCI EAFE Index (13.94%) (43.38%)11.17% 26.34% 13.54%90 36 93 38 84 CAI Broad Gr Intl Eq Sty (11.00%) (45.57%)18.58% 25.04% 17.37%50 50 50 50 50 Eaton Vance Management (5.87%)- - - -96 Wellington Management Co. 0.08% - - - -35 MSCI Emerging Mkts Idx 1.02%(53.18%)39.78% 32.59% 34.54%19 46 53 61 59 CAI Emerging Mkts Equity (0.57%) (53.32%)40.19% 34.16% 36.11%50 50 50 50 50 Domestic Fixed-Income (0.23%)2.54% 5.94% 5.07% 2.61%86 28 72 34 62 Public Fund - Dom Fixed 0.70%(1.37%)6.61% 4.67% 2.82%50 50 50 50 50 Dodge & Cox, Inc.(0.43%)1.37% 5.47% 5.62% 2.39%86 46 77 5 89 Western Asset Management Co.(0.03%)3.91% 6.51% 4.65% 2.78%81 42 49 42 48 BC Aggregate Index 0.12% 5.24% 6.97% 4.33% 2.43%77 23 22 80 86 CAI Core Bond Style 0.62% 0.76% 6.46% 4.54% 2.77%50 50 50 50 50 Real Estate (36.65%)- - - -97 Security Capital (36.65%)- - - -97 Dow Jones Wilshire RESI (33.85%) (39.83%) (17.67%)35.68% 13.83%94 93 99 9 79 Public Fund - Real Estate (12.24%) (11.58%)13.12% 21.00% 18.86%50 50 50 50 50 Total Fund (6.74%) (27.10%)7.22% 11.76% 6.72%72 63 65 81 67 Composite Benchmark (9.29%) (28.70%)6.30% 12.05% 4.72%100 84 87 79 87 Public Fund Sponsor DB (6.01%) (26.43%)8.20% 14.04% 7.54%50 50 50 50 50 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 14City Of Clearwater Employees Pension Fund Attachment number 4 Page 17 of 108 Item # 6 Investment Manager Returns The table below details the rates of return for the Sponsor’s investment managers over various time periods ended March 31, 2009. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund’s accounts for that asset class. Returns for Periods Ended March 31, 2009 Last Last Last Last Last 3 5 5-1/2 Quarter Year Years Years Years Domestic Equity Aletheia Research - Gross (10.24%) (42.20%)- - - Aletheia Research - Net (10.49%) (43.15%)- - - NTGI Russell 1000 Value - Gross (16.62%) (42.30%)- - - NTGI Russell 1000 Value - Net (16.64%) (42.38%)- - - Russell 1000 Value (16.77%) (42.42%) (15.40%) (4.94%) (1.63%) ING Investment Mgmt. - Gross (8.56%) (32.48%) (9.63%) (1.56%)0.92% ING Investment Mgmt. - Net (8.67%) (32.92%) (10.07%) (2.00%)0.49% Russell 1000 Growth (4.12%) (34.28%) (11.28%) (4.38%) (2.11%) Artisan Partners - Gross 1.86%(33.40%) (9.86%) (0.84%)2.29% Artisan Partners - Net 1.66%(34.20%) (10.66%) (1.64%)1.49% Russell Mid Cap Growth (3.36%) (39.58%) (14.89%) (3.91%) (0.68%) WEDGE Capital Mgmt. - Gross (15.57%) (39.75%)- - - WEDGE Capital Mgmt. - Net (15.75%) (40.45%)- - - Russell MidCap Value (14.67%) (42.51%) (16.68%) (3.81%) (0.01%) Independence Invmts. - Gross (4.77%) (36.11%)- - - Independence Invmts. - Net (4.98%) (36.95%)- - - Russell 2000 Growth (9.74%) (36.36%) (16.20%) (5.37%) (1.84%) Atlanta Capital - Gross (10.86%) (24.54%) (6.87%)1.76% 4.10% Atlanta Capital - Net (11.06%) (25.34%) (7.67%)0.96% 3.30% Systematic Financial - Gross (12.34%) (40.88%) (18.29%) (6.64%) (2.52%) Systematic Financial - Net (12.59%) (41.88%) (19.27%) (7.63%) (3.51%) Russell 2000 Value (19.64%) (38.89%) (17.54%) (5.30%) (0.97%) International Equity EARNEST Partners - Gross (8.22%)- - - - EARNEST Partners - Net (8.41%)- - - - NTGI-QM Enh. EAFE - Gross (14.73%) (47.42%) (14.75%)- - NTGI-QM Enh. EAFE - Net (14.82%) (47.77%) (15.10%)- - Wentworth, Hauser - Gross (3.33%)- - - - Wentworth, Hauser - Net (3.57%)- - - - MSCI EAFE Index (13.94%) (46.51%) (14.47%) (2.18%)1.65% Eaton Vance Mgmt. - Gross (5.87%)- - - - Eaton Vance Mgmt. - Net (6.11%) (50.56%)- - - Wellington Management - Gross 0.08%(43.31%)- - - Wellington Management - Net (0.17%) (44.31%)- - - MSCI Emerging Mkts Idx 1.02%(46.90%) (7.88%)6.25% 10.71% Domestic Fixed-Income Dodge & Cox - Gross (0.43%) (0.26%)3.98% 3.23% - Dodge & Cox - Net (0.59%) (0.90%)3.33% 2.58% - Western Asset Mgmt. - Gross (0.03%)1.91% 5.21% - - Western Asset Mgmt. - Net (0.11%)1.61% 4.91% - - BC Aggregate Index 0.12% 3.13% 5.78% 4.13% 4.30% Real Estate Security Capital - Gross (36.65%)- - - - Security Capital - Net (36.87%)- - - - Dow Jones Wilshire RESI (33.85%) (61.02%) (27.23%) (9.45%) (5.19%) 15City Of Clearwater Employees Pension Fund Attachment number 4 Page 18 of 108 Item # 6 Quarterly Total Fund Attribution In general, the actual return for the Total Fund will differ from the return for the Total Fund Target. This deviation is caused by two factors: The managers outperforming or underperforming their targets (Manager Selection Effect); or the actual asset allocation being different from the target asset allocation (Asset Allocation Effect). The table and charts below dissect the Total Fund return into smaller components to quantify each of these effects over the most recent quarter. Asset Class Under or Overweighting (10%)(5%)0%5%10%15% Domestic Equity (3.5%) Domestic Fixed-Income 11.8% Real Estate (3.1%) International Equity (5.2%) Domestic Equity Domestic Fixed-Income Real Estate International Equity Total Actual vs Target Returns (50%)(40%)(30%)(20%)(10%)0%10% (9.5%) (11.0%) (0.2%) 0.1% (36.7%) (33.9%) (5.2%) (7.3%) (6.7%) (9.3%) Actual Target Attribution by Asset Class (1.0%)(0.5%)0.0%0.5%1.0%1.5%2.0%2.5%3.0% 0.54% 0.07% (0.13%) 1.21% (0.17%) 0.84% 0.25% (0.08%) 0.50% 2.05% Manager Effect Asset Allocation Attribution for Quarter ended March 31, 2009 Effective Target Actual Target Manager Asset Asset Class Weight Weight Return Return Effect Allocation Domestic Equity 38% 42%(9.51%) (11.01%)0.54% 0.07% Domestic Fixed-Income 42% 30%(0.23%)0.12%(0.13%)1.21% Real Estate 7% 10%(36.65%) (33.85%) (0.17%)0.84% International Equity 13% 18%(5.21%) (7.29%)0.25%(0.08%) Total = + +(6.74%) (9.29%)0.50% 2.05% * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 16City Of Clearwater Employees Pension Fund Attachment number 4 Page 19 of 108 Item # 6 Cumulative Total Fund Attribution The charts below accumulate the Quarterly Total Fund Attribution Analysis (shown earlier) over multiple periods. By examining these cumulative results, the Fund Sponsor can quantify and understand the long-term impact of asset allocation differences from the target, as well as the contribution of the Fund’s managers to total return. In general, assuming the Fund Sponsor is pursuing a disciplined rebalancing program, the asset allocation effects should be close to zero. The manager effects should be larger, assuming the Sponsor is not using index funds. All analysis is for the period ended March 31, 2009. One Year Cumulative Attribution Effects (2%)(1%)0%1%2%3%4%5%6% Domestic Equity 0.64% 0.07% Domestic Fixed-Income (0.61%) 2.30% Real Estate (0.02%) 1.30% International Equity (0.11%) 0.23% Total (0.12%) 4.01% Manager Effect Asset Allocation Cumulative Attribution Effects (2%) (1%) 0% 1% 2% 3% 4% 5% 2008 2009 Manager Effect Asset Allocation Total One Year Cumulative Attribution Effects Effective Avg Trgt Actual Target Manager Asset Asset Class Weight Weight Return Return Effect Allocation Domestic Equity 43% 46%(36.90%) (38.09%)0.64% 0.07% Domestic Fixed-Income 37% 31% 0.72% 3.13%(0.61%)2.30% Real Estate 5% 5%(64.50%) (64.40%) (0.02%)1.30% International Equity 15% 18%(45.99%) (44.81%) (0.11%)0.23% Total = + +(27.57%) (31.46%) (0.12%)4.01% * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 17City Of Clearwater Employees Pension Fund Attachment number 4 Page 20 of 108 Item # 6 Cumulative Total Fund Attribution The charts below accumulate the Quarterly Total Fund Attribution Analysis (shown earlier) over multiple periods. By examining these cumulative results, the Fund Sponsor can quantify and understand the long-term impact of asset allocation differences from the target, as well as the contribution of the Fund’s managers to total return. In general, assuming the Fund Sponsor is pursuing a disciplined rebalancing program, the asset allocation effects should be close to zero. The manager effects should be larger, assuming the Sponsor is not using index funds. All analysis is for the period ended March 31, 2009. Twenty-One And One-Quarter Year Annualized Cumulative Attribution Effe (0.5%)0.0%0.5% Domestic Equity 0.37% 0.04% Domestic Fixed-Income (0.29%) 0.18% Real Estate (0.00%) 0.10% International Equity (0.02%) 0.04% Total 0.06% 0.36% Manager Effect Asset Allocation Cumulative Attribution Effects (30%) (20%) (10%) 0% 10% 20% 30% 40% 50% 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Manager Effect Asset Allocation Total Twenty-One And One-Quarter Year Annualized Cumulative Attribution Effe Effective Avg Trgt Actual Target Manager Asset Asset Class Weight Weight Return Return Effect Allocation Domestic Equity 54% 52% 8.75% 8.10% 0.37% 0.04% Domestic Fixed-Income 42% 44% 6.64% 7.37%(0.29%)0.18% Real Estate 0% 0% - -(0.00%)0.10% International Equity 4% 4% - -(0.02%)0.04% Total = + +7.65% 7.22% 0.06% 0.36% * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 18City Of Clearwater Employees Pension Fund Attachment number 4 Page 21 of 108 Item # 6 Cumulative Performance Relative to Target The first chart below illustrates the cumulative performance of the Total Fund relative to the cumulative performance of the Fund’s Target Asset Mix. The Target Mix is assumed to be rebalanced each quarter with no transaction costs. The difference between the Total Fund return and the Target Mix return is explained by the performance attribution on the next page. The second chart below shows the return and the risk of the Total Fund and the Target Mix, contrasted with the returns and risks of the funds in the CAI Public Fund Sponsor Database. Cumulative Returns Actual vs Target Cumulative Returns0% 100% 200% 300% 400% 500% 600% 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Total Fund Total Fund Target Twenty Year Annualized Risk vs Return 7%8%9%10%11%12%13%14% 6.2% 6.4% 6.6% 6.8% 7.0% 7.2% 7.4% 7.6% 7.8% 8.0% 8.2% Total Fund Total Fund Target Standard DeviationReturns Triangles represent membership of the CAI Public Fund Sponsor Database * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 19City Of Clearwater Employees Pension Fund Attachment number 4 Page 22 of 108 Item # 6 Actual vs Target Historical Asset Allocation The Historical asset allocation for a fund is by far the largest factor explaining its performance. The charts below show the fund’s historical actual asset allocation, the fund’s historical target asset allocation, and the historical asset allocation of the average fund in the CAI Public Fund Sponsor Database. Actual Historical Asset Allocation 0%0% 10%10% 20%20% 30%30% 40%40% 50%50% 60%60% 70%70% 80%80% 90%90% 100%100% 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Real Estate International Equity Domestic Fixed-Income Domestic Equity Target Historical Asset Allocation 0%0% 10%10% 20%20% 30%30% 40%40% 50%50% 60%60% 70%70% 80%80% 90%90% 100%100% 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Real Estate International Equity Domestic Fixed-Income Domestic Equity Average CAI Public Fund Sponsor Database Historical Asset Allocation 0%0% 10%10% 20%20% 30%30% 40%40% 50%50% 60%60% 70%70% 80%80% 90%90% 100%100% 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Global Equity Broad Hedge Fund-of-Funds Global Balanced Other Alternatives Intl Fixed-Inc Real Estate Intl Equity Short Term-Cash Domestic Broad Eq Domestic Fixed * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 20City Of Clearwater Employees Pension Fund Attachment number 4 Page 23 of 108 Item # 6 Total Fund Ranking The first two charts show the ranking of the Total Fund’s performance relative to that of the CAI Public Fund Sponsor Database for periods ended March 31, 2009. The first chart is a standard unadjusted ranking. In the second chart each fund in the database is adjusted to have the same historical asset allocation as that of the Total Fund. CAI Public Fund Sponsor Database Returns(40%) (30%) (20%) (10%) 0% 10% 20% Last Year Last 3 Years Last 5 Years Last 21-1/4 Years (57) (94) (87)(94) (88)(97) (48)(79) 10th Percentile (20.69) (3.62)1.70 8.31 25th Percentile (24.31) (5.17)0.67 8.06 Median (26.90) (6.53)0.16 7.59 75th Percentile (28.85) (7.46) (0.76)7.29 90th Percentile (30.17) (8.75) (1.59)7.06 Total Fund (27.57) (8.07) (1.54)7.65 Policy Target (31.46) (9.15) (2.95)7.22 Asset Allocation Adjusted Ranking Returns(40%) (30%) (20%) (10%) 0% 10% 20% Last Year Last 3 Years Last 5 Years Last 21-1/4 Years (78) (95) (76)(91) (78)(96) (57)(90) 10th Percentile (23.40) (5.41)0.38 8.17 25th Percentile (24.25) (6.17) (0.33)7.96 Median (25.52) (6.82) (0.91)7.66 75th Percentile (27.35) (7.98) (1.45)7.43 90th Percentile (29.65) (9.08) (1.94)7.19 Total Fund (27.57) (8.07) (1.54)7.65 Policy Target (31.46) (9.15) (2.95)7.22 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 21City Of Clearwater Employees Pension Fund Attachment number 4 Page 24 of 108 Item # 6 Asset Class Rankings The charts below show the rankings of each asset class component of the Total Fund relative to appropriate comparative databases. In the upper left corner of each graph is the weighted average of the rankings across the different asset classes. The weights of the fund’s actual asset allocation are used to make this calculation. The weighted average ranking can be viewed as a measure of the fund’s overall success in picking managers and structuring asset classes. Total Asset Class Performance One Year Ended March 31, 2009 Returns(60%) (50%) (40%) (30%) (20%) (10%) 0% 10% Public Fund Public Fund Public Fund - Dom Equity - Intl Equity - Dom Fixed (35)(65) (56)(40) (34)(10) 10th Percentile (34.15) (41.05)3.12 25th Percentile (36.52) (43.93)1.80 Median (37.58) (45.68) (2.07) 75th Percentile (38.79) (46.64) (5.02) 90th Percentile (41.38) (47.81) (9.47) Asset Class Composite (36.90) (45.99)0.72 Composite Benchmark (38.09) (44.81)3.13 Weighted Ranking 38 Total Asset Class Performance Twenty-One And One-Quarter Years Ended March 31, 2009 Returns6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% Public Fund Public Fund - Dom Equity - Dom Fixed (17) (43) (70) (29) 10th Percentile 9.23 7.99 25th Percentile 8.41 7.41 Median 8.05 7.19 75th Percentile 7.22 6.56 90th Percentile 6.74 6.44 Asset Class Composite 8.75 6.64 Composite Benchmark 8.10 7.37 Weighted Ranking 40 * Current Quarter Target = 42.0% S&P 500 Index, 30.0% BC Aggregate Index, 10.0% MSCI EAFE Index, 10.0% Dow Jones Wilshire RESI and 8.0% MSCI Emerging Mkts Idx. 22City Of Clearwater Employees Pension Fund Attachment number 4 Page 25 of 108 Item # 6 Domestic Equity ‘ Attachment number 4 Page 26 of 108 Item # 6 DOMESTIC EQUITY PERIOD ENDED MARCH 31, 2009 Quarterly Summary and Highlights Domestic Equity’s portfolio posted a (9.51)% return for the quarter placing it in the 34 percentile of the Public Fund - Domestic Equity group for the quarter and in the 35 percentile for the last year. Domestic Equity’s portfolio outperformed the S&P 500 Index by 1.50% for the quarter and outperformed the S&P 500 Index for the year by 1.19%. Quarterly Asset Growth Beginning Market Value $165,994,763 Net New Investment $10,000,034 Investment Gains/(Losses) $-15,994,061 Ending Market Value $160,000,736 Percent Cash: 2.0% Performance vs Public Fund - Domestic Equity (50%) (40%) (30%) (20%) (10%) 0% 10% 20% Last Last Last 3 Last 5 Last 10 Last 15 Last 20 Last 21-1/4 Quarter Year Years Years Years Years Years Years (34)(78) (35)(65) (57)(33) (42)(60) (53)(97) (48)(46) (12)(53)(17)(43) 10th Percentile (7.96) (34.15) (11.75) (3.09)0.22 6.86 8.63 9.23 25th Percentile (9.26) (36.52) (12.76) (3.76) (0.43)6.40 7.97 8.41 Median (10.29) (37.58) (13.70) (4.53) (1.37)5.82 7.54 8.05 75th Percentile (10.87) (38.79) (14.64) (5.27) (2.16)5.24 6.61 7.22 90th Percentile (11.78) (41.38) (16.58) (6.38) (2.47)4.86 5.96 6.74 Domestic Equity (9.51) (36.90) (13.93) (4.29) (1.46)5.84 8.42 8.75 S&P 500 Index (11.01) (38.09) (13.06) (4.76) (3.00)5.91 7.43 8.10 Relative Return vs S&P 500 Index Relative Returns(10%) (8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% 10% 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 0809 Domestic Equity Public Fund - Domestic Equity Annualized Five Year Risk vs Return 13 14 15 16 17 18 19 20 21 (9%) (8%) (7%) (6%) (5%) (4%) (3%) (2%) (1%) 0% Domestic Equity S&P 500 Index Standard DeviationReturns 24City Of Clearwater Employees Pension Fund Attachment number 4 Page 27 of 108 Item # 6 DOMESTIC EQUITY RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs Public Fund - Domestic Equity (60%) (40%) (20%) 0% 20% 40% 60% 12/08- 3/09 2008 2007 2006 2005 2004 2003 2002 2001 2000 3478 6344 2049 9121 2195 3484 1687 5573 7382 9896 10th Percentile (7.96) (35.25)8.91 16.48 9.31 14.74 36.10 (18.75) (5.66)1.05 25th Percentile (9.26) (36.39)6.61 15.62 7.98 13.47 32.95 (20.34) (7.12) (1.60) Median (10.29) (37.26)5.35 14.61 6.56 12.61 31.24 (21.17) (9.67) (4.62) 75th Percentile (10.87) (39.08)4.23 13.83 5.88 11.65 29.70 (22.26) (11.10) (6.87) 90th Percentile (11.78) (40.86)3.05 13.15 5.06 10.73 28.32 (23.53) (12.66) (8.86) Domestic Equity (9.51) (37.76)7.17 13.03 8.12 13.17 33.75 (21.29) (10.98) (10.07) S&P 500 Index (11.01) (37.00)5.49 15.79 4.91 10.88 28.68 (22.10) (11.89) (9.11) Cumulative and Quarterly Relative Return vs S&P 500 Index Relative Returns(25%) (20%) (15%) (10%) (5%) 0% 5% 10% 15% 20% 25% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 09 Domestic Equity Public Fund - Dom Equity Risk Adjusted Return Measures vs S&P 500 Index Rankings Against Public Fund - Domestic Equity Five Years Ended March 31, 2009 (10) (8) (6) (4) (2) 0 2 4 Alpha Treynor Ratio (28) (33) 10th Percentile 2.10 (6.13) 25th Percentile 1.33 (6.69) Median 0.67 (7.46) 75th Percentile (0.04) (8.10) 90th Percentile (0.47) (8.47) Domestic Equity 1.18 (7.01) (0.8) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 Information Sharpe Excess Return Ratio Ratio Ratio (46) (33) (50) 10th Percentile 0.76 (0.41)0.59 25th Percentile 0.50 (0.45)0.42 Median 0.32 (0.50)0.15 75th Percentile (0.02) (0.55) (0.26) 90th Percentile (0.26) (0.58) (0.52) Domestic Equity 0.37 (0.47)0.15 25City Of Clearwater Employees Pension Fund Attachment number 4 Page 28 of 108 Item # 6 LARGE CAP COMPOSITE PERIOD ENDED MARCH 31, 2009 Investment Philosophy Large Capitalization managers concentrate their holdings in large market capitalization domestic equity securities regardless of style (growth, value or core) orientation. Quarterly Summary and Highlights Large Cap Composite’s portfolio posted a (11.72)% return for the quarter placing it in the 65 percentile of the CAI Large Capitalization Style group for the quarter and in the 55 percentile for the last year. Large Cap Composite’s portfolio underperformed the Russell 1000 Index by 1.26% for the quarter and outperformed the Russell 1000 Index for the year by 0.70%. Quarterly Asset Growth Beginning Market Value $84,605,527 Net New Investment $0 Investment Gains/(Losses) $-9,912,970 Ending Market Value $74,692,557 Percent Cash: 1.6% Performance vs CAI Large Capitalization Style (50%) (40%) (30%) (20%) (10%) 0% 10% 20% Last Last Last 3 Last 5 Last 10 Last 15 Last 20 Last 21 Quarter Year Years Years Years Years Years Years B(56) A(65)(50) A(55) B(58)(59) A(54) B(55)(57) A(63) B(73)(69) A(75) B(79)(75) B(83) A(89)(80) A(75) B(88)(87)A(80) B(89)(87) 10th Percentile (2.19) (31.05) (9.30) (1.38)2.09 8.51 10.08 10.42 25th Percentile (5.49) (33.69) (10.86) (2.41)0.60 7.73 9.17 9.56 Median (10.48) (37.03) (12.49) (3.65) (0.81)6.88 8.52 8.97 75th Percentile (13.07) (40.19) (14.54) (4.94) (2.59)6.11 7.88 8.28 90th Percentile (15.50) (42.78) (15.83) (6.12) (3.89)5.45 7.28 7.85 Large Cap Composite A (11.72) (37.57) (12.92) (4.18) (2.55)5.67 7.85 8.19 S&P 500 B (11.01) (38.09) (13.06) (4.76) (3.00)5.91 7.43 7.91 Russell 1000 Index (10.45) (38.27) (13.24) (4.54) (2.57)5.97 7.53 7.99 Relative Return vs Russell 1000 Index Relative Returns(6%) (4%) (2%) 0% 2% 4% 6% 8% 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 0809 Large Cap Composite CAI Large Capitalization Style Annualized Five Year Risk vs Return 8 10 12 14 16 18 20 22 24 (16%) (14%) (12%) (10%) (8%) (6%) (4%) (2%) 0% 2% Large Cap Composite Russell 1000 IndexS&P 500 Standard DeviationReturns 26City Of Clearwater Employees Pension Fund Attachment number 4 Page 29 of 108 Item # 6 LARGE CAP COMPOSITE RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Large Capitalization Style (60%) (40%) (20%) 0% 20% 40% 60% 12/08- 3/09 2008 2007 2006 2005 2004 2003 2002 2001 2000 6550 2856 4052 6244 3864 5349 1835 4036 5555 5656 10th Percentile (2.19) (33.01)19.68 21.00 12.52 16.37 32.79 (15.33) (0.05)14.49 25th Percentile (5.49) (34.90)12.10 17.83 10.05 14.60 30.54 (19.43) (5.53)5.81 Median (10.48) (36.83)6.26 14.75 7.51 11.37 28.28 (23.45) (11.23) (3.57) 75th Percentile (13.07) (39.99)1.94 8.18 5.33 7.82 25.96 (26.07) (17.66) (10.82) 90th Percentile (15.50) (43.92) (2.70)4.83 4.01 5.30 23.41 (29.78) (25.87) (17.06) Large Cap Composite (11.72) (35.22)7.76 11.52 8.63 11.24 31.37 (22.03) (12.64) (7.49) Russell 1000 Index (10.45) (37.60)5.77 15.46 6.27 11.40 29.89 (21.65) (12.45) (7.79) Cumulative and Quarterly Relative Return vs Russell 1000 Index Relative Returns(15%) (10%) (5%) 0% 5% 10% 15% 20% 25% 88 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200809 Large Cap Composite CAI Large Cap Style Risk Adjusted Return Measures vs Russell 1000 Index Rankings Against CAI Large Capitalization Style Five Years Ended March 31, 2009 (12) (10) (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (70) (67) 10th Percentile 3.18 (4.89) 25th Percentile 2.02 (5.90) Median 0.86 (6.92) 75th Percentile (0.42) (8.22) 90th Percentile (1.65) (9.38) Large Cap Composite (0.03) (7.75) (0.8) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 Information Sharpe Excess Return Ratio Ratio Ratio (71) (73) (48) 10th Percentile 0.72 (0.31)0.75 25th Percentile 0.44 (0.37)0.47 Median 0.20 (0.45)0.16 75th Percentile (0.09) (0.52) (0.07) 90th Percentile (0.32) (0.59) (0.31) Large Cap Composite (0.02) (0.51)0.18 27City Of Clearwater Employees Pension Fund Attachment number 4 Page 30 of 108 Item # 6 ALETHEIA RESEARCH & MANAGEMENT PERIOD ENDED MARCH 31, 2009 Investment Philosophy Aletheia seeks to identify attractive investment opportunities through the rigorous analysis of insider activity, fundamental data analysis, forensic accounting, investigative corporate research and consultation with industry contacts. Quarterly Summary and Highlights Aletheia Research & Management’s portfolio posted a (10.24)% return for the quarter placing it in the 7 percentile of the CAI Large Cap Value Style group for the quarter and in the 72 percentile for the last year. Aletheia Research & Management’s portfolio outperformed the Russell 1000 Value Index by 6.53% for the quarter and outperformed the Russell 1000 Value Index for the year by 0.21%. Quarterly Asset Growth Beginning Market Value $11,438,724 Net New Investment $0 Investment Gains/(Losses) $-1,171,503 Ending Market Value $10,267,221 Percent Cash: 2.0% Performance vs CAI Large Cap Value Style (50%) (45%) (40%) (35%) (30%) (25%) (20%) (15%) (10%) (5%) Last Quarter Last Year Last 1-3/4 Years (7) (86) (72)(75) (42) (76) 10th Percentile (10.64) (33.78) (26.33) 25th Percentile (12.21) (37.58) (29.61) Median (13.63) (39.86) (31.37) 75th Percentile (15.40) (42.42) (32.94) 90th Percentile (17.01) (44.97) (36.05) Aletheia Research & Management (10.24) (42.20) (30.86) Russell 1000 Value Index (16.77) (42.42) (33.17) Relative Return vs Russell 1000 Value Index Relative Returns(10%) (8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% 10% 2007 2008 2009 Aletheia Research & Management Cumulative Returns vs Russell 1000 Value Index Cumulative Relative Returns(4%) (2%) 0% 2% 4% 6% 8% 10% 12% 14% 16% 2007 2008 2009 Aletheia Research & Management CAI Large Cap Value Style 28City Of Clearwater Employees Pension Fund Attachment number 4 Page 31 of 108 Item # 6 ALETHEIA RESEARCH & MANAGEMENT EQUITY CHARACTERISTICS ANALYSIS SUMMARY Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Portfolio Characteristics Percentile Rankings Rankings Against CAI Large Cap Value Style as of March 31, 2009 Percentile Ranking100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Weighted Median Price/Fore- Price/Book Forecasted Dividend MSCI Market Cap casted Earnings Earnings Growth Yield Combined Z-Score (82) (40) (3) (28) (73) (88) (2) (67) (76) (27) (11) (84) 10th Percentile 41.66 12.01 1.53 10.30 4.27 (0.27) 25th Percentile 38.21 11.38 1.46 9.66 4.10 (0.39) Median 26.10 10.72 1.33 8.83 3.74 (0.54) 75th Percentile 20.22 10.35 1.23 8.15 3.49 (0.68) 90th Percentile 17.97 9.87 1.14 7.45 3.02 (0.78) Aletheia Research & Management 18.69 12.62 1.24 13.61 3.47 (0.30) Russell 1000 Value Index 28.57 11.26 1.17 8.50 4.07 (0.75) Sector Weights The graph below contrasts the manager’s sector weights with those of the benchmark and median sector weights across the members of the peer group. The magnitude of sector weight differences from the index and the manager’s sector diversification are also shown. Diversification by number and concentration of holdings are also compared to the benchmark and peer group. Issue Diversification represents by count, and Diversification Ratio by percent, the number of largest holdings that comprise half of the portfolio’s market value. Sector Allocation March 31, 2009 0%5%10%15%20%25% Energy 20.1% 18.0% 16.3% Materials 20.0% 3.2% 3.5% Financials 13.8%50%Mgr MV50%Mgr MV20.4% 18.2% Consumer Discretionary 11.2% 8.7% 9.3% Consumer Staples 8.3% 9.9% 10.0% Utilities 7.7% 7.3% 5.0% Industrials 6.3% 7.6% 8.9% Health Care 5.4% 14.4% 15.0% Information Technology 4.2% 3.3% 7.9% Pooled Vehicles 2.9% Telecommunications 7.3% 5.9% Aletheia Research & Management Russell 1000 Value Index CAI Large Cap Value Style Sector Diversification Manager 2.72 sectors Index 2.84 sectors Relative Sector Variance Manager 51% Style Median 15% Diversification March 31, 2009 0 50 100 150 200 250 Number of Issue Securities Diversification (53) (31) 10th Percentile 191 26 25th Percentile 116 23 Median 79 19 75th Percentile 49 15 90th Percentile 39 12 Aletheia Research & Management 74 21 Russell 1000 Value Index 643 26 Diversification Ratio Manager 28% Index 4% Style Median 25% 29City Of Clearwater Employees Pension Fund Attachment number 4 Page 32 of 108 Item # 6 ING INVESTMENT MANAGEMENT PERIOD ENDED MARCH 31, 2009 Investment Philosophy Using a systematic approach to identify those companies whose success will likely continue and accelerate, ING believes that long term superior price appreciation is tied to a foundation of positive business momentum. Quarterly Summary and Highlights ING Investment Management’s portfolio posted a (8.56)% return for the quarter placing it in the 95 percentile of the CAI Large Cap Growth Style group for the quarter and in the 39 percentile for the last year. ING Investment Management’s portfolio underperformed the Russell 1000 Growth Index by 4.44% for the quarter and outperformed the Russell 1000 Growth Index for the year by 1.81%. Quarterly Asset Growth Beginning Market Value $42,416,223 Net New Investment $0 Investment Gains/(Losses) $-3,630,253 Ending Market Value $38,785,969 Percent Cash: 2.6% Performance vs CAI Large Cap Growth Style (50%) (40%) (30%) (20%) (10%) 0% 10% 20% Last Last Last 3 Last 5 Last 10 Last 15 Last 20 Last 21-1/4 Quarter Year Years Years Years Years Years Years (95) (64) (39)(53) (23)(47) (17)(67) (15) (89) (24)(83) (25)(92)(28)(90) 10th Percentile 0.41 (29.66) (8.58) (0.96) (0.34)8.82 10.50 10.72 25th Percentile (1.42) (31.41) (9.83) (2.28) (1.89)7.41 9.26 9.69 Median (3.18) (33.89) (11.32) (3.60) (3.26)6.42 8.84 9.13 75th Percentile (5.43) (37.15) (12.67) (5.04) (4.14)5.71 8.04 8.38 90th Percentile (7.16) (40.26) (14.94) (6.05) (5.39)4.23 7.29 7.17 ING Investment Management (8.56) (32.48) (9.63) (1.56) (1.06)7.47 9.29 9.62 Russell 1000 Growth Index (4.12) (34.28) (11.28) (4.38) (5.26)4.84 6.85 7.30 Relative Return vs Russell 1000 Growth Index Relative Returns(15%) (10%) (5%) 0% 5% 10% 15% 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 0809 ING Investment Management CAI Large Cap Growth Style Annualized Five Year Risk vs Return 10 12 14 16 18 20 22 24 (9%) (8%) (7%) (6%) (5%) (4%) (3%) (2%) (1%) 0% 1% ING Investment Management Russell 1000 Growth Index Standard DeviationReturns 30City Of Clearwater Employees Pension Fund Attachment number 4 Page 33 of 108 Item # 6 ING INVESTMENT MANAGEMENT RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Large Cap Growth Style (60%) (40%) (20%) 0% 20% 40% 60% 12/08- 3/09 2008 2007 2006 2005 2004 2003 2002 2001 2000 9564 738 4570 4625 1367 2865 2426 953 5851 22 90 10th Percentile 0.41 (33.82)23.58 10.45 13.37 13.76 33.21 (22.50) (10.57)2.70 25th Percentile (1.42) (36.58)20.07 9.05 9.86 11.21 29.92 (24.52) (14.64) (3.18) Median (3.18) (39.78)16.01 6.70 7.02 7.18 27.19 (27.46) (20.37) (11.78) 75th Percentile (5.43) (42.96)11.13 4.71 4.79 5.28 24.68 (29.78) (26.01) (17.06) 90th Percentile (7.16) (46.98)7.46 2.00 3.77 3.31 21.95 (32.16) (31.10) (22.42) ING Investment Management (8.56) (33.17)17.11 7.14 12.02 10.28 29.99 (22.23) (21.30) (3.13) Russell 1000 Growth Index (4.12) (38.44)11.81 9.07 5.26 6.30 29.75 (27.88) (20.42) (22.42) Cumulative and Quarterly Relative Return vs Russell 1000 Growth Index Relative Returns(20%) (10%) 0% 10% 20% 30% 40% 50% 60% 70% 80% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 09 ING Investment Management CAI Lrg Cap Growth Style Risk Adjusted Return Measures vs Russell 1000 Growth Index Rankings Against CAI Large Cap Growth Style Five Years Ended March 31, 2009 (12) (10) (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (39) (29) 10th Percentile 4.35 (3.85) 25th Percentile 2.86 (5.18) Median 1.34 (6.40) 75th Percentile (0.48) (8.09) 90th Percentile (1.32) (8.91) ING Investment Management 1.95 (5.41) (1.0) (0.5) 0.0 0.5 1.0 1.5 Information Sharpe Excess Return Ratio Ratio Ratio (40) (28) (22) 10th Percentile 1.11 (0.25)0.78 25th Percentile 0.65 (0.33)0.58 Median 0.28 (0.41)0.19 75th Percentile (0.11) (0.51) (0.12) 90th Percentile (0.37) (0.58) (0.44) ING Investment Management 0.47 (0.34)0.63 31City Of Clearwater Employees Pension Fund Attachment number 4 Page 34 of 108 Item # 6 ING INVESTMENT MANAGEMENT RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Large Cap Growth Style (20%) (15%) (10%) (5%) 0% 5% 10% 15% 20% 25% 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years Ended 3/09 Ended 12/08 Ended 9/08 Ended 6/08 Ended 3/08 Ended 12/07 Ended 9/07 Ended 6/07 Ended 3/07 Ended 12/06 2347 749 1452 3559 2658 2664 3163 1863 2364 1864 10th Percentile (8.58) (6.74)3.11 10.55 11.19 14.51 18.16 13.15 10.98 11.49 25th Percentile (9.83) (7.91)1.46 9.21 8.97 12.15 15.28 10.50 8.94 9.10 Median (11.32) (9.25)0.13 7.08 6.98 9.98 13.24 9.22 7.72 7.62 75th Percentile (12.67) (11.23) (1.77)4.10 4.64 7.87 11.52 7.63 6.27 6.15 90th Percentile (14.94) (12.62) (3.37)2.70 3.66 6.41 10.44 6.72 5.18 4.82 ING Investment Management (9.63) (5.70)2.70 8.03 8.77 12.02 14.53 11.39 9.10 9.80 Russell 1000 Growth Index (11.28) (9.11)0.04 5.91 6.33 8.68 12.20 8.70 7.01 6.87 Cumulative and Quarterly Relative Return vs Russell 1000 Growth Index Relative Returns(20%) (10%) 0% 10% 20% 30% 40% 50% 60% 70% 80% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 09 ING Investment Management CAI Lrg Cap Growth Style Risk Adjusted Return Measures vs Russell 1000 Growth Index Rankings Against CAI Large Cap Growth Style Five Years Ended March 31, 2009 (12) (10) (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (39) (29) 10th Percentile 4.35 (3.85) 25th Percentile 2.86 (5.18) Median 1.34 (6.40) 75th Percentile (0.48) (8.09) 90th Percentile (1.32) (8.91) ING Investment Management 1.95 (5.41) (1.0) (0.5) 0.0 0.5 1.0 1.5 Information Sharpe Excess Return Ratio Ratio Ratio (40) (28) (22) 10th Percentile 1.11 (0.25)0.78 25th Percentile 0.65 (0.33)0.58 Median 0.28 (0.41)0.19 75th Percentile (0.11) (0.51) (0.12) 90th Percentile (0.37) (0.58) (0.44) ING Investment Management 0.47 (0.34)0.63 32City Of Clearwater Employees Pension Fund Attachment number 4 Page 35 of 108 Item # 6 ING INVESTMENT MANAGEMENT EQUITY CHARACTERISTICS ANALYSIS SUMMARY Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Portfolio Characteristics Percentile Rankings Rankings Against CAI Large Cap Growth Style as of March 31, 2009 Percentile Ranking100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Weighted Median Price/Fore- Price/Book Forecasted Dividend MSCI Market Cap casted Earnings Earnings Growth Yield Combined Z-Score (34) (45) (39) (71) (80) (45) (17) (81) (21) (12) (85)(85) 10th Percentile 46.00 15.45 2.89 15.63 2.09 1.25 25th Percentile 40.05 14.25 2.73 14.64 1.78 1.07 Median 25.19 13.35 2.55 13.75 1.46 0.92 75th Percentile 20.71 12.60 2.37 12.88 1.20 0.70 90th Percentile 16.31 11.60 2.13 12.01 0.95 0.57 ING Investment Management 32.27 13.72 2.31 15.32 1.84 0.62 Russell 1000 Growth Index 26.00 12.81 2.58 12.68 2.06 0.62 Sector Weights The graph below contrasts the manager’s sector weights with those of the benchmark and median sector weights across the members of the peer group. The magnitude of sector weight differences from the index and the manager’s sector diversification are also shown. Diversification by number and concentration of holdings are also compared to the benchmark and peer group. Issue Diversification represents by count, and Diversification Ratio by percent, the number of largest holdings that comprise half of the portfolio’s market value. Sector Allocation March 31, 2009 0%5%10%15%20%25%30%35%40% Information Technology 24.6% 31.1% 32.5% Health Care 17.1% 14.9% 18.9% Energy 13.1%50%Mgr MV50%Mgr MV8.0% 7.6% Financials 10.5% 3.3% 5.7% Industrials 10.3% 11.9% 8.3% Consumer Discretionary 8.6% 10.2% 11.0% Materials 8.2% 4.2% 4.6% Consumer Staples 7.6% 13.9% 11.3% Telecommunications 0.8% Utilities 1.7% ING Investment Management Russell 1000 Growth Index CAI Lrg Cap Growth Style Sector Diversification Manager 2.63 sectors Index 2.29 sectors Relative Sector Variance Manager 37% Style Median 18% Diversification March 31, 2009 0 20 40 60 80 100 120 Number of Issue Securities Diversification (48) (36) 10th Percentile 93 24 25th Percentile 73 20 Median 54 17 75th Percentile 46 12 90th Percentile 29 11 ING Investment Management 55 18 Russell 1000 Growth Index 636 38 Diversification Ratio Manager 33% Index 6% Style Median 30% 33City Of Clearwater Employees Pension Fund Attachment number 4 Page 36 of 108 Item # 6 NORTHERN TRUST GLOBAL INVESTMENTS PERIOD ENDED MARCH 31, 2009 Investment Philosophy Northern Trust believes that a passive approach to portfolio management will provide index-like returns with minimal transaction costs. Quarterly Summary and Highlights NTGI Russell 1000 Value’s portfolio posted a (16.62)% return for the quarter placing it in the 85 percentile of the CAI Large Cap Value Style group for the quarter and in the 72 percentile for the last year. NTGI Russell 1000 Value’s portfolio outperformed the Russell 1000 Value Index by 0.15% for the quarter and outperformed the Russell 1000 Value Index for the year by 0.12%. Quarterly Asset Growth Beginning Market Value $30,750,580 Net New Investment $0 Investment Gains/(Losses) $-5,111,213 Ending Market Value $25,639,366 Performance vs CAI Large Cap Value Style (50%) (45%) (40%) (35%) (30%) (25%) (20%) (15%) (10%) (5%) Last Quarter Last Year Last 1-3/4 Years (85)(86) (72)(75) (76)(76) 10th Percentile (10.64) (33.78) (26.33) 25th Percentile (12.21) (37.58) (29.61) Median (13.63) (39.86) (31.37) 75th Percentile (15.40) (42.42) (32.94) 90th Percentile (17.01) (44.97) (36.05) NTGI Russell 1000 Value (16.62) (42.30) (33.07) Russell 1000 Value Index (16.77) (42.42) (33.17) Relative Return vs Russell 1000 Value Index Relative Returns(0.20%) (0.15%) (0.10%) (0.05%) 0.00% 0.05% 0.10% 0.15% 0.20% 2007 2008 2009 NTGI Russell 1000 Value Cumulative Returns vs Russell 1000 Value Index Cumulative Relative Returns(3%) (2%) (1%) 0% 1% 2% 3% 2007 2008 2009 NTGI Russell 1000 Value CAI Large Cap Value Style 34City Of Clearwater Employees Pension Fund Attachment number 4 Page 37 of 108 Item # 6 NORTHERN TRUST GLOBAL INVESTMENTS EQUITY CHARACTERISTICS ANALYSIS SUMMARY Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Portfolio Characteristics Percentile Rankings Rankings Against CAI Large Cap Value Style as of March 31, 2009 Percentile Ranking100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Weighted Median Price/Fore- Price/Book Forecasted Dividend MSCI Market Cap casted Earnings Earnings Growth Yield Combined Z-Score (40)(40) (25)(28) (87)(88) (68)(67) (27)(27) (84)(84) 10th Percentile 41.66 12.01 1.53 10.30 4.27 (0.27) 25th Percentile 38.21 11.38 1.46 9.66 4.10 (0.39) Median 26.10 10.72 1.33 8.83 3.74 (0.54) 75th Percentile 20.22 10.35 1.23 8.15 3.49 (0.68) 90th Percentile 17.97 9.87 1.14 7.45 3.02 (0.78) NTGI Russell 1000 Value 29.14 11.34 1.18 8.45 4.09 (0.75) Russell 1000 Value Index 28.57 11.26 1.17 8.50 4.07 (0.75) Sector Weights The graph below contrasts the manager’s sector weights with those of the benchmark and median sector weights across the members of the peer group. The magnitude of sector weight differences from the index and the manager’s sector diversification are also shown. Diversification by number and concentration of holdings are also compared to the benchmark and peer group. Issue Diversification represents by count, and Diversification Ratio by percent, the number of largest holdings that comprise half of the portfolio’s market value. Sector Allocation March 31, 2009 0%5%10%15%20%25% Financials 20.5% 20.4% 18.2% Energy 17.7% 18.0% 16.3% Health Care 14.4%50%Mgr MV50%Mgr MV14.4% 15.0% Consumer Staples 10.0% 9.9% 10.0% Consumer Discretionary 8.7% 8.7% 9.3% Industrials 7.6% 7.6% 8.9% Utilities 7.4% 7.3% 5.0% Telecommunications 7.3% 7.3% 5.9% Information Technology 3.3% 3.3% 7.9% Materials 3.2% 3.2% 3.5% NTGI Russell 1000 Value Russell 1000 Value Index CAI Large Cap Value Style Sector Diversification Manager 2.82 sectors Index 2.84 sectors Relative Sector Variance Manager 1% Style Median 15% Diversification March 31, 2009 0 100 200 300 400 500 600 700 800 Number of Issue Securities Diversification (1) (8) 10th Percentile 191 26 25th Percentile 116 23 Median 79 19 75th Percentile 49 15 90th Percentile 39 12 NTGI Russell 1000 Value 633 27 Russell 1000 Value Index 643 26 Diversification Ratio Manager 4% Index 4% Style Median 25% 35City Of Clearwater Employees Pension Fund Attachment number 4 Page 38 of 108 Item # 6 MID CAP COMPOSITE PERIOD ENDED MARCH 31, 2009 Investment Philosophy Mid Cap Equity managers invest primarily in mid-range companies with market capitalizations between core equity companies and small capitalization companies. The average market capitalization is approximately $3 Billion. Quarterly Summary and Highlights Mid Cap Composite’s portfolio posted a (6.98)% return for the quarter placing it in the 50 percentile of the CAI Mid Capitalization Style group for the quarter and in the 56 percentile for the last year. Mid Cap Composite’s portfolio outperformed the S&P Mid Cap 400 Index by 1.67% for the quarter and underperformed the S&P Mid Cap 400 Index for the year by 3.13%. Quarterly Asset Growth Beginning Market Value $34,302,588 Net New Investment $5,000,034 Investment Gains/(Losses) $-2,399,057 Ending Market Value $36,903,565 Percent Cash: 3.1% Performance vs CAI Mid Capitalization Style (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% 20% Last Last Last 3 Last 5 Last 10 Last 15 Last 20 Last 21 Quarter Year Years Years Years Years Years Years A(50) B(67)(66) A(56) B(75) (29) A(66) B(73)(45) B(69) A(80)(55) B(74) A(80) (49) B(80) A(87) (42)A(78) B(86)(41)A(79) B(83)(35) 10th Percentile (1.82) (31.24) (9.50)0.42 7.16 11.22 12.75 12.66 25th Percentile (3.42) (35.35) (12.30) (1.01)5.77 9.54 11.15 11.75 Median (6.97) (38.53) (13.97) (2.40)4.06 8.47 10.33 10.54 75th Percentile (10.29) (40.91) (15.60) (4.00)1.93 7.42 9.84 9.93 90th Percentile (11.94) (44.43) (18.13) (5.62)0.66 6.04 8.36 8.29 Mid Cap Composite A (6.98) (39.23) (14.88) (4.64)1.09 6.18 9.67 9.71 Russell Mid-Cap B (8.98) (40.81) (15.53) (3.53)2.27 7.24 8.82 9.09 S&P Mid Cap 400 Index (8.66) (36.09) (13.61) (2.84)4.20 8.67 10.62 10.92 Relative Return vs S&P Mid Cap 400 Index Relative Returns(30%) (20%) (10%) 0% 10% 20% 30% 40% 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 0809 Mid Cap Composite CAI Mid Capitalization Style Annualized Five Year Risk vs Return 10 15 20 25 30 (14%) (12%) (10%) (8%) (6%) (4%) (2%) 0% 2% 4% 6% S&P Mid Cap 400 Index Mid Cap Composite Russell Mid-Cap Standard DeviationReturns 36City Of Clearwater Employees Pension Fund Attachment number 4 Page 39 of 108 Item # 6 MID CAP COMPOSITE RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Mid Capitalization Style (60%) (40%) (20%) 0% 20% 40% 60% 12/08- 3/09 2008 2007 2006 2005 2004 2003 2002 2001 2000 5066 5921 4960 5468 8338 7056 3046 5540 6041 90 35 10th Percentile (1.82) (34.02)23.84 18.29 16.93 24.19 45.11 (7.76)14.15 28.77 25th Percentile (3.42) (36.48)19.41 16.00 13.79 20.44 39.91 (11.82)6.08 20.47 Median (6.97) (40.62)10.13 13.40 11.38 17.37 35.26 (17.83) (3.36)12.41 75th Percentile (10.29) (44.62)3.57 8.35 8.73 13.04 31.13 (26.84) (19.66) (0.21) 90th Percentile (11.94) (47.97) (0.70)5.63 6.54 10.06 29.11 (32.71) (32.73) (16.02) Mid Cap Composite (6.98) (41.80)10.25 12.54 7.84 14.48 38.94 (19.87) (7.30) (15.90) S&P Mid Cap 400 Index (8.66) (36.23)7.98 10.31 12.56 16.48 35.62 (14.51) (0.60)17.50 Cumulative and Quarterly Relative Return vs S&P Mid Cap 400 Index Relative Returns(30%) (20%) (10%) 0% 10% 20% 30% 40% 50% 88 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200809 Mid Cap Composite CAI Mid Cap Style Risk Adjusted Return Measures vs S&P Mid Cap 400 Index Rankings Against CAI Mid Capitalization Style Five Years Ended March 31, 2009 (10) (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (81) (78) 10th Percentile 3.86 (2.71) 25th Percentile 2.33 (4.26) Median 0.75 (5.66) 75th Percentile (1.05) (7.31) 90th Percentile (2.07) (8.18) Mid Cap Composite (1.32) (7.44) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 Information Sharpe Excess Return Ratio Ratio Ratio (86) (79)(90) 10th Percentile 0.67 (0.15)0.54 25th Percentile 0.42 (0.23)0.30 Median 0.14 (0.32)0.08 75th Percentile (0.17) (0.40) (0.21) 90th Percentile (0.35) (0.46) (0.41) Mid Cap Composite (0.28) (0.43) (0.40) 37City Of Clearwater Employees Pension Fund Attachment number 4 Page 40 of 108 Item # 6 ARTISAN PARTNERS PERIOD ENDED MARCH 31, 2009 Investment Philosophy Artisan Mid-Cap invests in mid-cap companies that possess franchise characteristics and whose stock is selling at attractive valuations. Quarterly Summary and Highlights Artisan Partners’s portfolio posted a 1.86% return for the quarter placing it in the 1 percentile of the CAI Mid Cap Growth Style group for the quarter and in the 21 percentile for the last year. Artisan Partners’s portfolio outperformed the Russell MidCap Growth Idx by 5.22% for the quarter and outperformed the Russell MidCap Growth Idx for the year by 6.18%. Quarterly Asset Growth Beginning Market Value $15,064,154 Net New Investment $5,000,352 Investment Gains/(Losses) $596,730 Ending Market Value $20,661,236 Percent Cash: 2.6% Performance vs CAI Mid Cap Growth Style (50%) (40%) (30%) (20%) (10%) 0% 10% 20% Last Quarter Last Year Last 3 Years Last 5 Years Last 7-1/2 Years (1) (56) (21) (64) (16) (71) (33) (71) (19)(57) 10th Percentile (0.97) (30.18) (9.04)0.76 5.28 25th Percentile (1.86) (34.40) (11.13) (0.20)3.18 Median (3.11) (37.96) (13.03) (2.08)1.99 75th Percentile (4.74) (39.92) (15.49) (4.62)1.27 90th Percentile (6.82) (43.43) (17.83) (5.59) (0.84) Artisan Partners 1.86 (33.40) (9.86) (0.84)3.70 Russell MidCap Growth Idx (3.36) (39.58) (14.89) (3.91)1.65 Relative Return vs Russell MidCap Growth Idx Relative Returns(6%) (4%) (2%) 0% 2% 4% 6% 8% 01 2002 2003 2004 2005 2006 2007 2008 09 Artisan Partners CAI Mid Cap Growth Style Annualized Five Year Risk vs Return 15 20 25 30 (8%) (6%) (4%) (2%) 0% 2% 4% Artisan Partners Russell MidCap Growth Idx Standard DeviationReturns 38City Of Clearwater Employees Pension Fund Attachment number 4 Page 41 of 108 Item # 6 ARTISAN PARTNERS RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Mid Cap Growth Style (80%) (60%) (40%) (20%) 0% 20% 40% 60% 80% 12/08- 3/09 2008 2007 2006 2005 2004 2003 2002 (1)(56) (44)(54) (33)(85)(34)(39)(76)(57)(25)(29) (57)(24) (23)(48) 10th Percentile (0.97) (36.08)32.02 14.64 17.29 21.52 48.46 (19.11) 25th Percentile (1.86) (40.49)23.49 12.95 14.76 16.13 42.33 (24.26) Median (3.11) (44.14)19.47 8.33 12.92 12.15 35.96 (27.71) 75th Percentile (4.74) (45.43)14.02 6.25 10.31 9.82 30.57 (31.83) 90th Percentile (6.82) (48.54)9.97 3.89 8.12 8.23 28.71 (33.85) Artisan Partners 1.86 (42.86)22.32 10.95 10.20 16.08 33.85 (23.38) Russell MidCap Growth Idx (3.36) (44.32)11.43 10.66 12.10 15.48 42.71 (27.41) Cumulative and Quarterly Relative Return vs Russell MidCap Growth Idx Relative Returns(20%) (15%) (10%) (5%) 0% 5% 10% 15% 20% 01 2002 2003 2004 2005 2006 2007 2008 09 Artisan Partners CAI Mid Cap Growth Style Risk Adjusted Return Measures vs Russell MidCap Growth Idx Rankings Against CAI Mid Cap Growth Style Five Years Ended March 31, 2009 (12) (10) (8) (6) (4) (2) 0 2 4 6 8 Alpha Treynor Ratio (37) (34) 10th Percentile 4.73 (2.22) 25th Percentile 3.79 (3.40) Median 1.98 (5.38) 75th Percentile (0.06) (7.14) 90th Percentile (1.26) (8.48) Artisan Partners 2.85 (4.25) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 Information Sharpe Excess Return Ratio Ratio Ratio (39) (34) (28) 10th Percentile 0.93 (0.10)0.94 25th Percentile 0.68 (0.18)0.68 Median 0.44 (0.28)0.31 75th Percentile (0.01) (0.35) (0.10) 90th Percentile (0.26) (0.43) (0.34) Artisan Partners 0.57 (0.22)0.61 39City Of Clearwater Employees Pension Fund Attachment number 4 Page 42 of 108 Item # 6 ARTISAN PARTNERS RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Mid Cap Growth Style (30%) (20%) (10%) 0% 10% 20% 30% 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years Ended 3/09 Ended 12/08 Ended 9/08 Ended 6/08 Ended 3/08 Ended 12/07 Ended 9/07 Ended 6/07 Ended 3/07 Ended 12/06 16 71 3276 2575 5772 4470 4370 4268 4755 5446 3935 10th Percentile (9.04) (5.44)5.45 14.09 13.53 18.04 23.01 19.04 16.04 15.68 25th Percentile (11.13) (7.46)3.92 12.43 11.61 15.72 20.98 16.81 14.45 13.48 Median (13.03) (9.81)1.41 10.26 9.70 13.65 18.65 14.88 11.90 11.77 75th Percentile (15.49) (11.41) (0.75)7.73 7.01 10.71 16.63 12.82 10.68 9.88 90th Percentile (17.83) (14.16) (2.94)5.32 5.27 9.84 14.38 10.61 8.70 7.95 Artisan Partners (9.86) (8.13)3.93 9.98 10.39 14.36 19.39 15.10 11.66 12.38 Russell MidCap Growth Idx (14.89) (11.79) (0.75)8.19 7.77 11.39 17.01 14.48 12.41 12.73 Cumulative and Quarterly Relative Return vs Russell MidCap Growth Idx Relative Returns(20%) (15%) (10%) (5%) 0% 5% 10% 15% 20% 01 2002 2003 2004 2005 2006 2007 2008 09 Artisan Partners CAI Mid Cap Growth Style Risk Adjusted Return Measures vs Russell MidCap Growth Idx Rankings Against CAI Mid Cap Growth Style Five Years Ended March 31, 2009 (12) (10) (8) (6) (4) (2) 0 2 4 6 8 Alpha Treynor Ratio (37) (34) 10th Percentile 4.73 (2.22) 25th Percentile 3.79 (3.40) Median 1.98 (5.38) 75th Percentile (0.06) (7.14) 90th Percentile (1.26) (8.48) Artisan Partners 2.85 (4.25) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 Information Sharpe Excess Return Ratio Ratio Ratio (39) (34) (28) 10th Percentile 0.93 (0.10)0.94 25th Percentile 0.68 (0.18)0.68 Median 0.44 (0.28)0.31 75th Percentile (0.01) (0.35) (0.10) 90th Percentile (0.26) (0.43) (0.34) Artisan Partners 0.57 (0.22)0.61 40City Of Clearwater Employees Pension Fund Attachment number 4 Page 43 of 108 Item # 6 ARTISAN PARTNERS EQUITY CHARACTERISTICS ANALYSIS SUMMARY Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Portfolio Characteristics Percentile Rankings Rankings Against CAI Mid Cap Growth Style as of March 31, 2009 Percentile Ranking100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Weighted Median Price/Fore- Price/Book Forecasted Dividend MSCI Market Cap casted Earnings Earnings Growth Yield Combined Z-Score (2) (17)(17) (79) (67) (60) (49) (78) (54) (8) (23) (85) 10th Percentile 4.83 17.59 2.65 19.04 1.17 1.04 25th Percentile 4.20 16.14 2.38 17.55 1.00 0.89 Median 3.79 14.58 2.13 16.50 0.77 0.80 75th Percentile 3.14 13.73 1.95 15.44 0.63 0.69 90th Percentile 2.90 12.27 1.78 14.56 0.52 0.59 Artisan Partners 5.75 16.73 2.03 16.51 0.75 0.90 Russell MidCap Growth Idx 4.49 13.30 2.09 15.20 1.34 0.64 Sector Weights The graph below contrasts the manager’s sector weights with those of the benchmark and median sector weights across the members of the peer group. The magnitude of sector weight differences from the index and the manager’s sector diversification are also shown. Diversification by number and concentration of holdings are also compared to the benchmark and peer group. Issue Diversification represents by count, and Diversification Ratio by percent, the number of largest holdings that comprise half of the portfolio’s market value. Sector Allocation March 31, 2009 0%5%10%15%20%25%30%35%40% Information Technology 32.2% 21.1% 23.7% Health Care 23.0%50%Mgr MV50%Mgr MV13.8% 17.4% Industrials 14.5% 16.5% 14.8% Consumer Discretionary 14.2% 19.5% 17.2% Financials 6.4% 5.5% 6.7% Energy 4.7% 8.4% 9.3% Consumer Staples 3.0% 4.5% 4.1% Materials 1.5% 4.9% 4.4% Telecommunications 0.6% 3.0% 2.3% Utilities 2.9% Artisan Partners Russell MidCap Growth Idx CAI Mid Cap Growth Style Sector Diversification Manager 1.78 sectors Index 2.59 sectors Relative Sector Variance Manager 42% Style Median 17% Diversification March 31, 2009 0 50 100 150 Number of Issue Securities Diversification (31) (63) 10th Percentile 128 37 25th Percentile 89 26 Median 72 22 75th Percentile 52 17 90th Percentile 46 14 Artisan Partners 85 19 Russell MidCap Growth Idx 500 88 Diversification Ratio Manager 22% Index 18% Style Median 32% 41City Of Clearwater Employees Pension Fund Attachment number 4 Page 44 of 108 Item # 6 WEDGE CAPITAL MANAGEMENT PERIOD ENDED MARCH 31, 2009 Investment Philosophy WEDGE Capital seeks to achieve consistently superior returns through a value oriented stock selection process and strict buy-sell disciplines. Quarterly Summary and Highlights WEDGE Capital Management’s portfolio posted a (15.57)% return for the quarter placing it in the 99 percentile of the CAI Mid Cap Value Style group for the quarter and in the 59 percentile for the last year. WEDGE Capital Management’s portfolio underperformed the Russell MidCap Value Idx by 0.90% for the quarter and outperformed the Russell MidCap Value Idx for the year by 2.76%. Quarterly Asset Growth Beginning Market Value $19,238,116 Net New Investment $0 Investment Gains/(Losses) $-2,995,788 Ending Market Value $16,242,328 Percent Cash: 3.7% Performance vs CAI Mid Cap Value Style (60%) (50%) (40%) (30%) (20%) (10%) 0% Last Quarter Last Year Last 2 Years (99)(96) (59) (82) (60)(82) 10th Percentile (7.92) (30.72) (20.76) 25th Percentile (9.30) (36.10) (24.00) Median (11.14) (39.30) (26.46) 75th Percentile (12.76) (41.53) (27.86) 90th Percentile (13.90) (46.60) (32.49) WEDGE Capital Management (15.57) (39.75) (27.34) Russell MidCap Value Idx (14.67) (42.51) (29.73) Relative Return vs Russell MidCap Value Idx Relative Returns(2%) (1%) 0% 1% 2% 3% 4% 2007 2008 2009 WEDGE Capital Management Cumulative Returns vs Russell MidCap Value Idx Cumulative Relative Returns0% 2% 4% 6% 8% 10% 12% 2007 2008 2009 WEDGE Capital Management CAI Mid Cap Value Style 42City Of Clearwater Employees Pension Fund Attachment number 4 Page 45 of 108 Item # 6 WEDGE CAPITAL MANAGEMENT EQUITY CHARACTERISTICS ANALYSIS SUMMARY Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Portfolio Characteristics Percentile Rankings Rankings Against CAI Mid Cap Value Style as of March 31, 2009 Percentile Ranking100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Weighted Median Price/Fore- Price/Book Forecasted Dividend MSCI Market Cap casted Earnings Earnings Growth Yield Combined Z-Score (68) (57) (79) (11) (85)(85) (18) (98) (3) (18) (93)(92) 10th Percentile 4.80 13.16 1.41 12.18 3.86 (0.26) 25th Percentile 4.11 11.78 1.25 11.08 3.22 (0.32) Median 3.67 11.08 1.14 10.47 2.92 (0.48) 75th Percentile 2.77 10.36 1.07 9.85 2.56 (0.58) 90th Percentile 2.40 9.64 0.87 9.31 2.28 (0.69) WEDGE Capital Management 2.84 9.88 0.97 11.50 4.72 (0.82) Russell MidCap Value Idx 3.51 12.35 0.97 9.03 3.72 (0.74) Sector Weights The graph below contrasts the manager’s sector weights with those of the benchmark and median sector weights across the members of the peer group. The magnitude of sector weight differences from the index and the manager’s sector diversification are also shown. Diversification by number and concentration of holdings are also compared to the benchmark and peer group. Issue Diversification represents by count, and Diversification Ratio by percent, the number of largest holdings that comprise half of the portfolio’s market value. Sector Allocation March 31, 2009 0%5%10%15%20%25%30%35% Financials 28.2% 27.7% 24.4% Industrials 14.2% 6.9% 9.7% Utilities 12.4%50%Mgr MV50%Mgr MV15.9% 12.9% Information Technology 11.9% 7.5% 10.2% Consumer Discretionary 9.4% 13.4% 13.7% Health Care 8.6% 5.5% 8.4% Materials 8.2% 6.3% 6.2% Consumer Staples 4.8% 9.3% 7.6% Energy 2.2% 5.4% 6.0% Telecommunications 2.0% 0.7% WEDGE Capital Management Russell MidCap Value Idx CAI Mid Cap Value Style Sector Diversification Manager 2.62 sectors Index 2.48 sectors Relative Sector Variance Manager 34% Style Median 19% Diversification March 31, 2009 0 20 40 60 80 100 120 140 160 180 Number of Issue Securities Diversification (94) (85) 10th Percentile 152 45 25th Percentile 102 32 Median 80 25 75th Percentile 51 15 90th Percentile 40 12 WEDGE Capital Management 36 13 Russell MidCap Value Idx 529 100 Diversification Ratio Manager 35% Index 19% Style Median 31% 43City Of Clearwater Employees Pension Fund Attachment number 4 Page 46 of 108 Item # 6 SMALL CAP COMPOSITE PERIOD ENDED MARCH 31, 2009 Investment Philosophy Small Cap Equity Style managers invest in companies with relatively small capitalizations of approximately $400 million. The companies typically have dividend yields below the broader market and exhibit greater volatility than the broader market. Quarterly Summary and Highlights Small Cap Composite’s portfolio posted a (7.87)% return for the quarter placing it in the 26 percentile of the CAI Small Capitalization Style group for the quarter and in the 20 percentile for the last year. Small Cap Composite’s portfolio outperformed the Russell 2000 Index by 7.08% for the quarter and outperformed the Russell 2000 Index for the year by 3.67%. Quarterly Asset Growth Beginning Market Value $47,086,649 Net New Investment $5,000,000 Investment Gains/(Losses) $-3,682,034 Ending Market Value $48,404,614 Percent Cash: 1.9% Performance vs CAI Small Capitalization Style (50%) (40%) (30%) (20%) (10%) 0% 10% Last Quarter Last Year Last 3 Years Last 5 Years Last 5-1/2 Years (26) (68) (20) (41) (32)(45) (38)(53) (47)(55) 10th Percentile (3.90) (30.94) (11.62) (0.71)2.98 25th Percentile (7.46) (35.38) (14.40) (2.99)0.69 Median (12.26) (38.32) (17.34) (4.89) (0.86) 75th Percentile (15.83) (41.89) (19.15) (6.60) (2.80) 90th Percentile (17.99) (43.60) (21.49) (8.32) (4.38) Small Cap Composite (7.87) (33.84) (15.08) (4.10) (0.73) Russell 2000 Index (14.95) (37.50) (16.80) (5.24) (1.32) Relative Return vs Russell 2000 Index Relative Returns(8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% 10% 03 2004 2005 2006 2007 2008 09 Small Cap Composite CAI Small Capitalization Style Annualized Five Year Risk vs Return 10 15 20 25 30 35 40 45 (15%) (10%) (5%) 0% 5% 10% Small Cap Composite Russell 2000 Index Standard DeviationReturns 44City Of Clearwater Employees Pension Fund Attachment number 4 Page 47 of 108 Item # 6 SMALL CAP COMPOSITE RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Small Capitalization Style (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% 20% 30% 40% 12/08- 3/09 2008 2007 2006 2005 2004 (26)(68) (54)(29) (45)(60) (32)(26) (55)(82) (66)(51) 10th Percentile (3.90) (29.54)20.20 21.82 14.77 25.42 25th Percentile (7.46) (33.02)10.51 18.62 10.97 22.73 Median (12.26) (37.75)1.39 14.59 7.55 18.56 75th Percentile (15.83) (42.41) (5.47)11.58 5.55 13.61 90th Percentile (17.99) (46.50) (11.43)7.13 2.78 8.81 Small Cap Composite (7.87) (38.63)3.26 17.40 7.21 15.71 Russell 2000 Index (14.95) (33.79) (1.57)18.37 4.55 18.33 Cumulative and Quarterly Relative Return vs Russell 2000 Index Relative Returns(8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% 10% 2003 2004 2005 2006 2007 2008 2009 Small Cap Composite CAI Small Cap Style Risk Adjusted Return Measures vs Russell 2000 Index Rankings Against CAI Small Capitalization Style Five Years Ended March 31, 2009 (15) (10) (5) 0 5 10 Alpha Treynor Ratio (54) (49) 10th Percentile 4.95 (4.05) 25th Percentile 2.51 (6.41) Median 0.46 (8.22) 75th Percentile (1.18) (9.85) 90th Percentile (3.23) (11.73) Small Cap Composite 0.33 (8.12) (0.8) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 Information Sharpe Excess Return Ratio Ratio Ratio (51) (50) (37) 10th Percentile 0.62 (0.18)0.60 25th Percentile 0.34 (0.31)0.34 Median 0.07 (0.42)0.04 75th Percentile (0.17) (0.49) (0.19) 90th Percentile (0.42) (0.59) (0.42) Small Cap Composite 0.06 (0.42)0.21 45City Of Clearwater Employees Pension Fund Attachment number 4 Page 48 of 108 Item # 6 ATLANTA CAPITAL MANAGEMENT PERIOD ENDED MARCH 31, 2009 Investment Philosophy Atlanta believes investing in a diversified portfolio of high quality, small capitalization companies as measured by a company’s historical ability to consistently grow earnings and dividends. Quarterly Summary and Highlights Atlanta Capital Management’s portfolio posted a (10.86)% return for the quarter placing it in the 14 percentile of the CAI Small Cap Value Style group for the quarter and in the 1 percentile for the last year. Atlanta Capital Management’s portfolio outperformed the Russell 2000 Value Index by 8.78% for the quarter and outperformed the Russell 2000 Value Index for the year by 14.35%. Quarterly Asset Growth Beginning Market Value $14,688,718 Net New Investment $0 Investment Gains/(Losses) $-1,595,155 Ending Market Value $13,093,563 Percent Cash: 4.5% Performance vs CAI Small Cap Value Style (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% 20% Last Quarter Last Year Last 3 Years Last 5 Years Last 5-1/2 Years (14) (84) (1) (37) (1) (47) (3) (47) (8) (48) 10th Percentile (10.58) (33.53) (12.86) (0.57)3.25 25th Percentile (13.74) (36.66) (14.89) (3.54)0.75 Median (17.09) (40.35) (17.63) (5.44) (1.23) 75th Percentile (19.18) (43.52) (19.47) (7.13) (2.55) 90th Percentile (20.37) (45.27) (22.54) (8.40) (4.56) Atlanta Capital Management (10.86) (24.54) (6.87)1.76 4.10 Russell 2000 Value Index (19.64) (38.89) (17.54) (5.30) (0.97) Relative Return vs Russell 2000 Value Index Relative Returns(10%) (5%) 0% 5% 10% 15% 03 2004 2005 2006 2007 2008 09 Atlanta Capital Management CAI Small Cap Value Style Annualized Five Year Risk vs Return 12 14 16 18 20 22 24 (14%) (12%) (10%) (8%) (6%) (4%) (2%) 0% 2% 4% Atlanta Capital Management Russell 2000 Value Index Standard DeviationReturns 46City Of Clearwater Employees Pension Fund Attachment number 4 Page 49 of 108 Item # 6 ATLANTA CAPITAL MANAGEMENT RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Small Cap Value Style (50%) (40%) (30%) (20%) (10%) 0% 10% 20% 30% 40% 12/08- 3/09 2008 2007 2006 2005 2004 (14) (84)(1) (19) (6) (59) (59)(12) (65)(83) (72)(56) 10th Percentile (10.58) (26.55)3.76 24.47 14.39 28.47 25th Percentile (13.74) (29.65) (2.46)21.48 11.04 25.39 Median (17.09) (32.95) (8.60)18.75 9.23 22.78 75th Percentile (19.18) (37.48) (12.68)14.65 5.40 19.12 90th Percentile (20.37) (41.08) (16.41)12.88 3.01 16.09 Atlanta Capital Management (10.86) (19.51)6.90 16.21 6.21 20.24 Russell 2000 Value Index (19.64) (28.92) (9.78)23.48 4.71 22.25 Cumulative and Quarterly Relative Return vs Russell 2000 Value Index Relative Returns(20%) (10%) 0% 10% 20% 30% 40% 2003 2004 2005 2006 2007 2008 2009 Atlanta Capital Management CAI Small Cap Value Style Risk Adjusted Return Measures vs Russell 2000 Value Index Rankings Against CAI Small Cap Value Style Five Years Ended March 31, 2009 (14) (12) (10) (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (9) (3) 10th Percentile 3.54 (4.39) 25th Percentile 1.09 (7.43) Median (0.28) (8.93) 75th Percentile (1.65) (10.20) 90th Percentile (3.25) (11.92) Atlanta Capital Management 3.92 (2.21) (0.8) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 Information Sharpe Excess Return Ratio Ratio Ratio (3) (3) (10) 10th Percentile 0.70 (0.23)0.86 25th Percentile 0.16 (0.37)0.27 Median (0.04) (0.45) (0.03) 75th Percentile (0.32) (0.53) (0.31) 90th Percentile (0.56) (0.60) (0.60) Atlanta Capital Management 0.92 (0.11)0.86 47City Of Clearwater Employees Pension Fund Attachment number 4 Page 50 of 108 Item # 6 ATLANTA CAPITAL MANAGEMENT RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Small Cap Value Style (30%) (20%) (10%) 0% 10% 20% 30% 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years Ended 3/09 Ended 12/08 Ended 9/08 Ended 6/08 Ended 3/08 Ended 12/07 Ended 9/07 Ended 6/07 Ended 3/07 Ended 12/06 1 47 1 28 626 10 49 741 1145 3061 7967 6955 8149 10th Percentile (12.86) (4.29)5.17 7.05 7.96 9.88 16.63 18.67 17.82 20.07 25th Percentile (14.89) (6.60)2.31 4.71 6.49 8.03 15.10 17.32 15.89 17.90 Median (17.63) (9.60) (0.09)1.33 3.40 5.02 13.07 15.67 14.70 16.41 75th Percentile (19.47) (11.44) (2.15) (1.40)1.74 2.76 10.60 14.13 12.41 14.38 90th Percentile (22.54) (15.06) (5.16) (3.79) (1.15)1.01 9.01 12.74 10.97 11.83 Atlanta Capital Management (6.87) (0.00)6.05 7.09 8.68 9.68 14.71 13.73 13.32 14.06 Russell 2000 Value Index (17.54) (7.49)2.00 1.39 4.33 5.27 12.51 15.02 14.47 16.48 Cumulative and Quarterly Relative Return vs Russell 2000 Value Index Relative Returns(20%) (10%) 0% 10% 20% 30% 40% 50% 2004 2005 2006 2007 2008 2009 Atlanta Capital Management CAI Small Cap Value Style Risk Adjusted Return Measures vs Russell 2000 Value Index Rankings Against CAI Small Cap Value Style Five Years Ended March 31, 2009 (14) (12) (10) (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (9) (3) 10th Percentile 3.54 (4.39) 25th Percentile 1.09 (7.43) Median (0.28) (8.93) 75th Percentile (1.65) (10.20) 90th Percentile (3.25) (11.92) Atlanta Capital Management 3.92 (2.21) (0.8) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 Information Sharpe Excess Return Ratio Ratio Ratio (3) (3) (10) 10th Percentile 0.70 (0.23)0.86 25th Percentile 0.16 (0.37)0.27 Median (0.04) (0.45) (0.03) 75th Percentile (0.32) (0.53) (0.31) 90th Percentile (0.56) (0.60) (0.60) Atlanta Capital Management 0.92 (0.11)0.86 48City Of Clearwater Employees Pension Fund Attachment number 4 Page 51 of 108 Item # 6 ATLANTA CAPITAL MANAGEMENT EQUITY CHARACTERISTICS ANALYSIS SUMMARY Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Portfolio Characteristics Percentile Rankings Rankings Against CAI Small Cap Value Style as of March 31, 2009 Percentile Ranking100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Weighted Median Price/Fore- Price/Book Forecasted Dividend MSCI Market Cap casted Earnings Earnings Growth Yield Combined Z-Score (16) (62) (9)(12) (2) (57) (5) (87)(92) (24) (1) (51) 10th Percentile 1.20 13.82 1.10 12.85 3.78 (0.18) 25th Percentile 0.96 12.41 1.02 11.99 3.34 (0.25) Median 0.65 11.20 0.91 11.10 2.76 (0.50) 75th Percentile 0.59 10.36 0.78 9.90 2.14 (0.58) 90th Percentile 0.54 9.28 0.69 8.31 1.64 (0.71) Atlanta Capital Management 1.08 13.90 1.78 14.82 1.37 0.29 Russell 2000 Value Index 0.62 13.58 0.85 8.82 3.37 (0.51) Sector Weights The graph below contrasts the manager’s sector weights with those of the benchmark and median sector weights across the members of the peer group. The magnitude of sector weight differences from the index and the manager’s sector diversification are also shown. Diversification by number and concentration of holdings are also compared to the benchmark and peer group. Issue Diversification represents by count, and Diversification Ratio by percent, the number of largest holdings that comprise half of the portfolio’s market value. Sector Allocation March 31, 2009 0%10%20%30%40%50% Consumer Discretionary 23.3% 10.8% 13.5% Information Technology 18.2% 12.5% 13.6% Financials 17.3%50%Mgr MV50%Mgr MV36.0% 28.6% Industrials 16.7% 13.7% 17.1% Health Care 9.7% 5.4% 6.6% Consumer Staples 5.7% 5.2% 4.1% Materials 4.2% 4.7% 5.8% Energy 3.7% 2.5% 4.6% Utilities 1.3% 8.3% 6.2% Telecommunications 1.0% Atlanta Capital Management Russell 2000 Value Index CAI Small Cap Value Style Sector Diversification Manager 2.50 sectors Index 2.02 sectors Relative Sector Variance Manager 54% Style Median 23% Diversification March 31, 2009 0 50 100 150 200 250 300 350 400 450 Number of Issue Securities Diversification (83) (83) 10th Percentile 403 75 25th Percentile 175 51 Median 106 32 75th Percentile 68 21 90th Percentile 53 15 Atlanta Capital Management 62 18 Russell 2000 Value Index 1283 191 Diversification Ratio Manager 30% Index 15% Style Median 28% 49City Of Clearwater Employees Pension Fund Attachment number 4 Page 52 of 108 Item # 6 INDEPENDENCE INVESTMENTS PERIOD ENDED MARCH 31, 2009 Investment Philosophy The investment philosophy, "Stocks that show improving fundamentals and are statistically undervalued with an identifiable catalyst for change are attractive," adds value through investing in a group of small cap growth companies without taking undue risk. Catalysts for growth include new products, new management, or a new distribution technique that will enhance shareholder value, but is not yet reflected in the current stock price. Quarterly Summary and Highlights Independence Investments’s portfolio posted a (4.77)% return for the quarter placing it in the 29 percentile of the CAI Small Cap Growth Style group for the quarter and in the 41 percentile for the last year. Independence Investments’s portfolio outperformed the Russell 2000 Growth Index by 4.97% for the quarter and outperformed the Russell 2000 Growth Index for the year by 0.25%. Quarterly Asset Growth Beginning Market Value $22,035,845 Net New Investment $5,000,000 Investment Gains/(Losses) $-808,089 Ending Market Value $26,227,756 Percent Cash: 0.9% Performance vs CAI Small Cap Growth Style (50%) (40%) (30%) (20%) (10%) 0% 10% Last Quarter Last Year Last 2 Years (29) (78) (41)(42) (84) (47) 10th Percentile (2.26) (29.06) (17.76) 25th Percentile (4.30) (32.86) (20.39) Median (7.34) (37.58) (24.48) 75th Percentile (9.16) (41.72) (26.95) 90th Percentile (12.82) (42.68) (30.44) Independence Investments (4.77) (36.11) (28.30) Russell 2000 Growth Index (9.74) (36.36) (23.88) Relative Return vs Russell 2000 Growth Index Relative Returns(10%) (8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% 2007 2008 2009 Independence Investments Cumulative Returns vs Russell 2000 Growth Index Cumulative Relative Returns(20%) (15%) (10%) (5%) 0% 5% 10% 2007 2008 2009 Independence Investments CAI Sm Cap Growth Style 50City Of Clearwater Employees Pension Fund Attachment number 4 Page 53 of 108 Item # 6 INDEPENDENCE INVESTMENTS EQUITY CHARACTERISTICS ANALYSIS SUMMARY Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Portfolio Characteristics Percentile Rankings Rankings Against CAI Small Cap Growth Style as of March 31, 2009 Percentile Ranking100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Weighted Median Price/Fore- Price/Book Forecasted Dividend MSCI Market Cap casted Earnings Earnings Growth Yield Combined Z-Score (95) (87) (69) (12) (44) (76) (18) (74) (97) (9) (26) (80) 10th Percentile 1.40 21.95 2.59 22.70 0.94 1.15 25th Percentile 1.16 18.86 2.30 21.10 0.60 1.00 Median 0.89 16.49 1.86 18.46 0.40 0.78 75th Percentile 0.77 14.50 1.72 17.34 0.24 0.66 90th Percentile 0.68 13.17 1.41 16.33 0.17 0.53 Independence Investments 0.62 15.02 1.93 21.86 0.12 0.98 Russell 2000 Growth Index 0.70 21.40 1.70 17.41 0.95 0.65 Sector Weights The graph below contrasts the manager’s sector weights with those of the benchmark and median sector weights across the members of the peer group. The magnitude of sector weight differences from the index and the manager’s sector diversification are also shown. Diversification by number and concentration of holdings are also compared to the benchmark and peer group. Issue Diversification represents by count, and Diversification Ratio by percent, the number of largest holdings that comprise half of the portfolio’s market value. Sector Allocation March 31, 2009 0%5%10%15%20%25%30%35%40% Information Technology 31.9% 24.1% 27.7% Health Care 30.7%50%Mgr MV50%Mgr MV26.0% 24.2% Financials 14.3% 5.2% 6.3% Consumer Discretionary 9.7% 14.0% 16.2% Pooled Vehicles 3.5% Energy 3.2% 5.8% 5.3% Industrials 2.7% 16.7% 14.7% Consumer Staples 2.4% 3.1% 2.9% Materials 1.7% 2.7% 1.5% Utilities 0.9% Telecommunications 1.5% 1.2% Independence Investments Russell 2000 Growth Index CAI Sm Cap Growth Style Sector Diversification Manager 1.59 sectors Index 2.00 sectors Relative Sector Variance Manager 50% Style Median 14% Diversification March 31, 2009 0 20 40 60 80 100 120 140 160 Number of Issue Securities Diversification (96) (85) 10th Percentile 137 39 25th Percentile 101 31 Median 86 25 75th Percentile 62 18 90th Percentile 51 14 Independence Investments 46 16 Russell 2000 Growth Index 1182 164 Diversification Ratio Manager 34% Index 14% Style Median 30% 51City Of Clearwater Employees Pension Fund Attachment number 4 Page 54 of 108 Item # 6 SYSTEMATIC FINANCIAL MANAGEMENT PERIOD ENDED MARCH 31, 2009 Investment Philosophy Systematic believes that a disciplined, traditional, value investment approach, combined with an emphasis on positive earnings surprise as a catalyst for price appreciation, will yield a diverse group of companies that will provide higher returns over the long term. Systematic’s goal is to invest in ’value’ companies that have a confirmed catalyst for stock price appreciation. Quarterly Summary and Highlights Systematic Financial Management’s portfolio posted a (12.34)% return for the quarter placing it in the 19 percentile of the CAI Small Cap Value Style group for the quarter and in the 51 percentile for the last year. Systematic Financial Management’s portfolio outperformed the Russell 2000 Value Index by 7.30% for the quarter and underperformed the Russell 2000 Value Index for the year by 1.99%. Quarterly Asset Growth Beginning Market Value $10,362,085 Net New Investment $0 Investment Gains/(Losses) $-1,278,790 Ending Market Value $9,083,295 Percent Cash: 1.0% Performance vs CAI Small Cap Value Style (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% Last Quarter Last Year Last 3 Years Last 5 Years Last 5-1/2 Years (19) (84) (51)(37) (54)(47) (72)(47)(74)(48) 10th Percentile (10.58) (33.53) (12.86) (0.57)3.25 25th Percentile (13.74) (36.66) (14.89) (3.54)0.75 Median (17.09) (40.35) (17.63) (5.44) (1.23) 75th Percentile (19.18) (43.52) (19.47) (7.13) (2.55) 90th Percentile (20.37) (45.27) (22.54) (8.40) (4.56) Systematic Financial Management (12.34) (40.88) (18.29) (6.64) (2.52) Russell 2000 Value Index (19.64) (38.89) (17.54) (5.30) (0.97) Relative Return vs Russell 2000 Value Index Relative Returns(25%) (20%) (15%) (10%) (5%) 0% 5% 10% 15% 03 2004 2005 2006 2007 2008 09 Systematic Financial Management CAI Small Cap Value Style Annualized Five Year Risk vs Return 15 16 17 18 19 20 21 22 23 (14%) (12%) (10%) (8%) (6%) (4%) (2%) 0% 2% 4% Russell 2000 Value Index Systematic Financial Management Standard DeviationReturns 52City Of Clearwater Employees Pension Fund Attachment number 4 Page 55 of 108 Item # 6 SYSTEMATIC FINANCIAL MANAGEMENT RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Small Cap Value Style (50%) (40%) (30%) (20%) (10%) 0% 10% 20% 30% 40% 12/08- 3/09 2008 2007 2006 2005 2004 (19)(84) (89) (19) (16) (59) (50)(12) (57)(83)(95) (56) 10th Percentile (10.58) (26.55)3.76 24.47 14.39 28.47 25th Percentile (13.74) (29.65) (2.46)21.48 11.04 25.39 Median (17.09) (32.95) (8.60)18.75 9.23 22.78 75th Percentile (19.18) (37.48) (12.68)14.65 5.40 19.12 90th Percentile (20.37) (41.08) (16.41)12.88 3.01 16.09 Systematic Financial Management (12.34) (40.70)0.47 18.60 8.25 11.40 Russell 2000 Value Index (19.64) (28.92) (9.78)23.48 4.71 22.25 Cumulative and Quarterly Relative Return vs Russell 2000 Value Index Relative Returns(25%) (20%) (15%) (10%) (5%) 0% 5% 10% 15% 2003 2004 2005 2006 2007 2008 2009 Systematic Financial Management CAI Small Cap Value Style Risk Adjusted Return Measures vs Russell 2000 Value Index Rankings Against CAI Small Cap Value Style Five Years Ended March 31, 2009 (14) (12) (10) (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (81) (89) 10th Percentile 3.54 (4.39) 25th Percentile 1.09 (7.43) Median (0.28) (8.93) 75th Percentile (1.65) (10.20) 90th Percentile (3.25) (11.92) Systematic Financial Management (2.34) (11.66) (0.8) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 Information Sharpe Excess Return Ratio Ratio Ratio (69) (72) (62) 10th Percentile 0.70 (0.23)0.86 25th Percentile 0.16 (0.37)0.27 Median (0.04) (0.45) (0.03) 75th Percentile (0.32) (0.53) (0.31) 90th Percentile (0.56) (0.60) (0.60) Systematic Financial Management (0.21) (0.51) (0.12) 53City Of Clearwater Employees Pension Fund Attachment number 4 Page 56 of 108 Item # 6 SYSTEMATIC FINANCIAL MANAGEMENT RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Small Cap Value Style (30%) (20%) (10%) 0% 10% 20% 30% 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years Ended 3/09 Ended 12/08 Ended 9/08 Ended 6/08 Ended 3/08 Ended 12/07 Ended 9/07 Ended 6/07 Ended 3/07 Ended 12/06 5447 7328 6026 1149 2941 1745 961 4267 7355 8749 10th Percentile (12.86) (4.29)5.17 7.05 7.96 9.88 16.63 18.67 17.82 20.07 25th Percentile (14.89) (6.60)2.31 4.71 6.49 8.03 15.10 17.32 15.89 17.90 Median (17.63) (9.60) (0.09)1.33 3.40 5.02 13.07 15.67 14.70 16.41 75th Percentile (19.47) (11.44) (2.15) (1.40)1.74 2.76 10.60 14.13 12.41 14.38 90th Percentile (22.54) (15.06) (5.16) (3.79) (1.15)1.01 9.01 12.74 10.97 11.83 Systematic Financial Management (18.29) (10.93) (0.51)6.44 5.59 8.85 16.88 16.10 12.71 12.66 Russell 2000 Value Index (17.54) (7.49)2.00 1.39 4.33 5.27 12.51 15.02 14.47 16.48 Cumulative and Quarterly Relative Return vs Russell 2000 Value Index Relative Returns(25%) (20%) (15%) (10%) (5%) 0% 5% 10% 15% 2004 2005 2006 2007 2008 2009 Systematic Financial Management CAI Small Cap Value Style Risk Adjusted Return Measures vs Russell 2000 Value Index Rankings Against CAI Small Cap Value Style Five Years Ended March 31, 2009 (14) (12) (10) (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (81) (89) 10th Percentile 3.54 (4.39) 25th Percentile 1.09 (7.43) Median (0.28) (8.93) 75th Percentile (1.65) (10.20) 90th Percentile (3.25) (11.92) Systematic Financial Management (2.34) (11.66) (0.8) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 Information Sharpe Excess Return Ratio Ratio Ratio (69) (72) (62) 10th Percentile 0.70 (0.23)0.86 25th Percentile 0.16 (0.37)0.27 Median (0.04) (0.45) (0.03) 75th Percentile (0.32) (0.53) (0.31) 90th Percentile (0.56) (0.60) (0.60) Systematic Financial Management (0.21) (0.51) (0.12) 54City Of Clearwater Employees Pension Fund Attachment number 4 Page 57 of 108 Item # 6 SYSTEMATIC FINANCIAL MANAGEMENT EQUITY CHARACTERISTICS ANALYSIS SUMMARY Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Portfolio Characteristics Percentile Rankings Rankings Against CAI Small Cap Value Style as of March 31, 2009 Percentile Ranking100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Weighted Median Price/Fore- Price/Book Forecasted Dividend MSCI Market Cap casted Earnings Earnings Growth Yield Combined Z-Score (35) (62) (37) (12) (20) (57) (8) (87)(83) (24)(24) (51) 10th Percentile 1.20 13.82 1.10 12.85 3.78 (0.18) 25th Percentile 0.96 12.41 1.02 11.99 3.34 (0.25) Median 0.65 11.20 0.91 11.10 2.76 (0.50) 75th Percentile 0.59 10.36 0.78 9.90 2.14 (0.58) 90th Percentile 0.54 9.28 0.69 8.31 1.64 (0.71) Systematic Financial Management 0.84 11.58 1.05 13.05 2.02 (0.24) Russell 2000 Value Index 0.62 13.58 0.85 8.82 3.37 (0.51) Sector Weights The graph below contrasts the manager’s sector weights with those of the benchmark and median sector weights across the members of the peer group. The magnitude of sector weight differences from the index and the manager’s sector diversification are also shown. Diversification by number and concentration of holdings are also compared to the benchmark and peer group. Issue Diversification represents by count, and Diversification Ratio by percent, the number of largest holdings that comprise half of the portfolio’s market value. Sector Allocation March 31, 2009 0%10%20%30%40%50% Financials 29.6% 36.0% 28.6% Information Technology 14.8% 12.5% 13.6% Consumer Discretionary 12.6%50%Mgr MV50%Mgr MV10.8% 13.5% Industrials 12.4% 13.7% 17.1% Materials 7.2% 4.7% 5.8% Health Care 6.3% 5.4% 6.6% Energy 5.5% 2.5% 4.6% Consumer Staples 4.9% 5.2% 4.1% Telecommunications 3.8% 1.0% Utilities 2.9% 8.3% 6.2% Systematic Financial Management Russell 2000 Value Index CAI Small Cap Value Style Sector Diversification Manager 2.45 sectors Index 2.02 sectors Relative Sector Variance Manager 27% Style Median 23% Diversification March 31, 2009 0 50 100 150 200 250 300 350 400 450 Number of Issue Securities Diversification (39) (55) 10th Percentile 403 75 25th Percentile 175 51 Median 106 32 75th Percentile 68 21 90th Percentile 53 15 Systematic Financial Management 123 31 Russell 2000 Value Index 1283 191 Diversification Ratio Manager 25% Index 15% Style Median 28% 55City Of Clearwater Employees Pension Fund Attachment number 4 Page 58 of 108 Item # 6 International Equity ‘ Attachment number 4 Page 59 of 108 Item # 6 INTERNATIONAL EQUITY COMPOSITE PERIOD ENDED MARCH 31, 2009 Quarterly Summary and Highlights International Equity Composite’s portfolio posted a (5.21)% return for the quarter placing it in the 2 percentile of the Public Fund - International Equity group for the quarter and in the 56 percentile for the last year. International Equity Composite’s portfolio outperformed the MSCI EAFE Index by 8.73% for the quarter and outperformed the MSCI EAFE Index for the year by 0.51%. Quarterly Asset Growth Beginning Market Value $51,823,357 Net New Investment $9,981,268 Investment Gains/(Losses) $-2,478,640 Ending Market Value $59,325,985 Performance vs Public Fund - International Equity (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% Last Quarter Last Year Last 3 Years Last 5 Years Last 7-3/4 Years (2) (86) (56)(72) (71)(76) (80)(81)(86)(83) 10th Percentile (9.45) (41.05) (10.95)1.04 2.78 25th Percentile (10.54) (43.93) (12.19) (0.39)2.13 Median (11.76) (45.68) (13.07) (0.92)1.41 75th Percentile (13.56) (46.64) (14.35) (1.60)0.49 90th Percentile (14.52) (47.81) (15.38) (2.80) (0.56) International Equity Composite (5.21) (45.99) (14.13) (1.98) (0.15) MSCI EAFE Index (13.94) (46.51) (14.47) (2.18)0.02 Relative Return vs MSCI EAFE Index Relative Returns(10%) (5%) 0% 5% 10% 15% 01 2002 2003 2004 2005 2006 2007 2008 09 International Equity Composite Public Fund - International Equity Annualized Five Year Risk vs Return 12 14 16 18 20 22 (6%) (4%) (2%) 0% 2% 4% 6% International Equity Composite MSCI EAFE Index Standard DeviationReturns 57City Of Clearwater Employees Pension Fund Attachment number 4 Page 60 of 108 Item # 6 INTERNATIONAL EQUITY COMPOSITE RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs Public Fund - International Equity (60%) (40%) (20%) 0% 20% 40% 60% 12/08- 3/09 2008 2007 2006 2005 2004 2003 2002 (2)(86) (94)(51) (83)(82) (21)(52) (82)(80)(81)(38) (91)(36) (35)(74) 10th Percentile (9.45) (38.71)17.89 28.49 19.45 22.79 41.38 (8.76) 25th Percentile (10.54) (41.13)16.50 27.26 16.81 20.59 39.66 (12.02) Median (11.76) (43.30)14.59 26.44 15.89 19.59 37.09 (14.20) 75th Percentile (13.56) (45.25)12.13 25.12 13.76 18.04 33.07 (16.04) 90th Percentile (14.52) (47.19)9.11 22.61 12.19 16.65 31.23 (17.64) International Equity Composite (5.21) (47.95)11.01 27.63 13.14 17.66 31.06 (13.03) MSCI EAFE Index (13.94) (43.38)11.17 26.34 13.54 20.25 38.59 (15.94) Cumulative and Quarterly Relative Return vs MSCI EAFE Index Relative Returns(15%) (10%) (5%) 0% 5% 10% 15% 2001 2002 2003 2004 2005 2006 2007 2008 09 International Equity Composite Public Fund - Intl Equity Risk Adjusted Return Measures vs MSCI EAFE Index Rankings Against Public Fund - International Equity Five Years Ended March 31, 2009 (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (70) (76) 10th Percentile 3.19 (2.29) 25th Percentile 1.99 (3.51) Median 1.31 (4.13) 75th Percentile 0.63 (4.88) 90th Percentile (0.42) (5.94) International Equity Composite 0.74 (4.99) (0.5) 0.0 0.5 1.0 1.5 Information Sharpe Excess Return Ratio Ratio Ratio (79) (75) (80) 10th Percentile 1.25 (0.12)1.19 25th Percentile 0.84 (0.18)0.81 Median 0.55 (0.21)0.49 75th Percentile 0.28 (0.25)0.26 90th Percentile (0.23) (0.31) (0.28) International Equity Composite 0.13 (0.25)0.03 58City Of Clearwater Employees Pension Fund Attachment number 4 Page 61 of 108 Item # 6 EARNEST PARTNERS PERIOD ENDED MARCH 31, 2009 Investment Philosophy EARNEST Partners is a fundamental, bottom-up stock selection manager whose investment objective is to outperform the benchmark while controlling volatility and risk. Quarterly Summary and Highlights EARNEST Partners’s portfolio posted a (8.22)% return for the quarter placing it in the 1 percentile of the CAI Broad Value Intl Equity Sty group for the quarter and in the 59 percentile for the last three-quarter year. EARNEST Partners’s portfolio outperformed the MSCI EAFE Index by 5.72% for the quarter and outperformed the MSCI EAFE Index for the three-quarter year by 1.32%. Quarterly Asset Growth Beginning Market Value $16,391,603 Net New Investment $-1,975 Investment Gains/(Losses) $-1,347,441 Ending Market Value $15,042,187 Performance vs CAI Broad Value Intl Equity Sty (60%) (50%) (40%) (30%) (20%) (10%) 0% Last Quarter Last 1/2 Year Last 3/4 Year (1) (61) (50)(75) (59)(75) 10th Percentile (9.12) (24.73) (36.51) 25th Percentile (11.37) (26.41) (38.85) Median (13.12) (29.82) (42.39) 75th Percentile (14.98) (31.08) (45.26) 90th Percentile (15.49) (34.76) (50.43) EARNEST Partners (8.22) (29.83) (43.95) MSCI EAFE Index (13.94) (31.11) (45.27) Relative Return vs MSCI EAFE Index Relative Returns(6%) (4%) (2%) 0% 2% 4% 6% 8% 2008 2009 EARNEST Partners Cumulative Returns vs MSCI EAFE Index Cumulative Relative Returns(6%) (4%) (2%) 0% 2% 4% 6% 8% 2008 2009 EARNEST Partners CAI Broad Vl Intl Eq Sty 59City Of Clearwater Employees Pension Fund Attachment number 4 Page 62 of 108 Item # 6 EATON VANCE MANAGEMENT PERIOD ENDED MARCH 31, 2009 Investment Philosophy Eaton Vance believes profound structural changes within the emerging markets landscape over the past two decades offer significant long-term growth opportunities. The firm believes that a disciplined, long-term, structured approach can efficiently participate in the systematic growth of emerging markets on a consistent and repeatable basis with lower return risk. Quarterly Summary and Highlights Eaton Vance Management’s portfolio posted a (5.87)% return for the quarter placing it in the 96 percentile of the CAI Emerging Markets Equity DB group for the quarter and in the 42 percentile for the last three-quarter year. Eaton Vance Management’s portfolio underperformed the MSCI Emerging Mkts Idx by 6.89% for the quarter and underperformed the MSCI Emerging Mkts Idx for the three-quarter year by 1.24%. Quarterly Asset Growth Beginning Market Value $4,244,229 Net New Investment $4,983,243 Investment Gains/(Losses) $94,780 Ending Market Value $9,322,252 Performance vs CAI Emerging Markets Equity DB (70%) (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% Last Quarter Last 1/2 Year Last 3/4 Year (96) (19) (86) (27) (42)(32) 10th Percentile 2.11 (23.81) (41.17) 25th Percentile 0.61 (26.48) (45.37) Median (0.57) (28.90) (48.47) 75th Percentile (1.94) (30.94) (50.78) 90th Percentile (3.30) (33.69) (53.70) Eaton Vance Management (5.87) (32.19) (47.71) MSCI Emerging Mkts Idx 1.02 (26.82) (46.47) Relative Return vs MSCI Emerging Mkts Idx Relative Returns(10%) (8%) (6%) (4%) (2%) 0% 2% 4% 6% 2008 2009 Eaton Vance Management Cumulative Returns vs MSCI Emerging Mkts Idx Cumulative Relative Returns(4%) (2%) 0% 2% 4% 6% 8% 2008 2009 Eaton Vance Management CAI Emerging Mkts Equity 60City Of Clearwater Employees Pension Fund Attachment number 4 Page 63 of 108 Item # 6 NORTHERN TRUST GLOBAL INVESTMENTS PERIOD ENDED MARCH 31, 2009 Investment Philosophy NTGI believes that the most consistent way to enhance returns is through a diversified, risk-controlled approach that capitalizes on identified market anomalies. They aim to add 75-100 bps over the benchmark return (EAFE Index) on a consistent basis. It is a stock selection driven strategy with no style, risk, country, or sector bets. Quarterly Summary and Highlights NGTI - QM Enhanced EAFE’s portfolio posted a (14.73)% return for the quarter placing it in the 83 percentile of the CAI Non-U.S. Equity Style group for the quarter and in the 72 percentile for the last year. NGTI - QM Enhanced EAFE’s portfolio underperformed the MSCI EAFE Index by 0.79% for the quarter and underperformed the MSCI EAFE Index for the year by 0.91%. Quarterly Asset Growth Beginning Market Value $7,202,017 Net New Investment $0 Investment Gains/(Losses) $-1,060,897 Ending Market Value $6,141,120 Performance vs CAI Non-U.S. Equity Style (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% Last Quarter Last Year Last 3 Years Last 4-1/2 Years (83)(69) (72)(60) (75)(71) (80)(79) 10th Percentile (9.39) (39.64) (9.52)1.91 25th Percentile (10.94) (41.90) (11.37)0.42 Median (12.26) (45.33) (13.36) (1.06) 75th Percentile (14.17) (47.92) (14.76) (2.20) 90th Percentile (15.22) (49.74) (16.47) (3.33) NGTI - QM Enhanced EAFE (14.73) (47.42) (14.75) (2.54) MSCI EAFE Index (13.94) (46.51) (14.47) (2.41) Relative Return vs MSCI EAFE Index Relative Returns(1.5%) (1.0%) (0.5%) 0.0% 0.5% 1.0% 1.5% 04 2005 2006 2007 2008 09 NGTI - QM Enhanced EAFE CAI Non-U.S. Equity Style Annualized Four And One-Half Year Risk vs Return 10 15 20 25 30 35 (10%) (8%) (6%) (4%) (2%) 0% 2% 4% 6% MSCI EAFE Index NGTI - QM Enhanced EAFE Standard DeviationReturns 61City Of Clearwater Employees Pension Fund Attachment number 4 Page 64 of 108 Item # 6 NORTHERN TRUST GLOBAL INVESTMENTS RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Non-U.S. Equity Style (60%) (40%) (20%) 0% 20% 40% 60% 12/08- 3/09 2008 2007 2006 2005 (83)(69) (57)(55) (63)(62) (34)(48) (80)(78) 10th Percentile (9.39) (36.13)22.08 31.58 22.75 25th Percentile (10.94) (39.52)17.77 29.21 18.62 Median (12.26) (42.87)13.17 26.00 15.70 75th Percentile (14.17) (46.51)9.68 23.98 13.77 90th Percentile (15.22) (49.26)6.23 20.41 11.55 NTGI - QM Enhanced EAFE (14.73) (43.67)11.01 28.49 12.81 MSCI EAFE Index (13.94) (43.38)11.17 26.34 13.54 Cumulative and Quarterly Relative Return vs MSCI EAFE Index Relative Returns(4%) (2%) 0% 2% 4% 6% 8% 10% 2004 2005 2006 2007 2008 2009 NTGI - QM Enhanced EAFE CAI Non-U.S. Equity Style Risk Adjusted Return Measures vs MSCI EAFE Index Rankings Against CAI Non-U.S. Equity Style Four And One-Half Years Ended March 31, 2009 (10) (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (78) (77) 10th Percentile 4.25 (1.60) 25th Percentile 2.81 (3.00) Median 1.29 (4.56) 75th Percentile 0.15 (5.72) 90th Percentile (0.77) (6.75) NTGI - QM Enhanced EAFE 0.00 (5.89) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 Information Sharpe Excess Return Ratio Ratio Ratio (78) (79) (84) 10th Percentile 1.09 (0.08)0.94 25th Percentile 0.71 (0.15)0.68 Median 0.39 (0.22)0.31 75th Percentile 0.05 (0.28)0.06 90th Percentile (0.20) (0.33) (0.24) NTGI - QM Enhanced EAFE 0.00 (0.29) (0.12) 62City Of Clearwater Employees Pension Fund Attachment number 4 Page 65 of 108 Item # 6 NORTHERN TRUST GLOBAL INVESTMENTS RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Non-U.S. Equity Style (30%) (20%) (10%) 0% 10% 20% 30% 40% 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years Ended 3/09 Ended 12/08 Ended 9/08 Ended 6/08 Ended 3/08 Ended 12/07 Ended 9/07 Ended 6/07 Ended 3/07 Ended 12/06 7571 5661 6772 6771 6673 6773 5562 5063 4857 4960 10th Percentile (9.52) (2.45)5.93 19.18 19.25 23.44 28.78 27.60 23.87 24.46 25th Percentile (11.37) (4.17)3.84 16.79 16.65 20.64 26.34 24.99 21.91 22.36 Median (13.36) (6.63)2.11 14.45 14.91 18.46 24.04 23.01 20.32 20.39 75th Percentile (14.76) (8.22)0.81 12.42 13.26 16.66 22.32 21.24 18.19 18.55 90th Percentile (16.47) (9.63) (0.04)10.78 11.52 14.85 20.68 19.60 17.13 16.99 NTGI - QM Enhanced EAFE (14.75) (7.03)1.25 13.19 13.77 17.18 23.80 23.04 20.51 20.43 MSCI EAFE Index (14.47) (7.35)1.12 12.84 13.32 16.83 23.24 22.24 19.83 19.93 Cumulative and Quarterly Relative Return vs MSCI EAFE Index Relative Returns(4%) (2%) 0% 2% 4% 6% 8% 2004 2005 2006 2007 2008 2009 NTGI - QM Enhanced EAFE CAI Non-U.S. Equity Style Risk Adjusted Return Measures vs MSCI EAFE Index Rankings Against CAI Non-U.S. Equity Style Five Years Ended March 31, 2009 (8) (6) (4) (2) 0 2 4 6 Alpha Treynor Ratio (79) (80) 10th Percentile 3.89 (1.55) 25th Percentile 2.67 (2.87) Median 1.28 (4.28) 75th Percentile 0.22 (5.23) 90th Percentile (0.51) (6.02) NTGI - QM Enhanced EAFE 0.04 (5.40) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 Information Sharpe Excess Return Ratio Ratio Ratio (78) (81) (83) 10th Percentile 1.06 (0.08)0.89 25th Percentile 0.70 (0.15)0.65 Median 0.36 (0.22)0.29 75th Percentile 0.07 (0.27)0.04 90th Percentile (0.15) (0.30) (0.15) NTGI - QM Enhanced EAFE 0.04 (0.28) (0.08) 63City Of Clearwater Employees Pension Fund Attachment number 4 Page 66 of 108 Item # 6 WELLINGTON MANAGEMENT CO. PERIOD ENDED MARCH 31, 2009 Investment Philosophy The investment style blends top-down country and sector analysis with bottom-up stock selection in a relatively concentrated, actively managed approach. The investment philosophy for emerging markets is driven by three main beliefs: 1) countries drive returns - especially at extremes 2) sector rotation offers opportunity 3) good companies rise to the top. The research and investment process is focused on assessing and adding value at each of these beliefs. Quarterly Summary and Highlights Wellington Management Co.’s portfolio posted a 0.08% return for the quarter placing it in the 35 percentile of the CAI Emerging Markets Equity DB group for the quarter and in the 12 percentile for the last year. Wellington Management Co.’s portfolio underperformed the MSCI Emerging Mkts Idx by 0.94% for the quarter and outperformed the MSCI Emerging Mkts Idx for the year by 3.59%. Quarterly Asset Growth Beginning Market Value $8,902,372 Net New Investment $5,000,000 Investment Gains/(Losses) $337,917 Ending Market Value $14,240,289 Performance vs CAI Emerging Markets Equity DB (70%) (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% Last Quarter Last 3/4 Year Last Year (35)(19) (24)(32)(12)(36) 10th Percentile 2.11 (41.17) (41.74) 25th Percentile 0.61 (45.37) (45.79) Median (0.57) (48.47) (48.15) 75th Percentile (1.94) (50.78) (50.44) 90th Percentile (3.30) (53.70) (53.86) Wellington Management Co.0.08 (44.80) (43.31) MSCI Emerging Mkts Idx 1.02 (46.47) (46.90) Relative Return vs MSCI Emerging Mkts Idx Relative Returns(2%) (1%) 0% 1% 2% 3% 4% 5% 2008 2009 Wellington Management Co. Cumulative Returns vs MSCI Emerging Mkts Idx Cumulative Relative Returns(2%) 0% 2% 4% 6% 8% 10% 2008 2009 Wellington Management Co. CAI Emerging Mkts Equity 64City Of Clearwater Employees Pension Fund Attachment number 4 Page 67 of 108 Item # 6 WENTWORTH, HAUSER AND VIOLICH PERIOD ENDED MARCH 31, 2009 Investment Philosophy The WHV International Equity attempts to add value by anticipating which sectors are likely to under or outperform and positioning the portfolio accordingly. Quarterly Summary and Highlights Wentworth, Hauser and Violich’s portfolio posted a (3.33)% return for the quarter placing it in the 2 percentile of the CAI Broad Growth Intl Equity Style group for the quarter and in the 97 percentile for the last three-quarter year. Wentworth, Hauser and Violich’s portfolio outperformed the MSCI EAFE Index by 10.60% for the quarter and underperformed the MSCI EAFE Index for the three-quarter year by 7.41%. Quarterly Asset Growth Beginning Market Value $15,083,135 Net New Investment $0 Investment Gains/(Losses) $-502,998 Ending Market Value $14,580,137 Performance vs CAI Broad Growth Intl Equity Style (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% Last Quarter Last 1/2 Year Last 3/4 Year (2) (90) (96) (57) (97) (44) 10th Percentile (7.32) (25.94) (39.31) 25th Percentile (10.13) (28.06) (42.42) Median (11.00) (30.59) (46.48) 75th Percentile (12.31) (32.03) (48.00) 90th Percentile (13.90) (33.04) (50.92) Wentworth, Hauser and Violich (3.33) (35.03) (52.68) MSCI EAFE Index (13.94) (31.11) (45.27) Relative Return vs MSCI EAFE Index Relative Returns(20%) (15%) (10%) (5%) 0% 5% 10% 15% 2008 2009 Wentworth, Hauser and Violich Cumulative Returns vs MSCI EAFE Index Cumulative Relative Returns(30%) (25%) (20%) (15%) (10%) (5%) 0% 5% 10% 15% 20% 2008 2009 Wentworth, Hauser and Violich CAI Broad Gr Intl Eq Sty 65City Of Clearwater Employees Pension Fund Attachment number 4 Page 68 of 108 Item # 6 Domestic Fixed-Income ‘ Attachment number 4 Page 69 of 108 Item # 6 DOMESTIC FIXED-INCOME PERIOD ENDED MARCH 31, 2009 Quarterly Summary and Highlights Domestic Fixed-Income’s portfolio posted a (0.23)% return for the quarter placing it in the 86 percentile of the Public Fund - Domestic Fixed group for the quarter and in the 34 percentile for the last year. Domestic Fixed-Income’s portfolio underperformed the BC Aggregate Index by 0.35% for the quarter and underperformed the BC Aggregate Index for the year by 2.41%. Quarterly Asset Growth Beginning Market Value $200,410,540 Net New Investment $-25,157,597 Investment Gains/(Losses) $-414,018 Ending Market Value $174,838,926 Performance vs Public Fund - Domestic Fixed (15%) (10%) (5%) 0% 5% 10% 15% Last Last Last 3 Last 5 Last 10 Last 15 Last 20 Last 21-1/4 Quarter Year Years Years Years Years Years Years (86)(77)(34) (10) (40) (14) (46)(20)(80)(24)(82)(20)(87) (17)(70)(29) 10th Percentile 2.50 3.12 5.89 4.40 5.94 6.88 7.67 7.99 25th Percentile 1.37 1.80 5.21 3.97 5.69 6.32 7.33 7.41 Median 0.70 (2.07)3.80 3.40 5.38 6.10 7.19 7.19 75th Percentile 0.13 (5.02)2.23 2.33 4.91 5.77 6.84 6.56 90th Percentile (0.76) (9.47)0.56 1.04 4.47 5.47 6.23 6.44 Domestic Fixed-Income (0.23)0.72 4.52 3.49 4.82 5.61 6.32 6.64 BC Aggregate Index 0.12 3.13 5.78 4.13 5.70 6.39 7.37 7.37 Relative Return vs BC Aggregate Index Relative Returns(3%) (2%) (1%) 0% 1% 2% 3% 4% 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 0809 Domestic Fixed-Income Public Fund - Domestic Fixed Annualized Five Year Risk vs Return 0 2 4 6 8 10 (4%) (2%) 0% 2% 4% 6% 8% BC Aggregate Index Domestic Fixed-Income Standard DeviationReturns 67City Of Clearwater Employees Pension Fund Attachment number 4 Page 70 of 108 Item # 6 DOMESTIC FIXED-INCOME RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs Public Fund - Domestic Fixed (15%) (10%) (5%) 0% 5% 10% 15% 20% 12/08- 3/09 2008 2007 2006 2005 2004 2003 2002 2001 2000 8677 2810 7238 3485 6283 9174 8979 7121 95 44 6348 10th Percentile 2.50 5.34 8.36 6.62 4.26 6.89 10.14 10.79 9.11 12.63 25th Percentile 1.37 3.10 7.20 5.34 3.18 5.50 6.87 10.12 8.69 12.09 Median 0.70 (1.37)6.61 4.67 2.82 4.83 4.91 9.48 8.32 11.51 75th Percentile 0.13 (5.77)5.71 4.42 2.48 4.32 4.48 7.87 7.53 10.60 90th Percentile (0.76) (10.00)4.39 4.12 2.28 4.03 3.70 5.57 6.56 9.09 Domestic Fixed-Income (0.23)2.54 5.94 5.07 2.61 3.92 3.78 8.07 5.57 11.13 BC Aggregate Index 0.12 5.24 6.97 4.33 2.43 4.34 4.10 10.26 8.43 11.63 Cumulative and Quarterly Relative Return vs BC Aggregate Index Relative Returns(10%) (8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 09 Domestic Fixed-Income Public Fund - Dom Fixed Risk Adjusted Return Measures vs BC Aggregate Index Rankings Against Public Fund - Domestic Fixed Five Years Ended March 31, 2009 (5) (4) (3) (2) (1) 0 1 2 3 Alpha Treynor Ratio (50) (50) 10th Percentile 0.45 1.45 25th Percentile 0.05 1.00 Median (0.55)0.30 75th Percentile (1.44) (1.01) 90th Percentile (2.27) (3.91) Domestic Fixed-Income (0.55)0.30 (1.0) (0.8) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 Information Sharpe Excess Return Ratio Ratio Ratio (74) (46) (72) 10th Percentile 0.46 0.30 0.34 25th Percentile 0.06 0.22 (0.09) Median (0.29)0.05 (0.38) 75th Percentile (0.51) (0.18) (0.57) 90th Percentile (0.69) (0.44) (0.75) Domestic Fixed-Income (0.50)0.07 (0.56) 68City Of Clearwater Employees Pension Fund Attachment number 4 Page 71 of 108 Item # 6 DODGE & COX, INC. PERIOD ENDED MARCH 31, 2009 Investment Philosophy Dodge & Cox employs a bottom-up security selection process focusing on undervalued issues. The process aims to produce a high-quality, diversified portfolio with above-market returns over three-to-five year periods. Quarterly Summary and Highlights Dodge & Cox, Inc.’s portfolio posted a (0.43)% return for the quarter placing it in the 86 percentile of the CAI Core Bond Fixed-Inc Style group for the quarter and in the 51 percentile for the last year. Dodge & Cox, Inc.’s portfolio underperformed the BC Aggregate Index by 0.54% for the quarter and underperformed the BC Aggregate Index for the year by 3.38%. Quarterly Asset Growth Beginning Market Value $98,118,345 Net New Investment $-10,000,000 Investment Gains/(Losses) $-351,482 Ending Market Value $87,766,863 Percent Cash: 3.3% Performance vs CAI Core Bond Fixed-Inc Style (10%) (8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% Last Quarter Last Year Last 3 Years Last 5 Years (86)(77)(51) (24) (59) (33) (59) (40) 10th Percentile 1.31 4.50 6.36 4.73 25th Percentile 0.94 2.85 6.10 4.51 Median 0.62 (0.23)4.23 3.39 75th Percentile 0.20 (2.22)3.11 2.78 90th Percentile (0.98) (6.74)0.94 1.52 Dodge & Cox, Inc.(0.43) (0.26)3.98 3.23 BC Aggregate Index 0.12 3.13 5.78 4.13 Relative Return vs BC Aggregate Index Relative Returns(3.0%) (2.5%) (2.0%) (1.5%) (1.0%) (0.5%) 0.0% 0.5% 1.0% 1.5% 2004 2005 2006 2007 2008 09 Dodge & Cox, Inc. CAI Core Bond Fixed-Inc Style Annualized Five Year Risk vs Return 2 3 4 5 6 7 8 (1%) 0% 1% 2% 3% 4% 5% 6% Dodge & Cox, Inc. BC Aggregate Index Standard DeviationReturns 69City Of Clearwater Employees Pension Fund Attachment number 4 Page 72 of 108 Item # 6 DODGE & COX, INC. RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Core Bond Fixed-Inc Style (8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% 10% 12/08- 3/09 2008 2007 2006 2005 (86)(77)(46) (23)(77) (22) (5) (80) (89)(86) 10th Percentile 1.31 6.51 7.39 5.38 3.14 25th Percentile 0.94 4.83 6.93 4.90 3.01 Median 0.62 0.76 6.46 4.54 2.77 75th Percentile 0.20 (2.09)5.61 4.42 2.64 90th Percentile (0.98) (6.30)4.30 4.22 2.37 Dodge & Cox, Inc.(0.43)1.37 5.47 5.62 2.39 BC Aggregate Index 0.12 5.24 6.97 4.33 2.43 Cumulative and Quarterly Relative Return vs BC Aggregate Index Relative Returns(6%) (5%) (4%) (3%) (2%) (1%) 0% 1% 2% 3% 2004 2005 2006 2007 2008 2009 Dodge & Cox, Inc.CAI Core Bond Style Risk Adjusted Return Measures vs BC Aggregate Index Rankings Against CAI Core Bond Fixed-Inc Style Five Years Ended March 31, 2009 (3) (2) (1) 0 1 2 3 Alpha Treynor Ratio (59) (61) 10th Percentile 0.70 1.69 25th Percentile 0.42 1.43 Median (0.54)0.39 75th Percentile (1.07) (0.53) 90th Percentile (2.23) (2.27) Dodge & Cox, Inc.(0.67)0.03 (1.0) (0.5) 0.0 0.5 1.0 1.5 Information Sharpe Excess Return Ratio Ratio Ratio (65) (59) (62) 10th Percentile 0.97 0.41 0.83 25th Percentile 0.58 0.33 0.46 Median (0.32)0.05 (0.41) 75th Percentile (0.53) (0.13) (0.62) 90th Percentile (0.69) (0.46) (0.74) Dodge & Cox, Inc.(0.47)0.01 (0.53) 70City Of Clearwater Employees Pension Fund Attachment number 4 Page 73 of 108 Item # 6 DODGE & COX, INC. RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Core Bond Fixed-Inc Style 0% 1% 2% 3% 4% 5% 6% 7% 8% 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years Ended 3/09 Ended 12/08 Ended 9/08 Ended 6/08 Ended 3/08 Ended 12/07 Ended 9/07 Ended 6/07 Ended 3/07 Ended 12/06 59 33 48 30 60 36 3443 6030 6559 787 8 87 3590 4584 10th Percentile 6.36 6.01 4.75 4.72 5.95 4.84 4.31 4.56 3.95 4.38 25th Percentile 6.10 5.64 4.36 4.24 5.56 4.80 4.24 4.51 3.86 4.27 Median 4.23 3.85 3.39 3.81 5.17 4.63 4.03 4.26 3.65 3.97 75th Percentile 3.11 2.65 2.85 3.16 4.60 4.36 3.95 4.09 3.48 3.81 90th Percentile 0.94 1.16 2.21 2.88 4.06 4.04 3.84 3.92 3.31 3.62 Dodge & Cox, Inc.3.98 4.14 3.20 4.17 5.00 4.48 4.35 4.59 3.80 3.99 BC Aggregate Index 5.78 5.51 4.15 4.09 5.48 4.56 3.86 3.98 3.31 3.70 Cumulative and Quarterly Relative Return vs BC Aggregate Index Relative Returns(6%) (5%) (4%) (3%) (2%) (1%) 0% 1% 2% 3% 2004 2005 2006 2007 2008 2009 Dodge & Cox, Inc.CAI Core Bond Style Risk Adjusted Return Measures vs BC Aggregate Index Rankings Against CAI Core Bond Fixed-Inc Style Five Years Ended March 31, 2009 (3) (2) (1) 0 1 2 3 Alpha Treynor Ratio (59) (61) 10th Percentile 0.70 1.69 25th Percentile 0.42 1.43 Median (0.54)0.39 75th Percentile (1.07) (0.53) 90th Percentile (2.23) (2.27) Dodge & Cox, Inc.(0.67)0.03 (1.0) (0.5) 0.0 0.5 1.0 1.5 Information Sharpe Excess Return Ratio Ratio Ratio (65) (59) (62) 10th Percentile 0.97 0.41 0.83 25th Percentile 0.58 0.33 0.46 Median (0.32)0.05 (0.41) 75th Percentile (0.53) (0.13) (0.62) 90th Percentile (0.69) (0.46) (0.74) Dodge & Cox, Inc.(0.47)0.01 (0.53) 71City Of Clearwater Employees Pension Fund Attachment number 4 Page 74 of 108 Item # 6 DODGE & COX, INC. PORTFOLIO CHARACTERISTICS SUMMARY AS OF MARCH 31, 2009 Portfolio Structure Comparison The charts below compare the structure of the portfolio to that of the index from the three perspectives that have the greatest influence on return. The first chart compares the two portfolios across sectors. The second chart compares the duration distribution. The last chart compares the distribution across quality ratings. Sector Allocation Dodge & Cox, Inc. US Credit 45% US ABS 2% US MBS 36% US Agcy 3% US CMOs 7% Cash 3% US Trsy 4% BC Aggregate US MBS 39% US ABS 1% US Trsy 26% US CMBs 3% US Credit 22% US Agcy 10% Duration Distribution 0% 5% 10% 15% 20% 25% 30% 35% <0 0.0% 0.0% 0-1 25.7% 3.4% 1-2 12.1% 22.5% 2-3 22.7%22.3% 3-5 11.4% 26.3% 5-7 17.6% 12.2% 7-10 7.4%6.4% >10 3.2% 6.8% Years DurationPercent of PortfolioWeighted Average: Duration Dodge & Cox, Inc.: BC Aggregate: 3.30 3.73 Quality Distribution 0% 10% 20% 30% 40% 50% 60% Trsy Agcy AAA AA+AA AA-A+A A-BBB+BBB <BBB Quality RatingPercent of PortfolioWeighted Average: Quality Dodge & Cox, Inc.: BC Aggregate: AA- AA+ 72City Of Clearwater Employees Pension Fund Attachment number 4 Page 75 of 108 Item # 6 DODGE & COX, INC. BOND CHARACTERISTICS ANALYSIS SUMMARY Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Fixed-Income Portfolio Characteristics Rankings Against CAI Core Bond Fixed-Inc Style as of March 31, 2009 (4) (2) 0 2 4 6 8 10 Effective Effective Coupon OA Duration Maturity Yield Rate Convexity (92)(60) (57)(44)(45) (87) (21)(62) (37)(48) 10th Percentile 4.22 8.44 7.78 6.12 0.10 25th Percentile 3.96 6.69 7.17 5.58 0.07 Median 3.79 5.70 5.70 5.25 (0.39) 75th Percentile 3.60 5.23 4.46 4.82 (0.75) 90th Percentile 3.38 4.82 4.03 4.51 (1.09) Dodge & Cox, Inc.3.30 5.50 5.80 5.68 (0.08) BC Aggregate Index 3.73 5.73 4.06 5.08 (0.29) Sector Allocation and Quality Ratings The first graph compares the manager’s sector allocation with the average allocation across all the members of the manager’s style. The second graph compares the manager’s weighted average quality rating with the range of quality ratings for the style. Sector Allocation March 31, 2009 0%10%20%30%40%50%60% US Credit 45.4% 24.5% 21.6% US MBS 35.5%50%Mgr MV50%Mgr MV31.0% 38.9% US CMOs 6.5% 5.2% US Trsy 4.1% 14.5% 26.2% Cash 3.3% 1.7% US Agcy 3.0% 7.3% 9.6% US ABS 2.2% 3.4% 0.6% US CMBs 12.4% 3.3% Dodge & Cox, Inc.CAI Core Bond Fixed-Inc Style BC Aggregate Index Quality Ratings vs CAI Core Bond Fixed-Inc Style A A+ AA- AA AA+ AAA Trsy Weighted Average Quality Rating (84) (22) 10th Percentile AAA 25th Percentile AA+ Median AA+ 75th Percentile AA 90th Percentile A+ Dodge & Cox, Inc.AA- BC Aggregate Index AA+ 73City Of Clearwater Employees Pension Fund Attachment number 4 Page 76 of 108 Item # 6 WESTERN ASSET MANAGEMENT CO. PERIOD ENDED MARCH 31, 2009 Investment Philosophy The firm’s investment philosophy emphasizes the use of multiple strategies and active sector rotation and issue selection, while constraining overall interest rate risk relative to the benchmark. Quarterly Summary and Highlights Western Asset Management Co.’s portfolio posted a (0.03)% return for the quarter placing it in the 81 percentile of the CAI Core Bond Fixed-Inc Style group for the quarter and in the 41 percentile for the last year. Western Asset Management Co.’s portfolio underperformed the BC Aggregate Index by 0.15% for the quarter and underperformed the BC Aggregate Index for the year by 1.22%. Quarterly Asset Growth Beginning Market Value $99,654,586 Net New Investment $-15,000,000 Investment Gains/(Losses) $-64,701 Ending Market Value $84,589,885 Percent Cash: 4.0% Performance vs CAI Core Bond Fixed-Inc Style (10%) (8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% Last Quarter Last Year Last 3 Years Last 4-1/2 Years (81)(77) (41) (24) (45)(33) (45)(36) 10th Percentile 1.31 4.50 6.36 5.07 25th Percentile 0.94 2.85 6.10 4.87 Median 0.62 (0.23)4.23 3.56 75th Percentile 0.20 (2.22)3.11 2.88 90th Percentile (0.98) (6.74)0.94 1.47 Western Asset Management Co.(0.03)1.91 5.21 4.19 BC Aggregate Index 0.12 3.13 5.78 4.44 Relative Return vs BC Aggregate Index Relative Returns(2.0%) (1.5%) (1.0%) (0.5%) 0.0% 0.5% 1.0% 04 2005 2006 2007 2008 09 Western Asset Management Co. CAI Core Bond Fixed-Inc Style Annualized Four And One-Half Year Risk vs Return 2 3 4 5 6 7 8 (1%) 0% 1% 2% 3% 4% 5% 6% BC Aggregate Index Western Asset Management Co. Standard DeviationReturns 74City Of Clearwater Employees Pension Fund Attachment number 4 Page 77 of 108 Item # 6 WESTERN ASSET MANAGEMENT CO. RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Core Bond Fixed-Inc Style (8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% 10% 12/08- 3/09 2008 2007 2006 2005 (81)(77) (42)(23)(49)(22) (42)(80) (48)(86) 10th Percentile 1.31 6.51 7.39 5.38 3.14 25th Percentile 0.94 4.83 6.93 4.90 3.01 Median 0.62 0.76 6.46 4.54 2.77 75th Percentile 0.20 (2.09)5.61 4.42 2.64 90th Percentile (0.98) (6.30)4.30 4.22 2.37 Western Asset Management Co.(0.03)3.91 6.51 4.65 2.78 BC Aggregate Index 0.12 5.24 6.97 4.33 2.43 Cumulative and Quarterly Relative Return vs BC Aggregate Index Relative Returns(6%) (5%) (4%) (3%) (2%) (1%) 0% 1% 2% 2004 2005 2006 2007 2008 2009 Western Asset Management Co.CAI Core Bond Style Risk Adjusted Return Measures vs BC Aggregate Index Rankings Against CAI Core Bond Fixed-Inc Style Four And One-Half Years Ended March 31, 2009 (3) (2) (1) 0 1 2 3 Alpha Treynor Ratio (46) (51) 10th Percentile 0.63 2.04 25th Percentile 0.33 1.54 Median (0.61)0.81 75th Percentile (1.16) (0.74) 90th Percentile (2.37) (2.32) Western Asset Management Co.(0.32)0.69 (1.5) (1.0) (0.5) 0.0 0.5 1.0 1.5 Information Sharpe Excess Return Ratio Ratio Ratio (47) (46) (45) 10th Percentile 0.99 0.49 0.97 25th Percentile 0.49 0.38 0.41 Median (0.36)0.04 (0.48) 75th Percentile (0.58) (0.18) (0.68) 90th Percentile (0.75) (0.53) (0.81) Western Asset Management Co.(0.34)0.19 (0.25) 75City Of Clearwater Employees Pension Fund Attachment number 4 Page 78 of 108 Item # 6 WESTERN ASSET MANAGEMENT CO. RETURN ANALYSIS SUMMARY Return Analysis The graphs below analyze the manager’s return on both a risk-adjusted and unadjusted basis. The first chart illustrates the manager’s ranking over different periods versus the appropriate style group. The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager’s ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Core Bond Fixed-Inc Style 0% 1% 2% 3% 4% 5% 6% 7% 8% 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years 3 Years Ended 3/09 Ended 12/08 Ended 9/08 Ended 6/08 Ended 3/08 Ended 12/07 Ended 9/07 Ended 6/07 Ended 3/07 Ended 12/06 4533 4230 49 36 4243 3530 4859 4887 3187 8 90 3 84 10th Percentile 6.36 6.01 4.75 4.72 5.95 4.84 4.31 4.56 3.95 4.38 25th Percentile 6.10 5.64 4.36 4.24 5.56 4.80 4.24 4.51 3.86 4.27 Median 4.23 3.85 3.39 3.81 5.17 4.63 4.03 4.26 3.65 3.97 75th Percentile 3.11 2.65 2.85 3.16 4.60 4.36 3.95 4.09 3.48 3.81 90th Percentile 0.94 1.16 2.21 2.88 4.06 4.04 3.84 3.92 3.31 3.62 Western Asset Management Co.5.21 5.02 3.41 4.10 5.44 4.64 4.04 4.43 4.04 4.54 BC Aggregate Index 5.78 5.51 4.15 4.09 5.48 4.56 3.86 3.98 3.31 3.70 Cumulative and Quarterly Relative Return vs BC Aggregate Index Relative Returns(6%) (5%) (4%) (3%) (2%) (1%) 0% 1% 2% 3% 2004 2005 2006 2007 2008 2009 Western Asset Management Co.CAI Core Bond Style Risk Adjusted Return Measures vs BC Aggregate Index Rankings Against CAI Core Bond Fixed-Inc Style Five Years Ended March 31, 2009 (3) (2) (1) 0 1 2 3 Alpha Treynor Ratio (44) (47) 10th Percentile 0.70 1.69 25th Percentile 0.42 1.43 Median (0.54)0.39 75th Percentile (1.07) (0.53) 90th Percentile (2.23) (2.27) Western Asset Management Co.(0.03)0.88 (1.0) (0.5) 0.0 0.5 1.0 1.5 Information Sharpe Excess Return Ratio Ratio Ratio (44) (44) (39) 10th Percentile 0.97 0.41 0.83 25th Percentile 0.58 0.33 0.46 Median (0.32)0.05 (0.41) 75th Percentile (0.53) (0.13) (0.62) 90th Percentile (0.69) (0.46) (0.74) Western Asset Management Co.(0.03)0.23 0.03 76City Of Clearwater Employees Pension Fund Attachment number 4 Page 79 of 108 Item # 6 WESTERN ASSET MANAGEMENT CO. PORTFOLIO CHARACTERISTICS SUMMARY AS OF MARCH 31, 2009 Portfolio Structure Comparison The charts below compare the structure of the portfolio to that of the index from the three perspectives that have the greatest influence on return. The first chart compares the two portfolios across sectors. The second chart compares the duration distribution. The last chart compares the distribution across quality ratings. Sector Allocation Western Asset Management Co. US MBS 45% Cash 4% US Credit 32% US Agcy 7% US Trsy 13% BC Aggregate US MBS 39% US ABS 1% US Trsy 26% US CMBs 3% US Credit 22% US Agcy 10% Duration Distribution 0% 10% 20% 30% 40% 50% <0 0.4%0.0% 0-1 18.6% 3.4% 1-2 36.3% 22.5% 2-3 6.1% 22.3% 3-5 8.9% 26.3% 5-7 13.0%12.2% 7-10 7.3%6.4% >10 9.5%6.8% Years DurationPercent of PortfolioWeighted Average: Duration Western Asset Management Co.: BC Aggregate: 3.76 3.73 Quality Distribution 0% 10% 20% 30% 40% 50% 60% Trsy Agcy AAA AA+AA AA-A+A A-BBB+BBB <BBB Quality RatingPercent of PortfolioWeighted Average: Quality Western Asset Management Co.: BC Aggregate: AA+ AA+ 77City Of Clearwater Employees Pension Fund Attachment number 4 Page 80 of 108 Item # 6 WESTERN ASSET MANAGEMENT CO. BOND CHARACTERISTICS ANALYSIS SUMMARY Portfolio Characteristics This graph compares the manager’s portfolio characteristics with the range of characteristics for the portfolios which make up the manager’s style group. This analysis illustrates whether the manager’s current holdings are consistent with other managers employing the same style. Fixed-Income Portfolio Characteristics Rankings Against CAI Core Bond Fixed-Inc Style as of March 31, 2009 (4) (2) 0 2 4 6 8 10 Effective Effective Coupon OA Duration Maturity Yield Rate Convexity (57)(60) (24) (44)(58) (87) (63)(62) (61)(48) 10th Percentile 4.22 8.44 7.78 6.12 0.10 25th Percentile 3.96 6.69 7.17 5.58 0.07 Median 3.79 5.70 5.70 5.25 (0.39) 75th Percentile 3.60 5.23 4.46 4.82 (0.75) 90th Percentile 3.38 4.82 4.03 4.51 (1.09) Western Asset Management Co.3.76 6.78 5.32 5.06 (0.60) BC Aggregate Index 3.73 5.73 4.06 5.08 (0.29) Sector Allocation and Quality Ratings The first graph compares the manager’s sector allocation with the average allocation across all the members of the manager’s style. The second graph compares the manager’s weighted average quality rating with the range of quality ratings for the style. Sector Allocation March 31, 2009 0%10%20%30%40%50%60% US MBS 44.8% 31.0% 38.9% US Credit 31.9%50%Mgr MV50%Mgr MV24.5% 21.6% US Trsy 12.6% 14.5% 26.2% US Agcy 6.7% 7.3% 9.6% Cash 4.0% 1.7% US CMBs 12.4% 3.3% US CMOs 5.2% US ABS 3.4% 0.6% Western Asset Management Co.CAI Core Bond Fixed-Inc Style BC Aggregate Index Quality Ratings vs CAI Core Bond Fixed-Inc Style A A+ AA- AA AA+ AAA Trsy Weighted Average Quality Rating (32) (22) 10th Percentile AAA 25th Percentile AA+ Median AA+ 75th Percentile AA 90th Percentile A+ Western Asset Management Co.AA+ BC Aggregate Index AA+ 78City Of Clearwater Employees Pension Fund Attachment number 4 Page 81 of 108 Item # 6 Real Estate ‘ Attachment number 4 Page 82 of 108 Item # 6 SECURITY CAPITAL PERIOD ENDED MARCH 31, 2009 Investment Philosophy The firm’s investment process is conviction-oriented and reflects the following philosophy for selecting securities and building portfolios: 1. Focus on net cash flow as the primary driver of value; 2. Emphasize quality of real estate assets and management as the dominant long-term characteristics; and 3. Invest with conviction based on proprietary insight and a dedication to research. Quarterly Summary and Highlights Security Capital’s portfolio posted a (36.65)% return for the quarter placing it in the 98 percentile of the CAI Real Estate-REIT DB group for the quarter and in the 84 percentile for the last three-quarter year. Security Capital’s portfolio underperformed the Dow Jones Wilshire RESI by 2.80% for the quarter and underperformed the Dow Jones Wilshire RESI for the three-quarter year by 0.78%. Quarterly Asset Growth Beginning Market Value $27,416,339 Net New Investment $5,000,000 Investment Gains/(Losses) $-11,127,135 Ending Market Value $21,289,205 Percent Cash: 2.4% Performance vs CAI Real Estate-REIT DB (70%) (65%) (60%) (55%) (50%) (45%) (40%) (35%) (30%) (25%) (20%) Last Quarter Last 1/2 Year Last 3/4 Year (98) (96) (91)(91)(84)(78) 10th Percentile (26.90) (49.29) (48.39) 25th Percentile (29.19) (54.66) (51.86) Median (30.84) (56.81) (54.61) 75th Percentile (31.89) (58.89) (57.32) 90th Percentile (32.45) (60.44) (61.01) Security Capital (36.65) (60.68) (59.58) Dow Jones Wilshire RESI (33.85) (60.57) (58.79) Relative Return vs Dow Jones Wilshire RESI Relative Returns(4%) (3%) (2%) (1%) 0% 1% 2% 3% 4% 2008 2009 Security Capital Cumulative Returns vs Dow Jones Wilshire RESI Cumulative Relative Returns(4%) (2%) 0% 2% 4% 6% 8% 10% 12% 14% 2008 2009 Security Capital CAI Real Estate-REIT DB 80City Of Clearwater Employees Pension Fund Attachment number 4 Page 83 of 108 Item # 6 Definitions ‘ Attachment number 4 Page 84 of 108 Item # 6 EQUITY MARKET INDICATORS The market indicators included in this report are regarded as measures of equity or fixed-income performance results. The returns shown reflect both income and capital appreciation. Dow Jones Industrial Average is a composite of 30 major industrial companies. The index is a price-weighted average of the issues in the index. FRMS Universe Index is composed of all common stock issues used in the Fundamental Risk Measurement Service (FRMS) by BARRA. The index contains about 5,700 companies and is capitalization-weighted. MSCI US Small + Mid Cap 2200 Index The MSCI US Small + Mid Cap 2200 Index represents the universe of small and medium capitalization companies in the US equity market. This index targets for inclusion 2200 companies and represents, as of October 29, 2004, approximately 27% of the capitalization of the US equity market. The MSCI Small + Mid Cap 2200 Index is the aggregation of the MSCI US Small Cap 1750 and Mid Cap 450 Indices. New York Stock Exchange Index is composed of all common stock issues listed on the New York Stock Exchange. The index is capitalization-weighted. Russell 1000 Growth measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. Russell 1000 Value measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. Russell 2000 Growth contains those Russell 2000 securities with a greater than average growth orientation. Securities in this index tend to exhibit higher price-to-book and price-earning ratios, lower dividend yields and higher forecasted growth values than the Value universe. Russell 2000 Value contains those Russell 2000 securities with a less than average growth orientation. Securities in this index tend to exhibit lower price-to-book and price-earning ratios, higher dividend yields and lower forecasted growth values than the Growth universe. Russell Mid Cap Growth measures the performance of those Russell Mid Cap Companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. Standard & Poor’s 500 Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index is capitalization-weighted, with each stock weighted by its proportion of the total market value of all 500 issues. Thus, larger companies have a greater effect on the index. Standard & Poor’s MidCap Index is a composite of 400 medium-capitalization, domestic common stocks. Stocks in this index are not included in the Standard & Poor’s 500 Index. The index is capitalization-weighted. 82 Attachment number 4 Page 85 of 108 Item # 6 FIXED-INCOME MARKET INDICATORS The market indicators included in this report are regarded as measures of equity or fixed-income performance results. The returns shown reflect both income and capital appreciation. Barclays Capital Govt/Credit Bond Index is a composite of all publicly issued, fixed rate, non-convertible, domestic bonds. The issues are rated at least BBB, have a minimum outstanding principal of $100 million for U.S. Government issues or $50 million for other bonds, and have a maturity of at least one year. The index is capitalization-weighted. 90-Day U.S. Treasury Bills provide a measure of riskless return. The rate of return is the average interest rate available on the beginning of each month for a Treasury Bill maturing in ninety days. Barclays Capital 1-3 Year Government Index is composed of agency and Treasury securities with maturities of one to three years. Barclays Capital Aggregate Bond Index is a combination of the Mortgage Backed Securities Index and the intermediate and long-term components of the Government/Credit Bond Index. Barclays Capital Govt/Credit Intermediate Index is one of the components of the Government/Credit Index which includes only bonds with maturities between one to ten years. Citigroup Government Bond Index is a composite that covers investments in all types of U.S. Government Debt outstanding. The index offers total returns on a broad base of government fixed-income securities with maturities of at least one year. Citigroup Long Term High-Grade Bond Index is a composite of approximately 800 industrial, financial, and utility bonds. The issues are rated AA or AAA and have a maturity of at least 12 years. The index is weighted by the outstanding principal amount of each issue. Salomon Brothers Broad Investment-Grade Bond Index is a composite of all institutionally traded U.S. Treasury, agency, mortgage, and corporate securities. The issues are rated BBB- or better, have remaining maturities of one year or longer and at least $25 million outstanding. The index is capitalization-weighted. 83 Attachment number 4 Page 86 of 108 Item # 6 INTERNATIONAL EQUITY MARKET INDICATORS The market indicators included in this report are regarded as measures of equity or fixed-income performance results. The returns shown reflect both income and capital appreciation. FT-Actuaries World Index is composed of at least 70% of the aggregate market value of every country’s domestic exchange-listed companies’ shares of stock, approximately 2400 common stocks. The index includes only markets, companies and securities where direct holdings of capital by foreign nationals is permissible. The index is capitalization-weighted; includes currency changes and is expressed in terms of U.S. dollars. Morgan Stanley Capital International (MSCI) EAFE Index is composed of approximately 1000 equity securities representing the stock exchanges of Europe, Australia, New Zealand and the Far East. The index is capitalization-weighted and is expressed in terms of U.S. dollars. Morgan Stanley Capital International (MSCI) Europe Index is composed of approximately 600 equity securities representing the stock exchanges of 14 European countries. The index is capitalization-weighted and is expressed in terms of U.S. dollars. Morgan Stanley Capital International (MSCI) Japan Index is composed of approximately 270 equity securities representing the stock exchanges of Japan. The index is capitalization-weighted and is expressed in terms of U.S. dollars. Morgan Stanley Capital International (MSCI) Pacific Index is composed of approximately 350 equity securities representing the stock exchanges of Japan, Hong Kong, Singapore, Malaysia, plus approximately 70 Australian and New Zealand securities. The index is capitalization-weighted and is expressed in terms of U.S. dollars. Morgan Stanley Capital International (MSCI) United Kingdom Index is composed of approximately 140 equity securities representing the stock exchanges of the United Kingdom. The index is capitalization-weighted and is expressed in terms of U.S. dollars. Morgan Stanley Capital International (MSCI) World Index is composed of approximately 1500 equity securities representing the stock exchanges of the USA, Europe, Canada, Australia, New Zealand and the Far East. The index is capitalization-weighted; includes currency changes and is expressed in terms of U.S. dollars. Morgan Stanley Capital Intl (MSCI) Emerging Markets Free Index is composed of about 549 equity securities representing the stock exchanges of 13 countries in Central Asia and the Far East, Latin America, Europe, and the Middle East. Only 20% of Korea’s market capitalization is included in this index. The index is market capitalization-weighted and is expressed in terms of U.S. dollars. 84 Attachment number 4 Page 87 of 108 Item # 6 CALLAN ASSOCIATES DATABASES In order to provide comparative investment results for use in evaluating a fund’s performance, Callan Associates gathers rate of return data from investment managers. These data are then grouped by type of assets managed and by the type of investment manager. Except for mutual funds, the results are for tax-exempt fund assets. The databases, excluding mutual funds, represent investment managers who handle over 80% of all tax-exempt fund assets. EQUITY FUNDS Equity funds concentrate their investments in common stocks and convertible securities. The funds included maintain well-diversified portfolios. Domestic Equity Database - The Domestic Equity Database is a broad collection of actively managed separate account domestic equity products. International Equity - Non-U.S.- The Non-U.S. International Equity Database consists of separate account international equity products that do not generally invest in U.S. equities. FIXED-INCOME FUNDS Fixed-Income funds concentrate their investments in bonds, preferred stocks, and money market securities. The funds included maintain well-diversified portfolios. Domestic Fixed-Income Database - The Domestic Fixed-Income Database is a broad collection of separate account domestic fixed-income products. BALANCED FUNDS Balanced funds diversify their investments among common stocks, bonds, preferred stocks and money market securities. The funds included maintain well-diversified equity and fixed-income portfolios. Domestic Balanced Database - The Domestic Balanced Database consists of all separate account domestic balanced funds. REAL ESTATE FUNDS Real estate funds consist of open or closed-end commingled funds. The returns are net of fees and represent the overall performance of commingled institutional capital invested in real estate properties. CAI Total Real Estate Funds - The Total Real Estate Funds Database consists of both open and closed-end commingled funds managed by real estate firms. 85 Attachment number 4 Page 88 of 108 Item # 6 EQUITY MANAGEMENT STYLE GROUPS Aggressive Growth - Managers who invest in growth securities with significantly higher risk/return expectations than the broader market. Sometimes makes concentrated "bets" by selecting a small number of securities or by investing in only a few specific sectors. Selects from companies with market capitalizations significantly below the broader market. Invests in companies with P/E ratios, Price-to-Book values, and Growth-in-Earnings values above the broader market. The companies typically have zero dividends or dividend yields below the broader market. Invests in securities which exhibit greater volatility than the broader market as measured by the risk statistics Beta and Standard Deviation. Contrarian - Managers who invest in stocks that are out of favor or which have little current market interest, on the premise that gain will be realized when they return to favor. Sometimes makes concentrated "bets" by selecting a small number of securities or by investing in only a few specific sectors. Invests in companies with Return-on-Assets values, Return-on-Equity values, Growth-in-Earnings values, and Growth-in-Dividend values below the broader market. Chooses securities that, due to their contrary status, do not move with the broader market, as measured by a low Beta and significant non-market risk. Core Equity - Managers whose portfolio holdings and characteristics are similar to that of the broader market as represented by the Standard & Poor’s 500 Index, with the objective of adding value over and above the index, typically from sector or issue selection. The core portfolio exhibits similar risk characteristics to the broad market as measured by low residual risk with Beta and R-Squared values close to 1.00. Large Cap Growth - Managers who invest mainly in large companies that are expected to have above average prospects for long-term growth in earnings and profitability. Future growth prospects take precedence over valuation levels in the stock selection process. Invests in companies with P/E ratios, Price-to-Book values, Return-on-Assets values, Growth-in-Earnings values above the broader market. The companies typically have zero dividends or dividend yields below the broader market. Invests in securities which exhibit greater volatility than the broader market as measured by the securities’ Beta and Standard Deviation. Large Cap Value - Managers who invest in predominantly large capitalization companies believed to be currently undervalued in the general market. The companies are expected to have a near-term earnings rebound and eventual realization of expected value. Valuation issues take precedence over near-term earnings prospects in the stock selection process. Invests in companies with P/E ratios, and Price-to-Book values below the broader market. Usually exhibits lower risk than the broader market as measured by the Beta and Standard Deviation. Middle Capitalization - Managers who invest primarily in mid-range companies with market capitalizations between core equity companies and small capitalization companies. The average market capitalization is approximately $7 billion. Invests in securities with greater volatility than the broader market as measured by the risk statistics Beta and Standard Deviation. The Middle Capitalization Style Group consists of the Middle Capitalization Growth Equity and the Middle Capitalization Value Equity Style Groups. 86 Attachment number 4 Page 89 of 108 Item # 6 EQUITY MANAGEMENT STYLE GROUPS Middle Capitalization (Growth)- Managers who invest primarily in mid-range companies that are expected to have above average prospects for long-term growth in earnings and profitability. Future growth prospects take precedence over valuation levels in the stock selection process. The average market capitalization is approximately $7 billion with market capitalizations between core equity companies and small capitalization companies. Invests in companies with P/E ratios, Price-to-Book values, and Growth-in-Earnings values above the broader market as well as the middle capitalization market segment. Invests in securities with greater volatility than the broader market and the middle capitalization segment as measured by the risk statistics Beta and Standard Deviation. Middle Capitalization (Value)- Managers who invest primarily in mid-range companies believed to be currently undervalued in the general market. Valuation issues take precedence over near-term earnings prospects in the stock selection process. The average market capitalization is approximately $7 billion with market capitalizations between core equity companies and small capitalization companies. Invests in companies with P/E ratios, Return-on-Equity values, and Price-to-Book value below the broader market and the middle capitalization segment. Invests in securities with risk/reward profiles in the lower risk range of the medium capitalization market. Small Capitalization - Mututal funds that invest in companies with relatively small capitalization. The average market capitalization is approximately $1.4 billion. The companies typically have zero dividends or dividend yields below the broader market. The securities exhibit greater volatility than the broader market as measured by the risk statistics Beta and Standard Deviation. The Small Capitalization Style Group consists of the Small Capitalization (Growth) Style Group and the Small Capitalization (Value) Style Group. Small Capitalization - Managers who invest in companies with relatively small capitalization. The average market capitalization is approximately $1.4 billion. The companies typically have zero dividends or dividend yields below the broader market. The securities exhibit greater volatility than the broader market as measured by the risk statistics Beta and Standard Deviation. The Small Capitalization Style Group consists of the Small Capitalization (Growth) Style Group and the Small Capitalization (Value) Style Group. Small Capitalization (Growth)- Managers who invest in small capitalization companies that are expected to have above average prospects for long-term growth in earnings and profitability. Future growth prospects take precedence over valuation levels in the stock selection process. Invests in companies with P/E ratios, Price-to-Book values, and Growth-in-Earnings values above the broader market as well as the small capitalization market segment. The companies typically have zero dividends or dividend yields below the broader market. The securities exhibit greater volatility than the broader market as well as the small capitalization market segment as measured by the risk statistics beta and standard deviation. 87 Attachment number 4 Page 90 of 108 Item # 6 EQUITY MANAGEMENT STYLE GROUPS Small Capitalization (Value)- Mutual funds that invest in small capitalization companies that are believed to be currently undervalued in the general market. Valuation issues take precedence over near-term earnings prospects in the stock selection process. The companies are expected to have a near-term earnings rebound and eventual realization of expected value. Invests in companies with P/E ratios, Return-on-Equity values, and Price-to-Book values below the broader market as well as the small capitalization market segment. The companies typically have dividend yields in the high range for the small capitalization market. Invests in securities with risk/reward profiles in the lower risk range of the small capitalization market. Small Capitalization (Value)- Managers who invest in small capitalization companies that are believed to be currently undervalued in the general market. Valuation issues take precedence over near-term earnings prospects in the stock selection process. The companies are expected to have a near-term earnings rebound and eventual realization of expected value. Invests in companies with P/E ratios, Return-on-Equity values, and Price-to-Book values below the broader market as well as the small capitalization market segment. The companies typically have dividend yields in the high range for the small capitalization market. Invests in securities with risk/reward profiles in the lower risk range of the small capitalization market. Small/Mid Cap (Value)- Managers who invest in small to medium cap companies that are believed to be currently undervalued in the general market. The companies are expected to have a near-term earnings rebound and eventual realization of expected value. Yield - Managers whose primary objective is a high current dividend yield. Invests in companies with Price-to-Book values and Growth-in-Earnings values below the broader market. Invests in securities with dividend yields above the broader market. Invests in securities with significantly lower volatility than the broader market as measured by the risk statistics Beta and Standard Deviation. 88 Attachment number 4 Page 91 of 108 Item # 6 INTERNATIONAL EQUITY MANAGEMENT STYLE GROUPS Bottom Up/Stock Selection - Managers who primarily emphasize stock selection over country or currency selection in their portfolio construction. The country selection process is mainly a by-product of the stock selection decision, or can be passively set according to the index country weights. Emerging Markets Equity - Managers who primarily concentrate on investments in newly emerging second and third world countries in the regions of the Far East, Africa, Europe, and Central and South America. These portfolios are characterized by aggressive risk/return profiles that generate high volatility in search of high returns. Europe - Managers who invest predominantly in the well developed stock markets of Europe. These products will exhibit risk/return profiles similar to the MSCI Europe Index. Global Equity - Managers who invest in both foreign and domestic equity securities in varying proportions. These products will exhibit risk/return profiles similar to the MSCI World Index. International Growth Style Group International Growth Equity Style managers invest predominantly in companies that are expected to have above average prospects for long-term growth in earnings and profitability. Future growth prospects take precedence over valuation levels in stock selection. The International Growth Equity Style group consists of broad developed market mandates with incidental exposure to the emerging markets. International Value Style Group International Value Equity Style managers invest predominantly in companies believed to be currently undervalued in the general market. The companies are expected to have a near-term earnings rebound and eventual realization of expected value. The International Value Equity Style group consists of broad developed market mandates with incidental exposure to the emerging markets. Japan - Managers who invest predominantly in the equity of companies in Japan. Pacific Basin - Managers who invest predominantly in Pacific Basin equities. Countries include: Japan, Hong Kong, Singapore, Malaysia, Australia, and New Zealand. These products will exhibit risk/return profiles similar to the MSCI Pacific Index. Pacific Rim - Managers who invest predominantly in Pacific Basin equities excluding Japan. Countries include: Hong Kong, Singapore, Malaysia, Australia, and New Zealand. These products will exhibit risk/return profiles similar to the MSCI Pacific ex-Japan Index. Top Down/Country Allocator - Managers who attempt to add value over an index such as the Morgan Stanley Capital International (MSCI) EAFE Index by emphasizing macroeconomic analysis in selecting allocations in countries with above average gain prospects. Stock selection plays a secondary role in the investment decision process, or can be passively matched to the index stock holdings within each country. 89 Attachment number 4 Page 92 of 108 Item # 6 FIXED-INCOME MANAGEMENT STYLE GROUPS Active Cash - Managers whose objective is to achieve a maximum return on short-term financial instruments through active management. The average portfolio maturity is typically less than one year. Active Duration - Managers who aggressively employ interest rate anticipation in setting portfolio duration. Portfolios are actively managed so that large changes in duration are made in anticipation of interest rate changes in hopes of profiting from downward rate movements and minimizing losses from upward rate movements. Core Bond - Managers who construct portfolios to approximate the investment results of the Barclays Capital Government/Credit Bond Index or the Barclays Capital Aggregate Bond Index with a modest amount of variability in duration around the index. The objective is to achieve value added from sector and/or issue selection. Core Plus Bond - Active managers whose objective is to add value by tactically allocating significant portions of their portfolios among non-benchmark sectors while maintaining majority exposure similar to the broad market. Defensive - Managers whose objective is to minimize interest rate risk by investing predominantly in short to intermediate term securities. The average portfolio duration is similar to the duration of the Merrill Lynch 1-3 Year Bond Index. Extended Maturity - Managers whose average portfolio duration is greater than that of the Barclays Capital Government/Credit Bond Index. These portfolios exhibit risk/return characteristics similar to the long-bond portion of the Barclays Capital Government/Credit Index, called the Barclays Capital Government/Credit Long Bond Index. Variations in bond portfolio characteristics are made to enhance performance results. This results in an aggressive risk/return profile that embraces interest rate risk in search of both high yields as well as capital gains. High Yield - Managers whose investment objective is to obtain high current income by investing primarily in non-investment grade fixed-income securities. Due to the increased level of default risk, security selection focuses on credit-risk analysis. Intermediate - Managers whose objective is to lower interest rate risk while retaining reasonable yield levels by investing primarily in intermediate term securities. The average portfolio duration is similar to that of the duration of the Barclays Capital Intermediate Government/Credit Bond Index. Mortgage - Managers who invest primarily in mortgage-backed securities including agency (FHLMC, GNMA, FNMA) and private issue pass-throughs, asset-backed securities, and mortgage derivatives (REMICS/CMOs, IOs, POs). Funds may also contain a small percentage of U.S. Treasuries. 90 Attachment number 4 Page 93 of 108 Item # 6 RISK/REWARD STATISTICS The risk statistics used in this report examine performance characteristics of a manager or a portfolio relative to a benchmark (market indicator) which assumes to represent overall movements in the asset class being considered. The main unit of analysis is the excess return, which is the portfolio return minus the return on a risk free asset (3 month T-Bill). Alpha measures a portfolio’s return in excess of the market return adjusted for risk. It is a measure of the manager’s contribution to performance with reference to security selection. A positive alpha indicates that a portfolio was positively rewarded for the residual risk which was taken for that level of market exposure. Beta measures the sensitivity of rates of portfolio returns to movements in the market index. A portfolio’s beta measures the expected change in return per 1% change in the return on the market. If a beta of a portfolio is 1.5, a 1 percent increase in the return on the market will result, on average, in a 1.5 percent increase in the return on the portfolio. The converse would also be true. Downside Risk stems from the desire to differentiate between "good risk" (upside volatility) and "bad risk" (downside volatility). Whereas standard deviation punishes both upside and downside volatility, downside risk measures only the standard deviation of returns below the target. Returns above the target are assigned a deviation of zero. Both the frequency and magnitude of underperformance affect the amount of downside risk. Excess Return Ratio is a measure of risk adjusted relative return. This ratio captures the amount of active management performance (value added relative to an index) per unit of active management risk (tracking error against the index.) It is calculated by dividing the manager’s annualized cumulative excess return relative to the index by the standard deviation of the individual quarterly excess returns. The Excess Return Ratio can be interpreted as the manager’s active risk/reward tradeoff for diverging from the index when the index is mandated to be the "riskless" market position. Information Ratio measures the manager’s market risk-adjusted excess return per unit of residual risk relative to a benchmark. It is computed by dividing alpha by the residual risk over a given time period. Assuming all other factors being equal, managers with lower residual risk achieve higher values in the information ratio. Managers with higher information ratios will add value relative to the benchmark more reliably and consistently. R-Squared indicates the extent to which the variability of the portfolio returns are explained by market action. It can also be thought of as measuring the diversification relative to the appropriate benchmark. An r-squared value of .75 indicates that 75% of the fluctuation in a portfolio return is explained by market action. An r-squared of 1.0 indicates that a portfolio’s returns are entirely related to the market and it is not influenced by other factors. An r-squared of zero indicates that no relationship exists between the portfolio’s return and the market. 91 Attachment number 4 Page 94 of 108 Item # 6 RISK/REWARD STATISTICS Relative Standard Deviation is a simple measure of a manager’s risk (volatility) relative to a benchmark. It is calculated by dividing the manager’s standard deviation of returns by the benchmark’s standard deviation of returns. A relative standard deviation of 1.20, for example, means the manager has exhibited 20% more risk than the benchmark over that time period. A ratio of .80 would imply 20% less risk. This ratio is especially useful when analyzing the risk of investment grade fixed-income products where actual historical durations are not available. By using this relative risk measure over rolling time periods one can illustrate the "implied" historical duration patterns of the portfolio versus the benchmark. Residual Portfolio Risk is the unsystematic risk of a fund, the portion of the total risk unique to the fund (manager) itself and not related to the overall market. This reflects the "bets" which the manager places in that particular asset market. These bets may reflect emphasis in particular sectors, maturities (for bonds), or other issue specific factors which the manager considers a good investment opportunity. Diversification of the portfolio will reduce or eliminate the residual risk of that portfolio. Sharpe Ratio is a commonly used measure of risk-adjusted return. It is calculated by subtracting the "risk-free" return (usually 3 Month Treasury Bill) from the portfolio return and dividing the resulting "excess return" by the portfolio’s risk level (standard deviation). The result is a measure of return gained per unit of risk taken. Sortino Ratio is a downside risk-adjusted measure of value-added. It measures excess return over a benchmark divided by downside risk. The natural appeal is that it identifies value-added per unit of truly bad risk. The danger of interpretation, however, lies in these two areas: (1) the statistical significance of the denominator, and (2) its reliance on the persistence of skewness in return distributions. Standard Deviation is a statistical measure of portfolio risk. It reflects the average deviation of the observations from their sample mean. Standard deviation is used as an estimate of risk since it measures how wide the range of returns typically is. The wider the typical range of returns, the higher the standard deviation of returns, and the higher the portfolio risk. If returns are normally distributed (ie. has a bell shaped curve distribution) then approximately 2/3 of the returns would occur within plus or minus one standard deviation from the sample mean. Total Portfolio Risk is a measure of the volatility of the quarterly excess returns of an asset. Total risk is composed of two measures of risk: market (non-diversifiable or systematic) risk and residual (diversifiable or unsystematic) risk. The purpose of portfolio diversification is to reduce the residual risk of the portfolio. Tracking Error is a statistical measure of a portfolio’s risk relative to an index. It reflects the standard deviation of a portfolio’s individual quarterly or monthly returns from the index’s returns. Typically, the lower the Tracking Error, the more "index-like" the portfolio. Treynor Ratio represents the portfolio’s average excess return over a specified period divided by the beta relative to its benchmark over that same period. This measure reflects the reward over the risk-free rate relative to the systematic risk assumed. Note: Alpha, Total Risk, and Residual Risk are annualized. 92 Attachment number 4 Page 95 of 108 Item # 6 COMMON STOCK PORTFOLIO CHARACTERISTICS All Portfolio Characteristics are derived by first calculating the characteristics for each security, and then calculating the weighted average of these values for the portfolio. Diversification Ratio - The ratio of the number of securities comprising the most concentrated half of the portfolio market value (see Issue Concentration) divided by the total number of portfolio securities (see Number of Securities). This value expresses to what extent a portfolio is equally weighted versus concentrated, given the number of names in the portfolio. This value can range from a high of 50% (equal weighted) to a low of 1% (half of the portfolio in 1% of the names). Dividend Yield - The total amount of dividends paid out for a stock over the preceding twelve months divided by the closing price of a share of the common stock. Five Year Beta - Beta measures the sensitivity of rates of return on a fund to general market movements. As such, the Beta for a portfolio is a reflection of the risk of the securities in the portfolio as compared to the broader market. This value is a composite of the individual Beta values within a portfolio. The Beta computation is based on the weighted average of the five year historical Betas of each security in a portfolio. Growth in Dividends - This value represents a weighted average five year annual growth rate of dividends per common stock share. The rates of growth in dividends for trailing twelve month periods are calculated using the dividend-per-share values for each time period. The five-year growth in dividends figure is calculated for each security in a portfolio. From these individual values, a weighted average value is calculated for the portfolio. The number of shares in each time period is adjusted to reflect any splits, mergers, or other capital changes. In this case, dividends are ex-dividends, meaning that the dividend has been declared and a buyer of the stock after the ex-dividend date does not receive the dividend. Growth in Earnings - This value represents a weighted average five year annual growth rate of earnings per common stock share. The rates of growth in earnings for trailing twelve month periods are calculated using the earnings-per-share values for each time period. The five-year growth in earnings figure is calculated for each security in a portfolio. From these individual values, a weighted average value is calculated for the portfolio. The number of shares in each time period is adjusted to reflect any splits, mergers, or other capital changes. In this case, the earnings per share is fully diluted and excludes extraordinary items and discontinued operations. Fully diluted earnings per share are earnings that are reduced, or diluted, by assuming the conversion of all securities that are convertible into equities. Issue Diversification - A measure of portfolio concentration in individual issues (securities). This number represents how many different securities (names) comprise the most concentrated half of the portfolio assets (half of the assets are in how many names?). This measure is useful in evaluating the concentration/diversification of portfolios made up of many issues but concentrated in a small subset of those issues (e.g. 100 stocks with 50% of assets in 10 stocks, Issue Diversification = 10). 93 Attachment number 4 Page 96 of 108 Item # 6 COMMON STOCK PORTFOLIO CHARACTERISTICS Market Capitalization - The market value of a company’s outstanding shares of common stock at a specific point in time, computed as the product of the number of outstanding shares times the stock’s closing price per share. Number of Securities - This is a simple portfolio diversification measure representing the number of unique non-cash securities (names) currently held in the portfolio. This measure does not address potential concentration of assets within these securities (see Issue Concentration). Price/Book Value - The Price to Book Value is a measure of value for a company. It is equal to the market value of all the shares of common stock divided by the book value of the company. The book value is the sum of capital surplus, common stock, and retained earnings. Price/Earnings Ratio - The Price to Earnings Ratio (P/E) is a measure of value for a company. It is equal to the price of a share of common stock divided by the earnings per share for a twelve-month period. Relative Sector Variance - A measure illustrating how significantly a portfolio currently differs from the sector weights of the index. This measure is the sum of the differences (absolute value) between the portfolio and index sector weights across all sectors. The higher the number the more aggressive the deviation from the index sector weights, and vice versa. This relative risk measure can help explain the magnitude of past tracking error and potential future tracking error versus the index. Return on Assets - Return on Assets is a measure of a company’s profitability, specifically relating profits to the total investments required to achieve the profits. It is equal to income divided by total assets. Income is after all expenses, including income taxes and minority interest, but before provision for dividends, extraordinary items, and discontinued operations. Total assets includes the sum of all current, non-current, and intangible assets. Return on Equity - Return on Equity is a measure of a company’s profitability, specifically relating profits to the equity investment employed to achieve the profits. Return on Equity focuses on the returns accruing to the residual owners of a company, the equityholders. It is equal to income divided by total common equity. Income is after all expenses, including income taxes and minority interest, but before provision for dividends, extraordinary items, and discontinued operations. Common equity includes common stock outstanding, capital surplus, and retained earnings. Sector Concentration - A measure of current portfolio diversification by economic sector (equity) or market sector (fixed income) to illustrate potential risk from concentrated sector exposures. The measure itself represents how few sectors contain half of the portfolio market value. A low number means the assets are concentrated in a few sectors and potentially highly exposed to the risks of those sectors. Total Debt/Assets - The Debt to Assets ratio is a measure of the level of total debt of a company as a portion of the assets of the company. It is equal to short-term and long-term debt divided by total assets. Total assets include the sum of all current, non-current, and intangible assets. 94 Attachment number 4 Page 97 of 108 Item # 6 FIXED-INCOME PORTFOLIO CHARACTERISTICS All Portfolio Characteristics are derived by first calculating the characteristics for each security, and then calculating the market value weighted average of these values for the portfolio. Allocation by Sector - Sector allocation is one of the tools which managers often use to add value without impacting the duration of the portfolio. The sector weights exhibit can be used to contrast a portfolio’s weights with those of the index to identify any significant sector bets. Average Coupon - The average coupon is the market value weighted average coupon of all securities in the portfolio. The total portfolio coupon payments per year are divided by the total portfolio par value. Average Moody’s Rating for Total Portfolio - A measure of the credit quality as determined by the individual security ratings. The ratings for each security, from Moody’s Investor Service, are compiled into a composite rating for the whole portfolio. Quality symbols range from Aaa+ (highest investment quality - lowest credit risk) to C (lowest investment quality - highest credit risk). Average Option Adjusted (Effective) Convexity - Convexity is a measure of the portfolio’s exposure to interest rate risk. It is a measure of how much the duration of the portfolio will change given a change in interest rates. Generally, securities with negative convexities are considered to be risky in that changes in interest rates will result in disadvantageous changes in duration. When a security’s duration changes it indicates that the stream of expected future cash-flows has changed, generally having a significant impact on the value of the security. The option adjusted convexity for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Option Adjusted (Effective) Duration - Duration is one measure of the portfolio’s exposure to interest rate risk. Generally, the higher a portfolio’s duration, the more that its value will change in response to interest rate changes. The option adjusted duration for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Price - The average price is equal to the portfolio market value divided by the number of securities in the portfolio. Portfolios with an average price above par will tend to generate more current income than those with an average price below par. Average Years to Expected Maturity - This is a measure of the market-value-weighted average of the years to expected maturity across all of the securities in the portfolio. Expected years to maturity takes into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. 95 Attachment number 4 Page 98 of 108 Item # 6 FIXED-INCOME PORTFOLIO CHARACTERISTICS Average Years to Stated Maturity - The average years to stated maturity is the market value weighted average time to stated maturity for all securities in the portfolio. This measure does not take into account imbedded options, sinking fund paydowns, or prepayments. Current Yield - The current yield is the current annual income generated by the total portfolio market value. It is equal to the total portfolio coupon payments per year divided by the current total portfolio market value. Duration Dispersion - Duration dispersion is the market-value weighted standard deviation of the portfolio’s individual security durations around the total portfolio duration. The higher the dispersion, the more variable the security durations relative to the total portfolio duration ("barbellness"), and the smaller the dispersion, the more concentrated the holdings’ durations around the overall portfolio’s ("bulletness"). The purpose of this statistic is to gauge the "bulletness" or "barbellness" of a portfolio relative to its total duration and to that of its benchmark index. Effective Yield - The effective yield is the actual total annualized return that would be realized if all securities in the portfolio were held to their expected maturities. Effective yield is calculated as the internal rate of return, using the current market value and all expected future interest and principal cash flows. This measure incorporates sinking fund paydowns, expected mortgage principal prepayments, and the exercise of any "in-the-money" imbedded put or call options. Weighted Average Life - The weighted average life of a security is the weighted average time to payment of all remaining principal. It is calculated by multiplying each expected future principal payment amount by the time left to the payment. This amount is then divided by the total amount of principal remaining. Weighted average life is commonly used as a measure of the investment life for pass-through security types for comparison to non-pass-through securities. 96 Attachment number 4 Page 99 of 108 Item # 6 Disclosures ‘ Attachment number 4 Page 100 of 108 Item # 6 List of Managers That Do Business with Callan Associates Inc. Quarterly List as of March 31, 2009 Confidential – For Callan Client Use Only Callan Associates takes its fiduciary and disclosure responsibilities to clients very seriously. The list below is compiled and updated quarterly because we believe our fund sponsor clients should have a clear understanding of the investment management organizations that do business with our firm. As of 03/31/2009, Callan provided educational, consulting, software, database, or reporting services to this list of managers through one or more of the following business units: Institutional Consulting Group, Independent Adviser Group, Fund Sponsor Consulting, the Callan Investments Institute and the “Callan College.” Per strict policy these manager relationships do not affect the outcome or process by which any of Callan’s services are conducted. Fund sponsor clients may request a copy of this list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by the managers employed by their fund. Per company policy, information requests regarding fees are handled exclusively by Callan’s Compliance Department. Clients should also be aware that Callan maintains an asset management division, the Trust Advisory Group (TAG). TAG specializes in the design, implementation and on-going management of multi-manager portfolios for institutional investors. Currently TAG serves as the sponsor and advisor to a multi- manager small cap equity fund and as the non-discretionary adviser to a series of Target Maturity Funds known as the Callan GlidePath® Funds. We are happy to provide clients with more specific information regarding TAG, including detail on the portfolios that it oversees. Per company policy these requests are handled by TAG’s Chief Investment Officer. Page 1 of 4 Manager Name Educational Services Consulting Services Aberdeen Asset Management Y Acadian Asset Management, Inc. Y Advantus Capital Management Y AIG Global Investment Group Y Allegiant Asset Management Group Y Y AllianceBernstein Y Y Allianz Investor Services, LLC Y Allstate Investments LLC Y American Century Investment Management Y AmSouth/Investment Management Group Y Ark Asset Management Co., Inc. Y Artio Global Management (fka, Julius Baer) Y Y Asset Strategy Consultants Y Atalanta Sosnoff Capital, LLC Y Atlanta Capital Management Co., L.L.C. Y Y AXA Rosenberg Investment Management Y Baillie Gifford International LLC Y Baird Advisors Y Y Bank of America Y Baring Asset Management Y Barrow, Hanley, Mewhinney & Strauss, Inc. Y Batterymarch Financial Management, Inc. Y BlackRock Y BlueCrest Capital Management Y Boston Company Asset Management, LLC (The) Y Y BNY Mellon Asset Management Y Brandes Investment Partners, L.P. Y Y Brandywine Global Investment Management, LLC Y Y Brown Brothers Harriman & Company Y Cadence Capital Management Y Capital Guardian Trust Company Y Y Calamos Advisors Y CastleArk Management, LLC Y Causeway Capital Management Y Chartwell Investment Partners Y Clear Bridge Advisors Y Y Columbia Management Advisors, LLC Y Y Columbus Circle Investors Y Y Cramer Rosenthal McGlynn, LLC Y Credit Suisse Asset Management Y DB Advisors Y Y DE Shaw Investment Management, L.L.C. Y Delaware Investments Y Y DePrince, Race & Zollo, Inc. Y Deutsche Asset Management/Deutsche Bank Y Y DSM Capital Partners Y DuPont Capital Management Y DWS Investments Y Eagle Asset Management, Inc. Y EARNEST Partners, LLC Y Eaton Vance Management Y Y EIM Asset Management Y Enhanced Inv. Technologies, LLC (INTECH) Y Entrust Capital Inc. Y Attachment number 4 Page 101 of 108 Item # 6 List of Managers That Do Business with Callan Associates Inc. Quarterly List as of March 31, 2009 Confidential – For Callan Client Use Only Callan Associates takes its fiduciary and disclosure responsibilities to clients very seriously. The list below is compiled and updated quarterly because we believe our fund sponsor clients should have a clear understanding of the investment management organizations that do business with our firm. As of 03/31/2009, Callan provided educational, consulting, software, database, or reporting services to this list of managers through one or more of the following business units: Institutional Consulting Group, Independent Adviser Group, Fund Sponsor Consulting, the Callan Investments Institute and the “Callan College.” Per strict policy these manager relationships do not affect the outcome or process by which any of Callan’s services are conducted. Fund sponsor clients may request a copy of this list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by the managers employed by their fund. Per company policy, information requests regarding fees are handled exclusively by Callan’s Compliance Department. Clients should also be aware that Callan maintains an asset management division, the Trust Advisory Group (TAG). TAG specializes in the design, implementation and on-going management of multi-manager portfolios for institutional investors. Currently TAG serves as the sponsor and advisor to a multi- manager small cap equity fund and as the non-discretionary adviser to a series of Target Maturity Funds known as the Callan GlidePath® Funds. We are happy to provide clients with more specific information regarding TAG, including detail on the portfolios that it oversees. Per company policy these requests are handled by TAG’s Chief Investment Officer. Page 2 of 4 Manager Name Educational Services Consulting Services Evergreen Investments Y Fayez Sarofim & Company Y Y Federated Investors Y Fiduciary Asset Management Y Fifth Third Asset Management, Inc. Y Fischer Francis Trees & Watts Y Fortis Investments Y Franklin Templeton Y Fred Alger Management Co., Inc. Y Y GE Asset Management Y Y GlobeFlex Capital, L.P. Y GoldenTree Asset Management, LP Y Goldman Sachs Asset Management Y Y Grande-Jean Capital Management Y Grantham, Mayo, Van Otterloo & Co., LLC Y Great Lakes Advisors, Inc. Y Harris Investment Management, Inc. Y Hartford Investment Management Co./The Hartford Y Y Heartland Advisors, Inc. Y Henderson Global Investors Y Hillcrest Asset Management, LLC Y HSBC Investments (USA) Inc. Y Independence Investments LLC Y Y ING Clarion Y ING Investment Management Y Y INVESCO Y Y Institutional Capital LLC Y Janus Capital Management, LLC Y Jensen Investment Management Y Kelly Capital Management, LLC Y Kensington Investment Group Y Knightsbridge Asset Management, LLC Y Lazard Asset Management Y Y Loomis, Sayles & Company, L.P. Y Y Lord Abbett & Company Y Y LSV Asset Management Y Y MacKay-Shields LLC Y Y Madison Square Investors Y Y Marquette Asset Management Y Marvin & Palmer Associates, I nc. Y MBIA Asset Management Y Mellon Capital Management (fka, Franklin Portfolio Assoc.) Y Metropolitan Life Insurance Company Y Metropolitan West Capital Management, LLC Y MFC Global Investment Management (U.S.) LLC Y MFS Investment Management Y Y Mondrian Investment Partners Limited Y Y Montag & Caldwell, Inc. Y Y Morgan Stanley Investment Management Y Y Natixis Global Asset Management Y Newton Capital Management Y Neuberger Berman (fka, Lehman Brothers) Y Y Nomura Asset Management U.S.A., Inc. Y Northern Trust Global Investment Services Y Y Attachment number 4 Page 102 of 108 Item # 6 List of Managers That Do Business with Callan Associates Inc. Quarterly List as of March 31, 2009 Confidential – For Callan Client Use Only Callan Associates takes its fiduciary and disclosure responsibilities to clients very seriously. The list below is compiled and updated quarterly because we believe our fund sponsor clients should have a clear understanding of the investment management organizations that do business with our firm. As of 03/31/2009, Callan provided educational, consulting, software, database, or reporting services to this list of managers through one or more of the following business units: Institutional Consulting Group, Independent Adviser Group, Fund Sponsor Consulting, the Callan Investments Institute and the “Callan College.” Per strict policy these manager relationships do not affect the outcome or process by which any of Callan’s services are conducted. Fund sponsor clients may request a copy of this list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by the managers employed by their fund. Per company policy, information requests regarding fees are handled exclusively by Callan’s Compliance Department. Clients should also be aware that Callan maintains an asset management division, the Trust Advisory Group (TAG). TAG specializes in the design, implementation and on-going management of multi-manager portfolios for institutional investors. Currently TAG serves as the sponsor and advisor to a multi- manager small cap equity fund and as the non-discretionary adviser to a series of Target Maturity Funds known as the Callan GlidePath® Funds. We are happy to provide clients with more specific information regarding TAG, including detail on the portfolios that it oversees. Per company policy these requests are handled by TAG’s Chief Investment Officer. Page 3 of 4 Manager Name Educational Services Consulting Services Northern Trust Value Investors Y Nuveen Investments Institutional Services Group Y Y OFI Institutional Asset Management Y Old Mutual Asset Management Y Y Oppenheimer Capital Y Pacific Investment Management Company Y Peregrine Capital Management, Inc. Y Philadelphia International Advisors, LP Y Y Phoenix Investment Partners Ltd. Y Pioneer Investment Management, Inc. Y Y Principal Global Investors Y Y Prudential Investment Management Y Y Putnam Investments Y Y Pyramis Global Advisors Y Y RCM Y Y Research Affiliates, LLC Y RidgeWorth Capital Management Y Rice Hall James & Associates, LLC Y RiverSource Investments, LLC Y Y Robeco Investment Management Y Y Rogge Global Partners Y Rothschild Asset Management, Inc. Y Y RREEF Y Russell Investment Group Y Schroder Investment Management North America Inc. Y Y Scottish Widows Investment Partnership Y SEI Investments Y Y Sit Investment Associates, Inc. Y Smith Group Asset Management Y Y Southeastern Asset Management, Inc. Y SouthernSun Asset Management Y Standard Life Investments Y Standish (fka, Standish Mellon Asset Management) Y State Street Global Advisors Y Y Sterne Agee Asset Management Y Stone Harbor Investment Partners, L.P. Y Stratton Management Y Systematic Financial Management Y Y T. Rowe Price Associates, Inc. Y Y Taplin, Canida & Habacht Y TCW Asset Management Company Y TD Asset Management (USA) Y Thrivent Financial for Lutherans Y Thompson, Siegel & Walmsley LLC Y Thornburg Investment Management Inc. Y TIAA-CREF Y TimesSquare Capital Management, LLC Y UBP Asset Management LLC Y UBS Y Y Union Bank of California Y Vanguard Group, Inc. (The) Y Victory Capital Management Inc. Y Y Waddell & Reed Asset Management Group Y Wagner Investment Management, Inc. Y Attachment number 4 Page 103 of 108 Item # 6 List of Managers That Do Business with Callan Associates Inc. Quarterly List as of March 31, 2009 Confidential – For Callan Client Use Only Callan Associates takes its fiduciary and disclosure responsibilities to clients very seriously. The list below is compiled and updated quarterly because we believe our fund sponsor clients should have a clear understanding of the investment management organizations that do business with our firm. As of 03/31/2009, Callan provided educational, consulting, software, database, or reporting services to this list of managers through one or more of the following business units: Institutional Consulting Group, Independent Adviser Group, Fund Sponsor Consulting, the Callan Investments Institute and the “Callan College.” Per strict policy these manager relationships do not affect the outcome or process by which any of Callan’s services are conducted. Fund sponsor clients may request a copy of this list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by the managers employed by their fund. Per company policy, information requests regarding fees are handled exclusively by Callan’s Compliance Department. Clients should also be aware that Callan maintains an asset management division, the Trust Advisory Group (TAG). TAG specializes in the design, implementation and on-going management of multi-manager portfolios for institutional investors. Currently TAG serves as the sponsor and advisor to a multi- manager small cap equity fund and as the non-discretionary adviser to a series of Target Maturity Funds known as the Callan GlidePath® Funds. We are happy to provide clients with more specific information regarding TAG, including detail on the portfolios that it oversees. Per company policy these requests are handled by TAG’s Chief Investment Officer. Page 4 of 4 Manager Name Educational Services Consulting Services WEDGE Capital Management Y Wellington Management Company, LLP Y Wells Capital Management Y Western Asset Management Company Y William Blair & Co., Inc. Y Zephyr Management Y Attachment number 4 Page 104 of 108 Item # 6 Callan Research/Education ‘ Attachment number 4 Page 105 of 108 Item # 6 Callan Associates •Knowledge for Investors CALLAN INVESTMENTS INSTITUTE White Papers Performance-Based Fees John Krimmel, CPA, CFA. March 2009 An Overview of Institutional Real Estate – A Primer Jim Callahan, CFA; Jamie Shen. March 2009 Global Equity Markets Review Toni Brown, CFA; Diana Greenstone; Jay Kloepfer. February 2009 Newsletters and Data Package DC Observer and Callan DC Index™– 4th Quarter 2008 Hedge Fund Monitor – 4th Quarter 2008 Capital Market Review – 1st Quarter 2009 Quarterly Performance Data Package – 1st Quarter 2009 Private Markets Trends – Winter 2008–2009 Surveys 2009 Cost of Doing Business Survey: U.S. Funds and Trusts – February 2009 2009 DC Trends Survey – Impact of Market Volatility on DC Plans – February 2009 2008 DC Fee Survey – October 2008 Below is a list of recent Callan Institute research and upcoming programs. The Institute’s research and educational programs keep clients updated on the latest trends in the investment industry and help clients learn through carefully structured workshops and lectures. For more information, please contact your Callan Consultant or Gina Falsetto at 415.974.5060 or institute@callan.com. RESEARCH AND UPCOMING PROGRAMS FIRST QUARTER 2009 Attachment number 4 Page 106 of 108 Item # 6 RESEARCH AND UPCOMING PROGRAMS (continued) CALLAN INVESTMENTS INSTITUTE FIRST QUARTER 2009 Callan Associates •Knowledge for Investors Event Summaries and Presentations Summary: The 29th Annual National Conference – January 2009 Featuring: The Capital Markets Panel, Richard Muller, David Walker, Richard Hokenson, and workshops on DC, Active Markets, and “Lessons Learned.” Summary: 2008 Regional Breakfast Workshop – October 2008 “Does Your Portfolio Have an Inflation Blind Spot?” Presentation: 2008 Regional Breakfast Workshop – October 2008 “Does Your Portfolio Have an Inflation Blind Spot?” Upcoming Educational Programs June 2009 Regional Breakfast Workshops “Asset Class Structure in Unstructured Times” June 23 in Chicago June 24 in San Francisco Registration is now open! Visit www.callan.com or contact us for more information. October 2009 Regional Breakfast Workshops October 21 in Atlanta October 22 in New York Subject TBA If you have any questions regarding these programs, please contact Ray Combs at 415.974.5060 or institute@callan.com. The Callan Investments Institute, the educational division of Callan Associates Inc., has been a leading educational forum for the pensions and investments industry since 1980. The Institute offers continuing education on key issues confronting plan sponsors and investment managers. 101 California Street, Suite 3500, San Francisco, California 94111, 415.974.5060, www.callan.com Attachment number 4 Page 107 of 108 Item # 6 Callan Associates •Knowledge for Investors THE CENTER FOR INVESTMENT TRAINING (“CALLAN COLLEGE”) “Callan College” – An Introduction to Investments April 28–29 in San Francisco October 20–21 in San Francisco “Callan College” – Advanced Investment Topics July 21–23 in San Francisco “Callan College” on Alternative Investing June 16–17 in San Francisco Tuition for the “Callan College” Introduction to Investments is $2,350 per person; tuition for all other sessions is $2,500 per person. Tuition includes instruction, all materials, breakfast and lunch on each day and dinner on the first evening with the instructors. Customized Sessions A unique feature of the “Callan College” is its ability to educate on a specialized level through its customized sessions. These sessions are tailored to meet the training and educational needs of the participants. Instruction is tailored to basic or advanced audiences. For more information on the “Callan College,” please contact Kathleen Cunnie at 415.974.5060 or college@callan.com. EDUCATIONAL SESSIONS FIRST QUARTER 2009 The Center for Investment Training (“Callan College”) provides relevant and practical educational opportunities to all professionals engaged in the investment decision making process. This educational forum offers basic- to-intermediate level instruction on all components of the investment management process 101 California Street, Suite 3500, San Francisco, California 94111, 415.974.5060, www.callan.com UPCOMING 2009 SESSION DATES Attachment number 4 Page 108 of 108 Item # 6 Pension Trustees Agenda Council Chambers - City Hall Meeting Date:5/18/2009 SUBJECT / RECOMMENDATION: Approve staff’s recommendation to move the money from Independence Investments to a Northern Trust small cap growth index fund and to terminate the contract with Independence Investments. SUMMARY: Last week the city received word that its small cap growth manager, Independence Investments, was possibly closing and could be looking to merge with another firm, due to loss of business. Currently Clearwater has just under $27 million with Independence. The city has used Independence for the last two years with mixed results. The pension plan has a contract in place with Northern Trust where it can use any of their index funds. The assets at Independence will be transferred to a Northern Trust small cap growth fund. An asset allocation study being performed by Callan and Associates is almost complete. In addition, an RFP process to select a firm to be the Plan's Investment Measurement & Consulting Services provider (currently Callan) is almost complete. That contract will be brought forward for Trustees' approval within the next two months. Once that firm is onboard the asset allocation study can be completed, it can be determine if it is in the plan's best interest to hire a new small cap growth firm, continue using an index fund, or to otherwise invest the plans' assets. We have consulted with Callan, as well as other consultants being considered in our RFP process, and the consensus is that this is the best course of action. Review Approval:1) Clerk 2) Assistant City Manager 3) Clerk 4) Clerk Cover Memo Item # 7 Pension Trustees Agenda Council Chambers - City Hall Meeting Date:5/18/2009 SUBJECT / RECOMMENDATION: Approve the recommended administrative expenditures totaling $321,500 for fiscal year 2009-10. SUMMARY: The Employees’ Pension Plan does not have a legal requirement to have a budget. The Trustees must approve all expenditures. The following are routine expenditures that staff is requesting approval for the sake of efficiency. These expenditures involve routine business matters and are mostly small dollar amounts. Printing and binding is for the statutorily required annual information distribution to the members of the pension plan. Postage is for certified mailings required under a new rule passed by the Pension Trustees and other pension related materials. Membership dues are for the annual dues for the Florida Public Pension Trust Association. Training and travel are for the estimated cost of training required by state statute. Klausner & Kaufman is our pension attorney firm. Annual attorney’s fees also include medical bills that are for the medical services authorized by the Pension Advisory Committee. Reimbursement to the General Fund and the Self Insurance Fund is for the cost of the oversight of the Plan and is recognized as revenue to the general and insurance funds. This reimbursement covers the services provided by Human Resources, Payroll, and Finance. At this time we are not budgeting for a Referendum for the next year. If a referendum is needed, approval will be sought at that time. Money manager, safekeeping, actuary, and pension administration fees are all set by contracts approved by the Trustees and are not included in this request. Type:Operating Expenditure Current Year Budget?:None Budget Adjustment:None Budget Adjustment Comments: Current Year Cost:Annual Operating Cost: Not to Exceed:$321,500 Total Cost:$321,500 For Fiscal Year:10/1/09 to 9/30/10 Appropration Code Amount Appropriation Comment 0646-various $321,500 Review Approval: 1) Financial Services 2) Office of Management and Budget 3) Clerk 4) Assistant City Manager 5) Clerk 6) City Manager 7) Clerk Cover Memo Item # 8 Description FY 09/10 FY 08/09 Increase/ Decrease Printing & Binding 400 400 - Postage 400 400 - Memberships 600 600 - Misc 100 100 - Training 5,000 5,000 - Travel Expense 3,000 5,000 (2,000) Medical Bills - - - Reimbursement to Self Insurance Fund (Human Resources) 45,000 44,000 1,000 Physicals 35,000 41,000 (6,000) Reimbursement to General Fund (Accounting & Finance) 22,000 22,000 - Reimbursement to General Fund (Payroll) 70,000 72,000 (2,000) Klausner & Kaufman (including Medical Bills) 140,000 140,000 - - - - 321,500$ 330,500$ (9,000) Employees' Pension Plan Administrative Expenses City of Clearwater Attachment number 1 Page 1 of 1 Item # 8