12-13-2010 - Joint Workshop CITY COUNCIL OF EDGEWATER
JOINT WORKSHOP
CITY COUNCIL /GENERAL EMPLOYEES /POLICE /FIREFIGHTERS PENSION BOARDS
DECEMBER 13, 2010
5:00 P.M.
COUNCIL CHAMBERS
MINUTES
CALL TO ORDER
Mayor Thomas called the Joint Workshop to order at 5:00 p.m. in the
Council Chambers.
ROLL CALL
CITY COUNCIL
Mayor Michael Thomas Present
Councilman Justin Kennedy Arrived at 5:12 p.m.
Councilwoman Gigi Bennington Present
Councilman Michael Ignasiak Present
Councilman Ted Cooper Present
City Manager Tracey Barlow Present
City Clerk Bonnie Wenzel Present
City Attorney Carolyn Ansay Present
GENERAL EMPLOYEES PENSION BOARD
Brenda Dewees Present
Tim Sopko Present
John Brackin Absent
John McKinney Present
Gigi Bennington Present
Tyna Hilton Present
Bobby Laramore Present
POLICE PENSION BOARD
Dan Blazi Arrived at 5:10 p.m.
Ferd Heeb Present
Lawrence Leaf Present
Vincent McCauley Arrived at 5:30 p.m.
Gary Conroy Absent
FIREFIGHTERS PENSION BOARD
Jim Jollie Present
Ron Hayward Absent
Gary Butt Absent
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Council Workshop
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Deborah Harrison Absent
Mayor Thomas asked that someone contact Justin Kennedy since Mayor
Thomas had forgotten about the meeting too.
DISCUSSION
City Manager Barlow informed Council the purpose of the meeting was to
provide a gross overview of the General Employee Pension Board, the
Police Pension Board and the Firefighters Pension Board.
City Manager Barlow informed Mayor Thomas that Councilman Kennedy
would be there in about 15 minutes.
City Manager Barlow turned the meeting over to Jack Evitt, with
Bogdahn Group, who was hired as a consultant for all three pension
boards. After this if there was additional interest, they could
schedule another workshop independent from a Council meeting and have
each one of the attorneys representing the pension plans available as
well as the actuarial.
Jack Evitt, Bogdahn Group, representing as the Performance Monitor and
Investment Consultant for all three pension funds in the City of
Edgewater, provided a sample of the information they collected and
provided to the Boards. He provided to Council a sample of a
quarterly report and described what the report included, the
Investment Policy Statement and the Actuarial Valuation for the
Firefighters Pension Plan from last year. (Attached) He informed
Council he wanted to go through some of the documents and give the
Council a chance to ask questions and get a sense for the kind of
information that would be most beneficial to them. He informed
Council he also had the performance reports for the General Employees
Pension Board and Police Pension Board but he didn't have enough to
distribute them.
Mr. Evitt explained their role as the Investment Consultant and
Performance Monitor was to make sure that the plans are invested as
they should be and that the Investment Managers are holding up their
end of the bargain. He further described their quarterly report that
they distribute. (Attached)
Councilman Cooper asked Mr. Evitt what their goals were for the
overall pensions in total when they compare it to the City's
contribution. Mr. Evitt explained from an investment standpoint the
cost of the plans includes more than just the investments. He could
only speak to what happened on the investment side. Going forward he
thought the key was to maintain an eye on the costs associated with
running the plans and to make sure they have the portfolios properly
allocated as they go forward. They are always looking for ways to
reduce volatility.
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I I
Councilman Cooper asked Mr. Evitt if they made recommendations
accordingly and if they went strictly to the boards or if they would
come back to Council. Mr. Evitt informed him they make
recommendations directly to the boards.
Councilwoman Bennington reminded Councilman Cooper that she serves as
Council representative on the General Employees Pension Board.
Councilman Cooper then asked what adjustments Mr. Evitt felt were
necessary in the next three to ten years on their three pensions to
continue support of the people that have paid in as well as the
strength of the pension itself. Mr. Evitt explained they are
constantly making recommendations and adjustments and monitoring the
portfolios. He spoke of the Fire Pension being set up differently
from an investment standpoint than the Police and General Employees.
He felt the Fire Pension was set up more like what they would like to
see where they have more flexibility, more clarity, more transparency
and more control over what happens and when and why.
Councilman Cooper asked Mr. Evitt if they were making those
recommendations and seeing to it that the other two boards were
getting up to speed to protect their investment as well. Mr. Evitt
informed him absolutely. He commented on the return differential
between the three plans in the fiscal year ending September 30 not
being a huge number. It ranged from 10.3 to 11.6. He felt all of the
plans had very good years with regard to performance.
Mayor Thomas asked that the record show that Councilman Kennedy was
now present at the meeting as well as Dan Blazi.
Councilman Cooper asked if the employee contribution aspect of the
pensions needed to be increased to keep the pensions sound or save the
City money or both. Mr. Evitt informed him he was asking the wrong
person. Councilwoman Bennington informed him yes.
City Manager Barlow stated he would caution. He didn't know to ask
one direct member of that. That is the purpose of the Pension Board,
to make an estimate based on that question. He spoke of that being
part of what Bogdahn does as well as the Board. They look at all the
investments and factor in many variables. Any increase in
contribution rate is going to decrease the actuarial that the City has
to fund but is that the right thing to do as you balance it out?
There are a lot of other factors associated with it.
Councilman Cooper didn't want to say that the pensions were a huge
expense because he felt the employees are owed their pension but also
felt they should be doing everything possible to make sure it never
stops. Councilwoman Bennington stated at every meeting they are
looking at the overall package and how they are performing and its
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disgust. They are in the middle of doing something the Council will
hear about in the near future. They don't ignore these things.
Councilman Cooper asked Dan Blazi or Jim Jollie if they had given any
long range thoughts on that and looked at that.
Dan Blazi, Police Pension Board member, explained the Pension Board's
job is for the fiduciary responsibility to the members. Its ultimate
goal is to make sure the pension is solvent and stays good. The
Boards work for the members. They want to make sure the members have
the best benefits they possibly can give but on the same token making
sure it is balanced with the cost to the City and the individual
contributions. He commented many ways this could be done. He
commented on what unfunded liability means.
Councilman Cooper stated he understood the obligation. He commented
on employees aging and the City not adding to the work flow so younger
bodies aren't coming in where they have longer contribution aspects.
In many of the pensions as the cost goes up to the City it is the
Council's job to see to it that they are watching those costs and make
sure the Pension boards are doing the things in order to protect the
people and to make sure the costs are being adjusted in such a way it
doesn't bankrupt the City either. He expressed concern with today's
economy and all the fear factors they are getting. They have three
good pensions and yet sometimes they need to add a little to protect
it over hard times and back it back off when everything is better
again. He was wondering if the Boards were perusing those ideas. Mr.
Blazi informed him they peruse those ideas on a daily basis. He
further commented on General Fund being a closed plan and there being
no more contributions except for those who are left going into that
particular plan.
Jim Jollie, Firefighters Pension Board member, went through the
attached Powerpoint presentation with regard to the Firefighters
Pension Fund.
Mayor Thomas and Councilman Cooper asked specific questions about the
Firefighters Pension Plan, which Mr. Jollie answered for him.
Mayor Thomas asked specific questions about the Police Pension Plan,
which Mr. Blazi answered for him.
There was a brief discussion regarding the cashing in of sick leave
adding to retirement and this being a benefit.
Mayor Thomas asked specific questions about the General Employee
Pension Plan, which Ms. Dewees answered for them.
Councilman Cooper came to the conclusion that all three pensions had
the same benefit.
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Councilman Ignasiak questioned if they were simply talking about pay
structure and not additional benefits such as medical insurance and
life insurance being provided by the City when someone does retire.
City Manager Barlow informed him none of the plans had any built in
COLA. Councilman Ignasiak questioned the employee being able to pay
the City for the City's insurance under the City's price structure.
City Manager Barlow informed him that was correct.
Mayor Thomas asked Mr. Jollie, Mr. Blazi and Ms. Dewees if they had a
cost of living adjustment every year, who all informed him no.
Mayor Thomas questioned the security of the plans in today's
environment. Mr. Evitt felt the reality was and the question was how
secure the City was.
Mr. Jollie stated they had some numbers, which he identified for
Council, because they asked the same question because of the concern
of cities down south going bankrupt and dumping their plans. He
further commented on the State eyeballing the smaller municipalities
and their assets and they are trying to make it look very attractive
for cities to fund their plans through the State. He commented on the
cost to go to the State being so high and it being a benefit that they
aren't with the State right now because it would cost the citizens
more money.
Councilman Cooper asked City Attorney Ansay if there was a State
safeguard. He thought there were statutes out there that protect the
pensions should a city go bankrupt. City Attorney Ansay explained if
the pensions go bankrupt it is largely because the cities go bankrupt.
At that point they have receivers at the State level that come in.
They have State intervention. That really can't happen unless there
is no way to get any additional money out of the city and there is no
way to meet their obligations. There was no State guarantee but she
felt there were other mechanisms that give them that level of
protection. There are processes to prevent them from getting to the
point where they are completely bankrupt but there is no insurance
pool sitting there that will make sure everybody gets paid. She
doesn't see that happening.
Mayor Thomas asked Jim Jollie if the firefighters felt secure in their
plan. He informed him they did. Mayor Thomas asked Dan Blazi is the
police officers felt secure in their plan. He informed him they did.
Mayor Thomas asked Ms. Dewees if the general employees felt secure in
their plan. Ms. Dewees believed they did.
Tim Sopko, General Employees Pension Board, stated 25% of the General
employees are not represented by a pension fund and are represented by
a 401K. The General Employees Pension Fund is closed and nobody can
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enter into it. He commented on some of the employees being at the
mercy of the stock market.
City Manager Barlow commented on the General Employee Defined Benefit
Pension being closed in 1998 or 1999, at which time they went with a
defined contribution plan.
Finance Director McKinney mentioned anything they wanted to know about
the pension plans was covered in the Comprehensive Annual Financial
Report that was reviewed by the auditors every year. Councilwoman
Bennington commented on her husband who has been at the Cape for 40
years always having a 401K plan and the hits they have taken from the
stock market.
Councilman Cooper commented on the City making up the contribution to
the General Employees Defined Benefit Plan. City Manager Barlow
confirmed that was correct and explained the City makes the
contribution to keep it actuarially sound. Mr. Sopko wanted everyone
to know that there are some people that are not in that pension fund
and are not part of that liability.
Councilman Cooper expressed concern with protecting the General
Employees Defined Benefit Plan. He referred to what was done in 2003
where the employees were able to opt out and still draw their pensions
and having less people paying in. City Manager Barlow commented on
that being the challenge. He referred to the long term and as the
retirees move on and they no longer have those payments then that
pension just dries up and goes away. He spoke of it struggling
because of no new members coming in to make those payroll
contributions.
Councilwoman Cooper asked Mr. Evitt if they were looking for ways they
may be able to reinvest and to guarantee those folks they will have
that throughout their life. Mr. Evitt explained the General Employees
Plan did have distributions in excess of contributions in the last
fiscal year. That is not a totally unique situation. Generally what
happens, when you have a closed plan, at some point in time they will
be down to one member, and there is an actuarial lifetime of a closed
plan. They do have to become more conservative with the investments.
He assured him it was something they pay attention to and something
they would love to have more control over.
Councilman Ignasiak stated there were no guarantees in the financial
market. Mr. Evitt commented on the differences in the Fire, Police
and General Employees plans.
Dan Blazi stated Defined Benefit Plans, one of the number one things
public safety looks at. The difference in a pension plan and a
contribution account is a contribution account is money. It does not
cover disability benefits or benefits to heirs. The number one
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difference in a defined benefit plan and contribution account is there
are benefits for someone's heirs with a defined benefit plan. A
defined benefit plan is a reassurance and a promise.
There was a brief discussion regarding children's educations being
covered if someone is killed in the line of duty.
Councilman Ignasiak questioned if under the defined benefit plan if
you die if a percentage goes to your spouse. Mr. Blazi informed him a
percentage did go to the spouse but it was the individual member's
choice, which determined the amount they would get monthly.
ADJOURNMENT
There being no further business to discuss, the Joint Workshop
adjourned at 5:52 p.m.
Minutes submitted by:
Lisa Bloomer, CMC
Deputy City Clerk
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Council Workshop
December 13, 2010
CITY OF EDGEWATER
(PLAN SPONSOR)
FIREFIGHTERS' PENSION PLAN
Investment Policy Statement
I. PURPOSE OF INVESTMENT POLICY STATEMENT
The Pension Board of Trustees (Board) maintains that an important determinant of future
investment returns is the expression and periodic review of the City of Edgewater Firefighters"
Pension Plan (the Plan) investment objectives. To that end, the Board has adopted this statement
of Investment Policy and directs that it apply to all assets under their control.
In fulfilling their fiduciary responsibility, the Board recognizes that the retirement system is an
essential vehicle for providing income benefits to retired participants or their beneficiaries. The
Board also recognizes that the obligations of the Plan are long -term and that investment policy
should be made with a view toward performance and return over a number of years. The general
investment objective is to obtain a reasonable total rate of return - defined as interest and
dividend income plus realized and unrealized capital gains or losses - commensurate with the
Prudent Investor Rule and any other applicable ordinances and statutes.
Reasonable consistency of return and protection of assets against the inroads of inflation are
paramount. However" interest rate fluctuations and volatility of securities markets make it
necessary to judge results within the context of several years rather than over short periods of
five years or less.
The Board will employ investment professionals to oversee and invest the assets of the Plan.
Within the parameters allowed in this document and their agreements with the Board, the
investment management professionals shall have investment discretion over their mandates,
including security selection, sector weightings and investment style.
The Board, in performing their investment duties. shall comply with the fiduciary standards set
forth in Employee Retirement Income Security Act of 1974 (ERISA) at 29 U.S.C. s. 1104(a) (1)
(A) — (C). In case of conflict with other provisions of law authorizing investments, the
investment and fiduciary standards set forth in this section shall prevail.
ADOPTED 9 -14 -2009 Page 1
II. TARGET ALLOCATIONS
In order to provide for a diversified portfolio, the Board has engaged investment professional(s)
to manage and administer the fund. The investment manager(s) are responsible for the assets and
allocation of their mandate only and may be provided an addendum to this policy with their
specific performance objectives and investment criteria. The Board has established the
following asset allocation targets for the total fund:
Asset Class Target Range Benchmark Index
Domestic Equity 50% 40% - 60% Russell 3000
International Equity 15% 5% - 25% MSCI ACWI ex U.S. _
Broad Market Fixed Income 35% 30% - 50% Barclays Aggregate
TIPS* 0% 0% - 10% Barclays TIPS 1
Real Estate* 0% 0% - 15% NCREIF Property
*Benchmark will default to "broad market fixed income" if these portfolios are not funded. Targets and
ranges above are based on market value of total Plan assets.
The investment consultant will monitor the aggregate asset allocation of the portfolio, and will
rebalance to the target asset allocation based on market conditions. If at the end of any calendar
quarter, the allocation of an asset class falls outside of its allowable range, barring extenuating
circumstances such as pending cash flows or allocation levels viewed as temporary, the asset
allocation will be rebalanced into the allowable range. To the extent possible, contributions and
withdrawals from the portfolio will be executed proportionally based on the most current market
values available. The Board does not intend to exercise short-term changes to the target
allocation.
III. INVESTMENT PERFORMANCE OBJECTIVES
The following performance measures will be used as objective criteria for evaluating the
effectiveness of the Investment Managers.
A. Total Portfolio Performance
1. The performance of the total portfolio will be measured for rolling three and five year
periods. The performance of the portfolio will be compared to the return of the policy
indexes comprised of 50 °A) Russell 3000, 15% MSCI ACWI and 35% Barclays
Aggregate Bond Index.
2. On a relative basis, it is expected that the total portfolio performance will rank in the top
40 percentile of the appropriate peer universe over three and five -year time periods.
3. On an absolute basis, the objective is that the return of the total portfolio will equal or
exceed the actuarial earnings assumption (7.5 %), and provide inflation protection by
meeting Consumer Price Index plus 3 %.
ADOPTED 9 -14 -2009 Page 2
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B. Equity Performance
The combined equity portion of the portfolio, defined as common stocks and convertible
bonds, is expected to perform at a rate at least equal to the 80% Russell 3000 and 20%
MSC] ACWI Index. Individual components of the equity portfolio will be compared to the
specific benchmarks defined in each Investment Manager addendum. All portfolios are
expected to rank in the top 40 percentile of the appropriate peer universe over three and
five -year time periods.
C. Fixed Income Performance
The overall objective of the fixed income portion of the portfolio is to add stability and
liquidity to the total portfolio. The fixed income portion of the portfolio is expected to
perform at a rate at least equal to the Barclays Capital U.S. Aggregate Bond Index. All
portfolios are expected to rank in the top 40 percentile of the appropriate peer universe over
three and five -year time periods.
D. Treasury Inflation Protection Security (TIPS) Performance
The overall objective of the TIPS portfolio, if utilized, is to provide inflation protection
while adding stability to the total portfolio. If TIPS are utilized the strategy is expected to
approximate the structure and performance of the Barclays Capital U.S Treasury TIPS
Index.
E. Real Estate Performance
The overall objective of the real estate portfolio of the portfolio, if utilized, is to add
diversification and another stable income stream to the total fund. The real estate portion of
the total fund, defined as core, open ended private real estate, is expected to perform at a rate
at least equal to the NCREIF Index and rank in the top 40 percentile of the appropriate peer
universe over three and five -year time periods.
F. Alternative and Other Asset Performance
The overall objective of the alternative and /or `other asset" portion of the portfolio, if
utilized, is to reduce the overall volatility of the portfolio and enhance returns. This portion
of the fund will be benchmarked as outlined in the manager addendum.
IV. INVESTMENT GUIDELINES
A. Authorized Investments
Pursuant to the investment powers of the Board of Trustees as set forth in the Florida Statutes and
local ordinances, the Board of Trustees sets forth the following investment guidelines and
limitations:
1. Equities:
a. Must be traded on a national exchange or electronic network: and
ADOPTED 9 -14 -2009 Page 3
b. Not more than 5% of the Plan's assets, at the time of purchase, shall be invested in
the common stock, capital stock or convertible stock of any one issuing company,
nor shall the aggregate investment in any one issuing company exceed 5% of the
outstanding capital stock of the company; and
c. Additional criteria may be outlined in the manager's addendum.
2. Fixed Income:
a. 85% of the fixed income investments shall have a minimum rating of investment
grade or higher as reported by a major credit rating service; and
b. The value of bonds issued by any single corporation shall not exceed 5% of the
total fund; and
c. Additional criteria may be outlined in the manager's addendum.
3. Money Market:
a. The money market fund or STIF options provided by the Plan's custodian; and
b. Have a minimum rating of Standard & Poor's Al or Moody's P 1.
4. Pooled Funds:
Investments made by the Board may include pooled funds. For purposes of this policy
pooled funds may include, but are not limited to, mutual funds, commingled funds,
exchange - traded funds, limited partnerships and private equity. Pooled funds may be
governed by separate documents which may include investments not expressly
permitted in this Investment Policy Statement. In the event of investment by the Plan
into a pooled fund, the Board will adopt the prospectus or governing policy of that fund
as the stated addendum to this Investment Policy Statement.
B. Trading Parameters
When feasible and appropriate, all securities shall be competitively bid. Except as otherwise
required by law, the most economically advantageous bid shall be selected. Commissions
paid for purchase of securities must meet the prevailing best - execution rates. The
responsibility of monitoring best price and execution of trades placed by each manager on
behalf of the Plan will be governed by the Portfolio Management Agreement between the
Plan and the Investment Managers.
ADOPTED 9 -14 -2009 Page 4
C. Limitations
1 Investments in corporate common stock and convertible bonds shall not exceed seventy
five (75 %) of the Plan assets at market.
2. Foreign securities shall not exceed twenty -five percent (25 %) of Plan's market value.
3. All securities must be readily marketable.
D. Absolute Restrictions
No investments shall be permitted in;
I. Any investment not specifically allowed as part of this policy.
2. Illiquid investments, as described in Chapter 215.47, Florida Statutes.
3. Direct investment in `Scrutinized Companies' identified in the periodic publication by
the State Board of Administration ("SBA list ", updated on their website
www.sbafla.com/fsb/ ), is prohibited. Any security identified as non- compliant on or
before January 1, 2010 must be divested by September 1, 2010. Securities identified
after January 1, 2010, are subject to the provisions of section V. (c) below. However, if
divestiture of business activities is accomplished and the company is subsequently
removed from the SBA list, the manager can continue to hold that security. Indirect
investment in `Scrutinized Companies' (through pooled funds) are governed by the
provisions of Section V(G) below.
V. COMMUNICATIONS
A. On a monthly basis, the custodian shall supply an accounting statement that will include a
summary of all receipts and disbursements and the cost and the market value of all assets.
B. On a quarterly basis, the Investment Managers shall provide a written report affirming
compliance with the security restrictions of Section IV (as well as any provisions outlined in
the Investment Manager's addendum). In addition, the Investment Managers shall deliver a
report each quarter detailing the Plan's performance, forecast of the market and economy,
portfolio analysis and current assets of the Plan. Written reports shall be delivered to the
Board within 30 days of the end of the quarter. A copy of the written report shall be
submitted to the person designated by the City, and shall be available for public inspection.
The Investment Managers will provide immediate written and telephone notice to the Board
of any significant market related or non - market related event, specifically including, but not
limited to, any deviation from the standards set forth in Section IV or their Investment
Manager addendum.
C. If the Fund owns investments, that complied with section IV at the time of purchase, which
subsequently exceed the applicable limit or do not satisfy the applicable investment
standard, such excess or noncompliant investments may be continued until it is
economically feasible to dispose of such investment in accordance with the prudent man
standard of care, but no additional investment may be made unless authorized by law or
ADOPTED 9 -14 -2009 Page 5
ordinance, An action plan outlining the investment `hold or sell' strategy shall be provided
to the Board immediately.
D. The Investment Consultant shall evaluate and report on a quarterly basis the rate of return
net of investment fees and relative performance of the Plan.
E. The Board will meet periodically to review the Investment Consultant performance report.
The Board will meet with the investment manager and appropriate outside consultants to
discuss performance results, economic outlook, investment strategy and tactics and other
pertinent matters affecting the Plan on a periodic basis.
F. At least annually, the Board shall provide the Investment Managers with projected
disbursement needs of the Plan so that the investment portfolio can be structured in such a
manner as to provide sufficient liquidity to pay obligations as they come due. To this end
the Investment Managers should, to the extent possible, attempt to match investment
maturities with known cash needs and anticipated cash -flow requirements.
G. The Investment Consultant, on behalf of the Plan, shall send a letter to any pooled fund
referring the investment manager to the listing of `Scrutinized Companies' by the State
Board of Administration ('SBA list'), on their website www.sbafla.com /fsb!. This letter
shall request that they consider removing such companies from the fund or create a similar
actively managed fund having indirect holdings devoid of such companies. If the manager
creates a similar fund, the Plan shall replace all applicable investments with investments in
the similar fund in an expedited timeframe consistent with prudent investing standards. For
the purposes of this section, a private equity fund is deemed to be an actively managed
investment fund. However, after sending the required correspondence, the Plan is not
required to sell the pooled fund.
VI. COMPLIANCE
A. It is the direction of the Board that the plan assets are held by a third party custodian, and that
all securities purchased by, and all collateral obtained by the plan shall be properly
designated as Plan assets. No withdrawal of assets, in whole or in part, shall be made from
safekeeping except by an authorized member of the Board or their designee. Securities
transactions between a broker- dealer and the custodian involving purchase or sale of
securities by transfer of money or securities must be made on a "delivery vs. payment" basis
to insure that the custodian will have the security or money in hand at conclusion of the
transaction.
B. MASTER REPURCHASE AGREEMENT.- -The investment policy shall require all
approved institutions and dealers transacting repurchase agreements to execute and perform
as stated in the Master Repurchase Agreement. All repurchase agreement transactions shall
adhere to the requirements of the Master Repurchase Agreement.
C. At the direction of the Board operations of the Plan shall be reviewed by independent
certified public accountants as part of any financial audit periodically required. Compliance
with the Board's internal controls shall be verified. These controls have been designed to
prevent losses of assets that might arise from fraud, error, or misrepresentation by third
ADOPTED 9 -14 -2009 Page 6
parties or imprudent actions by the Board or employees of the plan sponsor, to the extent
possible.
D. Each member of the Board shall participate in a continuing education program relating to
investments and the Board's responsibilities to the Plan. It is suggested that this education
process begin during each Trustee's first terns.
E. With each actuarial valuation, the Board shall determine the total expected annual rate of
return for the current year, for each of the next several years and for the long term thereafter.
This determination shall be filed promptly with the Department of Management Services, the
plan's sponsor and the consulting actuary.
F. The proxy votes must be exercised for the exclusive benefit of the participants of the Plan.
Each Investment Manager shall provide the Board with a copy of their proxy voting policy
for approval. On a regular basis, at least annually, each manager shall report a record of their
proxy vote.
VII. CRITERIA FOR INVESTMENT MANAGER REVIEW
The Board wishes to adopt standards by which judgments of the ongoing performance of a
portfolio manager may be made. If, at any time, any three of the following is breached, the
portfolio manager may be warned of the Board's serious concern for the Plan's continued safety
and performance. If any five of these are violated the consultant may recommend a manager
search for that mandate.
• Four (4) consecutive quarters of relative under - performance verses the benchmark.
• Three (3) year trailing return below the top 40 percent within the appropriate peer
group and under performance verses the benchmark.
• Five (5) year trailing return below the top 40 percentile and under perfornance
verses the benchmark.
• Three (3) year downside volatility greater than the index (greater than 100), as
measured by down market capture ratio.
• Five (5) year downside volatility greater than the index (greater than 100), as
measured by down market capture ratio.
• Style consistency or purity drift from the mandate.
• Management turnover in portfolio team or senior management.
• Investment process change, including varying the index or benchmark.
• Failure to adhere to the IPS or other compliance issues.
• Investigation of the firm by the Securities and Exchange Commission (SEC).
• Significant asset flows into or out of the company.
• Merger or sale of firm.
• Fee increases outside of the competitive range.
ADOPTED 9 -14 -2009 Page 7
• Servicing issues — key personnel stop servicing the account without proper
notification.
• Failure to attain a 60% vote of confidence by the Board.
Nothing in this section shall limit or diminish the Board's right to terminate the manager at any
time for any reason.
VIII. APPLICABLE CITY ORDINANCES
If at any time this document is found to be in conflict with the City Ordinances or applicable
Florida Statutes, the Ordinances and Statutes shall prevail.
IX. REVIEW AND AMENDMENTS
It is the Board's intention to review this document at least annually subsequent to the actuarial
report and to amend this statement to reflect any changes in philosophy, objectives, or
guidelines. In this regard, the Investment Manager's interest in consistency in these matters is
recognized and will be taken into account when changes are being considered. If, at any time,
the Investment Manager feels that the specific objectives defined herein cannot be met, or the
guidelines constrict performance, the Board should be notified in writing. By initialing and
continuing acceptance of this Investment Policy Statement, the Investment Managers concur
with the provisions of this document. By signing this document, the Chairman attests that this
policy has been recommended by the Investment Consultant, reviewed by the plan's legal
counsel for compliance with applicable law, and approved by the Board of Trustees.
X. FILING OF THE INVESTMENT POLICY
Upon adoption by the Board, the investment policy shall be promptly filed with the Florida
Department of Management Services, the City. and the plan's actuary. The effective date of the
Investment Policy shall be the 31 days following the filing date with the City.
CITY OF EDGEWATER FIREFIGHTERS' PENSION PLAN
( \■ t 1
- Chairman, Board of Trustees Date
ADOPTED 9 -14 -2009 Page 8
•
CITY OF EDGEWATER FIREFIGHTERS' PENSION PLAN
ADDENDUM TO
STATEMENT OF INVESTMENT POLICY
Bowen Hanes
(Opportunistic Core)
Bowen has been retained by the City of Edgewater Firefighters' Pension Plan to manage a well-
diversified portfolio of equity and money market securities. Bowen Hanes was retained for this
assignment based on their qualifications and experience in managing equity portfolios.
I. GUIDELINES
Within the guidelines contained in the Statement of Investment Policy established for the City of
Edgewater Firefighters' Pension Plan, the Bowen Hanes portfolio must comply with the
following:
A. The diversification of the equities held in the manager's portfolio among industries and
issuers is the responsibility of the investment manager. However, the overall manager's
portfolio characteristics should exhibit all capitalizations without a style bias.
B. American Depository Receipts (ADRs) are permitted.
C. Investments in cash and equivalents shall generally not exceed 15 %.
D. Not more than 10% of the manager's assets, at the time of purchase, shall be invested in the
common stock, capital stock or convertible stock of any one issuing company, nor shall the
aggregate investment in any one issuing company exceed 5% of the outstanding capital
stock of the company.
E. Short sales are prohibited.
F. The use of futures and options for hedging purposes is prohibited unless specifically
authorized by the Board and the manager is'notified in writing.
G. No equities may be purchased which are not publicly traded.
H. No use may be made of margin or leverage purchases.
I. No direct commodities are to be purchased.
9/14/09 Page 1
II. INVESTMENT OBJECTIVES
Total Portfolio:
A. The primary objective of the Bowen Hanes portfolio shall be to achieve a return over the
longer term, 3 to 5 years, in excess of the Russell 3000 Stock Index.
B. The secondary objective of the portfolio shall be to achieve a rate of return over the longer
teen, 3 to 5 years, that ranks in the top 40"' percentile of a representative universe of
similarly managed portfolios.
C. The volatility of the Fund's total returns is expected to be similar to that of this Target Index
and will be evaluated accordingly.
III. POLICY REVIEW '
This Addendum is a part of the City of Edgewater Firefighters Investment Policy and is
intended only to complement the objectives and guidelines outlined therein. It is the
intention of the Board of Trustees of the City of Edgewater Firefighters' Retirement System to
review the Statement of Investment Policy and this Addendum from time to time and to amend
them if necessary to reflect any changes in philosophy or objectives. However, if at any time the
investment manager believes that the specific objectives defined herein cannot be met, or that the
guidelines unnecessarily constrict performance, the Trustees shall be so notified in writing. By
signing this addendum the investment manager understands and agrees to adhere to the
guidelines, investment manager responsibilities, and other conditions therein.
N
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cri airniaii; Balard'of Trustees Date
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Bowen Hanes &�- Date
I
9/14/09 page 2
CITY OF EDGEWATER FIREFIGHTERS'
PENSION PLAN
ADDENDUM TO
STATEMENT OF INVESTMENT POLICY
Bowen Hanes
(Core Fixed Income)
Bowen Hanes has been retained by the City of Edgewater Firefighters' Pension Plan to manage a
well- diversified portfolio of fixed income and money market securities. Bowen Hanes was
retained for this assignment based on their qualifications and experience in managing fixed
income portfolios.
I. GUIDELINES
Within the guidelines contained in the Statement of Investment Policy established for the City of
Edgewater Firefighters' Pension Plan, the portfolio must comply with the following:
A. Securities rated below "BBB" by a major rating agency shall not exceed 1 5% of the
manager's portfolio.
B. Foreign bonds are permitted.
C. Non - dollar denominated bonds are prohibited.
D. The market value of bonds issued by any single issuer shall not exceed 5% of the fixed
income portfolio.
E. The duration of the manager's portfolio shall fall within a band of ±1- 25% of the Target
Index.
II. INVESTMENT OBJECTIVES
Total Portfolio:
A. The primary objective of the Bowen Hanes portfolio shall be to achieve a total return over
the longer term, 3 to 5 years, in excess of a Target Index. The Target Index for the portfolio
is defined as a 100% investment in the Barclays Capital U.S. Aggregate Bond Index.
B. The secondary objective of the Bowen Hanes portfolio shall be to achieve a total rate of
return over the longer tern, 3 to 5 years, that ranks in the top 40 percentile of a
representative universe of similarly managed portfolios.
C. The volatility of the Fund's total returns is expected to be similar to that of this Target Index
and will be evaluated accordingly.
9/14/09 Page 1
III. POLICY REVIEW
This Addendum is a part of the City of Edgewater Firefighters' Investment Policy and is
intended only to complement the objectives and guidelines outlined therein. It is the
intention of the Board of Trustees of the City of Edgewater Firefighters' Pension Board to
review the Statement of Investment Policy and this Addendum from time to time and to amend
them if necessary to reflect any changes in philosophy or objectives. However, if at any time the
investment manager believes that the specific objectives defined herein cannot be met, or that the
guidelines unnecessarily constrict performance, the Trustees shall be so notified in writing. By
signing this addendum the investment manager understands and agrees to adhere to the
guidelines, investment manager responsibilities, and other conditions therein.
\ N.)
Chainnan ; of Trustees Date
/ / 3a
- _ 1l ha
Bowen Hanes
Date
9/14/09 Page 2
CITY OF EDGEWATER
FIREFIGHTERS' RETIREMENT PENSION FUND
ACTUARIAL VALUATION
AS OF OCTOBER 1, 2009
CONTRIBUTIONS APPLICABLE TO THE
PLAN /FISCAL YEAR ENDED SEPTEMBER 30, 2010
Foster&Foster.
Actuarial Consultants for Retirement Programs
March 15, 2010
Board of Trustees
City of Edgewater
Firefighters' Pension Board
P.O. Box 100
Edgewater, FL 32132 -0100
Re: City of Edgewater
Firefighters' Retirement Pension Fund
Dear Board:
We are pleased to present to the Board this report of the annual actuarial valuation of
the City of Edgewater Firefighters' Retirement Pension Fund. The valuation was
performed to determine whether the assets and contributions are sufficient to provide
the prescribed benefits and to develop the appropriate funding requirements for the
applicable plan year.
The valuation has been conducted in accordance with generally accepted actuarial
principles and practices, including the applicable Actuarial Standards of Practice as
issued by the Actuarial Standards Board, and reflects laws and regulations issued to
date pursuant to the provisions of Chapters 112, and 175, Florida Statutes, as well as
applicable federal laws and regulations. In our opinion, the assumptions used in this
valuation, as adopted by the Board of Trustees, represent reasonable expectations of
anticipated plan experience.
In conducting the valuation, we have relied on personnel, plan design, and asset
information supplied by the City of Edgewater and the Board of Trustees, financial
reports prepared by the custodian bank, SunTrust, and the actuarial assumptions and
methods described in the Actuarial Assumptions section of this report. While we cannot
verify the accuracy of all this information, the supplied information was reviewed for
consistency and reasonableness. As a result of this review, we have no reason to
doubt the substantial accuracy of the information and believe that it has produced
appropriate results. This information, along with any adjustments or modifications, is
summarized in various sections of this report.
The undersigned is familiar with the immediate and long -term aspects of pension
valuations, and meets the Qualification Standards of the American Academy of
Actuaries necessary to render the actuarial opinions contained herein. All of the
sections of this report are considered an integral part of the actuarial opinions.
13420 Parker Commons Blvd., Suite 104 • Fort Myers, Florida 33912 • 239 - 433 -5500 • Fax 239 - 481 -0634 • www.foster- foster.com
Board of Trustees
March 15, 2010
Page Two
To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the
program has any direct financial interest or indirect material interest in the City of
Edgewater, nor does anyone at Foster & Foster, Inc. act as a member of the Board of
Trustees of the City of Edgewater Firefighters' Retirement Pension Fund. Thus, there is
no relationship existing that might affect our capacity to prepare and certify this actuarial
report.
If there are any questions, concerns, or comments about any of the items contained in
this report, please contact me at 239 - 433 -5500.
Respectfully submitted,
Foster & Foster, Inc.
(Al3Tj7\-t
By:
Jason L. Franken, FSA, EA, MAAA
Enrolled Actuary #08 -6888
JLF /mjg
Enclosures
TABLE OF CONTENTS
Section Title Page
Introduction
a. Summary of Report 1
b. Changes Since Prior Valuation 3
c. Requirements of Chapter 112,
Part VII, Florida Statutes 4
II Valuation Information
a. Reconciliation of
Unfunded Actuarial Accrued Liability 9
b. Actuarial Assumptions and
Funding Methods 10
c. Valuation Notes 11
d. Partial History of Premium
Tax Refunds 12
e. Excess State Monies Reserve 13
III Trust Fund 14
IV Member Statistics
a. Eligibility for Retirement 19
b. Statistical Data 20
c. Age and Service Distribution 21
d. Member Reconciliation 22
V Summary of Plan Provisions 23
VI Governmental Accounting Standards 26
Board Statements No. 25 and No. 27
Disclosure Information
VII Chapter 175 Share Plan 29
SECTION I
INTRODUCTION
1
SUMMARY OF REPORT
The regular annual actuarial valuation of the City of Edgewater Firefighters'
Retirement Pension Fund, performed as of October 1, 2009, has been completed and the
results are presented in this Report. The contribution amounts set forth herein are applica-
ble to the plan /fiscal year ended September 30, 2010.
The contribution requirements, compared with those developed in the October 1,
2008, actuarial valuation, are as follows:
Valuation Date 10/1/2008 10/1/2009
Applicable Plan Year End 9/30/2009 9/30/2010
Total Required Contribution
% of Total Annual Payroll 25.6% 30.0%
Member Contributions (Est.)
% of Total Annual Payroll 6.0% 6.0%
City and State Required Contribution
% of Total Annual Payroll 19.6% 24.0%
State Contribution (est.) * 66,946 66,946
% of Total Annual Payroll 4.5% 4.5%
Balance from City **
% of Total Annual Payroll 15.3% 19.5%
* "Frozen" for purposes of determining the minimum City contribution
amount. All additional State Monies are allocated to the "Share Plan ". See
Page 29 for details.
** For budgeting purposes, the required Sponsor Contribution (City and State) is
24.0% of Pensionable Earnings for the fiscal year ending September 30, 2010.
The precise City requirement for the year is this amount, less actual State Contri-
butions (up to the maximum $66,946).
2
During the last year, the experience has been more unfavorable than
expected, relative to the Plan's actuarial assumptions. The primary components of the loss
included a -0.1% investment return (Actuarial Asset Basis) that was Tess than the 7.5% as-
sumption and one large liability Member receiving a much higher than anticipated increase
in pensionable compensation. These losses were slightly offset by average increases in
pensionable compensation that were less than the assumed rate by 4.7 %.
The balance of this Report presents additional details of the actuarial valuation and
the general operation of the Fund. The undersigned would be pleased to meet with the
Board of Trustees in order to discuss the Report and any pending questions concerning its
contents.
Respectfully submitted,
FOSTER & FOSTER, INC.
By: (/�,
Christine M. L r
By:
Jason L. Franken, FSA, EA, MAAA
3
Plan Changes Since Prior Valuation
There have been no changes to the plan since the prior valuation.
Actuarial Assumption /Method Changes Since Prior Valuation
There have been no changes in actuarial assumptions or methodologies since the prior val-
uation.
4
Comparative Summary of Principal Valuation Results
10/1/2009 10/1/2008
A. Participant Data
Number Included
Actives 29 30
Service Retirees 1 0
Beneficiaries 0 0
Terminated Vested 1 1
Disability Retirees 1 1
Total 32 32
Total Annual Payroll 1,475,963 1,556,068
Payroll Under Assumed Ret. Age 1,475,963 1,556,068
Annual Rate of Payments to:
Service Retirees 52,720 0
Beneficiaries 0 0
Terminated Vested 11,018 11,018
Disability Retirees 11,532 11,532
B. Assets
Actuarial Value 4,977,603 4,700,591
Market Value 4,241,031 3,954,270
C. Liabilities
Present Value of Benefits
Active Members
Retirement Benefits 7,082,284 7,300,502
Disability Benefits 59,156 65,058
Death Benefits 48,246 51,287
Vested Benefits 420,199 343,172
Refund of Contributions 8,679 18,925
Service Retirees 701,147 0
Beneficiaries 0 0
Terminated Vested 104,591 96,831
Disability Retirees 156,050 156,321
Excess State Monies Reserve 0 0
Total 8,580,350 8,032,097
5
10/1/2009 10/1/2008
C. Liabilities - (Continued)
Present Value of Future Salaries 11,615,096 12,598,459
Present Value of Future Member Cont. 696,906 755,908
Normal Cost (Entry Age Normal)
Service Ret 338,734 355,357
Disability Benefits 1,560 1,834
Death Benefits 1,183 1,348
Vest Benefits 20,943 24,579
Refunds 270 511
Total Normal Cost 362,691 383,629
Present Value of Future Normal Costs 2,927,466 3,219,066
Actuarial Accrued Liability
Service Ret 4,420,989 4,404,034
Disability Benefits 41,147 43,246
Death Benefits 34,733 35,292
Vest Benefits 189,032 64,738
Refunds 5,197 12,568
Inactive plus excess reserve 961,787 253,152
Total Actuarial Accrued Liability 5,652,885 4,813,031
Unfunded Actuarial Accrued Liability 675,282 112,440
D. Actuarial Present Value of Accrued Benefits
Vested Accrued Benefits
Inactives 961,787 253,152
Actives 2,486,988 2,639,311
Member Contributions 713,758 654,192
Total 4,162,533 3,546,654
Non - vested Accrued Benefits 65,143 48,592
Total Present Value Accrued 4,227,676 3,595,247
Benefits
Increase (Decrease) in Present Value of
Accrued Benefits Attributable to:
Plan Amendments 0
Assumption Changes 0
New Accrued Benefits 417,861
Benefits Paid (53,084)
Interest 267,652
Other 0
Total: 632,430
6
Valuation Date 10/1/2009 10/1/2008
Applicable to Fiscal Year Ending 9/30/2010 9/30/2009
E. Pension Cost
Normal Cost (with interest)
% of Total Annual Payroll* 25.5 25.6
Administrative Expense (with interest)
% of Total Annual Payroll*
0.8 0.8
Payment Required to Amortize
Unfunded Actuarial Accrued
Liability over 25 years
(as of 10/1/09)
% of Total Annual Payroll* 3.7 (0.7)
Total Required Contribution
% of Total Annual Payroll* 30.0 25.6
Expected Member Contributions
% of Total Annual Payroll* 6.0 6.0
Expected City & State Contrib.
% of Total Annual Payroll* 24.0 19.6
F. Past Contributions
Plan Years Ending: 9/30/2009
Total Required Contribution 382,441
City and State Requirement 292,806
Actual Contributions Made:
Members 89,635
City 254,858
State 66,946
Total 411,439
G. Net Actuarial Gain (Loss) (564,571)
* Contributions developed as of 10/1/09 are expressed as a percentage of projected
annual payroll at 10/1/09 of $1,475,963
** Frozen pursuant to Chapter 175, Florida Statutes until benefit improvements
are implemented.
7
H. Schedule Illustrating the Amortization of the Total Unfunded Actuarial Accrued
Liability as of:
Projected Unfunded
Year Accrued Liability
2009 675,282
2010 669,017
2011 659,434
2016 546,762
2021 346,555
2031 125,104
2034 0
I. (i) 3 Year Comparison of Actual and Assumed Increases in Pensionable Compensation.
Actual Assumed
Year Ended 9/30/2009 2.8% 7.5%
Year Ended 9/30/2008 -0.5% 7.5%
Year Ended 9/30/2007 10.8% 7.5%
(ii) 3 Year Comparison of Investment Return on Actuarial Value
Actual Assumed
Year Ended 9/30/2009 -0.1% 7.5%
Year Ended 9/30/2008 1.6% 7.5%
Year Ended 9/30/2007 8.6% 7.5%
(iii) Average Annual Payroll Growth
(a) Payroll as of: 10/1/2009 $1,475,963
10/1/1999 632,671
(b) Total Increase 133.3%
(c) Number of Years 10.00
(d) Average Annual Rate 8.8%
8
Statement by Enrolled Actuary
This actuarial valuation was prepared and completed by me or under my direct
supervision, and I acknowledge responsibility for the results. To the best of my
knowledge, the results are complete and accurate, and in my opinion, the techniques
and assumptions used are reasonable and meet the requirements and intent of
Part VII, Chapter 112, Florida Statutes. There is no benefit or expense to be provided
by the plan and /or paid from the plan's assets for which liabilities or current costs
have not been established or otherwise taken into account in the valuation. All
known events or trends which may require a material increase in plan costs or
required contribution rates have been taken into account in the valuation.
Jason L. Franken, FSA, EA, MAAA
Enrolled Actuary #08 -6888
A copy of this Report is to be furnished to the Division of Retirement within 60 days
of receipt from the actuary at the following address:
Patricia Shoemaker Keith Brinkman
Municipal Police and Fire Division of Retirement
Pension Trust Funds Bureau of Local Retirement Systems
Division of Retirement Post Office Box 9000
Post Office Box 3010 Tallahassee, FL 32315 -9000
Tallahassee, FL 32315 -3010
SECTION II
VALUATION INFORMATION
9
Reconciliation of Unfunded Actuarial Accrued Liabilities
(1) Unfunded Actuarial Accrued Liability $112,440
as of October 1, 2008
(2) City and State Normal Cost Applicable 302,395
for the year *
(3) Interest on (1) and (2) 30,658
(4) Sponsor Contributions to the System during the 321,804
year ending September 30, 2009
(5) Interest on (4) 12,978
(6) Change to UAAL due to (Gain) or Loss 564,571
(7) Unfunded Accrued Liability as of October 1, 2009 675,282
( +( +( ( +(
Date Years 10/1/2009 Amortization
Base Established Remaining Amount Amount
Method Change 10/1/2004 25 $279,255 $14,603
Experience Loss 10/1/2004 ** 19 275,979 17,803
Experience Loss 10/1/2005 19 7,356 475
Experience Gain 10/1/2006 19 (115,385) (7,443)
Experience Loss 10/1/2007 19 31,257 2,016
Experience Gain 10/1/2008 9 (233,872) (28,498)
Method Change 10/1/2008 19 (133,878) (8,636)
Experience Loss 10/1/2009 10 564,571 62,620
675,282 52,940
*Includes $12,130 for administrative expenses.
** It is assumed that 50% of the cost method change base from 2004 was attributable
to unfavorable actuarial experience prior to that date.
10
ACTUARIAL ASSUMPTIONS AND FUNDING METHODS
Assumptions
Mortality Rate 1983 GAM Table - Sex Distinct. Rates for
disabled lives are set forward five years.
Interest Rate 7.5% per year compounded annually, net of in-
vestment related expenses.
Retirement Age Earlier of 1) Age 55 and the completion of 5 years
of service, or 2) the completion of 20 years of ser-
vice, regardless of age. Also, any member who
has reached Normal Retirement is assumed to
continue employment for one additional year.
Disability Rate See table below (1201).
Termination Rate See table below (1302).
Salary Increases 7.5% per year until the assumed retirement age
(see table below). Projected salary in the year of re-
tirement is increased 20% to account for
nonregular compensation.
Early Retirement Commencing at eligibility for Early Retirement,
members are assumed to retire with an
immediate benefit at the rate of 5% per year.
Administrative Expenses $11,513 per year.
Payroll Growth 5.0% per year.
% Becoming Disabled % Terminating Current Salary as % of
Age During the Year During the Year Salary at Age 53
20 .03% 6.0% 9.2%
30 .04 5.0 18.9
40 .07 2.6 39.1
50 .18 0.8 80.5
Funding Method
Entry Age Normal Actuarial Cost Method
11
VALUATION NOTES
Total Annual Payroll is the projected annual rate of pay for the fiscal year preceding the
valuation date of all covered members.
Present Value of Benefits is the single sum value on the valuation date of all future
benefits to be paid to current Members, Retirees, Beneficiaries, Disability Retirees and
Vested Terminations.
Normal (Current Year's) Cost is determined for each participant as the present value of
future benefits, determined as of the member's entry age, amortized as a level
percentage of compensation over the anticipated number of years of participation,
determined as of the entry age.
Individual Entry Aqe Normal Actuarial Cost Method (Level Percent of Compensation)
is the method used to determine required contributions under the Plan. The use of
this method involves the systematic funding of the Normal Cost (described above) and
the Unfunded Accrued (Past Service) Liability. The actuarial accrued liability for active
participants is the difference between the present value of future benefits and the
present value of future Normal Costs. The actuarial accrued liability for inactive partic-
ipants is the present value of future benefits.
Unfunded Actuarial Accrued Liability (UAAL) is the difference between the actuarial
accrued liability (described above) and the actuarial value of assets. Under the Entry
Age Normal Actuarial Cost Method, an actuarial gain or Toss, based on actual versus
expected UAAL, is determined in conjunction with each valuation of the plan.
Total Required Contribution is equal to the Normal Cost plus an amount sufficient to
amortize the Unfunded Accrued Liability over no more than 30 years. The required
amount is adjusted for interest according to the timing of contributions during the year.
12
PARTIAL HISTORY OF PREMIUM TAX REFUNDS
Received During Increase from
Fiscal Year Amount Previous Year
1991 9,348.42 %
1992 13,730.66 46.9%
1993 19,117.38 39.2%
1994 23,283.09 21.8%
1995 21,636.86 -7.1%
1996 23,899.69 10.5%
1997 25,299.42 5.9%
1998 47,642.95 88.3%
1999 41,330.46 -13.2%
2000 13,141.01 -68.2%
2001 99,059.22 653.8%
2002 59,783.17 -39.6%
2003 62,787.48 5.0%
2004 74,704.18 19.0%
2005 76,405.86 2.3%
2006 89,820.32 17.6%
2007 98,797.85 10.0%
2008 126,392.81 27.9%
2009 149,161.09 18.0%
EXCESS STATE MONIES RESERVE
Regular Distribution
Actual Applicable Excess State
State Contribution "Frozen" Amount Monies Reserve
Special Distribution
Actual Applicable Excess State
State Contribution "Frozen" Amount Monies Reserve
1998
$27,077.58
$27,077.58
$0.00
N/A
N/A
N/A
1999
29,676.24
55,291.58
0.00
11,65412
11,654.22
0.00
2000
42,819.90
53,291.58
0.00
13,141.01
13,654.22
0.00
2001
50,806.32
55,291.58
0.00
5,433.00
11,654.22
0.00
2002
59,387.22
55,291.58
4,095.64
395.95
11,654.22
0.00
2003
60,579.48
55,291.58
5,287.90
2,208.00
11,654.22
0.00
2004
70,534.72
55,291.58
15,243.14
4,169.46
11,654.22
0.00
2005
71,009.94
55,291.58
15,718.36
5,395.92
11,654.22
0.00
2006
83,487.36
55,291.58
28,195.78
6,332.96
11,654.22
0.00
2007
90,304.80
55,291.58
35,013.22
8,493.05
11,654.22
0.00
2008
94,710.49
55,291.58
39,418.91
31,682.32
11,654.22
20,028.10
2009
94,421.39
55,291.58
39,129.81
54,739.70
11,654.22
43,085.48
182,102.76
63,113.58
Accumulated Regular Excess
182,102.76
Accumulated Special Excess
63,113.58
Less Amount Allocated to Share
Plan
(245,216.34)
Total State Monies Reserve
$0.00
W
SECTION III
TRUST FUND
14
City of Edgewater
Firefighters' Pension Fund
BALANCE SHEET
September 30, 2009
ASSETS COST VALUE MARKET VALUE
Cash and Cash Equivalents:
Money Market 383,946.99 383,946.99
Total Cash and Equivalents 383,946.99 383,946.99
Receivable:
Member Contributions in Transit 3,764.36 3,764.36
City Contributions in Transit 20,835.23 20,835.23
State Contributions 94,421.39 94,421.39
Accrued Income 13,456.21 13,456.21
Total Receivable 132,477.19 132,477.19
Investments:
U S Govt & Agencies 75,960.02 73,871.82
Domestic Common Stocks 2,265,741.65 2,462,232.50
Corporate Bonds 793,722.75 812,337.75
Corporate CMO's 79,552.25 82,933.78
Foreign and ADR Securities 354,149.17 509,979.00
Total Investments 3,569,125.84 3,941,354.85
TOTAL ASSETS 4,085,550.02 4,457,779.03
LIABILITIES AND NET ASSETS
Total Liabilities 0.00 0.00
Net Assets:
Active and Retired Members' Equity 3,868,801.98 4,241,030.99
Share Plan Benefits 216,748.04 216,748.04
Total Net Assets 4,085,550.02 4,457,779.03
TOTAL LIABILITIES AND NET ASSETS 4,085,550.02 4,457,779.03
15
City of Edgewater
Firefighters' Pension Fund
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
September 30, 2009
Market Value Basis
INCOME
Contributions:
Member 89,634.63
Buy -Back 67,690.00
City 254,857.59
State 149,161.09
Total Contributions 561,343.31
Earnings from Investments
Interest & Dividends 110,341.65
Net Realized Gain (Loss) (979,876.12)
Unrealized Gain (Loss) 915,513.79
Total Earnings and Investment Gains 45,979.32
EXPENSES
Administrative Expenses:
Investment Related* 39,216.77
Other 11,513.25
Total Expenses 50,730.02
Distributions to Members:
Benefit Payments 42,285.62
Lump Sum Share Balances 9,482.08
Return of Contributions 1,316.04
Total Distributions 53,083.74
Share Account Net Change 216,748.04
Change in Net Assets for the Year 286,760.83
Net Assets Beginning of the Year 3,954,270.16
Net Assets End of the Year 4,241,030.99
*Investment Related expenses include investment advisory,
custodial and performance monitoring fees.
16
City of Edgewater
Firefighters' Pension Fund
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
September 30, 2009
Actuarial Asset Basis
INCOME
Contributions:
Member 89,634.63
Buy -Back 67,690.00
City 254,857.59
State 149,161.09
Total Contributions 561,343.31
Earnings from Investments
Interest & Dividends 110,341.65
Net Realized Gain (Loss) (979,876.12)
Change in Actuarial Value 905,765.18
Total Earnings and Investment Gains 36,230.71
EXPENSES
Administrative Expenses:
Investment Related* 39,216.77
Other 11, 513.25
Total Administrative Expenses 50,730.02
Distributions to Members:
Benefit Payments 42,285.62
Lump Sum Share Balances 9,482.08
Return of Contributions 1,316.04
Total Distributions 53,083.74
Share Account Net Change 216,748.04
Change in Net Assets for the Year 277,012.22
Net Assets Beginning of the Year 4,700,590.79
Net Assets End of the Year ** 4,977,603.01
*Investment Related expenses include investment advisory,
custodial and performance monitoring fees.
* *Net Assets may be limited for actuarial consideration
17
City of Edgewater
Firefighters' Pension Fund
ACTUARIAL ASSET VALUATION
September 30, 2009
Actuarial Assets for funding purposes are developed by increasing the Actuarial Assets used
in the most recent actuarial valuation of the Fund by the average annual market value rate of
return (net of investment related expenses) for the past four years, but are limited to 120% of
Market Value, if less.
Details of the derivation are set forth as follows:
Plan Year End Rate of Return*
9/30/06 6.72%
9/30/07 12.22%
9/30/08 - 16.84%
9/30/09 0.16%
Annualized Rate of Return
for prior four (4) years: -0.06%
(A) 10/01/08 Actuarial Assets: ** $4,700,590.79
(I) Net Investment Income:
1. Interest and Dividends 110,341.65
2. Realized Gains (Losses) (979,876.12)
3. Change in Actuarial Value 905,765.18
4. Investment Related Expenses (39,216.77)
Total (2,986.06)
(B) 10/01/09 Actuarial Assets: $4,977,603.01
Actuarial Asset Rate of Return = 21 /(A +B -I): -0.06%
10/01/09 Limited Actuarial Assets: $4,977,603.01
(Lesser of Actuarial Assets or 120% of Market Value)
*Market Value Basis, net of investment related expenses
* *Includes one -time adjustment resulting from Actuarial Standard of Practice No. 44.
(See 10/1/08 valuation report)
SECTION IV
MEMBER STATISTICS
18
ELIGIBILTY FOR RETIREMENT
Members are eligible for Normal Retirement based upon the following criteria:
1.) Earlier of Age 55 with 5 Years of Credited Service
or 2.) 20 Years of Credited Service, regardless of age.
Members are eligible for Early Retirement based upon the following criteria:
1) Attained Age 50 with 10 Years of Credited Service
As of the date of this valuation, the following list of Members are eligible for:
Normal Retirement Early Retirement
None None
19
STATISTICAL DATA
(Averages are salary weighted)
10/1/2006 10/1/2007 10/1/2008 10/1/2009
Number 30 27 30 29
Average Current Age 34.9 36.2 36.6 37.2
Average Age at Employment 26.5 26.5 26.7 26.9
Average Past Service 8.4 9.7 9.9 10.3
Average Annual Salary $49,254 $55,388 $51,869 $50,895
20
AGE AND SERVICE DISTRIBUTION
PAST SERVICE
AGE 0 1 2 3 4 5 -9 10 -14 15 -19 20 -24 25 -29 30+ Total
15 -19 0 0 0 0 0 0 0 0 0 0 0 0
20 -24 0 1 0 1 0 0 0 0 0 0 0 2
25 - 29 0 0 0 0 2 2 0 0 0 0 0 4
30 -34 1 1 0 0 1 2 0 0 0 0 0 5
35 -39 0 1 0 0 2 1 3 1 0 0 0 8
40 -44 0 0 0 0 1 2 1 4 0 0 0 8
45 - 49 0 0 0 0 0 0 1 1 0 0 0 2
50 -54 0 0 0 0 0 0 0 0 0 0 0 0
55 - 59 0 0 0 0 0 0 0 0 0 0 0 0
60 - 64 0 0 0 0 0 0 0 0 0 0 0 0
65+ 0 0 0 0 0 0 0 0 0 0 0 0
Total 1 3 0 1 6 7 5 6 0 0 0 29
21
MEMBER RECONCILIATION
1. Active lives
a. Number in prior valuation 10/1/08 30
b. Terminations
i. Vested (partial or full) with deferred 0
benefits
ii. Non - vested or full lump sum distribution 1
received
c. Deaths
i. Beneficiary receiving benefits 0
ii. No future benefits payable 0
d. Disabled 0
e. Retired 1
f. Voluntary withdrawal 0
g. Continuing participants 28
h. New entrants 1
i. Total active life participants in valuation 29
2. Non - Active lives (including beneficiaries receiving benefits)
Service
Retirees,
Vested Receiving Receiving
Receiving Death Disability Vested
Benefits Benefits Benefits Deferred Total
a. Number prior 0 0 1 1 2
valuation
b. In 1 0 0 0 1
c. Out 0 0 0 0 0
d. Number current 1 0 1 1 3
valuation
SECTION V
SUMMARY OF PLAN PROVISIONS
22
SUMMARY OF PLAN PROVISIONS
(Through Ordinance 2005 -0 -46)
Eligibility Full -time firefighters shall participate in the
system as a condition of employment (Fire
Chief may opt out).
Salary Total Compensation.
Average Final Compensation (AFC) Average Salary for the highest 5 years during
the 10 years immediately preceding retirement
or termination.
Credited Service Total years and fractional parts of years of ser-
vice with the City as a Firefighter.
Member Contributions 6.0% of Salary.
City and State Contributions Remaining amount necessary to pay current
costs and amortize past service cost, if any, as
provided in Part VII of Florida Statutes,
Chapter 112.
Normal Retirement
Date The earlier of: 1) age 55 and the completion of
5 years of Credited Service, or 2) the
completion of 20 years of Credited Service, re-
gardless of age.
Benefit 3.0% of Average Final Compensation times
Credited Service.
Form of Benefit Ten Year Certain and Life Annuity (options
available).
Early Retirement
Date Age 50 and 10 years of Credited Service.
Benefit Determined as for Normal Retirement and
reduced 3.0% for each year that Early
Retirement precedes Normal Retirement.
23
Disability Benefit
Eligibility
Service Incurred Covered from Date of Employment.
Non - Service Incurred 5 years of Credited Service.
Exclusions Disability resulting from use of drugs, illegal
participation in riots, service in military, etc.
Benefit Benefit accrued to date of disability. Minimum
benefit for Service Incurred is 42% of AFC, for
Non - Service Incurred is 25% of AFC.
Duration Payable for life (with 120 monthly payments
guaranteed), or until recovery (as determined
by the Board).
Death Benefits
Pre - Retirement
Vested Monthly accrued benefit payable to designated
beneficiary for 10 years.
Not Vested Refund of accumulated contributions without
interest.
Post- Retirement According to optional form of benefit selected.
Termination of Employment
Benefit
Less than 5 years Refund of accumulated contributions without
interest.
5 or more Refund of Contributions or Accrued benefit
payable at retirement age.
Board of Trustees a. Two Council appointees,
b. Two Members of the Department elected by
the membership, and
c. Fifth Member elected by the other 4 and
appointed by Council.
24
Deferred Retirement Option Plan
Eligibility Eligibility for Normal Retirement.
Participation Not to exceed 60 months.
Rate of Return Actual net rate of investment return (total return
net of brokerage commissions, management
fees and transaction costs) credited each fiscal
quarter.
Form of Distribution Cash lump sum at termination of employment.
Chapter 175 Share Accounts
Allocation Each year, commencing October 1, 2008,
premium tax monies received pursuant to
Chapter 175, Florida Statutes in excess of
the 1998 Base Amount plus improvements
will be allocated to individual Member Share
accounts based on full years of credited ser-
vice with the City.
Investment Earnings Net rate of investment return, based on days
worked.
Distribution Lump sum payment at retirement, termina-
tion, disability, or death.
Vesting Schedule Same as for other benefits (see above).
SECTION VI
GOVERNMENTAL ACCOUNTING STANDARDS
BOARD STATEMENTS NO. 25 AND NO. 27 INFORMATION
DISCLOSURE INFORMATION PER STATEMENT NO. 25 OF THE
GOVERNMENTAL ACCOUNTING STANDARDS BOARD
The schedule provided below has been prepared in accordance with the requirements
of paragraph 37 of Statement No. 25 of the Governmental Accounting Standards Board.
Actuarial
Actuarial Value of
Valuation Assets
Date (a)
SCHEDULE OF FUNDING PROGRESS
Actuarial
Accrued
Liability
(AAL)
- Entry Age
(b)
Unfunded
AAL Funded
(UAAL) Ratio
(b -a) (a /b)
Covered
Payroll
(c)
UAAL as
a % of
Covered
Payroll
((b -a) /c)
10/01/09
4,977,603
5,652,886
675,283
88.05%
1,475,963
45.75%
10/01/08
4,700,591
4,813,031
112,440
97.66%
1,556,068
7.23%
10/01/07
4,004,108
4,557,499
553,391
87.86%
1,495,480
37.00%
10/01/06
3,280,579
3,786,476
505,897
86.64%
1,477,632
34.24%
10/01/05
2,627,395
3,251,236
623,841
80.81%
1,419,308
43.95%
10/01/04
2,193,554
2,811,173
617,619
78.03%
1,105,165
55.88%
The schedule provided below has been prepared in accordance with the requirements
of paragraph 38 of Statement No. 25 of the Governmental Accounting Standards Board.
SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER AND OTHER CONTRIBUTING ENTITIES
Year
Ended
September 30
Annual
Required City State
Contribution Contribution Contribution
Percentage
Contributed
2009
292,806
254,858
66,946 *
109.90%
2008
323,433
256,487
66,946 *
100.00%
2007
318,049
264,272
63,785 *
103.15%
2006
316,265
254,640
61,625 *
100.00%
2005
242,078
181,391
60,688 *
100.00%
2004
246,544
187,083
59,461 *
100.00%
* Frozen pursuant to Chapter 175, Florida Statutes.
N
Cn
26
DISCLOSURE INFORMATION PER STATEMENT NO. 27 OF THE
GOVERNMENTAL ACCOUNTING STANDARDS BOARD
ANNUAL PENSION COSTS AND RELATED INFORMATION
Contribution rates as of 9/30/09
City 15.3%
Plan Members 6.0%
Annual pension cost 225,860
Contributions made 254,858
Actuarial valuation date 10/1/2008
Actuarial cost method Entry Age Normal
Amortization method Level Percentage of Pay, Closed
Remaining amortization period 26 Years
Asset valuation method 4 Year Smoothed Market
Actuarial assumptions:
Investment rate of return 7.5%
Projected salary increase* 7.5%
* Includes inflation at 3.0%
Post Retirement COLA 0.0%
THREE YEAR TREND INFORMATION
Actuarially Percentage Net
Year Determined of (A) Pension
Ending Contribution (A) Contributed Obligation
9/30/09 225,860 113% (129,739)
9/30/08 256,487 100% (102,377)
9/30/07 254,264 100% (104,039)
DISCLOSURE INFORMATION PER STATEMENT NO. 27 OF THE
GOVERNMENTAL ACCOUNTING STANDARDS BOARD
DEVELOPMENT OF NET PENSION OBLIGATION (NPO)
This municipal Defined Benefit Plan has been subject to the minimum funding standards since the
standards since the Retirement Benefits Act" (Part VII of Chapter 112, Florida Statutes) in 1980.
Accordingly, the sponsor has funded the actuarially determined required contributions for all years from
October 1, 1987, through the transition date, October 1, 1997. Thus, the NPO on October 1, 1997, is 0.
The development of the Net Pension Obligation to date is as follows:
Actuarially Determined
Contribution (A)
Interest on NPO
Adjustment to (A)
Annual Pension Cost
Contributions Made
Increase in NPO
NPO Beginning of Year
NPO End of Year
9/30/04
9/30/05
9/30/06
9/30/07
9/30/08
9/30/09
187,083
181,390
254,640
254,264
256,487
225,860
(8,321)
(8,188)
(8,058)
(7,929)
(7,803)
(7,678)
10,094
9,933
9,775
9,618
9,465
9,314
---- - - - - --
188,856
---- - - - - --
183,135
---- - - - - --
256,357
---- - - - - --
255,953
---- - - - - --
258,149
---- - - - - --
227,496
187,083
181,391
254,640
254,272
256,487
254,858
---- - - - - --
1,773
---- - - - - --
1,744
---- - - - - --
1,716
---- - - - - --
1,681
---- - - - - --
1,662
---- - - - - --
(27,362)
(110,953)
(109,180)
(107,437)
(105,720)
(104,039)
---- - - - - --
(102,377)
---- - - - - --
---- - - - - --
(109,180)
---- - - - - --
(107,437)
---- - - - - --
(105,720)
---- - - - - --
(104,039)
(102,377)
(167,687)
N
28
DISCLOSURE INFORMATION PER STATEMENT NO. 27 OF THE
GOVERNMENTAL ACCOUNTING STANDARDS BOARD
ANNUAL PENSION COSTS AND RELATED INFORMATION
Contribution rates as of 9/30/09
City 15.3%
Plan Members 6.0%
Annual pension cost 225,860
Contributions made 254,858
Actuarial valuation date 10/1/2008
Actuarial cost method Entry Age Normal
Amortization method Level Percentage of Pay, Closed
Remaining amortization period 26 Years
Asset valuation method 4 Year Smoothed Market
Actuarial assumptions:
Investment rate of return 7.5%
Projected salary increase* 7.5%
* Includes inflation at 3.0%
Post Retirement COLA 0.0%
THREE YEAR TREND INFORMATION
Actuarially Percentage Net
Year Determined of (A) Pension
Ending Contribution (A) Contributed Obligation
9/30/09 225,860 113% (102,377)
9/30/08 256,487 100% (104,039)
9/30/07 254,264 100% (105,720)
SECTION VII
CHAPTER 175 SHARE PLAN
CITY OF EDGEWATER
FIREFIGHTERS' RETIREMENT PENSION FUND
SUPPLEMENTAL CHAPTER 175 SHARE PLAN
(as of 10/112009)
Complete Earnings on
Years of Allocations
Date of Credited Termination Vested Prior Year Allocated State and Forfeiture End of Year Vested
Last First Middle tribal Date of Birth Employment Service Date Percent Balance Monies Balances Additions Distributions Balance Balance
Active membership as of 09/30/09
9,482.08
Barlow, Trevor
8/17/1966
12/8/1989
Blair, David
81211977
12/17/2007
Bradley, Russell
2/29/1972
1214/2007
Coates, Bruce
7/9/1970
3/8/1991
Cousins, Stephen
2/4/1971
2/611998
Dantgel, Jill
10/9/1964
111011992
De Rosier, John
9/6/1975
7122/2005
Everidge, Bryan
6/19/1982
3129/2002
Fade, Dominick
10/30/1974
10/8/2004
Halcomb, John
6/28/1973
4/2512003
Hayes, Michael
10/5/1966
12/1/1989
Haynes, Jason
3/4/1972
12/4/1998
Hayward, Ronald
10/14/1961
121411998
Hayward, Kory
10/22/1984
10/82004
Hudson, Brandon
9118/1983
4/252003
Jollie, James
5/10 /1965
11/27/1995
Lariscy, Jeffrey
4/15/1970
1214/1998
Lewis, Reese
10/111968
61212002
Lewis, Sheltie
8/5 11965
12/4/1998
Meeske, Dennis
4/17/1976
6/212002
Morgan, Andrew
11/411987
3/122008
Nickels, Justin
9/30/1978
1152009
Pantuso. Ashley
10/29/1986
7/1712006
Ruth, Daniel
6/27/1968
8120/1993
Spencer, David
3/27/1967
11/10/2003
Swats, Gregory
7/13/1977
4/25/2003
Thomas, Jeffrey
9/21/1971
722/2005
Ward, Jr.. David
9/8/1967
11/26/2004
White, James
9/15/1983
10/82004
19 100%
9,482.08
6,349.96
219.65
1,38334
0.00
17.435.03 17435.03
1 0%
0.00
33421
18.30
72.81
0.00
425.31
0.00
1 0%
0.00
334.21
18.30
72.81
0.00
425.31
0.00
18 100%
8,955.30
6,015.75
208.47
1.310.53
0.00
16,490.05
16.49005
11 100%
5,267.82
3,676.29
130.16
800.88
0.00
9,875.16
9,875.16
17 100%
8,42852
5,681.54
197.28
1,237.72
0.00
15545.06
15,545.06
4 0%
1,580.35
1,336.83
51.86
291.23
0.00
3,260.27
0.00
7 100%
3,160.69
2,339.46
85.42
50965
0.00
6,095.22
6,095.22
4 0%
1,580.35
1,336.83
51.86
291.23
0.00
3,260.27
0.00
6 100%
2,633.91
2,005.25
74.23
436.84
0.00
5,150.24
5,150.24
19 100%
9,482.08
6,349.96
219.65
1,383.34
0.00
17,435.03
17,435.03
10 100%
4.741.04
3,342.08
118.98
728.07
0.00
8,930.17
8,930.17
10 100%
4,741.04
3,342.08
118.98
728.07
0.00
8,930.17
8,930.17
4 0%
1,58035
1,336.83
51.86
291.23
0.00
3.260.27
0.00
6 100%
2.633.91
2.005.25
74.23
43684
0.00
5,150.24
5,150.24
13 100%
6,321.39
4,344.71
152.54
946.49
0.00
11,765.13
11,76513
10 100%
4,741.04
3,342.08
118.98
728.07
0.00
8,930.17
8.930.17
7 100%
3,16069
2,339.46
8542
509.65
0.00
6,095.22
6.095.22
10 100%
4,741.04
3,342.08
118.98
728.07
0.00
6,930.17
8.930.17
7 100%
3,160.69
2,339.46
85.42
509.65
0.00
6,095.22
6.095.22
1 0%
0.00
334.21
18.30
72.81
0.00
425.31
0.00
0 0%
000
0.00
0.00
0.00
0.00
0.00
0.O0
3 0%
1,053.56
1,002.63
40.67
218.42
0.00
2,315.28
0.00
16 100%
7,901.73
5,347.34
186.09
1,164.92
0.00
14,600.08
14,600.08
5 100%
2,107.13
1,671.04
63.04
364.04
0.00
4,205.25
4,205.25
6 100%
2,633.91
2,005.25
7413
436.84
0.00
5,150.24
5.15014
4 0%
1,580.35
1,336.83
51.86
291.23
0.00
3,260.27
0.00
4 0%
1,580.35
1,336.83
51.86
291.23
0.00
3,260.27
0.00
4 0%
1,58035
1,336.83
51,86
291.23
0.00
3,260.27
0.00
Members terminating or retiring during the fiscal year ending 09130109
Barlow, Tracey
8117/1966
12/8/1989
19
228/2009
100%
9,482.08
6,349.96
219.65
1,38134
9.482.08
7,952.95
7,952.95
Smith, Jerry
11129/1987
12/32007
1
10/31/2008
0%
0.00
0.00
0.00
0.00
0.00
0.00
OAO
Members terminating or retiring prior to
fiscal year ending 09/30109
Erdman, James
10/1111969
3/8/1991
18
22312008
100%
17,910.60
0.00
- 120.90
- 8,95520
0.00
8,834.40
8.834.40
Marsch, Christian
6/8/1976
3/1912006
3
11/6/2006
N/A
1,053.56
0.00
0.00
- 1,053.56
0.00
0.00
0.00
Newell, David
6/14/1977
121411998
10
3/1812007
NIA
4,741.04
0.00
0.00
- 4,741.04
0.00
0.00
0.00
Swets, Geoffrey
7/15/1973
3/29/2002
7
2/2612007
N/A
3,160.69
0.00
0.00
- 3,160.69
0.00
0.00
0.00
Total
246
141,177.63
82,215.29
2,837.20
0.00
9,482.08
216,748.05
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City of Edgewater
Firefighters' Retirement Plan
Quarterly Report
3rd Quarter 2010
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WWW.BOGDAHNCROUP.COM simplifying your investment and fiduciary decisions
Statistics Definitions
Statistics Description
Return — Compounded rate of return for the period.
Standard Deviation — A statistical measure of the range of a portfolio's performance, the variability of a return around its average return over a
specified time period.
Sharpe Ratio -- Represents the excess rate of return over the risk free return divided by the standard deviation of the excess return. The result is
the absolute rate of return per unit of risk. The higher the value, the better the product's historical risk - adjusted performance.
Alpha — A measure of the difference between a portfolio's actual returns and its expected performance, given its level of risk as measured
by beta. It is a measure of the portfolio's historical performance not explained by movements of the market, or a portfolio's
non - systematic return.
Beta — A measure of the sensitivity of a portfolio to the movements in the market. It is a measure of a portfolio's non - diversifiable or
systematic risk.
R- Squared -- The percentage of a portfolio's performance explained by the behavior of the appropriate benchmark. High R- Square means a
higher correlation of the portfolio's performance to the appropriate benchmark.
Treynor Ratio -- Similar to Sharpe ratio, but focuses on beta rather than excess risk (standard deviation). Represents the excess rate of return over
the risk free rate divided by the beta. The result is the absolute rate of return per unit of risk. The higher the value, the better the
product's historical risk - adjusted performance.
Downside Risk — A measure similar to standard deviation, but focuses only on the negative movements of the return series. It is calculated by
taking the standard deviation of the negative quarterly set of returns. The higher the factor, the riskier the product.
Tracking Error -- A measure of the standard deviation of a portfolio's performance relative to the performance of an appropriate market
benchmark.
Information Ratio -- Measured by dividing the active rate of return by the tracking error. The higher the Information Ratio, the more value -added
contribution by the manager.
Consistency -- The percentage of quarters that a product achieved a rate of return higher than that of its benchmark. The higher the consistency
figure, the more value a manager has contributed to the product's performance.
Excess Return -- Arithmetic difference between the managers return and the risk -free return over a specified time period.
Active Return -- Arithmetic difference between the managers return and the benchmark return over a specified time period.
Excess Risk — A measure of the standard deviation of a portfolio's performance relative to the risk free return.
Up Market Capture — The ratio of average portfolio return over the benchmark during periods of positive benchmark return. Higher values indicate
better product performance.
Down Market Capture — The ratio of average portfolio return over the benchmark during periods of negative benchmark return. Lower values indicate
better product performance.
Calculation based on monthly periodicity. - THE
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3 rd Quarter 2010 Market Environment
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Edgewater Firefighters' Retirement Plan
Benchmark History
As of September 30, 2010
Total Fund Polic Total E e uit Polic
Allocation Mandate Weight ( %) Allocation Mandate Weight ( %o)
Effective Date: Dec -2001 Effective Date: Dec -2001
Russell 3000 Index 50.00 MSCI EAFE 15.00
Barclays Capital Aggregate 40.00 Russell 3000 Index 85.00
MSCI EAFE 10.00
Effective Date: Jul -2007
Effective Date: Jul -2007 MSCI EAFE 15.00
S &P 500 Index 50.00 S &P 500 Index 85.00
Barclays Capital Aggregate 40.00
MSCI EAFE 10.00 Effective Date: Jan -2010
MSCI AC World ex USA 20.00
Effective Date: Jan -2010 Russell 3000 Index 80.00
Russell 3000 Index 50.00
Barclays Capital Aggregate 35.00
MSCI AC World ex USA 15.00
Domestic E • uity Policy
Allocation Mandate Weight ( %,)
Effective Date: Dec -2001
Russell 3000 Index 100.00
Effective Date: Jul -2007
S &P 500 Index 100.00
Effective Date: Jan -2010
Russell 3000 Index 100.00
THE
26
BOGDAHN
` GROUP
The Market Environment
Domestic Equity Style Index Performance
Period Ended: September 30, 2010
Quarter Performance - Russell Style Series
• Growth managed to outpace value by roughly 3% for the 3000 Value 10.1%
quarter at each capitalization level of the Russell data series. 3000 Index 11.5%
Whereas investors were faced with a "nowhere" to hide 3000 Growth 13.0%
scenario during the 2nd quarter's market pullback, the 3rd
quarter represented a much broader spectrum of investment 1000 Value 10.1%
opportunities. In the large cap space, growth -style managers 1000 Index 11.6%
had the benefit of performance in the heavily- weighted ( >30 %) 1000 Growth 13.0%
information technology sector, which posted a return of 11.9% -
vs. 11.6% for the broad Russell 1000 index. This technology MidCap Value 12.1%
MidCap Index 13.3%
sector advantage was further enhanced by strong
performance in the "growth- favored" industrial (14.0 %) and MidCap Growth 14.7%
consumer discretionary (15.8 %) sectors, which collectively 2000 Value 9.7%
represented an additional 27% weight of the growth index. In 2000 Index 11.3%
contrast, value -style performance for the quarter was 2000 Growth 12.8%
hampered by its roughly 27% weight to the financial sector. 0.0% 5.O% 10.O% 15.0% 20.0%
This sector's 5.4% return represented the quarter's weakest
result. 1 -Year Performance - Russell Style Series
• The advantage of growth over value for the Russell data 3000 Value 9.2%
series during the 3 quarter persists in the one -year style 3000 Index I 11.0%
index results. However, the spectrum of performance 3000 Growth 12.8%
between growth and value over the period is more varied,
ranging from a narrow 140 basis points for the Russell 1000 Value 8.9%
MidCap style benchmarks to 380 basis points for the Russell 1000 Index 10.8%
1000 series. Much like the breakdown of the 3 quarter's 1000 Growth 12.7%
style attribution, the advantage of growth over value in the MidCap Value 16.9%
one -year period is largely the result of the 1,200 basis point MidCap Index 17.5%
return range between the technology sector return of 11.1% MidCap Growth 1111111111118.3%
and the financial sector return of -0.9 %.
2000 Value 11.8%
2000 Index 13.4%
2000 Growth 14.8%
0.0% 5.0% 10.0% 15,0% 20.0%
Source: Russell Investments ��" THE
�
3 ` BOGDAHN
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Edgewater Firefighters' Retirement Plan
Bowen Hanes Fixed Portfolio
September 30, 2010
Financial Reconciliation 1 Quarter
Market Value Net Ca dal Market Value
As of Transfers Contributions Distributions Fees Expenses Income Apprec./ Deprec. As of
6/30/2010 9/30/2010
Bowen Hanes Fixed Portfolio 4,663 - 221 -29 -7 -16 35 462 5,329
Financial Reconciliation October 1, 2009 To September 30, 2010
Market Value Net Capital
Market Value
As of Transfers Contributions Distributions Fees Expenses Income ApprecJ Deprec. As of
9/30/2009 9/30/2010
Bowen Hanes Fixed Portfolio 4,339 - 610 -122 -25 -33 1 18 442 5,329
Peer Croup Analysis - US Broad Market Core Fixed Income (SA +CF) Cumulative Performance
$130.0
15.00
$127.5
• • • $120.0-
10.00 -
,- , $115.9
8
C 5.00 - .7,',7.71.7,.,- ; $110.0 -
t
•
0.00 $100.0-
1 Oct -2009 1 2 3 4 5
Quarter To Year Years Years Years Years
Sep -2010
• Bowen Hanes Fixed Portfolio 4.37 (1) 10.82 (16) 10.82 (16) 10.88 (55) 5.59 (93) N/A N/A
• Barclays Capital Aggregate 2.48 (85) 8.16 (89) 8.16 (89) 9.35 (88) 7.42 (75) 6.84 (73) 6.20 (74) $90.0 , 1 , 1 1
6/07 3/08 12/08 9/09 9/10
Median 2.86 9.14 9.14 10.98 8.10 7.35 6.67 - Bowen Hanes Fixed Portfolio - -= a Barclays Capital Aggregate
Comparative Performance
1 1 1 1 1 1
Quarter Quarter Quarter Quarter Quarter Quarter
Ending Ending Ending Ending Ending Ending
Jun -2010 Mar -2010 Dec -2009 Sep -2009 Jun -2009 Mar -2009
Bowen Hanes Fixed Portfolio 0.89 (100) 2.80 (15) 2.37 (2) 5.23 (36) 8.17 (6) -1.23 (93)
Barclays Capital Aggregate 3.49 (46) 1.78 (77) 0.20 (74) 3.74 (82) 1.78 (86) 0.12 (68)
US Broad Market Core Fixed Income (SA +CF) Median 3.44 2.11 0.57 4.67 3.35 0.51
c 24 BOGDAHN
GROUP
The Market Environment
Top 10 Index Weights & 3rd Quarter Performance for the Russell 1000 & 2000
Period Ended: September 30, 2010
Top 10 Weighted Stocks Top 10 Weighted Stocks
Russell 1000 Symbol Weight Return Sector Russell 2000 Symbol Weight Return Sector
Exxon Mobil Corp XOM 2.72% 9.1% Energy Tibco Software Inc TIBX 0.25% 47.1% Information Technology
Apple Inc AAPL 2.09% 12.8% Information Technology Salix Pharmaceuticals SLXP 0.24% 1.8% Health Care
Microsoft Corp MSFT 1.68% 7.0% Information Technology Riverbed Technology In RVBD 0.24% 65.0% Information Technology
Procter & Gamble Co PG 1.55% 0.8% Consumer Staples Nordson Corp NDSN 0.23% 31.8% Industrials
General Electric Co GE 1.47% 13.5% Industrials Highwoods Pptys Inc HIW 0.23% 18.6% Financials
International Business IBM 1.46% 9.2% Information Technology Henry Jack & Assoc Inc JKHY 0.22% 7.2% Information Technology
Johnson & Johnson JNJ 1.45% 5.9% Health Care Mfa Financial Inc MFA 0.22% 5.8% Financials
At &T Inc T 1.39% 20.3% Telecomm Service Parametric Technology PMTC 0.21% 24.7% Information Technology
Jpmorgan Chase & Co JPM 1.37% 4.1% Financials Omega Healthcare Invs 01 0.21% 14.5% Financials
Chevron Corp New CVX 1.35% 20.5% Energy Verifone Sys Inc PAY 0.21% 64.1% Information Technology
Top 10 Performing Stocks Top 10 Performing Stocks
Russell 1000 Symbol Weight Return Sector Russell 2000 Symbol Weight Return Sector
Priceline Com Inc PCLN 0.12% 97.3% Consumer Discretionary 3Par Inc PAR 0.08% 254.2% Information Technology
Mbia Inc MBI 0.01% 79.1% Financials Vimetx Holding Corp VHC 0.03% 148.0% Information Technology
Atmel Corp ATML 0.02% 65.8% Information Technology Keithley Instrs Inc KEI 0.01% 144.4% Information Technology
Cnh Global N V CNH 0.01% 61.8% Industrials Zymogenetics Inc ZGEN 0.03% 131.0% Health Care
Nbty Inc NTY 0.03% 61.7% Consumer Staples Unica Corp UNCA 0.03% 119.0% Information Technology
Citrix Sys Inc CTXS 0.09% 61.6% Information Technology Travelzoo Inc TZOO 0.01% 108.1% Information Technology
Informatica Corp INFA 0.03% 60.8% Information Technology Allis Chalmers Energy ALY 0.01% 102.4% Energy
Anadarko Pete Corp APC 0.22% 58.4% Energy Netezza Corp NZ 0.09% 97.0% Information Technology
Las Vegas Sands Corp LVS 0.08% 57.4% Consumer Discretionary Sycamore Networks Inc SCMR 0.05% 95.0% Information Technology
Fossil Inc FOSL 0.02% 55.0% Consumer Discretionary Arcsight Inc ARST 0.08% 94.6% Information Technology
Bottom 10 Performing Stocks Bottom 10 Performing Stocks
Russell 1000 Symbol Weight Return Sector Russell 2000 Symbol Weight Return Sector
Tfs Finl Corp TFSL 0.01% -25.9% Financials Lecg Corp XPRT 0.00% -57.7% Industrials
Capitol Fed Finl CFFN 0.01% - 24.4% Financials Alphatec Holdings Inc ATEC 0.02% - 54.1% Health Care
Lincare Hldgs Inc LNCR 0.02% -22.3% Health Care Amag Pharmaceuticals I AMAG 0.06% -49.9% Health Care
Fti Consulting Inc FCN 0.01% -20.4% Industrials Dynavox Inc DVOX 0.01% - 49.3% Health Care
Bancorpsouth Inc BXS 0.01% - 19.5% Financials Arena Pharmaceuticals ARNA 0.06% - 48.9% Health Care
Wilmington Trust Corp WL 0.01% - 18.9% Financials Aspenbio Pharma Inc APPY 0.00% -48.0% Health Care
Comstock Res Inc CRK 0.01% - 18.9% Energy First Bancorp P R FBP 0.00% -47.2% Financials
Aeropostale ARO 0.02% -18.8% Consumer Discretionary Green Bankshares Inc GRNB 0.01% - 46.8% Financials
Beckman Coulter Inc BEC 0.03% - 18.8% Health Care Network Engines Inc NENG 0.01% -46.1% Information Technology
Vistaprint N V VPRT 0.01% -18.6% Information Technology Amedisys Inc AMED 0.08% -45.9% Health Care
��
THE
Source: Thompson Financial
5 BOGDAHN
GROUP
dno
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Edgewater Firefighters' Retirement Plan
Bowen Hanes International
September 30, 2010
Financial Reconciliation 1 Quarter
Market Value Net Ca rtal Market Value
As of Transfers Contributions Distributions Fees Expenses Income ApprecJ Deprec. As of
6/30/2010 9/30/2010
Bowen Hanes International 4,663 - 221 -29 -7 -16 35 462 5,329
Financial Reconciliation October 1, 2009 To September 30, 2010
Market Value Net Capital Market Value
As of Transfers Contributions Distributions Fees Expenses Income Apprec./ Deprec. As of
9/30/2009 9/30/2010
Bowen Hanes International 4.339 - 610 -122 -25 -33 118 442 5,329
Peer Group Analysis - International Core Equity (SA +CF) Cumulative Performance
$ 115.0-
30.00
•
20.00- $ 101 . 2
•
$100.0 -
,',W411
', Y .
10.00-
° imimmim -mo mill•Imirm Newomm
L _� - a ��
8 0.00 - $85. -
k gtx t -
CI' $ 77.1
WIGRAMERV
- 10.00 - S7 $70.0 -
-20.00 1 1 I I 1 1
1 Oct -2009 1 2 3 4 5 $55.0 -
Quarter To Year Years Years Years Years
Sep -2010
• Bowen Hanes International 25.27 (1) 14.07 (4) 14.07 (4) 19.65 (1) 0.40 (I) N/A N/A
• International Policy 16.66 (60) 6.37 (49) 6.37 (49) 5.07 (49) -8.29 (47) -0.83 (52) 2.97 (58) $40.0 i 1 1 1 ,
9/07 6/08 3/09 12/09 9/10
Median 17.11 6.22 6.22 4.94 -8.51 -0.68 3.32 Bowen Hanes International - -M- International Policy
Comparative Performance
1 1 1 1 1 1
Quarter Quarter Quarter Quarter Quarter Quarter
Ending Ending Ending Ending Ending Ending
Jun -2010 Mar -2010 Dec -2009 Sep -2009 Jun -2009 Mar -2009
Bowen Hanes International -22.03 (100) 9.30 (1) 6.85 (2) 25.50 (2) 18.27 (97) -0.31 (1)
International Policy -12.26 (37) 1.66 (38) 2.22 (73) 19.52 (37) 25.85 (36) -13.85 (69)
International Core Equity (SA+CF) Median -12.88 1.36 3.11 19.11 24.22 -13.05 THE
22
�� BOGDAHN
GROUP
The Market Environment
U.S. Dollar International Index Attribution & Country Detail
Period Ended: September 30, 2010
MSCI -EAFE MSCI - ACWIxUS 3rd Quarter 1- Year
Country Ending Weight Ending Weight Return Return
MSCI - EAFE Ending Weight 3rd Qtr Return 1 - Year Return United Kingdom 21.5% 14.8% 19.8% 9.7%
Japan 21.1% 14.5% 5.9% 0.2%
Energy 7.4% 22.4% - 2.0% France 10.1% 0.8% 20.9% -2.9%
Materials 10.4% 19.3% 13.3% Australia 8.6% 5.9% 23.7% 9.6%
Industrials 12.2% 15.9% 10.8% Germany 8.0% 7.0% 16.7% 2.0%
Switzerland 7.8% 5.4% 13.3% 9.0%
Consumer Discretionary 10.4% 18.7% 13.3% Spain 3.8% 2.6% 27.7% - 12.5%
Consumer Staples 10.4% 14.6% 17.4% Sweden 3.2% 2.2% 24.7% 30.1%
Health Care 8.5% 11.2% 4.7% Italy 2.9% 2.0% 20.0% - 14.3%
Hong Kong 2.7% 0.2% 21.9% 21.8%
Financials 24.8% 17.8% - 7.1% Netherlands 2.6% 1.8% 16.4% 4.1%
Information Technology 4.8% 8.6% 1.0% Singapore 1.7% 1.2% 15.8% 25.6%
Finland 1.1% 0.1% 26.5% 1.7%
Telecommunication Services 5.8% 20.3% 6.1% Denmark 1.0% 0.7% 17.7% 19.0%
Utilities 5.2% 11.3% - 6.8% Belgium 1.0% 0.7% 19.6% 5.6%
Total 100.0% 16.5% 3.7% Israel 0.8% 0.6% 11.6% 14.4%
Norway 0.8% 0.6% 29.4% 14.9%
Austria 0.3% 0.2% 28.4% -10.6%
Greece 0.3% 5.5% 18.9% -52.3%
Portugal 0.3% 0.2% 20.6% -9.5%
Ireland 0.2% 0.2% -3.4% -24.8%
New Zealand 0.1% 0.1% 13.6% -1.9%
otal EAFE Countries 100.0% 67.0% 16.5% 3.7%
Canada 7.6% 13.4% 13.5%
MSCI - ACWIxUS Ending Weight 3rd Qtr Return 1 -Year Return otal Developed Countries 74.6% 16.2% 4.6%
Energy 10.4% 16.8% 2.3% China 4.3% 10.7% 14.1%
Materials 12.2% 20.3% 18.7% Brazil 3.9% 21.8% 16.6%
Korea 3.2% 17.2% 15.3%
Industrials 10.5% 17.4% 13.7% Taiwan 2.5% 19.9% 13.0%
Consumer Discretionary 9.1% 19.6% 17.6% India 1.9% 15.4% 27.4%
Consumer Staples 9.0% 15.8% 21.4% Hong Kong 1.8% 21.9% 21.8%
South Africa 1.8% 25.4% 29.7%
Health Care 6.1% 11.4% 6.9% Russia 1.4% 13.4% 13.2%
Financials 25.7% 17.5% -0.4% Mexico 1.0% 11.5% 24.3%
Information Technology 6.4% 10.7% 5.0% Malaysia 0.7% 18.9% 38.6%
Indonesia 0.6% 17.9% 42.6%
Telecommunication Services 6.1% 18.0% 9.7% Turkey 0.4% 31.9% 43.7%
Utilities 4.5% 11.2% -3.1% Chile 0.4% 32.6% 57.9%
Thailand 0.4% 32.5% 49.2%
Total 100.0% 16.7% 8.0% Poland 0.4% 35.6% 25.1%
Colombia 0.2% 32.3% 49.6%
Peru 0.2% 24.9% 32.0%
Philippines 0.1% 29.6% 54.2%
Hungary 0.1% 27.0% 3.3%
Czech Republic 0.1% 17.4% -5.2%
Morocco 0.0% 8.3% 3.1%
Total Emerging Countries 25.4% 18.2% 20.5%
Total ACWIxUS Countries 100.0% 16.7% 8.0%
��
THE
Source: MSCI Capital Markets, & Franklin/Templeton 7 ` BOGDAHN
GROUP
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Edgewater Firefighters' Retirement Plan
Bowen Hanes Domestic Equity
September 30, 2010
Financial Reconciliation 1 Quarter
Market Value Net Ca rtal Market Value
As of Transfers Contributions Distributions Fees Expenses Income Apprec./ Deprec. As of
6/30/2010 9/30/2010
Bowen Hanes Domestic Equity 4,663 - 221 -29 -7 -16 35 462 5,329
Financial Reconciliation October 1, 2009 To September 30, 2010
Market Value Net Ca t 1 Market Value
As of Transfers Contributions Distributions Fees Expenses Income Apprec./ Deprec. As of
9/30/2009 9/30/2010
Bowen Hanes Domestic Equity 4,339 - 610 -122 -25 -33 118 442 5,329
Peer Group Analysis - LJS Core /Large Cap Equity (SA +CF) Cumulative Performance
$110.0
20.00
! - • • $100.0
10.00 - w �+ womomm
$90.0
••••=1
1 \
0.00 -
°. x. .4s §4:4
C $80.0
TAMM
-10.00 - ic.
$70.0
-20.00 1 1
$60.0
1 :::: Quarter Year Years Years Years Years
• Bowen Hanes Domestic Equity 12.09 (17) 13.22 (10) 13.22 (10) 0.80 (66) -7.51 (74) N/A N/A $50.0
• Bowen Hanes Domestic Equity Policy 11.53 (30) 11.11 (26) 11.11 (26) 1.70 (45) -6.90 (58) N/A N/A 6/07 3/08 12/08 9/09 9/10
Bowen Hanes Domestic Equity
Median 11.11 9.81 9.81 1.44 -6.52 -1.28 1.03 - -Bowen Hanes Domestic Equity Policy
Comparative Performance
1 1 1 1 1 1
Quarter Quarter Quarter Quarter Quarter Quarter
Ending Ending Ending Ending Ending Ending
Jun -2010 Mar -2010 Dec -2009 Sep -2009 Jun -2009 Mar -2009
Bowen Hanes Domestic Equity -10.33 (17) 4.91 (72) 7.37 (9) 16.66 (18) 16.20 (35) -14.05 (99)
Bowen Hanes Domestic Equity Policy -11.32 (40) 5.94 (24) 6.04 (49) 15.61 (38) 15.93 (42) -11.01 (68)
US Core /Large Cap Equity (SA +CF) Median -11.45 5.40 6.01 15.28 15.58 -10.44
�^
20 ` THE
BOGDAHN
GROUP
The Market Environment
Market Rate & Yield Curve Comparison
Period Ended: September 30, 2010
1 -Year Trailing Market Rates
• The Fed kept its target for the fed funds rate steady at 0.0% to 5.50
mom 0.25% during the quarter, which marked the 21st month of its 5.00 Fed ■Funds Rate TED Spread 3 -Month Libor
current policy. Although there was no substantial change in 4.50 BAA/10yr •Spread 10yr Treasury 10yr TIPS
the language of Fed's statement regarding their target rate,
4.00
there was a rather significant announcement regarding the
various securities held on their balance sheet. The Fed 3.50
indicated that it would maintain the current level of $1.8 trillion 3.00 - s .
in securities purchased during its quantitative easing program 2.50 -
by reinvesting the principal payments from its agency and
MBS securities holdings into longer -dated Treasuries. The 2.00 -
unchanged fed funds rate target combined with the 1.50
reinvestment announcement led investors to surmise that the 1.00 r~
current rate environment is likely to persist for the immediate
0.50
future. While credit spreads remained relatively steady during
the quarter, the continued decline of 10yr Treasury and TIPS 0.00
Sep-09 Dec -09 Mar -10 Jun -10 Sep -10
yields is clearly visible. The TED spread, a general indication
of credit risk in the global economy, also recorded a sizable Treasury Yield Curve
reduction during the quarter as Europe's ongoing sovereign 5.50 -
support efforts eased investor worries. 5.00 - I o 9/30/2009 -0- 12/31/2009 X0-6/30/2010 ♦9/30/2010
4.50 - • •
• The yield curve continued to drift downward throughout the
quarter and maintained its significant steepness. The largest 4.00 - • o
•
yield reductions were realized in the 5 to 7 year range where 3.50 - •
rates fell just over 50 basis points during the quarter. Short- •
term rates remained extremely low with the 2 -year rate 3 - 0 •
•
reaching an all time low of 0.37% during the quarter. The 10- 2.50 - •
year Treasury bond closed the quarter with a yield of 2.53 %, 2.00 -
which was down 44 basis points from the 2.97% yield on • •
6/30/10 and 132 basis points from the 3.85% yield on 1.50 -
12/31/09. 1.00 - • •
•
0.50 - in/ t
0.00 N►'
1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
��
THE
Source: Mortgage X com , US Department of Treasury & St. Louis Fed 9 ( BOGDAHN
` GROUP
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Edgewater Firefighters' Retirement Plan
Total Fund (Gross)
September 30, 2010
Financial Reconciliation October 1, 2009 To September 30, 2010
Market Value Net Capital Market Value
As of As of
Transfers Contributions Distributions Fees Expenses Income Apprec./ Deprec.
9/30/2009 9/30/2010
Total Fund (Gross) 4,339 - 610 122 -25 -33 1 18 442 5,329
Financial Reconciliation Since Inception
Market Value Market Value
Net As of Transfers Contributions Distributions Fees Expenses Income ApprecJrDeprec. As of
11/30/2001 9/30/2010
Total Fund (Gross) 1,320 - 3,855 -663 -68 -78 359 604 5,329
Peer Group Analysis - All Public Plans -Total Fund Cumrnulative Performance
$175.0 -
20.00
$160.0 -
■ •
10.00 - - __r:i. • • $149.1 al • $145.0 -
\ ��....... $135.9 et 0.00 -
E $130.0-
..
F . Pk. . . .._
a
- 10.00- $115.0-
$100.0 -
-20.00 1 1 1 i 1 1 h
1 Oct -2009 1 2 3 4 5 y
Quarter To Year Years Years Years Years $85.0 -
Sep -2010
• Total Fund (Gross) 10.55 (8) 12.22 (11) 12.22 (11) 5.50 (55) -2.28 (76) 1.42 (79) 2.66 (84)
• Total Fund Policy 9.20 (33) 9.78 (56) 9.78 (56) 5.72 (50) -1.00 (47) 2.34 (52) 3.55 (56) $70.0 , 1 1 , ,
12/01 9/03 6/05 3/07 12/08 9/10
Median 8.79 10.00 10.00 5.69 -1.20 2.40 3.65 -Total Fund (Gross) -----Total Fund Policy
Comparative Performance
1 1 1 1 1 1
Quarter Quarter Quarter Quarter Quarter Quarter
Ending Ending Ending Ending Ending Ending
Jun -2010 Mar -2010 Dec -2009 Sep -2009 Jun -2009 Mar -2009
Total Fund (Gross) -8.06 (99) 4.40 (17) 5.76 (1) 13.14 (13) 12.42 (23) -8.66 (97)
Total Fund Policy -6.38 (71) 3.92 (46) 3.33 (60) 11.14 (58) 11.13 (41) -6.76 (75)
All Public Plans -Total Fund Median -5.84 3.84 3.43 11.45 10.63 -5.81
�� THE
18 ` BOGDAHN
GROUP
The Market Environment
Historical Total Return Impact of Interest Rate Changes on Aggregate Bond Index Performance
Period Ended: September 30, 2010
Rate % Growth of $100
12.00% 1,100
18 9 16 13 12 25 Duration (Months)
3.00% 1.44% 3.19% 3.00% 1.75% 4.25% Fed Rate Increase %
11.00% - 6.49% (2.88 %) 7.73% 0.01% 1.21% 3.09% Barclays Aggregate Retur *
- 1,000
10.00%
4- -4
Rising Rate
9.00% - Environment - 900
8.00% 800
7.00% -
6.00% - 700
5.00% 600
4.00%
- 500
3.00%
2.00%
- 400
1.00% I o r I I I r I r' f 300
0.00%
PA
-1.00% -
200
-2.00% 100
- 3.00% -
'annualized for periods > 12 months
-4.00% -
s °j0ry re s re ,,l's se �.°j�'t x. 95% . ' ,Pc' �. c ? ? �. c P 's �. coc''L 0 �. cbc'r5 ,,l �. � 99y � 0 ,,,I.\ , X 99; 99I e99 a Op s Do ti e e e e g co , e OH O
s`L� stiff s`I) , s`L� s'I� stiff s'I� s'I� s`v s`I� ' s`� s'ti� <1>\ , s46 s46 <a s4 4 s4 s4 N s4 o
■ Barclays Aggregate Monthly Performance -Target Fed Funds Rate -Barclays Aggregate Growth of $100 (Y2 -Axis)
Target Fed Funds Rate
represents lower -band
series from 1/2009. \ THE
Source: Zephyr, US Department of Treasury & St. Louis Fed 11 BOGDAHN
GROUP
dnoxD
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Edgewater Firefighters' Retirement Plan
Comparative Performance Trailing Returns
As of September 30, 2010
oct -20119
1 To 1 3 4 5 Since Inception
Quarter Sep-2010 Year Years Years Years Inception Date
Total Fund (Net) 10.40 11.62 11.62 - 2.81 0.87 2.06 2.86 12/01/2001
Total Fund Poli■ 9.20 9.78 9.78 -1.00 2.34 3.55 4.68
Difference 1.20 1.84 1.84 -1.81 -1.47 -1.49 -1.82
Total Fund (Gross) 10.55 (8) Si 12.22 (11) 12.22 (11) - 2.28 (76) 1.42 (79) 2.66 (84) 3.57 N/A 12/01/2001
Total Fund Policy 9..211 (33) 9.78 (56) 9.78 (56) - 1.00 (47) 2.34 (51) 3.55 (53) 4.68 N/A
Difference 1.35 2.44 2.44 -1.28 -0.92 -0.89 -1.11
All Public Plans -Total Fund Median 8.78 10.00 10.00 -1.20 2.35 3.60 N/A
Total Domestic Equity 12.09 (17) 1122 (10) 1122 (10) -7.51 (74) i, - 1.60 (60) 0.52 (72) 1.99 (83) 12/01/2001
Domestic Equity Policy 1 1.53 (30) 11.11 (26) 11.11 (26) - 6.90 (58) - 1.41 (55) 0.81 (60) 2.69 (52)
Difference 0.56 2.11 2.11 -0.61 -0.19 -0.29 -0.70
US Core/Large Cap Equity (SA+CF) Median 11.11 9.81 9.81 -6.52 -1.28 1.03 2.72
Bowen, Hanes Domestic Equity 12.09 (17) 13.22 (10) 13.22 (10) -7.51 (74) N/A N/A -6.15 (68) 07/01/2007
Bowen Hanes Domestic Equity Policy 11.53 (30) 11.11 (26) 11.11 (26) -6.90 (58) N/A N/A -5.80 (58)
Difference 0.56 2.11 2.11 -0.61 N/A N/A -0.35
US Core/Large Cap Equity (SA +CF) Median 11.11 9.81 9.81 -6.52 - 1.28 1.03 -5.59
Total International Equity 25.27 (1) 14.07 (4) 14.07 (4) 0.40 (1) 7.48 (1) 10.00 (1) 14.12 (1) 09/01/2003
"Fotal international Policy 16.66 (60) 6.37 (49) 6.37 (49) - 8,29 (47) - 0.83 (52) 2.97 (58) 9.05 (67)
Difference 8.61 7.70 7.70 8.69 8.31 7.03 5.07
International Core Equity (SA +CF) Median 17.11 6.22 6.22 -8.51 -0.68 3.32 9.48
Bowen, Hanes International Equity 25.27 (1) 14.07 (4) 14.07 (4) 0.40 (1) N/A N/A 3.47 (1) 09/01/2007
International Policy 16.66 (60) 6.37 (49) 6.37 (49) -8.29 (47) -0.83 (52) 2.97 (58) -6.50 (49)
Difference 8.61 7.70 7.70 8.69 N/A N/A 9.97
International Core Equity (SA+CF) Median 17.11 6.22 6.22 - 8.51 - 0.68 3.32 -6.70
Total Fixed Income 4.37 (1) 10.82 (16) 10.82 (16) 5.59 (93) 3.55 (100) 3.49 (100) 4.18 (100) 12/01/2001
"Total Fixed Income Policy 2.48 (85) 8.16 (89) 8.16 (89) 7.42 (75) 6.84 (73) 6.20 (74) 5.74 (77)
Difference 1.89 2.66 2.66 - 1.83 -3.29 -2.71 -1.56
US Broad Market Core Fixed Income (SA +CF) Median 2.86 9.14 9.14 8.10 7.35 6.67 6.06
Bowen, Hanes Fixed Income 4.37 (1) 10.82 (16) 10.82 (16) 5.59 (93) N/A N/A 4.64 (98) 07/01/2007
Barclays Capital Aggregate 2.48 (85) 8.16 (89) 8.16 (89) 7.42 (75) 6.84 (73) 6.20 (74) 7.75 (74)
Difference 1.89 2.66 2.66 -1.83 N/A N/A - 3.11
US Broad Market Core Fixed Income (SA +CF) Median 2.86 9.14 9.14 8.10 7.35 6.67 8.40
Returns for periods greater than one year are annualized. THE,
Returns are expressed as percentages. /// ���
Current Fund Policy= 50% Russell 3000, 15% MSCI ACWI ex US & 35% Barclays Aggregate. 16 ' i BOGDAHN
GROUP
The Market Environment
US Business Cycle Facts
Period Ended: September 30, 2010
• The Length: At 18 months, the recession that just ended represented the longest since the great depression.
• The Damage: From peak to trough, real GDP declined at an annualized rate of 2.8% and unemployment increased by 4.1%, which
resulted in a net loss of 7 million jobs.
• The Reality: The NBER's announcement of the end of the downturn in June of 2009 is not a conclusion that economic conditions
have been favorable since that time or that the economy is now operating at normal capacity. The trough simply marks the end of the
declining phase and the start of the rising phase.
• The Definition: While the "rule of thumb" is that a recession is defined as two consecutive quarters of negative GDP, the National
Bureau of Economic Research (NBER) uses a broader definition of a recessionary period. The NBER defines a recession as "a
period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real
income, employment, industrial production, and wholesale - retail sales ".
• Double -Dip ?: Growth has clearly not returned to pre- crisis levels and several economic indicators such as unemployment might likely
go higher before recovering. However, by the NBER's definition, should there be a further downturn in economic activity from here
resulting in a newly defined recessionary period, that downturn would be considered a new recession by the NBER, not a double -dip.
�� THE
BOGDAHN
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CITY OF EDGEAA
PENSION FUND
CITY OF EDGEWATER FIREFIGHTERS' PENSION
F U , D"
)�, Current Board Members
-Jim Jollie (Chairman Member appointed *)
-Ron Hayward (Secretary Member appointed *)
- Gary Butt (Pension Board appointed *)
- Deborah Harrison (Council appointed *)
- vacant (Council appointed *)
Shontella Jackson (non -board member recording secretary)
All appointments are two -year terms with no limits
*Per Ordinance
CITY OF EDGEWATER FIREFIGHTERS' PENSION
FUNU
��, Board Member's Responsibility
- - Established by Florida Statute 175.061/.071
- - Fiduciary Liable
- - Attend Quarterly and Special meetings as scheduled
- - Invest and Reinvest assets as established by Investment Policy
- - Disburse funds
- - Record keeping
- - Ensure fund performance monitoring
CITY OF EDGEWATER FIREFIGHTERS' PENSION
FUND ---
��, Council Responsibility
Chapter 175.071(5)
The sole and exclusive administration of, and the responsibilities
for, the proper operation of the firefighters' pension trust fund
and for making effective the provisions of this chapter are
vested in the board of trustees; however, nothing herein shall
empower a board of trustees to amend the provisions of a
retirement plan without the approval of the municipality or
special fire control district
CITY OF EDGEWATER FIREFIGHTERS' PENSION
FUN D'
Professional Relationships
Bowen, Hanes & Company, Inc.
Money Manager Atlanta, Ga
Salem Trust
Custodial Agent (Bank) Tampa, FI
Foster & Foster, Inc
Independent Actuarial Fort Myers, FI
Bogdahn Consulting Group
Independent Performance Monitoring Orlando, FI
CITY OF EDGEWATER FIREFIGHTERS' PENSION
F UN OWN&
Codified Ordinances
90 -0 -27 Initial ordinance establishing the plan and partial funding
mechanism through commercial insurance policies issued within city limits:
Premium Tax Monies levied at 1.85%
Additional ordinances establishing changes or mandates since 1990:
95 -0 -13 Establishing the plan as "Local" under Chapter 175
99 -0 -04 Establishing employee contribution requirements 6% net income
Vesting Period (5 years)
20 -year minimum requirement
3% Multiplier
05 -0 -46 Buy -back procedure for Military, previous Fire Service (maximum 5- years)
DROP plan provisions (Payouts based on plan earnings with no minimum guarantee)
08 -0 -06 SHARE plan provisions (Allocates extra State premium tax monies over $66,946 year)
CITY OF EDGEWATER FIREFIGHTERS' PENSION
FUN D'
Financial Snapshot of Fund
Current Assets 12/3/10
2010 Investment earnings
Fiscal year-to-date Returns 9/30 -12/3
Ad m i n istrative Cost of Pla n
Current Assumption Rate
Funding Requirements by City
(Percent of Payroll)
-5.66 million
12.2% (Gross of Fees)
11.6% (Net of Fees)
11th Percentile of Peers
6.1%
—0.8%
7.5%
19.5%
CITY OF EDGEWATER FIREFIGHTERS' PENSION
FUN D'
Investments and Market Trends
The past few years have been rather difficult, but Bowen, Hanes & Company,
Inc, feel we should return to a more normalized environment over the coming
years. We are confident that the portfolio is positioned to add value over the
long term and is well situated to exploit a variety of top -down themes that we
think are important.
For fiscal year 2011, we are expecting less volatility, but there are plenty of
macro - economic issues that could negatively impact the market. However, we
expect that stocks will outperform both bonds and cash.
Assuming relatively small "bumps" along the way, there is no reason not to
assume another total return number close to 10 %, especially since we are off to
such a solid start. (David Kelly, Bowen, Hanes & Co in a letter dated Dec 2010)
CITY OF EDGEWATER FIREFIGHTERS' PENSION
FUN_D`___
Future Plan Options
- Increase vesting period to 10 years
- Establish a Separate Bond Manager once plan reaches 10 Million in assets
- Continue to keep administrative costs low by limiting travel to Central Florida
area when possible
- Utilizing in -house resources
CITY OF EDGEWATER FIREFIGHTERS' PENSION
F U NE
Questions?