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