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Home My WebLink About2005 07 26 Attached Report Given to Board Member During MeetingDate: July 26, 2005 THE ATTACHED REPORT WAS GIVEN TO BOARD MEMBERS DURING THE MEETING. IIIII~ Illll~ Illll^~ ~ IIII~ ,~.~ I~ ~s +~ Ili r IIIII~ ~ Illll~ IIII~ I~ ~ n^^~ Illll~ TRUSCO CAPITAL MANAGEMENT Prepared Exclusively For: City of Winter Springs General Employees' Pension Plan Investment Review Second Quarter 2005 Molly Halcom Investment Manager 407-237-4372 molly.halcom @truscocapital.com Dianne Garcia Relationship Manager 407-237-4513 dianne.garcia @ suntrust.com The Hurt Building -,~tlmaa, G~1 ~~ ~ ~ r ~ ~s ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ r ~ Period Ending ~ Table of Contents June 30, 2005 Economic Overview /Market Snapshot Performance & Portfolio Composition Fund Fact Sheets Fund Attribution Summary Appendix Please refer to appendix for full disclosure ~' ~;. City of Winter Springs General Employees' Pension Plan Section Section II Section III Section IV Section V TRUSCO CAPITAL MANAGEMENT I 1 ~i~ s . ~ r s ~ . ~ r ~w ~ w~ ~ ~r ~ ~ ~ ~ Period Ending Market Snapshot: June 30, 2005 June 30, 2005 Please refer to appendix for full disclosure. City of Winter Springs Generai Employees' Pension Plan TRLISCO CAPITAL MANAGEMENT 12 i t rr r i s r r~ r i r~ rr rs rr r~ rs r Q2 2005 Investment Overview • Stocks moved higher in the second quarter despite a renewed rise in energy prices and two additional Federal Reserve interest rate hikes. S&P 500 gained 1.4% on a total return basis after falling 2.1 % in the first quarter. The trailing Stocks rose itt Q2 price/earnings ratio eased to 17.4X compared to the 18.9X average over the past 20-years. Bonds also improved during despite increased the period amid reports of continued moderate inflation and speculation that the Fed might slow the pace of tightening. The ' lteadwittds from Lehman Aggregate Bond Index rose 3.0% following first quarter s 0.5% decline. The yield on the 10-year Treasury note , and the 10-year A-rated corporate bond closed the quarter at 3.9% and 4.8%, respectively. energy and interest rates. Defensive and • Second quarter economic growth remained firm, despite the increased headwinds from energy and interest rates, due interest rate sensitive in large part to continued job growth, which in turn raised consumer confidence. Business spending softened slightly on equities tended to balance, but continued to grow at an estimated double-digit annual rate. Sustained strength in the housing market, rapidly rising prices, and reports of excess leverage drew increased regulatory scrutiny. Inflation remained moderate in aggregate, otttperfortn. Bonds though evidence of corporate pricing power spread. Overseas, the outlook in Europe softened, while expectations rose in also improved, and Japan. The dollar rose on atrade-weighted basis during the period. the yield on the 10- • The Federal Reserve raised the overnight fed funds rate two more times during the second quarter to 3'/a%, citing year Treasury note firmer economic growth and elevated inflation risks. The Fed has increased rates nine times in the past year for a total of 2 dipped below 4%. ~/a%. Bond yields fell for the quarter, and the yield curve flattened further. All major fixed-income sectors advanced in the quarter led by long Treasuries. Otrr ecottotttic ~ In the equity markets, the more defensive and interest rate sensitive sectors outperformed, led by utilities, health outlook t•enutitts care, and financials. Corporate profits growth appeared to slow during the quarter on a year over year basis, but full-year positive and we see estimates continued to rise. Mid-caps again outperformed during the quarter, while the growth style and international the economic glass stocks lagged. as "half=full." We • Our outlook for the economy remains positive and we see the economic glass as "half-full", with steady job gains are maintaining an more than offsetting the rise in energy costs. We look for roughly average growth (--3 Y2%) in 2005, though some soft spots overweight position could emerge. Inflation is likely to trend higher and support the Fed's plan to raise interest rates gradually in the months itt equities and ahead. The dollar will likely be under downward pressure. etrtpltasizittg quality • We continue to recommend a modest overweight position in stocks within current asset allocation ranges, emphasizing itt bond portfolios. large-caps, the growth style, and international equities where appropriate. However, we recognize that some of the factors that have favored equities (steep yield curve, low yields, and easy profit comparisons) are changing and not as favorable. We will continue to be very price sensitive in entry and exit points and emphasize companies with consistent growth. • Infixed-income portfolios, we anticipate moderately higher yields and a further flattening of the yield curve, though much of the move has already occurred. In this environment we will maintain a neutral duration maturity structure and an emphasis on Treasuries. We reduced the overweighting in TIPS, but will look for attractive opportunities to increase exposure. We will maintain an underweight position in corporate bonds and mortgages. e~.r ~ .. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT s June 30, 2005 ~ Job Growth Boosted Confidence and Spending... Consumption Growth Remained Healthy in 42 Personal Outleys (YOY%) Consumer spending remained firm in the second quarter, helped by strojtger job growth despite ]nigh oil prices. 10 6 6 4 2 400 zoo 0 -200 -400 al az as an as ae ar atl as uu ul uz o3 oa o: Source: Bureau of Economic Melysis /Hover Malyties Firm Q2 Job Growth Helped Boost Consumer Confidence Job Growth (3-mo. mov. avg.- Bar) Consumer Confidence (Line) al 8'L 83 84 8~ 8ti 8r 8tl 88 00 01 02 03 04 0: Sources: BLS, CNFBOARD /Hover 10 tl • Consumer spending continued to trend higher in the second quarter despite rising energy prices. Personal outlays, a broad measure of 6 consumption, increased 6% on a year over year basis in nominal terms, matching the growth 4 rates of the 1990s. ,60 • Job growth is the key driver of personal 140 income, spending, confidence, and willingness to take on leverage. While the acceleration in job 120 creation has been below average, growth firmed in the second quarter averaging 181 K, and was ,00 high enough to offset much of the negative effect of higher energy prices. Further job gains should 80 help sustain consumer spending. 60 40 - ,~ . Cit of Winter S rin s General Em to ees' Pension Plan TRUSCO APITAL M 4 y p g p y C ANAGEMENT ~ ~ t- ~ w ~ ~r ~ ru ~ ~ r r r wr is ~ ~ r June 30,2005 ~ ...while Low Mortgage Rates Helped Housing Home Demand Remains Strong Pushin Upp Prices House Price Index (YOY% -Blue) 8 Housing Startsg(SAAR -Olive) The housijlg fnarizet remained strong in the second quarter, fueling home price inf Zation. Low mortgage rates and new fllZai2Cll2g innovations have allowed consumers to tap into rising property values. 225D 2000 • The housing market remained strong in the second quarter, putting upward pressure on prices. The year over year price increases of over 12% nationally is viewed as excessive and 15 unsustainable over an extended period, but low mortgage rates and other financing innovations ~2 are supporting demand. ,D .0 ID i0 a~ az a~ as as ac ar as as o0 of oz o3 oa o: Sources: CENSUS, OFHEO /Hover 15.0 12.5 10.0 7.5 5.0 2.5 o.o Consumers Tap Home Equity Via Low Mortgage Rates of Refi with Higher Loan Amounts Blue) & Fixed Mort. Rates (Olive) • Despite the eighth and ninth short term rate hikes from the Fed, longer term mortgage rates remained low in the second quarter. This, combined with above-average home price appreciation, has prompted many consumers to tap the rising equity in their homes. This trend is unsustainable, in our view. 12 10 6 4 6 100 ao 60 40 20 au as uu ua Sources: FHFB, FMAC !Haver City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 5 r ~e ~ rlls r +~^~ ~ AI ~ w ~ r rr rr ~ +~ t~ ~ June 30, 2005 ~ Business Activity Remained Firm in Q2.. Businesses Still Expanding ISM Indexes: Menufactuting (Bar) b Nonmanufacturing (Line) Business output conti~aa~ed to expand in the seco>'zd quarter afad inventory co~itrol remc~irzed a high priority. 70 65 60 55 50 45 as as ac 8i a6 99 00 O1 02 03 04 OS Source: Institute for Supply Management /Haver Analytics 1 70 65 • Overall business activity remained firm in 6o the second quarter. The ISM Manufacturing Survey (shaded area in the chart top left) 55 eased from the peak levels of 2004, but 5o remained at expansionary levels comparable to those in the 1990s. The newer, 45 nonmanufacturing survey (line) moved back up close to cyclical highs. ao • While inventory levels have increased in 10 total, corporations remain fairly cautious, keeping inventories relative to sales at 5 historically low levels. This tight inventory management tends to limit an important source of economic volatility. 0 -5 94 95 96 97 98 99 00 01 02 03 04 OS Source: Census Buresu/Haver Melytiea ~ ° ~;e ~ i Cit of Winter S rin s General Em to ees' Pension Plan TRUS~ 0 A s Y p g p Y C C P[TAL MANAGEMENT Inventory Ratio Remained Low Despite Slight Slowing in Sales Inventory / Seles Ratio (Bar) & Sales (YOY%) 15 ~ ~ ~ a ~ ~a ~ ~ ~ ~ a ~ w~ ~ r ~ i ~ ~ June 3O, o` 5 Profits and Investment Remain Healthy Corporate Profits Growth Remains Healthy Corporate Profits / GDP Corporate profits and cash flow drive inveshnent spendijig. Corporate profits as a percent of total economic activity moved above the peak iii the late-1990s, ficeli~ng further ifzvesbnent. Moreover, capital spending lzas begu~z to spread beyond equipment to structures. • Corporate profitability is a key measure of corporate health and a primary driver of investment spending. While the pace of corporate earnings growth is slowing, it remains above the long-term 7% average. In the first quarter, profits relative to total economic activity (GDP) moved up to 11 %, eclipsing the high in the 1990s. • These corporate profits are being used for a variety of purposes including investment, dividend increases, share repurchases, and acquisitions. Until recently, investment was largely limited to new equipment. More recently that spending spread to include structures. Equipment Investment Strength Spreading to Structures YOY%: Equipment 8 Software (Line) & Structures (Bar) 0.12 0.11 0.10 o.os a.oe o.o~ 0.06 30 20 10 Irr . o -10 -zo -30 Source: Bureeu of Economic Malysia /Haver Melytice _, ~~ .~ °_ . Cit of Winter S rin s General Em to ees' Pension Plan TRUSCO CAPITAL MANAGEMENT ~ Y p g p Y 0.12 0.11 0.10 0.09 a.oe o.o~ 0.06 30 zo to 0 -,o. -20~ _an~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1r ~ ~ ~ June 30, o`o Bonds Gain Despite Fed Rate Hikes Curve Flattened on Fed Rate Hikes 6.0 5.0 4.0 3.0 2.0 1.0 00 6/30/2005 - 3/31/2005 -- 12/31 /2004 6/30/2004 Credit Spreads Off Lows 200 150 100 50 ' ' 0 5 10 15 20 25 30 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 Treusur~ Yie/d Curve .Source: /~tctSet 10-Yr. "A"-lZuted ('ur/r. rs. 7reusurs~ Source: rllcrrill Lsrlrh Longer Maturity Bonds Outperformed Treasuries Outperformed in Q2 25.0 20.0 15.0 10.0 5.0 00 12.0 10.0 8.0 6.0 4.0 2.0 00 3 Mo 6 Mo 2 Yr 5 Yr 10 Yr 30 Yr Agg Treas. Govt. Corp. Sec. HiYd Muni. ^ 3-Mos. 0.71 0.78 1.15 2.81 5.38 9.42 ~ 3-Mos. 3.01 3.63 3.03 3.53 2.34 2.76 2.80 ~ YTD 1.28 1.33 0.71 1.22 4.11 11.67 ^ YTD 2.51 3.20 2.53 2.36 2.15 1.11 2.45 1-Y r. 2.12 2.15 1.75 4.14 9.68 22.58 1-Y r. 6.80 7.06 6.35 8.16 6.12 10.86 7.24 7~rectsurr Retur•rr.r Soecrce: Lelnunn Brothers AQgregute & Sector Reuu•as Source: Lehnuur l3rotlrer.c City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 8 Period Ending I Energy /Utilities Led Mixed Market in Q2 June 30, 2005 Energy /Utilities Led Market in Q2 50 40 30 20 io °4-r-_ ~`~~~ti -10 -20 SPX Disc Stpl Eng Fn Hlth Ind Tec Mat Tel Lftil ^ 3-Mos. 1.4 -1.0 -0.6 2.0 4.3 4.1 -3.3 1.8 -9.5 3.6 9.3 ^ 6 Mos. -0.8 -6.6 0.0 19.9 -2.3 3.5 -4.9 -5.7 -7.8 -4.5 15.2 1-Yr. 6.3 4.8 2.0 39.4 5.8 3.0 4.6 -3.5 3.6 10.2 38.0 Sector Pet,~orntanee Sc~P S00 Source: FuctSet Corporate Profits Growth Slower in ~05 40% 30% 20% 10% 0% -10% -20% -30% Valuations Reasonable but not Cheap 35 30 25 20 15 10 5' 75 80 85 90 95 00 05 ianlirt ~ <Yc l~~n~ucuzlP/ERatiu Sotcrce: FactSet Small-Caps & Bonds Led in Q2 15 10 5 -5 3-Mos. ^ L-Cap 1.4 ^ S-Cap 3.9 Intl. -2.0 Bonds 3.01 ^ T-Bill 0.72 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 S&P Op. Ear•rtings (YOY%) -Olive i.r est. Source: Trtcsco Capital Capltali,atiott Perfornuutce .F .m ., . ~ , ~ = ~-b.= YTD -0.8 1.8 -2.8 2.52 1.30 1-Y r. 6.3 13.5 11.2 6.81 2.13 Source: S&P City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT ~ s r r r r r r~ r rr r~ r r r^r r rr r ~r r Period Ending Investors Looking to Diversified Portfolios June 30, 2005 Diversif icatiort appears to be a primary goal and focus for investors. • Investors appear to be diversifying portfolios to a much greater extent than in the past. While net inflows into equity funds are slower so far in 2005, inflows into asset allocation and balanced funds is up significantly. Equity Mutual Fund Inflows Slower but International Gaining Share quity Fund Inflows (Bar) 6 World Equity /Total (12-mo. Mov. Avg. -Line) 45000 0.600 • The diversification theme was particularly evident with the sharp increase in interest in international equities. World equity funds garnered nearly 50% of the total equity inflows on a 12-month average basis in the second quarter. 37500 30000 22500 15000 7soo 0 30000 20000 ioooo 0 -ioooo -20000 0.525 0.450 0.375 0.300 o.22s 0.150 ~ii~lull~~~ '~ City of Winter Springs General Employees' Pension Plan TRllSCO CAPITAL MANAGEMENT 1 ~ Diversification Increasely Important for Investors Asset Allocation + Bslenced Funds 12-mo Total in SMilliona) rr . r rr r r r r r r rr rr r~ rr r rr r~ r r June 30, 0105 Asset Allocation Update & Summary In the second quarter: • S&P 500 rose 1.4% (TR) lead by a 9.4% surge in utility stocks. However, the S&P lagged the 3.0% gain in the Lehman Aggregate Bond Index in the second quarter. • The Russell 2000 outperformed the S&P 500 but still lagged YTD. • International (MSCI EAFE) slightly underperformed the S&P 500 for the quarter but is even YTD. • Style performance was mixed. • Treasuries and investment-grade corporate outperformed the Aggregate in D2. • TIPS slightly underperformed the Aggregate in Q2 but lead YTD. • Stock/Bond Indicators: Most valuation indicators continue to favor stocks, helped by the rally in the bond markets. However, the flatter yield curve arising from a tighter Fed and continued low bond yields, while still favorable, is considerably below the peak. We retain our moderate overweight allocation to equities. • Large-Cap/Small-Cap Indicators: Small-cap outperformance is extended, but the Russell 2000 enjoyed a rebound in the second quarter. Moreover, the further flattening of the yield curve tipped the economic measures over to large-cap. The valuation and economic components favor large-caps, and we retain an overweight position. • GrowthNalue Indicators: Our style measures are mixed, but given the extended period of value outperformance, we retain a modest overweight position in growth. • International: While we have longer-term concerns over the ability of the dollar to remain relatively strong, the roughly 13% annualized outperformance by EAFE over the past two years is vulnerable to correction, and we are concerned about lower growth expectations in the EU. We reduced the current overweight position in international. • Fixed-Income: Infixed income portfolios, we have removed the barbell maturity structure and are neutral duration. We remain underweight in corporate, high yield, and mortgage securities given the narrow credit spreads and an increase in downgrades and company actions that are not "bond-friendly." Most recently, we trimmed our overweight position in TIPS. They have been performing very poorly along with other non-Treasury sectors during the past month as Credit and Hedge Fund problems have caused market participants to shed risk. We are also coming out of the high accretion period for TIPS, so we are more comfortable reducing exposure and looking for a better time to re-establish positions. • The economic outlook remains favorable, despite some recent softness, and we continue to expect average growth for all of 2005. Inflation pressures are building in our view and will push core inflation moderately higher. Risks are increasingly important in this environment. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 11 Period Ending June 30, 2005 Summary and O u t l o o k Stocks a,ul bc-nds • Stocks recovered somewhat in the second quarter, despite another jump in energy prices and a gai,red i„ Q2 a,,,id tighter Fed, while bond yields fell. The S&P 500 gained 1.4% for the quarter on a total return basis, ,f'ir,n economic while the Lehman Aggregate Bond Index rose 3.0%. growth, higher oil prices and ,Wore • Cyclical economic strength continued as better than expected consumer spending augmented hawkish Ped strong CAPEX. Job growth continued to trend higher on a year over year basis and the co,nmentary. unemployment rate fell to 5.0% from the 6.3% cyclical peak. Headline inflation moderated, but core ' inflation and labor costs moved higher, and corporate pricing power seemed to improve. The O„r o,rtlook for Federal Reserve raised the fed funds rate twice to 3 1/4% and promised more rate increases in the growth in the months ahead to curb the elevated inflation risk. econo,ny and • Equity markets tended to be concentrated in the more defensive and interest-sensitive sectors. Mid- corpo,•ate profits cap and domestic stocks outperformed. In fixed-income markets, the Fed raised rates twice more to remains positive, but 3'/a%, but the fed funds rate remained under the generally recognized "neutral range of 3-5% and moderate slowing is the Fed suggested that "measure" rate increases were likely in the future. Bond yields fell and the likely in hoth. We yield curve flattened. Higher quality outperformed. a„ticipate liiglter core inflation • We remain positive on our outlook for the economy and corporate profits, but the rate of growth in , fi,rther Ped rate both is likely to slow closer to historical averages due to economic headwinds and more difficult comparisons, respectively. Capital spending is expected to continue growing faster than consumer increases, and spending. Headline inflation may ease if oil prices retreat from the recent spike, but core inflation moderately higher will likely trend moderately higher, supporting the Fed's plan to raise interest rates gradually in the bo„d yields. months ahead. The dollar will likely remain under longer-term downward pressure on a trade- weighted basis. Bond yields are likely to rise moderately higher. We favor a„ overweight position • We continue to recommend a modest overweight position in stocks within current asset allocation in stocks with ranges. However, we recognize that some of the factors that have favored equities (steep yield specific emphasis o„ curve, low yields, and easy profit comparisons) are changing and not as favorable. We will continue to be very pace sensitive in entry and exit points and emphasize companies with consistent growth. large-caps, the We will likely view any significant market pullback as an opportunity to build equity positions, growth style, and especially if energy prices and bond yields moderate. inte,•natio~ral. In fixed-income • In fixed-income portfolios, we anticipate moderately higher yields and a further flattening of the yield portfolios, we favo,- curve, though much of the move has already occurred. We also see credit spreads as vulnerable quality and inflation given their relatively low level. In this environment we favor a neutral duration maturity structure and protection. a moderate overweight in Treasury inflation-indexed securities (TIPS). We will also maintain an underweight position in corporate bonds and mortgages. s 4R a City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 12 .s . . I. I~ ~ . r ~ III r ^~ . III ~^~I Iw I~ I~ I~ ~ ~_ - .. i (9/30/2004) $ 8,942,442 ied Income $ 589 $ 8,943,031 $ 923,787 $ (142,604) $ 643,321 Dividends $ 184,443 ncome $ 371 Income $1 $ 0,551,389 959 Please refer to appendix for full disclosure. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT I i s Period Ending ~ Performance Comparisons June 30, 2005 Year Fiscal Year Inception to Date to Date Trailing Trailing Trailing Trailing to Date Quarter 6 Months 9 Months 12 Months" 36 Months' 60 Months'120 Months'139 Months" •. ~ ~ Total Equity ,, 0.56% -0.57% 10.83% 9.37% 8.74% 3.08% 10.69% 10.73% SunTrust Retirement High Grade Growth Fund Russell 1000 Grovith Index S & P 500 Barra Grov~th Index S & P 500 Index SunTrust Retirement High Grade Relative Value** Russell 1000 Value Index S & P 500 Barra Value Index S & P 500 Index STI Classic Small Cap Growth Fund Russe112000 Growth Index STI Classic Small Cap Value Fund Russe112000 Value Index STI Classic International Equity Index Fund MSCI EAFE Index SunTrust Retirement Mid Cap Equity Fund Russell Mid Cap Index S & P Mid Cap 400 Index Total Fixed Income Please refer to appendix for full disclosure. 0.12% -3.49% 4.15% 0.61 % 3.27% -0.21 % 11.36% 11.11 2.46% -1.72% 7.29°'° 1.68% 7.26% -10.36% 7.40% 8.47% 0.14% -1.73% 6.63% 1.54% 6.43% -7.87% 9.12% 9.99% 1.37% -0.81 % 8.34% 6.32% 8.28% -2.37% 9.94% 10.50% 1.16% 2.86% 12.26% 12.32% 9.53% 2.67% 10.12% 10.06% 1.67% 1.76% 12.33% 14.06% 11.00% 6.56% 12.03% 12.02% 2.58°6 0.09% 10.03% 11.18% 10.09% 3.36% 10.29% 10.59% 1.37°6 -0.81 % 8.34% 6.32% 8.28% -2.37°'° 9.94°0 10.50°0 3.25% -1.48% 13.36% 9.34% 13.34% 4.74% - - 3.48% -3.589b 10.96% 4.29% 11.37% -4.51 % 5.16°io -- 1.43% -0.49% 13.50% 13.67% 16.00% 18.82% 15.14% - 5.08% 0.90% 14.22% 14.39°0 14.15% 16.12°0 13.88% 13.18% -1.71 % -2.70% 13.22% 12.23% 11.62% -1.61 % 6.20% - -1.00°% -1.16°0 13.99% 13.66% 12.06% -0.59% 5.20% 6.02% 5.39% 7.06% 20.99% 21.21 % 11.33% 1.35% - - 4.18°'° 3.92°0 18.11 % 17.12% 15.86°% 7.34% 12.90% 12.89% 4.26% 3.85% 16.47% 14.03% 13.16% 8.49% 14.66°% 14.21 2.71 % 2.59% 3.52% 6.54% 5.71 % 7.44% 6.83% 6.59% SunTrust Retirement High Grade Intermediate*** 2.17% 1.87% 2.74% 5.18% - - - - Lehman Intermediate Aggregate Bond Index 2.42% 1.85% 2.64% 5.40% 4.94% 6.90% -- -- Lehman Intermediate A+ GoWCredit Bond Index 2.45% 1.69% 2.02°'° 4.57% 4.67% 6.71 % 6.27°0 6.08°'0 SunTrust Retirement High Grade Bond Fund 3.00% 2.87% 3.87% 7.27% 6.02% 7.60% 6.93% 6.68% Lehman Govt Credit Bond Index 3.44°i° 2.75% 3.57% 7.26% 6.41 % 7.70% 6.90% 6.66% Lehman Aggregate Bond Index 3.01 °% 2.51 % 3.49% 6.80% 5.76% 7.40% 6.82% 6.64% ` - Return Lc unnuuli:ed. - bu-eptinn 6/_30/200 2. Longer ter m results ore linked Iu dre Sl7 Clussir Gro K7h oral hu•nnte Funel to .ch mr results prior to inreplinn. ~* - Inception 10/20/200.;. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT ~ 14 ~ ~ ^~ ~ ~ ~ ~ ~ ^~ r ~ ~ ^~ Illy ~ ~ i iii Period Ending Portfolio Com ~~7~1~~~ June 30, 2005 I p Total Cash Equivalents 1.0% Total Fxed Income 30.4% Please refer to appendix for full disclosure. Total Equities 68.6% SunTrust Retirement High Grade Growth Fund $ 3,041,452.10 SunTrust Retirement High Grade Relative Value Fund $ 2,412,111.83 STI Classic International Equity Index Fund $ 943,317.67 SunTrust Retirement Mid Cap Equity Fund $ 425,456.90 STI Classic Small Cap Growth Fund $ 209,953.77 STI Classic Small Cap Value Fund $ 209,139.45 Total Equities $ 7,241,431.72 SunTrust Retirement High Grade Bond Fund $ 2,349,671.52 SunTrust Retirement High Grade Intermediate Bond Fund $ 854,306.98 SunTrust Retirement Reserve Fund Tnt~l f`~cL~ Cn~~iv.~ler~+e. $ 105,978.48 $ 105,978.48 28.8% 22.9% 8.9% 4.0% 2.0% 2.0% 22.3% 8.1 1.0% .,,tea, City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 15 June 30, 2005 ~ SunTrust Retirement High Grade Growth Fund Fund Description ~ Value Bfend Growth NAV: $54.13 Large Assets (mil): $54.0 Medium Small Please refer to appendix for full disclosure. Investment Cateoo Large Growth • • - Security E uit Security Equity Exxon Mobil Corp. 3.0% Cisco Systems Inc. 2.5% Microsoft Corp. 2.9% Chubb Corp. 2.5% American Express Co. 2.6% Oracle Corp. 2.3% EMC Corp. 2.5% Goldman Sachs 2.3% Texas Instruments Inc. 2.5% General Electric Co. 2.2% . .. The Fund seeks capital appreciation by investing primarily in large, well- established domestic corporations. The Fund is designed to comply with guidelines that are based principally on .. Cash: 3.2% U.S. Stocks: 96.8% Non-U.S. Stocks: 0.0% Florida laws governing the investment of municipal retirement plans for fire, police and general government employees. ,~h ussi~ks ~ 8~, 3 [`' Non-OS SIa1~ Consumer Discretionary , - 14.1 Consumer Staples ° ° ~° 10.1 Energy 4.4% a. a % Financials 20 8% Healthcare ~ ~ '° Characteristics Fund S &P 500 Index 13.4 e% ^~,s _ Industrials ~ 11.2 . Dividend Yield 1 2% 1 8°~ . . , Informatio n Technology 28.2 % Market Capitalization ($bil) 66.2 88.7 151 % Return on Equity 17.8 19.3 Materials 1'0 % 3.0% Est. 3-5 Yr EPS Growth 13 4 12 0 Telecom Services 3 2 % . . ^ Fund Price to Book 2.8x 2.8x utilities ^ S&P 500 Index 3 5, Price to Earnings(FY1) 17.1x - 15.8x . - - - Annualized Three One Three Five Ten Inception Months YTD Year Year Year Year 04/01/1990 Fund 0.1 % -3.5°ro 0.6°ra 3.39b -0.2°0 11.4% 11.7% S&P 500 Index 1-~°~ -i~.8"-~~ G.3°~ 8.3°~ ~- ~~ °, Lipper Large Cap Growth In dex 3.5% -1.3% 3.8% 5.7% -10.0% 6.6% 8.9% City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 16 Jne30, o`o ~ SunTrust Retirement High Grade Growth Fund Please refer to appendix for full disclosure. The stock market fell sharply in April but rebounded in May and June, with the Fund finishing the quarter up 0.1 versus the S&P 500 advancing 1.4%. S&P sector performance analysis indicated Value styles continued to outperform Growth. Best performing sectors for the quarter were Electric Utilities (+9.3%), followed by Financials (+4.3%) and Health Care (+4.1 %), while the worst performing sectors were Materials (-9.9%), Industrials (-3.3%), and Consumer Discretionary (-1.0%). Stocks within the Fund continue to demonstrate superior earnings growth with few reporting disappointing results. As the year progresses, these consistent growers will be rewarded as earnings growth slows for many cyclical companies. The Fund remains focused on high quality, large cap stocks raising dividend payments, generating strong cash flows, buying back stock, and selling at reasonable valuations. These characteristics are prevalent within the Funds largest sector holding, Technology. We see positive returns for the balance of the year as the economy shows average growth with only a moderate level of inflation. Fund Manager: Elliott Perny, CFA 1998 1999 2000 2001 2002 2003 2004 2005 First Quarter 15.4% 5.6% 0.2% -4.8% 2.4% -2.2% 1.3% -3.6% Second Quarter 5.7% 5.1% 0.6% 5.8% -10.9% 9.6% 1.0% 0.1% Third Quarter -12.4% -7.7% 2.6% -13.6% -14.9% 2.0% -3.4% Fourth Quarter 25.9% 14.8% -1.7% 12.3% 4.0% 10.4% 7.9% Fund 34.7°~0 17.6°% 1.6°,0 -23°-0 -19.3 %~a 20.9°a 6.6°% -3.5°0 ->~ iii Index ~ti f3'~ . t_ 1 _ _ i i 8"~ =~2 7- ors - i ~ ~x r N~'~~ Lipper Large Cap Growth 25.7% 28.0% -10.9% -18.0% -24.2% 27.0% 7.5% -1.3% $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 3 Year Alpha Beta R-Squared Sharpe Ratio Std. De~nation Fund -0.20 0.69 73.66 0.16 11.06 S&P !,0(i Index ii.00 '~ u0 ?OU.U~~ 0.50 ?3.75 City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 17 ~ ~ '~ ~ ~ ~ ~ ~ ~ ~ i ~ ~ ~ !~ ~ ~ ~ ~ June 30, oio SunTrust Retirement High Grade Relative Value Fund Value Blend Growth Cusip: 990001182 Large NAV: $13.14 Medium Assets (mil): $49.1 Small Investment Category Large Value Please refer to appendix for full disclosure. Security %Equity Security %Equity Exxon Mobil 1.9% General Electric 1.7% Citigroup 1.8% Bank of America 1.7% Pfizer 1.8% Berkshire Hathaway B 1.7% Applied Materials 1.7% Microsoft 1.7% Advance Auto Parts 1.7% Principal Financial 1.7% • • • - Barra Characteristic Fund Value Dividend Yield (Current) 1.9% 2.1°0 5 Year EPS Growth (Hist.) 14.0% 3.8°0 Market Capitalization ($bil) 69.9 B 59.6 B Price-to-Book 2.6x 2..Ox P/E (12 months trailing) 16.8x 15.3x Return on Equity 19.8% 15.1% The Fund seeks long-term capital Cash: 2.8% appreciation with a secondary goal of U.S. Stocks: 97.2% current income by using avalue- oriented investment strategy. The 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. Consurrer Discretionary Consumer Staples Energy Financials Healthcare Industrials Inf orrretion Technology Nhterials Telecom Services Utilities ~~ t2s % - ss% 2.4 to.o% 8.3 - 12.5°0 8.0°/ ~ tz.z% 8.2 tt.s% 3.7 % 42 2.8 % ~ s.o% 3.4°~ 6.3 ^ Fund ^ Barra Value Index 36.8 Annualized Three Year to One Three Inception Months Date Year Years 6/30/02 Fund 1.2% 2.9% 12.3% 9.5% 9.5% Barra Value IrldE?x > 6 %~. C; 1 ~~: t 1 .2`>~ w Q 1'~~, 1(i t ~> S&P 500 1.4% -0.8% 6.3% 8.3% 8.3% City of Winter Springs General Employees' Pension P lan ~° TRUSCO CAPITAL MANAGEMENT 18 ~e ~ ~ ~ ~ r ~ ~ r r~ ~ rr vs rrir >tr- ~ ~ ~r r Period Ending SunTrust Retirement High Grade Relative Value Fund- June 30, 2005 continued Please refer to appendix for full disclosure. Persistently higher energy prices, a rebounding dollar, and tepid money supply growth headed a laundry list of factors creating global economic headwinds in the second quarter. The economic "soft patch" proved to be bad news for industrially-oriented sectors but good news for bonds and interest-sensitive sectors. Equities finished the quarter higher; the S&P Barra Value Index gained 2.6% mostly occurring in June. Financials, healthcare, utilities, technology, and energy fueled the gain, while materials, industrials, and consumer spending areas declined. Fund performance was slightly behind the value index in the second quarter, though still ahead year to date. Fund strategy and market outlook are not significantly different from last quarter and we anticipate a respectable market return over the balance of the year. Fund Manager: Charles B. Arrington, CFA 2002 2003 2004 2005 First Quarter N/A -4.1 % 2.4% 1.7% Second Quarter N/A 13.5% 2.6% 1.2% Third Quarter -17.4% 2.1% 0.1% Fourth Quarter 6.5% 14.1 % 9.1 Fund -12.1 % 26.7% 14.7% 2.9°% Barra Value -12.6°ro 31.8% 15.7°'° 0.1 °~o S&P 500 -10.3% 28.7% 10.9% -0.8% $14,000 $13,000 I $12,000 - - $11,000 $10,000 \- __ $9,000 \ ~'~~, $8,000 $7,000 ~------ Jun Sept Dec Mar Jun Sept Dec March June Sept Dec March June - SunTrust Retirement High Grade Relative Value S&P/Barra 500 Value City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 19 ~ ~ 1~r ~ ~ ~ ~ ~i ~ ~• ~Ir tt ~ ~ ~ ~ ~ ~ ~ June 30, o`o STI Classic International Equity Index Fund Please refer to appendix for full disclosure. Value Blend Growth Ticker: SIEIX The Fund seeks to rovide P ° Cash: 1.9 /o Large Expense Ratio: 1.03% diversification a nd capital Non-U.S. Stocks: 98.1% Medium NAV: $12 61 appreciation by investing in U.S. Stocks: 0.0% Small Assets (mil): . $533 37 securities of companies . headquartered or based in foreign countries to replicate "S s~~ks "°^"5 sta"~ Investment Cate~7corv the Morgan Sta nley EAFE Foreign Stock GDP Index. ~as~ .. .~ y~~, Security %Eguity Securitv %E uit - Total S.A. 1.5% Siemens AG 1 2% Consumer Discretionar Y ,2.9°-0 . i2_e ENI S.p.A. 1.5% BP PLC 1.2% Consumer staples s.2i Toyota Motor Corp. 1.4% Telefonica S.A. 1.1% 6.2°6 EON AG 1.3% Sanofi-Aventis S.A. 1.1% ~ergY 7.840 Deutsche Telekom AG 1.2% Banco Santander Cer 1 0% 7.9°;° . Financials 27 3°.0 '• • 27.3 Healthcare 5.9 MSCI ssr Characteristic Fund EAFE GDP Industrials ~ 1'4 1.4, Dividend Yield (Current) 2.5% 2.5% 8 7°' EPS Growth (5 yr est.) 11.4% 11.4% Information Technobgy ' O 67~ Market Capitalization ($bil) 39 8 39 8 Materials 7.o i . . 70, PrICe-tO-BOOk 2.OX 2.OX 7.8 P/E (12 months trailing) 16.Ox 16.Ox Telecom services 7.e°~ ^ Fund Return on Equity 16.3% 16.3% tnuiees ~ it~° ^ MSCI EAFE GDP W i ht d e g e - -. - - . Annualized Three Year to One Three Five Ten Inception Months Date Year Years Years Years 6/01/1994 Fund -1.7°,/° -2.7°0 12.2°0 11.6% -1.6°~0 6.2% 5.8°0 MSCI EAFE GDP Weighted -2 i°~, -~ 7°<, i> >~' 10.6°'~ -20~'~ 5.2°~ ~.8°~ Lipper International Funds Average -0.7% -1.1 % 12.6% 10.3% -1.4% 6.1 % 5.5% ;~.-~ City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 20 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1~ ~ ~ ~ ~ Period Ending June 30, 2005 The MSCI EAFE GDP was down 2.7% in the second quarter. The best performing sectors were Energy +6.0%, Utilities +3.3%, and Health Care +1.3%. The worst performing sectors were Telecommunications Services -5.5%, Consumer Discretionary -3.0%, and Consumer Staples -2.9%. From a country standpoint, Norway led the way at +8.5% followed by Hong Kong +8.1 and Austria +6.9%. The worst performing markets were Portugal - 8.4%, Belgium -4.2% and Italy -3.9%. As has been the case for the past few quarters, investors sought out stocks that were trading at lower valuation multiples and stocks with higher Dividend Yields. In addition, small and mid-cap stocks continued to outperform larger cap stocks. The Fund modestly outpaced its benchmark down 1.71 %. STI Classic International Equity Index Fund -continued Fund Manager: Chad Deakins, CFA Co-Manager: Andrew Atkins ~ - .. 1998 1999 2000 2001 2002 2003 2004 2005 First Quarter 17.6% 1.9% -0.6% -12.2% 0.9% -8.2% 4.8% -1.0% Second Quarter 4.8% 4.3% -4.3% -1.4% -1.5% 20.1% 0.2% -1.7% Third Quarter -13.0% 5.7% -8.5% -15.5% -20.5% 8.9% -0.9% Fourth Quarter 21.3% 16.4% -4.7% 4.5% 5.7% 17.0% 16.4% Fund 30.0°ro 30.7°/ -17.1% -23.5°/ -16.5°~~ 40.5% 21.1°~0 -2.7% ".q~ rl ~~r~ ,.~,n ~r,i ~,~,,_,~ ,~ ,:,; ~_, ~_ Lipper International Funds Average 12.7°~0 37.8% -14.7% -19.3% -16.7% 34.7% 18.1% -1.1% $25, 000 $20, 000 $15,000 $10, 000 $5, 000 Jun- Jun- 94 95 Jun- Jun- Jun- Jun- Jun- Jun- Jun- Jun- Jun- Jun- 96 97 98 99 00 01 02 03 04 05 Fund MSCI EA FE GDP Weighted Please refer to appendix for full disclosure. Fund Lipper International Funds City of Winter Springs General Employees' Pension Plan 3 Year Alpha Beta R-Squared Sharpe Ratio Std. Deviation 0.08 0.98 1.00 0.66 15.27 '.UPI t),l~l ~J.61 -0.12 0.98 0.94 0.18 15.16 TRUSCO CAPITAL MANAGEMENT ~ 21 Period Ending I SunTrust Retirement Mid-Cap Equity Fund June 30, 2005 Value BIerW Growth The Fund seeks Ion term ca ital rowth NAV: $30.45 9- p 9 Large by investing in domestic corporations with Assets (mil): $30.32 a market capitalization between $1 billion Medium and $10 billion. The Fund is designed to small comply with guidelines that are based principally on Florida laws governing the Investment Category investment of municipal retirement plans for fire, police and general government Mid-Cap Blend employees. Cash: 0.0% Stocks: 100.0% U 5 S~aAs ~~~~, c~sn orr. .. - - Security Equity Security E uit Reynolds American Inc. 2.1% Marathon Oil Corp. 1.8°ro consumer Discretionary Ashland Inc. 2.1% Yum! Brands Inc. 1.8% Rockw ell Collins Corp. 2.1 % Textron Inc. 1.8% Consumer Staples Monsanto Co. 2.0% CIGNA Corp. 1.6% Energy Amerada Hess Corp. 1.8% Lincoln National Corp. 1.6 Rnancials Please refer to appendix for full disclosure. ~ zo.~ % , 9.5 ^ s.a% _ 9.0 5.5 , - 20.5 • Health Care , t2 % 9.9 Characteristic Fund Diu: soli iViil_i `~,:, ~ ,o s% Industrials . Dividend Yield (Current) 1.3% 1.4°~ a.9i EPS Growth (5 Yr. Est.) 12.4% 12.8°~ Information Technology ,s.s% 'a'°'° Market Capitalization ($bil) 9 0 7 7 Materials 3.4 % . . 5., Price-to-Book 2.5x 2.5X Telecom Services ,.z% ^ Fund P/E (12 mo trailing) 15.6x 18.4x ,.s % Price-to-Sales 1.1 x ~ .2x utilities s.o% ~ go ^ Russell Midca Index p - -. - - Annualized Three Year to One Three Five Inception Months Date Year Years Years 12/1996 Fund 5.4% 7.1 % 21 .2% 1 1 .3% 1 .4% 14.0% Russell Mid-(ap Index 4.2°~~ 3.9~,o t 7 1 °~, 1 5.9"~~ 7_'3°~~ 1 1 2°~° Lipper Mid Cap Core Funds Avg 2.6% 2.1 % 1 1.9% 12.0% 4.7% 12.1 City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 22 ~ I~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Period Ending SunTrust Retirement Mid-Ca Eryryuit`/ Fund -continued June 30, 2005 ~ `1 7 The Russell Mid Cap Index was up 4.2% for the 2nd quarter of 2005. The best performing sectors were Utilities +10.3%, Financials +8.1 %, Telecommunication Services +8%. The worst performing sectors were Information Technology -0.65%, Industrials -1.8% and Materials - 5.2%. Smaller Cap stocks generally performed better than Large Cap issues. Some of the best performing stocks were Ameritrade +82%, Southwestern Energy +65%, Kos Pharmaceutical +57%. The Fund outperformed its index by 120 basis points with a return of 5.4%. Fund Manager: Chad Deakins, CFA 1998 1999 2000 2001 2002 2003 2004 2005 First Quarter 13.8% -0.6% 21.5% -11.7% -5.5°/ -4.9% 3.8% 1.6% Second Quarter -1.3% 19.1% -1.5% 16.5% -13.4% 14.1% 0.5% 5.4% Third Quarter -17.9% -3.1% 6.0% -21.0% -15.3% 4..5% 0.2% Fourth Quarter 25.9% 35.8°% -11.6% 24.5% 0.5% 13.2% 13.0% Fund 16.0°0 55.9°-0 12.2°i L2°~o -30.4°~° 28.4°~0 18.0°0 7.1°'° Lipper Mid Cap Core Funds Avg 7.8% 28.2% 6.3% -4.9% -17.4% 36.1% 15.5% 2.1% $35,000 $30, 000 $25, 000 $20, 000 $i s,ooo $i o,ooo $s,ooo $o S ~ ~ ~ ~ ~ ~ 8 s 8 8 8 ~ ~ Fund Russell Midcap Index Please refer to appendix for full disclosure. Fund Russell Mid-C~zp Inr_tex Lipper Mid Cap Core Funds City of Winter Springs General Employees' Pension Plan 3 Year Alpha Beta R-S uared Sharpe Ratio Std. Deviation 0.33 0.85 0.68 0.70 14.19 U i_)i~ ~ lPa 1 SJi) 0.98 14.651 -0.25 0.96 0.94 0.21 14.84 TRUSCO CAPITAL MANAGEMENT 23 ~ s ~ . ~r ~r r it ~ a~ ~ ~ ~ r ~r ~ .~ r ~ June 30, 20105 STI Classic Small Cap Growth Stock Fund Value Blend Growth Large Medium Small Investment Cateoorv Small Growth Please refer to appendix for full disclosure. Ticker: SSCTX The fund seeks long-term Expense Ratio: 120% capital appreciation by investing in the stocks of NAV: $20.64 companies with market Assets (mil): $985.8 capitalization between $50 million and $2 billion at the time of purchase. Security % Equity Security % Equity Flow Intl. 1.1% Nice-Systems 0.8% Jos A Bank Clothier 1.0% Ultimate Software 0.8% Protein Design Labs 0.9% SFBC Intl 0.8% Genlyte Group 0.9% Rocky Shoes 0.8% Aspect Medical 0.9% Captiva Software 0.8% Characteristic Dividend Yield (Current) EPS Growth (3 yr est.) Market Capitalization ($bil) Price-to-Book P/E (12 months trailing) Return on Equity S&P 600 Fund Sm. Cap Grth 0.3% 0.6% 19.1% 16.3% 0.9 1.6 2.5x 3.7x 18.2x 21.5x 13.8% 18.7% Consumer Discretionary 3.1 Consumer Staples 2.3 3.6 Energy Rnancials H Rh ea care Industrials Information Technology 4.4°0 Materials 3.3 o.o % Telecom Services o.a % O~0 Utilities 2.1 Cash: 0.0% U.S. Stocks: 100.0% U S Stocks t 00 0°e ~; - 13.6% 22.6 ~ 9J°% 10.3 7.9 1 5.4 21.2% 17.6 1 5.4 % 32.0 1 s.1 ^ Fund ^ S&P 600 Small Cap Growth Index Annualized Three One Three Four Five Inception Months YTD Year Years Years Years 10/08/1998 Fund 3.3% -1.5% 9.3% 13.3% 6.0% 4.7% 15.2% S&P 600 Small Cap Urowtfl index 3.8°0 20°~: 1~ 7'~. 1~, 3°,; X3.5°~. 5._r°~: 11,6°~~~ Lipper Small Cap Growth Classification 3.8% -1.7% 5.4% 9.8% 0.8% -3.6% 12.0% •: x= City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 24 rr r^~ ~r r rr ~ r~ r. r r. ~ r r r rr ~ rr rr r Period Ending STI Classic Small Cap Growth Stock Fund -Continued June 30, 2005 Following a difficult start to the year, small cap stocks rebounded in the 2nd quarter, as the S&P 600 Barra Growth and Russell 2000 Growth gained 3.8% and 3.5%, respectively. The Small Cap Growth Fund gained 3.3%, slightly trailing the 3.8% return of the Lipper Small Cap Growth category. While smallcap stocks outperformed large caps this quarter, the value style, led by Energy and Financials, outperformed growth once again. Continued Fed rate increases led to strong performance in Healthcare, as investors gravitated toward the least economically sensitive sector. Conversely, more sensitive areas like the Materials, Industrials, and Technology sectors were the weakest performers. The Fund's positive overall stock selection was offset by overweights in these weaker sectors. Fund Manager: Mark Garfinkel, CFA Please refer to appendix for full disclosure. 1999 2000 2001 2002 2003 2004 2005 First Quarter -11.4% 16.4% -10.6% 1.1% -6.4% 8.1% -4.6% Second Quarter 20.8% -0.1 % 16.0% -10.2% 24.2% -0.6% 3.3% Third Quarter -5.2% 0.3% -22.8% -19.9% 9.7% -3.5% Fourth Quarter 18.8% -4.1% 23.9% 6.2% 14.2% 15.1% Fund 20.6% 11.8°0 -0.8°% -22.7% 45.6°i° 19.2% -1.5°i° S~iP 60U Small Cap ~~rz~;a,t1~ In~Jrx 19 ti': ri.6",_ -12`; 15.=1' 37.3' ?2 il" ~' 0°,. Lipper Small Cap Growth Classification 63.4% -6.2% -11.3% -29.7% 44.4% 10.7% -1.7% $30, 000 $25, 000 $20.000 $15, 000 $to.ooo $s,ooo $o Oct-98 Aug-99 Jun-00 Apr-01 Feb-02 Dec-02 Oct-03 Aug-04 Jun-OS Fund S&P 600 Small Cap Grow th Index Fund S&P 600 Small Cap Growth Index City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT I 25 3 Year Sharpe Std. Alpha Beta R-Squared Ratio Deviation -0.3 1.2 1.0 0.6 5.5 U 0 7 O LG 0_y 4.(~~ Period Ending I STI Classic Small Cap Value Fund June 30, 2005 Value Blend Grow[h Large Medium Small Investment Cateoorv Small Value Please refer to appendix for full disclosure. Ticker: SCETX The fund seeks long-term Expense Ratio: 1.22% capital appreciation and income by investing in the NAV: $20.10 stocks of companies with a Assets (mil): $680.2 market capitalization between $50 million and $3 billion. Securi % E ui Securi % E ui Harris Corp. 3.3% Airgas Inc. 2.0% Cooper Cos. 2.6% CHC Helicopter 2.0% Fair Isaac Corp. 2.6% FactSet Research 1.9% Reynolds & Reynolds 2.3% Church & Dwight 1.9% Brink's Co. 2.1% StanCorp Financial 1.8% Russell Characteristic Fund 2000 Value Dividend Yield (Current) 1.5% 1.8°~0 Est. 3-5 Yr EPS Growth 13.7% 10.8% Market Capitalization ($bil) 1.8 1.0 Price to Book 2.Ox 1.7x Price to Earnings 17.3x 18.2x Return on Equity 13.7°,0 8.5°~~ consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials I nlortnalion Technology Materials Telecom Services Utilities Cash: 3.2% U.S. Stocks: 81.8% Non-U.S. Stocks 15.0% 3 z~ ~. ._ ~ z ,:, ~_ ~ tB.o% 1 5.4 4.4 % 1 3.0 ~ 11.2% ~ 64 % s. e 33.7°ib ^ Fund ^ Russell 2000 Value Index Annualized Three One Three Five Ten Inception Months YTD Year Year Year Year 8/31/1994 Fund 1.4°% -0.5% 13.7 %% 16.0°%° 18.8% 15.2% 15.5% Russell 20001 Vatue Index 5. 1 ° ; 0.9°0 14 4°~, '14.2"~ ~ r~ 1 °<; 13.9°~ 13.6°~ Lipper Small Cap Value Index 3.1% 1.3% 13.5% 15.6% 15.7% 13.2% 13.0% - 3~ ~, City of Winter Springs General Employees' Pension Plan , TRUSCO CAPITAL MANAGEMENT 26 I~ ~ ~ ~ r r r ~ r ~ ~ ~ rr ~ ~ ~ ~ wr ~ Period Ending I STI Classic Small Cap Value Fund -continued June 30, 2005 Please refer to appendix for full disclosure. The STI Classic Small Cap Value Fund returned 1.4% during the second quarter versus 5.1 % for the Russell 2000 Value Index. Cheap, dividend paying stocks lagged the overall small cap index, hampering the Funds quarterly performance. Exposure to cyclical companies also contributed to underperformance. The Fund actively traded in the second quarter, selling several companies meeting internal valuation targets while adding undervalued companies to the portfolio. Economic indicators and financial markets both remain undecided, stemming from concerns over rising interest rates and high energy costs. Strict discipline adherence drives Fund performance over long time periods, directed by our bottoms- up, dividend paying investment process preferring quality stocks over risky, unprofitable companies. Fund Manager: Brett Barner, CFA 1998 1999 2000 2001 2002 2003 2004 2005 First Quarter 9.7% -13.3% -4.1% 5.5% 9.7% -6.4% 5.7% -1.9% Second Quarter -8.9% 19.8% 5.9% 8.9% -1.8% 17.1% 3.9% 1.4% Third Quarter -22.0% -8.1% 6.7% -8.1% -12.6% 7.9% 0.2% Fourth Quarter 11.0% 1.9% 9.0% 14.9% 4.3% 15.9% 14.1 Fund -13.5°0 -2.7°io 18.0% 21.2% -1.7°'0 37.1% 25.5% -0.5°io Lipper Small Cap Value Index -6.7% 1.9% 16.1% 17.2% -11.2% 47.5% 20.7% 1.3% Fund Russell 2000 Value . - - - 5 Year Alpha Beta R-Squared Sharpe Std. Deviation Fund 0.44 0.80 86.88 1.14 14.37 Russell :'000 Valise Inric~x 0.00 1_UU 100.00 0.81 1( sit City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 27 ll~ >t~ ll~ ~^. rM rr r ~ r ~ r ~ I~ r l~ ~ ~ r ~ June 30, o`o SunTrust Retirement High Grade Bond Fund Short Int. Lon High Medium Low Investment Cateaorv Intermediate-Term Bond Please refer to appendix for full disclosure. Unit Value: $33.11 The fund seeks to provide a Assets (mil): $249.49 high level of total return 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 G/C A+ US Treasury 85.8% 50.3°~ 0-1 Year Agency/Gov Related 0.0% 25.1 ° Mortgages 0.0% 0.0°~~ 1-3 Years Corporate Bond 1 1.6% 24.6 ~ ., Cash 2.6% 0.0°, 3-5 Years Characteristic Fund ML G/C A+ 5-7 Years Average Rating TSY AAA Average Coupon 4.3% 5.0 7-10 Years Current Yeld 4.1 % 4.6 Yeld-to-Maturity 3.8% 4.2 10+Years Average Maturity 6.8 7.4 Effective Duration 4.7 5.1 °r° 37.1 1d ~ roles G/C A+ Annualized Three Year- One Three Five Ten Inception Months to-Date Year Years Years Years 9/1989 Fund 3.0% 2.9°0 7.3°0 6.0% 7.6°0 6.9% 8.0% Merrill Lynch G/C A Rated and Above Index 3.5% 3.0°ro 7.0°~0 5.8°0 7.5°0 6.8% 7.7% City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 128 Cash: 2.6% Bonds: 97.4% Bonds 97.4°0 Ca zc ~ ~ llll~ ~ r ~ ~ r ~ ~ ~ ~ ~ +~ ~ ~ +~^~ ~ r June 30, oio SunTrust Retirement High Grade Bond Fund High grade investors were rewarded in Q2 with solid absolute returns of 3.0% as the fixed income markets once again thwarted the pundits. The rising interest rates widely predicted for 2005 have only been evident in the front end of the yield curve. The FED raised short term rates 50 basis points to further remove past accommodation and keep inflation in check, but longer-term rates actually declined 55 basis points. Holdings in TIPS and the underweight in spread product hurt relative performance. Current data shows the US economy on a steady path of self-sustaining growth, and combined with globally competitive interest rates enables the US bond market to keep attracting overseas investors and helped to keep rates lower than expected in the US. We are underweight the corporate sector as tight spreads and low volatility in our view present more risk than return potential. The modest yield give up in the current environment in return for a significantly higher quality portfolio reinforces our strategic conviction. With inflation expectations lowered, valuations cause us to favor nominal Treasuries over TIPS. We find spreads of longer duration securities more compelling than short and intermediate bonds. MBS spreads are very rich relative to long term historical norms and we will await more attractive buying opportunities before adding to the sector. Fund Managers: John Talty, CFA Perry Troisi Aug-04 1999 2000 2001 2002 2003 2004 2005 First Quarter -0.4% 2.3% 3.2% -0.5% 1.6% 2.9% -0.1 Second Quarter -1.0% 0.7% 0.2% 4.2% 2.5% -3.0% 3.0% Third Quarter 0.9% 2.5% 5.2% 5.7% -0.4% 3.3% Fourth Quarter -0.5% 4.9% -0.1 % 1.5% -0.1 % 1.0% Fund -1.1 % 10.7% 8.6% 11.4% 3.6% 4.1 °ro 2.9% Merrill Lynch G/C A+ Index -2.2"~ 12.4°> 8.2°~ 1 1.6°j~ 3.2°<. 3.8°~ 3.0% $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 4 Aug-89 Aug-92 Aug-95 Aug-98 Aug-01 Fund ML G/C A+ Please refer to appendix for full disclosure. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 29 w w w w >~ r w ~r w +~r w w w w w rr rl^~ I~ r Period Ending SunTrust Retirement High Grade Intermediate Bond Fund June 30, 2005 Short Int. Long High Medium Low Investment Cateoorv Intermediate-Term Bond Sector Treasury Agency/Gov Related Mortgages Corporate Bond Cash Characteristic Average Coupon Current Yield Yield-to-Maturity Average Maturity (Years) Effective Duration (Years) 9.1 0-1 Year 1.1% Cash: 0.4% Bonds: 99.6% Bonds 99.6°a c~~: o.a 1-3 Years 24.4% 3-5 Years 5-7 Years 12.5% 1 1.8% 3.6% 7-10 Years 10.0% Three Months 2.2% 2.4°~0 Unit Value: $10.72 The fund seeks to provide a high level of total return through Assets (mil): $160.24 current income and capital appreciation by investing in domestic corporate investment grade bonds rated A or higher by major credit rating agencies, mortgages and U.S. Government Securities. Fund Leh Agg Int A+ 54.7% 23.6°0 0.0% 16.0% 38.4% 48.1 °o 6.5% 12.3% 0.4% 0.0% Fund TS Y 4.9% 4.8% 4.2% 6.1 2.9 Leh Aaq Int A+ AAA/AA1 4.9% 4.8% 4.4% 4.7 3.0 Fund Please refer to Lehman Aggregate Intermediate A or Better Index appendix for full disclosure. City of Winter Springs General Employees' Pension Plan 50.4% 47.3% ^ Fund ^ Lehman Agg Int A+ Annualized Year to One Inception Date Year 11 /2003 1.9% 5.2% 3.9% 1.9°'0 5.3°0 4.0% TRUSCO CAPITAL MANAGEMENT I 30 ~ w^~ ~ ~ ~ ~ r ~ ~ ~ ~Ir ~ ~ ~ s ~ ~ ~ r Period Ending SunTrust Retirement High Grade Intermediate Bond Fund June 30, 2005 Intermediate high grade fixed income investors were rewarded in Q2 with solid absolute returns of 2.2%. Performance relative to the benchmark however was negatively impacted by our TIPS position which lagged nominal treasuries when investor sentiment on inflation shifted to a more positive stance. Security selection within the mortgage sector also modestly hurt returns in the quarter. The rising interest rates widely predicted for 2005 have only been evident in the front end of the yield curve. The Federal Reserve raised short term rates 50 basis points to further remove past accommodation and keep inflation in check, but intermediate-term rates actually declined almost 50 basis points. Current data shows the US economy on a steady path of self- sustaining growth and coupled with globally competitive interest rates enables the US bond market to keep attracting overseas investors. We are underweight the corporate sector as tight spreads and low volatility in our view present more risk than return potential. The modest yield give-up in the current environment in return for a significantly higher quality portfolio reinforces our strategic conviction. With inflation expectations lowered, valuations cause us to favor nominal Treasuries over TIPS. We find spreads of longer duration securities more compelling than short and intermediate bonds. MBS spreads are very rich relative to long term historical norms and we will await more attractive buying opportunities before adding to the sector. 2001 2002 2003 2004 2005 First Quarter N/A N/A N/A 2.2% -0.3% Second Quarter N/A N/A N/A -1.7% 2.2% Third Quarter N/A N/A N/A 2.4% Fourth Quarter N/A N/A N/A 0.9% Fund N/A N/A N/A 3.7% 1.9% Lehman Aggregate Inter. A+ Index 8.7°0 9.6°~0 3.3°-0 3.6°% 1.9% $11,000 $10,500 $10,000 $9,500 ; I I I I I I I I I Oct-03 Dec-03 Feb-04 Apr-04 Jun-04 Aug-04 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Fund Managers: Fund Lehman Agg Int A+ Please refer to John Talty, CFA appendix for full Perry Troisi disclosure. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT ~ 31 Period Ending Fund Attribution Summar Ann reciated more than 15% June 30, 2005 Y - Np COACH INC COM $ APPLE COMPUTER INC COM $ CORNING INC COM $ LEGG MASON INC COM $ STORAGE TECHNOLOGY CORP C $ ARCH COAL INC COM $ PROTEIN DESIGN LABS INC C $ LSI LOGIC CORP COM $ 7-ELEVEN INC COM $ HUMANA INC COM $ UGI CORP COM NEW $ NORDSTROM INC COM $ WESTCORP INC COM $ RYLAND GROUP INC COM $ CBL & ASSOC PPTYS INC COM $ ALLEGHENY ENERGY INC COM $ INDYMAC BANCORP INC COM $ HOSPIRA INC COM $ ABERCROMBIE & FITCH CO CL $ CIGNA CORP COM $ EQUITABLE RES INC COM $ M D C HLDGS INC COM $ URBAN OUTFITTERS INC COM $ SCIENTIFIC ATLANTA INC CO $ MEMC ELECTRONIC MATERIALS $ AMERICAN CAP STRATEGIES L $ E TRADE FINL CORP COM $ MCAFEE INC COM $ BLOCK H & R INC COM $ AUTODESK INC COM $ PRIDE INTERNAITONAL COM $ Please refer to appendix for full disclosure. City of Winter Springs General Employees' Pension Plan 193, 278.19 $ 132, 030.81 147.02 240, 560.91 $ 254, 872.44 76.67 136, 509.45 $ 256, 745.76 49.33 106,582.96 $ 176,466.45 33.43 - $ 143,164.05 32.7 120,341.98 $ - 26.82 80, 093.91 $ 127, 828.25 26.39 73,597.94 $ - 26.31 242, 938.28 $ 205, 208.64 25.9 307,326.68 $ 482,721.78 24.42 217,153.02 $ 334,632.60 23.2 129, 921.48 $ 196, 569.24 23.04 204,954.75 $ - 22.45 127,761.20 $ 197,489.61 22.42 - $ 60,814.84 22.24 137,740.22 $ 219,817.52 22.07 104,040.00 $ 156,362.47 20.91 113,687.21 $ 175,110.00 20.86 254, 946.96 $ 281,189.10 20.24 382,382.60 $ 388,518.90 19.88 236,997.44 $ 143,004.00 19.11 278,739.30 $ 410,674.25 18.35 91,430.82 $ 133,334.88 18.18 203,776.62 $ 302,324.49 17.94 102,838.70 $ 229,642.74 17.25 112,447.80 $ 161,122.82 17.16 161, 628.00 $ 237, 508.23 16.58 146, 098.56 $ 212, 791.04 16.05 255, 631.32 $ 371, 806.20 15.81 184,273.92 $ 268,916.54 15.39 - $ 173,629.20 15.16 TRUSCO CAPITAL MANAGEMENT I 32 June 3O, of 5 Fund Attl'IbUtIOCI SUI'1'll'1'lal'~/ -Depreciated more than 15% SunTrust Retirement High Gra de E quity Fund NO SECURITIES DEPRECIATED MORE THA N 15°'0 - - un rus a firemen i ra a qu ncome un AMERICAN EXPRESS CO COM MOLSON COORS BREWING CO C INTERNATIONAL PAPER CO CO DIEBOLD INC COM DU PONT E I DE NEMOURS & 3M CO COM $ $ $ $ $ $ 101,353.01 196,783.50 218,238.28 153,196.05 272,596.80 325.622.00 $ $ $ $ $ $ - - 179.205.72 - 228.613.20 130,140.00 -100.00 -18.77 -17.21 -15.92 -15.34 -15.14 un rus a firemen fig ra e e a five a ue u n INTERNATIONAL BUSINESS MA NORFOLK SOUTHERN CORP COM DU PONT E I DE NEMOURS & $ $ $ 524.886.72 712,323.30 768.036.36 $ $ $ 459,743.20 590,778.72 678,912.85 -18.58 -16.14 -15.34 un rus a Yemen f a un AVAYA INC COM OLOGIC CORP COM UNITED STS STL CORP NEW C PETCO ANIMAL SUPPLIES INC PACIFIC SUNWEAR OF CALIF LEXMARK INTL INC NEW CL A $ $ $ $ $ $ 176,146.08 117,207.00 - 78,773.40 105,036.92 103.001.36 $ $ $ $ $ $ - 113,138.55 140,882.63 - - - -25.94 -23.78 -23.13 -19.81 -18.71 -16.12 un rus a firemen i ra a on un NO SECURITIES DEPRECIATED MORE THAN 15°b - - un rus a Iremen I ra e n erme is a on un NO SECURITIES DEPRECIATED MORE THAN 15°a - - Please refer to appendix for full disclosure. ...............,....................... _.. r _ y,,..~ ....._ WORKSTREAM INC COM SEDOL $ 26,700.00 $ 13,529.95 -59.60 DITECH COMMUNICATIONS COR $ 286,810.00 $ 133,045.00 -47.96 MERIXCORP COM $ 145,730.00 $ 67,660.00 -47.81 METROLOGIC INSTRS INC COM $ 263,016.00 $ 150,480.00 -44.22 ALTIRIS INC COM $ 102,555.00 $ 109,875.00 -38.57 MIPS TECHNOLOGIES INC COM $ 153,456.00 $ 66,960.00 -37.39 NAVIGANT CONSULTING INC C $ 408,450.00 $ 16,653.38 -35.15 MARTEK BIOSCIENCES CORP C $ 325,864.00 $ 261,924.00 -34.77 CONNETICS CORP COM $ 323,712.00 $ - -33.55 GEORGIA GULF CORP COM PAR $ 229,900.00 $ 136,620.00 -32.30 THIRD WAVE TECHNOLOGIES C $ 155.756.16 $ 94,481.13 -31.77 MAGMA DESIGN AUTOMATION I $ 207,725.00 $ 130,416.00 -29.57 COMMERCIAL METALS CO COM $ 203,340.00 $ 85,752.00 -29.53 US XPRESS ENTERPRISES INC $ 68,670.00 $ 71,460.00 -27.16 COVENANT TRANSPORT INC CL $ 160,705.60 $ - -26.37 ELKCORP COM $ 292,296.00 $ 194,140.00 -25.64 METAL MGMT INC COM NEW $ 179,760.00 $ 119,908.00 -24.40 KFORCE INC COM $ 252,770.00 $ 75,294.00 -23.02 RADWARE LTD COM $ 100,921.00 $ 110,288.00 -22.97 GREENBRIER COS INC COM $ 280,720.00 $ 208,670.00 -22.60 INFOCROSSING INC COM $ 253,440.00 $ 177,074.00 -21.28 ORANGE 21 INC COM $ 114,010.00 $ 102,548.70 -21.08 SAUER INC COM $ 133,358.59 $ 115,505.00 -21.02 DOT HILL SYS CORP COM $ 26,150.25 $ - -20.00 UNIVERSAL TRUCKLOAD SERVI $ 124,490.00 $ 123,297.00 -19.95 II-VI INC COM $ 94,176.00 $ - -19.20 ABIOMED INC COM $ 113,523.40 $ 247.95 -19.19 CARRIER ACCESS CORP COM $ 116.816.00 $ 83,868.00 -19.13 MOLDFLOW CORP COM $ 136,298.76 $ 115,433.00 -18.89 EMMIS BROADCASTING CORP C $ 144,150.00 $ - -18.01 COMMERCIAL CAP BANCORP IN $ 122,100.00 $ 51,801.00 -17.55 PERFORMANCE TECHNOLOGIES $ 150,023.16 $ 110,743.78 -16.97 VENTIV HEALTH INC COM $ 227,700.00 $ 188,944.00 -16.17 GIBRALTAR INDS INC COM $ 263,280.00 $ 197,522.00 -15.63 TELECOMMUNICATION SYS INC $ 138,840.00 $ 104,638.00 -15.36 NCI BLDG SYS INC COM $ 308,800.00 $ 131,200.00 -15.03 City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 33 June 30, O15 I Important Disclosure Information For use with Trusco Separately Managed Accounts, Common and Collective Trust Funds, and SanTrust Retirement Accounts INVF,STMENT PERFORMANCE Past performance is not indicative of future results. Performance data related [o accounts managed by Tniscu represents returns gross of investment management fees. Sec Trusco's Form ADV, Par[ 11 for a description of investment advisory fees. The performance information reported herein may be for a variety of products which have different methods of presenting performance data, i.e. net of fees, gross of ices, or a comhination of these. This information should not be evaluated independent of or without reference to the investment advisory agreement that more specifically addresses applirihle imcstment advisory fees. Fees have a compounding effect on cwnulative results. For example, assume the account achieves a I O~Ic annual return prior to the deduction of fees each year for a period of ten years. If an annual fee of 0.5`~r o(assets under management were charged each of the ten years, the resulting annual average return net of fees would be reduced to 9.48~/~. YIELD INFORMATION Yield information more closely reflects the current earnings of the Fund than the total return. In the absence of current fee waivers the yield would he reduced. A SEC Yield relates aggregate net earnines of a fund to its aggregate net assets. In any given period a fund may distribute more or less than its actual InCOmC. SECTOR WEIGHTINGS AND PORTFOLIO CHARACTERISTICS The senor weightings and portti~lio characteristics arc presented as of the date shown in the left-hand corner of this presentation, and may change without notice. A complete list of sector weightings and individual security positions for any specific period are available upon request. FORECASTING Forecasting is based on current economic and market information, which may be revised at any time RF.PRF,SF,N"I'ATIVE CLIENT LIST The list is intended simply to indicate a broad cross section of Trusco Capital Management. Inc. clients in the public and private sectors. The selection of clients for the list is not based on performance criteria. This list should not be construed as an endorsement or approval by [he listed clients of Trusco Capital Management. Inc. or of the advisory services provided F,CONOMIC AND MARKET REVIEW This perspective was prepared for clients and prospective clients of Trusco Capital Management, Inc Neither Trusco nor any affiliations make any representation or warranties as to [he accuracy or merit of this analysis for individual use. Comments and projections arc based on information available at the time of writing and helieved to be accurate. arc for informational purposes only, and may not be relied upon for future investing. Investors are advised to consult with their investment professional ahout their specific circumstances before making any investment decisions. FINANCIAL "PERMS Total Return -All performance calculations are total returns. Total return is comprised of dividend and interest income, realized and unrealized gains and losses. Estimated Annual [nrnme - An estimate of the dividends and interest to be received over the next twelve months based on current asset allocation and information. ty~. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 34 June 30, 20 5 Important Mutual Fund Disclosure Information INVESTMENT PERFORMANCE Past performance does not guarantee future results. The performance data quoted represents past perl~~rmance and current returns may be lower or higher. Total return tigures include change in share price. reinvestment of dividends and capital gains. Returns arc shown net of fees. The investment return and principal value will tluctuate so that an investor's shares. when redeemed, may be worth more or less than the original cost. For performance data current to the most recent month end. please visit our website at wwwsticlassicfunds.com. [n the absence of current fee waivers the total return would be reduced. All returns greater than 12 months have heen annualised YIELD INFORMATION For use with STI Yield information more closely reflects the current earnings of the Fund than the total return. Classic Funds In the absence of current fee waivers the yield would he reduced. A SEC Yield relates aggregate net earnings of a fund to its aggregate net assets. In any given period a fund may distribute more or less than its actual income. GENF,RAL DISCLOSURE An investor should consider the fund's investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the STI Classic Funds can be found in the fund's prospectus. To obtain a prospectus, please call I-800-428-6970. option 1, or by visiting www.sticlassicfunds.com. Please read the prospectus carefully before investing. Mutual land investing im~olves risk, including possible loss of principal. STI Classic Funds are advised by Trusro Capital Management, Inc.. which receives a tee tier its services. and are distributed by BISYS Fund Services, LP, which is not afYiliated with Trusco Capital Management, Inc. Invesnnents in the STI Classic Funds are not insured by the FDIC or any other Federal a~aency nor are they guaranteed by any bank, and may lose value. INVES'I'MEN"T CONCERNS Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of equity mutual funds will tluctuate as the value of the securities in the portfolio changes. MPT S'CATISI'ICS/O'CHER MEASUREMF,NTS Alpha -Alpha is defined as the difference between the average realized return of a portfolio manager with private information and the expected return of the passive strategy based upon public information only wish equal systematic risk. Beta - A measure of an investment's volatility. relative to an appropriate asset class. R-Squared -Statistical measure of how well a regression line approximates real data points; an r-squared of ].0 (100~7c) indicates a perfect fit. r- squared measures how well the Capital Asset Pricing Model predicts the actual performance of an investment or portfolio. Sharpe Ratio -The Sharpe Ratio (also known as Reward-to-Volatility-Ratio) indicates the excess return per unit of risk associated with the excess return. The higher the Sharpe Ratio, the better the performance. Standard Deviation - A statistical measurement of dispersion about an average, which, for a mutual fund. depicts how widely the returns varied over a certain period of time. HIGH GRADE MUTUAL FUNDS The Fund does not invest in limited partnerships, real estate (including REITsI. private placements. Rule 144A securities and certain other non- publicly traded, thinly traded or restricted securities. City of Winter Springs General Employees' Pension Plan TRUSCO CAPITAL MANAGEMENT 35