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Home My WebLink About2004 10 26 Attachment Given to Board Members by Blake MytonDate: October 26, 2004 ATTACHMENT GIVEN TO BOARD MEMBERS DURING MEETING B Y BLAKE MYTON r r~ r r ~~ ~ A r A A~ fit ~ A r» a TRUSCO CAPITAL MANAGEMENT Prepared Exclusively For: City of Winter Springs General Employees' Pension Plan Investment Review Third Quarter 2004 Blake Myton Investment Manager 407-237-5816 blake.myton @truscocapital.com Dianne Garcia Relationship Manager 407-237-4513 dianne.garcia @ suntrust.com The Hurt Building -Atlanta, G~1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ l~ ~ ~ ~ ~ Table of Contents Economic Overview /Market Snapshot Trusco-Seix Merger Performance & Portfolio Composition Fund Fact Sheets Fund Attribution Summary Section I Section II Section III Section IV Section V Past performance is not indicative of future results. Performance returns are shown gross o1 fees. Comments and projections are based on information available at the time of writing and believed to be accurate, are for informational purposes only, and may not be relied upon for future investing. ~~°.. a_ ~~ ____ City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT ~ ~r r ~ a~ r- ~c ~ i'i ~ r it rl~[ ~ ~ ~ ~ rrl ~ r Market Snapshot: September 30, 2004 Citv of Winter Snrinas General Emnlovees' Pension Plan TRUSCO CAPITAL MANAGEMENT 12 ll~ r ~ li ~ 1~ ~ >r^r ~ r~ ~ ~ l~ ~ l~ s• ~ ~ i Investment Overview • Stock prices and bond yields both edged lower in the third quarter amid concerns that future growth would be hampered by record hurricane activity in Florida and higher oil prices, among other issues. The S&P 500 lost 1.9% on a total return basis, while the Lehman Aggregate Bond Index gained 3.2%. The trailing price/earnings ratio for the S&P 500 slipped to 17.9X, and yields on the 10-year Treasury note and the 10-year A-rated corporate bond fell to 4.1 % and 4.9%, respectively. • A pick-up in consumer spending prompted the Fed to raise the Fed rate twice during the quarter on its way to a "neutral" policy. However, job growth remained moderate. "Headline" inflation eased, but oil prices hit $50 /barrel. • Long Treasury yields fell during the quarter, despite the Fed rate hikes, as inflation expectations dipped. The yield curved flattened. The High Yield and Credit sectors outperformed, while Mortgages lagged. • Concerns over the headwind of rising energy costs and the prospects for slower future corporate earnings growth put downward pressure on the equity markets. The energy, utility, and telecom sectors moved higher, but technology, healthcare and consumer stocks fell. The Value style outperformed Growth in the third quarter, and Small-cap stocks (Russell 2000) outperformed Large-caps. International stocks outperformed the S&P 500. • We remain positive on our outlook for the economy and corporate profits, but the rate of growth in both is likely to slow due to lower levels of stimulus and more difficult comparisons, respectively. Core inflation will likely trend moderately higher, and support the Fed's plan to raise interest rates gradually in the months ahead. • We continue to recommend a modest overweight position in stocks within current asset allocation ranges, due to the relative attractiveness of stocks versus bonds. However, we recognize that some of the factors favoring equities (steep yield curve, accommodative Fed policy, and easy profit comparisons) are changing and not as favorable. We will continue to be very price sensitive in entry and exit points, but will likely view any market pullback as an opportunity to build equity positions. • Infixed-income portfolios, we believe yields are moving up after reaching secular lows. However, given the current steep yield curve and our expectations of only gradual Fed rate hikes, we will maintain a barbell neutral duration maturity structure, with moderate overweight positions in corporate securities and Treasury inflation-indexes securities. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT s rr ~ i . ~ ~ ~ ~ l~ ~ ~r r~ ~ ~ i~ r ~ ~ ~^ Economic Summary: Fed Hikes vs. "Soft Patch" The economy "regained some traction "following a "soft patch " earlier in the year. Moderate joG growth continued and manufacturing data was first. The Fed raised the fed f iuzds rate two times to 1 ;/.r% and plans to raise rates further at a "measured pace" Stltce m0lletary policy is not yet "neutral ". We forecast a cozztiztued expansion, Gut Iziglzer oil pn~ces and falling stinzzzlus will contizzzze to moderate growth. High Neutral High Low Low At an inflection point Stimulative Neutral Neutral/ Cyclical job gain kicking in modestly, following Fading along delay and is expected to offset possible diminishing fiscal and monetary stimulus, sustaining consumer demand. However, further cyclical acceleration unlikely, and oil is near-term restraint. Housing, autos near peak. Positive Positive New order growth being funded by strong profits and cash flow. Business confidence improved. Inventory investment increasing. Production gains are broadly based. Positive Neutral Higher defense spending enhanced by election-year politics. Post-election cuts are likely. Positive Positive Record trade deficit likely to narrow. Exports are improving. At Inflection Somewhat Period of low/benign inflation ending Point Higher gradually. Stimulative fiscal and monetary policies, rising commodity and energy prices, and a lower dollar, are putting upward pressure on inflation. Wage inflation and pricing power not yet widespread. Restrictive Restrictive Fed policy has turned more restrictive. Fed raised rates on June 30, August 10, and September 21 and is expected to continue rate hikes at "measured" pace. Less Becoming Tax cut impact fading. Focus turning to Stimulative somewhat budget balance after election. Restrictive City of Winter Springs General Employees' Pension Plan TRLISCO CAPITAL MANAGEMENT a l~ ~ ~ l~ ~ ~ ~ 1~ ~ ' ~ ~ ~ ~ ~ ~ ~ ~ Consumer Sgendinq Accelerated in Q3 Spending Growth Picked Up in Q3... ° Co~isunzer spending reaccelerated in the third quarter, following a soft patch in tl~ie second period. Moderate job gains and hourly earnings growth provided sustainable support. 8.0 /° ~.o°i° 6.0% 5.0% 4.0% 4.0% 3.0% 2.0% 1.0% 0.0% 00 01 02 03 04 Real Personal Consumption (Arm. Rote - ~); Esp. l Suurre~: BEA ...Fueled by Job and Wage Growth 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 00 01 02 03 04 Nonfurnt Pa}roll (Mo. Diff) & Avg. Hourh~ Earn. (YOY`%,) Suwre: BLS bUU 500 400 300 200 100 0 -100 -200 -300 44C~ • Consumer spending retrenched in the second quarter, and raised concerns that the current expansion might falter. However, spending growth resumed in the third quarter moving closer to its historical average. • Employment growth has been relatively weak so far this cycle, but the combination of job gains and hourly wage growth provided a sustained boost to consumer spending power. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 5 ~ 1~ r ~ ~ i ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 70 65 60 55 50 45 40 35 30 Business Activity Firm in Q3... ° Orders and output are trending Itiglter. Business Activity Remained Firm in Q3... - ° 93 94 95 96 97 98 99 00 01 02 03 04 Nondefense Cal~itu! Goods Orders less Aircraft Source: Ceusus 25 /° 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% 30°/ 10 /° 8% 6% 4% 2% 0% -2% -4% -6% -8% 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 lnd. Prod. Gro~rth 1 YOY`I.1 Sources: 1~'K6 & ISM ...and Orders Growth Trending Higher ° • Business activity remained firm in the third quarter, despite the sluggish pace of hiring. Industrial production was up over 5% from a year ago, and the ISM survey of manufacturing activity was in the expansion zone for the 17th consecutive month. • Investment and new order growth also trended higher in the third quarter. A key measure of core investment activity is nondefense capital goods orders less the volatile aircraft component. This gauge was up over 10% from a year ago. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 6 r r r rr >! r~ r r +~r r r irr r >• ~r ~~ +~ "Headline" Inflation Moved Lower in Q3 • "Headline" inflation, as measured by the Consumer Price Index, eased during the third quarter to 2.7% on ayear-over-year basis. The Core Personal Consumption Deflator, a favorite of Fed policy makers, moved down to 1.4%. Key ili f lation gauges eased in the Nlird quarter, and the upward trelld 111 productivity remained intact. • Productivity growth was not as strong in recent quarters, but the upward trend continued to be a fundamental force keeping inflation down. Unit Labor Costs were also benign. "Headline" Inflation Eased in Q3... 5 0°/ 95 96 97 98 99 00 01 02 03 04 CPI and Core Pe~rarnal Cunsun~pliun Dc'/]ator• Sorure: BLS, Bf_'A ...and Productivity Gains Continued ° . ° 4.5% 4.0% 3.5% 3.0% 2.5% 2.o°r° 1.5% 1.o°i° 7 r° 6% 5% 4% 3% 2% 1 °r° o°i° -1% -2% -3% 95 96 97 98 99 00 01 02 03 04 Ontlrn~/Hr. (YOYrIr) & Unit Lcibor Coss YOYcIo) Soru-c~e: BLS City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT ~ ~ lill (~ ~ r i fr r i Iw r ~ ~ l~ ~ ~ ~ Alli ~ Job grox'Nt and wage gains are critical at this point in Nte expansion, as fiscal and monetary stintnlus is largely over. Policy "Tailwinds" Fading • Tax cuts and rebates provided timely support to consumers' disposable income during the early stages of the expansion and helped moderate the severity of the recession. However, those temporary boosts are over, and more fundamental forces such as wage and job growth are needed to fuel future income and spending increases. • A significant drop in mortgage rates also provided support to consumers by reducing monthly house payments and expanding home equity. However, while low rates are not restrictive in the current environment, the support from falling rates is over. Impact of Tax Cuts /Rebates Fading... 1 o°i 00 01 02 03 04 Persnrur! & Ui.cpu.cublc~ Ine•onu~ Crutirllr (YUYc7~) Source: BEA ...along with Low Mortgage Rates 9.0 ° 9% s°i° ~°i° 6% 5% 4% 3% 2% 1% o°~° 8.0 7.0 6.0 5.0 ' 00 01 02 03 04 Conrentiorro! Morl,~crge Rute Arera~~e Soeu-ee: FRB City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 8 ~ rr. r r ,r rls ..~ ~ ~ Nlir r ~ ~ +~ ~ ~ ~ rr Ir Energv and Healthcare Costs are Headwinds Energy /Import Costs are a Headwind While aggregate Ill f latlon measures are comfortable, "visible"inflation garrges such as gasoline prices and healthcare costs have moved significantly higher. These higher expenses represent a headwind for ,fl(tl[I'e consumption spending. t7 %o 4°io 2% 0% -2% -4% 6°~ 60 50 40 30 20 10 - - 0 95 96 97 98 99 00 01 02 03 04 WTI Oil l$1 & Non-Oil /nqu~rt Prires (YOY` ~ 1 Soui-rc~s: WSJ, BLS Businesses Paying Higher Healthcare 8% 7% 6% 5% 4% 3% 2% 1% 0% 95 96 97 98 99 00 01 02 03 04 ECI - Wn~c~s & Banc.%its (YOY~I 1 Sourc•c~: BLS City of Winter Springs General Employees' Pension Plan • While aggregate headline inflation measures were quite comfortable in the third quarter, the headwind of higher oil prices intensified. WTI spot oil prices hit $50 / barrel. Moreover, non-oil import prices, once a source of "imported disinflation" are also moving higher as a result of dollar weakness. • Another source of inflation has been higher healthcare costs. While businesses have enjoyed only moderate wage cost increases, benefits costs were up over 7% from a year ago. TRUSCO CAPITAL MANAGEMENT 9 ~ ~ ~ ~ ~ I~ r r rlr ~ r . ~ +~ ~ ~Ir ~ r ~ Fed Raised Rates in Q3: What is "Neutral"? The Fed raised short-term interest rates two more times in the tltird quarter, lifting the beilehmark fed funds rate to !3/r%. Three more rate hikes are expected by text summer, but market expectations are currently below levels suggested by Fed officials. • The Federal Reserve first increased the benchmark policy fed funds rate to 1'/a% on June 30, but followed it with two more rate hikes in the third quarter to 1 3/a%. The Fed indicated that the current level of interest rates was still accommodative and would work to remove that at a "measured pace". • Investors have priced in three more Fed rate hikes by next summer. However, as shown in the chart at right, these expectations are below the levels implied by Federal Reserve officials. These officials view a "neutral" funds rate as one between 3% and 5%. Fed Raised Funds Rate a 3~d Time... 95 96 97 98 99 00 01 02 03 04 Snnrce: h~Kf3 ...and 3 More Rate Hikes Priced In ° 7.0 6.0 5.0 4.0 3.0 2.0 1.0 00 6.0 /° 5.0% 4.0% 3.0% 2.0% 1.0% o. o°i° 0 0 0~~ o o ~ ~ ~ ~ r N N SO!(PCe: CI3T }!~;:~'. "`;~- City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 1 ~ li ll~ >• r .^~ Irlr ~ l~ ~ ~^. l~ I~ ~ r rs ll~ r r ~ "Twin Deficits" Once Again in the Spotlight "Promise" to Halve Federal Deficit ° T!t e "twUt deficits" received ittcteased scrutiny in the third quarter. The rise in both resurrected old concerns about U.S. economic policies, attd was blamed for a weaker dollar. Lowering the federal deficit is a key politieal,foctrs that will tend to restrain future growth. 15 /° 10% 5% 0% -5% -10% -15°/ 400 300 200 100 0 -100 -200 -300 -400 -500 • Tax cuts and rebates, along with higher defense spending, pushed the 12-month rolling federal deficit to $446 billion in the latest report, and helped lower the value of the dollar. Both presidential candidates promised to halve the deficit, which will tend to restrain growth. However, some help will come from a cyclical rise in tax receipts. ° 95 96 97 98 99 00 01 02 03 04 12-nw Sune Rerei/ns, Outlcn~.c YOYSc & De,%i<•rl l~ourl Source : Trecrsru~ Trade Deficit Historically Wide ° - ° 30 /° 25% 20% 15% 10% 5% 0% -5% -10% -15% 20°/ 0 -10 • The widening trade deficit is both a drag on domestic growth and an -20 increased concern to dollar investors. While aggregate global activity has -30 rebounded, as shown in the year over year gains in both imports and exports, -40 the deficit could keep upward pressure -50 on U.S. interest rates. -60 95 96 97 98 99 00 01 02 03 04 L•:rport, bnport Grox•tk (YOYr7) crnd Mo. Trade Deficit Source: Cert.rus =~~ - ~' City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 11 IIII>• r r r r >r r r r~ r r~~~ r~ r l~ Equity Markets Summary Isgrtit~ ttutrkets retreated itt the third quarter amid concerns about higher oil prices, modest job growt{t, hurricanes, and two h'ed rate hikes. While we look f'or slower corporate profits growth in the quarters ahead, history suggests that Nze equity markets can move higher, particrtlarly given the trtore attractive valuatt~ons and --elative under- perforntance versos bonds. • The S&P 500 lost 1.9% on a total return basis in the third quarter, but was up a modest 1.5% year to date. The close of 1115 on the index on September was 3.7% below the 2004 high of 1158 on February 11. • Stronger consumer spending during the quarter lifted near-term economic growth estimates, but higher oil prices, sales losses related to significant hurricane activity, disappointing job gains, and downward earnings revisions by a few high-profile companies raised concerns about future strength. • In something of a reversal from the second quarter, the technology, healthcare, and consumer sectors were weakest in the third quarter, while energy, telecom, and utilities moved higher. • Small-cap stocks outperformed Large-cap stocks in the quarter, after lagging the second quarter. The three-year outperformance by small-ca s remained near an extreme. In another reversal from the second quarter, the Value style outperformed Growth, and the MSCI EAFE International Index outperformed the S&P 500. • The combination of strong demand and firm profit margins sustained the year-over-year growth in S&P 500 operating profits well above the long-term average through the second quarter, but the pace of future profits growth is expected to slow. We project third quarter earnings growth closer to 14%, with further year-over-year slowing into early 2005. We also recognize that legal and regulatory changes being discussed and implemented are causing companies to adopt new, more conservative reporting practices which would also affect profits growth. We believe the cost of compliance with many of these changes could be significant. • The underperformance of equities versus bonds on a rolling three-year basis remains historically significant. The equity softness in 2004 makes stocks more attractive in both absolute and relative terms, especially given recent decline in bond yields. • The expansion in the economy is expected to support growth in profits and equity prices in the coming quarters, though gains are likely to be restrained by the rise in bond yields. However, gains will tend to be sporadic and volatile as the market sifts out companies with weaker business models. We will continue to emphasize individual company fundamentals in our equity selection process, and our purchases will be both price and timing sensitive. City of Winter Springs General Employees' Pension Plan _,n,:.:~ ~t~,4~ ., TRUSCO CAPITAL MANAGEMENT 12 ~Ir rw r r r r wr r r rr r r r r~ rl~ r r ~r r Stock Market Eased in Q3 Commodities, Utilities Led in Q3 50 40 30 20 10 ~r~ ~! 1 ..~~_ -10 -20 Disc Stpl Engy Fn Hth Ind Tech Mat Te; LJ[il ^ 3-Nbs. -1.2 -5.6 11.0 0.4 -5.4 0.0 -9.9 3.5 6.6 6.7 ^YTD -0.2 0.2 25.6 2.8 -3.4 7.3 -9.7 4.3 10.8 10.8 1-Yr. 14.2 8.3 44.8 14.9 4.8 23.3 2.0 28.4 25.8 19.6 Secvur Per%arnrctnc~c~ S&P Sp0 Source: Fa<~tSet Earnings Estimates Show Slowing in ~04 40% 30% 20% 10% o ~ IIII I II.- Illitt .II I ! II I~III 0 /o ~ ~I I I ~I I -10% -20% -30% 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 S&P Op. bcrr-nings (YDY~/) -Olive is est. Suurrc~: Truseo Capital Valuations Held Relatively Steady 30 . 25 20 15 Trailing P/E -Forward P/E 10 ' 91 92 93 94 95 96 97 98 99 00 01 02 03 04 Trailing & /~inlrard P/ERcrti~r Scrnrce: [3uselirte Small-cap Outperformed Large in Q3 30 25 20 15 10 5 0 -5 1 Mo. 3-Mos. 6 Mos. YTD 1-Yr. ^ S & P 100 -0.7 -3.4 -3.0 -2.9 7.3 ^ MidCap 3.0 -2.1 -1.1 3.9 17.6 SmlCap 5.3 -1.4 2.2 8.5 24.6 CapitaN--crtian Per(nrntcutre Socu-ce: S&P / Rtcssell i~ City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT i 3 r rr r r r r r rr r r r r Ir Ir r r r r r Fixed Income Markets Summa I3oirds gained in the third quarter despite two more h'ed rate hikes. The yield curve .flattened. • The restraining effects of higher oil prices and lackluster job growth lifted the Lehman Aggregate Bond Index 3.20% on a total return basis in the third quarter, despite two more quarter-point Fed rate hikes. • Longer-term Treasury yields fell during the quarter causing the yield curve to flatten, with the yield on the 10-year note closing the quarter at 4.12%. • Credit spreads remained relatively narrow and stable in the third quarter, as they have for much of 2004. The spread between 10-year "A" rated corporate bonds and 10-year Treasury securities closed at 77 basis points, somewhat below average for the past decade, pointing to improving credit market conditions. • In the third quarter, the yield advantage of Credit and High Yield securities caused relative outperformance, while Mortgages lagged. Long maturities outperformed shorter maturities. • Although we continue to believe that the 20-year secular decline in yields is over, a sharp rise from this point is unlikely over the near-term given the Fed's stated policy approach to a "measured" rise in short-term rates and some signs of economic moderation. As a result, we are maintaining portfolio durations neutral relative to benchmarks, but have a more defensive portfolio structure, emphasizing: • Barbell maturity structure (shorter-term and longer-term securities) which will benefit from a flatter yield curve due to rising short-term rates from the Fed. • Corporate bonds that will add current income and be somewhat less vulnerable to higher rates. • Sectors that perform well in rising inflation environments such as Treasury inflation-indexed securities due to increased demand. City of Winter Springs General Employees' Pension Plan TRUSCO CA['tTAL MANAGEMENT 14 Illy ~ Illy ~ ~ ~ r ~^ r~ r ~ ~ ~ ~ ~ ~ ~ ~ ~ 5.0 4.0 3.0 2.0 1.0 00 Curve Flattened on Fed Rate Hikes 6.0 Lo/tg-maturity bond yields be/tefited f /-o/n s(~ fte/ting economic data a/td more restrallt ed i/t flation reports, despite two Wrote Ped rate hikes. The yield curve flattened. Credit spreads remained fir//t and stable, allowing credit- sensitive sectors (wiN1 higher C(/t/p0/1S~ t(/ outperform. "Soft Patch" /Rate Hikes Flatten Curve in Q3 - 9/30/2004 - 6/30/2004 -12/31/2003 9/30/2003 0 5 10 15 20 25 30 Treccsun Yield Cru'i'e~ Sutu'ce: (urrSet Flatter Curve Benefited Long Maturities 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 00 3Mo 6Mo 2Yr 5Yr 10Yr 30Yr ^ 3-Nbs. 0.36 0.42 1.06 2.98 5.03 7.46 ^ YTD 0.83 0.86 0.92 2.49 4.59 6.58 1-Yr. 1.11 1.19 1.01 1.75 3.21 4.90 7-reasrrv-~• Returns Snrure: Lehnurn Brothers Credit Spreads Relatively Stable in 04 200 150 100 50 ' - ' 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 l0-Yr. "A"-Rated Corlr. rs. %~rea.~ur~ Sotrree: h~err-ill L~•nrh Credit /High Yield Led in Q3 14 0 . 12.0 10.0 8.0 6.0 4.0 2.0 o.o Agg G/Cr I G/C Tr Agy ^ 3-Nbs. 3.20 3.56 2.70 3.31 2.68 Cred ABS NBS HiYd Mun 4.20 2.16 2.61 4.85 3.64 ^ YTD 3.35 3.37 2.60 3.10 2.68 3.93 2.63 3.39 6.27 3.39 1-Yr. 3.68 3.35 2.66 2.56 2.43 4.43 2.96 4.35 12.56 4.27 Aggregate & Sector Returns Suurce: Leknurrr l3rodters City of Winter Springs General Employees' Pension Plan TRLISCO CAPITAL MANAGEMENT 115 ~ ~ ~ li• ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ T/te ecoltolnic expansion is in- tact and evidence Of 1710re sustainable growth will increase. Iil~atl0/1 I'iS~CS' are iltcl-easing and the Fed will continue to raise short-tel°nt rates. Stocks remain ~y~l«aiiy attractive, t{lough opp~~rtllltities to enhance current yield in bond portfolios are still available. Summary of Investment Outlook and Strategy • The "hand-off" from a stimulus supported to a sustained expansion was hampered in the third quarter by a number of factors including higher oil prices, disappointing job growth, and bad weather. However, a recovery in consumer spending from a depressed second quarter prompted the Fed to raise short-term rates two more times to 1 3/4%. The S&P 500 fell 1.9% on a total return basis during the quarter, but the Lehman Aggregate Bond Index gained 3.2%. • The pace of economic growth increased in the third quarter in a number of areas, but a further acceleration in job growth is viewed as an essential ingredient to sustainability. "Headline" inflation moved lower, but higher oil prices were a drag on discretionary spending and corporate earnings growth. The Fed lifted the fed funds rate twice more to 1 3/a%, and suggested more rate hikes would be needed to achieve a "neutral" monetary policy. • The current expansion appears to be near the stage where additional strength will begin to strain existing resources and push inflation higher, but a sharp acceleration is unlikely over the near term. Fiscal policy is moderating and monetary accommodation is reversing, so that employment increases will be the primary driver of new income and spending gains. As a result, the future rate of growth will be closer to the long-term average pace of 3'h%. Fed tightening is expected to continue, but the recent bond rally suggests a potential divergence from Fed expectations and market forecasts. • Corporate earnings growth has begun to moderate. We project 18 ~h% growth in S&P 500 operating profits for all of 2204, slowing to 7'h% in 2005. • Stocks remain cyclically attractive relative to bonds, given the onset of Fed tightening and risk of higher inflation, and we recommend a moderate overweight position in equities within asset allocation ranges. While earnings growth is likely to slow in the coming quarters, history has shown that equity prices can move higher when corporate earnings growth slows from high rates. We believe that companies with stronger financial quality (high cash flow, top line sales growth, low debt) will outperform in this climate. We will continue to be very price sensitive in the entry and exit strategies for individual stocks. • Infixed-income portfolios, we believe yields are at a cyclical and secular low, particularly given the Fed's recent shift to raising short-term rates. While yields will generally trend higher, we believe most of the movement will be in short-term rates causing the yield curve to flatten from the current steep level. We recommend a neutral relative duration with a barbell maturity structure, and emphasize quality corporates as effective investments to enhance current yield in portfolios and securities that perform well in rising inflation environments such as Treasury inflation-indexed securities. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 16 Trusco-Seix A Powerful Team • Effective June 2004 Seix Investment Advisors became a division of Trusco Capital Management. Seix is a major national investment advisor specializing in fixed income management and will focus on client mandates in (1) high yield, (2) core/investment grade and (3) core plus. • The acquisition adds significant investment resources • Fixed Income CIO with 31 years of experience • Investment grade team leader with 22 years of experience • 5 Portfolio Managers specializing on specific market sectors • 22 research analysts • State-of-the-art proprietary trading and compliance system • The similarity in the investment process of the two firms means that future integration will be seamless and enable us to continue to deliver an exceptional level of investment service to our clients. • The consolidated resources will provide significantly more focus in all aspects of the investment process. • Portfolio management • Research • Trading • Client service City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT Why Seix Investment Advisers ~' ~ ~ ~ ~ ~ • Lower rate environment has driven demand for multi class i.e. core plus fixed income managers • High yield research and portfolio management are the key and scarce capabilities in building a successful core plus manager • While Trusco has core plus and high yield products, it would take years to achieve critical mass • Experienced investment professionals (avg. age 43) who are still highly motivated to grow • Trusco and Seix have similar investment philosophies and views on business strategy • Seix is a highly regarded, nationally recognized fixed income manager • Seix is has proven to be successful in the institutional market with consultants and brokerage wrap sponsors • Cross sell Trusco products through Seix's relationships in the consultant and wrap channels as well as directly to Seix clients • There is little overlap between Seix and Trusco's product sets ~~- ;`: City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 18 ~ ~ ! ~ ~ r! i ~ ~ ~ ~ r ~ ~ ~ ~ ~ ~ r Trusco/Seix Style Similarities • Conservative Investment Philosophy • Bottom-up/Research Oriented Approach ~ • Controlled Duration Management • Emphasis on Income • Significant but Controlled Sector Weightings • High Overall Quality Portfolio • Highly Diversified • Tactical Yield Curve Strategies • Rigorous Sell Discipline • Strong Risk Controls • No Derivatives or Currency Risk City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 1 s Cornerstones of Core/High Grade Approach • No Market Timing • Income Tilt • High Portfolio Quality/Small Positions • No Derivatives • Rigorous Sell Discipline City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 20 a~ ~ ~ ~ ~ ~- ~ ~ ~ ~ ~ ~ ~ ~s ~ ~ ~ ~ .. (9/30/2003) $ 7,039,995 I Income $ 51 $ 7,040,045 $ 1,160,973 $ (202,734) $ 911,001 Ividends $ 33,207 come $ 538 $ 8,942,442 come $ 58~- ~ ~~- ~ I iC0 CAPITAL MANAGEMENT r 21 air rr ~ +~ ~ ~r ~ ~ ~ ~ ~^r ~ ~~ ~ ,~ r err ~ +r Period Ending Performance Comparisons September 30, 2004 ~'~ ~~ 'nception to i.° =r. to Date Gtuarter 5 iulonths 12 IL4t~nths° 36 fVlontf~s' 6tl t~lonti~is' ?20 Months' 13u ~c?onths' Total Equity -1.31% 3.60% 17.57% 5.87% 5.69% 10.98% 10.46% SunTrust Retirement High Grade Growth Fund -3.40% -1.19% 9.10% 2.72% 1.92% 12.27% 11.51% S & P 500 Barra GrotM1th Index -4.78% -2.19% 7.52% 2.01 % -5.22% 10.60% 10.06% S & P 500 Index -1.87% 1.51 °% 13.87% 4.05% -1.31 % 11.08% 10.45% SunTrust Retirement High Grade Relative Value Fund ** 0.05% 5.06% 19.82% 4.95% 2.01% 10.24% 9.62% S & P 500 Barra Value Index 1.04% 5.25% 20.47% 5.83% 2.31 % 11.09% 10.38% STI Classic International Equity Index Fund -0.87% 4.03% 21.74% 8.45% -2.06% 5.27% -- MSCI EAFE Index -0.29% 4.26% 22.06% 9.11 % -0.90% 3.99°i° 5.17% STI Classic Small Cap Growth Fund -3.55% 3.61% 18.33% 13.06% 8.95% - -- S & P Barra 600 Grotath Index -3.04% 7.03% 20.92% 14.35% -- _ __ Russe112000 Grovuh Index -6.01 % -0.67% 11.92% 9.09% -0.68% - - STI Classic Small Cap Value Fund 0.15% 10.01% 27.52% 19.40% 16.64% 15.32% -- Russe112000Value 0.15% 7.99% 25.66% 17.69% 14.71% 13.40% 12.76% SunTrust Retirement Mid Cap Equity Fund 0.18% 4.55% 18.27% 5.12% 7.53% - -- Russell Mid Cap Index -0.84% 5.77% 20.55% 13.32% 8.26% 12.77% 12.10% Total Fixed Income 2.92% 2.81 % 2.63% 5.69% 7.21 % 7.66% 6.72% SunTrust Retirement High Grade Bond Fund 3.28% 3.12% 3.05% 5.93% 7.30% 7.72% 6.79% Lehman Govt Credit Bond Index 3.56% 3.36% 3.33% 6.32% 7.74% 7.76% 6.79% Lehman Aggregate Bond Index 3.20% 3.35% 3.68% 5.88% 7.48% 7.66% 6.77% SunTrust Retirement High Grade Intermediate*** 2.38% 2.81% -- -- -- - __ Lehman Intermediate A+ Govt/Credit Bond Index 2.49% 2.35% 2.21 % 5.23% 6.99% 7.00% 6.31 "Renmr i.r annuali:.ed. ** - laceptiorr 6/_i0/2002. L.cmger term results are lurked n, Nre S77 Classic Grn~rtlr and /ncurne Fund to shnx~ restrltr prior m irx~eption. *~x - brception 10/20/200. Past Performance is not indicative of future results. Returns are shown gross of fees. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 22 ~...r...~+....,r.. r.r ~ r~..~,.. a. ~. Period Ending Portfolio Composition September 30, 2004 Total Cash 5 .,,, Total Fixed Income 21.1% SunTrust Retirement High Grade Growth Fund SunTrust Retirement High Grade Relative Value Fund STI Classic International Equity Index Fund STI Classic Small Cap Growth Fund STI Classic Small Cap Value Fund SunTrust Retirement Mid Cap Equity Fund Total Equities SunTrust Retirement High Grade Bond Fund SunTrust Retirement High Grade Interm Bond Fund Total Fixed Income Cash Total Cash Portfolio Holdings are as of 9/?0/Oa and may change at mry tune and without notice. City of Winter Springs General Employees' Pension Plan Total Equities 73.5% $ 1,844,856.06 20.6% $ 1,564,808.73 17.5% $ 894,992.13 10.0% $ 693,667.34 7.8% $ 692,689.64 7.7% $ 882,938.51 9.9% $ 6,573,952.41 73.5% $ 943,148.87 10.5% $ 941,283.59 10.5% $ 1,884,432.46 ~. 21.1 $ 484,057.01 5.4% $ 484,057.01 5.4% ~, ~ r TRUSCO CAPITAL MANAGEMENT 23 ~ ~ lll~ nts a~ .~ ~ ~ ~ lll~ .~ ~ ~ ~ rJ~ r +~.~ l~ r Period Ending SunTrust Retirement High Grade Growth Fund September 30, 2004 Nast perjirrnrrurce is nut indicatirc~ u/' junu-e resrrlt.c. Perfirrmance returns nre shulru net of fees. Nurtfulin huldin,{s nntl clearncteri.~7ics ure us uj' l/3!I/t7-1 urrd mqv clmnne at mrv time nud irithuut nutire. Value Blend Growth Large Medium Small InVBStmeflt Catet]OrV Large Growth The Fund seeks capital appreciation by NAV: $51.87 investing primarily in large, well- established domestic corporations. The Assets (mil): $57.9 Fund is designed to comply with guidelines that are based principally on Florida laws governing the investment of municipal retirement plans for fire, police and general government employees. Security E uit Security Equity Microsoft Corp. 4.1% Lowe's Cos. 2.3% Johnson & Johnson 3.3% Procter & Gamble 2.3% Pfizer Inc. 2.9% Boston Scientific 2.2% Biomet Inc. 2.9% Marriott International 2.1% American Express Co. 2.6% Goldman Sachs 2.1% Characteristics Fund S&P 500 Index Dividend Yield (Current) 1.2% 1.4°~0 Market Capitalization ($bil) 77.0 88.8 Price-to-Book 3.1 x 2.9x P/E (12 mo fwd) 18.4x 16.7x EPS Growth (5 yr est) 13.7 12.2 ROE 19.0 16.0 Three Fund -3.4% -~~:1 ,~I Ir,.i~F ~ ~3" , Lipper Large Cap Growth Index -4.4% Consumer Discretionary Consumer Staples Energy 3.7 % Fi i l nanc a s Healthcare Industrials I f ti T h l n orma on ec no ogy Materials 1 .4 3.1 Telecom Services 0.0 3.7 Utilities 1.0 % 2.s % Cash: 1.4% U.S. Stocks: 98.6% Non-U.S. Stocks: 0.0% i 13.1 11.1 10.7 a% ~ 20.6 - 16.3 3.1 - 17.1 '% 20.2% 1 5.7 ~ Fund 17 S&P 500 Index Annualized One Three Five Ten Inception YTD Year Year Year Year 04/01/1990 -1.2°io 9.1 % 2.7% 1.9°% 12.3°% 12.0% r ~ ~ I- -2.3% 7.6% 0.6% -7.3% 7.6% 9.1 City of Winter Springs General Employees' Pension Plan TRUSCU CAPITAL MANAGEMENT ~ z4 ~ a r l~ >~ l~ r~ ~ ~. ~ .~ ~ ~ ~ ~ ~ +~.- ~. +r Period Ending 2004 tember 30 Se SunTrust Retirement High Grade Growth Fund , p PasT per~ornrrurre is not iudiratire ul,lirture results. ['er/orntcuree relurus are slrrnra act a/'/i~e.c. ['urrfblia Irolrliu~s trod edrrrurterLcties cu•e us q/' 9/30/IM crud mgti' rAan};e a1 mtC lime acrd ,rirltura rr„rice. The third quarter saw investors still focusing on the negatives of a projected slowdown in consumer spending, escalating oil prices, election jitters and peaking year over year growth rates for corporate profits. Ignored were surprisingly good quarterly earnings reports and generally upbeat economic reports. After selling off in the first half of the quarter, stocks rallied in the second half. However, returns for the quarter were negative with the S&P 500 down 1.1 % and the Fund down 3.4%. The Fund trailed during the downward moveearly in the quarter but gained ground in September. The best performing sectors for the quarter were Energy, Utilities and Telecom, while the worst were Technology, Consumer Staples and Healthcare. While small cap and value styles continued to outpace growth, those trends appeared to have started to reverse as the focus shifts to earnings estimates where large cap growth stocks will have strong relative performance. This points to our style returning to favor and outperforming going forward. 1997 1998 1999 2000 2001 2002 2003 2003 First Quarter 2.6% 15.4% 5.6% 0.2% -4.8% 2.4% -2.2% 1.3% Second Quarter 18.8% 5.7% 5.1% 0.6% 5.8% -10.9% 9.6% 1.0% Third Quarter 7.3% -12.4% -7.7% 2.6% -13.6% -14.9% 2.0% -3.4% Fourth Quarter 3.7% 25.9% 14.8% -1.7% 12.3% 4.0% 10.4% Fund 35.5°0 34.7°~ 17.6°'a 1.6°0 -2.3°0 -19.3°0 20.9°0 -1.2°° Lipper Large Cap Growth 28.1% 25.7% 28.0% -10.9% -18.0% -24.2% 27.0% -2.3% $60,000 $50, 000 $40, 000 $30, 000 $20,000 $10,000 $0 ; ~~ Apr-90 Apr-92 Apr-94 Apr-96 Apr-98 Apr-00 Apr-02 Apr-04 Fund S&P 500 - • - - - - Fund Manager: 3 Year EIIIOtt Perny, CFA Alpha Beta R-Squared Sharpe Ratio Std. Deviation Fund -0.02 0.71 74.46 0.10 12.56 ;~ ~~-, City of Winter Springs General Employees' Pension Plan TRLISCO CAPITAL MANAGEMENT 25 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1~ ~ ~ Period Ending SunTrust Retirement High Grade Relative Value Fund September 30, 2004 e un see cs ong- erm cape a Value Blend Growth Cash: 3.1 appreciation with a secondary Large Cusip: 990001182 goal of current income by using a U.S. Stocks: 96.9% NAV: $11.70 value-oriented investment Medium Assets (mil): $41.9 strategy. The Fund is designed to comply with guidelines that are small based principally on Florida laws governing the investment of Investment Category municipal retirement plans for fire, Large Vafue police and general government Securitv %Equity Securitv %Equity Exxon Mobil 2.1 % Bank of America 1 9% Consumer Discretionary 11s% . 12.8 Chevron Texaco 2.0% Berkshire Hath B 1 8% 10.2 % . . Consumer staples ConocoPhillips 2.0% Prudential Financial 1.8% z.s% General Electric 1.9% Principal Financial 1 8% Energy 10.E % . 129 0 American Elec. Pwr.1.9% Rockwell Auto. 1.8% 23 8 % Fnancials ' ' • • • - Fieatthcare 9.3 % 4.4 Barra Intlustrials 13.3% Characteristic Fund Value a.a% Dividend Yield (Current) 1.9% '~ 1 ~°- Information Technobgy 9.3 5 ~ EPS Growth (5 yr est.) 11.1% ~ 1 U" Materials 38, Market Capitalization ($bil) 65.5 B r~' tj E; 3.s~,o 3.4 Price-to-Book 2.6X ~ };x Telecom services s.s% P/E (12 months trailing) 17.2x 15 ,'= 4s% ^ Fund Return on Equity 21.5% 18.t~ Utilities 59~'° ^ Barra Value Index 35.9 - -. - Annualized Three Year One Two Inception Months to Date Year Years 6/30/02 Fund 0.1 °.0 5.1 % 19.8% 19.1 % 7.3°io Barra Value Index 1.0°~ 5.3"~„ 2C1.5"~ 23.5°~ 0-9 . City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 26 ~ +~ ~^r r r it Itttl~ r ~ ~ ~ r~ ~ ~ ~ ~ t• ~ ~ Period Ending SunTrust Retirement High Grade Relative Value Fund- September 30, 2004 i continued :.- ~ - - uring ummer, t e capita markets followed acounter-trend zag as investors reassessed their exaggerated fears that zigged throughout the second quarter. The economy hit a "soft-patch", bonds defiantly rallied, and stocks struggled early before rallying back later in the quarter. These events benefited interest- sensitive sectors and penalized most everything else. Energy remained the stellar performer, as skeptics have converted to fresh admirers in droves. Overall, value hugely outperformed growth, and the value benchmark bested more diversified strategies like ours. The Fund remains positioned to capture a likely upwardly-biased market that rides the maturing tailwind of the economic and corporate profit cycles. Current valuation supports the notion that, while ~ getting late, these cycles are not yet over. Fund Manager: Charles B. Arrington, CFA 2002 2003 2004 First Quarter N/A -4.1 % 2.4% Second Quarter N/A 13.5% 2.6% Third Quarter -17.4% 2.1% 0.1% Fourth Quarter 6.5% 14.1% Fund -12.1 °0 26.7% 5.1 Barra Value -12.6°0 31.8°0 5.3% $13,000 $12,000 $11,000 ~ v $10,000 ~ $9,000 `~ /~~~, $s,ooo ~/ $7,000. - - - Jun Sept Dec Mar Jun Sept Dec March June Sept - SunTrust Retirement High Grade Relative Value S&P/Barra 500 Value City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 27 s ~ ~ .~ s +~ .irr ~ «l~ r r .~ ~ ~ ~ ~ ~ ~llls SeptembeE30! 004 STI Classic International Equity Index Fund Composition Value Blend Growth Ticker: SIEIX The Fund seeks to rovide P ° Cash: 1.0% Large Expense Ratio: 1.06% diversification and capital Non-U.S. Stocks: 0.0% Medium NAV: $11 35 appreciation by investing in U.S. Stocks: 99.0% smeii Assets (mil): . $373.41 securities of companies headquartered or based in foreign countries to replicate ~ s stake "°"-" S S`°`k~ o~,o se Investment Category the Morgan Stanley EAFE . oo°,o Foreign Stock .. - GDP Index. - ~~sh o~a Securitv %Eguity Securitv %Eguity 0 ENI S.p.A. 1.8 /° Telef onica S.A. o 1.3 /0 Consumer Discretionary 13.4% Total S.A. 1.7% EON AG 1.3% s.1 r 13.4% Siemens AG 1.6% Sanofi-Aventis S.A. 1.2% Consumer Staples 6 ~ Toyota Motor Corp. 1.6% BP PLC 1.1 % Ener 9Y 7.s Deutsche Telekom AG 1.3% Deutsche Bank AG 1.1 % 7.s Rnancials 26.4% 26.4 Fieatthcare 6.1% MSCI s'' Characteristic Fund EAFE GDP Industrials 10.6% 1os i Dividend Yield (Current) 2.5% 2.5°~; EPS Growth (5 yr est.) 11.5% 11.5` Information Technolo sv 7.or ~ p Market Capitalization ($bil) 36.3 3Ft ,'• Materials 72~ 7.2 r Price-to-Book 1 9x 1 9x P/E (12 months trailing) . . 15.6x 15.6x TelecomServices 6 ,oo 6.7i ® Fund Return on Equity 13.1% 13.1°, llttttties ssi i MSCI EAFE GDP Weighted s.s i -. Annualized Three Year to One Three Five Ten Inception Months Date Year Years Years Years 6/01/1994 Fund -0.9% 4.0% 21.7°0 8.5°0 -2.1% 5.3% 4.9°0 1f1~~'I r1 `= ~ ~eO(~ 1~~ t-;,-: -~ 11`x,. ; 1n „ ''. ~?`; (,,:.: Lipper International Funds Average -0.3% 3.4% 19.6% 8.3% -0.4% 4.7% -h N/A City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 28 ~r ~ i- ~ ~ r ^Il~ sr r ~ it ~ ~ rir ~ ~ ~ ~ ~ Period Ending ' September 30, 2004 ; STI Classic International Equity Index Fund -continued .- ~ - - - The MSCI EAFE GDP was down 1.00% for the quarter. The best performing markets were Norway, Singapore, Belgium and New Zealand, all returning more than 10%. However, Japan, France, Germany, Switzerland, Finland and The Netherlands were among the worst performing countries, all producing negative returns in the third quarter. Strong sectors included Energy, up 7.8%, followed by Materials up 4% and Healthcare up 3%. Consumer Discretionary and Consumer Staples were down 5% and 6.5% respectively but Information Technology ~ performed the worst, down 10% for the quarter. Low valuation, low beta and jdividend-paying stocks fared better than high P/E stocks and higher beta names in the third quarter. The Fund closely tracked its index, falling 0.9% in the quarter. Fund Manager: Chad Deakins, CFA ~ - .. 1997 1998 1999 2000 2001 2002 2003 2004 First Quarter 0.5% 17.6% 1.9% -0.6% -12.2% 0.9% -8.2% 4.8% Second Quarter 11.8% 4.8% 4.3% -4.3% -1.4% -1.5% 20.1% 0.2% Third Quarter 2.6% -13.0% 5.7% -8.5% -15.5% -20.5% 8.9% -0.9% Fourth Quarter -5.5% 21.3% 16.4% -4.7% 4.5% 5.7% 17.0% Fund 9.0% 30.0°0 30.7°,0 -17.1°0 -23.5 0 -16.5% 40.5°~° 4.0°% Lipper Intemational Funds Average 7.3% 12.7% 37.8% -14.7% -19.3% -16.7% 34.7% 3.4% $25, 000 $20,000 $15,000 $10, 000 $5,000 t I Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Fund MSCI EA FE GDP Weighted Alpha Beta R-Squared Sharpe Ratio Std. Deviation Fund 0.03 0.99 1.00 0.45 15.33 Lipper Intemational Funds -0.08 0.93 0.91 N/A 15.22 .:ti City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 29 M ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ r ~ l~ ~ ~ ~ ~ SeptembeE30l 004 STI Classic Small Cap Growth Stock Fund !'ust per/iunrrrnee is not iudicatice ul'future results. l'er/irrnrrrru•e returns are .C/Ia N'Ir rrel Of fPP.1'. .l/ure current inres(nrent per/brnrurree return ir~~ormution mqy be obtained by rallin,>; /-b'l10-~17a-x7711, uptiorr i, ur ri.citin~ Nre .1'%'l Clus.cic !'unda' Ircbsih~ ut it n~ w. clirlacsirjuttds.cunr. Port%oliu lroldin~s and ehuraeleri.eties are ns u/ %Ltll/Oa and orgy elrnut;e rrt any flare nor! rritlurut notice. Value BIerM Growth Ticker: SSCTX Large Expense Ratio: 1.20% Medium NAV: $20.40 small Assets (mil): $779.3 Investment Categonl Small Growth .. - . . Security % Equity Security % Equity Infocrossing Inc. 1.0% Connetics 1.0% Penn Ntl Gaming 1.0% Rofin-Sinar Tech. 0.9% Jos. A. Bank Clothier 1.0% Actuant 0.9% Ditech Comm. 1.0% Protein Design Labs 0.9% Navigant Consulting 1.0% Commercial Metals 0.9% Characteristic Dividend Yield (Current) EPS Growth (3 yr est.) Market Capitalization ($bil) Price-to-Book P/E (12 months trailing) Return on Equity S&P 600 Fund Sm. Cap Grth 0.3% 0.5 %o 20.2% 17.5°% 0.9 1.2 2.4x 3.4x 18.1x 20.8x 14.3% 16.9% The fund seeks long-term capital appreciation by investing in the stocks of companies with market capitalization between $50 million and $2 billion at the time of purchase. Consumer Discretionary Consumer Staples Energy Fnanc ials F-leatthcare Industrials Yif orrration Technology Ngterials Telecom Services Utilities Three Year- Months to-Date Fund -3.5°~0 3.6°0 Lipper Small Cap Growth Classification -6.2% -3.0% Cash: 0.5% U.S. Stocks: 99.5% US Sloths Annualized ,a r 25.3 One II Three Four Five Inception ~ ~ Year Years Years Years 10/08/1998 18.3°~0 13.1°0 2.6°'0 9.0°'0 14.8°0 ,a 9.2% 6.7% -7.7% 1.7% 10.8% City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT I so ~ ~ ~ ~ ~ ~ ~ ~ Illy ~ ~ ~ ~ ~ ~ ~ ~ ~' ~ Period Ending September 30, 2004 Past per%arnrance is aut iudieatire u/•.ftaure res'nlts. /'erjoruuuu•e returns are slurnvr net of fees. :1/arc currentinresunent per/irruunree return information nun• be uhluiacri by cailin,~ /-800-871-,r770, option i, ar risitinn Nre S/'/ Classic /~ ands websile m n~wn~..~rirlac.~~i<•/irm$'.cum. /'orlfoiio /ruidia/;s turd charrrctcristics arc as of 9/.?0/0-l mrd ntgv clraa~e at «nv time aced without aotire. STI Classic Small Cap Growth Stock Fund -continued Small Cap Growth stocks had a difficult quarter, but finished strong, as the S&P 600 Barra Growth and Russell 2000 Growth returned -3.0% and -6.1 %, respectively. The Small Cap Growth Fund posted a return of - 3.5%, well ahead of the -6.2% average for the Lipper Small Growth category. The greatest negative impacts came from weak stock selection in the Consumer Discretionary, Financials, and Industrials sectors, along with an overweight in the poorly performing Technology sector. However, strong stock selection from Consumer Staples, Healthcare, Technology, and Materials sectors provided a positive offset. While small caps lagged the first two months of the quarter, the group rebounded nicely in September, but still trailed the S&P 500 for the second consecutive quarter. Fund Manager: Mark Garfinkel, CFA ~ - - .. - 1998 1999 2000 2001 2002 2003 2004 First Quarter N/A -11.4% 16.4% -10.6% 1.1% -6.4% 8.1% Second Quarter N/A 20.8% -0.1 % 16.0% -10.2% 24.2% -0.6% Third Quarter N/A -5.2% 0.3% -22.8% -19.9% 9.7% -3.5% Fourth Quarter 46.3% 18.8% -4.1 % 23.9% 6.2% 14.2% Fund 0.0°0 20.6% 11.8°io -0.8% -22.7°% 45.6% 3.6°-0 S&r' E~0 ~ ~;;nal! C;at~ ~n~~,wtii !r~f~:~ '.', a ~°~: G 6"~:; -1.2°„ 1-~ _,~ ~7 ^ 7 ., Lipper Small Cap Growth Classification 5.4% 63.4% -6.2% -11.3% -29.7% 44.4% -3.0% $30, 000 $25, 000 $20, o00 $15, 000 $10, 000 $5, 000 $0 oct-sa Aug-99 Jun-00 Apr-01 Feb-02 Dec-02 Oct-03 Aug-04 Fund `° S&P 600 Small Gap Grow th Index • - -- - ~ 3 Year Sharpe Std. Alpha Beta R-Squared Ratio Deviation Fund -0.2 1.2 1.0 0.6 19.9 S&F~;UU Srririli L~}~ lr-awtii ~nc7~x O.U 1.0 i ~i U 8 16.5 City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT ~ 31 period Ending ~ STI Classic Small Cap Value Fund Se tember 30, 2004 Past perfirrnuuue is not indicative q/ frrtru-e resrdts. /'erfuruuuu•e rehrrns nre sh»mn uet of fires. J4ore eurreat inves7rneat per~m•mance retunr iq/irrnration stay be ubtnirred by ca!lirtg /-8/10-R7={-•17711, option ~, ar visiting the S/Y Classic Furrds' website u! u• u' ~r..cti cl2c.e it/u nd s. rum. Porl~oliu holdi»g.c curd elneraeteristics nre as of l/_ill/1l4 and nrav cka»gc at an f• tune and h•itGoru rrotiee•. Value Blend Growth Large Medium Small Investment Category Small Value Ticker: SCETX The fund seeks long-term Expense Ratio: 124% capital growth and income by investing in the stocks of NAV: $19.15 companies with a market Assets (mil): $681.63 capitalization between $50 million and $2 billion. Cash: 0.3% U.S. Stocks: 80.6% Non-U.S. Stocks 19.1% Top Ten Holdings Industry Concentration Securitv %Equity Securitv %EQUity Autodesk Inc. 4.4% Cummins Inc. 2.2% Consumer Discretionar y 20.6 ,a.o% Cooper Cos. 4.0% CHC Helicopter 2.2% Consumer Staples ss°'° Harris Corp. 3.4% Peabody Energy 2.1 3.1 Brink's Co. 2.7% Mentor Corp. 2.0% Fser9y 2.8 ~ s.s % Reynolds & Reynolds 2.7% StanCorp Financial 1.9% Fnancials 159 33.9 '• • Healthcare 9.5 % 4.9 Russell Characteristic Fund 2000 Value Industrials 18.6 % Dividend Yield (Current) 1.5% 1.8°~ 13.8 % EPS Growth (5 yr est.) 13.0% 10.5°~~ Inf orrretion Technology ,s.a % &.3% Market Capitalization ($bil) 1.9 0.9 Materials „.8 % Price-to-Book 2.1 x 1.6x 8.8 % P/E (12 months trailing) 17.6x 15.8x o.o % Telecom Services ,.o% ^ Fund Return on Equity 14.0% 8.2°~~ Utilities os% 0 ^ Russell 2000 Value Index 0 6 3 Annualized Three One Three Five Ten Inception Months YTD Year Year Year Year 8/31/1994 Fund 0.2% 10.0% 27.5% 19.4% 16.7% 15.3% 15.3% Russ ll >r;Ui ~t ~ ~ ciiu ~:a<x ,.:~ ~),~ ~ s ~~ 7" 3.l ~ ?`.,_ , r 7° ',.7`~< ?4 ,_ 13.4" 7 ' ?"_ Lipper Small Cap Value Index -0.6% 7.1% 24.7% 18.5% 14.7% 12.7% 12.5% City of Winter Springs General Employees' Pen sion Plan TRUSCO CAPITAL MANAGEMENT 32 r nr r +r r r r r r ~r r r~ r~ r~ rr r r Period Ending STI Classic Small Cap Value Fund - September 30, 2004 continued P«sl prrfirrmmtcc~ i.i trot indic[rlive of future results. Per/in•ntnnce returns [rte s/roan net «/ /i'es. .tlore current irn'eslntert! petfornr«nce retrrrrt irrfirrorutiun nrup he obtained option ?, ur rlsitin~ tlu' .ti%Y C'lus.cir !~ undc rceh.cim «t u• u' n•, s!i clrt ~ cic~u rttlc cunt. /'urt%uliu lur/[lirt,{s uu[l clurrarterislie.c «re «s o/' 9/.i0/thl «rtd ntgp ciuutke «t «nti'tiweand rritborrt notice. The STI Classic Small Cap Value Fund returned .15% for the quarter versus 0.15% for the Russell 2000 Value Index. Higher quality companies continued to be top performers for the third quarter of 2004. Superior selection of securities assisted the Fund in matching the benchmark. The Fund continues its strict adherence to quality, lower risk companies which we believe allows the Fund to outperform in the long run. We believe that the market continues to refocus on fundamentally strong, profitable companies. This can be seen in the quarter as Value outperformed Growth through the first nine months of 2004. This bodes well for our bottoms- up, dividend paying investment process which prefers quality stocks over high risk, unprofitable companies. Fund Manager: Brett Barnet, CFA 1997 1998 1999 2000 2001 2002 2003 2004 First Quarter 4.8% 9.7°i° -13.3% -4.1% 5.5% 9.7% -6.4% 5.7% Second Quarter 15.0% -8.9% 19.8% 5.9% 8.9% -1.8% 17.1% 3.9% Third Quarter 12.5% -22.0% -8.1% 6.7% -8.1% -12.6% 7.9% 0.2% Fourth Quarter -2.1% 11.0% 1.9% 9.0% 14.9% 4.3% 15.9% Fund 32.6°° -13.5°a -2.7°o 18.0°'° 21.2°° -1.7°0 37.1°~ 10.0°~ .1,, ;,_. ~ ~~ ,_, ,, , ~ . Lipper Small Cap Value Index 28.8% -6.7% 1.9% 16.1% 17.2% -11.2% 47.5% 7.1% $45.000 $ao,aoo $35,000 $30,000 $25.000 $20,000 $,5.000 $,o,ooo $s,ooo Sep-94 Sep-95 Sep-96 Sep-97 Sep-96 Sep-99 Sep-00 Sep-Ot Sep-02 Sep-03 Fund Russell 2000 Value 3 Year Alpha Beta R-Squared Sharpe Std. Deviation Fund 0.48 0.72 90.61 1.35 13.30 Rusn~-11 .ril~'c'-il~~u ii~~l,,, ~i i;i i 'i[i lU(i lii~ ~i'J:'~ li;-!,i City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 33 r . . r r . rN rr ~r rr r r r rr r ~ r llr rl Period Ending SunTrust Retirement Mid-Cap Equity Fund September 30, 2004 fast per/irrma«ce is «ul indicutire u,/'future results. 1'er(arurance rrnrrns are sboKVt «el of fees. .1-fore curreru itrres7metrt per(uruuracr renrr« i«/irrumliou ntr{t' he ahtrtlrtrd by callirt~ /-Roll-b'7.1--177/1. npliurr i, ur risitini; the S1'/ Classic F«rrds rvchsih' at n• n' n •. ~ ticlus.cir(u rrd ~'. coot. 1'artfir/ia 1«rldinl;s nod rlrarucleristics arc as of l/all/Ill acrd mqe eluur,{e ut aut' linu• and u•iNrurd Butiee. Value Blend Growth NAV: The Fund seeks Ion term ca ital rowth Cash: $25.17 g- p g Stocks: 1.4% 98 6% Large Assets (mil): by investing in domestic corporations with $25 45 . . a market capitalization between $1 billion Medium and $10 billion. The Fund is designed to comply with guidelines that are based small principally on Florida laws governing the Investment Category investment of municipal retirement plans Storks H~•: for fire, police and general government Mid-Cap Blend employees. Security Equity Security Equity Consumer Discretionary ~ 9.6 l1Gl Corp. 2.4°io Amerada Hess Corp. 2.0% i ~.s % Equitable Resources Inc. 2.3% Ntarathon Oil Corp. 2.0% consumer Staples 3.z % a.s°,o Ball Corp. 2.3% Student Loan Corp. 2.0% s_~oo Ryland Group hc. 2.2% Anthem Inc. Energy 1.9% s.s % Cigna Corp. 2.1% Reynolds American hc. 1.9% Fnancials z2.3% 21 .8 % '• • • - Health Care 9.8 9.9 Characteristic Fund F;uss~~ll Mid__L_~_L~ ,ndusir;als to.s% Dividend Yeld (Current) 1.7% 1.5°~ to.s % EPS Growth (5 Yr. Est.) 12.3% 129"~. Information Technology ~ 4.s ,a., % Market Capitalization ($bil) 6.9 E~.2 Materials 6.3 Price-to-Book 2.2x 2.4 x Telecom Services o.e % ^ Fund 1.3 P/E (12 mo trailing) 15.3x 17 Ox utilities 6.8 % ~ Russell Midcap Index Price-to-Sales 1.Ox ~ ! x 81 % - . -• • . - Annualized Three Year to One Three Five Seven Inception Months Date Year Years Years Years 12/1996 Fund 0.2% 4.5% 18.3% 5.1 % 7.5% 9.7% 12.6% f~l .. .. -.~~' ' „(I_. U.:~r. -1~.~~ ~ i C~` ~iJ r; ~ '_ ~~ ,~ „~ 72.~~"~ li.il"-~ Lipper Mid Cap Core Funds Avg -2.2% 3.2% 16.6% 11.2% 8.0% ~ I 11.1 % N/A City of Winter Springs ~- r_ General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 34 ~l . . . wi^ ~ r r ~ ~ 1. ~ ~ ~ r ,~ ~ A Period Ending SunTrust Retirement Mid-Cap Equity Fund -continued September 30, 2004 Past per/irrnrnnee is mrt indinatire a/future results. Perfirrnuuu•n return.v nre slunvn uet of fens. .bore eurr[•rrt inre.+7nrenf perforuraare return itrforaratiua urm• be obtained be calling l-8lll/-~ti7~/-X7711, nptiorr i, ur visiting Nre ,47Y C'lrrssic Feuds rrehsite ut n u rr.srirlassic/und.ccnnr. Portlidio holdings turd eharuetnristics are as• of 9Ltll/ll-I rnul rntn• change nt aae tunr «nd rriNunrt rrotire. Mid Cap stocks continued to do better than Large and Small Caps in the third quarter. The Russell Midcap was down -0.8% but is still up 5.8% year-to-date. Within the Mid Cap space, Value stocks did much better than Growth stocks, +1.7% vs. -4.3% for Q3. The SunTrust Retirement Mid Cap Fund (trust shares) had a respectable quarter, with a return of - 0.1 %, placing it in the top 15% of Lipper Midcap Core funds. Year-to- date, the Fund is now median vs. Lipper peers. Results in Q3 were driven by the Fund's attention to valuation, its higher representation in dividend-paying quality stocks, and its risk control in terms of sector exposures. Fund Manager: Chad Deakins, CFA 1997 1998 1999 2000 2001 2002 2003 2004 First Quarter -1.2% 13.8% -0.6°/ 21.5°/ -11.7°/ -5.5% -4.9°/ 3.8°/ Second Quarter 14.5% -1.3% 19.1% -1.5% 16.5% -13.4% 14.1% 0.5% Third Quarter 16.7% -17.9% -3.1% 6.0% -21.0% -15.3% 4..5% 0.2% Fourth Quarter -0.5% 25.9% 35.8% -11.6% 24.5% 0.5% 13.2% Fund 31.4°~0 16.0°6 55.9% 12.2°0 1.2°~ -30.4°~ 28.4°~b 4.5°0 Lipper Mid Cap Core Funds Aug 22.2% 7.8% 28.2% 6.3% -4.9% -17.4% 36.1% 3.2% $35, 000 $30, 000 $2s,ooo $20, 000 $15, 000 $10, 000 $5, 000 $o Dec-96 Fund Russell Mid-Cap Index Lipper Mid Cap Core Funds City of Winter Springs General Employees' Pension Plan 3 Year Alpha Beta R-S oared Sharpe Ratio Std. Deviation -0.60 0.98 0.85 0.22 16.68 0.76 15.63 -0.13 0.96 0.89 k 0.19 16.00 TRUSCO CAPITAL MANAGEMENT 35 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Fund Russell Midcap Index ~ ~ lllll~ Ir I. . ~ ~ ~ ~ ~ ~ llll~ ~ r ~ . lllll~ w Period Ending I SunTrust Retirement High Grade Bond Fund September 30, 2004 Short Int. Lon High Medium Low Investment Cateoorv Intermediate-Term Bond /'«st per/irruutnrr is rr«t indierdire of f'rrture rrsults. Nerfin-urunee returns «re slrun•n net nf~fi•es. !'ortfirliu hulrlings «rut c•Irar«rteristic•s «re «.c [~/~ 9/.30/0-! «rul urrn• elr«n,~e rrl arn• lime unrl ~~ iNnnu nurir e. The fund seeks to provide a Unit Price: $31.9 high level of total return Assets (mil): $198.4 through current income and capital appreciation by investing in domestic corporate investment grade bonds rated A or higher by major credit rating agencies and U.S. Government securities. Sector Fund ML "A" G/C Corporate Bond 17.1 °ro 27.8°,, Agency ~,~% ~ 22.2`.<, 0-3 Years Mortgages 3.0% 0.0°, US Treasury 76.5% 50.0"., s-s Years ABS 0.0% 0.0°~ Cash 3.4°0 5-7 Years '. 7-10 Years Average Rating AGY AAA Average Coupon 3.6% 5 ~ Current Yeld 3.4% 4.8 10-20 Years Yeld-to-Maturity 3.4% 3 Average Maturity 8.4 7 d 20+ Years Effective Duration 5.1 5.0 Annualized Three Year- One Three Five Ten Inception Months to-Date Year Years Years Years 9/1/89 Fund 3.3% 3.1 % 3.1 % 5.9% 7.3% 7.7% 8.2% Merrill Lvnch G/C A Rated and Above 3.3°0 3.1°0 2.8°,0 5.8°~, 7.5°,0 7.6°~ 7 9°° 45.2 City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 36 Cash: 3.4% Bonds: 96.6% BOndS sss~e Casn 3.49° Period Ending SunTrust Retirement High Grade Bond Fund - (continued) September 30, 2004 Pa.et per/brrurrrrrr is unt indicatn•e q/_%uturc resalLc. Perfin-atanre returns are clturcrt net q/•fee.c. Port%olio Iwldin~.e artd rlrnrrtetr•ri.~Tic.c are res of lL3lI/Il-I and nxn' cluur,>;e at am' lime ruin u ilhunr nulirr. Continuing the roller coaster nature of fixed income returns, the third quarter was extremely positive for the Fund at +3.3% vs. -3.0% in the second quarter and +2.9% for the first quarter. Returns of 3.1 % for the year-to-date period are in line with the benchmark, but rank very well in data bases of peer managers, who tended to be short duration. One factor which positively impacted performance was the barbell maturity structure which performed extremely well in the yield curve flattening environment. Exposure to the longer maturity BBB credit sector, where compelling valuations still exist as credit fundamentals continue to improve, also benefited the portfolio. Fund Managers: John Talty, CFA and Perry Troisi 1998 1999 2000 2001 2002 2003 2004 First quarter 1.7% -0.4% 2.3% 3.2% -0.5% 1.6% 2.9% Second Quarter 2.7% -1.0% 0.7% 0.2% 4.2% 2.5% -3.0% Third Quarter 5.2% 0.9% 2.5% 5.2% 5.7% -0.4% 3.3% Fourth Quarter 0.2% -0.5% 4.9% -0.1 % 1.5% -0.1 Fund 10.0°0 -1.1% 10.7% 8.6% 11.4% 3.6% 3.1% Merrill L~ncli G;C A Rated 9.7°0 -2.2°'° 12.4°% 8.2"0 11.6°~ 3.2°-~ 3.1°'° $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 ~°' Q~ City of Winter Springs General Employees' 00 0~ 02 03 ~~` ~h ~6 ~'~ ~0 ~°' p0 p~. prl. p~ pb Qh eG eG eG eG ~G 0G ~G GG ~G eG ~G ~G eG eG eG eG J ~ ~ Q Q Q Q Q Q 0 Q ~ ~ ~ 0 Fund - ML A Rtd G/C ,, Pension Plan TRUSCO CAPITAL MANAGEMENT 37 Period Ending SunTrust Retirement High Grade Intermediate Bond Fund September 30, 2004 Short Int. Lon Unit Price: High Assets (mil) Medium Low Investment Category Intermediate-Term Bond fast per/oruuutre i.e tntt i/1(I%('(Iti1'P Of `f(trUe reStllts. I'etfitrunntce returHS are chuwH net n/ fi'es. Part%aliu holdings turd churnrteristic.c are us qr 9/30/ll1 and mqt• chuHne a1 aqt' Bute and u'ilhuut Halite. Sector Fund Leh Aqq Int A+ Corporate Bond 15.0°0 14.7°° Agency 0.0°r° 12.8°° Mortgages 5.6°r° 48.2°ro US Treasury 74.5% 22.6°% ABS 0.0% 1.7°io Cash 4.9°~0 0.0°r° Characteristic Fund Leh Ayq Int Ai Average Rating AGY AAWAAI Average Coupon 2.9°i° 4.9°% Current Yield 2.8% 4.8% Yeld-to-Maturity 3.0°i° 4.1 °~o Average Maturity 4.2 5.3 Effective Duration 3.5 3.4 The fund seeks to provide a Cash: $10.4 high level of total return Bonds: $196.1 through current income and capital appreciation by investing in domestic corporate investment grade bonds rated A or higher by major credit rating agencies and U.S. Government securities. 03 Years 3-5 Years 5-7 Years 7-10 Years 10+ Years 51 .2 i; Int A or Better Continuing the roller coaster nature of fixed income returns, the third quarter was extremely positive for the Fund at +2.4% after the first two quarters Three Year- tended to offset each other. Returns of 2.8% for the year-to-date period are in Months to-Date line with the benchmark, but rank very well in data bases of peer managers, Fund 2.4°% 2.8°o who tended to be short duration. A factor which positively impacted L_ i ~ ~ , , - i~ ,~ ~~ t i , '•.;~ performance was the barbell maturity strategy which performed extremely ell in the yield curve flattening environment. The Fund was fairly neutral in he credit sector on a percentage basis, but overweight on a duration contribut on basis which helped returns. Fund Managers: John Talty, CFA and Perry Troisi City of Winter Springs General Employees' Pension Pfan TRUSCO CAPITAL MANAGEMENT s$ 4.9% 95.1 Bonds 95.1 °6 Casa 4.9°x. Period Ending ; FUnCI Attl'IbUtlOn SUI'1'll'1'lal')/ -Appreciated more than 15% ~tember 30, 2004 I SunTrust High Grade Equity 6' Fund COX COMMUNICATIONS INC $ 675,435.95 $ - 19.58 KOHLS CORP $ 525,244.44 $ 866,600.77 13.98 SunTrust Hi h Grade E uity Income Fund MARATHON OIL CORP $ - $ 88,752.00 18.92 SunTrust Hi h Grade Relativ e Value Fund QUESTAR CORP $ 479.136.00 $ 648,353.00 19.20 SEI CORP $ 248,292.00 $ 324,607.84 15.98 SunTrust Retirement Mid Ca Fund CITIZENS COMMUNICATIONS C $ 147,983.00 $ 145,482.35 28.05 SYMANTEC CORP $ 244,730.20 $ 272,479.20 25.35 UNOCAL CORP $ - $ 104,705.00 23.72 FREEPORT-MCMORAN COPPER & $ 93,483.00 $ 101,250.00 22.77 LIMITED BRANDS INC $ 85,833.00 $ 90,720.30 19.77 APPLE COMPUTER INC $ 88,834.20 $ 185,225.00 19.08 RYLAND GROUP INC $ 523,158.00 $ 550,863.70 18.62 HUMANA INC $ 154,128.00 $ 162,037.80 16.22 RYDER SYS INC $ 257,650.10 $ 269,068.80 17.74 INTUIT INC $ 230,708.40 $ 241,301.00 17.68 UGI CORP $ 577,479.00 $ 595,787.40 16.74 ADOBE SYS INC $ - $ 179.823.45 16.72 VALERO ENERGY CORP NEW $ - $ 181,274.60 15.70 CHOICE HOTELS INTL INC $ 426,861.60 $ 435,092.45 15.21 M D C HLDGS INC $ 232,176.50 $ 237.209.50 15.14 SunTrust Hi h Grade Bond Fund NO SECURITIES APPRECIATED MORE THAN 15% - - SunTrust Hi h Grade Interme diate Bond Fun d NO SECURITIES APPRECIATED MORE THAN 15% - - JOS A BANK CLOTHIERS INC $ 439,460.00 $ 449,800.00 98.50 AMXCORP NEW $ 220,200.00 $ 306,340.00 63.67 SMART& FINAL INC $ 205,542.00 $ 281,568.00 39.43 OMI CORP NEW $ 273,700.00 $ 240,300.00 35.04 CONNETICS CORP $ 343,400.00 $ 424,214.00 33.76 FREMONT GEN CORP $ 168,875.20 $ 243,075.00 31.53 ULTRA PETROLEUM CORP $ 343,436.00 $ 353,160.00 31.40 PALOMAR MEDICAL TECHNOLOC $ 218,270.00 $ 280,576.00 30.55 CACI INTL INC $ 283,080.00 $ 364,182.00 30.51 ELECTRONICS BOUTIQUE HLDG $ 210,720.00 $ 269,390.00 29.46 BANK OF THE OZARKS INC $ 139,920.00 $ 175,407.00 27.83 GENERAL MARITIME CORP $ 192,080.00 $ 191,565.00 26.93 INTUITIVE SURGICAL INC $ - $ 308,563.00 25.01 GEORGIA GULF CORP $ 322,740.00 $ 396,851.00 24.56 JUPITERMEDIA CORP $ - $ 224,867.40 24.30 COMMERCIAL METALS CO $ 350,460.00 $ 397,200.00 22.69 AGRIUM INC $ 261,900.00 $ 383,616.00 22.01 PROVINCE HEALTHCARE CO $ 257,250.00 $ 309,616.00 21.98 PENN NATIONAL GAMING INC $ 451,520.00 $ 432,280.00 21.69 TEXAS INDS INC $ - $ 303,496.00 21.63 SENSYTECH INC $ 441,180.00 $ 230,420.00 21.02 MINE SAFETY APPLIANCES CO $ 417,880.00 $ 272,824.00 21.00 ULTIMATE SOFTWARE GROUP I $ 253,750.00 $ 302,088.00 20.99 FLORIDA ROCK INDS INC $ 126,510.00 $ 240,051.00 20.82 MUELLER INDS INC $ 304,300.00 $ 360,780.00 20.25 GLOBAL PAYMENTS INC $ 112,550.00 $ 131,679.45 19.04 HEADWATERS INC $ 440,810.00 $ 121,588.40 19.01 COLDWATER CREEK INC $ 73,321.90 $ 229,570.00 18.27 US XPRESS ENTERPRISES INC $ 295,724.00 $ 274,392.00 17.86 CAL DIVE INTL INC $ 357,776.00 $ 249,340.00 17.48 MAVERICK TUBE CORP $ 268,860.00 $ 246,480.00 17.33 CBRL GROUP INC $ 231,375.00 $ 266,992.00 17.31 INFOCROSSING INC $ 256,500.00 $ 295,740.50 17.15 KEY ENERGY SVCS INC $ 207,680.00 $ 238,680.00 17.06 ELKCORP $ 287,280.00 $ 327,568.00 16.17 INVERESK RESEARCH GROUP I $ 49,344.00 $ - 15.87 ROFIN-SINAR TECHNOLOGIES $ 342,765.00 $ 434,824.00 15.71 CAPTIVA SOFTWARE CORP DEL $ 251,940.00 $ 303,249.00 15.48 SILGAN HLDGS INC $ 189,940.72 $ 213,535.60 15.22 City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 39 i ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Period Endin September 30, 004 Un ttribution UYl'lf'Ylal'~/ -Depreciated more than 15% SunTrust Hi h Grade Equity Fund VERITAS SOFTWARE CORP $ 678,465.06 $ 185.903.20 -35.95 INTEL CORP $ 1,395,483.60 $ 946,651.46 -27.18 AGILE NT TECHNOLOGIES INC $ 760,489.44 $ 522,921.51 -26.33 CISCO SYS INC $ 1,061,570.40 $ 756,616.20 -23.63 AMERICAN PWR CONVERSION C $ 480,717.60 $ - -22.18 KLA TE NCOR CORP $ 817,189.62 $ - -20.41 TIFFANY & CO $ 456,313.55 $ - -19.12 SOUTHW EST AIRLS CO $ 812,976.06 $ 616,277.76 -18.75 APPLIED MATLS INC $ 838.499.94 $ 657,736.63 -15.95 SunTrust Hi h Grade E ui Income Fund COLLATE PALMOLIVE CO $ 115,614.10 $ 114,215.04 -222~~ TE LEFLEX INC $ 75,024.40 $ 59.330.00 -14.8-i BOISE CASCADE CORP $ 41,705.12 $ - -14.18 SunTrust Hi h Grade Relative Value Fund MERCK 8 CO INC $ 280,487.50 $ 216,546.00 -29.65 INTEL CORP $ 419,520.00 $ 343,507.44 -27.16 COLLATE PALMOLIVE CO $ 263,025.00 $ 347,434.20 -22.25 AGILE NT TECHNOLOGIES INC $ - $ 389,144.37 -17.96 EXPRESS SCRIPTS INC $ 374,361.75 $ 341,662.86 -17.53 SVSCO CORP $ 310,454.85 $ 195,108.32 -16.32 SunTrust Retirement Mid Ca Fund LSI LOGIC CORP $ 105,613.20 $ 53,077.65 -43.44 IMCLONE SVS INC $ 261,659.50 $ 143,487.75 -38.417 VERITAS SOFTWARE CORP $ 204,256.50 $ 116.234.00 -35-9'.-~ NATIONAL SEMICONDUCTOR $ 186,475.20 $ 116,717.15 -29.56 SIEBEL SYS INC $ 132,021.50 $ 82,751.50 -29.4 i MARVEL ENTERPRISES INC $ 53,972.80 $ 35,817.60 -25.41 AVNET INC $ 224,730.00 $ 150,656.00 -24_fiY UNIVERSAL TECHNICAL INST $ 83,937.00 $ 56,436.60 -24.49 SANMINA-SCI CORP $ 222,768.00 $ - -24.OH BIG 5 SPORTING GOODS CORP $ 160.806.60 $ - -23.26 AMERICAN AXLE 8 MANUFACTU $ 286,880.40 $ 204,966.30 -19.16 STORAGE TECHNOLOGY CORP $ 127,890.00 $ - -19.12 SOUTHW EST AIRLS CO $ 363,741.30 $ 266,339.10 -18.76 ACUITY BRANDS INC $ 154,440.00 $ - -18.73 ABERC ROMBIE 8 FITCH CO $ 380,912.50 $ 275,310.00 -18.42 ADVANCED MICRO DEVICES IN $ 81,885.00 $ 59,475.00 -18.24 ST PAUL TRAVELERS COS INC $ 306,482.40 $ 222,163.20 -17.97 MEDCO HEALTH SOLUTIONS IN $ 189,000.00 $ 140,286.00 -17.60 ARROW ELECTRONICS INC $ 282,951.00 $ 211,687.50 -15.81 ELECTRONIC ARTS INC $ 504,04200 $ 377,577.90 -15.69 NOVELLUS SVS INC $ 231,398.40 $ 174,092.40 -15.27 CORNING INC $ 249,707.20 $ 188.249.20 -15.16 SunTrust Hi h Grade Bond Fu nd NO SECURITIES DEPRECIATED MORE THAN 15% - - SunTrust Hi h Grade Interm ed iate Bond F und NO SECURITIES DEPRECIATED MORE THAN 15% - - CONEXANT SYS INC $ 33,990.50 $ 12,400.00 -63.05 POSSIS CORP $ 307,350.00 $ 180,090.00 -54.14 ULTRALIFE BATTERIES INC $ 96,800.00 $ 114,921.00 -47.47 TELECOMMUNICATION SYS INC $ 261,280.00 $ 132,894.00 -43.49 GEVITY HR INC $ 379,755.00 $ 219,934.00 -41.05 POW ER ONE INC $ 351,360.00 $ 184,680.00 -40.98 ROGERS CORP $ 419,400.00 $ 250,691.00 -39.21 BROWN SHOE CO INC $ 298,789.00 $ 117,782.00 -38.61 CYPRESS SEMICONDUCTER COR $ 255,420.00 $ 252,249.40 -37.70 SELECT COMFORT CORP $ 383,400.00 $ - -35.53 THE SPORTS AUTHORITY INC $ 359,000.00 $ 183,280.00 -35.38 SECURE COMPUTING CORP $ 233,000.00 $ 149,523.00 -34.85 MYKROLIS CORP $ - $ 97,679.00 -33.50 AXCELIS TECHNOLOGIES INC $ 286,120.00 $ 154,836.00 -33.44 PERFORMANCE TECHNOLOGIES $ 122,330.00 $ 94,600.00 -32.84 CE LLSTAR CORP $ 117,920.00 $ - -32.62 COMPUTER NETWORK TECHNOLC $ 27,284.45 $ 18,131.85 -32.05 INTEGRATED DEVICE TECHNOL $ 359,840.00 $ 230,864.25 -31.14 MPS GROUP INC $ 183.012.00 $ 125,309.00 -30.61 COPARTINC $ 507,300.00 $ 316,131.00 -29.10 NEWPORT CORP $ 105,105.00 $ 73,408.00 -29.07 SONIC SOLUTIONS INC $ 297,500.00 $ - -28.57 DOT HILL SYS CORP $ 358,720.00 $ 252,630.00 -28.46 CASUAL MALE RETAIL GROUP $ 160,600.00 $ 113,184.00 -28.22 ENCORE WIRE CORP $ 276,000.00 $ 276,054.00 -27.66 BRADLEY PHARMACEUTICALS I $ 418,500.00 $ 240,130.00 -27.06 UROLOGIX INC $ - $ 66,524.32 -26.66 AXCAN PHARMA INC $ 274,300.00 $ 90,190.00 -26.30 AE ROFLEX INC $ 78,540.00 $ 116.270.00 -25.98 NOBLE INTL LTD $ 232,838.00 $ 168,084.00 -25.84 ROCKY SHOES & BOOTS INC $ 61,760.77 $ 175,000.00 -25.56 ATMI INC $ 355,030.00 $ 169,984.00 -25.01 CARRIER ACCESS CORP $ - $ 166,800.00 -22.96 THOR INDS INC $ 368,060.00 $ - -22.56 CSK AUTO CORP $ 342,800.00 $ 213,120.00 -22.29 HYPERION SOLUTIONS CORP $ 327,900.00 $ 183,546.00 -22.26 HOT TOPIC INC $ 184,410.00 $ - -22.01 MARINEMAX INC $ 286,800.00 $ 231,956.00 -21.48 TRADESTATION GROUP INC $ 143,800.00 $ - -20.72 CONCORDE CAREER COLLEGES $ 49,678.16 $ - -20.14 ANDRX CORP DEL $ 335,160.00 $ 156,520.00 -19.94 ENGINEERED SUPPORT SYS IN $ - $ 228,200.00 -19.54 ANN TAYLOR HLDGS INC $ 217,350.00 $ 138,060.00 -19.25 NETWORK EQUIP TECHNOLOGIE $ 81,526.56 $ 59,490.00 -19.00 SM8A $ 215,250.00 $ 157,974.00 -18.82 GOODY'S FAMILY CLOTHING I $ 228,140.00 $ 181,872.00 -18.52 TRANSACT TECHNOLOGIES INC $ 268,770.00 $ 303,996.00 -18.25 ITRON INC $ 206,460.00 $ - -18.21 C-COR INC $ 267,540.00 $ 216,320.00 -17.88 FEDDE RS CORP $ 15,042.30 $ - -17.36 ORBITAL SCIENCES CORP $ 248,580.00 $ 202,134.00 -17.31 HOLOGIC INC $ 104,625.00 $ 132,963.00 -17.12 STONE RIDGE INC $ 122,876.00 $ 156,510.00 -17.06 AMERICAN MEDICAL SECURITY $ 381,500.00 $ - -16.99 4 KIDS ENTMT INC $ 167,440.00 $ 139,380.00 -15-55 T-HO INC $ 297,700.00 $ 116,760.00 -15.02 City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 40