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HomeMy WebLinkAbout2002 10 28 Consent A Contract with Trusco COMMISSION AGENDA ITEM A ICONSENT INFORMATIONAL PUBLIC HEARING REGULAR x Odoher 2R, 2002 Meeting MGR fV'- /DEPT.--,:/-)-- A lIthori7.;:)tion REQUEST: The Pension Board of Trustees is Requesting the City Commission Approve its Selection of Trusco Capital Management (SunTrust) as the Provider of Investment Management Services for the Cities Defined Benefit Pension Plan and Authorize the City Manager to Enter into Contract with Trusco in Accordance with the Cities Retirement Investment Policy. PURPOSE: To Approve Trusco as the Provider of Investment Management Services for the Cities Defined Benefit Pension Plan and Authorize the City Manager to Enter into Contract with Trusco. CONSIDERATIONS: . The Pension Board felt it was an appropriate time to evaluate providers of investment management services over pension funds given the City's new retirement investment policy. . The Cities current contract for investment management services with Trusco (SunTrust) has no expiration date. The most recent contract is dated 7/6/98. Notice of termination may be given in writing by either party with 60 days notice. . The RFP was designed by our Investment Consultant, Steve Alexander, with Public Financial Management (PFM) and reviewed and approved by the Pension Board. . The proposals were due August 30, 2002. Nine proposals were received by the cutoff date and time. . The Pension Board, Investment Consultants, Finance Director and the City Manager reviewed the proposals and on September 24,2002, the Pension Board met to discuss and rank the proposals. A presentation was given by the Cities Investment Consultants (PFM) as to their evaluation process and their recommendation. The Board decided to invite Trusco and Wachovia to the Cities for oral presentations on October 8, 2002. . Oral presentations were made on October 8, 2002, the Board ranked Trusco the highest and is recommending to the City Commission that a new contract be entered into with Trusco. Trusco's earning performance in equities was one ofthe best ofthe proposers and since 70% of the pension fund is invested in equities, the Board felt that the emphasis should be placed there. The Board also noted that the level of investment risk incurred to produce the equity returns was favorable compared to the other proposers. . Investment Management over pension funds is expected to occur under new contract beginning January 1,2003 with a slight reduction in our fees. The City pays Trusco based on the total market value at the end of each quarter. The new contract will be at 75 basis points per $1,000 up to $10,000,000. The value in the pension fund at the end of June, 2002 was $5,877,034. Based on this value, the City would pay Trusco approximately $44,000 per year for investment services. Note that Trusco did shave $2,500 off of there annual bill for investment services by reducing the basis points charged on the first 1 million to 75 from 100 basis points. · The Cities retirement investment policy provides for a 3 year contract with the option to renew for two more one year periods, for a possible total of 5 years. . Our Investment Consultants will assist the City in its preparation of an Investment Advisory Agreement. RECOMMENDATION: To Approve Trusco as the Provider of Investment Management Services for the Cities Defined Benefit Pension Plan and Authorize the City Manager to Enter into Contract with Trusco. ATTACHMENTS: . Review of Request for Proposal for Investment Management Services for Defined Benefit Pension Plan Funds prepared by Public Financial Management (PFM) dated September 24, 2002 . Finalist Presentations for Investment Management Services for Defined Benefit Pension Plan Funds prepared by Public Financial Management (PFM) dated October 8, 2002 . Trusco's Proposal- August 30, 2002 · Trusco's Presentation Handout - October 8,2002 · Minutes of Pension Board of Trustees meeting, September 24, 2002 . Minutes of Pension Board of Trustees meeting, October 8, 2002 COMMISSION ACTION: . , QUEST FOR PROPOSAL FOR INVESTMENT MANAGEMENT SERVICES FOR DEFINED ENEFIT PENSION PLAN FUNDS For <:ity of Winter Springs, Florida RFP Number: #019-02/LF Due Date: Friday, August 30, 2002 by 3:00pm ; . ,.... .. ~ TREQUEST FOR PROPOSAL FOR . I INVESTMENT MANAGEMENT SERVICES FOR DEFINED BENEFIT PENSION LAN FUNDS Table of Contents . . Page I. INTRODUCTION 2 II. GENERAL SPECIFICATIONS 2 III. BACKGROUND 2 IV. EXAMINA TION OF RFP 3 V. SCOPE OF WORK 3 VI. MINIMUM QUALIFICATIONS 4 VII. PAYMENT 4 VIII. ADDITIONAL INFORMATION 4 IX. CONTRACT TERM 5 X. SPECIAL PROVISIONS 5 XI. RESPONSE TO THE REQUEST FOR PROPOSALS 6 XII. SUBMISSION OF PROPOSAL 25 XIII. EV ALUA TION OF PROPOSALS 25 XIV. AWARD OF CONTRACT 25 XV. CITY COMMISSION APPRO V AL 25 XVI. ANTICIPATED CONTRACT TERMS AND CONDITIONS 26 XVII. PROPOSER'S WARRANTY 30 XVIII. A 1'1' A CHMENT 31 Gcneral Employec Retircment System Invcstment Policy Statement Timclinc . . , I ity of Winter Springs, Florida ' REQUEST FOR PROPOSAL FOR INVESTMENT MANAGEMENT SERVICES FOR DEFINED BENEFIT PENSION LAN FUNDS I I. INTRODUCTION Pursuant to its Purchasing Policies and Procedures, The City of Winter Springs, Florida, invites the submission of proposals to provide Investment Management Services for its Defined Benefit Pension Plan funds. All proposals must be submitted in a sealed envelope marked "Proposal-Investment Management Services" and receivedby the Office of the Director of Finance, 1126 East State Road 434, Winter Springs, Florida 32708, no later than 3:00 P.M. Friday, August 30, 2002. Proposals will be acknowledged and evaluated by an ad hoc committee of city staff, the pension Board of Trustees, and outside consultants. A final determination on the placement '01' funds wi II be made by the City Commission at a date and time to be determined. It is understood that the City of Winter Springs reserves the right to reject any or all proposals as it determines to be in the best interest of the City. II. GENERAL SPECIFICATIONS The City of Winter Springs (the "City") invites proposals from qualified financial institutions interested in providing investment management services for the City's pension funds. The City wishes to contract for services with a firm registered with the Securities and Exchange Commission (SEC) under the Investment Advisor's Act of 1940, which will act in a fiduciary capacity. The successful proposer will be required to manage the funds in accordance with the laws of the State of Florida, and investment policies and procedures outlined in the City's pension plan documents. ][11. BACKGROUND The City of Winter Springs, Florida, is a home-rule municipality operating under the Council-Manager form of government. The City Commission is comprised of five voting members. A separately elected mayor votes only in the case of a tie. The City is located in south Seminole County, approximately 15 miles northeast of Orlando, Florida, and has a population of approximately 31,000. It is primarily an upscale, suburban, residential community, with home values generally ranging between $150,000 to over $1 ,000,000. The city has adopted plans for extensive commercial development in a central city core called the Town Center. The city's workforce numbers almost 251, and at six months of service, all employees are required to participate in the pension plan. Each employee contributes 3% of his/her compensation to the fund, and the city contributes the equivalent of 8% of each employee's compensation. As of June 30, 2002, the Defined Benefit Pension Plan fund contained just over $5,875,000 and is currently managed by SunTrust Bank in Orlanclo. EEmfdsi'dlNTERiS '~Rl~Gs~F,itoRID'At~t~~~i'p.ENsI6wINvEsTMENTJsERYics~RE 'tlEst~F.~R~~R"oP9sAi!SIL'" .,.:t"/k:~;:;~1;\.,:t':1(;;:'>~;lp.AGE~' -. ~..;I-.."'~.""'A'''''''~~'~';';'''''~''~';'''' ..~,~...,., ,..J ~ ...."...._, ......,,\o...~~I~~4 \-., . ~ .,......._._ .......,..., ,. ...;'~"'_r'_ ,......~.', "_'G~':';.:'l{' :t.,.-.' ~..r:._~~. . .".. +. '-.. ~_'''~ .'Jl~.r~.. <.ll~m .>.....~j' ''''^~l)'''',....~.....Nft:~!''~... ......~: . (' IV. EXAMINATION OF RFP The City encourages interested paJ1ies to examine this RFP carefully. The Investment Manager and/or its affiliates will be required to attain the highest possible yields on the fund, consistent with directives in the pension plan documents, mandates of the Board of Trustees, and the laws of the State of Florida. The Investment Manager shall act solely in a fiduciary capacity, and shall receive fees or compensation pursuant to the provisions of its contract with the City. V. SCOPE OF WORK Specific responsibi lities of the In vestment Manager wi II include, but wi II not be limited to the followi ng: 1. Execute purchases and sales of securities with approved brokers/dealers in accordance with state law and directives of the city. 2. Provide monthly reports on investment activities, earnings, the value of the pOl1folio holdings, and projected portfolio cash flows. These reports must include a market-to-market valuation and other information needed for the City to report investment holdings under GASB 31. The Investment Manager must maintain accurate reports of investments including the diversity of investments and compliance with applicable investment policies of the City and the State of Florida. 3. Provide quarterly investment reports including, but not limited to, a description of market conditions, investment strategies employed, performance, and suggested changes to investment strategy. Investment performance must be provided on a total return basis and compared to appropriate benchmarks. 4. Maintain a list of approved broker/dealers that have met the City's approved criteria, and furnish evidence of compliance with those criteria to the City. 5. Provide professional presentations to the Board of Trustees on portfolio status and performance. 6. Provide customized reporting on investment activity, earnings, and portfolio status. ~~iQ6 -I. VI. MINIMUM OUALIFICA TIONS To be considered by the City, proposers must: I. Ha ve a minimum of fi ve years expericncc in managi ng pension fund assets for state and/or local governments, including experience managing portfolios with assets in excess of five million dollars. 2. Assign an account manager to the City's account who has a minimum of five years experience in providing investment services to public entities equivalent in workforce size to the City of Winter Springs. 3. Be familiar with all applicable Florida statutes with regard to qualified investments for public entities. 4. Be registered with the Securities and Exchange Commission under the Investment Advisor's Act of 1940 and be properly registered to provide investment management services in Florida. 5. Be financially solvent and adequately capitalized to be able to service the City for the duration of the contract. 6. Be either completely independent of any financial institution or securities brokerage firm, or fully and continuously disclose to the City any such relationships with such financial institution or securities brokerage firm, specifically as that relationship impacts the firm's dealings with the city. 7. Have Errors & Omissions and Fiduciary Liability Insurance coverage of at least ten (10) million dollars. 8. Adhere to the Code of Professional and Ethical Standards as described by the Association for Investment Management and Research (AIMR). VII. PAYMENT The successful proposer will only receive payment for rendered services after the city receives properly prepared invoices. VIII. ADDITIONAL INFORMATION Inquiries regarding this RFP shall be directed to: Ms. Louise C. Frangoul Finance Director City of Winter Springs 1126 East S.R. 434 Winter Springs, Florida 32708 Phone (407) 327-5960 Fax to (407) 327-4753 IX. CONTRACT TEH.M The successful proposer will be awarded a three (3) year contract effective January 1,2003, through January I, 2006 It may be extended for two (2) additional one (I) year terms, provided all terms and conditions (except for the contract period being extended) remain unchanged and in full force and effect. This option, if exercised, is to be executed in the form of a Letter of Agreement, to be issued not sooner than ninety (90) days prior to the expiration of this contract, nor later than the final day of the contract period. The decision to renew the contract will be at the sole discretion of the City. Refusal by the City to exercise this renewal option will cause the contract to expire on the original or mutually agreed date. The total period of this contract, including all renewals as a result of exercising this option, may not exceed a maximum combined period of five (5) years. X. SPECIAL PROVISIONS Proposers are encouraged to submit concise and clear responses to the RFP. Responses that are excessive in length or complexity are discouraged. The City reserves the right to include the entire selected proposal or any part thereof in the final contract. Emphasis should be on completeness and clarity of content. By submission of a proposal. the proposer certifies, and in the case of a joint proposal each pat1y certifies, that in connection with any cost proposal submitted, the prices quoted are not the product, direct or indirect, of any collusion with any other proposer, and have not been knowingly disclosed by the proposer, either directly or indirectly, to any other proposer prior to submission to the City. All proposals must state the period for which the proposal shall remain in effect. Such period shall not be less than 90 days from the proposal due date. Notwithstanding any other provisions of this RFP, the City reserves the right to award this contract to the proposer that best meets the requirements of the RFP. Further, the City reserves the right to reject any or all proposals prior to execution of the contract, with no penalty to the City. Potential proposers are prohibited from directly or indirectly communicating with City Commission members regarding proposer qualifications, or the award of a contract. Also prohibited is contact with City staff, unless submitting an inquiry in compliance with the provisions of "ADDITIONAL INFORMATION" above. Any violation will result in immediate disqualification of the proposer from the selection process. XI. RESPONSE TO THE REQUEST FOR PROPOSALS At a minimum, responses 10 this RFP must include the following: A. FIRM BACKGROUND: I. Describe the organization, date rounded, and ownership of your firm. Has it experienced significant change in organizational structure, ownership, or management during the past three years and, if so, please describe. Trusco Capital Managemelll. Inc. is a wholly owned investment subsidim)' of Sun Trust Bank. Inc.. headquartered in Atlanra. Georgia. Sun Trust Bank. Inc. provides afull array of banking services and is the nation's 9th largest commercial banking organization. Trusco Capital Management. Inc. \I'as established in 1985 as el/l independent corporation and 0 wholly owned investment subsidiary olSunTrust Bonks. Inc. In FebruOf)' 1985, Trusco Capital become operational os a SEC Registered Investment Advisor. From /985 to /999. Ive executed all investment, administrative, ond morketing octivities out of our headquarters located in Atlanta. GA. /n Janllm)' 2000, our/i rst regional office opened in Noshvil/e, TN. The opening 0./ this o.ffice added additional equi(v ondfixed portfolio monagers os well as support-personnel to service our growing institutional clients in Tennessee ond the Mid- Westem United States. Trusco 's senior management team has made a mojor commitment to mointainthe operational and managerial cohesiveness evident since ourfounding in 1985. Our investment philosophy. process and corporate model hOl'e been successfully employed throughollt ollr histOl}'. It has allowed Trusco to marshal substantial resources and talent into a single team ensuring our strong traditions ofgrowth, consistent investment pel.-f{)f"JI/once and superior client service can)' on into the future. 2. Describe any other business affiliations (e.g., subsidiaries, joint ventures, and "soft dollar" arrangements with brokers). -+ Trusco Capital does not have allY subsidiary cOll/panies and is not a join.t venture partner. -+ Trusco does utiliz.e major Wall Streetfirms to supplement our own internal research. We utiliz.e traditional brokerage researchfirms (i.e. Salomon Smith Barney, Merrill Lynch), 3.rd party research providers and 3rd party research/oriented services (i.e. - FactSet, Bloomberg, First Call, etc.). All of these entities are paid via commissions generated by client accoullts as allowed by the SEe SafeHarbor guidelines. Traditionally, Trusco allocates 50-60% of commission dollars to these providers. Additional in/ormation related to this matter is contained ill our Form AD\!. 3. Describe your finn's policy on soft dollars. Trusco does utilize so./i dollars to some extent to purchase outside investment research.' . , 4. Does your firm have an office in the State of Florida? Yes. equity and fixed income portfolio management. inveslment research, markcting. trading, client service 5. Is your firm a registered investment advisor under the Investment Advisor's Act of I 940? Yes. Trusco Capital became operational as a SEC Registered Investment Advisor in Februarv of 1985. 6. Describe any SEC, NASD or any other regulatory censure or litigation involving your firm or its employees during the past five (5) years. Trusco Capital has never been indicted. investigated. or has been involved in any litigation with any regulatOl)' or governmental agency, or any court ofcOlnpetent jurisdiction. Trllsco Capital does not have an)' officers. principals. owners, directors or contract ernployees that have been convicted of 0 felony. had any odjudication of guilt, or pleaded nolo contendere to any felon)'. 7. Summarize fidelity bond coverage, errors and omissions, employee dishonesty, fiduciary liability insurance, or other fiduciary coverage your firm carries, and provide a current Certificate of Insurance. Amount of Covera e 100000000 100000000 100,000 000 8. Provide a copy of your firm's most recent audited financial statement. See attached. 9. Describe your firm's revenue sources and comment on your firm's financial condition. Trusco Capital derives all 0.[ its revenue from the investment management business. 10. Does your firm adhere to the Code of Professional and Ethical Standards as described by ArMR? With 35 CPA Charterlzolders and /8 CPA Candidates on st(~ff Trusco adheres to the A1MR Code of ProfessioizCtl and Ethical Standards. /n addition. Trusco employees also are bound by certain ethical regulations outlined in Trusco's policy manual as Ivell as the Securities and Erchange Commission. " B. EXPERfENCE: I. Describe your firm's experience in managing investment portfolios for public funds and governmental entities. Trusco's investment professionals are organi::.ed by inl'estmelll product mtherthan by client tvpe served. Trusco currently nwnages over $4.3 billion for the Public sector and an additional $2.1 billion for Healthcare organiz.ations. 2. Summarize your assets under management (institutional only) over the past five years. Total Assets Under Mqmt (All Products - 1000's) June 30, 2002 $ 45,500 December 31, 2001 $ 45,500 December 31, 2000 $ 45,400 December 31, 1999 $ 30,699 December 31, 1998 $ 22,500 December 31, 1997 $ 19,000 3. What is your finn's experience in developing investment policies and pOl1folio management guidelines for public employee pension funds? Trusco CapitallFould work close/v with your internal in 1 'estment slalfto refine afounal investment policy.lor the plan. We feel that H'e bring unique capabilities to this task in thatlVe are able to share what other organi::.ations I\'ith similar requirements speci!,' in their guidelines. The investment policy should specifically ([(Idress thelollowing: -+ Type of po rtfo lio. date portfolio is adopted and an identification o./,the beneficiaries or participants. -+ Current dollar amount o.{assets to be managed along with assumptions regarding cashjlOlv projections and requirements. -+ Funding status including any accrued and/or projected liabilities. -+ The investment objectives that the parr/olio IllUst meet in order sati,~h' (JI'erall portfolio return requirements. -+ A discussion of the appropriate asset classes that are permitted by the plans governing documents and/or regulations. -+ Identification of acceptable risk and volatility levels consistent with the investment goals and objectives. -+ The asset allocation that will result in the highest probability o.{achieving long-ternl plan goals and objectives. -+ HolV in vestmentmanagenlent decisions \vill be made. -+ How pe/formance will be monitored including spec(/ication of the applicable benchmark. -+ Provisions/or periodic reviews of the investment policy statement to amend or change as necessa I)'. ~~~OC'r'.'1 ':+C~R'sirT.'jGs..t:j;'tORIDAt'%f~1\BENs1oNiINVEstMENT1SERvlcEs~lREQUEST,j"OD'iP.RO~os'~1rSl,. ~ ,fi",j.~f'~. -~;';i';fi~~fl1I;'RAGE\8 .' ~IJ~.."~'~,,,~,,~. .<f",~,~,~,~,<_... i:!..:;' ',,' ""'i, <.d ~~.*7fi~ )f,",~",,,,,.^ -...,"-....."'.,._.....:..(.~- L",".. '-::....-~..~ "". ___ '". .........""'....,'!/. . ..~..v.::'f,....". 0'.) ........ft':..... :f.' l~K. .d,.."...r....<J.\.":t:..II'...J.;J..':iCt %1tp;".~.,........ ,_..... . '-, 4. Does your firm act as a broker or as a pri mary dealer in securities or recei ve any other form of additional compensation (including soft dollars) for client transactions aside from the direct fee paid by clients? Trusco Capital deril'es aIL oli/s rel'enueji'om the inveslmenlmanagement business. We transacl aI/ of ollr Pllrchases and sales through major ins/itll/ional brokerage finns. We are no/ a broker/dealer and . do not trade through cd/ilia led bro!.:.etldealers. In order to supplement ollr own internal research. Trusco does lItili;e s(~/t dollars /0 SO/Ill' extell! to purchase outside investment research from major WaIL Streetfinns. 5. Provide five client references (public sector) for which you provide similar services including client name, contact personnel, address, phone number, and length of time you have managed their assets. Richard Adams - Chairman City of Palm Bay Police and Fire Pension Plan PO Box 100225 Palm Bay. Florida 32910 (321) 724-8877 Assets Managed since 1989 -Inl'eslll/en! Ojiicer contacl since 1997 Julie Enright City of Tilusville Police and Fire Pension Plan PO Box 2806 Titusville. FL 32780 (321) 383-5772 Assets Managed since 1989 -IIlVeS[melll Ojficer contact since 1997 Melissa McCarthy City of Cocoa General Employees Pellsion Plan 603 Brevard Avenue Cocoa. FL 32922 (321) 639-7515 Assets Managed since 1989 -Investment Officer contact since 1997 Maria Jabalee City of Dania General Employees Pension Plan 3210 NW 120'" Way Sunrise. FL 33323 (954) 748-0077 Assets Managed since fl.J93 - Inves/melll OJ/icer contact since 1999 1,0: fi}jJC'"illif''' '~"",,' 'B -"~'''''sMf ':'cr'IDA~~;r~I'}lPEfis'lbN~NvisiMENnSERVTcES~RltltJE' !A~ FiiI~ (g - ~~.d~1]a~,"f!'~~,....~l,:.)L ~a.~~!l_.."..... ,d,.. ,,'__... n'_"v_"~.__.,,,..~JL i.&! .ilM 6. Provide the number and types of accounts, total asset value, and composition of portfolios currently being managed by your firm. Trusco Capital Manaf!.elllent - Assets Under Mana!:elllcnt Equity Products ' C~.ce ]g~2-t~C.-=~.': :=~-==.~~:~. ~$~-=-~.:.. Absolute Value Equity . $ Growth&'income--"----- ... - .-- . "'$ .. inte;:;;atJonal EqUity'.-.-----.--.--..f-. -'" sii-iaiICip-Growth-'--~ --.-- ..... ('$ .- --.. sriiaffipvajUe'" -'. ----- .. 1'$ M.i~~<!e_~guiL~~~_=_"':::':-:-':-_ . tJ A!~nativ~~quity ____._ .j..! Other EquiLY $ Total Equity $ Assets h '8:532:223,099 i;266)S4)iY i,27"2,926,865' - .....535,289;140' -599-;946,995 673,757,078 ..-....-.. 398,929,138 .- .. '538~817--:S74 --.- -.. 'sil;fi2,564 14,280,056,770 Fixed Income Products . Assets 'Core Fixed----.---.:T-.-----S;313,41O,695. Core Plus ~.__..--._......-Tr ....._... --""63,Xi8,864- -High YielcTFixed Inco~'--' "- '~':f .... --. 74;7'52,720 Intermedi-ate-Fixea---"-'" . ---7f" .... .-. .. i)66,97S:462 -.--------.-.- -- . ..j..-... .. ....-- -------- Government Only Fixed Income : $ 638,732,755 ShortTerm Fixed --------.. ~ '$"1;"445,995,489 )~x-ExemptF~~jj--' . h..... '.:.=:~~r:"'-' .~~: 1,.~~.4..~Q~I Custom Bench Fixed Income : $ 534,704,094 Enhanced TShorfTermcash f' $ 2:468,558:530 .... .-..--.-.--..----. . .r..... .... "'-'. Money market . $ 15,381,584,025 Other-RX-ed--------.--.. . . ..... -$ --1,-564:2"37:6~jT Total Fixed Income $ 31,227,750,397 Grand Total $ 45,507,807,167 ?eperate.lx.Manage_d_Client P.!:.o.D!e . - ----.,--.- ----....- . .-.~~--._- ~~do~'!!~~.~E.9.~l]d.2~9!1_~... .' _LL. ..._.. 8,531,584,69~_ High Net Worth Individuals I $ 367,468,201 Corpora'tiOns..----...-- - "--T---'-- 6,989,503,666 ..~~!?lTc-~~s ~===~:'~~~~..=Ir-~:~ ~~. ~ '.2~~~?:.~?6~2.0-= .~a~!. Un19n.s____. __......_ ___.__;...L___.___. ??~,.~Z,ii.92.. ttE!~~hca-'.:~_Q!:.~aniz'!tion_~__. ... ..__J .L.______._.?~7.~,.?~4L.~?-_ ..rn.s.!1~anc:..e_ Compal].!~~_.____._ ~_-LJ..._._.._... .!!.!nJ~~!..~9_. Trade Associations I $ 1,011,180,762 Total $ 23,308, 064, 742 Mutual Funds $ 22,199,742,425 Grand Total $ 45,507,807,167 lE1iX9fiWI[~lm?Emtm~~l!IR~l':f:jS~S.IR~}!Nvtsll~fE~jl~.~<~YJp~'s~8'E9.V.E.~f~~jp..A '!1.l9~~._ .' -;?~'~eXGE&'otl;t: .1 t.u~w.......f_.ffi.~..~..._....~W~ 7. List your most comparable municipal clients and the length of time they have been clients. Ci()I (~l Palm Bay Police and Fire Pension Plan Assets Managed since /989 City of Titusville Police and Fire Pension Plan Assets Managed since /989 City of Cocoa General Employees Pension Plan Assets Managed since /989 City of Donia General Employees Pension Plan Assets Managed since 1993 8. How many accounts have you gained in the last 12 months? How many accounts have you lost in the last 12 months, and provide an explanation for the loss of each of these accounts. Provide contact name and number for each of the accounts lost in the last 12 months. )---. -----.-. Year Lost Gained 2002 YTD 25** 28 ~- .---- 2001 25** 42 ---.----- .- -.......-----.-.- -- 2000 20** 13 1999 5* 56 1998 4* 30 /998 and 1999 numbers reflect those lost accounts lostfor Trusco Capital Management ** 2000 - 2002 numbers ref7ect those accounts lost for the 3 consolidated Investment Management Subsidiaries - Trusco Capital Management. ST! Capirol Management. and Crestar t UlClnCta! ~ Management. * .-; 0( ~. ~, C. PERSONNEL: I. Provide an organizational chart showing analytical. invcstmcnt and rescarch staff, other dccision support, and back officc support. Idcntify the primary contact and describe thc roles of each key person. Douglas S. Phillips, CFA President and CEO Portfolio Management 46 Equity 15 Fixed Income 12 Liquidity Name: Title: Address: Phone: Facsimile Number: E-mail Address: Role: Name: Title: Address: Phone: Facsimile Number: E-mail Address: Role: Ste\'e Cordon Vice President 300 South Orange Ave. Suite /600. Orlando. F13280/ (407) 237-5758 (407) 237-4726 Steve. Gordoll@TruscoCapital.co/ll ) '-.... -..---.- .-~-_. Ti/ll Nash Vice President 300 South Orange Ave. Suite /600. Orlando. F13280/ (407) 237-4/73 (407) 237-4726 Tim. Nash@TruscoCapitul.com ..J _.......,-- '-.. - rtaf. ,"1)' -'I'M"~1~iliNGS'2iiF.hoRiDAtfu1;ii0P.ENsIOffiNVEs.TMENfsERvlcES~REQuEsiffO''''lPR )j:rs""1i1"".&11l1~ "~. q' ~!)'~J~!~ . f)!;r.E;.!"!i'H.m. '..u"a.~~., .~ ,.:lIL,... ,', ,,,..,,k..,,.,,, " .L...., .", _ F.,_. "",' . :'J.",,~Q.f ,_A.~jh~ . , 2. Provide detailed resumes and biographical information for all key investment professionals who will be directly responsible for the investment of the City of Winter Springs pension funds. Include the following information: title, number of years at your firm, total number of years of experience, professional designations or licenses. Tilllothy J. Nash - Vice President: B.B.A. Finance, Stetson University, 1992; M.B.A. Rollins College. 1998: 8 years in\'est/l/ent experience: joined Trusco in 1995. Ste\'en E. Gordon - Vice President: B.A. Finance. University of South Florida, 1990; M.B.A., Finance, Rollins College. 1998: 12 years in\'estlllent experience; joined Trusco in 1995. Fund Managers: Sun Trust Hie.h Grode Bond Fund L. Earl Denney. Jr.. CrA - Managing Director and Co-Head of Fixed Income Strategy: B.S. Management. Carson Nell'/l/an College, 1975: M.B.A. Universi(v of Georgia, 1976; Orlando Socie(}' of Financial Analvsts: Fixed Incollle Analysts Socie(}'; 25 years investment experience: joined Trusco in 1982. \ , STI (;;Iassic International Dluitv Fund ''-Clic/{! Deakins. CfA - Vice President: B.S. Finallce. Florida Slate University, 1992; 7 years investment experience: joined Trusco ill 1995. SUIlTmst Hie.h Grade Grmvth Fund Ellioll A. Perny, CFA - Managing Director: B.B.A. Stetson University. 1970; M.B.A. University of Florida, 1972; Florida Trust School. 1980: 29 years investment experience; joined Trusco in 1982. '- . STI ulassic Growth and Income Fund <Jefj/ey E. Markunas. CrA - Managing Director; B.A. English, College of Holy Cross, 1978; M.S. Finance, Virginia COllllllonlVealth University. 1984: 17 years investment experience; joined Trusco in 2000. SunTmst Hie.h Grade Equitv Incollle Fund Mills A. Ric7a[(;k. L/~A. Lf'A - Managing DireclOr; B.S. Accollnting. Florida State University. /980; 20 years investmeiu experience: joined Trusco in 1989. SunTrllst U.S. Limited Capitalization Fund John M. Hamlin - Vice President; 13.5'. Biology. University of Notre Dame, 1980; M.B.A. University of Connecticut. 1992: 12 years investment e.\perience; joined Trusco in 2000. Sun Trust Retirement Reserve Fund Kimberly C. Maichle. CFA - Vice President: B.B.A. Finance. Enwf)' University, 1986: M.S. Finance. Georgia State University. 1991: Atlanta Socie(}' of Financial Analysts; 13 years investlllent experience; joined Trusco in 1992. .. .; 3. Describe your firm's activities to keep portfolio managers informed of developments relevant to the management of public sector investment pOlifo/ios. Trusco's portfolio managers participate in a variely of professional organi';'.ations including the Associationfor Investment Management and Research (AIMR) and the Florida Analysts Society. In addition. Trusco is an active participant in various industry associalions such as thl} National Government Finance Officers Association and the Florida Public Pension Truslee Association. '- ------- '- D. INVESTMENT MANAGEMENT APPROACH AND DISCIPLINE: I. Briefly describe your firm's investment management philosophy, including your approach to managing public employee pension funds. Fixed Income Trusco Capital Management believes that inefficiencies in the fixed income markets creale investrnent opportunities. Our portfolio managers take advantage of lhese opportunities Llzrough active management. Competitive returns can be achieved without making extreme sh(fts in maturi(v/duration. Our philosophy forfixed income nzanagement is based on achieving consistently good pe/.formance withour rnaking extreme shifts in maturity/duration. Our fixed incorne process simultaneously analyzes three primmyfactors to identify market ineffIciencies and to add value. Thesefactors are yield curve analysis. sector analysis. and credil analysis. Yield curve analysis determines the relative risk reward of maturity decisions. optimizes maturity structure, and captures market anomalies. Sector analysis identifies undervalued and overvalued sectors. tracks historical yield spread relationships. and implements optimal allocation to cO/porates. mortgages, treasuries, and agencies. Credit analysis identifIes entities that meet our credit criteria, predicts credit quality upgrades and downgrades. and arbitrages spread d(fferences between issuers with similar credit quali(v. . Trusco Core Growth E{fuitv: In managing large cap core equi(v portfolios. Trusco Capital Management utilizes a "bot/om up" investment approach. believing individual company characleristics are the dominantfactors in the equity selection process. Ol/r equity philosophy is based on two determinants. earnings trends and valuation levels. We believe that stocks with positive earnings trends move froll/undervalued to overvalued levels as earnings trends improve. Conversely, stocks move back to undervalued levels as earnings trends deteriocate. Our securi()' selection process focuses on company spec(flc earnings trends and valuation. We also employ proprietary quantitative models. which rank, on a relative basis, approximately 400-500 stocks based upon earnings trends. We also utilize three valualion models: dividend discount. return on book and earnings yield. Stocks with highly ranked eaming trends are lhen reviewed by our analYSIS to evaluate the fllndarnenlals 0/ the company and the industry. and determine the sustainabi/ity 0/ the eamings trends and the quality (~/the reported earnings. The analysts are also responsih/efor analyzing how the market vieH's these companies through tradilionally accepted metrics. such as price to cashflolllfor oil companies. utilities on a dividend yield basis and financial Slacks 01/ a price to book basis. 11/ addition. the analyst examines IIIhere these companies have traded historically versus the metrics and relative to their peer group. After compiling and distributing thisfimdwnentol quolitatil'e information to the core equi(\' port/olio Inanagers, a thorough discussion ensues and a decision is II/ode by the Investment COl/l/nillee on H'hether ({ stock is added to the "Focus Lis/. " Trusco's philosophy has llOt changed since ourjiJ'JI/'s il/ception in /985. The senior investment professionals responsible for the oversight and ongoing execulion (~/Ihe core equitl' stmtegy, Douglas Phillips, (CFA), President; Roberl Rhodes. (CFA), Director (~l Equi(v Management; ({nd E/i~obelh Polo. (CFA), Director of Research have been lI'ilh onrfirm since ils inception. 2. How are portfolios managed (e.g., by team, individual manager)? What is the back up when the manager is away? Portfolios are managed on an indiFidual basis. HOIvever. there is a por{folio tearn thO! is mode up (~la primal)' portfolio manager, responsible for Ihe relationship. supported by a backup I/lOnager and a portfolio trading assistant. Each parllolio is tailored to meet the clielll's .I'pec(lic in\'estment o/~jectives and restrictions and is managed on an individual basis. 3. What are the strategies employed by your firm for adding value to portfolios (e.g., market timing, credit research, etc.)? Trusco 's portfolio managers participale in a variety o/prolessional organizations in eluding the Association for Investment Management and Research (AIMR) and Ihe Florida Analysts Society, In addition. Trusco is an active participant in various industJy associations slIch as the National Govemment Finance Officers Association and the Florida Public Pension Truslee Associarion. 4. Describe the in-house technical and research support services you have available. What other sources does the firm utilize on a regular basis? State oftlze art hardware and sojilFare is a FaIlle-added element o/the Trusco investment process. In addition to analytics and modeling s.vstems. Trusco also employs Iwmerous systems that pr(JI'ide market data, news, and research. These systems represent a "best o.tbreed" approach lvilll the majority of these services provided via an external vendor relationship. Ewmples of these systems related to the core equity process include: -+ FactSet (Investment Research & Port/olio Management) -+ Baseline (Investment Research & Por(folio Managernent) -+ Bloomberg (Investment Research & Portfolio Management) -+ First Call (Investment Research & Portfolio Management) -+ Nell/swatch (Investment Research -+ Advent Axys (Portfolio Management) -+ Bridge (Trading & Por(/olio Management) -+ DAIS (Investment Research) -+ Stock Val (Investment Research & Portfb/io Managernel1t) 5. How will you handle tluctuating cash flows and the cash forecasting process? Sweep Each night, all excess cash balances (at manager al/d pIal/ le\'e/) are I}rojected by the trust system. These excess cash halal1ces are then sl\'ept and iI/vested. Cliel/t aCCOIIl/ts are .\wept daily dOll'/l to a halal/ce (~l $.99 or less. Inl'estmenl Choices SunTrusl Cuslod.l' accounts are sll'ept daily/or all excess cash (i.e. contributions. dividends. interest. sales. maturities. etc.) infO one (!l two (fI'ailable 1110111'1' market jimds. To ensure IIWXilllllm earnillgs potenlial consistent with negligible risk and ol'emllliquidit\', an intema!!y managed mone.l' tnarketfillld is used. The proposed/i/lu/s are IJOth dol/ar denominated (no/luct/wtion in nI'l asset value) and otlers daily liquidity. There is no addilionol charge/or autolllOlic sll'eell. 6. Describe the investment program you are proposing for the City, including the type of securities you propose to purchase. how (he funds will be managed after the initial investments are made and how you will provide liquidity. Trusco Capital Management plOlIS 10 allocate the City of Winter Springs portfolio ill thefolloll'ingJimds - canying the corresponding porllolio weight: Fund .:liTiii'il~W:1~ 30y'~; 2%: _. .}9~ 2%' , -1 17%. 190,t;;1 lO~~ . SunIr.ust High Grade Bond Fund :?'!lQassic International Equity Fund ,~u._nTrus! I-!ig~.~~ade Growth, Fund :STI..Cla.~sLc.0r.gwth and Income Fund !Sun:rr.~st High Grade Equity Income Fund , ?U~~.r:.LJst US. Limited Capitalization Fund !.Su!1.T!_ust Retirement Reserve Fund Total 100% Trusco heliel'es that il is imporlantlo examine a portfolio's assel allocation on a regular basis. We work with clients in reviell'ing assel allocalion slmtegy as part o.lour ongoing serFice ofFering. Additional charges do IlOt apply/or this sen'ice. Olle o.fthe most d!fficull decisiolls you face is choosing all appropriate illveslmellt mix that will best meet your employees' retirement o/~iectives. At Trusco 11'1' believe that a divers(fied pOr/!,olio o.linvesrments plays a far greater role ill determining a por(j'olio's rotal retlll'll than even securit)' selection or market timing. During serl'ice implemelltation meetings 11'1' wi!! discuss diversification ({nd asset allocation considerations for your plan and your employees. Trusco will focus on long-term investment planning and assist you with del'eloping an investmentfil/uling policy designed to meet your specific needs. A por(lolio will be implemented using a combination ofSTI Classic Funds. PORTFOLIO ASSET ALLOCA TlON RISK CA TECORIES Due to this IFide spectrum qlinvesfors. Trusco has established ({ more simplified categorization process Il.'hen communicating asset allocation options. This process will take the complex Morningstar categories and reduce them to pI'e inl'estment objectil'e oriented categories. which Ive believe will be more easily understood. Point # () and #7 dewils the investment processes usedfor the ST/ Classic In(emotional Equity Fund and Sun Trust U.S. Limited Cap Fund. Plan SIJOnsors benefitfi'(}fn Truscn's increased ability to cOIII/lll/llicate asset allocation strategies bosed on their own risk (olerance. I. Ar:r:ressil'e Growth Por(lolios Il'ithinthe Aggressil'e Growth objectil'e tend to be the mostl'olatile investments available to you in your plan, Historically. Il()\\:ever. they have consistently outpefjormed less risky investments Ol'er the long term. TheseJilllds typically invest in stock. Depending on theJimd objective. these funds might invest in domestic stock. international stock. or {{ lIIixture olboth, Whilefimds with the Aggressive Growth objective tend to have a higher risk/return ratio avent/I. some (~lthesefunds can be less risky than others. depending on their actual investments, Funds in this categof)' are characterized by greater volatility when compared to the S&P 500 index and IlIore spec!fically greater volatility than theJimds listed in the growth category. The S&P 500 Index is a cOllllllonly used benchmark when evaluating equity fund options. 2. Growth As the name implies. portfolios \I'ithin the Growth objective put an emphasis on growing principal. While I)(Jr(lolios lI'ith an Aggressive Groll'th objective typically strive to grow principal as quickly and as much as possible. portfolios with a GrO\l'th objective usually stril'efor a balance between speed of growth and level of risk. While the Growth o~jective tend to be less risky than Aggressive Growth funds, the potential for near-term loss still renwins. GrO\vth objective fi/llds typically invest in stock of domestic companies that have shown a consistent and proven earnings record. Thesefi/llds may invest in large, medill/n, or small companies. Funds in this categOl)' ore characteriz.ed by lower volatility when compared against the S&P 500 Index. 3. Balanced Portfolios \I'ithinthe Bet/anced objective blend the growth potential of Growth objectivefunds with the benefits of stable income offered byjimds with an Income objective. Becausefunds with a Balanced objective invest in both stocks and bonds. the risk/return ratio of any specific Balancedfund will depend on the particular investment mix within tllOtJillld-ofund that invests more heavily in stock \villtend to be more risky. The stock portion (~fJilllds within the Balanced objective may be invested in domestic or international stocks of companies olall siz.es. Thefixed income portion will generally be invested in bonds ofdomestic companies. the US. gOl'emmenl, and/orfederal agencies. 4. Income While grOll'th-oriented por(folios seek out investlnents that \I'ill appreciate in value. portfolios with an Income objective seek investments that generate income that can be reinvested. Because Income objective investments-such as bonds-tend to pelfonn better in market conditions that depress equity investments, .limds with Oil Income objective can help temper the volatility of 0 portfolio thot holds 0 high proportion of grOlvth-oriented funds. These Ji/lld.I' ill vest primarily in fixed income securities, sllch asfederal bonds, govenunent bonds. or domestic corporate bonds. The value of these funds will va,)' based on interest rates, the quality of the individual bonds. and time to maturity of each of the bonds. 5. Capital Appreciation Porffolios within the Capital Preservation o~jective strive to do exactly what their name implies-preserve capital. Thesefimds attempt to mainlOinthe value of money invested in them. Porffolios within this objective typically invest in short-tennjixed income securities. money markets. and TreasUf)' bills. 6. STl Classic International eCllIit\' Fund Today n/Ore than one-ltC/if of the world's Inarket capitaliWlion is located outside the US.. inclllding the 7 {~f the 10 largest energy companies, 5 of the 10 largest lelecom services companies, 6 o,fthe 10 largest utilities comlwnies. and 5 {?fthe worlds 10 largest materials companies. International stocks call provide excellent dil:ersificationfor a portfolio heavy on US. equities. Trusco Capital Managemenl developed non-US. equity investment capabilities 10 bring these opportllllilies to our clienls. We lIfili~e a disciplined Inethodologv to identify international componie,l' with the best combination {4 earnings cllOracteristics, valuation, and prrditability improvement. Our process is a bottom-up approach 10 the internationol equity f/wrket seeking high quality companies, with a positive earnings growth outlook. which are wulenl(ilued to their global industry peer groups. 7. U.S. Limited Cap ThefwId seeks out Small/Mid-Cap securities with a strong growth histo!)' as Ivell os goodfimdamentals within the specific sector and indust!)'. Each security is evaluated relative to its induslf)' sector and the market in general. Each indust!)' sector is evaluated in relation to the business cycle in order to achieve the best pe!jormance in that given business cycle. The securities thatfall within the fa vored sectors are analyzed based on fundamentals- quality of earnings. dependability of growth rates and the relative attractiveness o.fprice to earnings ("P/E") ratios. We seek securities with a strong growth histOf)'. good jimdamentals. securities that have upward earnings revisions and earnings acceleration. We also look for securities that are trading near the lmv end o.ftheir historic relative price to earnings range. It is important to remember to look at long-tertn time horizons when considering various port{olio choices. In any given short-term environment. one portfolio that is categorized with less I'o/atility may. in fact. e.rperience greater volatility than one that is listed in a more aggressive category. All categorizations have been based on volatility that exists in 3. 5 and IO-year comparisons. 'ffr"""'dsWiliM~"'>"$i~'l'ftlil'~..~ '~'f',,, '" '~'-'M ,,2!! .;.,.!?~_ .'*1l~'$:;w['~~~\W~'i\:1',fft~~~~E4Jk" 7. Provide your firm's investment performance as compared to the benchmarks lisled in the City's General Employee Retirement System Investment Policy Statement for the past I, J, 5 and 10 -year periods. Please show annualized quarterly returns gross of all management fees. ._. .Qtr YTD 1Yr 2Yr 3Y~ 1YL .SYr 6Yr 7Yr 8Yr 9Yr lOYr -10.37 -8.67 -11. 95 -6.82 -4.31 0.76 4.90 8.42 10.38 11.25 10.15 :13.42 -18.21 -19.53 -II. 97 6.91 10.58 14:2_9 -10.89 -8.76 -11.47 -5.19 -1.34 4.p 9~~l 13. 27 15.02 15.37 13.70 14.17 -8.15 -3.81 -5.51 6.81 -2.62 1.81 4.89 8.22 10.88 12.42 11.63 -13. 40 -13.16 -17.99 -16.42 -9.18 -2.07 3.66 8.29 10.66 12.48 11.19 11.43 --- -~-.- _. -- --- -~.- -- -..--- -2.51 -1.43 -9.16 -13.19 -5.91 -4.88 -1.53 3.00 -1.94 -1.38 -9.22 -16.57 -6.50 -3.08 -1.26 1.01 2.72 2.63 4.16 5.71 ; Intemationa I STl Classic International Equity Fund MSCI EAFE ' Fixed and Money Market SunTrust Retlrerrent Reserve Fund SunTrust High Grade Bond Fund Lehman Aggregate Bond Portfolio Index . , 10 5 o 4.44 4.92 5.9~ . 5~?9 5:24 5.32 5.34 5.16 5.02 10.02 7.77 6.79 7.75 7.68 7.32 7.90 6.88 7.48 9.92 8.11 6.84 7.57 7.67 7.29 7.93 6.86 7.34 2Yr _. 3Yr 4Y~._ .-?yr...._. f?'l:!___ J}r_ ~Yr 9Yr .. JOYr 0.03 2.65 5.52 8.84 -8.26 -3.77 0.67 4.78 0.55 1.11 .2.J8 4.21 3.73 8.98 3.70 3.80 8.63 _ Qtr .. _YTQ. .)'l:! _ -6.08 -5.72 -5.67 -7.87 -7.67 -9.56 "" co cO M o 6 ""III ~ ~ ~ ~ ~ ~ ~ ~ ~ q' -5 -10 -15 Qtr YTD * I '" N c? I Yr 2Yr \I) '" N N \I) vi iii - . ~ " ": r;> 3Yr 4Yr 5Yr The above performance is (/ lI'eighTed-al'erage pelformance based on The currenT Citv of WinTer Springs porTfolio allocaTion: ___ - - . -- Sun Trust High Grade Bond Fund STI Classic International Equity Fund SunTrust High Grade Growth_ F.und STI Classic Growth an_d Inc()me Fund Sun.Trust High grade Equ~ .I~c_~rl1e Fl,!,nd SunTrust U.s. Limited Capitalization Fund SunTrust Retirement Reserve Fund 30% 2% 29 % 2~.. 17% 19 % 1% Total _('I1W~ ~w.rcr' 'N~'" TN'GS~~jtl'oR'(Dj{~' c1:~~t~p.;ENsiON'INv.ESTMENT SERvicEs:.i.REQUES.,ri('.'I~~' 'P.OSA~';i.~~'~~);Thi-a,1~~;::'i~~eAGi('9~~' ~~ ..fML,l:!':"".",~Im..,,,-.~,~ ~\l_, _..,J,"" .'''t..._ .. ..~." .."" ....L ...4".......,. ......' _ ,j ~>f,I~Q;>; "~.~~~-.~,.~"'r;;tt\i',l.~h..<.:.!~";L~~.r>~ ..,~~.A:~I 8. /-low frequently would you suggest your staff make conlact with the City's staff'! Who will make contact? Trusco Ca{lital Management believes comlllunication is Ihefoundalion upon IFhich success./i,1 relationships are built. TOIFards thot e.t/fm. Trusco has im{llell/ented "sl'ITice standards" to provide the highest level (~{ client service. The assigned portfolio manager. Tim Nash. will tllAe the lead role in client service actil'ities. This individualll'ill be available to the elient or their rcpre.I'l'ntOlil'es to discuss the account during regularly scheduled II/eetings. l'ia conference calls and at other times as required. We will meet IFith each client according to an agreed IlllOn schedule during the year, toformally discuss account pel/ormance and review guidelines to ensure compliance. Our position regarding meeting Fequency is to be available os needed and defer to the client ll'ith regard to ongoing communication needs. 9, Brietly describe any additional feature, attributes or conditions that the City should consider in selecting your firm. Through its association with Sun Trust. Trusco Capital Management provides custodial services at no additional base cost. E. ACCOUNTrNG AND REPORTING: I. Describe the investment accounting and reporting system used by your firm and whether it complies with AfMR standards. In late Decelnber qf 200 I Trusco Capital Management retained the services of Deloirte and T ollche to implement AIMR-PPS StandardsJirrll-ll'ide and 10 pelform a third party verificotion of the Finn. Deloitte and Touche will began there lI'orA in early Februarv lvith an expected completion in the early part of the third quarter, 2002 Trusco Management's pelformance presentotion methodology is intended to providefair representation. andjidl and ethical disclosure. o.lour investment nlClIlClgement pelformance. The existing Trusco composites are cOllstructed and calculated in accordance Il'ith AMR and investment indlls,,)' standards including the following: -+ Calculations ore pe/formed on 0 "Totol Return" basis. which includes realized an{(unrealized gains plus income -+ Returns ore "Time-IFeighted" utilizing the industty recogniz.ed ModUied Dietz method -+ Por{folios are valued monthly. and periodic returns are geometrically linked -+ Performance is calculated gross offees -+ Trade date accounting is utiliz.ed -+ Composites are asset weighted using beginning-qrperiod weightings -+ Rerumsfrom cash and cash equivalents held in portfolios are in eluded in retum calculations -+ Cash and cash equivalents are in eluded in the IJOr!!(Jlio WI/ount (total assets) on I\'hich the retum is calculated -+ Nell' porr!,o!ios are added in the composite at the start oj'the nextfidl pelformance measurement period (at leasf quarterly) ((tier the portFolio co III e,l' under m(///{/gement -+ Terminaled ponlolios are excludedfromlhe composile afler the last full pelformance period the IJOr!/olios Ivere III/der mal/agel/Jel/r. bur hisroric cOlI/posire pelfonnal/ce cOl/rinues ro il/clude terlllil/(rled porr(oliosfor all periods prior to rerrninatiol/ 2. Describe thc frequcncy and format of reports that your finn would provide to the City, including the methods and formulas used to calculate yield and performance. Provide a sample of all reports that will bc provided. Trusco Capital maillfains ilS inl'estmenr accounts on the parent company's AM Trust accounting :system. We utili;.e this syslelll ro creme monthly reports detailing all security holdings. purchases and sales, income received and disbursed. and all other activity lhat has occurred in the account during the month. Accounting reports are al'ailable monthly and clienl meetings books are typically compiled quarterly. There are lhree standard accounting sratementfomlOts available. All of these are fully automated. I. CateC!.orized trade date income accrual accountinC!. statements. Thisformat is a trade date based statemellf. It ine/udes a listing of alllransactions occurring during the statement period separated into categories based on the transaction type. Thisformat includes a list of assets and liabilities with the cost basis and market value of each individual security, Accrued incollle is also shown. This accounting statement is available ten business days (!fieI' the end (?lan accoullfing period. This statement also includes the following reports: 0) 0 market-to-lIIarker SUlIIl/lOr\' b) 0 brokerage cOl/llllission report c) 0 reportable lransaction report by issue ond broker 2. Coter:orized trust srmements. Thisforl/(((t is a contrac({wl se((lelllent date based statement. It includes a list (?{oll transoctions occurring during the se((lemel1f period separated into categories bosed on the lronsaction (vpe. Thisformot also includes a list qfassets and liobilities with the cost basis and market value of each individual security. This accounting statement is available three business days ({fter the elld of an accoullting period. 3, ChrollOloC!.icaltrusr sfalell/ents. Thisformat is a contractual sefflelllellf date based statement. It includes a chronological listing of account trallsoctions os I\'ell as a list of assels and liabilities with the cost and ma[ket value of each individual security. This accounting statement is available three business days qtier the end of an accoullfing period. ReportinC!. Methodolof!,ies Trusco's trust accounting sysrelll can prOl'ide reporting on the following formats: a) cash h) modified cosh c) income oCCl'llol d) tax lot occounting e) trode dote .I) settlenlent dote ~~rA"'i -',' :""'1 .lfiN"rsi~LOI 'l-i{~j.~~?P,ENSioNTNVESTME"";jJ' 'ERvicEs~EQU" . ~~1~:dr.Hf1j;.f!~JYL ~,.!.it.;-1.~13.! ..~,.,..,i ",' ., ". ~. ,,"[!ol,,~~...,,~, "...'g _,. g) book value h) trade date income accrual Our reports can be produced on either a contractual or sell. OPtional reports available inelude: -+ Transaction reportsfor prior dates -+ Assets held reports.fen' prior dates -+ Unit holders, reports for prior dares -+ Common stock analysis -+ Bond portfolio analysis (includes maturi(v analysis and quality analysis) Style consistency is maintained through rigorous adherence to our investment process and the parameters that govern the purchase olassetsfor each investment product. The investment polic\' committee comprised of our CEO/CIO, Director of Equity Mutual Funds. Director of Fixed Income Mutual Funds and senior discipline leaders regularly monitors the benchmark clwracteristics Citeach investment product for style consistency. Finally. style consistency is monitored using Zephyr Ana/vtical softHy/re. There are 3 steps in Trusco's petj'ormance monitoritH!' process: -+ The Trusco composites for separate!.v managed styles are constructed and calculated in accordance with the Petformance Presentation Standards of the Associationforlnvestmelll Managen/Cnt and Research (AIMR-PPS). Mutualfund perfonnance is calculated using the industr\' accepted NA V methodologies. -+ The returns are evaluated relative to the appropriate benchmarks as well as the appropriate peer groups managing similar style portfolios. -+ Portfolio characteristics are evaluated on an ongoing basis to ensure that they comply IFith the stated style discipline. FaetSet and BondEdge. as well as other resources, are employed to generate the comparative data used in monitoring equity and fixed income petjormance respectively. Portfolio managers a'L Ivell as senior management cOI?firms performance through comparison with multiple 3rd par(v data sources. These sources include Frank Russell. Mobius. Callan Associates. Capital Resource Advisors. Cambridge Associates. Yanni Partners. Morningstar and Lipper. . i-iifOJfdr'A1!Sj~W;:Ij;:<:.~IM:~',T~(f~~fii?l'GE~t'~ ~L- ulL..... (l';;>ll; i."""Ldl:'<as5.,~)_",,<-'!1.._'1.o ~..,. .., ..... .~:?!l, IF. FEES: I. Describe your firm's fee schedule. Is there a minimum fee? What expenses would be covered through the fee structure? The City of Winter Springs IviLl incur afee. 01/ (/ (juanal.\' basis, of 0.75 % (75 basis points) of" the total l'allle of the City's Assets under Managelllen!. llJisfee ineludes the management and clIstody olassets. 2. What additional expenses, not covered by the fee schedule, will the City be expected to pay in order La implement your investment services? None. 3. What fees would be required to provide specific advice concerning aspects of the present portfolio? NOlle. 4. Provide a description and/or example of the billing method that will be used. The city of Winter Springs will be billed 01/ a quarterly basis. G. SUPPLEMENTAL INFORMATION: I. Provide a copy of your firm's most recent Form ADV, Parts I. and II as on file with the SEe. Please see atwched. 2. Provide proof of slate registration. Tmsco is a Registered Investment Advisor with the 5,ecurities and Erchange Comlnission (File # 801- 23163). In addition we prol'ide /lOticefilings in sel'eral states Il'ith Il'hich we maintain (~ffices and a significant bus9iness base. Currently, Il'e provide no/ice to the secretarv (~/stote in Georgia, Florida, Tennessee. Matyland, Virginia and Washington, DC. A copy a/our 2002 uniform business report accompanies this response. * Please see atlached '2002 Unflorm Business Repol'!' / 'State Registration '. 3. Provide any conlracllanguage your firm would request or require in a contracl with the City. * Please see attached. 'New Account Package '. 4. Provide assurances lhalthe proposer will be cognizant of. comply with, and enforce all applicable Federal, State and Local statutes and ordinances. Trusco has a dedicated Compliance Team to prol'ide RegulatOly/Legal Support. Thefinn's compliance (~flicer has 26 years securities experience and is supported by a junior compliance analyst. Bnth individuals are totally dedicated to Compliance and have the suppaI'! o.lLegal Counsel internal/y as well as the authority to consult extemallegal counsel as necessat)'. Senior management at Tn/su) promotes compliance as an integral component o.lthe business. As a Registered Investment Adviser \I'ith the SEe. Tmsco is subject to the requirements of the Inl'estment Advisers Act of 1940 and as an adviser to the STI Classic nllltualfunds, is subject to the Investment Company Act o.l1940. All employees olTmsco are su/~iect to the Code o.f Ethics, which inco/porotes the recommendations (d'the Investment Company Institute's Report o.fthe AdvisOl)' Group on Personal Investing. Finally, our parent company pc/fonus annual audits to ensure that Trusco is operating according to all internal as well as externallL/H's. regulations and requirell/ellls. Independent verijicoti(llI of our compliance with 01/ applicable Federal. State and Local statutes and ordinances is obtained through periodic examinations by The Securities and Erchange Commission. The Federal Reserve and by Deloitte and Touche, our auditor. '~.,J. '. "~~ XII. SUBMISSION OF PROPOSAL Seven (7) copies of the proposal must be submitted. Proposals received after the above date and time will not be considered. The City is under no obligation to return proposals. XIII. EV ALUATION OF PROPOSALS An ad hoc committee as previously described will evaluate proposals submitted in response to this RFP. The selection of a proposal and the execution of a contract, while anticipated, are not guaranteed by the City. The City reserves the right to determine which proposal is in the City's best interest and to award the contract on that basis. The City may reject any and all proposals, waive any irregularities of any proposal, negotiate with any potential proposer (after proposals are opened) if such is determi ned to be in the best interest of the Ci ty. After all proposals are reviewed, proposers may be selected for interviews or oral presentations as may be necessary. The City makes no commitment to any respondent to this RFP beyond consideration of the written response to this RFP. XIV. A WARD OF CONTRACT After selection of a proposer based on qualifications, the City will then enter into negotiations as to the terms of the agreement, all aspects and levels of services, and compensation to be paid. In the event the negotiations between the proposer selected and the City cannot be completed as a result of an inability to reach agreement on the fee for services, or the scope of work to be performed, then at the option of the City, the contract may be awarded to the second most qualified proposer. Negotiations will continue in this sequence until a contract is finalized, or all proposals are rejected. XV. CITY COMMISSION APPROVAL The final contract will be submitted to the City Commission for approval. The selected proposer will be required to assume responsibility for all services offered in their proposal. The selected proposer wi II be considered the sole point of contact with regard to contractual matters, including payment of any and all charges resulting from the contract. The selected proposer will be required to enter into a written contract with the City in a form approved by the City Attorney. This RFP and the proposal, or any part thereof, may be incorporated into and made a part of the final contract. The City reserves the right to negotiate the terms and conditions of the contract with the selected proposer. XVI. ANTICIPATED CONTRACT TERMS AND CONDITIONS 1. Standards of Performance A. The performance of all services by the proposer under this Agreement will be by persons appropriately licensed or registered under state, local and federal laws. B. In performing all services under this Agreement, the firm will use that degree of care and skill ordinarily exercised for similar projects by professional finns who possess special expertise in the types of services involved under this Agreement. C. Any provisions in this Agreement pertaining to the City's review, approval and lor acceptance of written materials prepared by the firm's subsidiaries or sub- contractors in connect ion with this Agreement wi II not di minish the fi rm' S responsibility for the materials. D. The firm will perform all of its services in coordination with the City, and will advise the City of data and information it needs to perform its services. The firm will meet with City representatives at mutually convenient times to assemble this data and information. E. In performing all services under this Agreement, the firm will comply with all local, state and federal laws. 2. City's Responsibilities A. The City will provide information to the firm regarding the City's requirements or the firm's services under this Agreement. B. The City will designate an authorized representative to act on the City's behalf with respect to this Agreement. The City will examine documents and information submitted by the firm, and promptly render responses to the firm on issues requiring a decision by the City. 3. Firm's Records A. All expense records of the firm's personnel will be kept on a recognized accounting basis acceptable to the City, and will be available to the City at mutually convenient times. This provision applies only if the firm is to be reimbursed for any expenses. B. The City, its auditors, and federal and state agencies that have monitoring or auditing responsibilities for this Agreement will have access to any books, documents, papers and records of the firm which are directly pertinent to this Agreemcnt for the purpose of making audits. examinations, exccrpts, copying and transcriptions. ~..". m8' RRO~'c)'S1\r~~:;:!l;.l:dt~,tl'%;'iffl';;':'~P-A'GEi.26~~:( _. , !fi .~rt'<.._ ~~~~JE"':t~...-....~'l.1o~~'.h'J'__""-::,,,r;'_'''<I. 'l...K. C. The I~rm will furnish to Ihe City, at such time and in such form as Ihe City may require, financial statements including audited financial statements, records, reports, dara and information, as the City may request pertaining to the mailers covered by this Agreement. 4. Ownership and Use of Documents A. All documents prepared by thc firm in connection with this Agrcement will become the property 01' the City. B. The firm will retain all of its records and supporting documentation relating to this Agreement, and not delivered to the City, for a period ol'three years, except that in the event the firm goes out of business during that period, it will turn over to the City all of its records relating to the City. 5. Term and Termination of Agreement A. The term of Ihis Agreement begins upon its execution by the City, and will end upon the finn's completion, and the City's acceptance, of all services described in this Agreement. B. Either party upon 30 days prior written notice may terminate this Agreement, should the other party fail substantially to perform in accordance with its terms through no fault of the party initiating the termination. C. The City upon at least 30 days prior written notice to the firm may terminate this Agreement at will. D. In lhe event of termination as provided in this Section, the firm will be compensated for all services performed to the termination date which are deemed by the City to be in accordance with this Agreement. This amount will be paid by the City upon the firm delivering to the City all information and materials developed or accumulated in performing the services described in this Agreement, whether completed or in progress. 6. Insurance and Indemnity A. The firm will hold harmless, indemnify, and defend the City and its employees, agents, omcers and servants from any and all lawsuits, claims, demands and causes of action of any kind arising from the negligent or intentional acts, errors or omissions of the firm, its officers, employees or agents. This will include. but not be limited to, the amounts of judgments, penalties, interest, court costs, reasonable legal fees, and all other expenses incurred by the City arising in favor of any party, including the amounts of any damages or awards resulting from claims, dcmands and causes of action for personal injuries, deat h or damages to property. .. B. The firm will procure and maintain at its expense insurance with insurance companies authorized to do business in the State of Florida, covering all operations under this Agreement, whether performed by the firm or its agents, subcontractors or employees. Before commencing the work, the firm will furnish to the City a certificate or certificates in a form satisfactory to the City, showing that firm has complied with this paragraph. All certificates will provide that the policy will not be canceled until at least 30 days written notice has been given to the City, and will name the City as an additional named insured on all coverage's. The kinds and amounts of insurance required are as follows: Workers' Compensation Insurance in accordance with the statutory provisions of the State of Florida Liability Insurance. Commercial general liability insurance with a combined single limit of $2.000,000 for each occurrence and $2,000,000 in the aggregate. Automobile liability insurance in an amount not less than $2,000,000 for injuries to anyone person, $2,000,000 on account of anyone accident, and in an amount of not less than $2,000,000 for propeliy damages. Professional liability insurance with a combined single limit of $2,000,000 for each occurrence and $2,000,000 in the aggregate. Employee dishonesty coverage and fiduciary coverage in an amount adequate to cover related assets. C. The stated limits of insurance required by this Paragraph are minimum only-- they do not limit the firm's indemnity obligation, and it will be the firm's responsibility to determine what limits are adequate. These limits may be met by basic policy limits or any combination of basic limits and umbrella limits. The City's acceptance of certificates of insurance that do not comply with these requirements in any respect does not release the firm from compliance with these requirements. 7. Miscellaneous Provisions A. The laws of the State of Florida govern this Agreement. Exclusive venue for any dispute arising under this Agreement is in Seminole County, Florida. B. As to all acts or failures to act by either party to this Agreement, any applicable statute of limitations will commence to run and any alleged cause of action will be deemed to have accrued when the pariy commencing the cause of action knew or should have known of the existence of the subject act or failure to act. C. The firm agrees not to use funds received by it under the terms of this Agreement for any partisan political activity or to further the election or defeat of any candidate for public office. 1f """"',':!f:,"'fu;"~il::~';'~l!:I'~~""". .J:~4IOr""~~~I.fi,~j~~'r't"l!';;Mtit D. The finn hereby affirms that it has not made or agreed to make any valuable gift whether in the form of service, loan, thing, or promise to any person or any of his/her imlllediate family, having the duty to recommend, the right to vote upon, or any other direct influence on the selection of firms to provide professional services to the City within the two years preceding the execution of this Agreement. E. In performing the services required under this Agreement, the firm will not discriminate against any person on the basis of race, color, religion, sex, national origin, age or disability. F. All references in this Agreement to any particular gender are for convenience only and will be construed and interpreted to be of the appropriate gender. The term "will" is mandatory in this Agreement. G. Should any provision in this Agreement be found or deemed to be invalid, this Agreement will be construed, as not containing the provision, and all other provisions, which are otherwise lawful, will remain in full force and effect. To that end, the provisions of this Agreement are declared to be severable. H. All services provided pursuant to this Agreement are for the exclusive use and benefit of the City. l. Florida statutes applicable to public records and the public dissemination thereof govern the City of Winter Springs. J. This Agreement and all written information generated under this agreement may be subject to release. K. The City and the firm, respectively, bind themselves, their partners, successors, assigns and legal representatives to the other party to this Agreement and to the partners, successors, assigns and legal representati ves of such other party with respect to all covenants of this Agreement. The City and the firm may not assign, sublet or transfer any interest in this Agreement without the written consent of the other. L. This Agreement represents the entire and integrated Agreem~nt between the City and the firm, and supersedes all prior negotiations, representations or agreements either written or oral. Except as to a change in the scope of services, this Agreement Illay be amended only by written instrument approved by the City's governing body and signed by both the City and the firm. M. Any exhibits and/or attachments attached to this Agreement are incorporated by reference into this Agreement as though included verbatim herein. N. [n the event of any conflict between these Terms and Conditions and the provisions of any exhibit or attachment to this Agreement, these Terms and Conditions will govern and control. XVII. PROPOSER'S WARRANTY The undersigned person by his/her signature affixed hereon warrants that: (a) he/she is an officer of the institution submitting the proposal; (b) he/she has fully read and understands this RFP and has full knowledge of the scope, nature, quantity, and quality of work to be performed; the detailed requirements of the services to be provided, and the conditions under which the services are to be performed; and (c) acknowledges that the institution has no objection to incorporating the Request for Proposal and its responses to it as an attachment to the contract we may mutually develop for the Investment Management Services for the Defined Benefit Pension Plan Funds services. PROPOSER WW:;CU qapl kJ l1lamqj &Yle-yL!- N~~ Signat --':;:ft'(~o(d()T'- Name (Print or Ty ) i J~o.l Od- I I, 300 '5, Oc d YlJ (' OtJiL i Or Wfld-o FL :3 J ~D I Address . 407- ;/37--5'761' Date Telephone Number LI67-~37-&9r~ Fax Number "G;mY!o",~Wi '; .'~~~R1m;~cCORr6At;'~P.~N~lotlifNV"~fMEtl ~SERV.icES~REQtJESi~roR.P.R"OP.as'AtS>l~r<.,t;{~'W;.~~~,'Y:w.'~'}P.AGEiJO." ~.,~)oio.\;.,,-~...~.~........., ..!.!:'J.'"!""~HF"'._~.'"'' ''!}.lfS..... ..--,.,>.....~~~~.."r... ~'_~,.."""." 1'> - .......J;.~t.'.......,., -.I..;fE.., -...... ' ... ...:o....Y..........." ._......... pt~~-1...,...:._"._..f, ;c.:r;::... '~""" ~,!)~."l.'~..:t.;~~.."..._,_- 1~~~,w.1.i1~..._ .t., ....,....~ .,,.,.. XVIII. ATTACHMENT General Employee Retirement System Investment Policy Statement Timeline fPiiY;Of;<Wj"tE{i"'sp.RiNGSf!Ifi~'OiiIDA~\~i<!()'jeENslo "'INVESTMEtftiS "OV.iCESE.:R'EQUESr,lFroRiP.Roeo hAus\'~\"",",i1~~'~l'&~~~~~~:P.AGE~ - .~'f!' ~I ~ :a~<lN....,,.,... '.0. '." ..<.." .-. .... ~w.~4'al.r;.......... J..{.~",,. . .,"~ "~"'...!~" "''C. ." ,+ .....~ . ,.~ . .",~.. ". ,....l?",......~j 5JI"."'~.,.,J~ .=,'ffi..~..~_ ..~J.~ , ~ CITY OF WINTER SPRINGS' MINUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING SEPTEMBER 24,2002 I. CALL TO ORDER The Board of Trustees - Pension Plan Special Meeting was called to order by Chairman Robert Nippes, on Tuesday, September 24, 2002 at 7:30 p.m. in the West Conference Room of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Chairman Robert Nippes, present Vice Chairman Vernon Rozelle, present Board Member Vincent Giannoni, absent Board Member Mark Queen, present Board Member Mark Sardo, present II. REGULAR REGULAR A. Review And Ranking of RFPs ("Request For Proposal") Mr. Eric Lasso, Consultant, Public Financial Management, Suite 720, 202 South Orange Avenue, Orlando, Florida; introduced associate Mr. John Molloy, from the Harrisburg, Pennsylvania office. While distributing a booklet Mr. Lasso explained that Mr. Molloy prepared the analysis of all of the proposals to be reviewed by the Board Members. Mr. John Molloy, Consultant, PMF Assest Management LLC, One Keystone Plaza, Suite 300, North Front and Market Streets, Harrisburg, Pennsylvania: addressed the Board. Mr. Molloy proceeded to review the nine (9) proposals by discussing each company's recommendation of fund preference; the recommended asset allocation, the past performances of the recommended Funds; fee schedules; the representatives that will be handling the Pension Fund; and the company's references. City Manager Ronald W McLemore arrived at 7:46 p.m. Discussion followed regarding Management Fee and Advisory Fee and the City's former experience with Florida Municipal Investment Trust. The Board Members and Consultants continued to review the proposals. Discussion. ~ : ~ ~ ~ ~ ~ ~ ~ L--..J t::t ~ If I CITY OF WINTER SPRINGS MINUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING - SEPTEMBER 24, 2002 PAGE20F3 Tape II Side B Referring to "Reporting devices", Mr. Molloy stated, "None of these proposals were for administration of the plan. So they are not calculating - they are not proposing benefits calculations they are not proposing the annual participants statement that tell them we expect your benefit will be 'X' based on 'X"'. Ms. Louise Frangoul, Finance Department Director said, "Isn't that common with Defined Benefit Plans though versus Defined Contribution because you have an individual account. Whereas we have a Defined Benefit Plan and you can calculate what your benefits are going to be when you retire but you can't necessarily equate it back to the pool of the money that is sitting in there at this point of time. I think that is why you can't give individual statements on a monthly, quarterly for an individual. It's an actuarial type thing." Discussion. Ms. Frangoul suggested, "That maybe one of the things that we might want to bring up when we actually have our orals and we have an opportunity to ask them questions, how can they bring that extra little customer service to us." Next discussed were the performances of proposed Domestic Equity Funds, International Equity Funds, and Fixed Income Funds. Additionally discussed were the rankings and the Consultant's recommendations. Discussion. MOTION BY BOARD MEMBER SARDO. "I'LL MAKE A MOTION THAT WE SET UP - INTERVIEWS WITH TRUSTCO CAPITAL MANAGEMENT AND W ACHOVIA CAPITAL MANAGEMENT GROUP." SECONDED BY VICE CHAIRMAN ROZELLE. DISCUSSION. WITH CONSENSUS OF THE BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Ms Frangoul confirmed that the interviews would be held on October 8, 2002 at 6:30 p.m. Brief discussion followed regarding the format for that Meeting; and Mr. Steven Alexander [CCM, Senior Managing Consultant, Public Financial Management] agreed to contact Trustco Capital Management and Wachovia Capital Management Group. III. FUTURE AGENDA ITEMS This Item was not discussed. IV. ADJOURNMENT Chairman Nippes asked, "Do I hear a Motion to Adjourn?" c ~ ~ ~ .~ ~ ~ J --: t...--.l ~ ~ r . -,l CITY OF WINTER SPRINGS MINUTES . BOAR!) OF TRUSTEES - PENSION PLAN SPECIAL MEETING - SEPTEMBER 24. 2002 PAGE 3 OF 3 MOTION BY BOARD MEMBER QUEEN. "I'LL MAKE THAT MOTION." SECONDED BY BOARD MEMBER SARDO. DISCUSSION. WITH CONSENSUS OF THE BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Chairman Nippes adjoumed the Meeting at approximately 9: 1 0 p.m. RESPECTFULLY SUBMITTED: DEBBIE GILLESPIE DEPUTY CITY CLERK S:\dept - City CIerk\BOARDS\TRUSTEES\aIlI\MINUTES\2002\092402 SPECIAL.doc NOTE: These Minutes were approved at the 0,2002 Board of Trustees-Pension Plan Meeting. ~ ~ ~ ~ ~ ~ <==> ~ l:2.:I '==' .. .' CITY OF WINTER SPRINGS MINUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING OCTOBER 8, 2002 I. CALL TO ORDER The Board of Trustees - Pension Plan Special Meeting was called to order by Chairman Robert Nippes, on Tuesday, October 8, 2002 at 6:40 p.m. in the Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Chairman Robert Nippes, present Vice Chairman Vernon Rozelle, arrived at 6:43 p.m. Board Member Vincent Giannoni, present Board Member Mark Queen, absent Board Member Mark Sardo, present II. REGULAR REGULAR A. Opening Comments. Mr. Steven Alexander, CCM, Senior Managing Consultant, Public Financial Management, 201 South Orange Avenue, Suite 720, Orlando, Florida: presented to the Board, a booklet which included a "Scoring sheet" for each firm's proposal. Vice Chairman Vernon Rozelle arrived at 6:43 p.m. REGULAR B. Presentation By Trusco Capital Management. Presentation commenced with Mr. Steve Gordon, Vice President, Trusco Capital Management, 300 South Orange Avenue, Suite 1600, Orlando, Florida. Board Member Mark Sardo asked Mr. Gordon regarding the fourth quarter and the first quarter, "Would you change your positions?" Mr. Gordon said, "No sir. Tim [Nash, Trustco Capital Management] will talk to asset allocation. But just from the stock funds that we manage, it is a continuous process - it is an ongoing process so we will position ourselves with the stocks that we think have the best earnings trends. And if one falls off, then another one will bubble to the top. It is a continuous evaluation process. We do not start at the top and say it is now time to buy whatever sector, and then go in and look for the individual stocks in that sector. We start at the bottom and see which companies have ~ ~ ~r' . ~ Ii ~ ~ ..... ~ ..- ~ L~.J I :I CITY OF WINTER SPRINGS MINUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING - OCTOBER 8. 2002 PAGE20F9 good earning trends. And then within our parameters of making sure we do not have too much in anyone sector, or too much in anyone stock, we build a portfolio from the bottom up. So it is a continuous, evolving type of thing." Board Member Vincent Giannoni asked about "Cross-selling products and services". Mr. Gordon stated, "If you indicated you had a need for some other service that we are not providing, and we have it, we would be happy to offer it to you." Board Member Giannoni then inquired, "Do you have any relationship with - for example IPO's. Do you promote?" Mr. Gordon stated, "We have a completely separate subsidiary in Suntrust called Suntrust Securities that does brokerage. We do not do any marketing ofIPO's or anything of that nature. We occasionally buy an IPO, for instance a spin-off of a major corporation may well have a documented track record with earnings that have been split out. We would look at an IPO if it is a company that it established and has good earnings. And we are able to buy IPO's for you if that is an attractive thing. But we are not involved in any way in bringing companies to market or anything of that nature." Mr. Tim Nash, Vice President, Trusco Capital Management, 300 South Orange Avenue, Suite 1600, Orlando, Florida: addressed the Board. Chairman Nippes asked, "What assurance, or probability do we have of achieving our goal of nine percent (9%) expected return, and how do we assure this?" Mr. Nash stated, "Your actuarial assumption compared to the - as Steve [Gordon] talked about, we manage about one hundred (100) municipalities, ninety-two (92) within the state of Florida. Your actuarial assumption is a little bit high compared to the average plan within the state of Florida. It is typically about eight percent (8%). In the current investment environment that we are in, none of these plans clearly are going to meet their actuarial assumption for this year, even if they used a four (4) year smoothing technique. Actually when we look at the snapshot in time, the numbers that are out there for the last five (5) years, you will see - that is also below your nine percent (9%) or eight percent (8%). It is about six point eight percent (6.8%) on average over the last five (5) years. I think when you are looking at your actuarial assumption you have to go back to longer time periods and look at how have stocks and bonds performed over more meaningful time periods, rather than just a snapshot at the last five (5) years." Board Member Mark Sardo asked, "How quickly do you invest assets once you receive?" Mr. Nash responded, "Typically once the check arrives on day one (1), the assets are invested on day two (2). And actually it is good you bring up that point because you were using our Common Trust funds, which prior to June were valued two (2) times a month, on the fifteenth (15th) and the thirtieth (30th), actually the last business day. So we, in the past, only had the ability to move money in or out twice a month. We have gone to a daily evaluation on all of these funds so that is how we are able to invest on a daily basis, or withdraw money on a daily basis should you need that for pension, or checks. So that's actually an enhanced service from the funds." t:~ ~ ?:i ~ ~ ~ ~ ~ t:--.:J ~ CITY OF WINTER SPRINGS MINUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING - OCTOBER 8, 2002 PAGE30F9 Tape I/Side B REGULAR C. Presentation By Wachovia Retirement Services. Mr. William Callaway, Vice President Business Development, Wachovia Capital Management Group, One Wachovia Center, Charlotte, North Carolina, 28288: addressed the Board. Ms. Louise Frangoul, Finance Department Director, asked Mr. Callaway, "Is it my understanding - for the fee that you have stated we get all the actuarial services?" Mr. Callaway stated, "No, that was just to let you know that it is there down the road if you want that. But it will be a basis point charge. I have seen most of them in the one hundred ten (110), one hundred twenty (120) basis point range." Ms. Frangoul asked, "And the employee education?" Mr. Callaway said, "That all comes with it. We would certainly quote secondly on that." Pension Payroll was discussed with Mr. Callaway stating, "We would do that. It is two dollars ($2.00) per periodic payment and twenty dollars ($20.00) for a lump sum" in addition to the basis points. Board Member Sardo stated, "I noticed in the RFP [Request For Proposal] that we had asked a question - about how many accounts you had gained, how many accounts you had lost over the past twelve (12) months and there was no response on your end of that." Mr. Callaway answered, "I think the reason being is because we had Evergreen assist us with this response because it was all investment driven. Wachovia Retirement Services versus Evergreen, I guess we did not know which one to respond to but let me find that. I do know that it is not in our practice to give you names of departed clients. We do not give references until we are done. I apologize. I think we can probably get you that number. There is no reason why we could not answer that. And I will just give you Wachovia Retirement Services because that is who we are representing, because that is a product ofWachovia Retirement Services. I think that was probably an oversight." Board Member Giannoni asked, "Can you provide a percentage right now? What percentage of clients - what kind of payroll do you have right now?" Mr. Callaway asked, "Mary Lou [Dixon, Senior Relationship Manager, Wachovia Capital Management Group], just in our Florida office, how many accounts have we lost in the last twelve (12) months?" Ms. Mary Lou Dixon, Senior Relationship Manager, Wachovia Capital Management Group, One Wachovia Center, Charlotte, North Carolina, 28288: responded, "Well there are different ways of losing them - so excluding the mergers and acquisitions, we have got about one hundred ten (110) accounts in our Tampa office. In the last twelve (12) months I would have to say about four (4)." Board Member Sardo asked, "How <r.:~ .~ ~ ~ ~- I ..... a ...... .::= - -- ~ L-..J '--' CITY OF WINTER SPRINGS MrNUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING - OCTOBER 8, 2002 PAGE40F9 about gaining?" Ms. Dixon stated, "Gains, I think we have added five (5)." Mr. Callway stated, "I think my RFP team can come up with a number and I can get that to you tomorrow morning. I can have them fax it to you." Chairman Nippes asked, "Do you have any client references we can check on?" Mr. Callaway answered, "Sure, not with me tonight but I can get those to you tomorrow if that is what you would like." Board Member Sardo asked, "How do you propose to handle the transfer of assets from our current Manager to the Evergreen funds? How will you minimize the costs that are associated with that transaction?" Mr. Callaway answered, "What are you invested in? Is it all STI funds?" Board Member Sardo stated, "For the most part." Mr. Callaway said, "They will liquidate on one day and wire the same day, and we can invest it at the end of the business day." Ms. Dixon said, "But there should not be any fees." Board Member Giannoni asked, "Do you do any kind of cross-selling in terms of, like if you have an IPO, would you actually consider other investments that you have other than the Evergreen - to be put into the portfolio, or just sticking with what you are recommending here?" Ms. Robin Herzog Vice President Investment Officer, Wachovia Capital Management Group, One Wachovia Center, Charlotte, North Carolina, 28288: responded, "If what you are talking about is individual securities, no. What we are talking about is basically giving you access to different investment funds. I think the most conservative approach that we can offer for a plan such as yours, and for all of our retirement plans, is to offer these different types of investments. Now if the underlying managers take part in IPO's, any gains that they receive from them would be reflected in the underlying...." Mr. Callway said, "...I think we are going to stick to your investment policy and I do not think your policy statement allows for that." Chairman Nippes asked, "How quickly do you invest assets once the money is received from us?" Mr. Callaway said, "Same day if we receive them by four (4:00)." Board Member Sardo asked, "Traditionally, what kind of meetings would you set up with us as a Committee, how frequently would you meet with us?" Mr. Callaway stated, "We determine that on a need basis. Some clients need us once a year. Some clients do not ever want to see us; they want us to deal directly with their Consultant and then they work with you. If you want us to meet with you on a quarterly basis we will be happy to, semi-annually we would be happy to. It is whatever frequency. We let you set the prescribed frequency of our meetings." Brief discussion developed on Wachovia Retirement Services' capability of providing web-site access to customers. Tape 2/Side A ~ ~ I ~ I ....J ::;u -- ~ ~ L--.J l.. .J CITY OF WINTER SPRINGS MINUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING - OCTOBER 8, 2002 PAGE50F9 Mr. Callaway distributed a "Sample" Defined Benefit Statement to Members of the Board. Board Member Rozelle inquired about the web-site access. Mr. Callaway stated, "The sixty (60) to eighty (80) basis points, depending on your portfolio structure that is strictly for asset management - there will be some additional fees, maybe forty (40) to sixty (60) more basis points, for the actuarial and the internet, and everything else except for the Pension payments which is we have a two bucks ($2.00) per check, per month fee. But we can certainly discuss that. I am not prepared to give you pricing tonight but we can certainly do that at a later date." Mr. John Molloy, Consultant, PMF Assest Management LLC, One Keystone Plaza, Suite 300, North Front and Market Streets, Harrisburg, Pennsylvania: asked of Mr. Callaway, "How do we know when these funds that you are replacing in the line up are funds that are going to perform well in the future?" Mr. Callaway said, "It is a consistency of performance that Robin [Herzog] spoke of. It is a due diligence process that we go through. Weare looking at style adherence. Performance is just one thing. We are looking at performance over the long terms, we are looking at consistency of performance, we are looking at performance versus peer group, we are also looking at manager tenure." Ms. Herzog added, "We also do on-site interviews. Not only do we first have to figure out which Managers are going to be included in our program to start with, and then once they are in, every single quarter they have to prove to us why they should continue to be part of our program." Mr. Alexander asked, "Can you describe what happened from the time that the proposal was formulated - to your strategy today - your due diligence process, what triggered the change from your - RFP?" Mr. Callaway stated, "To be honest with you, we responded to this RFP August 30th. September 12th I was at a sales conference in Charlotte and this new process was written out. This 630 Defined Benefit approved list - something we have been doing at the Bank for a long time with our wealth management client - but our bundle of product, we could not go to the market and say it's Evergreen. We needed more. We have relegated Mass Mutual to an actuary. It was rolled out to me and I said you know what, this was before we were notified, but I said this is great for our DB [Defined Benefit] plan prospects, customers. It is going to make our bundle of product just soar because we have that flexibility. That is what happened. It is not new to the Bank, it is new to me, it is new to our group. It is a tool we have that we did not know that we had. And quite honestly, it is going to benefit you and all of my other clients." Mr. Molloy asked, "In light of the way that that program is put together, do you see any problems or issues with compliance on our investment policy?" Mr. Callaway said, "Given the Florida Statutes?" Mr. Molloy said, "Given the City of Winter Springs investment policy." Mr. Callaway asked, "Are you referencing a particular section?' Mr. Molloy said, "I am thinking about the whole thing." Page eight (8) was referenced. Mr. I -; ;> . '-' . ~ ~ Ill:. __ ... . ~ =: L--.J Ii. JI CITY OF WINTER SPRINGS MINUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING - OCTOBER 8. 2002 PAGE60F9 Callaway said, "Item VII, no. Without knowing the portfolio structure of those two (2) funds at this time, no I can't." Ms. Herzog stated, "I believe many Mutual Funds out there have a five percent (5%) roll just as you do in your policy statement. So I can quickly check this. Some of these oppositions are a little dated - but my guess is that the majority of the funds that we put before you have the same five percent (5%) restriction that your investment policy statement does." Mr. Molloy asked, "How often are you adding and deleting managers from this approved list, and is there a target that you guys have for the number of managers to put in each of the boxes here. Some of your competitors have thirty (30) to forty (40) funds...." Mr. Callaway answered, "... On our DC [Defined Contribution] side we do. Where I guess planned sponsors feel that participants need more ofa choice. We do not feel that way on the DB [Defined Benefit] side. Their ultimate goal is to comply with your policies and meet your actuarial assumption. If Evergreen is working you are going to see it is not turning our head on some things. They are currently reviewing for third quarter right now. As far as adding and deleting, it has got to be on a quarterly basis if any. There may not be a need for additions or deletions in every quarter. It will happen on a quarterly basis should that happen." Mr. Molloy asked, "As you consider changing managers in a program like this, one of the reasons to change a manager is because performance - and you are looking to replace it with a manager who's past performance was - worse. So again, how do we make sure that we are just not chasing performance? If you are going to replace managers - is their style performance - you are not going to replace them with someone who is worse performing most likely, but somebody much better. Again, how do we make sure this is not a process of chase and performance?" Mr. Callaway stated, "Performance is just one of the due diligence steps that we go through." Ms. Herzog added, "And we do not necessarily suggest replacing a manager based on one (1) bad qUalier, two (2) bad quarters, four (4) bad quarters. They have got to be falling below our expectation levels or below that fiftieth percentile (50%) mark on the three (3) and five (5) year basis unless something dramatic has happened. For example, a manager changes or a company changes ownership structure; but we are not going to come back here every quarter and say you know what, one (1) quarter you are underperforming the market, it is time to replace it. We take a much longer view of the market and a much longer view of the retirement plan and if it is only on a consistent basis, if we get that three (3) and five (5) year number, usually when the three (3) year number goes below fiftieth percentile (50%), that is when I start speaking to my clients about maybe we need to think about this and I am on the phone with the company finding out what the problem is. Unfortunately, no one has got a crystal ball. But the best we have is this past performance, which is no guarantee of future results." Mr. Molloy asked, "How do you look at the risks of the combined portfolio - how do you look at the risks of those Managers as they combine with each other?" Ms. Herzog stated, "We look at the standard metrics out there, standard deviation. We look at what is available on - Morning Star. Morning Star has got this - function where it will tell you -- I ..- ~ :>- · W I ...J ~ -= - -~. ~ L--=.J t.....I CITY OF WINTER SPRINGS MINUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING - OCTOBER 8, 2002 PAGE 7 OF 9 the three (3) year or five (5) year risk and return of a fund, below average, above average. Those are the types of things we look at. What we do not want to see is something with an above average risk with a below average return. We want to see below average or average risk, and average or above average, or high returns. Again, when I see those metrics start to shift, that is when I say something is going on there and I have got to find out what is going on with the company through my network of wholesalers and speaking to portfolio managers, and go back and report to my client what is going on." Mr. Molloy questioned, "All of the managers here are running Mutual Funds - not separate accounts?" Ms. Herzog stated, "Yes, that is correct. They are all Mutual Funds." Mr. Molloy asked, "And the numbers that you showed on them, are those the net per June 30th?" Ms. Herzog stated, "No, I have the August 31, 2002 numbers." Mr. Molloy said, "So our book that we all have is June 30th?" Ms. Herzog stated, "Yes." Mr. Callaway stated, "And they are net." Ms. Herzog stated in regards to Mr. Molloy's earlier question, "The only thing I was able to find is that occasionally the cash allocation will be more than five percent (5%). I do not think that violates your policy, or does it - if a cash position in a fund goes above five percent (5%)." Mr. Molloy asked, "Could you give us a little bit more explanation on the managers program. I believe you said it is new to you -." Mr. Callaway stated, "This group in Jacksonville, - from Wealth Management Group. They have been doing this, they are part of the Capital Management Group and they just became a part of the Capital Management Group in 2001. So what they were doing, they were a part of the General Bank, they came into the Capital Management Group structure, then it became known to us what they were doing. As integration goes, it takes a while for infOlmation to trickle out. So we realized it was a good thing they were doing for their clients, could we tap into that. And all they are doing for us is managing this process, going through the due diligence, applying - results. And then from there, we structure." Ms. Herzog added, "Once we have the results, you have someone like myself looking at it on behalf of the plan to make sure that the funds are still meeting the needs and requirements, and doing the job we put them in the plan to do." Mr. Molloy clarified, "Let me now try to separate a little bit. With the selection of managers for the overall program, the recommendation and advice that you have given us on which managers to use in this plan is the Wealth Management Group that formerly- manages the overall program, and now is doing that for institutional?" Mr. Callaway stated, "They are still part of the Wealth Management Group which is now under the Capital Management umbrella. So we are working together. Weare duplicating what they are already doing. We are tapping into what they have already got established." Mr. Molloy asked, "How long have they been doing that?" Ms. Herzog stated, "I would ~ ~ P- I W · W ~ II:..... _ ~ L--..J l. .I CITY OF WINTER SPRINGS MINUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING - OCTOBER 8,2002 PAGE 8 OF 9 venture to say that they have been performing the services as long as they have been in the investment management business." Ms. Frangoul asked, "On your proposal you listed City of Orlando as one of your municipal clients for twelve (12) years. Did I understand you say that they are no longer - and did you just recently lose them, and what would be the reason for that?" Mr. Callaway stated, "They could be an Evergreen Plan and we would not have that knowledge because they assisted us with this RFP." REGULAR D. Discussion. Discussion evolved between the Board Members and the Consultants, including appraisal of the two (2) firms. Chairman Nippes stated, "As far as performance is concerned, I believe Trustco has performed over five (5) years better." Board Member Sardo stated, "It seems to me that Trustco might be more efficient because they have less risk and generate more return for the same amount at seventy percent (70%), at our large asset allocation." Regarding Wachovia's asset allocation, Board Member Sardo stated, "I did not get any clear cut direction on how they came up with their asset allocation." Tape 2/Side B In summary, out of a possible score of one hundred (100) points, the average score for the firms were as follows: . Trustco Capital Management: 99 · Wachovia Capital Management: 84.5 MOTION BY VICE CHAIRMAN ROZELLE. "I MOVE THAT WE RETAIN TRUSTCO AND BEGIN THE PROCESS OF NEGOTIATING A NEW CONTRACT WITH THEM. THAT MAY BE TWO (2) MOTIONS IN ONE (1)." SECONDED BY BOARD MEMBER SARDO WHO STATED, "I WILL GO AHEAD AND SECOND THAT INITIAL MOTION ANYWAY TO RETAIN TRUSTCO." VICE CHAIRMAN ROZELLE STATED, "I WILL AMEND IT [MOTION] TO JUST THE FIRST CLAUSE, THE MOVE TO RETAIN TRUSTCO FOR THE NEXT CONTRACT PERIOD." SECONDED BY BOARD MEMBER SARDO. DISCUSSION. WITH CONSENSUS OF THE BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Mr. Alexander stated he would present a draft copy of the contract to the Board Members because, "It would be a good idea for the Committee to take a look at the contract." IL = !:...~ P I '-' a '-' ::-u K. _ ~ L-.J '--' .'" III. FUTURE AGENDA ITEMS This Item was not discussed. IV. ADJOURNMENT MOTION BY BOARD MEMBER SARDO. ADJOURN." SECONDED. DISCUSSION. BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Chairman Nippes adjourned the Meeting at 9:09 p.m. RESPECTFULLY SUBMITTED: HOLLY N. PIERSTORFF ASSISTANT TO THE CITY CLERK CITY OF WINTER SPRINGS MINUTES BOARD OF TRUSTEES - PENSION PLAN SPECIAL MEETING - OCTOBER 8, 2002 PAGE 9 OF 9 .. . I ~ :J · ...J "I MAKE A MOTION TO ==~ WITH CONSENSUS OF THE.. - .. ~-~ L--.J t:::I NOTE: These Minutes were approved at the City Clerk\Boards and Committees\Board of Trustees\aIll\MINUTES\I 00802 SPECIAL.doc , 2002 Board of Trustees-Pension Plan Meeting. ------------------- City of Winter Springs Finalist Presentations for Investment Management Services for Defined Benefit Pension Plan Funds October 8 2002 presented by PFM Asset Management LLC One Keystone Plaza, Suite 300 N. Front & Market Streets Harrisburg, PA 17101-2044 (717) 231-6200 Fax: (717) 233-6073 201 South Orange Avenue, Suite720 Signature Plaza Orlando, FL 32801 (407) 648-2208 Fax: (407) 648-1323 - - -,- - - - - - - - - - - - - - - -' Table of Contents TAB -" , 'T"7;"':~'----~!:- ". l?t' " " " 'q , 'J\, A' ,- '~d -"II. ,.. -". c_ . 'fi ,; ,~~:? ",~ it: c,,~:L'~~( ',. ,.','Jiji ,,:::, , " I; , , ,..' \~ ' '\ .;';- : \ /' I ~}' "~' ,- }{\\ ,~.::::.~~p" "'c-=' , ! Finallsfl?r9fi~s-~'RF'~"ResRoris"e~/ ~f(,~"': . , -........., <----~-1 ~.-- 'I" - !'\; II ~':-"2>~""::J' , , "'\ 1 . 0 ,.,. <.)..'. I,.;",',';; d. ", ': " , ,- . .1 -- ...-' . "'./ /. . ~--:-:- 'L~~ _~_:;_; "',,,' .....,-,~~~_-..: i,,~ L " "h . ct. h ,I j . '.. ""___- , '.. - "1 " v. ,"} :\" "..~ I;'-p~tf~~m~nc~of P.rqp-os-e1:l-Fun-aS~~J fJ' , -~) 1\'1-,:, -- - (.:..--". ' ';,,};.-J..';'" ....' 'u' ~ ~C '~r8..j'i "'~'>t!\'r ~ '\~ .1.'(,: .'? .' ;,: -'l~ ~. "1~~~~~_:::,';, :~,.;;, :'_~..fj,~",.ct)!L'}'I;;~;f::, LCtu~ti0tis~for~~ilialiS'ts ,> -",i>,~~j ~~:iii, '--------~ II III IV ~, ~ 0: S~9.re Sheet 0,;,0 . \ '_ , , ~O'~ :}. . (~,_ '.' , '. r.. ", YD'O [~~i~i:~;~otF Sysie'Mrlnv~~trn,e~tp6Ii~}/ b~ ~ L~ ~' .~- - r; "ji', '~h'" ..' ,- , , --....-,..-., --------,-.......--.-~--"~-~-....-..-,- ~T"-.....-----.-- -"....-.,.,-,-'-.-, -, , V VI SiPf'M ~Asset Management LLC 12 ------------------- Agenda ------------------- Agenda Time Topic 6:30pm.............................. Meeting Called to Order 6:30pm - 6:45pm................. Meeting Preview - PFM Steve Alexander, Phyllis Heverly-Flesher, John Molloy 6:45pm - 7:30pm................. 7:30pm - 8: 15pm................. 8:15pm - 8:30pm................. 8:30pm - 9:00pm................. 9: OOpm. .. . . . . ... .. . . .. .... . . ... ... .. Presentation - Trusco Capital Management Steve Gordon, Tim Nash, Elliott Perny Presentation - Wachovia Capital Management William Calloway, Mary Lou Dixon, Robin Herzog, Corrie Bowman Break Discussion and Decision Meeting Adjourns aiP]FM ~Asset Management LLC 14 ------------------- Finalist Profiles & RFP Responses - - - - - - - - - Trll!i:~o r~nit~1 M~n~opnu~nt I ~nnTrn~t R~n" --- - -......-- .........-.........-. ~""'-----e-------_. .....,-..--- -- _1>.1'''' .-.,_....1110.- 300 South Orange Ave., Suite 1600 Orlando, FL 32801 Steve Gordon, Vice President (407) 237-5758 Recommended Funds/Accounts Description Sun Trust High Grade Growth Fund STI Classic Growth and Income Fud Sun Trust High Grade Equity Income Fund SunTrust U.S. Limited Capitalization Fund STI Classic International Equity Fund SunTrust High Grade Bond Fund SunTrust Retirement Reserve Fund descriptions for the above funds were not provided with proposal Recommended Allocation 1% 19% PFM Asset Management LLC o SunTNSt High Grade Growth Fund . STI Classic Growth and Income Fud o SunTrust High Grade Equity Income Fund o SunTrust U.S. Limited Capitalization Fund . STI Classic International Equity Fund o SunTrust High Grade Bond Fund . SunTNSt Retirement Reserve Fund - - - - - - - - - - Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: 1985 $45,500,000,000 Not Provided $4,300,000,000 Performance of Recommended Funds/Accounts gross or fees (For periods ended June 30, 2002) Fund I Benchmark: One Year Three Year Five Year Ten Year SooTrust High Grade Growth Fund -11.47% -1.34% 9.81% 14.17% STI Classic Growth and lncome Fu -11.95% -4.31% 4.90% NA SunTrust High Grade Equity lncom -5.51% -2.62% 4.89% NA SooTrust U.S. Limited Capifalizati -19.53% 6.91% 14.29% NA S & P 500 -/7.99% -9.18% 3.66% 11.43% STI Classic lnternational Equity Fu -9.16% -5.91% -1.53% NA EAFE lndex -9.49% -6.78% -1.55% 5.40% SunTrust High Grade Bond Fund 8.98% 7.77% 7.75% 7.48% SunTrust Retirement Reserve Food 2.78% 4.92% 5.20% 5.02% Lehman Aggregate 8.63% 8.11% 7.58% 7.35% Expenses/Fee Schedule Basis Points Charged 75 basis points on total assets includes management and custody of assets IInvestment Fees on $6 million account: $45,000 I 6 - - - - - - - - - Trusco Capital Management / SunTrust Bank 300 South Orange Ave., Suite 1600 Orlando, FL 32801 Steve Gordon, Vice President (407) 237-5758 - - - - - - - - - - T:'~___ n___L"!I_. r 11111 r l'UIIIt:. Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: 1985 $45,500,000,000 Not Provided $4,300,000,000 Kev Professionals Steven E. Gordon Vice President 8 years investment experience, joined Trusco in 1995 B.A, University of South Florida; MBA, Rollins College Timothy J. Nash Vice President 8 years investment experience, joined Trosco in 1995 B.B.A.. Stetson University; MBA, Rollins College L. Earl Denney, Jr., CFA Managing Director, Ponfolio Manager - High Grade Bond Fund 25 years investment experience, joined Trusco 1982 B.S., Carson Newman College; MBA. University of Georgia Chad Deakins, CFA Vice President, Portfolio Manager - International Equity Fund 7 years investment experience. joined Tn/sea in 1995 B.S., Florida State University EUiott A. Perny, CPA Managing Director, Ponfolio Manager - High Grade Growth Fund 29 years investment <<perience. joined Tn/sco in 1982 B.B.A., Stetson University; MBA, University of Florida Jeffrey E. Markunas, CFA Managing Director, Ponfolio Manager - Growth and Inoorne Fund /7 years investment experience,joined Tn/sea in 2000 B.A., College of Holy Cross; MS, Virginia Conunonwealth University Mills A. Riddick, CF A, CPA Managing Director, Ponfolio Manager - High Grade Equity Inoome Fund 20 years investment experience. joined Trusco in 1989 B.S.. Florida State University John M. Hamlin Vice President, Ponfolio Manager - U.S. Limited Capitalization Fund 12 years investment experience, joined Tn/sco in 2000 B.S., University of Notre Dame; MBA, University of Connecticut Kimberly C. Maichle, CFA Vice President, Portfolio Manager - Retirement Reserve Fund J 3 )'ears investment e.'Cperience, joined r,1JSCO in J 992 P F M ~'k^et~arn~~~mW~rr\<ergia State University References and Reoresentative Clients References: City of Palm Bay Police and Fire Pension Plan City of Titusville Police and Fire Pension Plan City of Coooa General Employees Pension Plan City of Dania General Employees Pension Plan Representative Clients City of Palm Bay Police and Fire Pension Plan City of Titusville Police and Fire Pension Plan City of Coooa General Employees Pension Plan City of Dania General Employees Pension Plan Client since: 1989 1989 1989 1993 7 - - - - - - - - - - Wachovia Bank, N .A. Capital Management Group One Wachovia Center Charlotte, NC 28288-0206 William Calloway (904) 489-5499 Recommended Funds/Accounts Description Strategic Value Fund - Seeks long-term capital growth by investing in large capitalization companies undervalued in the market Select Strategic Growth Fund - Invests in large and mid-sized companies whose classifIcation falls within the Russell 1000 index Special Values Fund - Invest at least 80% in common stocks of small U.S. companies that are undervalued and have potential for growth Growth Fund - Small Cap Flmd that invests in small to mid-sized companies demonstrating strong and consistent earnings growth International Growth Fund - Chooses equity securities located in foreign countries with developed markets to achieve long term growth Core Bond Fund - Maximize return by a controlled risk approach that emphasizes duration, sector and security selection. Recommended Allocation o Strategic Value Fund . Select Strategic Growth Fund o Special Values Fund o Growth Fund . International Growth Fund 7% 7% o Core Bond Fund PFM Asset Management LLC - - - - - - - - - Firm ProfIle: Evergreen Investments Founded: Wachovia Corporation Fonned: Assets Under Management: Public Clients Served: Public Clients' Assets: 1932 2001 $175,700,000,000 NR $692,933,475 Performance of Recommended Funds/Accounts gross of fees (For period ending June 30, 2002) Fund I Benchmark: One Year Three Year Five Year Ten Year Strategic Value Fund -14.90% -4.01% 3.95% 12.42% Select Strategic Growth Fund -21.01% -5.19% 6.15% N/A Special Values Fund 9.48% 12.64% 11.87% N/A Growth Fund -15.09% 6.17% 5.53% 12.44% S&P 500 -17.99% -9.18% 3.66% 1l.43% International Growth Fund 0.12% 1.55% 3.56% 8.43% MSCI EAFE -9.49% -6.78% -1.55% 5.40% Core Bond Fund 8.50% 8.46% 7.97% 7.73% Lehman Aggregate 8.63% 8.11% 7.58% 7.35% Expenses/Fee Schedule Basis Points Charged 80 50 basis points on 1st $10 Million on assets in excess of $1 0 million Ilnvestment Fees on $6 million account: $48,000 I 8 - - - - - - - - - - Wachovia Bank, N.A. Capital Management Group One Wachovia Center Charlotte, NC 28288-0206 William Calloway (904) 489-5499 - - - - - - - 1932 2001 $175,700,000,000 NR $692,933,475 - - Firm ProfLle: Evergreen Investments Founded: Wachovia Corporation Formed: Assets Under Management: Public Clients Served: Public Clients' Assets: Kev Professionals Mary Lou Dixon, CRSP Vice President and Senior Relationship Manager 19 years of Employee Benefits Administration nxperience Marcheta D. Winters, CRSP Senior Trust Associate 10 years of Employee Benefits Administration Experience B.S. Business Administrationn, University of Central Florida PFM Asset Management LLC References and Representative Clients References: Withheld for confidentiality Representative Clients City ofTampa City of Madison City of Deerfield Beach City of De\ray Beach City of St. Petersburg City of Orlando 9 ------ - -- - - - - - - - - - - I"i+u _.J \Ali...+ft.. C.....i...,.u~ C'1_..i.....,. DI:'D Dft.r-.............r-ft 1\11.,.+..;" of".. 1:';.......1;""+",, ",n.,. \oil "".. n."1 '"'t'I"I~~, I 1\011 lUG - 1'1 r 1'"'='t''\oIII'=''' I"IQLII^ IVI r"lall'='L~ A. Firm Background Trusco Capital Management (SunTrust) Wachovia Capital Management Group (Evergreen) Descnbe the organization, date founded, and" ownership of yourfiml,Hasit expeiienced significant" ' change inotgallizaticmal structure;6wnership;dr !, . management during the past three years and, if ~o, lease describe.' Describe any other business affiliations (e.g., subsidiaries, joint ventures, and "soft dollar" arran ements with brokers . Descr;ibe'your fil11l's po,liCyoj1soft;dollars. '00 " 4 Does our finn have an office in the State of Florida? ,5 '" 'Is your finn a registered investment advisor underthe " Investment Advisor's Act of 1940? 6, 'pescribe any SEC, NASD orany pthenegulatory' c~nsure or litigation involvi'ng your finn or it~ ' : em 10 ees diJrinthe astfive 5 ears. 7 Summarize fidelity bond coverage, errors and omissions, employee dishonesty, fiduciary liability insurance, or other fiduciary coverage your finn carries, and provide a current Certificate of Insurance. Inve,slment Subsidiary of SunTrust Bank founded In 1985, 1879- Wachovla founded , " 1~~2: .EYeigr~~n' fOl!nde9~~ 's~l:)sJd'ofWac.h.9via, ". ,',' ,., No reCent changes (outside'oftheFirsf Union/Wachoviamergei': 9/1 {{f1J ' 0 . 2 No subsidiaries; soft dollars 1 directed commissions pay for research services. Evergreen Investment See, Evergreen Funds, Intern'l Advisors, InterSt Johnson See, OFFITBANK, Tattersall Adv Group, Wachovia Bank/Funds '$ee:~~()p , . LJs~d.tb P, ayfor}eseafc~' ~ln9 :~eivlces . .. ~. ~ 8 .Provide a copy of yourfinn'smostrecent audited ,They say "seeattached"bufwe.don't have , financial statement. 9 Describe your finn's revenue sources and comment on All from inv mgmt business our finn's financial condition. 10 I)oes your finn adhere to the Code of Professional and Yes; plus Trusco!s ethical regs in policy manual ' Ethical Standards as described b AlMA? 5mil- Comm. Gen liab, 1mil (each event) - Auto 500K (each)-Wkmn Comp 5mil- Umbrella 200mil- Bnkr's Blanket Bond plus Cmputr Crime 200mil- Capt Mkts E&O 200mil- Ca Mnmt E&O ATTACHED In accordanCe, but 3rdparty firm audits their reports' PFM Asset Management LLC - 10 - - -- - - - -- - B. EXPERIENCE Trusco Capital Management (SunTrust) Wachovia Capital Management Group 2002: $45.5B 2001: 45.5 2000: 45.4 1999:30.7 1998: 22.5 1997: 19.0 ,,_' '::'Nhatisyourfirm'sexperieIlG,ejn'gev.elopingiIW,estment,' ," ,Wea~e_ abletp'sha~e whayothecpl,ms sp~cifyil) their.policies ' : ;policiesanoportfoliOri1ana:geJ1;lentguidelinesjorpublic;,-'~:; ; L~: - Zi:1-;~;i~'/~ : "j" :eni 10 ee ensionfunds?' , , ' - ' " " Does your firm act as a broker or as a primary dealer in securities or receive any other form of additional compensation (including soft dollars) for client transactions aside from the direct fee aid b clients? 5; .Providefiiteclient references (public sector) f()r'which ,youprovicte similar services including Ciie'ritname, ,cpntact personl1el,agdress, phone nuri)ber, aildlength ' " , ,of time you have manage<Hheir assets. Provide the number and types of accounts, total asset value, and composition of portfolios currently being mana ed b our firm. '7 . List your most comparable municipal' clients and. the .~Iength of time they have been clients. 2 " De~~ribe. your firm's experience in managi~gjnv~~tment " ortfolios for ublic funds and ovemmental'entities. Summarize your assets under management (institutional only) over the past five years. 6 8 How many accounts have you gained in the last 12 months? How many accounts have you lost in the last 12 months, and provide an explanation for the loss of each of these accounts. - - - - - - - - - $4.3B for Public sector clients,$2.1B forHealthcare Manages $7.4bil for 270 public.!unds & govt entities 97 - 87 bil 98-118 bil 99 - 121.8 bil 00 -129 bil 01 - 178.1 bil 02 -175.7 bil ,Si.IJce,19.~2:'portrebalanced mo~ly;/qtryly;pro\fider 'n3ComnieQde<lasserallo~tioii,.~:, ,.' ' , , _. _;. .._, 0;.. _0_ ,.-. _:. ~ . ,< ,,- ". . "".'." ..' _ ._, _ _0 ._ . Palm BayP& FPensio"n ':-TituslJille'P&"F'Pension; , ',Cocoa'General Ees Pension ';DaniaGeneraIEes Pension, No filth iven . Willprovide upon furth~r:consiaera!ion,of,pr6p~sal. , Total: 1653 accounts, $215,614mil assets See Prop 'As, above, Palm Bay, Titusville, Cocoa since'89,'Dania since '93.. ' , . . PFM Asset Management LLC - 11 - -- - - - - - - - - - - - - - -- - C. PERSONNEL Trusco Capital Management (SunTrust) Wachovia Capital Management Group Provide detailed resumes and biographical information See Investment Profile page for all key investment professionals who will be directly responsible for the investment of the City of Winter Springs pension funds. Include the following information: title, number of years at your firm, total number of years of ex erience, rofessional desi nations or licenses. Describe your firm's activities to keep portfolio' ,AIM~, FL An~lysts~ociety, Natl GFOA, FL-PublicP.ension",Qrtly report ",0 allin~titutional investors, also special reports for ~:Olan'ag'ers;inf()ril1ed of developments "relevant t(fthe'~:" :.,' ~~rUste'e;Associ'" -",' :c"---'sighit-events;relevarifto'client'sRortfolio-seflH6C1ieW'" :'-t-.;: :' . 'mana ementof ublic sector investmenfortfolios. '- t Provide an organizational chart showing analytical, , investment and research staff, other decision sUPPQrt, ,and back, office support. Identify the primary contact and . ~esCri_be the_roles,of e~ch k~y person~, Portfolio managers: 73 ' Analysts: 24 Traders: 11 Adm.inj~D/Support: 14'0, 2 :'3 14 Managing Directors; 20 Portfolio Managers; 28 Analysts; 25 AssociateS/Other " - , PFM Asset Management LLC - 12 - - - - -- - - - D. INVESTMENT MANAGEMENT APPROACH AND Trusco Capital Management (SunTrust) Wachovia Capital Management Group DISCIPLINE '5, Briefly describe your firm's Investment management philosophy, including your approach to managing public . employee pension funds. How are portfolios managed (e.g., by team, individual manager)? What is the back up when the manager is awa? ': WhCit ,are the strategies employed by your firm for ,:a_ddiriQ v~lue to portfolios (e.g:,; market tirning;,credit :~researCh,:etc.-?:":: 0 r .. _":<r.,''< ,J~ Describe the in-house technical and research support services you have available. What other sources does the firm on a regular basis use? ',How will you handle fluctuating cash flows and the cash ~ forecastin . rocess? Describe the investment program you are proposing for the City, including the type of securities you propose to purchase, how the funds will be managed after the initial investments are made and how you will provide liquidity. 6 7 ,Provide your firm's investment performance as . "'~.' : compared to the benchmar1<s listed in the Cny's General, .. , , Employee Retirement System Investment Policy Statement for the past 1, 3, 5 and 10 -year periods. . Please show annualized quarterly returns gross of all mana ement fees. 8 How frequently would you suggest your staff make contact with the Cit 's staff? Who will make contact? 9 Briefly describe any additional feature, attributes or . conditions that the City should consider in selecting your . firm. - - - - - - - - - - No different from other client types. FI: Small bets on rates; generally yield curve, sector and security analysis lead to purchase. Equity: fundamental analysis alter quant. screen on earnin s trend and valuation Individual manager with backup and trading asst Emphasis on three areas: Understanding the client's Investment Policy & Objectives, Structuring Port. Accordinglo Needs, Maintai~ing Ongoing Communication Team approach- 2+ PM responsible for each proposed fund. .' NH (same as answer to C3) I:arge research effort combinedwilhchallenge'and Collaboration bt}'~arT!.spenef~sclients . .... ',. . ,_ ; _" ""'_~:_ _.".. "Co '._-.-~ .;" - -.; -~_.- ......:> .;-. :...... ._." .~-;"- '" --, :c' ~io-:-;-...."'~~,;~;- :~J,';" -:""'s'.; '~~~ .. ';," - -.-.-r-~ - BRRA, CMS, Factset, First Call, Perform, Macgregor MFTP, Decalog IDEE, Salomon Yield Bk, Security APL, Portia, Archipelago, Bloomberg, Instinet, Knight, Posit, Redibk, Li uidnet. Clienr~ariagElr will routinely .monitor~1Ccts. :, SunTrust funds: Hi Grade Bond Inll Equity Hi Grade Growth (E) Growth and Income Hi Grade Equity Income US LId Cap Retr Reserve Fund; See. attached investment profiles , . .' Maintain fully invested portfolio with a cash position required by the account and its liquidity requirements ... See attached investment profiles .~ PFM Asset Management LLC - 13 - -- - - - - -- - - - - - - - - - - E. ACCOUNTING AND REPORTING Trusco Capital Management (SunTrust) Wachovia Capital Management Group Describe the investment accoun.ting.and reporting-_ system used by your finn and whetherit complies with AIMRstandards. 2 Describe the frequency and fonnat of reports that your Finn would provide to the City, including the methods and fonnulas used to calculate yield and perfonnance. Provide a sample of all re orts that will be rovided. Composites constructed and calculated according to AIMR Stat!'! St provides Accting services Accounting reportd available monthly and client meeting books Mo'ly/Otly or as requested quarterly F. FEES Trusco Capital Management (SunTrust) Wachovia Capital Management Group p age e us ody 1 $10m 80 bps $10mil+ -50 bps -- <-no min. fee. . NONE 2 NOlle. NONE 4 Quarterly Billed on Mo'ly or taken from assets mo'ly G. SUPPLEMENTAL INFORMATION Trusco Capital Management (SunTrust) Wachovia Capital Management Group - :Provide a copy of your firm's most recent Fonn ADV, Parts II, and I as on filewith the SEC. 2 Provide roof of state re istration. 3 . Provide any contract language your finn would request . or re uire in a contract with the Oi . 4 Provide assurances that the proposer will be cognizant of, comply with, and enforce all applicable Federal, State and Local statutes and ordinances. . Not received bYPFM A~ached Not received by PFM Not received by PFM Attached - '. Attached Dedicated Compliance officer and analyst; internal and external counsel; SEC registeres and examined; Deloilte and Touche auditor; Internal ethics code Attached PFM Asset Management LLC - 14 ------------------- Performance of Proposed Funds - -- - ----- - - - - - - - - - - Performance of Proposed Funds Average Annual Total Returns Firm Fund Name for periods ended June 30,2002 1 Year 3 Years 5 Years 10 Years U.S. Equity Portfolios Wacnovia ,,' ,Special Values Fund " ," 9.48% - 12.64% ,11.87% "N/A .-..- _.,,~_._-_._._-_._- __ ___..__ .-r.o-,__.,.........,-...... "._.__....._..~-..-,._.,-;..~__._. ..-.."~.___.~_~.._"_ _ ___ ..!.~.~___ ~~..........~~.~__---:...-"'--__~~~~ Trusco SunTrust U.S. Limited Capitalization Fund -19.53% 6.91 % 14.29"10 N/A 5.V~~~i~i~~~~_~~ __ ,~"~,~~ -~~~~~F ~~~,d~~~;:~Y--' ~~;~~-0::~:---:~ -~,' ,i ~,::'~;rc~ ~-~~6?~~-:~~~',:If~~;E~,!i:~=,~-~li~~J.E"f~.=~~-=~)~l44~ Trusco SunTrustHigh Grade Growth Fund -11.47% -1.34% 9.81% 14.17% i~s~~" , -,.,--....c-:--'-.'s~iiT~~t'Higi;~Gril(i~-~~ityIncome F~d'~--.--~:,--- ~f51u:',:;~: - ~=2~62o/~.'::--~;:;.74:8~1o .~'~~~.N;.A ----..:~-,-~ ~-_--~._-.-__~_~__.-"-__~___._..:___'.___..:_4 :~f..__..........';___~~~____..;.......~~__;t._,~~_~._:.__...:....~.':_._~__..:..:....._,~_.::~~:.......:..:.-:..:..;.~.......:_~.:~_'__~.;.~~ Wachovia Strategic Value Fund -14.90% -4.01 % 3.95% 12.42% --- ---.. -- ,---- ,__H -0- ,-, '-,'-' --_ __..,.-. ,_. '__-_'-_'----,,--"--~-'-_-~---~-----.---..------'-----,-'--~-_~.-~-.-..~~h-_--- ~~~~o _, __,__ __ ,__~ ___'-"~~!!_~~!_~_ gr~~_~~,~ ,I.n~;~1lJe F_u~~, _ ,_,~_.. _.5---'1_. __~~l. 95.~___~"- ~:~ ~,~~_ , __-' ~~5~1____~:__..~,.:~_~ Wachovia Select Strategic Growth Fund -21.01% -5.19% 6.15% N/A Index/Benchmark S&P 500 Composite Stock Price Index -17.99% -9.18% 3.66% 11.43% Wachovia International Equity Portfolios '__" _ .___ __...In ~~~atio~a!_~~.~~~~r:~___.._____ "___ _ 'u.____,:._ ._____~~..~J2.~~_.._~_1.:5,?~ __:~.._~C-__ 3'-:~!~:_.o..._.:____~'~~ STI Classic IntemationalEquity Fund -9.16% -5.91 % -1.53% N/A MSCI EAF E Index -9.49% -6.78% -1.55% 5.40% Trusco Index/Benchmark u.s. Bond Portfolios ',', Wachovia "CoreBondFund- - , -- 8.50%c ", 8;46% '7-97>47.73% Index/Benchmark Lehman Aggregate Bond Index 8.63% 8.11% 7.58% 7.35% Trusco SunTiustHigh GradeBon~lFund " ,"- _, K9W'ill,: 7.77.% _ ,'7.75% .' .7.480/0 ~~'- _.....~.--.--_.__.~.- -_.. _.- __::...;..~._<o,_.<,' ___.....,.,_ -__ - _. -. --~-........... -. --- __'_'_' ___,,-__,",~,<-____,___,,-,,-,,"-__,------,--_.__ __.. .-.,.. __, ~. ._._--'--"-__---'- ~... _~ _~.,-.....o- ~__ ...--.._____,__.. _... ~..,~.T._.__.._. .._....... ._~__..__ .__.__ .-....... _ .~_.. "__. _--"_'. Trusco SunTrust Retirement Reserve Fund 2.78% 4.92% 5.20% 5.02% aJPJFM ,",,=Asset Management LLC 116 ------------------- Questions for Finalists ------------------- Questions: Investments C t NOTES a eaorVJ ues Ion rusco ac oVla 1 P What assurance, or probability, do we have of achieving our goal of 9% expected return? How will you ensure this? 2 A How did you derive your proposed asset A allocation? 3 P What is your process for selecting, evaluating and replacing funds for our plan? How did you decide upon the funds you are proposing (out of the broader fund family available to you to select from)? 4 A How often and for what reason will you A rebalance our portfolio? 5 R Describe for us the portfolio managers' process for assessing and managing risk in the funds they manage. How do you measure and manage risk for the total plan? 6 IP Is there anything about our investment policy that you feel would be difficult to comply with? How will you assure compliance with our investment policy? IQ f T W h a!iPFM _Asset Management LLC 118 ------------------- Questions: Investments C t NOTES IQ f T W h a eaory, ues Ion ruseo ae oVla 7 R How quickly do you invest assets once received from us? 8 P Describe the circumstances or market conditions that have favored your investment strategy. When can it be expected that your strategy will be out of favor or unrewarded versus our benchmarks? 9 P What kind of current market discussions do we have? 10 P For the proposed funds, what is the portfolio managers' tenure? How are the portfolio managers and analysts compensated and retained? What kind of succession plan is in place in case one departs? 11 For Wachovia: How do you propose to handle the transfer of assets from our current manager to the Evergreen funds? How will you minimize the costs of the transaction and ensure we are not out of the market? SiPFM _Asset Management LLC \19 - - r - - - - - - - - - - - - - - - - Questions: Client Services and Reporting NOTES Category/Question Trusco Wachovia 12 CS Who will be responsible for our account? What is their experience level? What kind of a team supports their day-to-day work? How many clients will our Account Manager be responsible for? How similar are these plans to City of Winter Springs? 13 CS How many people at your firm are engaged in managing public pension assets? How many clients do you have that are public pension plans? How many of those invest all of their plan's assets in your funds? 14 CS How often will we receive statements and performance measurement reports for our account? How much of the report can be customized for us? Is there an additional cost? Within what timeframe do you provide the monthly/quarterly reports to us? 15 CS Do we have on-line access to our accounts? What is available on-line? How often is the on-line system updated? 16 CS How often will your firm meet with our committee? Who will meet with us? How often will portfolio managers attend the meeting? siJPJFM _Asset Management LLC 120 - - - - - - - - - - - - - _! - -' - - - Questions: Other C t IQ NOTES a egorYJ ues Ion rusco ac oVla 17 In addition to the investment management and advisory services you proposed to us, what other services does your firm provide to public pension plans? (Actuarial, Administration, Employee Communications, etc.) Fees? Experience? 18 19 20 21 22 t" T W h 5JPJFM _Asset Management LLC 121 ------------------- Questions: Other Categor IQuestion NOTES Trusco Wachovia 23 24 25 26 27 28 ~PJFM ",!!!:Asset Management LLC \2Z - - - _. - - - - - - - - - - - - -. - - Score Sheet ------------------- Score Sheet Since we expected one of the two firms will be selected, for each category, award the better of the two firms the total number of "possible points", and the lesser of the two firms fewer points, depending on your appraisal of the difference between firms. Generally, the difference will not be large since both are qualified to manage the plan's assets. "Possible points" is a subjective measure of the relative importance of the various criteria, so feel free to change the possible point amount. Your Total "possible points" should still equal 1 00. . C C Possible Trusco Capital Mgmt Wachovia Capital Mgmt Evaluation ategory ode p. t (S T t) G om s un rus roup Investments ."i Perfonnance P 35 Risk R 15 Asset Allocation AA 10 \0 l .:::> Adherence to Investment Policy IP 10 Invest1flents Subtotal 70 Client Service/Comfurt Level withK~y PersOlmel CS ' 10 18.75. ($48,000). . Fees :20 Total 100 3 Ii-/-: 5 i-oa) ()?~ .,v- ''''~ ~ "1--' q., -- ,5iPJFM - ~Asset Manage I ~p~ ." ~ '::----- LC 124 ------------------- Retirement System Investment Policy I I I I I I I I I I I I I I I I I I I .-." 'dENERAL[E~Pl..~YEE RE'tIREMENT"SY~TEM INVeSTMENT POLICY STATEMENT I I I I I I I I I I I I I I I I I I I Table of Contents Page I. SCOPE..................................................................................................................... 3 II. INVESTMENT OBJECTIVES ........... ................................... ...... ............................ 3 III. PERFORMANCE MEASUREMENT .. ... ....... ......... ......... ... ... ... .... ... ...... .......... .... ... 3 IV. INVESTMENT AND FIDUCIARY STANDARDS................................................ 4 V. AUTHORizED INVESTMENTS...... ... .... ... ... ........ ...... .... ... ... ... .... ... .............. ... ...... 5 VI. MATURITY AND LIQUIDITY REQUIREMENTS............................................... 6 VII. PORTFOLIO COMPOSITION.. .............................................. .......................... ...... 7 VIII. RISK AND DIVERSIFICATION ............................................................................7 IX. EXPECTED ANNUAL RATE OF RETURN .......................................................... 8 X. THIRD PARTY CUSTODIAL AGREEMENTS..................................................... 8 XI. MASTER REPURCHASE AGREEMENT.............................................................. 8 XII. BID REQUIREMENT ..................... ...... ................................. ................................. 8 XIII. fNTERNAL CONTROLS........................ ................................ ......... ............. .......... 8 XIV. CONTINUING EDUCATION ................................................................................ 9 XV. REPORTING ........................................................................................................... 9 XVI. FILING OF INVESTMENT POLICy..................................................................... 9 XVII. VALUATION OF ILLIQUID INVESTMENTS ......................................................9 Retirement System Investment Policy City of Winter Springs Page 2 I I I I I I I. I I I I CITY OF WINTER SPRINGS GENERAL EMPLOYEES' RETIREMENT SYSTEM INVESTMENT POLICY STATEMENT Scope A. The City Commission of Winter Springs ("City") has adopted this investment policy statement for the investment of the General Employees' Retirement System ("Plan") assets to be administered by the Board of Trustees ("Board") of the General Employees' Retirement System in accordance with applicable Florida State Statutes and City Ordinances. To that end, this investment policy is intended to set forth the investment objectives and parameters for the management of those assets in a manner designed to fulfill the requirements of the Board's fiduciary investment responsibilities. B. The Board recognizes their responsibility for the investment of the Plan's assets, and in order to implement this function, the Board is authorized by law to retain the services of Investment Managers who possess the necessary skilled personnel and facilities to provide the expertise with respect to the investment of the Plans funds. C. This investment policy will be reviewed annually by the Board and may be revised upon the City's approval. II. Investment Objectives I I I I I I III. I I I A. The foremost objective of this investment policy is the proper investment of the assets of the Plan in order to provide ongoing pension benefits to the Plan's members and their beneficiaries. B. The Board will strive to increase the Plan's total rate of return through capital appreciation and income while limiting the amount of risk exposure to the Plan. The methodology to detennine the Plan's risk/return characteristics is through a diversification of investments across various asset classes detailed in Section V. c. Additionally, the Board will try to keep losses at a minimum due to erosion of market value or from security defaults. To that end, investment managers will trade securities from time to time to improve yield, maturity, quality, credit risk, and total return potential. D. The assumed actuarial rate of return, over a market cycle (3-5 years), along with the annualized total return for the Plan should exceed the rate of inflation as measured by the Consumer Price Index ("CPI") by 4 percent. Performance Measurements A. The Board shall adopt perfonnance measurements for the Plan's assets to be reviewed on a quarterly basis and evaluated based on a market cycle of 3-5 years. The Board may retain the services of an independent investment consultant to assist in monitoring the investment Retirement System investment Policy City of Winter Springs Page 3 I I I I I B. I I I I I I I I I I performance of the Plan's individual investment managers. Such performance is measured to determine the following: 1. If the investment manager has performed according to this investment policy. 2. If the investment manager has perfornled within the appropriate investment style. 3. How the manager has performed in relation to the performance measurements for the appropriate asset class. The performance measurement indexes on the asset categories are as follows: 1. The Plan's total fund return will be compared to the CPI Index as an inflationary measurement and the actuarial interest assumption as described in Section IX. 2. The Plan's fixed income portfolio return will be compared to the weighted average return of the Lehman Aggregate Bond Index or equivalent. 3. The Plan's domestic equity portfolio return will be compared to the weighted average return of the Standard and Poor's 500 Index or equivalent. 4. The Plan's international portfolio return will be compared to the weighted average return of the Morgan Stanley Europe, Australia, & Far East (EAFE) Index or equivalent. 5. The Plan's emerging markets portfolio return will be compared to the weighted average return of the MSCI Index for Emerging Markets or equivalent. IV. Investment and Fiduciary Standards A. The Plan's as.sets will be invested in a manner consistent with the standards set forth in: I I I B. 1. The Employee Retirement Income Security Act of 1974 at 29 U.S.c. s. 11 04(a)(1 )(A)- (C). 2. Chapters 112 and 518, Florida Statutes. 3. City of Winter Springs Ordinances. 4. The Plan's Investment Policy Statement. 5. The Pension Plan document. 6. In the event of a conflict within these provisions or any other provisions of law authorizing investments, the investment and fiduciary standards set forth in Section 112.661(4), Florida Statutes and item I above shall prevail. The Board will adhere to the Prudent Person standard and this standard shall be applied in the context of managing the overall Plan. The Prudent Person standard is as follows: I Retirement System Investment Policy City of Winter Springs Page 4 I I I I c. I I I "Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived from the investment." Any person or firm hired or retained to invest, monitor, or advise concerning these assets shall be held to the higher standard of Prudent Expert. The standard shall be that in investing and reinvesting moneys and in acquiring, retaining, managing, and disposing of investments of these funds, the contractor shall exercise: the judgment, care, skill, prudence, and diligence under the circumstances then prevailing, which persons of prudence, discretion, and intelligence, acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims by diversifying the investments of the funds, so as to minimize the risk, considering the probable income as well as the probable safety of their capital. v. Authorized Investments I A. I B. I I .1 I I I I I I Funds placed with investment managers are to be invested only in those authorized classes of investments as contained in this investment policy. Investments should be made subject to the Plan's cash flow needs and such cash flows are subject to revision due to changes in the Plan's needs and market conditions. Investments not listed in the investment policy are prohibited. The authorized classes of investments for the Plan are as follows: 1. Obligations guaranteed as to principal and interest by the United States government. 2. Bonds, securities, and certificates of indebtedness of United States government agencies. 3. Obligations guaranteed as to principal and interest by government-sponsored agencies of the United States government. 4. The Florida Local Government Surplus Funds Trust Fund (SBA). 5. Commercial Paper rated in the highest category by a nationally recognized rating service. If a Letter of Credit (LOC) backs the Commercial Paper, the long-term debt of the LOC provider must be rated A or better by at least two nationally recognized rating servIces. 6. Bankers Acceptances of United States banks or a federally chartered domestic office of a foreign bank, which are eligible for purchase by the Federal Reserve System, rated in the highest category by a nationally recognized rating service. 7. Corporate bonds or notes, registered or unregistered under Rule l44A, issued by firms organized and operating within the United States or by depository institutions licensed by the United States rated (A) or equivalent by a nationally recognized rating service at the time of purchase. Rule I 44A bonds or notes must include rights of registration. Any bond or note that falls below investment quality must be eliminated immediately. I Retirement System Investment Policy City of Winter Springs Page 5 I I I I I I I I I I I I I VI. Maturity and Liquidation Requirements 8. General Obligation and/or Revenue Bonds of state or local government taxable or tax- exempt debt rated A, for long term debt, by a nationally recognized rating service or rated MIG-2 or SP-2, for short term debt, by a nationally recognized rating service. 9. Intergovernmental investment pools authorized pursuant to the Florida Interlocal Cooperation Act provided in Section 163.01, Florida Statutes. 10. Common and preferred stocks from domestic or foreign corporations. 11. Real estate and real estate securities as deemed proper investments by the Board. 12. Repurchase Agreements a. The Plan's investment managers may invest in repurchase agreements composed of only those investments authorized in numbers 1,2, and 3 (above). All firms are required to sign the Plan's Master Repurchase Agreement prior to the execution of a repurchase agreement transaction. b. A third party custodian with whom the Plan has a current custodial agreement will hold the collateral for all repurchase agreements with a term longer than one (1) business day. A clearly marked receipt that shows evidence of ownership must be supplied to and retained by the Plan's investment manager. c. Securities authorized for collateral must have maturities less than 10 years with a market value for the principal and accrued interest of 102% of the value and for the term of the repurchase agreement. Immaterial short-term deviations from 102% requirement are permissible only upon the approval of the Pension Plan Administrator. 13. Mutual funds registered under the Investment Company Act of 1940. A. The Plan's maximum investment maturities for the following securities are as follows: I 2. I 3. 1. The overall duration of the principal return for the Plan will be less than 140% of the Lehman Aggregate Bond Index. For commercial paper, 180 days or less from the date of purchase. For bankers' acceptances, 180 days or less from the date of purchase. I 4. For repurchase agreements, 90 days or less from the date of purchase. B. On a quarterly basis, the Plan's Actuary will notify the investment manager of the plan's liquidity requirements for the payroll and administrative expenses. I I I Retirement System Investment Policy City of Winter Springs Page 6 I I I VII. Portfolio Composition The Board has adopted the following long-term target asset mix for the Plan as shown below. I I 1. 70% of the Plan's assets market value will be allocated to equity investments. Based on market fluctuations, the Board will accept variances of up to five percent (between 65%- 75%) from the above asset target. This target is further allocated as follows: Stock Category Target Range I High Grade Equity High Grade Equity Income Small Caps Mid Caps International 10% - 30% 15% - 25% 15% - 30% 15% - 30% 5% - 15% I I I I 2. 30% of the Plan's asset market value will be allocated to the fixed income securities. 3. Quarterly, the Board will review the investment portfolio for the purpose of potentially reallocating assets within the individual asset class target ranges based on changes within the capital market environment. I I I I I I 4. The Board will review these asset allocation targets annually and will revise the targets if any significant changes occur within the capital market environment. VIII. Risk and Diversification A. The Board has adopted a strategy, described in Section VII, whereby the Plan's assets will be diversified to the extent practicable in order to control the risk ofloss which might result from an over-concentration of investments in a specific security, maturity, issuer, dealer, or bank through which financial instruments are bought or sold. B. In a further effort to control the risk of loss and assure adequate diversification, the following limitations are imposed upon the investment of the Plan's assets: 1. A maximum of 5% investment in the outstanding common stock of anyone company or organization. I I I 2. A maximum of 5% investment in the outstanding debt issuance of anyone company or organization. Retirement System Investment Policy City of Winter Springs Page 7 I I IX. Expected Annual Rate of Return I The Board has set the Plan's current expected rate of return at 9% and to the extent the actual rate of return various from the expected rate of return the gains or losses will be spread over a 5 year moving average period. The short term expected rate of return is 9%, and long term expected rate of return to be at least the actuarial interest assumption rate of 9% along with an additional annualized return that exceeds the rate of inflation measured by the CPl. I I X. Third-Party Custodial Agreements I I All securities will be held with the custodial bank under a contractual agreement with the Board. All securities purchased by and all collateral obtained by the investment managers and/or the Board are designated as assets of the Plan. No withdrawal of securities, or transfer of funds, in whole or in part, can be made from safekeeping except by authorization of the Board and written execution by anyone ofthe following: the Board Chairman, Vice-Chairman, or the Plan Administrator. Securities transactions between a broker/dealer and the custodial bank involving the purchase or sale of securities by transfer of money or securities must be made on a "delivery vs. payment" basis, if applicable, to ensure that the custodial bank will have the security or money, as appropriate, in hand at the conclusion of the transaction. I I XI. Master Repurchase Agreement I All approved institutions and dealers transacting repurchase agreements will execute and perform as stated in the Master Repurchase Agreement. All repurchase agreement transactions will adhere to the requirements of the Master Repurchase Agreement. I I I I I I XII. Bid Requirements Each investment manager shall obtain competitive bids and offers on investment transactions to the fullest extent possible. The investment managers will make periodic reports to the Board reflecting purchases, sales, or other activity. XIII. Internal Controls I I I A. The Plan Administrator will establish a system of internal controls and written operational procedures to be a part of the Plan's operational procedures. The internal controls should be designed to prevent losses of funds, which might arise from fraud, employee error, and misrepresentation by third parties, or imprudent actions by employees. The written procedures should include reference to safekeeping, repurchase agreements, separation of transaction authority from accounting and record keeping, wire transfer agreements, banking service contracts, collateral/depository agreements, and "delivery-vs. -payment" procedures. No person may engage in an investment transaction except as authorized under the terms of this investment policy. B. Independent auditors, as a normal part oftheir annual financial audits, will conduct a review of the system of internal controls to ensure compliance with policies and procedures. Additionally, Retirement System Investment Policy City of Winter Springs Page 8 I I I XIV. I I XV. I I I I XVI. I I I I I the Plan's Actuary, Investment Consultant, and the City auditors will complete an annual system reVIew. Continuing Education Annually, members of the Board have the responsibility for completing continuing education programs in matters relating to the Plan's investments by reading the appropriate materials and by attending the appropriate local and national conferences and seminars as authorized by the Board. Reporting On an annual basis, the Board will provide the City with an investment report regarding the Plan's investment portfolio. The annual report shall provide all, but not limited to, the following: name and type of securities in which the funds are invested, the amount invested, income earned, the book value and the market value of the investment portfolio. Investment reports shall be available to the public. Filing of Investment Policy A. Upon adoption, the Board will promptly file this investment policy statement with the State of Florida's Department of Management Services, the City of Winter Springs, and the Plan's Actuary. B. The effective date of this investment policy shall be the 30th calendar day following the date filed with the City of Winter Springs. XVII. Valuation of Illiquid Investments I I I I I All illiquid investments for which a generally recognized market is not available or for which there is no consistent or generally recognized pricing mechanism will be given an actuarial valuation by the Plan's Actuary on an annual basis. For each actuarial valuation, the Board must verify the determination of a fair market value for those investments and ascertain that their determination complies with all applicable state and federal requirements. The Board will disclose each illiquid investment to the State of Florida's Department of Management Services and to the City of Winter Springs. APPROVED AND ADOPTED BY THE GENERAL EMPLOYEE'S RETIREMENT SYSTEM BOARD OF TRUSTEES ON Retirement System Investment Policy City of Winter Springs Page 9 I_i I_I _ _ _ _ _. _ _. _ _ _ _ _, _' _ _. _ _ City of Winter Springs, Florida General Employee Retirement Plan Representing Trusco Capital Management: Tim Nash Associate 407-237-4173 ti m. nash@truscocapital.com Steve Gordon Vice President 407-237-5758 steve.gordon@truscocapital.com Elliott Perny Managing Director 407 -237 -4233 ell ioU. perny@truscocapital.com I' TRUSCO CAPITAL MANAGEMENT II II Ii' I I I 1.11 II I III. _ _ _ _ _ _ _ _ _ _ _ _ Table of Contents 1. Introduction to Trusco 2. Understanding Your Needs 3. Investment Philosophy 4. Returns 'I TRUSCO CAPITAL MANAGEMENT IIII IIII 1_ .. _ _ _ _ _ _ _ _ _ Trusco Capital Management Firm Overview Trusco Capital is a nationally recognized, high quality dependable firm that specializes in the management of assets for multiple types of clients and provides each client with superior client service and competitive investment returns. A stable, Diversified and Growing Organization... _ _ _ $45.5 Billion in Assets Under Management SEC Registered Investment Advisor Incorporated in 1984 Offices: Atlanta, Chattanooga, Nashville, Orlando, Richmond and Washington, DC ~_..J!JuiltPn the Following Organizational Strengths: SuperiorClientSerWce . Clients have direct contact with the Portfolio Manager . Portfolio Manager bonuses are based on providing our clients with superior service Talented and Deep Investment Staff Senior Management averages 24 years experience as a team at Trusco Portfolio Managers average 17 years experience Credentials: 44 CFA Charterholders, 7 CPAs, 36 MBAs, 3 J.D.s, 1 PHD Trusco utilizes a team approach vs. a star system Disciplined Investment Process . Investment Policy Committee directs tactical strategic positioning . Employs risk management oversight Consistentlv Good Investment Performance Returns . Our core equity returns have outperformed indexes for the last ten years 08/31/02 I TRUSCO CAPITAL MANAGEMENT 1 - ..111 II I II.. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Client Profile & Assets Under Management Total Assets Under Management = $45.5 Billion Mutual Funds = $ 23 Billion as of June 30, 2002 ~ Separately Managed Client Profile 11% 30% D Endowments & Foundations $ 8.5 Billion . Corporations $ 6.2 Billion III Public Funds $ 2.5 Billion . Healthcare Organizations $ 2.0 Billion o Insurance Companies $ 1.2 Billion D Trade Associations $ 1.0 Billion . Labor Unions $ 667 Million High Net Worth Individuals $ 330 Million We have successfully grown our business by providing superior service and excellent investment performance returns. I TRUSCO CAPITAL MANAGEMENT 2 I I I I : : III :1 I t II .11111 ._ I.. _ _ _ _ _. _ _ _ _ The Leading Manager of Florida Municipal Retirement Plans Publicly Managed Municipalities in Florida -_.~ --------- --- ------- ,~- --~ ------ ---~----~- --- ----~-~.__.- --- * Includes all Florida municipalities managed publicly . Trusco Manages part or all of the retirement assets for 36% of Florida Municipalities managed publicly. Source: Florida Division of Retirement 9/30/00 Advisors List Why? I TRUSCO CAPITAL MANAGEMENT 3 ------------------- The Leading Manager of Florida Municipal 1<.etirement Plans . Industry Leading Chapter 175, 185 and 112 Expertise . Superior Client Service . Top-rated Custodial Services . Complete Participant Distribution and Tax-Withholding Services . On-Line, Real-Time Reporting . Florida Municipal Money Managed in Orlando since 1979 + Solid Investment Performance..... I' TRUSCO CAPITAL MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - National Money Manager Rankings Trusco Capital is a nationally recognized money management firm. Trusco was ranked as the 36th larQest institutional money manager and the 25th larQest manager of actively managed domestic equities in the May 14, 2001 issue of Pensions & Investments magazine. Top 25 manaCJers of active domestic equity* Assets in millions. Finn Assets r:-:---'---,-~..---.-___,....'.'--'V ~:. ~_'--~.r..-'''''",-: .........- .....-.-_~......- ~" LFlMty _~-2~. ~ c ~25'4~~4; Alliance Capital $101.855 I ~ bw~s-r-C----"'S65:968! l. __.________._ ,___~ _ Janus $51.763 ,... ._~.,.---- -.-,- .-...-....- -...... -..--.--~.._.'.........,,,...., -~--""...... .".: .~ ,PnIdentIiIIDSiirUce.' -.', '$42,964 t ___'.. . ~: ",_. _. _ _____?~ '__ , ,_ I MFS Investment $36,845 j~~~~ __~~~ J:__=~~$~_3ilil American Express $32,995 lI~~=~~, ::~_~~__._~-:..: ~e ~~2';~~~J Fayez Saroflm $29,664 \'.__~--- ----~ ~$z9,29-5) t.......~__.._-._~._ ____.'___--.-._ __~_ __ __ .______). Capital GuanIJaD $25,538 r~--~"""""" -.:>-- ~~..------.~~-'----~' ~~~~.^'.__ ',_ ~?_5.~9~j 'U.s.lnstitutional. tax-exempl olSS@lsmanaqedintemaDy. 06/30/01 Firm Assets' i :-~:,~~'~::'~2:~."~'$'2,~~f~' . Moatq, CakhreU $24.266' , ~{@",,-. ~';~' --_=~~T~2;'6;1J, T. Rowe PrIce $22.385 I~~~~_~:~_~~~~~~~=~~ ~-)2_z[1~~ GE Asset $21,601 i'~~~~~'~-~:"7-;=~?!~~~! : Morvan Stanley $18.778 tllldeii~!~~~t:::,..._~1?~8i~ . Goldmm Sadls $17,503 fM'-[jiir~~-;;..--~ S17,4i~J. \ T~~ c.;.t.l---~----- $16.O11.'~ TOTAL $1.007,899 . ,JOye I> \ ~. ~ l , Top 100 managers ranked by U.S Institutional tax-exempt assets managed Internally Assets In millions. - FIrm Al_ - FIrm Al..b ~_.SitHt;'ClAiI';,,"o::,..;;;, '.:r,,-;."/.. .".'.'$5i1!:o.,~1 ~~~""; .. ".' ,~.. - 529.230 I ., .. 2, 1IordoyI- 5492.500 53. UunI AlHl 528,626 ~~~~-:1.::.,,~~_~.,;^'!Jtt!l:..t(~:'- S38,4->9RI ~1lQ("Uifct"".;.., ... ..,.-.-..... :.527.920 I 4, TIAA-cIU 5277.636 55. 1IIrT.., Hooley 527.412 I 5,. .~fNl{GIiiii.>':'-':~;: ~,i.;i:o:-."\,::~-~~ ,SiOo7i~ ~~Trt.st,,"".' . $26.891/ 6. PIIICO 5186,313 57, _ ''''' UIt 526,780 ~~-~ '. - ...~;@ f~~~jJ~iM..u" -'->= .' ~ .- ~-......,~.'::' 8. - c.,IIII 5164,120 59. IIcMlqa 526.231 19. ~1Iis_ c~-:-~--'-"'si...H.tf1 r 6O.~;;;;aUIt $26.2031 10. y....... er.., 5118.036 61. _F........... 525.487 ~"II1i;'Alitt .~ ...... ~ 5113;4611 1 oz. ....f4iIiy. . SZS.3BB 1 12. -- 5113,453 63. - CIty 524.723 ~"""5lBoy:"': ~'si09;3081 IM~ri"IIaHSbieIIICj. ---- .- $24.558j 14. c.,IUI_ 5108,738 65, -c:.,tIal 524.177 115; -IIIYESCO.. 59,2,8701 166.~.~j,_ 523.8981 16. _OlIo 592.427 67. _01_ 523.650 117.-.c~toI~" .. $91.407j 168. AIIII.~_: $2,3.16~ 18. IIenID Lf1lCII $86.594 69. ~- 522.915 ~~"......;:. 518.4291 ~I_.~"~"'- $22.667, 20. Lott- 576.592 71. - CaflloI 521.569 r21."~EIIIm 573.4901 172, 1IIdIliIai~~ -- SZO.511S ' 22. - c.,ItJI 571.328 73. GrIlllll8, lIIyo.. _ 520.249 123..;[__ .. $70;700] ! 74,_ c.,a.. , 520.000) 24. -- 561.640 75. lIlY AssIt 519.988 ~L~-'. ~~~~~ \76. _'IIIII:odI_ 519.022; 26. ___ CofIbI 558.512 77. __ AssIt 0 519.000 ~...-----:-:-- 5S6.5zZ1 178. .._,- $18,4.471 28, G[ AssIt 554.480 79, -..--. 518.278 {i9, ~ 5rrta 554.1021 180, am.. GroIf 518.084! 30. UIS Asset 553.195 8L ---- c.ptoI 517.777 [3i7' ~_"... 552.8951 182. .~ l;oIbrt" Si6:24-4l 32. -- 552.181 83. FlnW_ 516.000 [33:- CIGIIA_ . 552.1131 {&4. ,.....,Met .on:", , 515.797 ! 34. T. R_ _ 550.050 85. ~- 515.677 "" !35""'~'~.""";"'r''-'';'''''i-B,,,,,,,,,,,,,,;;''~3i1,2;3,1 1,8/;,,~~ir! : ie>;""".,.,.""".... .. 515,s~~1 /' 36. T..... ~ 543.063 87. -.- 515.446 I"" !37t:,!!IIij[~IT~'C"~~:!';:'~.'~$ll1~~~ I'Bll~\.~~~~~~;;i',f.':."'~::~J~i~~ vl).. 38. MlIWIe 541.003 89. LeIIlI~__ 514.850 t ~~~fim',~,.,'~~~ t2Q&i~~ciI!II"W' -=;~ oi i. -<"51:4;S~~ 40. _11_ 539.778 9L _ AssIt 514.415 r~I~~~~&;t~'~'~,~~.~~;':~"1::~:ll9Oj r92:'STj~~;i....:~~~~':(:;c';"tDS:I~ 42. _ RCIl 535.285 93, u.s. Trast II ..,. 514.033 19~1!!!."Ji'C."UR,Y~~~\3~aH ~9~1i~i!:_-:"~~~~;"~iS~5t3Ji~ 44. s_s__ 532.197 95, -- 513.318 14sa~-_lIi~~"}.~~~m"i:oaq 1:9_6~r'~!Iii '"~~rii,,:.;,~..$i~i~ 46. F..,.._ 531.229 97. -- c.,lIII 512.651 141A!....I!ii..~~)~ J:2RLIiiUF. .. . __Jl':a;,t<~"":~:~t2~ 48. ,..,.. 'Ind $30.492 99. -..- 512.449 ,Y 1~'~~'~""--"--'-'l:{g?Q ~:t~~_~i';~$i'2(2~ so. 5tmbIl. a,.,'..... $30.028 IS1?i:e.;;.J!i[;~~~~__~~8j T1ITAI. 56.050.118 5 iI TRUSCO CAPITAL MANAGEMENT - - - - - - - - - - - - - - - - - - - News SUNTRUST For Immediate Release February 5. 2002 Contact: Michael McCoy 404-588-7230 STI Classic Funds Named #3 Mutual Fund Family in the Nation Atlanta -- SunTrust Banks' STI Classic Funds was named the number thrce family of funds in performance for 2001 in Barron '.I' seventh annual mutual fund ranking issue, published February 2. 2002. According to the publication, its ranking process, which evaluated thc mutual fund offerings of 87 investment firms, "seeks to capture the performance of an entire firm's product line." In addition to the overall number three ranking. STI Classic Funds were cited as number four in performance among domestic stock funds, number five among balanced funds, and number nine in tax-exempt bond fund performance. "We're pleased that the performance of our family of funds has received such strong recognition from a well-respected financial publication such as Barron's." stated Douglas S. Phillips. CFA. president, chief executive officer and chief investment ofticer of Trusco Capital Management. Inc. advisor of the STI Classic Funds and the investment management subsidiary of SunTrust Banks. Inc. "While it is an honor to be recognized for one particular year. we are ever mindful of our long-term goal of seeking to provide long-term, consistent returns for our clients." Phillips also emphasized the impol1ance of having a team of experienced investment professionals and the adherence to a disciplined investment process. The STl Classic Funds, which were introduced in 1992, now consists of over 28 stock, bond and money market mutual funds and have more than $25 billion in assets under management. "This ranking helps underscore our commitment to serving all the investment needs of our clients." said Bill Rogers, executive vice president. Privale Client Services line of business. "The market and economic turmoil of the past year emphasized the value of professional money managers in helping investors achieve their objectives and financial goals. We're glad we were able to stand out as one of the best in the industry for our clients even under these challenging conditions." I TRUSCO CAPITAL MANAGEMENT 6 - - -- - o ~ en :D a. ~ en lI) CI) (/);: :J .~ 0:: ~ CI) CI) Een Be .:: E - I:: o Gi ~~ :Del g.ui en::l iijiij I:: I:: .g .g ~ ~ .~ .E lI) lI) I:: I:: - - - lI) :! "D 'i: I:: ~ o u m CI) en CI)_ "01:: Cll CI) '" E ell:: - '" I:: CI) CI) > E 0 (jjel CI) . >en I:: . _::l u u 'w'w lI) lI) Cll Cll (3(3 i=i= en en Fixed Income Interm, - CI) E o CD u E.:: o u u .- 1::0) - CI) J:- od~ ZU; u u 'iij 'w I/J lI) as Cll u(3 i=i= men Fixed Income Specialty - - - - - - - - ~ 3 CI) e~ 0> 0.0. Cll Cll ~~ Cll Cll E E en en u u 'w'w lI) lI) Cll Cll (3(3 i=i= en en I Equity Small Cap - - - - II Q I z a: :) ~ w a: LL o W ~ <( a: o w ~ o W 0- X W 1>> Q) .:.: ~ '" - Cll ~~E >o~~_ ~ >og~ ~~:iE~ - Oll):iE ~ ~:iE.!!! ~ ;:~(I)''Ec :iE:;'!!!~0 >o~~~ ~~~enc 0"" cue G> :iE~enCl)E >oE~ECI) ~C:JE~ cuGi~Q)C: ~ > CI) > Cll o 0 1-'" ,<~ :iE Cl)el ...,~ .~uiuiui::l D:::i::l::lO uuiijiijiij .~ '~ .2 .2 .2 ctScu.......... (3(3.~.~ ~ i=i=c;;(;iUi enen.::.::.:: Mutual Fund Investment Options lI) ~ 0:: CI) E o U I:: lI) ~ .;: lI) ~ CI) u ._ CI) .~ (/) :; CI) u 0) CI) Cll en,El >0'" '" 0 ~:iE ::liij CI) '" '" CI) "0 1-"0 1::"0 . CI) ol::enu. mO::iE m '" E E E CI) ;....Ci)t- t-;"SI-;"'g ............. ooo'E ~ ~ ~ ,- enenen~ u-uu ._ Cll._._ lI) I:: lI) lI) lI) 0 lI) lI) Cll'- Cll Cll -~-- o.~oo i=(jji=i= en':: en en "0 CI) U I:: ~ Cll m u 'w lI) Cll (3 i= en I Balanced I CI) E o u CI)':: E"O o I:: U Cll .::~ Cl)3 .2 0 Cll '" >el u u 'w'w lI) lI) Cll Cll (3(3 i=i= en en Equity Value EXPECTED RISK LEVEL I::~ 03 0';:: 0 Cll '" '0 el CI) CI) '" > 0.._ ~.'!::: <( lI) I:: iij CI) .'t:: en 0.)( Cll Cll 01- u u 'w'w lI) lI) Cll Cll (3(3 i=i= en en ~ .; 0' w ~CI) .- ~ ~- O'Cll w> 0.0. Cll Cll 00 ,j,j :E:E u u 'w'w lI) lI) Cll as (3(3 i=i= en en )( CI) "0 .:: ~.~ ~ ~ 0'0' WW ..,.... .::.:: u u 'w'w lI) lI) Cll Cll (3(3 i=i= en en Equity Int'I ~ u CI) CI) 1-0) all Cll oc :E~ u u 'w'w lI) lI) Cll Cll (3(3 i=i= en en Equity Specialty .... , HIGH RISK I z cc :J I- W a: ~ 9 I Cash t LOW RISK HH. Rev. 06/30/01 Fixed Income Short Term Ultra Short TRUSCO CAPITAL MANAGEMENT 7 Equity Mid-Cap Equity Growth - ..._ 1- .. _ _ _I _. _ _ _ _ _ _ _ _ _ _ Representative Municipal Client List Trusco Capital currently manages in excess of $2 billion in assets for over 100 municipal clients. City of Bradenton, FL Fire City of Dearborn Heights, MI City of Fayetteville, NC City of Ft. Myers, FL Fire City of Gainesville, FL City of Jacksonville Beach, FL City of Kissimmee, FL City of Largo, FL Police City of Miami, FL City of Montgomery, AL Reti rement System City of Norfolk, VA City of Palm Bay, FL Police! Fire City of Pensacola, FL General! Police! Fire City of Plantation, FL Fire & General City of Pontiac, MI City of Savannah, GA City of St. Cloud, FL City of St. Petersburg, FL Fire City of Titusville, FL Cobb County GA Retirement System County of Hanover, VA County of Spotsylvania, VA Employee Retirement System of Georgia Florida Birth Related Neurological Georgia Municipal Employee Benefit System James City, VA Service Authority Macon, GA Fire and Police Retirement Rockingham, VA County State Treasurer of Florida Virginia Equal Housing Foundation W TRUSCO CAPITAL MANAGEMENT 8 ------------------- Defined Benefit Plan Obiectives . Defined Benefit Pension Plans . Identify Current Fund Status . Establish a Proper Asset Allocation to Meet Objectives . Maintain and Adjust Investment Policy . Communicate With the Committee Quarterly . Meet and Exceed Stated Actuarial Assumptions I' TRUSCO CAPITAL MANAGEMENT 9 ------------------- Defined Benefit Services . Trustee Services . Flexible Plan Reporting . Cash Basis Reporting . Trade Date Accrual Reporting . Pension Payments . On-line Capabilities I TRUSCO CAPITAL MANAGEMENT 10 ------------------- Core Equity Philosophy We believe that a portfolio of stocks with positive earnings characteristics purchased at a reasonable valuation will provide above average returns over time. The key elements of our philosophy are: . Earnings trends dictate stock performance . Fundamental analysis determines sustainability . Diversification controls risk OVERVALUED ~MIPROV~NG Gu0 UNDERVALUED GEL0 DETERIORA TING Trusco's focus is to identify companies with improving earnings trends that sell at reasonable valuation levels. m TRUSCO CAPITAL MANAGEMENT 1 1 11- III ..1 .. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Investment Process A disciplined investment process identifies the companies with the best growth characteristics in an objective and consistent manner. SCREENING CRITERIA (NYSE:NASDAQ) (640 Stocks) . Trading volume of at least $100 million per month . History of operating profits . Balance sheet and financial criteria .,. STOCKS RANKED ON BASIS OF EARNINGS TRENDS AND VALUATION (400 Stocks) . Earnings Growth Stability . Earnings Momentum . Earnings Surprise . Estimate Activity . Valuation .,. ~ FUNDAMENTAL ANALYSIS CONDUCTED BY INTERNAL RESEARCH ANALYSTS (70-75 Stocks) . Buy List . Managers Only Allowed to use these stocks .,. Portfolio Managers Investment Policy Objectives & Constraints ~ CLIENT PORTFOLIO (60-65 Stocks) . Rigorous Risk Control by Management to Ensure Sector & Security Representation 'I TRUSCO CAPITAL MANAGEMENT 12 - - - ------ - - - - - - -- - - Quantitative Screening Tools Focuses Attention on Stocks with Attractive Characteristics Earnings Trends Models 1. Weighted Earnings Revision - Is computed by using the 1-month, 3-month, and 6-month estimate revision. Estimate revision is the percentage change in the fiscal year 1 estimates. 2. Standardized Unexpected Earnings - Is the latest reported quarterly earnings less First Call Consensus forecast quarterly earnings divided by the standard deviation of the estimates. 3. Last Quarter's Earnings Growth - Is the latest reported quarterly earnings per share divided by the similar quarter earnings per share reported a year ago. 4. Stable Growth - Is computed as the ratio of 5-year earnings growth divided by earnings variability (standard deviation of last 20 quarterly earnings growth). - - - --~~------------------ -- ~ Run Weekly & Sorted Analyst/PM Highlight . Each individual model deciled . 1 =Best; 10=Worst . All models rolled into composite score. . 1 =Best; 10=Worst . Stocks with 1 's & 2's scores in individual . models or composite. . Stocks moving up several deciles in . Estimate Model. -+ Fundamental Review - - -- - - - - - - -- - - --- --- - ------- -- - ------ I TRUSCO CAPITAL MANAGEMENT 13 111- ..1111 11.1 ..1 II. _ _ _ _ _ _ _ _ _ _ _ _ _ _ Sell Discipline Stocks are Sold from All of our Portfolios When: . Earnings Trends Deteriorate . A Stock reaches an Extreme Valuation Level Stocks that have appreciated significantly to represent more than 3.50/0 of the portfolio are trimmed back. \') From 1993 - 2000, approximately 590/0 of the stocks we sold underperformed the market for the next 12 months. o The average underperformance for our sells has been 50/0 (500 Basis Points) 'I TRUSCO CAPITAL MANAGEMENT 14 ------------------- Risk Control Measures Risk C((}I!iJ~fJ'@U ff~ fE}!fi) Drrv~(p)gfJ'taJU !PtaJfJ'~ 0(/ UfJ'rusrc@j$ !Equity !PfJ'ocess . Adequate Diversification . Limit Maximum Position Size . Minimum Liquidity Requirements . Minimum Market Capitalization . Limit Maximum Industry Exposure 'I TRUSCO CAPITAL MANAGEMENT 15 - - - - ----- - - - -- - - - -- NAV: Assets (mil): $49.16 $151.20 Top Ten Holdings The fund seeks capital apprecIatIOn by investing primarily in the large. well- established companies in the top three quality rating categories of major credit rating agencies, including Value Line, Moody's or Standard & Poor's. Cash: U.S. Stocks: Non-U.S. Stocks: 5.9% 94.1% ""us,"", 0.0% .': ~s\. US 51<<1>\ .." Industry Concentration Security % Equity Security American Inti Group 3.7% Harley Da\oidson Pfizer Inc 3.4% Freddie Mac Microsoft Corp 3.2% General Elec Co Johnson & Johnson 3.2% Marsh & McLennan Cos Union Pac Corp 3.1 % Masco Corp % Equity 2.8% 2.7% 2.6% 2.5% 2.4% Portfolio Characteristics Characteristics Dividend Yield (Current) EPS Growth (5 Year Estimate) Market Capitalization ($bil) Price-to-Book PIE (12 months trailing) Return on Equity Fund 0.9% 16.3% 66.5 3.9x 20.5x 18.2% S&P 500 Index 1.6% 13.8% 85.1 3.0x 18.6x 16.7% Consumer Discretionary Consumer Staples Ene rgy Financials Healthcare Industrials Information Technology Materials Telecom Services Utilities 3.220/0 0.000/0 4.060/0 0.000/0 3.090/.0 20.460/00 , 3.630/0 , 7.980/0 20.000/00 , 3.930/0 _ Fund - S&P 500 Cumulative & Annualized Total Return Performance as of .June 30, 2002 Fund S&P 500 Index Lipper Growth Funds Index Three Months -10.9% -13.4% -14.1% Year- to-Date -8.8% -13.2% -15.9% One Year -11.5% -18.0% -22.8% II Three Years -1.3% -9.2% -11.1% Annualized Five Seven Y ears Years 9.8% 15.0% 3.7% 10.7% 1.9% 7.5% Inception II 04/1990 13.9% 11.6% 9.7% I TRUSCO CAPITAL MANAGEMENT 16 1.1 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . The second quarter of this year was a VArv disaoooi ntina one for both the . -- J - . I. _ economy and the securities markets. The rebound in economic growth was lower than expected as consumer and business spending rates were below forecasts. More importantly for the securities markets was a drop in investors' confidence, as corporate accounting scandals continued. The Fund return for the quarter was - 10.9% versus -13.4% for the S&P 500 Index. Even though our heaviest sector exposures were Consumer Discretionary, Technology and Healthcare, all of which were hard hit, the high quality of the individual stocks cushioned the fall. We remain underweight in Energy and Materials, which did relatively well in the quarter, but in which we see limited earnings growth. While we expect volatility to remain fairly high in the second half of the year, we also are optimistic that the market decline is near an end. We believe stocks will recover nicely with the leaders being the ones with superior earnings growth. Fund Manager: Elliott Perny, CFA 1995 1997 1998 1999 2000 2001 2002 First Quarter 9.3% 5.6% 2.6% 15.4% 5.6% 0.2% -4.8% 2.4% Second Quarter 6.6% 5.6% 18.8% 5.7% 5.1% 0.6% 5.8% -1 0.9% Third Quarter 6.8% 3.7% 7.3% -12.4% -7.7% 2.6% -13.6% Fourth Quarter 6.0% 4.7% 3.7% 25.9% 14.8% -1.7% 12.3% Fund S&P 500 Index Lipper Growth Funds Index 31.9% 21.0% 35.5% 37.5% 23.0% 33.4% 32.6% 17.5% 28.1% 34.7% 17.6% 1.6% -2.3% 28.8% 21.1% -9.2% -11.9% 25.7% 28.0% -10.9% -18.0% -8.8% -13.2% -15.9% Growth of $10,000 from 07-31-90 to 06-30-2002 $60.000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 JUIl- .l1I1l- Jun- ~o 9 I 92 J UIl.- SJ3 Jun- .l1I1l- ~4 95 J UIl- 96 J UIl- 97 .J LlIl- 9H JUII- Jun- 99 on J lIll- UI J un- 02 Fund S& p 500 MPT Statistics/Other Measurements II 3 Year R-Squared 81.99 100.00 Sharpe Ratio -0.01 -0.14 Std. Deviation II 15.01 15.79 Alpha 0.53 0.00 Beta 0.80 1.00 Fund S&P 500 Index I 17 TRUSCO CAPITAL MANAGEMENT -..-------------- SunTrust High Grade Equity Income Fund June 30, 2002 Equity Style J;~und Description Value Blend Growth I I, Large NAV: $26.99 $44.5! ^ ('('a.t(' (0,;1\. l .l.J.;JvlJ \11111}. Medium Small Top Ten Holdings Fund Philosophy The fund invests in a diversified portfolio of high quality, blue chip equities to provide an above-average total return through capital growth and moderate income. Composition Cash: U.S. Stocks: Non-U.S. Stocks: ~ Large Value 4.5% 95.5'10 0.0% Cash 4,5% Industry Concentration Security % Equity Security % Equity Verizon Comm. 2.9% Exxon Mobil Corp 2.2% SSC Communicatio 2.7% Chubb Corpl 2.1% Citigroup Inc. 2.7% Phillips Petroleum 2.1% Gannett Co. 2.6% Masco Corp 2.1% American Inti Gr 2.3% Kimberly-Clark Corp. 2.0% Portfolio Characteristics Characteristics Fund S&P Barra Value Dividend Yield (Current) 2.2% 2.0% EPS Growth (5 Year Estimate) 11.3% 12.1% Market Capitalization ($bil) 41.6 62.7 P rice-to-Book 2.5x 2.0x PIE (12 months forward) 17.4x 15.8x Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecom Services Utilities 11.6% 10.3% o . S&P Barra Value . Fund 23.6% 32. 0/0 Cumulative & Annualized Total Return Performance as of June 30, 2002 Fund S&P 500 Barra Value Index Lipper Equity Income Average Three Mont hs -8.2% -10.7% -9.4% Year- to-Date -3.8% -9.5% -6.7% One II Year - -5.5% -18.1% -9.8% Three Years -2.7% -5.7% -3.2% Annualized Five Years 4.9% 4.1% 4.1% Seven Years 10.9% 10.4% 9.4% Inception II 04/1993 11.4% 10.8% 9.4% I TRUSCO CAPITAl MANAGEMENT 18 ------------------- Manager's Qtdy Perspective The High Grade Equity Income r- _ ,._ _I ._ _ _..r. _ .____ _ _I . ~ . _ II _ __ _ r-una ~erIurllleu well UII i::l relative basis during the second quarter of 2002. The Fund returned -8.20/0 for the quarter versus -10.7% for the S&P Barra Value Index. Although the stock market would suggest otherwise the economy is recovering with first quarter GDP up a healthy 6.1 %. However there are obstacles that remain, such as a "spent up" and "levered up" consumer, abundant unused plant capacity and concerns over corporate governance. As the markets and economy move through this phase we believe those companies with strong balance sheets, good operating leverage and most importantly, solid dividend policies will be the best performers. The Fund is positioned to benefit from these types of companies. Fund Manger: Mills Riddick, CFA. 1995 1996 1997 1998 1999 .2000 2001 2002 ~irct (J"<:Irtar 10.8% 5.30/0 3. 1 ~/o 12.3~/o _1 l=:oL -3.7~{; -4.70/0 4.70/0 I II""''' .....'-"'-",'-__ I.V'V Second Quarter 6.7% 4.1% 12.6% -3.8% 14.9% -2.3% 5.9% -8.2% Third Quarter 8.0% 2.9% 8.9% -9.0% -12.0% 6.6% -8.8% Fourth Quarter 8.4% 5.9% 0.5% 13.2% -2.3% 12.1% 7.7% Fund 38.4% 19.4% 27.0% 11.3% -2.8% 12.4% -0.7% -3.8% S&P 500 Barra Value 37.0% 22.0% 30.0% 14.7% 12.7% 6.1% -11.7% -9.5% Lipper Equity Income Average 29.7% 17.9% 27.5% 11.7% 4.2% 7.5% -5.2% -6.7% Growth of $10,000 from 04-01-93 to 06-30-02 $40,000 - $35.000 - $30,000 - $25,000 $20.000 - $15.000 $10.000 - $5.000 $0 Jun.93 Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 ~Jun-OO Jun-01 Jun-02 - Fund - Barra Value MPT Statistics/Other Measurements Fund S&P 500 Sarra Val.ue Index Alpha 0.24 0.00 3 Year R-Squared Sharpe Ratio 74.71 -0.02 100.00 -0,08 Std. Deviation 16.78 15.52 Seta 0.91 1.00 I TRUSCO CAPITAl MANAGEMENT 19 II .1' IIII .. _ _ _ _ _ _ _ _ _ _ _ _ _ _ SunTrust U.S. Limited Capitalization Equity Fund June 30, 2002 Equity Style l;'und Description Value Blend Growth NAY: Assets (mil): $22.1 $55.2 1 _ _ _ ~ Largt: Medium Small Top Ten Holdings l;'und Philosophy The fund seeks long-term capital growth Cash: Composition through investment in a diversified portfolio U.S. Stocks: of stocks of companies with a market Non-U.S. Stocks: capitalization between $100 million and $10 billion ~ Mid-Cap Blend 3.7% 96.3% 0.0% Non-U.S. Stock~ Cash 3.70/0 U.S. Stocks 96.3% Industry Concentration Security % Equity Security % Equity SouthTrust Corp. 2.3% Heartland Express Inc. 1.8% Dean Foods CO 2.0% Hibernia Corp 1.8% Allston Co. 1.9% Renal Care Group 1.7% North Fork Bancorp 1.9% Bectronics Boutique Hldgs 1.6% Iv1arshall & lis ley Corp 1.8% Too Inc. 1.5% Portfolio Characteristics Characteristics Dividend Yield (Current) EPS Growth (5 Year Estimate) Market Capitalization ($bil) P rice-to-Book PIE (12 months forward) Return on Equity Fund 0.5% 19.1% 3.1 2.7x 20.5x 11.4% S&P Mid Cap 400 1.1% 16.2% 2.9 2.3x 15.0x 11.4% Consumer Disc retionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecom Services Utilities 15.40/0 19.40/0 18.90/0 15.20/0 0.00/0 7.00/0 . Fund . S&P Mid Cap 400 Cumulative & Annualized Total Return Performance as of June 30, 2002 Fund 50% S&P Mid Cap 400 / 50% S&P 600 Index Lipper Mid Cap Core Index Three Months -13.4% -6.5% -10.6% Year- to-Date -18.3% -0.1% -7.3% One II Year -19.5% -0.7% -11.6% Three Years 6.9% 8.3% 3.8% Annualized Five Seven Years Years 14.3% 10.9% 7.5% Inception II 12/1996 15.4% 12.1% 8.6% 14.3% 11.0% I TRUSCO CAPITAl MANAGEMENT 20 ------------------- Sun Trust u.s. Limited Capitalization Equity Fund June 30,2002 Fund S&P Mid Cap 400 Index I TRUSCO CAPITAL MANAGEMENT Mana~er's Otrly Perspective . Small and mid-cap stocks outperformed large-cap stocks in the second quarter of 2002 as the S&P 600 Small-Cap Index returned - 6.5%, the S&P 400 Mid-Cap Index returned -9.3% and the S&P 500 Index returned -13.4%. The SunTrust U.S. Limited Cap Fund returned -13.4%. Growth significantly underperformed value in the quarter and the Fund's current tilt toward growth had a negative impact on performance relative to the benchmark. The Fund remains positioned to benefit from a continuing economic recovery. The Fund's focus is on companies already showing earnings progress in the improved economic envi ron ment. Fund Manager: John Hamlin Historical Quarterly/Calenda.' Returns 1997 1998 1999 2000 2001 2002 First Quarter -1.2% 13.8% -0.6% 21.5% -11 .7% -5.5% Second Quarter 14.5% -1.3% 19.1% -1.5% 16.5% -13.4% Third Quarter 16.7% -17.9% -3.1% 6.0% -21.0% Fourth Quarter -0.5% 25.9% 35.8% -11.6% 24.5% 00 00. Fund 50% S&P Mid Cap 400 / 50% S&P 600 Index Lipper Mid Cap Core Index 31.4% 16.0% 55.9% 12.2% 30.5% 20.3% 28.9% 8.9% 13.5% 14.7% 25.4% 17.9% 22.2% 7.8% 28.2% 6.3% 1.2% -18.3% 3.0% -0.1% -4.9% -7.3% G,'owth of $10,000 from 12-31-1996 to 06-30-2002 35,000.00 30,000.00 25.000.00 20.000.00 15,000.00 10,000.00 -1 -- -- Jun-97 Jun-9S J un-99 J un-OO Jun-01 J un-02 - Fund - SP 4-00/SP 600 MPT Statistics/Other Measurements II Alpha 0.01 0.00 3 Year R-Squared 77.89 100.00 Sharpe 0.11 0,12 Std. De\Aation II 28.59 21.05 Beta 1.17 1.00 21 II III I II I IIIII _ _ _ _ _ _ _ _ _ _ _ _ _ Blend Growth I I Large Medium Small Ticker: Expense Ratio: NAV: Assets (mil): Top Ten Holdings Security Cooper Industries Duke Energy Berkshire Hathaway Chevron Texaco International Paper % Equity 3.2% 2.9% 2.6% 2.6% 2.6% Security Honeywell Inti Newell Rubbermaid Exxon Mobil Wells Fargo Conoco % Equity 2.5% 2.5% 2.4% 2.4% 2.3% Portfolio Characteristics* Characteristics Dividend Yield (Current) EPS Growth (5 Year Estimate) Market Capitalization ($bil) Price-to- Book PIE (12 months Trailing) Return on Equity Fund 1.9% 8% 53.0 B 2.8x 20.1x 14.9% Barra Value 2.0% 4% 62.7 B 2.0x 19.7x 9.3% CRVAX 0.99% $12.95 $852.2 The fund seeks to provide long-term capital appreciation and, as a secondary ubjective, current income, by investing primarily in domestic and foreign common stocks of companies with market capitalization of at least $1 billion. Cash: 1.2% 98.8% Stocks: ......<:1::0" ,% Industry Concentration Consumer Discretionary 32. 0/0 12.1% 12.1% . Fund . Barra Value Con~umer Staples Energy Financials 21.9% Healthcare Industrials 17.1% Information Technology 10.3% 12.2% Materials Telecom Services 7.9% Utilities *Factset Cumulative & Annualized Total Return Performance as of June 30, 2002 Fund Barra Value Annualized Three One II Three Five Seven Inception II Months Year Years Years Years 10/92 (10.4%) (12.0%) (4.3%) 4.9% 10.4% 10.6% (10.7%) (18.1%) (5.7%) 4.1% 10.4% 11.6% I 22 TRUSCO CAPITAl MANAGEMENT 111I1 1.11 1111. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Ongoing disclosures of corporate malfeasance and a 2Q economic pace that decelerated from robust I Q levels weighed heavily upon US equity market results. Equities suffered one of the worst quarters since World War II, with no sector, style, nor size strategies escaping unscathed. The Fund again performed better than its lndex and slightly better than its peer group, although measured against an extremely negative yardstick is viewed with absolute disappointment. While impending doom and growing pessimism are becoming pervasive, sentiment belies an investment backdrop that continues its slow, grinding improvement. We believe that economic progress, profit recovery, valuation, and generally stable interest rates and inflation can revive the market during the second half, and have positioned the Fund accordingly. Fund Manager: Jeffrey E. Markunas, CF A 8.5% 4.9% 0.0% 12.6% 2.6% 1.0% -7.7% 1.9% Second Quarter ~ nOI- II ')01- 17.40/0 () ~Of- 9.9% -1.4% II QOf- -10.4~/o V.V/V ""T.il"... IV -._1..., ""T....., IV Third Quarter 7.3% 1.8% 9,1% -10.4% -7.2% 5.0% -10.8% Fourth Quarter 4,8% 7.1% -0.2% 16.4% 9.1% -3.1% 8.1% Fund 29.4% 19.1% 27.7% 18,2% 14.2% 1.4% -6.6% -8.7% Barra Value 37.0% 22.0% 30.0% 14.7% 12.7% 6.1% -11 .7% -9.5% G,'owth of $10,000 from 10/0111992 to 6/30/02 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 - -- -- $15,000 -- $10,000 -~-- - -- -- $5,000 ----- $0 --rrrrr-r-r-l'lT--TI' -n-'ll II II/ II Trln III II II III It III t~rrl II II II j IITrTJ'-11~1'--rr~rnT-'n 92 93 94 95 96 97 98 99 00 01 02 - Fund - Barra Value MPT Statistics/Other Measurements Fund Alpha -1.09 3 Year R-Squared II Sharpe Ratio Std. Deviation II 80.464 -0.66 13.26 Beta 0.762 I TRUSCO CAPITAL MANAGEMENT 23 ------------------- Ticker: Expense Ratio: NAV: Medium Assets (mil): Small STrTX The fund seeks long-term capital Cash: 1.8% 1 A on!. I....O-/u appreciation by investing prinlurily in a Stocks: 98.2% diversified portfolio of equity securities of foreign issuers. $8.93 $265.64 Top Ten Holdings Slocks 98.2% 1.8% ,-.""''''''.... va~11 Industry Concentration Consumer Discretionary Consumer Staples Energy Financials Portfolio Characteristics Security % Eauitv Security % Eauitv BP PLC 3.22% Shell Transport & Tradir 1.79% Novartis AG 2.34% Lafarge SA 1.68% Royal Bank of Scotland Gr 1.86% GlaxoSmithKline PLC 1.55% TotalFinaElf SA 1.85% Nestle SA 1.52% BNP Pari bas SA 1.80% Northern Rock PLC 1.41% Characteristics Dividend Yield (Current) EPS Growth (5 Year Estimate) Market Capitalization ($bil) Price-to-Book PIE (12 months trailing) Return on Equity Fund 2.2% 11.5% 37,6 2.1x 23.5x 12.9% Healthcare MSCI EAFE 2.3% 10.6% 42 2.0x 31.00 11.7% Industrials Information Technology Materials Telecom Services Utilities 25.2% 24.4% . MSCI EAFE . Fund Cumulative & Annualized Total Return Performance as of June 30, 2002 Three Months -2.5% -2.1% -2.9% Three Years -5.9% -6.8% -5.3% Annualized Five Seven Years Years -1.5% N/A -1.6% 2.4% -0.7% 3.7% Inception to Date 4.9% 2.2% N/A One Year -9.2% -9.5% -10.2% I Fund MSCI EAFE Index Lipper International Funds Objective TRUSCO CAPITAL MANAGEMENT 24 ------------------- The MSCI EAFE was down 2.1% ,...,. ....in,..,. +hl"'\ ro t""\1"'r'\n~ ru l'=Inot" f"\f I)n"0 UUIIIIH L1IC .:n::;vVI I\"A \.fUCA' '-"-'I V I '-VVL.... The STI Classic International Equity Fund was down 2.5% during the same period. The Fund underperformed mainly due to a higher exposure to cyclical companies that were expected to benefit from the current economic recovery. Relative to US stocks, many international stocks are still well undervalued, and we believe this valuation disparity will continue to narrow. Although international markets are likely to be characterized by volatility in the short term, we are confident that long-term investors should continue to be rewarded for their patience. We continue to look for companies with a positive earnings outlook trading at attractive valuations relative to their global peers. Fund Manager: Chad Deakins, CFA 1996 1997 1998 1999 2000 2001 2002 First Quarter 4.7% 4.1% 1 5.2O/~ 0.2% -1.4% -11.7% 1.1% Second Quarter 5.5% 12.2% 1.1% 2.8% 5.3% 1.1% -2.5% Third Quarter 1.2% 5.3% -18.3% 0.4% -8.1% -11 .3% Fourth Quarter 9.2% -7.8% 16.9% 6.0% 1.1% 3.9% Fund 22.1% 31.1% 11.2% 9.5% -3.5% -17.7% -1.4% MSCI EAFE Index 6.4% 2.1% 20.3% 27.3% -14.0% -21.2% -1.4% Lipper International Funds Objective 12.7% 6.2% 13.5% 41.7% -15.3% -21.7% -1.7% Growth of $10,000 from 02-01-1995 to 06-30-2002 $30,000 $25.000 $20,000 $15,000 $10,000 $5,000 $0 Feb-95 Feb-96 Feb-97 Feb-98 Feb-99 Feb-OO Feb-01 Feb-02 - Fund - MSCI EAFE Index MPT Statistics/Other Measurements Fund MSCI EAFE Index Lipper International Funds Objective Alpha -0.09 0.00 1.07 R-Sauared 1/ 0.67 1.00 0.59 3 Year Sharpe Ratio Std. Deviation -0.69 14.36 -0.73 15.07 NlA 22.01 Beta 0.78 1.00 0.90 I 25 TRUSCO CAPITAL MANAGEMENT ------------------- Investment Process Our active fixed income process simultaneously analyzes three primary factors to identify market inefficiencies and to add value. .. Determine the relative risk/reward of maturity decisions .. Optimize maturity structure (Iaddered, barbell, bullet) .. Capture market anomalies , ~ .. Identify undervalued and overvalued sectors .. Track historical yield spread relationships .. Implement optimal allocation to corporates, mortgages and treasuries t E> Identify companies that meet our credit criteria IJ> Predict credit quality upgrades and downgrades ll> Arbitrage spread differences of issues with similar credit quality I TRUSCO CAPITAL MANAGEMENT 26 III I II II I.. __ _ _ _ _ _ _ _ _ Credit Analysis Credit Analysis is an integral part of our fixed income process · Trusco Capital Management utilizes credit analysis for debt issuers, including industrial, bank and finance, and utility companies. . Analysis Process · Analysts and portfolio managers closely monitor industry and issue fundamentals. · Follow rating agency activities to determine improving or deteriorating credit quality. · Build and actively manage our focus list of approved issuers. · Reach independent conclusions about credit quality and relative value of issuers. We use this in our purchase and sell discipline to add value and minimize risk. I TRUSCO CAPITAl MANAGEMENT 27 ------------------- Credit Analysis Credit analysis is an integral part of our fixed income process. We utilize investment grade securities in constructing client portfolios. Sta nda rd & Poor's Moody's Comments U.S. Treasury U.S. Government Backing U.S. Government Agency Inherent Government Backing Highest AM Aaa Quality AA+ Aa1 t AA Aa2 AA- Aa3 A+ A1 Investment Grade A A2. A- A:3 r 888+ 8aa1 888 Baa2 888- Baa3 88+ Ba1 8B+ Ba2 t B8- Ba3 8+ B1 8 B2 8- 83 High Yield I Speculative " ~ CCC +//- Caa 1,2,3 I CC+//- Ca 1,2,3 Lowest Quality C+//- C 1,2,3 Default Resources o 17 Internal Credit Analysts Analvsis Process o Analyst and Portfolio Managers monitor industry and issue fundamentals. o Follow rating agency activities to determine improving or deteriorating credit quality. o Build and actively manage focus list of approved issuers. Result o Portfolio managers use these tools to evaluate quality and relative value. We incorporate this analysis in our buy and sell decisions. 'I TRUSCO CAPITAL MANAGEMENT 28 - - - - - - - - - - - - -, - - Fixed Income Investment Performance Periods Ending 6/30/02 Annualized Returns Calendar Year Returns ::: 1 8.6% 6.4% 8.1% .-n~ 7.3% 7.4% - - - - 7.3% 4.5% Investment Performance Disclosure - The investment performance results displayed represent a composite of selected accounts managed using a similar investment discipline. The composite returns are calculated using the market value weighted and time-weighted calculation methodologies commonly used within the investment management industry. Returns prior to January 1, 1993 were calculated using the median returns of a composite of individually managed accounts. The equity and fixed income composite may include the equity returns and fixed income returns from individually discretionary balanced accounts. Returns do not reflect the deduction of investment advisory fees or other fees that may reduce actual returns. For example, if you invested $1.00 and it earned a 10% return over 10 years, the dollar would grow to $2.71 without a fee and $2.57 with a 50 basis point fee. 2.5% 0.5% -1.5% Otr YTD 1 Year 3 Year 5 Year 7 Year 10 Year I . TCM Aggregate Fixed Income 0 Lehman Aggregate 21.0% ~ iii l!! 15.0% 19.0% .... ~ 17.0% 13.0% 11.0% 9.0% 7.0% 5.0% 3.0% 1.0% -1.0% -3.0% -5.0% a; <:' 1995 1994 1991 2001 2000 1999 1998 1997 1996 1993 1992 . TCM Aggregate Fixed Income 0 Lehman Aggregate TRUSCO CAPITAL MANAGEMENT 29 ------------------- ~ I _ IHigh I I I I::;"m NAV: Assets (mil): Distribution b)' Market Sector Corporate Bond Agency Mortgages US Treasury ABS Cash Fund 39,5% 6.1% 20.3% 24.8% 2.8% 6.5% ML A Rtd GIC 31.1% 22.0% 0.0% 46.9% 0.0% 0.0% Portfolio Characteristics Characteristics A \A9rage Rating A \A9rage Coupon Current Yield Yield to Maturity A\A9rage Maturity (Years) Effecti\A9 Duration (Years) Fund AA1 6.3% 5.9% 4.9% 8.6 5.1 ML A Rtd GIC AAA 6.3% 5.8% 4.5% 8.4 5.1 $27.79 $107.94 The fund seeks to provide a high level of total return through current income and capital appreciation by investing in corporate investment grade bonds rated A or higher by major credit rating agencies and U.S. Government securities. Cash: Bonds 6.5% 93.5% Distribution by Maturit)' 0-3 Years 3-5 Years 5-7 Years 7-10 Years 10-20 Years 20+ Years 35.7% 15.2% .MLA Rtd G/C . Fund Cumulative & Annualized Total Return Performance as of June 30, 2002 Th ree Year- One II Three Months to-Date Year Years Fund 4.2% 3.7% 9.0% 7.8% Lehman Aggregate 3.7% 3.8% 8.6% 8.1% Merrill Lynch A Rated and Abo\€ G/C 4.4% 3.8% 9.0% 8.1% I TRUSCO CAPITAL MANAGEMENT 30 Annualized Fi\€ Se\€n Years Years 7.8% 7.3% 7.6% 7.3% 7.7% 7.2% Inception II 8.3% 8.2% 8.1% ----------..-------- Despite the economy continuing to grow in the second quarter, a flight to quality took place in the fixed income markets as interest rates declined, the yield curve steepened and higher quality securities outperformed. This flight to quality was caused by investor concerns about the pace and character of economic growth, credibility and credit problems with some corporations, and international unrest. As the economy slowed from a 6.1 % growth rate in the first quarter, expectations of Federal Reserve tightening were pushed out toward year end or early next year. This led the Treasury yield curve to steepen from 208 basis points to 263 basis points as the two year yield declined by 86 basis points versus the 31 basis point decline in thirty year yields. Treasury indexes performed best followed by agencies, mortgages and corporates respectively. Mortgages, after having a very good first half of the year lagged in June as higher volatility and prepayment expectations hurt their performance. Corporates had a poor quarter overall but followed the overall theme of higher quality outperforming lower quality issues. Fund Manager: Earl Dennev. CFA 1995 1996 1997 1998 1999 2000 2001 2002 First Quarter 4.4% -1.8% -0.7% 1.7% -0.4% 2.3% 3.2% -0.5% Second Quarter 6.1% 0.5% 3.5% 2.7% -1.0% 0.7% 0.2% 4.2% Third Quarter 1.9% 1.5% 3.4% 5.2% 0.9% 2.5% 5.2% Fourth Quarter 4.6% 2.8% 3.5% 0.2% -0.5% 4.9% -0.1% Fund 18.1% 3.1% 10.0% 10.0% -1.1% 10.7% 8.6% Lehman Aggregate 18.5% 3.6% 9.7% 8.7% -0.8% 11.6% 8.4% Merrill Lynch A Rated and Above G/C 18.9% 2.8% 9.7% 9.7% -2.2% 12.4% 8.2% Growth of $10,000 from 09-01-1989 to 06/30/2002 $30,000 $25.000 $20.000 $15.000 $10,000 $5.000 $0 Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- 89 90 91 92 93 94 95 96 97 98 99 00 01 02 - Fund - ML A Atd G/C I 31 TRUSCO CAPITAL MANAGEMENT i IIII .1111 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Performance Through 8/31/02 I ~h~_,______ , L-Q~_YT1?, 1Yr -16.00 -16.65 -27.10 -22.54 -15.S1 -12.52 -14.65 -13.30 -12.S3 -2,23 -3.60 -13.801 -19.401 -17.991 -21.261 -10.32 Portfolio Index rQ-tr YTD 1 Yr 2Yr 3Yr 4Yr 5Yr 6Yr --S.4SI -10.121-7.921 -4,521 1.951 7.541 6,s31 -8.341 -11.11/ -9.841 -11.471 -4.251 2.291 3.541 7Yr ------~ SYr 9Yr, 10Yr r I I I I 10 v Ll) r-: M co Ii 5 Ll) C1) ..... Ii. o "."" ~ ~ M ~ I ~ ~ ci ~ ~ V M ~ I . , M ..... , ..... Qtr YTD 1 Yr 2Yr ' -. -5 -10 Ll) N 'f -15 3Yr 4Yr 5Yr Dr TRUSCO CAPITAL MANAGEMENT 32 ------------------- City of Winter Springs Review of Request for Proposal for Investment Management Services for Defined Benefit Pension Plan Funds Se tember 24 2002 presented by PFM Asset Management LLC One Keystone Plaza, Suite 300 N. Front & Market Streets Harrisburg, PA 17101-2044 (717) 231-6200 Fax: (717) 233-6073 201 South Orange Avenue, Suite720 Signature Plaza Orlando, FL 32801 (407) 648-2208 Fax: (407) 648-1323 - r - - _. - - - - - - - - - - - - - - Table of Contents TAB ~.",.N'--'-.--:--JJrI"''''''':'~-'''' .~r -'-'~-:---0. ",. " ,,-1 IF, " .'~' {it ,",.... , ' ;PEM,an~' tfu&Revi~wJ Pr():Gess;:-~=,;, J ~~r:;~~~~t~j~;?:~~~i~i !.R,,'esnO'OA'ent-4cJrOfHeS'=:1 -~-:<i:1;.""';"~~-:t' -...... p,":Ly "f - -e..- r~"",. - - 0 L' ")'~' :(. . ", ';JL :' ,".:J. <:~J . ~L-!?~~'~~ :., ,,;...;,"r"',~'~ ;::'/: .-,'.., '~fiTr' , ~l~('< "." ~""f:'-. ~f'~<' ;~~~~in~nse.of,:'iQPose~.., f~nd~;I~ ,;~~,,~-;,,~L,. -~~~~~;~~:;~~~~~~4~, --:.- --.--. ---'~. --- ---:--:-.-.-:,-----~_.--~-----:~.-l ~~_~kin9.s aQ~..~~:~~I1}Ten~ati1?n } ',- :5:~~:~~ k . .,'. .~)~~., ":"'~l f _:~~_.'~ .~ l~~._~~ ~'- X-~,-~ .~,~ t '-. . " . .~,.., i. , . ' ' .,_ _ , Q):l:d~~ 0.::':' ,P ":'-,' .,{)_.>_:~", '\'~.Q';;;,... ;Respdn'Se':~Matti1f;','.' . . ",;,f~; ;'''';-.' [~~~._;., '00 - ,.,U~~::,:/'7r_;.'{_' '~~~~~ II III IV V Our objective is to maintain the highest level of investment safety, enhance services and improve returns. aPFM ,,",=Asset Management LLC 12 ------------------- PFM and the Review Process ------------------- Presentation Participants - ,'~StevEfn;-- '. , . - - -,~ _}\h~x'aA:der, GGM--- . '-. - . . '.. ',-"':" -' -. -. . ,. ~. .~ - . .'- , . ". --., :,-, -, '-.. ','-' . -':'.-:'"""_ - "": ' ' .' ..~,-:";~.~- .~. '.-:c.' ...... ,0" ~. . ~~ "'-~', _ .~.; ,'." '.C> :. ..', ,:.- --.--,: eo' ":~~ :/;-',."'~~'-:~'~ ;.'. .;,'1 '-:~-1:~,~;.:y~).:'~~:,~~::.~~':-:::,:_:~.. .. . ,"., ...-..- . ". . Steven Alexander is a Senior Managing Consultant in PFM's Orlando office. Mr. Alexander is responsible for the administration of PFM's investment advisory -!:)ervices and products in the southeast of the country. Mr. Alexander has a Bachelor of Business Administration Degree in finance from Stetson University and a Bachelor of Science Degree in accounting from Florida Southern College. Mr. - Alexander is also a graduate of Rollins College Financial Planner Program and is a Certified Cash Manager. '.oj,', . .- ~\ii -.' :,~\"~"" . <'-2'\ ~\:\ " \ :\,-.\ ; "'" ,\<,'..\..:",\ _ John Molloy is a Senior Managing Consultant and is located in the Harrisburg office, PFM's money management headquarters. Mr. Molloy's role in PFM's money management practice is to provide strategic direction and program management for . new investment and service programs. Mr. Molloy earned a Master of Business Administration degree from the Johnson School at Cornell University and a Bachelor of Arts degree in Government & Law and Economics & Business from Lafayette College. Mr. Molloy also holds National Association of Securities Dealers Series 6 and 63 licenses. '.,.l ,:. aaPFM _Asset Management LLC 14 ------------------- The Process: Respondents · City of Winter Springs RFP for Investment Management Services for Defined Benefit Pension Plan Funds responses due Friday, August 30, 2002. Responses received from: - AmSouth Bank - Banc of America - Florida Municipal Investment Trust - Portfolio by Design - Sawgrass Asset Management, LLC - State Street Global Advisors - TIAA-CREF Trust Company - Trusco Capital Management (SunTrust) - Wachovia Capital Management Group (Evergreen) aePFM _Asset Management LLC 15 ---------.---------- The Process: Methods and Assumptions Create matrix of all respondents and RFP questions (Tab V) Develop summary sheet on each respondent (Tab II) Analyze performance of each respondent against benchmarks as listed in City of Winter Springs Investment Policy (Tab III) Determine weighting of other criteria included in RFP (Tab IV) Rank respondents against RFP criteria (Tab IV) Recommendations of top three respondents (Tab IV) ~ \7' ~ - ~ Information presented in the responses, including performance figures, is assumed accurate Performance is gross of fees, unless otherwise noted Performance was ranked on 3 year average annual total return Investment risk was evaluated on qualitative deviation from benchmarks (quarterly returns were missing from several responses preventing quantitative analysis) Other criteria were ranked qualitatively from both responses and experience ~; i;t' ii' ;:~. ".,. ;:, SiPFM _Asset Management LLC 16 ------------------- Respondent Profiles - - - - - - - - - - AMSouth Asset Management Group Post Office Box 588001 Oriando, Florida 32858 Fred Johnston (407) 835-3024 Recommended Funds/Accounts Description Growth Opportunity Portfolio - Focus on large companies with consistent earnings growth diversified across market sectors. Value Opportunity Portfolio - Invests in diversified stocks believed to be undervalued based on price appreciation potential. Mid Cap Fund - Fairly conservative; invests in S & P 350 and 400 stocks that have widening investor expectations. Small Cap Fund - 60 to 80 small companieswith above-market sales, earnings growth, increased estimates of future earnings. International Equity Fund - Manage portfolio risk by investing in broadly diversified cross section of international stocks Bond Fund - Takes advantage of changes in fixed income yields to pursue strong returns. Recommended Allocation . Growth Opportunity Portfolio I', C Value Opportunity Portfolio C Mid Cap Fund /~. " //:1:. , I. , ,~'.1'Il ' , iii Small Cap Fund . International Equity Fund . Bond Fund 7% PFM Asset Management LLC .. .. - - - - - - - Firm Profile: Founded: 1915 ^ ~~...... T T.....J..._ 1\.f...._....~................_.. rt.O:>>.:\\.-l<) UHU....l !\,.lQl1Q5",un...Ul. 1t'1f\ 0,00,0 tt::A ..p.1V,U.J7,7..J7,.1V"T Public Clients Served: Public Clients' Assets: NR $692,933,475 Performance of Recommended Funds/Accounts net of fees (For period ending June 30, 2002) Fund I Benchmark: One Year Three Year Five Year Ten Year Growth Opportunity Portfolio -14.50% NR NR NR Value Opportunity Portfolio -2.20% NR NR NR Mid Cap Fund -7.21% -1.80% NR NR Small Cap Fund -24.07% 1.42% NR NR S&P Index -17.99% -9.18% 3.66% 11.43% . . . International Equity Fund -13.35% -7.19% NR NR MSCI EAFE Index -9.49% -6. 78% -1.55% 5.40% Bond Fund 8.81% 7.73% 7.39% 7.06% Lehman Aggregate 8.63% 8./1% 7.58% 7.35% returns for Growth and Value Opportunity Portfolios are gross of fees Expenses/Fee Schedule Basis Points Charged 60 50 32.5 25 20 on 1st 5500,000 on next $500,000 on next $500,00 on next 52,500,000 on the balance Minimum Administrative Fee: $5,000 I Investment Fees on $6 million account: $17,375 8 - - - - - - - - AMSouth Asset Management Group Post Office Box 588001 Oriando, Florida 32858 Fred Johnston (407) 835-3024 - - - - - - - - - -, - Firm Profile: Founded: Assets Undci r-,.1anagement: Public Clients Served: Public Clients' Assets: 1915 It 1 () Q <:0 0<:0 1 hA "" J. V,VJJ,/J/, J. V-'- NR $692,933,475 Kev Professionals Kimberly Kutlenios Vice President Administration, Client Services Relationship Manager 20 years of Institutional Administration Experience B.S and B.A, Salem College Matt Smith, CFA Senior Vice President & Regional Manager, Portfolio Manager 27 years of Investment Experience B.S. Education, Universtiy of South Alabama M.A. Finance, University of Alabama Michael Portnov, CFA Assistant Portfolio Manager 20 years of Institutional Adminis/ration Experience B.S Psychology, M.B.A. Stetson University PFM Asset Management LLC References and Reoresentative Clients References: City of Pulaski Gallatin City Department of Electricity Pulaski Electric Melbourne Firefighters Pension Town of Lady Lake Reoresentative Clients State of Alabama State of Florida MetrolDavidson Cnty Teachers Retirement City of Pulaski Chattanooga ARTA Pulaski Electric Sweetwater Utility District Clinton Utilities District Montgomery Cnty, Alabama Gallatin Electric 9 - - - -' -' - -'- - - - - - - - - -' - - Banc of America Capital Management Firm Profile: ^ A...I......ro,... 1 (\ 1 C".....H...... 'T_u.......... Ct-rao.t Cn~to. '111(\(\ 01-.........1.....++.... 1\Tf""I ..,Q"1.c;:, ~UUJ.\"''::)';:). IV! lJVUUl 1 JYVlJ. U\.J....."'L, uuu.\".o ,J"'TVV, '-....<l1CUIVl..U..., 1"1'-' ~U...J-' 1:"............1.....-1. J .VUllU\..oU. lone L77..J Andrew Katko, Vice President, Institutional Investment Strategies (813) 225-8198 Assets Under Management: Public Clients Served: Public Clients' Assets: $172 billion 27 $5.7 billion Recommended Funds/Accounts Description Performance of Recommended Funds/Accounts Nations Managed Index Fund gross of fees -Total return that exceeds the S&P 500 (For periods ended June 30, 2002) -Replicates S&P 500 while overweighting stocks expected to outperform Fund I Benchmark: One Year Three Year Five Year Ten Year Nations Marsico Focused Equities Fund -Long-term growth of capital -Core of 20-30 large cap companies Nations Managed Index Fund -16.43% .9.07% 3.14% NA Nations Marsico Focused Equities FLUId -4.48% -3.30% NA NA Nations SmaIl Company Fund Nations Small Company Fund 15.93% 3.87% 4.74% NA -Long-term capital growth in primarily equities S &P 500 -/7,99% -9./8% 3.66% //,43% -Invests primarily in equity securities with market capitalization of $2 billion or less Nations Intermediate Bond Fund Nations Intermediate Bond Fund 7.29% 6.75% 6.09% NA -Interest income and capital appreciation Nations Short-Term Income Fund 6.34% 6.53% 6.16% NA -Invests primarily in investment grade intermediate and longer-tenn bonds Lehman Aggregate 8.63% 8,11% 7,58% 7.35% Nations Short-Term Income Fund -High current income with minimal fluctuations in principal -Investment grade debt securities Recommended Allocation Expenses/Fee Schedule Strategic Solutions-Based Partnerships: Fees are based on an individual accountleve! of $25,000 -develop understanding of portfolio no brokerage, J2b-J, acceptance, loads or administrationfees -set clear investment objectives -determine appropriate asset allocation No additional expenses for other services described in the RFP or specific advice, -tailor investment program -monitor for adjustments -ongoing communication PFM Asset Management LLC 10 - - - - - - - - - Bane of America Capital Management Arlrlr""'" 101 I;:,..mtJ., Tru....n I;:trppt I;:"itp'lL1()O r'J.,,,rlntt,, 1\.1r' "HI,)" ~ ..u-~v..,..,. .I....,... ........,\,.I...J...1 ....lJv.. ....,................, ......'-1-........."., IV',""" ..........J.uJ..v'",,"', .1........... _V_oJ""; Andrew Katko, Vice President, Institutional Investment Strategies (813) 225-8198 - - - - - - - - - - Firm Profile: Founded: !995 $172 billion 27 $5.7 billion Kev Professionals Andrew Katko Vice President, Institutional Investment Strategies 9 years investment experieJlce Bachelor's in Economics, Wingate College Jeff McCroy Managing Director, Institutional Investment Management Exel.."Utive 18 years investment experience Bachelor's in Business Administration, Creighton University Michael Kenneally, CFA President and Chief Investment Officer 19 years investment experience BSBA in Economics and MEA in Finance, University of Missouri Andrew J. Stenwall Manager Director, Taxable Fixed Income 14 years investment experience Bachelor's in Aeronautical Engineering, Rensselaer Polytechnic Institute Preston "Tony" Estep Managing Director, Quantitative Strategies 38 years of investment experience BA in English Literature, Washington University Christian Pineno, CF A Managing Director, Small Cap Strategies 8 years ofinvesnnellt experience BA in Rhetoric and Communication Studies, University of Virginia; MBA from William and Mary Steve Young, CF A Director of Asset Allocation 17 years of investment experience BS in Business Administration, Kansas State University Michael Fischer, CFA Managing Director, Institutional Advisory Services 20 years investment experience Bachelor's in Business Administration, University of Tennesse; MBA, University of North Carolina PFM Asset Management LLC Assets Under Management: Public Clients Served: Public Clients' Assets: References and ReDresentative Clients References: Public School Teachers Pension & Retirement Fund of Chicago Georgia State Teachers Salvation Army Los Angeles County Metro Transportation Authority North Carolina Retirement System Reoresentative Clients Calleguas Municipal Water District Charlotte Firefighters' Retirement Association City of Pinellas Park Elsinore Valley Municipal Water District State of North Carolina 11 - - - - - - - - - Florida Municipal Investment Trust 301 South Bronaugh Street, Suite 300 P.O. Box 1757 Tallahassee, Flo 32302-1757 Darlene Malaney (850) 222-9684 Recommended Funds/Accounts Descriotion Diversified Domestic Equity Portfolio - Invests in equity securities with superior return to bonds Diversified Small Cap Equity Portfolio - Invests in 500-{500 small cap companies with favorable valuations, financial strength, and earnings stability International Growth Opportunities Fund* - Invests in foreign companies well posiitioned to provide superior perfonnace over a three year horizon. Broad Market High Quality Bond Fund - Targets securities with 8.5 year maturities to gain higher return than that offered by money market funds Recommended Allocation EJ Diversified Domestic Equity Portfolio . Diversified Small Cap Equity Portfolio 50% D International Growth Opportunities Fund'" [] Broad Market High Quality Bond Fund PFM Asset Management LLC - -' - - - - - - - - Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: 1992 $608,202,242 NR NR Performance of Recommended Funds/Accounts gross offees (For period ending June 30, 2002) Fund I Benchmark: One Year Three Year Five Year Ten Year Diversified Domestic Equity Portfolio -17.40% -6.63% 5.20% t3.25% Diversified Small Cap Equity Portfolio 8.10% 10.34% t 1.32% 14.27% S & P 500 -17.99% -9.18% 3.66% 11.43% International Growth Opportunities Fund" -15.96% -4.66% 1.33% 8.92% MSCI EAFE -9.49% -6. 78% -1.55% 5.40% Broad Market High Quality Bond FWld 8.96% 8.21% 7.99% N/A Lehman A re ate 8.63% 8.11% 7.58% 7.35% *retums for composite Exoenses/Fee Schedule Diversified Domestic Equity Portfolio Basis Points Charged 61 Diversified Small Cap Equity Portfolio 61 International Growth Opportunities Fund' 94 Broad Market High Quality Bond Fund 3t Investment Fees on $6 million account em 10 in the recommended asset allocation: $32,190 12 - - - - - - - Florida Municipal Investment Trust 301 South Bronaugh Street, Suite 300 P.O. Box i 757 Tallahassee, Flo 32302-1757 Darlene Malaney (850) 222-9684 - - - - - - - - - -. - - Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: 1992 $608,202,242 NR NR Kev Professionals Darlene Malaney Associate Director of Financial Services PFM Asset Management LLC References and Representative Clients References: City of Fort Lauderdale City of Orlando City of Stuart Town of Juno Beach City of Pembroke Pines Reoresentative Clients City of Stuart City of Hialeah City of Sanibel 13 - - - - - - - - - - - - - - - - - - - Portfolio By Design / Signator Investors Address: Not Provided Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: Not Provided Not Provided Not Provided Not Provided Tom Oongilla, Investment Adviser Representative (561) 241-5488 Recommended Funds/Accounts Description Performance of Recommended Funds/Accounts Voyageur Large Growth gross 01 lees -Large cap domestic growth portfolio, 30 to 40 stocks (For periods ended June 30, 2002) -Independent fundamental research aided by quantitative valuation models Fund I Benchmark: One Year Three Year Five Year Ten Year Sovereign Dividend Performers -Large cap domestic value portfolio, 30 to 40 stocks -Invest in companies that have raised dividends year after year Voyageur Large Growth -16.89% .3.39% 8.63% NA Sovereign Dividend Perfonners -7.28% -2.92% 6.52% NA EubeI, Brady & Suttman Mid Value Eubel, Brady & Suttman Mid Value 15.54% 19.60% 19.85% NA -Mid cap domestic value portfolio, 30 to 40 stocks LotsoffCapital Mgmt Small Core 2.10% 9.17% 13.02% NA -Intrinsic value of "franchise-type" cos., low cost producers, or have high barriers to entry S&P500 -/7.99% -9.18% 3.66% 11.43% Lotsoff Capital Mgmt Small Core -Small cap domestic core portfolio, 40 to 50 stocks ING Advisors Int'l (ADR) -8.47% ~.ll% 4.06% NA -Bottom-up, discounted cash flow model used to find relative value, sector neutrat EAFE Index -9.49% -6.78% -1.55% 5.40% ING Advisors Int'l (ADR) -Large cap international (through ADRs) relative value portfolio - up to 15% emerging mkts Sage Intermediate Taxable Bond 8.53% 8.18% 7.62% -Global macroeconomic outlook determines regions and sectors to invest Lehman Aggregate 8.63% 8.11% 7.58% 7.35% Sage Intermediate Taxable Bond -Intermediate duration high quality bod portfolio -Select sectors first, followed by credit research for specific security selection Recommended Allocation I1iI Voyageur Large Growth Expenses/Fee Schedule . Sovereign Dividend 77 basis points Separate Account Fee Performers 15 basis points Administrative Fee DEubel, Brady & Sutlman 50 basis points Advisor Fee Mid Value 15% 142 Total 3~ o LotsoffCapital Mgmt Small Core Fees are based on account size of $5,875,000 15% .ING Advisors Int1 (ADR) and may change as asset/evels fluctuate. 10% 15% !] Sage Intermediate Taxable I Fees on $6 million account: $85,200 I t5% Bond PFM Asset Management LLC 14 - - - - - - - - Portfolio By Design / Signator Investors Address: Not Provided Tom DongiIla, Investment Adviser Representative (561) 241-5488 - - - - - - - - - - - Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: Not Provided Not Provided Not Provided Not Provided Kev Professionals Tom Dongilla Investment Adviser Representative Voyageur Asset Management Sovereign Asset Management Eubel, Brady & Suttman Asset Management LotsoffCapital Management ING Advisors Sage Advisory Services Ltd. PFM Asset Management LLC References and Representative Clients References: None Provided Reoresentative Clients None Provided 15 - - - - - - - - - Saw grass Asset Management, L.L.C. 1579 The Greens Way, Suite 20 Jacksonville Beach, Florida 32250 Andrew M. Cantor, Principal (904) 493-5500 Recommended Funds/Accounts Description Large Cap Equity Fund -Investment styte selects stocks with greater eanrings potential than the market by identifYing companies with strong earnings momentun, rising earnings estimates, and reasonable valuation relative to the S&P index. Broad Market Fixed Income Fund - Focus on controlled duration management of investment grade securities, strategic sector valuations, and specific security analysis. -Consists of U.S. dollar-denominated governement, corporate and mortgage-backed securities. -Duration from 4-6 years and Average Maturity from 8-12 years. Recommended Allocation o Broad Market Fixed hlcome FWld . Large Cap Equity Fund Kev Professionals Marty LaPrade, CFA Partner, Equity Portfolio Manager 23 years of Investment Experience Bachelor of Science, Furman University PFM Asset Management LLC - - - - - - - - - - Firm Profile: Founded: IQnll':~r'l 1 '\ 10QR ......~.........& j ......, ....,"'..... Assets Under Management: Public Clients Served: Public Clients' Assets: $1,049,300,000 13 $258,200,000 Performance of Recommended Funds/Accounts gross of fees (For period ending June 30, 2002) Fund I Benchmark: One Year Three Year Five Year Ten Year Large Cap E(juity FU11d -9.30% -5.80% 6.00% 11.50% S & P 500 -/7.99% -9.18% 3.66% //.43% Broad Market Fixed Income Fund 9.30% 8.30% 7.70% 7.60% Lehman Aggregate 8.63% 8.11% 7.58% 7.35% Expenses/Fee Schedule Large Cap Equity Fund 70 60 50 basis points on 1st $10 Million basis points on next $20 Million basis points on batance Broad Market Fixed Income Fund 45 35 25 basis points on 1st SIO Million basis points on next S20 Million basis points on balance Proposed Fee Schedule for Winter Springs: 60 basis points on a $6 million portfolio Ilnvestment Fees on $6 million account: $36,000 I References and Representative Clients References: St. Augustine Police Officers Palmetto Police Officers Cooper City, FL General Employees, Police & Fire 16 - - - - - - - - Saw grass Asset Management, L.L.C. 1579 The Greens Way, Suite 20 Jacksonville Beach, Florida 32250 Andrew M. Cantor, Principal (904) 493-5500 - - - - ~ - - - - - - Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: T~nl1~Ml 1" 1 QO~ ........-.....J .._, ........... $1,049,300,000 13 $258,200,000 Andy Cantor, CFA Partner, Fixed Income Portfolio Manager 27 years oj Investment Experience B.S. Economics, the Wharton School, University of Pennsylvania PFM Asset Management LLC Jacksonville Beach, Florida General Employees Deerfield Beach Firefighters Representative Clients Palmetto Police Officers Cooper City, FL General Employees, Police & Fire 17 - - - - - - - - - - - - - - - - - - - State Street Global Advisors / Advanced Investment Technology One International Place Boston, MA 02 i i 0 Thomas J. Capobianco, Principal (617) 664-4112 Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: 1792 $770.8 billion 297 $159.003 Recommended Funds/Accounts Description Performance of Recommended Funds/Accounts gross of fees (For period ending June 30, 2002) AIT AIICap Equity - Holds large mid and small cap stocks in proportion to Russell 3000 Fund I Benchmark: One Year Three Year Five Year Ten Year - Employs quantitative analysis to select stocks based on forecasted price performance SSgA International Alpha AIT AllCap Equity -17.43% -7.96% N/A N/A -Country neutral relative to EAFE S&P 500 -/7.99% -9./8% 3.66% //.43% -Quantitatve stock selection based on valuation, growth and sentiment - SSgA Passive Aggregate Fixed Income SSgA International Alpha -6.36% -2.80% N/A N/A -Intends to match the performance of the Lehman Aggregate Bond Index MSCI EAFE -9.49% -6.78% -/.55% 5.40% SSgA Passive Aggrega~e Fixe_dIncOl - . 8.68% 8.12% 7.62% N/A . .. . ~ -- --. Lehman Aggregate 8.63% 8.//% 7.58% 7.35% Recommended AUocation Expenses/Fee Schedule "State Street Global Advisors and Advanced Investment Technology are proposing a Basis Points Charged combination of AIT's All Cap Equity, SSgA's International Alpha, and SSgA's Passive 60 basis points on 1st S50 Million Aggregate Fixed Income strategies." AnnuaL Minimum Fee: SIO,OOO A specific allocation was not recommended. (covers investment management, monitoring and development of investment policy, reporting and client service) Additional fee for custody of AITAllCap: $25,000 IInvestment fees on $6 million account: $61,000 I PFM Asset Management LLC 18 - .- - - - - - - - - - - - - - State Street Global Advisors / Advanced Investment Technology One International Place Boston, MA 02110 Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: Thomas J. Capobianco, Principal (617) 664-4112 - - - - 1792 $770.8 billion 297 $159.003 References and Representative Clients Kev Professionals Douglas W. Case, CFA Advanced /nvestmelll Technology (A/I), President and Chief //IVestmelll Officer 14 years investment experience B.S., University of Pittsburgh; MBA, Florida State University References: Town of Clinton, MA City of Gains vi lie , FL City of Pembroke Pines, FL Police, Fire & Employees City of Sanibel Milton Firefighters Pension Fund Representative Clients City of Deerfield Beach Firefighters City of Del ray Beach City of Fort Pierce City of Hialeah Police City of Jacksonville Police & Fire City of Lakeland Employees City of Lauderhill Firefighters City of Miami City of Sanford Police City of Sunrise Fire City of Tamarac Employees & Police Florida Board of Administration Florida Municipal Investment Trust Orland Utilities Commission John P. Kirby State Street Global Advisors, Principal, Portfolio Manager, Core Bond Team 21 years investment experience B.S., Boslon College Jim Hopkins State Street Global Advisors, Principal, Portfolio Manager. Global Fixed Income Team 25 years investmelll experience B.A., University of San Francisco; MBA, Colwnbia University Michael C. Schoeck State Street Global Advisors, Principal, Global Active Quantitative Equity Team 16 years investment experience London Univcrsity; Masters, Stuttgart University Thomas J. Capobianco State Street Global Advisors, Principal, Sales and Service 13 years investmelll industry experience B.S., Fitchburg State College Eric W. Roberts State Street Global Advisors, Principal, Client Service Officer, Public Funds 6 years investmelll industry experience B.A., Hamilton College; MBA, Suffolk University PFM Asset Management LLC 19 - - - - - - - - - - TIAA - CREF Trust Company FSB 555 Twelfth Street NW, Suite 700 South Washington, DC 20004 Corey M. Landry (202) 637- 8949 Recommended Funds/Accounts Description Growth & Income Fund - Fairly conservative; invests in S & P 350 and 400 stocks that have widening investor expectations. International Equity Fund - Focus on large companies with consistent earnings growth diversified across market sectors. Institutional Bond Fund - Invests in diversified stocks believed to be undervalued based on price appreciation potential. Recommended Allocation II International Equity Fund 14% 56% [J Growth & Income Fund . Institutional Bond Fund 30% PFM Asset Management LLC - - - - - - - - - Firm Profile: Founded: 1999 Assets Under Management: Public Clients Served: Public Clients' Assets: $10,859,959,164 NR $692,933,475 Performance of Recommended Funds/Accounts net of fees (For period ending June 30, 2002) Fund I Benchmark: One Year Three Year Five Year Ten Year Growth & Income Fund -25.15% -11.35% NfA NfA S&P 500 -/7.99% -9./8% 3.66% II .43% h1ternational Equity Fund -15.83% -7.96% N/A NfA MSCI EAFE -9.49% -6.78% -/.55% 5.40% Institutional Bond Fund 7.59% 8.70% NfA NfA Leitman A re ate 8.63% 8.II% 7.58% 7.35% Expenses/Fee Schedule Basis Points Charged 30 25 20 15 10 basis points on 1st $5 Million basis points on next $5 Million basis points on next $10 Million basis points on next $30 Million on assets in excess of $50 million A1I11uul Minimum Fee: $5,000 Fund Growth & Income Fund International Equity Fund Bond Fund Total Ex ense Ratio* 0.22% 0.29% 0.19% IInvestment Fees on $6 million account: $30,7481 20 - - - - - - - TIAA - CREF Trust Company FSB 555 Twelfth Street NW, Suite 700 South WalShingtun, DC 20004 Corey M. Landry (202) 637- 8949 - - - - - - - - - - - - Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: $10,859,959,164 NR $692,933,475 1999 Kev Professionals Martha Kikas, CEBS Senior Institutional Trust Administrator 14 years of Trust Administration Experience B.S. Business Administration, Lindenwood College Susan Owen Institutional Trust Administrator 15 years of IllSitutuational and Trust Administration Experience B.A, Vanderbilt University PFM Asset Management LLC References and Representative Clients References: Brookhaven at Lexington ICDDR,B: Centre for Health and Population Research National Development Council City of Creve Coeur Representative Clients City of Creve Coeur 21 - - - - - - - - - - - - - - - _. - - - Trusco Capital Management / SunTrust Bank 300 South Orange Ave., Suite 1600 Orlando, FL 3280 I Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: 1985 $45,500,000 Not Provided $4,300,000 Steve Gordon, Vice President (407) 237-5758 Recommended Funds/Accounts Description Performance of Recommended Funds/Accounts SunTrust High Grade Growth Fund gross or fees (For periods ended June 30, 2002) STI Classic Growth and Income Fud Fund / Benchmark: One Year Three Year Five Year Ten Year SunTrust High Grade Equity Income Fund SunTrust High Grade Growth Fund -11.47% -1.34% 9.81% 14.17% STI Classic Growth and Income Fu -11.95% -4.31% 4.90% NA SunTrust U.S. Limited Capitalization Fund Sun Trust High Grade Equity Incom -5.51% -2.62% 4.89% NA Sun Trust U.S. Limited Capitalizati -19.53% 6.91% 14.29% NA STI Classic International Equity Fund S & P 500 -17.99% -9.18% 3.66% 11.43% SunTrust High Grade Bond Fund STI Classic International Equity Fu -9.16% -5.91% -1.53% NA SunTrust Retirement Reserve Fund EAFE Index -9.49% -6.78% -1.55% 5.40% descriptions for the above funds were not provided with proposal SunTrust High Grade Bond Food 8.98% 7.77% 7.75% 7.48% SooTrust Retirement Reserve Food 2.78% 4.92% 5.20% 5.02% Lehman Aggregate 8.63% 8.11% 7.58% 7.35% Recommended Allocation IiiI SunTrust High Grade Expenses/Fee Schedule Growth Fund Basis Points Charged . STI Classic Growth and 75 basis points on total assets Income Fud includes management and custody of assets 1% o SunTrust High Grade 3~1o Equity Income Fund DSunTrust U.S. Limited Capitalization Fund I Investment Fees on $6 million account: $45,000 I . STI Classic International 2% 2% Equity Fund t9% 17% I!I SunTrust High Grade Bond Fund . SunTrust Retirement Reserve Fund PFM Asset Management LLC 22 - - - - - - - - - Trusco Capital Management / SunTrust Bank 300 South Orange Ave., Suite 1600 Orlando, FL 32801 Steve Gordon, Vice President (407) 237-5758 - - - - - - - - - - Firm Profile: Founded: Assets Under Management: Public Clients Served: Public Clients' Assets: 1985 $45,500,000 Not Provided $4,300,000 Kev Professionals Steven E. Gordon Vice President 8 years i1lvestment experie1lce,joi1led Trusco i1l1995 BA, University of South Florida; MBA, Rollins College Timothy J. Nash Vice President 8 years illvestment experiellce.joilled Trusco i1l1995 B.B.A., Stetson University; MBA, Rollins O:lllege L. Earl Denney, Jr., CFA Managing Director, Ponfolio Manager - High Grade Bond Fund 25 years illvestment e<periellce.joilled Trusco 1982 B.S., Carson Newman College; MBA, University of Georgia Chad Deakins, CFA Vice President, Portfolio Manager - International Equity Fund 7 years investment experience,jouled Trusco in 1995 B.S., Florida State University Elliott A. PeTRY, CFA Managing Director, Ponfolio Manager - High Grade Growth Fund 29 years investment e'Cperience, joined Trusco in 1982 BRA., Stetson University; MBA, University of Florida Jeffrey E. Markunas, CFA Managing Director, Portfolio Manager - Growth and Income Fund 17 years investmem experience, joined Trusco in 2000 B.A., College of Holy Cross; MS, Virginia Commonwealth University Mills A. Riddick, CFA, CPA Managing Director, Portfolio Manager - High Grade Equity Income Fund 20 years illvestment experiellce. joilled Trusco ill 1989 B.S., Florida State University John M. Hamlin Vice President, Portfolio Manager - U.S. Limited Capitalization Fund J 2 years investmem experience. joined Trusco in 2000 B.S., University of Notre Dame; MBA, University of Connecticut Kimberly C. Maichle, CFA Vice President, Portfolio ~1anagcr ~ Retirement Resen'e Fund 13 years illvestment experiellce. joilled Trusco ill 1992 BRA., Emory University; MS, Georgia State University PFM Asset Management LLC References and Representative Clients References: City of Palm Bay Police and Fire Pension Plan City of Titusville Police and Fire Pension Plan City of Cocoa General Employees Pension Plan City ofDan!a General Employees Pension Plan Reoresentative Clients City of Palm Bay Police and Fire Pension Plan City of Titusville Police and Fire Pension Plan City of Cocoa General Employees Pension Plan City ofDania General Employees Pension Plan Client since: 1989 1989 1989 1993 23 - - - - - - - - - - Wachovia Bank, N.A. Capital Management Group One Wachovia Center ,...,.1 1... "1t.T"" ....0""'00 ^""nr L.nanOllC, I'lL. L.OL.OO-VL.VO William Calloway (904) 489-5499 Recommended Funds/Accounts Description Strategic Value Fund - Seeks long-term capital growth by investing in large capitalization companies undervalued in the market Select Strategic Growth Fund - tnvests in large and mid-sized companies whose classification falls within the Russell 1000 index Speciat Vatues Fund - Invest at least 80% in common stocks of small U.S. companies that are undetvalued and have potential for growth Growth Fund - Small Cap Flmd that invests in small to mid-sized companies demonstrating strong and consistent earnings growth International Growth Fund - Chooses equity securities located in foreign countries with developed markets to achieve long term growth Core Bond Fund - Maximize return by a controlled risk approach that emphasizes duration, sector and security selection. Recommended Allocation 8 Strategic Value Fund "P1~ r. .Ii ~ ,. Il.....------ ~~ '. , , . Select Strategic Growth Fund o Special Values Fund o Growth Fund . International Growth Fund 7% 7% I] Core Bond Fund PFM Asset Management LLC - - - - - - - - - Firm ProfIle: Evergreen Investments Founded: t932 U.T~,..h^,,;~ r.....rnn.,....tl........ ~.....y..n.u~rl. ...............u.. .............1"''''............ ................,..... 2001 Assets Under Management: Public Clients Served: Public Clicnts' Assets: $175,700,000,000 NR $692,933,475 Performance of Recommended Funds/Accounts gross of fees (For period ending June 30, 2002) Fund I Benchmark: One Year Three Year Five Year Ten Year Strategic Value Fund -14.90% -4.01% 3.95% 12.42% Select Strategic Growth Fund -2t.Ot% -5.19% 6.15% N/A Special Values Fund 9.48% 12.64% 11.87% N/A Growth Fund -15.D9% 6.17% 5.53% t2.44% S&P 500 -17.99% -9.18% 3.66% 11.43% International Growth Fund 0.12% 1.55% 3.56% 8.43% MSCI EAFE -9.49% -6.78% -1.55% 5.40% Core Bond Fund 8.50% 8.46% 7.97% 7.73% Lehman Aggregate 8.63% 8.11% 7.58% 7.35% Expenses/Fee Schedule Basis Points Charged 80 50 basis points on 1st $10 Million on assets in excess of $10 million IInvestment Fees on $6 million account: $48,000 I 24 - - - - - - - - - - - - - - - - - - - Wachovia Bank, N .A. Capital Management Group One Wacha via Center Firm Profile: Evergreen Investments Founded: 1932 Charlotte, l~C 28288-0206 \ll"'F'Oh^~T;'" r.........,.........,t~^.." 1:.................rI. "U.....IIV"U.... '--"-'I PVIQU.Vll .I. V...I.....U. 2001 William Calloway (904) 489-5499 Assets Under Management: Public Clients Served: Public Clients' Assets: 5175,700,000,000 NR 5692,933,475 Kev Professionals Mary Lou Dixon, CRSP Vice President and Senior Relationship Manager 19 years of Employee Benefits Administration Experience References and Representative Clients References: Withheld for confidentiality Marcheta D. Winters, CRSP Senior Trust Associate 10 years of Employee Benefits Administration Experience B.S. Business Administrationn, University of Central Florida Representative Clients City of Tampa City of Madison City of Deerfield Beach City of Delray Beach City of St. Petersburg City of Orlando PFM Asset Management LLC 25 ------------------- Performance of Proposed Funds - - - - - - - - - - - - - - - - - - - Proposed Domestic Equity Funds Average Annual Total Returns Firm Fund Name 'for periods ended June 30, 2002 . 1 Year 3 Years 5 Years 10 Years . - " P<;irtfolio By Des ign. : ,.'," .. .Bubel, Brfldy,&,: $ut,~n Mis1<Y<ilu.e'" ,'.,;;;:."~:; ,,'.. 15.~4% .:.::l9,()O% ';" :.,19,~5'}(<>:.~.' .:._ N(A ~;'~~_~~_i~_,:~~-.==._-~=~:- --~-'~'-TS~-;ci~i-v;~;s FU~d'--=~-=.----~I~-~~48fo'--l2:64o/~--=il~87~'r-----=~N/~ Bank of America ~ations.S~UO:lnwal1yFulld. . ". .;:.~." . r~.9~%: ,'.l'.? 3.~,7% .~. ':<<4.11%,~.,.'::<'N/A ~~~~~~ _.~~. ] s~nCap F~_n.?~~~7:"_~~___~__~__ -.~-J'r'-~~ . ~~~.92~(. . -~~o/:l::~:-~=N~ ~L~~-:~-=---~~~ Trusco . .... '.' . SunTms'tBigh:Qiade:Gro\ytbfril1(L."..~.., .,.::'-1J.4-rk'::';,\;',~1;3::l%:.".,..;..,9.81%'. . \;'1~.17% :.\~~~th- ,,_p~,-----~--c~'-']Midc;~'F;nd'-'-~~-~-~.c._... .,'. C" . ~7:21~'~1~8O%T~~ N/AC-'-----~NiA "-~-''C'---'--'~-'-_'----'---~'~'~-'''''''--;r_''''''-, .' '. ",' . . .:=--------,--:-....,--,....,~=--..,...i .. .... ;_~_ ..............,~.--.----,-_. Trusco .... . . ,<.. SlinTmstHigh.GradeEquityJnco@Fund,;',.J-5.51%: ""..' -2.62%,.'.... ,":4.89% ".;. <NtA fft~:L:;;~~~~--,,~T~;~~~':;71:;:l~~~~i'~~;0)';~;';f~~[,~;~~r;~f~~-~;;~:t~~S;-=;~ ~;~~1f:~De;'~~~~='==,jfi~~~~~~ihL~~--;~;=~ '.' . ..~~~r'~:?'~$-I=,=3;~~~S~-2:~~ Trusco ISTIClassicGrowth and Income Fud I -11.95% -4.31%1 4.90%J N/A ~-:-~....... ~,--'----;--~----:-'"~~~~~~'7'~-~~~~_~-;-r-:~:~~~''''-,''''''''''''''''''"~~''''''''~.~.I:''7--=''':---~-::-~~"-::-"'-:-~'~'-;--~""--:-,-.,,=-~....-::'~-::::-~--c""~:~":",""~~,,~--:-r'~---r,--;;-;: .--''':~,~'''-:;--~''~~_. Wacho~ia' " '.; ..' ',. . SelectSti:ate icGroWthFrind" . .,',.......,:'.. '~2r:()l% '.~' "'.:-S.190jg". ",' c:~'6:15o/;'-':';":' '..: N/:A ~:;'i';;;=A~';I~~;:g;~t~~=~]L.~~~~~YF~:~::~J:_:'_~2i~C" ~,80"j..,_"~_^,~:,J::.' _05~;' FloridaMunicipal4J,vestnient,1'nis,t. Diversified'pome~tic'l3quityPOiifolio .'" .>.; ." ,.-17.<l-()01o "';; ~:.;,' .:(;263% c.' , : '" ; --5.2~.16 . ,.;.:. .;]3:25% -.-----..--.----.--~_._--...~....-r:--------~~-------~--.-----..~.r--..---'--'..--T . -~'~.~~------,.-..-.---._--- State Street Global Advisors lAITAllCapEquity ! -17.43%1 -7.96%1 N/Ai N/A _.- ~ --~ - -_. '-- '-'~'--~-.- -*~_..-_.__..,..____._~_.............. '-__._. _~_'''- .-..__,__~_-._~___._ ;____--:v__._______ ~___'_~_.____~_v__.........-'.....--_,...-~- ._~"_~....~______~_-~-_ ,. .....-.~______,-;-..,..----'-__:__~_:--~-;-- BankofAmeriy.a . NationsManagW'Jri4exFy'na.. .<.;.,~.. . .. ;~f9A3% :"9.Q7%.. '. 3.l~%' ...' N/A Index/Benchmark S&P 500 Composite Stock Price Index -17.99% -9.18% 3.66% 11.43% ~~;~~ ',;-, :~~-;~~;~~~~~~~~~:~:~'~~t~'~~~~"~~~;:~~~1=~~~~S~~;'~~~~ aPFM _Asset Management LLC 127 - - - - - - - - - - - - - - - - - - - Proposed International Equity Funds W achovia ~ :IntewationalGrowtp Fu~a .. . . ,0.11% . .' 1,~55 o/~ ~. c 3.:;6%' . '8.43% ,__~,^","__'M -----.--.--,.-...--~.......------r--~--.---.-~.----'--------~--.---.-~~'--'-~' -_'_';""'--~--:-r---'------'--_._--- Port!olio By Des ig~__ __.!IN~~isors Int1 (ADR) .. _ _ ..L. -8.~7% ~__~.:! 1 o~ .. ~.06~ ~_ N/ A ~ ~ 1.,:_ _~-- _ -~-:;- , - -::.-; - _ "', ~>,~ _. - -~ "'" ';.,. , - '-~_' ';,' .~; '"': ~, ~"":; '!'",_ \" '. . 7' ~":- ~> ._.--, - ",- -~"', ,~"" T "~-~ - ;:.,., - ~', -.-",:;' "',:.., ~' . A_'_ ~.~.~, ''',' - -,' - ;'c-' H, - ,", -.. ~: - - ,_,;, ~,- _~ '/ - ,~;.~~' ~ ",'~'_ 'A" ~,~-'~", ',",: i) ~_;6.-, $tafeSfreet G1obalAdvisorS . :SSgkIhte~ati6nalAlpha .... ,',. ":' ::' .:.:. .-9.3~%. '. _ ,< -~;80%' -. ',;. "'.-,, N/A' - _ _ '. N/A . ~- --- --'.--.....-- .--... --~-- ._J_ -~---,-",,'--~--'--'~-'--~"------'J~-I---_>-':"_'---_h_"Y---,~------- --.r~~---- -~.'-r-_. ,,-- ---- --.. Florida Municipal Investment Trust JIntemational Growth Opportunities Fund*7"L -15.96%! -4.66%J 1.33%1 8.92% t~~'~b-':; '-:- .. . ;~~':;-::';'~'":~frd1~:~]hf~ffikii;~iJ'~~ifi:EtJ~F:1~~:;'~~~', ,". 2'~V;T~:f~~~:"('.~~'"~:~~:9f~tc::.,~~:;~';:~i:5,~~' ',:"~::,'E";;:h~tN0: MSCI EAF E Index -9.49% -6.78% 5.40% AlllSoutb. .' 'Inteniittioncil Equity Fmid' .. ;')h.3:;i{':e.. ~7.19%~"'," N/A','. " H;:NlA .....-._'--._':~ .~. :--..----. _..._......._:__."...:..._--c--i-...~'.. -_.~~'-._~._.._--:..._,,- c.__~_.:-~. ._.___._,__:......:,.,.._.cc...~._ ..:.-.~~..--------'--____....,____..:c_ c..:.._c-~--l:-;" .:...:-..._ ---'-__''-:' TIAA-CREF I Intemational Equity Fund I -15.83%1 -7.96% I N/Al N/A F~~~t~~~;f;~;~~;;;it;,-~~t;ct~al fund (inception ~:]-012:.~~_~i1shire Compass _J sPFM _Asset Management LLe 128 - - - - - - - -,- - - - - -,- - - - - Proposed Fixed Income Funds .. , '. 'N/A'.' ", "N/A ..-------.:.. -,-- -'- --~- - _:."-._--.:......~y...:. ;:-----:.--:...-~..:,-'-,..,~-~---,...:.-.--.~~..:..._r-:.....:.--~-----------r---~::;;:;i--.. . .. ':.' (~;,..-'::':'~-2:. Wachovia ICore Bond Fund I 8.50%! 8.46% ! 7.97% I 7.73% Florida Municipal Investment Trust tBroad Market High Quality Bond Fund L 8.96%1 8.210101 7.99%1 N/ A State Street Global Advisors !SSgA Passive Aggregate Fixed Income I 8.68%1 8.12% I 7.62%1 N/A Index/Benchmark Lehman Aggregate Bond Index 8.63% 8.11% 7.58% 7.35% Trusco !SunTrust High Grade Bond Fund I 8.98%1 7.77% I 7.75%1 7.48% - ~--~~-;---------:-~~ - ; -"- - _ -'- '. --., -"'~~t-'--"7~~~""~~~.."'7"----;-'';'''''''-~'~'''''~'''''--;-"'':':-'''-'~-'''''''~~~'~.!~:-~----':--~-"-'~'~--:-.~-,~---:;.'-r'~-~0-...-.....-....,..,-'-:-----~:,,:--~ AmSouth B dp- d':":' . ,';".: . ',' " '8.81%..-, ." 7 73%"'''' 7:39"A.'" '-7.06% , .. __ , - ., _.' ... , d,._..._, -:,"'-M "'._:?.!:. _:,:~~,_....,_."'L::"'_c,.i_~-'-::",,-'-"-;;',-'--:.c..~~~:y:-":'::':':~~'_~.__,,~;.:.,~_ '.' '~?"',' c' ,;,:..~.::_:.:_:.-,-?: " :...:.:...:....:~:.::::~ Bank of America rNations Intermediate Bond Fund i 7.29%1 6.75% i 6.09"/01 N/A i~;,~!A~<k'~,,- ~___~___~~;:~~;~~!~~!~~;;;;_d' '~f-ri:';~i-S;:';:~~~~~:T~]i::~~?I;;:J~~~ aPFM ~Asset Management LLC 129 ----------~-----~-- Rankings and Recommendation - - - - - - - - - - - - - - - - - - - Rankings and Recommendation ~.~rfon11llnce -J?quity . ' Perfonnance - \nt'l Equity 10.0% 'Performance ~ FiXed :\ncorne. Investment Risk 15.0% Fees 15.0"1<> Client Service 15.0% Business Stability and Ethics. 10.0"10 sPFM ",!!!!:Asset Management LLC 131 ------------------- Rankings and Recommendation Criteria and Methodology · Performance - Equity: ranked on 3 year performance, large cap portfolios given greatest weight as they receive largest allocation · Performance - International Equity: ranked on 3 year performance, grouped by dispersion from index · Performance - Fixed Income: ranked on 3 year performance; funds within +/- .25% of index given 4 or 2, greater than +/- .250/0 given 5 or 1 · Investment Risk: considered diversification present in recommended allocation and similarity of portfolio construction to indexes · Fees: ranked from lowest to highest, grouped within ranges · Client Service: ranked RFP responsiveness, number of meeting proposed per year, reports, and personnel assigned to account · Business Stability and Ethics: reviewed ADV and financial data · Experience with Public Plans: reviewed number of, assets from and percentage of public plans Non-responses were assigned a 1 (lowest) ranking aPFM ~Asset Management LLC 132 ------------------- Rankings and Recommendation Potential Finalists · State Street Global Advisors - Very strong in Investment Risk, Client Service, Business Stability and Experience - Investment program mid- to upper tier - Custody fees on AIICap portfolio are only concern · Wachovia Capital Management Group - Very strong Investment Program - Middle tier for most other categories - Difficult to accurately determine Investment Risk · Florida Municipal Investment Trust - Investment program very similar to SSgA, strong in Investment Risk, Fees and Experience · Trusco Capital Management - Strong domestic equity performance, weak fixe"d income performance - Experience with Winter Springs plan aiPFM _Asset Management LLC 133 -------------'------ Response Matrix --------- ------ - - -- -~~- - -~ ,..:-,,-... ~_...i_....~ CI""II"~ ~I=P R~~nnn~A M-..tr \"ny UI VVIIILt:1 ~..,. ...~~, . .v. :....... - .,.. . '__..._......~ ___<<:L_ ix A. Firm Background AmSouth Bank of America Florida Municipal Portfolio by Design Sawgrass Asset State Street Global TIAA-CREF Trusco Capital .. Wachovia Capital Investment Trust Management LLC Advisors Management Management Group (SunTrust) (Evergreen) 1 Describe the Date- NR $1728 RIA; est. 1995 as Rorida League of Cities NR (FL based Employee-owned 72.5% SSgA: $nOB investment Subsidiary of TIM Investment subsidiary of 879- Wachovia founded organization, date Consumer & Comrcl TradeStreet Inv Assoc; -founded 1922, Bdof investment adviser rep Founded: 1/15/98 management subsidiary (founded over 80 years SunTrust Bank founded 1932- Evergreen founded, and banking services : w/600 roots to 193Os; Dir ownership for Signator Investors no changes - all orig. of State Street B & T Co ago); Federally in 1985 founded as subsid of ownership of your offices in all 50 states subsidiary of BofA (MAl) founding employees (1792); SSgA reorg in chartered savings bank Wachovia. firm. Has it State Street Global remain 1995, no changes in Trust division est. in No recent changes experienced Advisonriounded1978 27.5% AmSouth owned ownership; All: formed 1999, No recent (outside of the First Investment Management in 1996 from LBS Capnal changes Union! Wachovia merger significant change in Arm $ custodian bank for Mgmt spin off, now 90% 9/1/01) organizational FLC owned by SSgAlliance I structure, ownership, \ or management Atlanta capnal- founded during the past three 1969 years and, if so, olease describe. 2 Describe any other AmSouth Leasing, BofA affiliates FL Leag Cnies (FLC) NR NONE Sate Street Corp Subsidiary of TIM No subsidiaries; soft Evergreen Investment business affiliations Investmt Services, Cap. affiliates dollars / directed See, Evergreen Funds, (e.g., subsidiaries, Corp, & Inv Mnmt Co. State St Corp (SSgA) - commissions pay for Intem'l Advisors, InterSt joint ventures, and Equity investment in: custodian bank for FLC research services, Johnson See, .soft dollar. Rckhvn AsstMan, OFFITBANK, Tattersall arrangements with Oakbrook Invstmts Atlanta Capnal (AC) Adv Group, Wachovia brokers). Sawgrass AM LLC BankfFunds 3 Describe your finn's Conditional- See prop. Legitimate and lawful FLG- NA NR Used in agrmnt w/ SEC May direct transactions Does not pay soft dollars Used to pay for research See prop policy on soft dollars. research for investment SsgA- require request rulings; no deals with in exchange for and services decisions or trading forms, compliance and Brokers research, follow section execution, not investment committee 28e of Sec Exch Act, administrative or approval, and fiduciary Officer monnors operational functions Comptroller approval and reports At- conform to SEC code and provide qtrly detailed reports of all soft-$ activity 4 Does your firm have an Yes- 6 No Yes- 4 NR (presumably) Jacksonville Beach - SSgA: Naples No- but TIAA does in Investmen subsidiary of Yes- includes Tampa for pffice in the State of only office AIT: Clearwater and Tampa SunTrust Bank founded Winter Springs service Ir-Iorida? Weston in 1985 5 Is your firm a Yes Yes, since 1995 FLC - NA NR Yes, 2/14/98 SSgA exempt from Act Yes Yes, since 1985 Yes registered investment SSgA - Exempt (ADV available for funds advisor under the Atlanta Capnal- Yes mgmt affiliate; Investment Advisor's AIT is registered Act of 1940? PFM Asset Management LLC - 35 --_._----- ------- - -- . A. Firm Background AmSouth - Bank of America Florida Municipal I. Portfolio by Design Sawgrass Asset State Street Global T Investment Trust Management LLC Advisors Management Management Group (SunTrust) (Evergreen) 6 Describe any SEC, None None None NR None "None that would None None None NASD or any other materially affect SSgA's regulatory censure or or Airs ability to litigation involving perform" your finn or its employees during the Dast five (5) years. 7 Summarize fidelity 25mil- E&O Blended Prof Uability of See Prop. NR 5mil- E & 0 Insured up to $5OOM l00mil- Dir & Off $100M each, E&O, Fid 5mil- Comm. Gen Liab. bond coverage, errors 50 mil- Fiduciary Ins. $3OOM; ERISA bond of 1 mil- Dir & Offirs Financial Institution 100mil- E & 0 Liab, Fid Bonding 1 mil (each event) - Auto and omissions, Meets all reg. $50M; certificate l00K-Emp Dishonesty Bond and Bankers SOmil- Fidelity 500K (each)-Wkmn employee dishonesty, Requirelnents - specific provided 4mil- Cmcl Gen Liab Professional Liability SOmil- Financiallnst. Comp fiduciary liability policy info not avail. for + Fiduciary .Ins (E &0) Bond Ins. 5mil- Umbrella public review + ERISA 10% of acet 200mil- Bnkr's Blanket insurance, or other (up to 500K) Bond plus Cmputr Crime fiduciary coverage 200mil- Capt Mkts E&O your firm carries, and 200mil- Cap Mnmt E&O provide a current Certificate of Insurance. 8 Provide a copy of your ATTACHED Not provided to PFM ATTACHED NR ATTACHED SSgA lOoK included with ATTACHED They say .see attached" ATTACHED finn's most recent Proposal but we don't have audited financial statement. 9 Describe your firm's 56% - Consumer Revenues solely trom FLC- membership dues, NR Fees from Clients Investment Services Only 1% of parent All from inv mgmt See proposal revenue sources and banking services inv advisory and mgmt. admin fees, publications (Public, Taft-Hartley, 81%, Inv Mgmt 19%; company's total revenue business comment on your 36% - Commercial BAC stock traded on NY & conf regis fees-Good Corp, Sub-Advsory) senior debt AA- (S&P); firm's financial Banking Group and Pacific SE, London SSgA- trans. Fees - 1.1 bil under Mnmt 2001 revenues of $3.9B, condition. and Tokyo also; LT debt Good -Extremely good position NI of $661 M rating AA- AC- inv advisory srvcs- Good 10 Does your finn adhere Own code is similar - Yes Yes NR Yes Compliant with AIMR Yes Yes, plus Trusco's In accordance, but 3m to the Code of 75% of group hold AIMR PPS, undergoing ethical regs in policy party firm audits their Professional and charters composite audit; manual reports Ethical Standards as All: compliant with described by AIMR? AIMR PPS, composite verified PFM Asset Management LLC - 36 - -- - - - - -- - - - - - - - - - - .- B. EXPERIENCE - AmSouth Bank of America Florida Municipal Portfolio by Design Saw I Investment Trust Management LLC I Advisors Management Management Group : (SunTrust) 1 Describe your firm's Managing since 1915, $5.78 for 27 public FLe- NR All emp-19 yrs 300 public funds w~h -3k of 13k are public $4.38 for Public sector Manages $7,4bil for 270 experience in tax-ex $ since 1942. accounts (6130/02) 12 Pub aects = $258 mil $154B,21 plans in FL insmutions clients, $2.18 for public funds & govt. managing investment currently $15bil in assets SsgA- Igest manager of Public Trustees Assoc & with $98 -Expertise, personal Healthcare entnies portfolios for public tax-exempt assets in Govt FO Associations services & low fees funds and U.S. -PM for WS, FL has 22 governmental entities. yrs experience AC- managing assets for 25 years; public funds make up 60% of assets \ under management ($4.5 billion) 2 Summarize your Corp - 1,055 Billion 2001:$183B 6/2002: $608M NR 02- 1 ,049 Mil 2002: $7718 02 - 3.448,413.177 2002: $45.58 97 - 87 bil assets under Public - 692.93 Mil 2ooo:$14OB 12/2001: $587M 01 -1.059 Mil 2001: $7858 01 - 3,044,634,261 2001: 45.5 98-118bil management Taf Hartley - 55.91 Mil 1999:$115B 12/2000: $474M 00-1.177 Mil 2ooo:$725B 00 - 1 ,550,420,468 2000: 45.4 99-121.8 bil (institutional only) EndowmenllFoundations 1998:$75B 12/1999: $576M 99- 629 Mil 1999:$6728 99 - 260,263.468 1999:30.7 00 - 129 bil - 835.84 Mil 1997:$52B 12/1998: $492M 98 -189.5 Mil 1998:$493B 98 - 2,027.000 1998: 22.5 01-178,1 bil over the past five Pooled Accts - 7.14 Bil. 1997:$398B 1997: 19.0 02 -175.7 bil years. Other - 1.079 Bil Total $10.859 billion 3 What is your firm's Consider: Time horizon, CS Rap will develop with NR NR 19 yrs of Pension Plan Refer to their experience Flexible-focus on indiv We are able to share Since 1932- port experience in tax situation, risk client; use template! work as described in #81, Needs what other plans specify rebalanced mo'Iy;lqlryty, developing investment tolerance,liq questionnaire based 12 public clients - $ plus initial planning Consider risk tolerance, in their policies provide recommended policies and portfolio requiements to best suit approach 258mil meetings on transition. invest obj & current asset allocation management specific needs reporting, liquidity needs guidelines Est target IRR & horizon guidelines for public Create Inv Policies & employee pension Guidelines Statement funds? 4 Does your firm act as NO No (affiliates may) FLC - No NR No Not w~hout prior written No Not a broker I dealer, no No a broker or as a SSgA- Selectively consent of client affiliated broker I dealer; primary dealer in AC- Certain Research soft dollars as described securities or receive tools above any other form of additional compensation (including soft dollars) for client transactions aside from the direct fee paid by clients? PFM Asset Management LLC - 37 - - -- - - - -- - - - - - - - - -- B. EXPERIENCE - AmSouth -.- Bank of America Florida Municipal Portfolio by Design Sawgrass Asset State Stre Investment Trust Management LLC Advisors Management Management Group (SunTrust) 5 Provide five client City of Pulaski; Gallatin Public School Teachers City of Fort Lauderdale; NR St. Augustine Police Town of Clinton, MA; Brookhaven at Palm Bay P & F Pension Will provide upon further references (public City Department of of Chicago; City of Orlando,; City of Palmetto Police City of Gainsville, FL; Lexington TItusville P & F Pension consideration of sector) for which you Electricity; Pulaski GA State Teachers; Stuart; Town of Juno Cooper City General City of Pemroke Pines, ICDDR,B: Centre for Cocoa General Ees proposal provide similar Electric; Melboume Salvation Army; LA Beach; City of Pembroke Ees, Police & Fire FL Fire & Ees; City of Health and Pop'l Pension services including Firefighters Pension; County (CA) Trans Pines Jacksonville Beach Sanibel; Milton Research Dania General Ees Town of Lady Lake Authority; NC General Ees Firefighters Pension National Development Pension client name, contact Retirement System Deerfield Beach Fund Council No fifth given personnel, address, (names and phone Firefighters City of Creve Coeur phone number, and numbers included) length of time you have managed their \ assets. 6 Provide the number See Prop table 75 Mutual Funds:$140B; See Prop NR See Prop Corporate: 1220 clients Planned Giving (48) Total: 1653 accounts, and types of 157 Corp: $11.7B; 24 $205B; Public 297 wI 173,570,052 $215,614mil assets accounts, total asset Public: $5.8B; 95 (in Millions) $159B; E&F 735 wI EndowmentsIFound (28) See Prop value, and E&F:$2,7B; and others Tax-Ex-1,016 $60B; 1,276,235,256 composition of Taxble - 43.4 Defined Benefit (5) Overall- 1 ,060 14,110,588 portfolios currently Defined Contribution (3) being managed by 16,763,985 your firm. Other (35) 252,854,100 7 Ust your most State of AIabama,;State of Repr client lisl:Calleguas City of Stuart - since 1998 NR Cooper City Refer to #85 above Retirement Plan for Crave As above, Palm Bay, Orlando- 12 yrs comparable municipal Florida; City 01 Pulaski; Muni Water, Charlotte City of Hialeah - since 2001 Palmetto Police Officers Coeur Titusville, Cocoa since Tampa, FL - 8 MetroJDavidson Cnty Firefighters, Elsinore Valley City of Sanibel- since 2001 Since 2-7-01 Madison, FL-7 clients and the length Teachers Retirement; Mui Water, Stale 01 NC, no '89, Dania since '93 Deerfield Beach, FL - 7 yrs of time they have Chattanooga ART A; dates Delray Beach, FL- 6 yrs been clients. Pulaski Electric; St. Petersburg, FL- 2 yrs Sweetwater Util Dist.; Clinton Utilities Dlst; Gallatin Electric; Montaomery Cnw AL 8 How many accounts Gained: 1959 (01), 664 Gain: 91 aects, $3.1B o Lost NR Lost: 1 Endowment client Gained 690 and $48B; Gained: 2002 - 8; 2001- 6 months ended 6/2002: NR have you gained in (2002) Lost: 45 aects, $2.1 B; no 5 Gained: Gained: 13 in 2001,5 in Lost 146 and $ 9B 68 28 gained, 28 lost; 2001: the last 12 months? Lost: 3071 (01), 1330 names, no reasons 4 in 2001, 1 in 2002 2002 Lost: 1 In the last 3 yrs 42 gained, 25 lost, no How many accounts (2002) names provided No explanation Client lost was Institutional have you lost in the Endowment Client that had last 12 months, and only received custody services - client momved to provide an a custodial institution that explanation for the committed to deliver loss of each of these desired investment accounts, performance measurement services PFM Asset Management LLC - 38 - - -- - - - - - - - - - - - - - - - C.PERSONNEL , AmSouth - Bank of America Florida Municipal 'I Portfolio by Design Sawgrass Asset 5 Investment Trust Management LLC Advisors Management Management Group (SunTrust) 1 Provide an No firm wide numbers Charts provided do not FLC- 1 Chairman, 7 NR 1 Equity Port Mn Org charts provided for Enclosed in Proposal, Portfolio managers: 73 14 Managing Directors; organizational chart provided; answer question. Committee members, 4 1 Fxlnc Port Man. AIT and SSgA's Infl Tab 3 Analysts: 24 20 Portfolio Managers; showing analytical, Kimber1y Kutlenios- Trustees and 2 Trust Joe Beattie - Prim and Fixed Income Traders: 11 28 Analysts; 25 investment and Client Services Officer; Chairs, 1 Fin. Srvces contact Teams; AdminlBD/Support: 140 Associates/Other research staff, other Matt Sm~h- Portfolio Director, 1 Investment Manager; Michael Analyst decision support, and Portnov- Asst. Portfolio SsgA- CEO, CIO, back office support. Manager and the Chairman, Vice- Identify the primary Account Relationship Chairman contact and describe Team (7 members) the roles of each key i person. , 2 Provide detailed See Investment Profile See Investment Profile See Investment Profile See Investment Profile See Investment Profile See Investment Profile See Investment Profile See Investment Profile See Investment Profile resumes and page page page page page page page page page biographical information for all key investment professionals who will be directly responsible for the investment of the City of Winter Springs pension funds. Include the following information: title, number of years at your firm, total number of years of experience, professional designations or licenses. 3 Describe your firm's 75% CFAI candidates- Conferences, speaking Committees - meet to NR FGFOAlFPPTA Conferences, FL Public -Subscribe to AIMR, FL Analysts Qrtly report to all activities to keep req'd to be updated on engagements, research study & recommend Teach & Attend Pension Trustees publications/services Society, Natl GFOA, FL insmutional investors, portfolio managers pub sector inv. port info materials read, extemal pos~ions on state legis Assoc speakers, and encourage seminar Public Pension Trustee also special reports for informed of & continuing education vendors and specialists issues. industry research and & conference Assoc signif. events relevant developments League Cmte - development attendance to clienfs portfolio sent compiles & recom. committees to client relevant to the Annual legis policy to management of League members public sector investment portfolios. a PFM Asset Management LLC - 39 - - - - - - - - - - - - - - - - - - - D. INVESTMENT AmSouth I Bank of America .. Florida Municipal Portfolio by Design , Sawgrass Asse , I, MANAGEMENT Investment Trust Management LLC Advisors Management . Management Group APPROACH AND (SunTrust) DISCIPLINE - -- 1 Briefly describe your Diversified equity No difference across Investment of assets NR Public clients managed Active and passive Key Principals: No different from other Emphasis on three firm's investment strategy leads to less client types. Enhanced outsourced to others: similarly to all others; Lg strategies, full spectrum, Broad diversification; client types. FI: Small areas: Understanding management volatility, more efficient core - quantitative, State Street Global Cap Equity product low cost; AIT Decision-making bets on rates; generally the client's Investment philosophy, including way of meeting 150bpstrac~ngerror, Advisors and Atlanta emphasizes stocks w/ > AIICapEquity, SSgA Infl support; yield curve, sector and Policy & Objectives, your approach to investment objectives; Small Cap- Capnal earnings than market, Alpha and Passive Professional security analysis lead to Structuring Port. Duration Management fundamental research; Fxd Income Fund Aggregate FI Management; purchase. Equity: According to Needs, managing public driven by interest rate Focused Eq - Marsico, controls duration to Low Fees; Uquidity fundamental analysis Maintaining Ongoing employee pension projection used to take topdown mnigate risk and after quant. screen on Communication funds, advantage of rates over economirJindustry maximize eamings eamings trend and market cycl~ w/fundamental tock valuation \ selection; FI-Iimned duration bets w/auantitaliveselection 2 How are portfolios W/ mutual funds, model Team approach to asset Team of 3 - 2 must Selection of outside Teams - Port Man SSgA: team approach, Team- w/ PM, Trust Individual manager with Team approach- 2+ PM managed (e.g., by port of indiv securities, management, cs agree on change/port mutual funds/managers responsible for yet each is assigned a Admin, Asst. Admin, & backup and trading asst responsible for each team, individual or custom-managed sec manager coordinator action regardless of design/strategy lead and back-up Back-up PM proposed fund. manager)? What is presence manager the back up when the AIT: Team approach, senior person always manager is away? available 3 What are the Asset A1loc Model Ref to #D1 -High quality stocks Asset allocation Consistent & -AIT: ownership Refer to #D1 NR (same as answer to Large research effort strategies employed Purchase Investments -Devlong-tenn investmt Repeatability of Inv Port structure, quant C3) combined with challenge by your firm for Monnor Results themes & fund analysis Manager, team & modeling, risk mgmt and collaboration bft adding value to Rebalance Portfolio by dedicated industry Process in adding value SSgA: Int'l is country teams benefits clients portfolios (e.g., Distributions analysts neutral using valuation, growth, sentiment and market timing, credit industry to aid stock research, etc.)? selection; FI is passive 4 Describe the in-house 6 Eq. Research Analysts Research: StockVal, 1)Eamings Momentum NR 80% Internally SSgA; Internal research Lg TIM Size allows FactSet, Baseline, BRRA, CMS, Factset, technical and + 1 Fxd Inc. Analysts- in Barra, 2)Profonna Balance developed, rest 'streer centers; level of unparalleled Bloomberg, FirslCall, First Call, Perfonn, research support house research + Wall Bloomberg,Bridge, Hon, Sheetllncome Analysis research AIT: access to SSgA resources Newswatch, Advent Macgregor MFTP, services you have Street (2ndary) First Call; Attribution: 3) Valuation research and own factor CREF - 28 global Axys, Bridge, DIAS, Decalog IDEE, Salomon available. What other internal proprietary Blue Chip Econ. Service research and modeling industry analysts StockVal Yield Bk, Security APL, sources does the firm system; Perf BARRA, Wilshire & TIM- 20 analysts Portia, Archipelago, Measurement: internal DBs Bloomberg, Instinet, on a regular basis PM IS/Query 2 Knight, posn, Redibk, use? LiQuidnet. ~ PFM Asset Management LLC - 40 - - -- - - - - - - - - - - - - - - - D. INVESTMENT AmSouth Bank of America Florida Municipal Portfolio by Design Sawgrass Asset Sta MANAGEMENT Investment Trust Management LLC Advisors i Management Management Group APPROACH AND (SunTrust) DISCIPLINE 5 How will you handle Excess cash flow swept Portfolio contructed with Port open last bis day of NR Identify cash need & Good communication Benefit Pymt group Sweep account daily Client Manager will fluctuating cash flows into money maJt<et - securities to target kown month for redemption! provide needed liquidity worKs wI PM team to down to $0.99. Into MM routinely monnor aects and the cash monitored routinely and disbursements, frequent cotribution; need written provide current info. fund forecasting process? invested on day of communication will aid notification 3 days prior, Fees & expenses receipt forecasting process redemptions made by tracked to estim. $ wire transfer or check needs and raise approp. mailed from Custodian $ for disbursements to member's address on membershipfonn 6 Describe the Innially invest ,in mutual Consultative 4 Funds proposed: Five separate accounts Balanced - both Fixed & AIT AIICap (outperfonn Recommended funds SunTrust funds: Maintain fully invested investment program funds & AmSduth Ipartnership approach Divers. Domestic Eq. (see attached equity disciplines, Iiq. Russell 3000), SSgA are Inv. Grade- 30%; Hi Grade Bond portfolio wnh a cash you are proposing for money mkt fund for (ie no asset allocation is Port; Divers. Small Cap investment profile), provided as required. Int'! Alpha (outperfonn Large & Mid Cap Equity- Inti Equity position required by the the City, including the temp cash. $4.9million in proposed among the Eq Port; Inti Growth annual rebalancing (?) EAFE) and SSgA 46%; Small Cap Equity- Hi Grade Growth (E) account and its liquidity type of securities you Div, Eq - Value Op Port- fourlfive strategies Opportunnies Strategies; Passive Aggregate FI 10%; and Inti Fund- 14% Growth and Income requirements 35%; Growth Op Port- datailes in #D1 ; ongoing Broad MarKet High (track Lehman Expected retum 9.05%; Hi Grade Equity Income propose to purchase, 35%; MidCap Fund - mgmt will be based 0 Quality Bond Fund Aggregate) strategies Expected risk 11.81 % US LId Cap how the funds will be 10%; Small Cap Fund- reviews with WS Allocation? Retr Reserve Fund; managed after the 10%; Intemational Fund initial investments are -10%. made and how you $2.1 million in Fixed Inc. will orovide liquidity. (100% core bond fund) 7 Provide your firm's See attached investment See attached investment See attached investment See attached investment See attached investment See attached investment See attached investment See attached investment See attached investment investment profiles profiles profiles profiles profiles profiles profiles profiles profiles performance as compared to the benchmarks listed in the City's General Employee Retirement I System Investment Policy Statement for the past 1, 3, 5 and 10 -year periods. Please show annualized quarterly returns gross of all manaaement fees. a How frequently would Otrlyl as needed CS Manager, quarterly; Monthly & Otrly NR Otrly or more freq'ly as Annually, semi-annually Annually and as Defer to client on As preferred by client you suggest your staff Portfolio Managers less statements, meet as needed-Joe Beattie or more frequent if necessary frequency; Tim Nash will make contact with the frequently requested (primary contact) desired Iwad client service City's staff? Who will activities make contact? PFM Asset Management LLC - 41 ----_._---------- - -- D. INVESTMENT - AmSouth - Bank of America Florida Municipal Portfolio by Design Sawgrass Asset " State Street Global TIAA CREF rusco apl MANAGEMENT Investment Trust Management LLC Advisors Management Management Group APPROACH AND (SunTrust) DISCIPLINE 9 Briefly describe any Emphasis on high $5.7B public; AC- NR Highly Personalized AIT AIICap (outperfonn -Time-tested, low-cost Custodial services at no Time-honed Principles additional feature, quality of client service consultative approach; Consistent philosophy Approach, flexibility to Russell 3000), SSgA strategy addnional cost of Long-Tenn Investing, attributes or offered . . inv professionals Repeatable process capnalize on mid Infl Alpha (outperfonn -Experienced staff will Specialized Tenns, conditions that the average over 16 yrs Seasoned & Stable changes, proximity to EAFE) and SSgA wor1< to customize to Shared Resources, Full City should consider experience Team Winter Springs Passive Aggregate FI needs of Winter Springs Complement of Solid Perf. Over mid (track Lehman -Detailed stat. Analysis Investment Disciplines, in selecting your firm. cycles Aggregate) strategies creates strategies that Diversnied Asset Mnmt Allocation? meet objectives wI least Base risk \ -Broadly diverse & time- proven fund strategies -Full admin support -Provide benefits payment processing, 1099 issuance & Fonn 5500 filinQ assistance PFM Asset Management LLC - 42 - ----,- _. - - - _.- - - - - n a unlclpa 0 010 . , AND REPORTING ' Investment Trust Design : Management LLC :. Global Advisors Management Management " , (SunTrust) Group 1 Describe the Investmt Scorecard - AIMR compliant, AC- PORTIA & NR Advent Axys - SSgA: On-line Green Hill GHPerf- Composnes State St provides investment complies w/ AIMR customized system LongView tracking complies w/ AIMR reporting, secure SE12000 Accting constructed and Accting services accounting and PMISlQuery2 system websne includes Sys- complies w/ calculated according reporting system monnors and tracks perfonnance, AIMR to AIMR flows and transition details, used by your firm . perfonnance asset summary, and whether it transaction activity, complies with AIMR PPS compliant AIMR standards. AIT: uses Advent Axys 2 Describe the Mo'ly/AnnuaVAs I Sample report Monthly, qlrly and NR Monthly/OIrly/ As Monthly and Monthly Accounting reportd Mo'ly/OIly or as frequency and Needed \ provided wnh Annual reports desired by client Quarterly portfolio available monthly requested \ format of reports proposal; quarterly Time-or-$-wgted reports, appraisal- 4 and client meeting that your firm , meetings, monthly to 7 days after period books quarterly accounting reports by close, trade summary would provide to 10th business day; 1to 2 days after the City, including detailed perfonnance trade, account the methods and report quartely summary 9 to 18 formulas used to business days after calculate yield and period performance. Provide a sample of all reports that will be provided. : -, - - PFM Asset Management LLC - 43 - -- - -. _. - -: -' -; - - - _. _.- - -,- AmSouth Ban 0 - F. FEES menca on a unlclpa 0 010 Y eSlgn awgrass sse - :F--fros , Investment Trust Management LLC Advisors Management Management Group .. (SunTrust) 1 Describe your firm's Min: 5k Small Co Fund 1.15%; FLMvlT Portfolio: nbps inv mgmt Large Cap: 60 bps on the first 161 $5mil- 30 bps 75bps on AUM, 161 $10mil- 80 bps fee schedule. Is 161 $5OOk- $12/1k Managed Index Fund Admin - 11 bps 15bps administrative 161 $10mil- 70bps $5OM, $10,000 nest $5mil-25 includes management $10mil + . 50 bps there a minimum 2ndSSOOK-$10.00 0.50%; Marsico Investment-15-45 50 bps advisor fee next $20mil- 60bps minimum includes inv next $10mil- 20 and custody -no min, fee fee? What expenses 3rt! $5OOK- $6.50 Focused 1.11 %; Custodial- 2.6 142bps total Balance - 50 bps mgmt services, next $30 mil- 15 would be covered next 2.5mil-$5 Interm Bond 0.81%; ST Total: 31 - 94 bps Broad Mid Fxd Inc: mon~oring and 50+ mil- 10 bps through the fee Balance- $4,00 Income Fund 0.52%; 45bps (above) developing inv policy, Min. Annual Fee- Pooled Investments 35, 25 bps reporting, client service $5,000 structure? $25,000 2 What additional NONE None NONE NR NONE Custody for AIT AIICap Other fees for services None NONE expenses, not is $25,000 outside of prop scope covered by the fee \ schedule, will the City are expected to pay in order to implement your I investment services? 3 What fees would be NONE NONE NONE NR NONE None NONE None NONE required to provide specific advice concerning aspects of the present portfolio? 4 Provide a description Schedule-based fee is Billed quarterly in Based on Port. Net NR Fees billed qrtly in Quarterly in arrears Monthly, in arrears Quarterly Billed on Mo'ly or taken and/or example of negotiable arrears on AUM; for Asset Value, deducted arrears base on average from assets mo'ly the billing method Mutual Funds, fees are from income at each month end market that will be used. assessed at fund level. mo'ly port valuation values wlin quarter; invoices sent after end of quarter PFM Asset Management LLC - 44 _ _ _ _ _I __1 _ _, _, _,_ _, _' _ _ _ _ _' Provide a copy of Attached Included with Attached NR Attached Airs included with Attached Not received by PFM Attached your firm's most Proposal proposal, SSgA recent Form ADV, exempt Parts II, and I as on file with the SEC. 2 Provide proof of Attached Registered with Attached NR Attached Airs included wnh Attached Not received by PFM Attached state re istration. SEe, not states proposal 3 Provide any Attached Sample contract Attached NR Attached SSgA will provide Attached Not received by PFM Attached contract language enclosed .upon requesr your firm would request or require \ in a contract with theC' . 4 Provide Attached "will strive to be Will remain NR Attached SSgA manages 21 Attached Dedicated Attached assurances that cognizant of, compl coqnizant of FL plans that are in Compliance officer the proposer will be with all applicable /comply with all compliance. AIT "will and analyst; intemal cognizant of, " applicable statutes attempt to be and extemal counsel; comply with, and & ordinances, cognizant of and SEC registeres and comply with all examined; Deloine enforce all applicable.... and Touche audnor; applicable Federal, Intemal ethics code State and Local statutes and ordinances. PFM Asset Management LLC - 45