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2nd Quarter
City of Sebastian Police Officers' Retirement Systemas of June 30, 2018Quarterly Summary of Relevant FactsDistribution of Assets:Other Important Facts:Equity Total Portfolio $14,570,622 -Large Cap. Value $3,282,719Total Gain/(Loss) - Gross-of-Fees $240,805 -Large Cap. Growth $2,788,388Total Fees ($33,660) -SMID Cap. Value $712,242Total Gain/(Loss) - Net-of-Fees $207,145 -SMID Cap. Growth $793,493 -International Value $723,428Highland - Large Cap Value Highland - Large Cap Growth -International Growth $1,005,529Total Assets $3,282,719 Total Assets $2,788,388 Total Equity$9,305,799 Gain or (Loss) - Gross-of-Fees $58,174 Gain or (Loss) - Gross-of-Fees $144,097Fixed$3,550,598 Fees($3,831) Fees ($3,309)MLPs$608,456 Gain or (Loss) - Net-of-Fees $54,343 Gain or (Loss) - Net-of-Fees $140,788Private Real Estate$681,630Cash$424,139Boston Partners - SMID Value Fiera Capital - SMID GrowthTotal Portfolio$14,570,622Total Assets $712,242 Total Assets $793,493Gain or (Loss) - Gross-of-Fees $18,344 Gain or (Loss) - Gross-of-Fees $13,145Distribution by Percentages:Policy Current RangeFees($3,546) Fees ($1,467)Equity BreakdownGain or (Loss) - Net-of-Fees $14,798 Gain or (Loss) - Net-of-Fees $11,678 -Large Cap. Value 21.25% 22.53% 15.00 - 25.00% -Large Cap. Growth 21.25% 19.14% 15.00 - 25.00%Highland - Intl Value Renaissance - International Growth -SMID Cap. Value 5.00% 4.89% 2.50 - 7.50% Total Assets $723,428 Total Assets $1,005,529 -SMID Cap. Growth 5.00% 5.45% 2.50 - 7.50% Gain or (Loss) - Gross-of-Fees ($7,799) Gain or (Loss) - Gross-of-Fees ($57,419) -International Value 5.00% 4.96% 2.50 - 7.50% Fees($914) Fees ($1,702) -International Growth 7.50%6.90%5.00 - 10.00%Gain or (Loss) - Net-of-Fees ($8,712) Gain or (Loss) - Net-of-Fees ($59,121) Total Equity 65.00% 63.87%40.00 - 70.00%Fixed25.00% 24.37%20.00 - 35.00%Highland - Fixed Income Center Coast - MLPMLPs5.00% 4.18%0.00 - 10.00%Total Assets $3,550,598 Total Assets $608,456Private Real Estate 5.00% 4.68%0.00 - 10.00%Gain or (Loss) - Gross-of-Fees ($5,478) Gain or (Loss) - Gross-of-Fees $53,783Cash0.00%2.91%Fees($4,456) Fees ($685)Total Portfolio 100.00% 100.00%Gain or (Loss) - Net-of-Fees ($9,934) Gain or (Loss) - Net-of-Fees $53,098Receipt & Disbursement Intercontinental - Private Real EstateTotal Assets $424,139 Total Assets $681,630Gain or (Loss) - Gross-of-Fees $1,504 Gain or (Loss) - Gross-of-Fees $22,454Fees ($11,967) Fees ($1,783)Gain or (Loss) - Net-of-Fees ($10,464) Gain or (Loss) - Net-of-Fees $20,671The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not a guarantee of future results.Page 1 City of Sebastian Police Officers' Retirement Systemas of June 30, 2018Breakdown of ReturnsDOMESTIC EQUITYGross-of-Fees Net-of-FeesHighland - Large Cap ValueReturn Return Russell 1000 Value PSN Money ManagersQuarter 1.80 1.68 1.18 1.81Fiscal Year to Date 4.64 3.99 3.55 5.41Since 8/31/2017 7.65 6.98 5.37 NAHighland - Large Cap GrowthRussell 1000 Growth PSN Money ManagersQuarter 5.45 5.32 5.76 4.17Fiscal Year to Date 13.97 13.54 15.69 12.84Since 8/31/2017 17.73 17.29 19.34 NABoston Partners - SMID ValueRussell 2500 Value PSN Money ManagersQuarter 2.65 2.12 5.80 3.35Fiscal Year to Date 5.47 4.45 7.37 7.72Since 8/31/2017 8.06 7.01 10.63 NAFiera Capital - SMID GrowthRussell 2500 Growth PSN Money ManagersQuarter 1.69 1.49 5.53 4.56Fiscal Year to Date 15.88 15.29 14.90 16.94Since 8/31/2017 19.48 18.87 19.94 NAINTERNATIONAL EQUITYHighland - Intl Value MSCI EAFE (net)Quarter (1.07) (1.19) (1.24)Fiscal Year to Date 2.64 2.07 1.36Since 8/31/2017 3.79 3.22 3.85Renaissance - International GrowthMSCI AC Wd x US (net)Quarter (5.40) (5.55) (2.61)Fiscal Year to Date (1.69) (2.13) 1.05Since 8/31/2017 (0.47) (0.92) 3.46FIXED INCOMEHighland - Fixed Income BC AggQuarter (0.15) (0.28) (0.16)Fiscal Year to Date (1.15) (1.66) (1.24)Since 8/31/2017 (0.75) (1.26) (0.82)ALTERNATIVESCenter Coast - MLPAlerian MLP IndexQuarter 9.69 9.56 11.80Fiscal Year to Date (6.09) (6.43) (1.58)Since 8/31/2017 (8.90) (9.23) (5.79)The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not a guarantee of future results.Page 2 City of Sebastian Police Officers' Retirement Systemas of June 30, 2018Breakdown of ReturnsIntercontinental - Private Real EstateNCREIF Index NCREIF ODCE BC AggQuarter 3.12 2.85 1.81 2.05 (0.16)Since 9/30/2017 9.13 8.27 5.40 6.45 (1.24)TOTAL RETURNTime-Weighted Returns (TWR)Policy Index (1) Policy Index (2)Quarter 1.66 1.43 2.41 2.41Fiscal Year to Date 4.33 3.69 5.21 5.211 Year 7.10 6.45 8.66 8.663 Year 6.67 5.97 7.55 7.99 5 Year 7.78 7.15 8.51 9.03Since 1/31/2011 7.23 6.63 8.31 8.9715 1/2 Years 6.21 5.54 6.90TOTAL RETURNDollar-Weighted Returns (IRR)Actuary Rate CPI +4Quarter 1.43 1.86 1.54Fiscal Year to Date 3.72 5.58 4.901 Year 6.48 7.45 7.053 Year 5.99 7.45 5.875 Year 7.13 7.45 5.53Since 1/31/2011 6.69 7.45 5.74Policy Index (1) Composition Policy Index (2) Composition - 21.25% Russell 1000 Value / 21.25% Russell 1000 Growth / 5% Russell 2500 Value / 5% Russell 2500 Growth / 5% MSCI EAFE (net) / 7.5% MSCI AC Wd x US (net) / 25% BC Aggregate / 5% Alerian MLP / 5% NCREIF for periods since 7/31/2017- 60% S&P 500 / 40% BC Aggregate for periods since 12/31/2015- 60% S&P 500 / 40% BC Aggregate for periods since 6/30/2011- 48% S&P 500 / 49% BC Gov/Credit / 3% Citi 3 Month T-Bill for periods prior to 6/30/2011- 21.25% Russell 1000 Value / 21.25% Russell 1000 Growth / 5% Russell 2500 Value / 5% Russell 2500 Growth / 5% MSCI EAFE (net) / 7.5% MSCI AC Wd x US (net) / 25% BC Aggregate / 5% Alerian MLP / 5% NCREIF for periods since 7/31/2017- 50% S&P 500 / 10% MSCI EAFE (net) / 40% BC Aggregate for periods since 12/31/2015- 50% S&P 500 / 10% MSCI EAFE (net) / 40% BC Aggregate for periods since 6/30/2011- 48% S&P 500 / 49% BC Gov/Credit / 3% Citi 3 Month T-Bill for periods prior to 6/30/2011The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not a guarantee of future results.Page 3 City of Sebastian Police Officers' Retirement Systemas of June 30, 2018Trailing ReturnsManager vs Benchmark: Return through June 2018(not annualized if less than 1 year)Return02468101 quarter 1 year 3 years 5 years 10 years 15 years 2 quartersSebastian Police (Gross)Sebastian Police (Net)Sebastian Police Policy IndexManager vs Benchmark: Return through June 2018(not annualized if less than 1 year)Sebastian Police (Gross)Sebastian Police (Net)Sebastian Police Policy Index1 quarter1 year3 years5 years10 years15 years 2 quarters1.66%7.09%6.66%7.78%6.14%6.21%1.43%6.41%5.95%7.14%5.50%5.54%2.41%8.66%7.55%8.51%7.37%6.90%The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not a guarantee of future results.Page 4 City of Sebastian Police Officers' Retirement Systemas of June 30, 2018Risk/Return - 5 Year AnalysisManager Performance20-Quarter Moving Windows, Computed QuarterlyJuly 2013 - June 2018100110120130140150Q2 2013 Q4 2014 Q4 2015 Q4 2016 Q2 2018Sebastian Police (Gross)Sebastian Police Policy IndexManager Risk/ReturnSingle ComputationJuly 2013 - June 2018Return0%2%4%6%8%10%Standard Deviation0% 1% 2% 3% 4% 5%Sebastian Police (Gross)Market Benchmark:Sebastian Police Policy IndexCash Equivalent:Citigroup 3-month T-billReturn & Risk MeasurementsJuly 2013 - June 2018: Summary StatisticsSebastian Police (Gross)Sebastian Police Policy IndexReturnExcessReturnvs.MarketStandardDeviationBetavs.MarketMaximumDrawdownUpCapturevs.MarketDownCapturevs.MarketAlphavs.MarketSharpeRatioR-Squaredvs.Market7.78%-0.73%4.76%1.00-5.61%95.39%123.61%-0.68%1.5585.69%8.51%0.00%4.40%1.00-4.22%100.00%100.00%0.00%1.84100.00%The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not a guarantee of future results.Page 5 City of Sebastian Police Officers' Retirement Systemas of June 30, 2018Risk/Return - 15 1/2 Year AnalysisManager Performance20-Quarter Moving Windows, Computed QuarterlyJanuary 2003 - June 2018100150200250300Q4 2002 Q4 2005 Q4 2007 Q4 2009 Q4 2011 Q4 2013 Q4 2015 Q2 2018Sebastian Police (Gross)Sebastian Police Policy IndexManager Risk/ReturnSingle ComputationJanuary 2003 - June 2018Return0%1%2%3%4%5%6%7%Standard Deviation0% 1% 2% 3% 4% 5% 6% 7% 8%Sebastian Police (Gross)Market Benchmark:Sebastian Police Policy IndexCash Equivalent:Citigroup 3-month T-billReturn & Risk MeasurementsJanuary 2003 - June 2018: Summary StatisticsSebastian Police (Gross)Sebastian Police Policy IndexReturnExcessReturnvs.MarketStandardDeviationBetavs.MarketMaximumDrawdownUpCapturevs.MarketDownCapturevs.MarketAlphavs.MarketSharpeRatioR-Squaredvs.Market6.21%-0.68%7.36%1.02-22.97%96.89%111.42%-0.76%0.6894.90%6.90%0.00%7.03%1.00-21.59%100.00%100.00%0.00%0.81100.00%The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not a guarantee of future results.Page 6 City of Sebastian Police Officers' Retirement Systemas of June 30, 2018IPS Compliance Check ListGUIDELINESOBJECTIVESEquity PortfolioTotal Portfolio5 yearsSince InceptionListed on recognized exchangeExceed Target Index No NoSingle issue not to exceed 5% at market value forExceed Target Rate of Return (7.45%)* No No each equity in each separately managed portfolioExceed CPI + 4% *Yes YesTotal equity portfolio < 70.00% & > 40.00% of total fund *Performance compared to dollar-weighted net returns at marketHighland Capital Large Cap ValueRenaissance International GrowthLarge Capitalization Value Equity PortfolioInternational Growth Portfolio Market Value < 25.00% & > 15.00% of total fund Market Value < 10.00% & > 5.00% of total fund Performance (Since 8/31/2017)3 yearsSince Inception Performance (Since 8/31/2017)5 yearsSince Inception Rank in the Top 50% of manager universe N/A Yes Return > MSCI World Ex US (Net) N/A No Return > Russell 1000 Value N/A YesHighland Capital Large Cap GrowthHighland Fixed IncomeLarge Capitalization Growth Equity PortfolioFixed Income Portfolio Market Value < 25.00% & > 15.00% of total fund Market Value < 35.00% & > 20.00% of total fund Performance (Since 8/31/2017)3 yearsSince Inception Performance (Since 3/31/2014)3 yearsSince Inception Rank in the Top 50% of manager universe N/A No Return > BC AggN/A Yes Return > Russell 1000 Growth N/A No U.S. Government / Agency or U.S. Corporations Bonds rated "A" or betterBoston Partners SMID Cap Value Single corporate issuer not exceed 10% of bond portfolioSMID Capitalization Value Equity Portfolio (except U.S. Government/Agency) Market Value < 7.50% & > 2.50% of total fund Performance (Since 8/31/2017)3 yearsSince InceptionCenter Coast MLPs Rank in the Top 50% of manager universe N/A NoMaster Limited Partnerships Return > Russell Mid Value N/A No Market Value < 10.00% & > 0.00% of total fund Performance (Since 8/31/2017)5 yearsSince InceptionFiera Capital SMID Cap Growth Return > Alerian MLPN/ANoSMID Capitalization Growth Equity Portfolio Market Value < 7.50% & > 2.50% of total fundIntercontinental Performance (Since 8/31/2017)5 yearsSince InceptionCore Private Real Estate Rank in the Top 50% of manager universe N/A No Market Value < 10.00% & > 0.00% of total fund Return > Russell Mid Growth N/A No Performance (Inception 10/31/2017)3 yearsSince Inception Return > NCREIF Property Index N/A YesHighland Capital International Value Return > NCREIF ODCE Index N/A YesInternational Value Equity Portfolio Return > BC Agg IndexN/A Yes Market Value < 7.50% & > 2.50% of total fund Performance (Since 8/31/2017)3 yearsSince Inception Return > MSCI EAFE (Net) N/A NoYesYesYesYesYesYesYesYesYesYesYesYesIn ComplianceIn ComplianceYesYesYesThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not a guarantee of future results.Page 7 City of Sebastian Police Officers’ Retirement SystemQUARTERLY PERFORMANCE EVALUATIONPrepared for:Charles H. Mulfinger, II, CIMA®Managing Director, Wealth ManagementInstitutional Consulting DirectorAlternative Investment Director100 North Tampa Street, Suite 3000Tampa, FL 33602800-282-0655, ext. 2061 / 813-227-2061Graystone Consulting TampaAs of June 30, 2018David A. Wheeler, CFP®, CIMA®Senior Vice PresidentInstitutional Consulting DirectorInstitutional ConsultantScott Owens, CFA®, CIMA®Associate Vice PresidentInstitutional Consultant Table of Contents Capital Markets OverviewTab 1 Performance ReportsTab 2 Past performance is no guarantee of future results. Estimates of future performance are based on assumptions that may not be realized. This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Please refer to important information, disclosures and qualifications at the end of this material. This slide sourced from Market Performance section. WEALTH MANAGEMENT INVESTMENT RESOURCES | CHARTBOOK | MARKET PERFORMANCE Capital Markets Overview: 2Q 2018 Introduction As of 2Q 2018 Source: FactSet, Bloomberg, Morgan Stanley & Co. Research, Morgan Stanley Wealth Management GIC •After a volatile start to 2018, markets found some relief in the second quarter. However, the environment remains challenging for equities.While economic data continues to be constructive, a protectionist trade policy pursued by the Trump administration has weighed on sentimentas uncertainty over tariffs threatens to overshadow strong corporate earnings and consumer confidence. CIO and MS & Co.’s Chief US EquityStrategist, Mike Wilson, has maintained his price target of 2,750 for the S&P 500 and expects choppy trading in the coming months.•US equities generated positive returns in the second quarter, as the S&P 500 rose 3.43% and 7 of the 11 sectors finished in the black. Energy ledthe way, jumping 13.48% as oil prices rebounded and moved over $70 per barrel at the end of June. It was followed by Consumer Discretionaryand Tech, which increased by 8.17% and 7.09%, respectively. Industrials were the greatest laggards, losing 3.18%. They were followed closely byFinancials, which shed 3.16%. Other major US indices were positive on the quarter; the Dow Jones rose 1.26% and the NASDAQ returned6.61%. •International equities were challenged by a rising US dollar and other geopolitical pressures. For the second quarter, the MSCI EmergingMarkets Index dropped 7.73% for US-currency investors as weaknesses in China, Turkey, and Argentina were amplified by the strongergreenback. The MSCI Europe Index dropped 0.87% for US-currency investors, while MSCI Japan fell 2.12%. Both European and Japanesereturns were positive on a local currency basis, further reflecting the impact that the dollar had on international stocks.•The bond market registered slightly negative returns during the second quarter. The Bloomberg Barclays US Aggregate Bond Index, a generalmeasure of the bond market, fell 0.16%.•Morgan Stanley & Co. economists expect US real GDP will be 2.7% in 2018, amid an environment of 3.9% global GDP growth.•Commodities were up slightly in the second quarter; the Bloomberg Commodity Index gained 0.40%. Past performance is no guarantee of future results. Estimates of future performance are based on assumptions that may not be realized. This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Please refer to important information, disclosures and qualifications at the end of this material. This slide sourced from Market Performance section. WEALTH MANAGEMENT INVESTMENT RESOURCES | CHARTBOOK | MARKET PERFORMANCE Capital Markets Overview: 2Q 2018 Source: FactSet, Bloomberg, Morgan Stanley & Co. Research, Federal Reserve Bank of St. Louis, Morgan Stanley Wealth Management GIC The Bureau of Economic Analysis estimated that real Gross Domestic Product increased at an annual rate of 2.0% in 1Q18, in comparison to a 2.9% increase in 4Q17. Morgan Stanley & Co. economists forecast US Real GDP growth will be 2.7% in 2018 and 2.2% in 2019. The seasonally adjusted unemployment rate for May 2018 was 3.8%. Job gains occurred in construction, professional and technical services, retail, transportation and warehousing, and manufacturing. The number of unemployed was 6.1 million in May, down from 6.7 million in February of this year. The number of long-term unemployed (those jobless for 27 weeks or more) was 1.2 million, a decrease of more than 200,000 from February. These individuals accounted for 19.4% of the unemployed vs. 20.8% at the end of last quarter. According to the most recent data from the Federal Reserve Bank of St. Louis, corporate profits increased 8.67% quarter over quarter and are up 16.88% year over year as of Q1 2018. Inflation increased in the US, according to the Bureau of Labor Statistics. The year-over-year Consumer Price Index was 2.2% in May, up from the 1.8% figure in February. Morgan Stanley & Co. economists forecast a 2.6% annual inflation rate for 2018 and 1.9% for 2019. The Census Bureau reported that the number of new private-sector housing starts in May 2018 was at a seasonally adjusted annual rate of 1,301,000—8.0% above housing starts this time last year. The Census Bureau also reported that seasonally adjusted retail and food services sales increased at 5.9% year over year in May. Consumer confidence decreased slightly in 2Q18, with Conference Board Consumer Confidence reading 126.4 in June after peaking at 130 in February—the highest level it had been since 2000. In May, the Institute for Supply Management’s Purchasing Managers Index (PMI), a manufacturing sector index, arrived at 60.2, down 1.0% from February’s reading of 60.8. Generally speaking, a PMI or NMI (ISM Non-Manufacturing Index) over 50 indicates that the sector is expanding, and a PMI below 50 but over 43 indicates that the sector is shrinking but the overall economy is expanding. PMI has registered above 50 for 26 out of the last 29 months, indicating an expansion in manufacturing since March 2016. Overall, PMI has been above 43 for 105 consecutive months, indicating overall economic recovery and expansion since June 2009. The NMI for May was 58.6—0.9 points lower than in February 2018. The index has now been above 50 for 99 consecutive months, indicating non-manufacturing expansion since February 2010. The US Economy As of 2Q 2018 (with most recent data available) Past performance is no guarantee of future results. Estimates of future performance are based on assumptions that may not be realized. This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Please refer to important information, disclosures and qualifications at the end of this material. This slide sourced from Market Performance section. WEALTH MANAGEMENT INVESTMENT RESOURCES | CHARTBOOK | MARKET PERFORMANCE Capital Markets Overview: 2Q 2018 INDEX IN USDQuarter 12 Months5-Years (Annualized)7-Years (AnnualizedS&P 5003.43% 14.56% 13.41% 13.39%Dow Jones1.26% 16.65% 12.95% 13.04%Russell 20007.75% 17.50% 12.45% 11.97%Russell Midcap2.82% 12.64% 12.21% 12.01%Russell 10003.57% 14.73% 13.36% 13.27%Key US Stock Market Index Returns (%) for the Period Ending 6/29/2018US Equity Markets As of 2Q 2018 Source: FactSet, Bloomberg, Morgan Stanley Wealth Management GIC The Dow Jones Industrial Average gained 1.26% in the second quarter, while the NASDAQ Composite Index was up 6.61%. The S&P 500 Index rose 3.43% over the same period. 7 of the 11 sectors finished in the black for 2Q18. Energy led the way, jumping 13.48% as oil prices rebounded and moved over $70 per barrel at the end of June. It was followed by Consumer Discretionary and Tech, which increased by 8.17% and 7.09%, respectively. Industrials were the greatest laggards, losing 3.18%. They were closely followed by Financials, which shed 3.16%. The Russell 1000, a large-cap index, increased 3.57% for the quarter, with large-cap growth (+5.75% ) outperforming large-cap value (+1.17%). The Russell Midcap gained 2.82% on the quarter, with mid-cap growth (+3.16%) outperforming mid-cap value (+2.40%). The Russell 2000, a small-cap index, appreciated 7.75% for the quarter, with small-cap growth (+7.23%) underperforming small-cap value (+8.30%). Past performance is no guarantee of future results. Estimates of future performance are based on assumptions that may not be realized. This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Please refer to important information, disclosures and qualifications at the end of this material. This slide sourced from Market Performance section. WEALTH MANAGEMENT INVESTMENT RESOURCES | CHARTBOOK | MARKET PERFORMANCE S&P 500 Sectors Source: Bloomberg YTD 2018 Total Return As of June 29, 2018 11.5%10.9%6.8%1.8%0.8%0.3%-3.1%-4.1%-4.7%-8.4%-8.6%-10% -5% 0% 5% 10% 15%DiscretionaryTechnologyEnergyHealth CareReal EstateUtilitiesMaterialsFinancialsIndustrialsTelecomStaples Past performance is no guarantee of future results. Estimates of future performance are based on assumptions that may not be realized. This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Please refer to important information, disclosures and qualifications at the end of this material. This slide sourced from Market Performance section. WEALTH MANAGEMENT INVESTMENT RESOURCES | CHARTBOOK | MARKET PERFORMANCE Capital Markets Overview: 2Q 2018 Source: FactSet, Bloomberg, Morgan Stanley Wealth Management GIC INDEX IN USDQuarter 12 Months5-Years (Annualized)7-Years (Annualized)MSCI EAFE-0.80% 6.66% 6.93% 5.61%MSCI EAFE Growth0.58% 9.21% 7.82% 6.40%MSCI EAFE Value-2.22% 4.10% 5.95% 4.75%MSCI Europe-0.87% 5.33% 6.81% 5.18%MSCI Japan-2.12% 10.25% 7.69% 7.50%S&P 5003.43% 14.56% 13.41% 13.39%MSCI Emerging Markets-7.73% 8.25% 5.38% 1.96%Key Global Equity Market Index Returns (%) for the Period Ending 6/29/2018The second quarter was difficult for international markets, as a strengthening US dollar challenged returns. This could especially be seen in the sell-off of emerging market (EM) equities and their underperformance versus developed market stocks. The MSCI EAFE Index (a benchmark for international developed markets) fell 0.80% for US-currency investors. In the second quarter, the MSCI Emerging Markets Index dropped 7.73% for US-currency investors as weaknesses in China, Turkey, and Argentina were amplified by the stronger greenback. The MSCI Europe Index dropped 0.87% for US-currency investors, while MSCI Japan fell 2.12%.Both European and Japanese returns were positive on a local currency basis, further reflecting the impact that the dollar had on international returns. The S&P 500 Index gained 3.43% for the quarter. Emerging economy equity market indices were down sharply in the second quarter. The MSCI BRIC (Brazil, Russia, India and China) Index fell 6.67% in US dollar terms, while the MSCI EM Asia Index was down 5.06%. Global Equity Markets As of 2Q 2018 Past performance is no guarantee of future results. Estimates of future performance are based on assumptions that may not be realized. This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Please refer to important information, disclosures and qualifications at the end of this material. This slide sourced from Market Performance section. WEALTH MANAGEMENT INVESTMENT RESOURCES | CHARTBOOK | MARKET PERFORMANCE Capital Markets Overview: 2Q 2018 INDEX IN USDQuarter 12 Months5-Years (Annualized)7-Years (Annualized)Bloomberg Barclays Capital US Aggregate -0.16% -0.54%2.27% 2.55%Bloomberg Barclays Capital High Yield 1.03% 2.65% 5.51% 6.38%Bloomberg Barclays Capital Government/Credit -0.32% -0.85% 2.24% 2.72%Bloomberg Barclays Capital Government 0.10% -0.81% 1.48% 2.04%Bloomberg Barclays Capital Intermediate Govt/Credit0.01% -0.72% 1.59% 1.93%Bloomberg Barclays Capital Long Govt/Credit -1.45% -1.07% 5.10% 6.18%Bloomberg Barclays Capital Mortgage Backed Securities 0.24% 0.01% 2.25% 2.15%Bloomberg Barclays Capital Muni 0.87% 1.55% 3.53% 3.91%Key US Bond Market Index Returns (%) for the Period Ending 6/29/2018The bond market registered slightly negative returns during the second quarter. The Bloomberg Barclays US Aggregate Bond Index, a general measure of the bond market, fell 0.16%. Interest rates increased during the second quarter, as the yield on the 10-year US Treasury note increased to a quarter-end 2.86% from 2.74% at the end of March. The intra-quarter move to 3.11% in May marked a 6-year high in rates. Riskier parts of the bond market such as US high yield debt fared better in the second quarter. The Bloomberg Barclays Capital High Yield Index, a measure of lower-rated corporate bonds, gained 1.03%. Mortgage-backed had marginal gains in the second quarter. The Bloomberg Barclays Capital Mortgage Backed Index rose 0.24%. Municipal bonds were also up; the Bloomberg Barclays Capital Muni Index saw gains of 0.87%. The US Bond Market As of 2Q 2018 Source: FactSet, Bloomberg, Morgan Stanley & Co. 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Please see the Morgan Stanley Smith Barney LLC program disclosure brochure (the Morgan Stanley ADV) for more information in the investment advisory programs available. The Morgan Stanley ADV is available at www.morganstanley.com/ADV. Sources of Data. Information in this material in this report has been obtained from sources that we believe to be reliable, but we do not guarantee its accuracy, completeness or timeliness. Third-party data providers make no warranties or representations relating to the accuracy, completeness or timeliness of the data they provide and are not liable for any damages relating to this data. All opinions included in this material constitute the Firms judgment as of the date of this material and are subject to change without notice. This material was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Some historical figures may be revised due to newly identified programs, firm restatements, etc.Global Investment Manager Analysis (GIMA) Focus List, Approved List and Tactical Opportunities List; Watch Policy. GIMA uses two methods to evaluate investment products in applicable advisory programs: Focus (and investment products meeting this standard are described as being on the Focus List) and Approved (and investment products meeting this standard are described as being on the Approved List). In general, Focus entails a more thorough evaluation of an investment product than Approved. Sometimes an investment product may be evaluated using the Focus List process but then placed on the Approved List instead of the Focus List. Investment products may move from the Focus List to the Approved List, or vice versa. GIMA may also determine that an investment product no longer meets the criteria under either process and will no longer be recommended in investment advisory programs (in which case the investment product is given a Not Approved status). GIMA has a Watch policy and may describe a Focus List or Approved List investment product as being on Watch if GIMA identifies specific areas that (a) merit further evaluation by GIMA and (b) may, but are not certain to, result in the investment product becoming Not Approved. The Watch period depends on the length of time needed for GIMA to conduct its evaluation and for the investment manager or fund to address any concerns. Certain investment products on either the Focus List or Approved List may also be recommended for the Tactical Opportunities List based in part on tactical opportunities existing at a given time. The investment products on the Tactical Opportunities List change over time. For more information on the Focus List, Approved List, Tactical Opportunities List and Watch processes, please see the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management. Your Financial Advisor or Private Wealth Advisor can also provide upon request a copy of a publication entitled Manager Selection Process.The Global Investment Committee is a group of seasoned investment professionals who meet regularly to discuss the global economy and markets. The committee determines the investment outlook that guides our advice to clients. They continually monitor developing economic and market conditions, review tactical outlooks and recommend model portfolio weightings, as well as produce a suite of strategy, analysis, commentary, portfolio positioning suggestions and other reports and broadcasts.The GIC Asset Allocation Models are not available to be directly implemented as part of an investment advisory service and should not be regarded as a recommendation of any Morgan Stanley investment advisory service. The GIC Asset Allocation Models do not represent actual trading or any type of account or any type of investment strategies and none of the fees or other expenses (e.g. commissions, mark-ups, mark-downs, advisory fees, fund expenses) associated with actual trading or accounts are reflected in the GIC Asset Allocation Models which, when compounded over a period of years, would decrease returns.Adverse Active Alpha (AAA) is a patented screening and scoring process designed to help identify high-quality equity and fixed income managers with characteristics that may lead to future outperformance relative to index and peers. While highly ranked managers performed well as a group in our Adverse Active Alpha model back tests, not all of the managers will outperform. Please note that this data may be derived from back-testing, which has the benefit of hindsight. In addition, highly ranked managers can have differing risk profiles that might not be suitable for all investors. Our view is that Adverse Active Alpha is a good starting point and should be used in conjunction with other information. Morgan Stanley Wealth Managements qualitative and quantitative investment manager due diligence process are equally important factors for investors when considering managers for use through an investment advisory program. Factors including, but not limited to, manager turnover and changes to investment process can partially or fully negate a positive Adverse Active Alpha ranking. Additionally, highly ranked managers can have differing risk profiles that might not be DISCLOSURES suitable for all investors. For more information on AAA, please see the Adverse Active Alpha Ranking Model and Selecting Managers with Adverse Active Alpha whitepapers. The whitepaper are available from your Financial Advisor or Private Wealth Advisor. ADVERSE ACTIVE ALPHA is a registered service mark of Morgan Stanley and/or its affiliates. U.S. Pat. No. 8,756,098 applies to the Adverse Active Alpha system and/or methodology.The Global Investment Manager Analysis (GIMA) Services Only Apply to Certain Investment Advisory Programs GIMA evaluates certain investment products for the purposes of some but not all of Morgan Stanley Smith Barney LLCs investment advisory programs (as described in more detail in the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management). If you do not invest through one of these investment advisory programs, Morgan Stanley Wealth Management is not obligated to provide you notice of any GIMA Status changes even though it may give notice to clients in other programs.Strategy May Be Available as a Separately Managed Account or Mutual Fund Strategies are sometimes available in Morgan Stanley Wealth Management investment advisory programs both in the form of a separately managed account (SMA) and a mutual fund. These may have different expenses and investment minimums. Your Financial Advisor or Private Wealth Advisor can provide more information on whether any particular strategy is available in more than one form in a particular investment advisory program. In most Morgan Stanley Wealth Management investment advisory accounts, fees are deducted quarterly and have a compounding effect on performance. For example, on an advisory account with a 3% annual fee, if the gross annual performance is 6.00%, the compounding effect of the fees will result in a net performance of approximately 3.93% after one year, 1 after three years, and 21.23% after five years. Conflicts of Interest: GIMAs goal is to provide professional, objective evaluations in support of the Morgan Stanley Wealth Management investment advisory programs. We have policies and procedures to help us meet this goal. However, our business is subject to various conflicts of interest. For example, ideas and suggestions for which investment products should be evaluated by GIMA come from a variety of sources, including our Morgan Stanley Wealth Management Financial Advisors and their direct or indirect managers, and other business persons within Morgan Stanley Wealth Management or its affiliates. Such persons may have an ongoing business relationship with certain investment managers or mutual fund companies whereby they, Morgan Stanley Wealth Management or its affiliates receive compensation from, or otherwise related to, those investment managers or mutual funds. For example, a Financial Advisor may suggest that GIMA evaluates an investment manager or fund in which a portion of his or her clients assets are already invested. While such a recommendation is permissible, GIMA is responsible for the opinions expressed by GIMA. See the conflicts of interest section in the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management for a discussion of other types of conflicts that may be relevant to GIMAs evaluation of managers and funds. In addition, Morgan Stanley Wealth Management, MS & Co., managers and their affiliates provide a variety of services (including research, brokerage, asset management, trading, lending and investment banking services) for each other and for various clients, including issuers of securities that may be recommended for purchase or sale by clients or are otherwise held in client accounts, and managers in various advisory programs. Morgan Stanley Wealth Management, managers, MS & Co., and their affiliates receive compensation and fees in connection with these services. Morgan Stanley Wealth Management believes that the nature and range of clients to which such services are rendered is such that it would be inadvisable to exclude categorically all of these companies from an account.Consider Your Own Investment Needs: The model portfolios and strategies discussed in the material are formulated based on general client characteristics including risk tolerance. This material is not intended to be a client-specific suitability analysis or recommendation, or offer to participate in any investment. Therefore, clients should not use this profile as the sole basis for investment decisions. They should consider all relevant information, including their existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. Such a suitability determination may lead to asset allocation results that are materially different from the asset allocation shown in this profile. Talk to your Financial Advisor about what would be a suitable asset allocation for you, whether CGCM is a suitable program for you.No obligation to notify Morgan Stanley Wealth Management has no obligation to notify you when the model portfolios, strategies, or any other information, in this material changes.Please consider the investment objectives, risks, fees, and charges and expenses of mutual funds, ETFs, closed end funds, unit investment trusts, and variable insurance products carefully before investing. The prospectus contains this and other information about each fund. To obtain a prospectus, contact your Financial Advisor or Private Wealth Advisor or visit the Morgan Stanley website at www.morganstanley.com. Please read it carefully before investing.An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.The type of mutual funds and ETFs discussed in this presentation utilizes nontraditional or complex investment strategies and/or derivatives. Examples of these types of funds include those that utilize one or more of the below noted investment strategies or categories or which seek exposure to the following markets: (1) commodities (e.g., agricultural, energy and metals), currency, precious metals; (2) managed futures; (3) leveraged, inverse or inverse leveraged; (4) bear market, hedging, long-short equity, market neutral; (5) real estate; (6) volatility (seeking exposure to the CBOE VIX Index). Investors should keep in mind that while mutual funds and ETFs may, at times, utilize nontraditional investment options and strategies, they should not be equated with unregistered privately offered DISCLOSURES alternative investments. Because of regulatory limitations, mutual funds and ETFs that seek alternative-like investment exposure must utilize a more limited investment universe. As a result, investment returns and portfolio characteristics of alternative mutual funds and ETFs may vary from traditional hedge funds pursuing similar investment objectives. Moreover, traditional hedge funds have limited liquidity with long lock-up periods allowing them to pursue investment strategies without having to factor in the need to meet client redemptions and ETFs trade on an exchange. On the other hand, mutual funds typically must meet daily client redemptions. This differing liquidity profile can have a material impact on the investment returns generated by a mutual or ETF pursuing an alternative investing strategy compared with a traditional hedge fund pursuing the same strategy.Nontraditional investment options and strategies are often employed by a portfolio manager to further a funds investment objective and to help offset market risks. However, these features may be complex, making it more difficult to understand the funds essential characteristics and risks, and how it will perform in different market environments and over various periods of time. They may also expose the fund to increased volatility and unanticipated risks particularly when used in complex combinations and/or accompanied by the use of borrowing or leverage.KEY ASSET CLASS CONSIDERATIONS AND OTHER RISKSInvesting in the markets entails the risk of market volatility. The value of all types of investments, including stocks, mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts, may increase or decrease over varying time periods. To the extent the investments depicted herein represent international securities, you should be aware that there may be additional risks associated with international investing, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes, and differences in financial and accounting standards. These risks may be magnified in emerging markets and frontier markets. Small- and mid-capitalization companies may lack the financial resources, product diversification and competitive strengths of larger companies. In addition, the securities of small- and mid-capitalization companies may not trade as readily as, and be subject to higher volatility than, those of larger, more established companies. The value of fixed income securities will fluctuate and, upon a sale, may be worth more or less than their original cost or maturity value. Bonds are subject to interest rate risk, call risk, reinvestment risk, liquidity risk, and credit risk of the issuer. High yield bonds are subject to additional risks such as increased risk of default and greater volatility because of the lower credit quality of the issues. In the case of municipal bonds, income is generally exempt from federal income taxes. Some income may be subject to state and local taxes and to the federal alternative minimum tax. Capital gains, if any, are subject to tax. Treasury Inflation Protection Securities (TIPS) coupon payments and underlying principal are automatically increased to compensate for inflation by tracking the consumer price index (CPI). While the real rate of return is guaranteed, TIPS tend to offer a low return. Because the return of TIPS is linked to inflation, TIPS may significantly underperform versus conventional U.S. Treasuries in times of low inflation. There is no guarantee that investors will receive par if TIPS are sold prior to maturity. The returns on a portfolio consisting primarily of environmental, social, and governance-aware investments (ESG) may be lower or higher than a portfolio that is more diversified or where decisions are based solely on investment considerations. Because ESG criteria exclude some investments, investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria. The companies identified and investment examples are for illustrative purposes only and should not be deemed a recommendation to purchase, hold or sell any securities or investment products. They are intended to demonstrate the approaches taken by managers who focus on ESG criteria in their investment strategy. There can be no guarantee that a client’s account will be managed as described herein. Options and margin trading involve substantial risk and are not suitable for all investors. Besides the general investment risk of holding securities that may decline in value and the possible loss of principal invested, closed-end funds may have additional risks related to declining market prices relative to net asset values (NAVs), active manager underperformance and potential leverage. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. NAV is total assets less total liabilities divided by the number of shares outstanding. At the time an investor purchases shares of a closed-end fund, shares may have a market price that is above or below NAV. Portfolios that invest a large percentage of assets in only one industry sector (or in only a few sectors) are more vulnerable to price fluctuation than those that diversify among a broad range of sectors.Alternative investments often are speculative and include a high degree of risk. Investors could lose all or a substantial amount of their investment. Alternative investments are suitable only for eligible, long-term investors who are willing to forgo liquidity and put capital at risk for an indefinite period of time. They may be highly illiquid and can engage in leverage and other speculative practices that may increase the volatility and risk of loss. Alternative Investments typically have higher fees than traditional investments. Investors should carefully review and consider potential risks before investing. Certain of these risks may include but are not limited to: Loss of all or a substantial portion of the investment due to leveraging, short-selling, or other speculative practices; Lack of liquidity in that there may be no secondary market for a fund; Volatility of returns; Restrictions on transferring interests in a fund; Potential lack of diversification and resulting higher risk due to concentration of trading authority when a single advisor is utilized; Absence of information regarding valuations and pricing; Complex tax structures and delays in tax reporting; Less regulation and higher fees than mutual funds; and Risks associated with the operations, personnel, and processes of the manager. As a diversified global financial services firm, Morgan Stanley Wealth Management engages in a broad spectrum of activities including financial advisory services, investment management activities, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication, and other activities. In the ordinary course of its business, Morgan Stanley Wealth Management therefore engages in activities where Morgan Stanley Wealth Managements interests may conflict with the interests of its clients, including the private investment funds it manages. Morgan Stanley Wealth Management can give no assurance that conflicts of interest will be resolved in favor of its clients or any such fund. All expressions of opinion are subject to change without DISCLOSURES notice and are not intended to be a forecast of future events or results. Further, opinions regarding Alternative Investments expressed herein may differ from the opinions expressed by Morgan Stanley Wealth Management and/or other businesses/affiliates of Morgan Stanley Wealth Management. This is not a "research report" as defined by NASD Conduct Rule 2711 and was not prepared by the Research Departments of Morgan Stanley Smith Barney LLC or Morgan Stanley & Co. LLC or its affiliates. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may differ materially from those reflected or contemplated in such forward-looking statements. Clients should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. While the HFRI indices are frequently used, they have limitations (some of which are typical of other widely used indices). These limitations include survivorship bias (the returns of the indices may not be representative of all the hedge funds in the universe because of the tendency of lower performing funds to leave the index); heterogeneity (not all hedge funds are alike or comparable to one another, and the index may not accurately reflect the performance of a described style); and limited data (many hedge funds do not report to indices, and the index may omit funds, the inclusion of which might significantly affect the performance shown. The HFRI indices are based on information self-reported by hedge fund managers that decide on their own, at any time, whether or not they want to provide, or continue to provide, information to HFR Asset Management, L.L.C. Results for funds that go out of business are included in the index until the date that they cease operations. Therefore, these indices may not be complete or accurate representations of the hedge fund universe, and may be biased in several ways. Composite index results are shown for illustrative purposes and do not represent the performance of a specific investment. Individual funds have specific tax risks related to their investment programs that will vary from fund to fund. Clients should consult their own tax and legal advisors as Morgan Stanley Wealth Management does not provide tax or legal advice. Interests in alternative investment products are offered pursuant to the terms of the applicable offering memorandum, are distributed by Morgan Stanley Smith Barney LLC and certain of its affiliates, and (1) are not FDIC-insured, (2) are not deposits or other obligations of Morgan Stanley or any of its affiliates, (3) are not guaranteed by Morgan Stanley and its affiliates, and (4) involve investment risks, including possible loss of principal. Morgan Stanley Smith Barney LLC is a registered broker-dealer, not a bank. This material is not to be reproduced or distributed to any other persons (other than professional advisors of the investors or prospective investors, as applicable, receiving this material) and is intended solely for the use of the persons to whom it has been delivered. This material is not for distribution to the general public. Past performance is no guarantee of future results. Actual results may vary. SIPC insurance does not apply to precious metals, other commodities, or traditional alternative investments. Interests in alternative investment products are offered pursuant to the terms of the applicable offering memorandum, are distributed by Morgan Stanley Smith Barney LLC and certain of its affiliates, and (1) are not FDIC-insured, (2) are not deposits or other obligations of Morgan Stanley or any of its affiliates, (3) are not guaranteed by Morgan Stanley and its affiliates, and (4) involve investment risks, including possible loss of principal. Morgan Stanley Smith Barney LLC is a registered broker-dealer, not a bank. In Consulting Groups advisory programs, alternative investments are limited to US-registered mutual funds, separate account strategies and exchange-traded funds (ETFs) that seek to pursue alternative investment strategies or returns utilizing publicly traded securities. Investment products in this category may employ various investment strategies and techniques for both hedging and more speculative purposes such as short-selling, leverage, derivatives and options, which can increase volatility and the risk of investment loss. Alternative investments are not suitable for all investors. As a diversified global financial services firm, Morgan Stanley Wealth Management engages in a broad spectrum of activities including financial advisory services, investment management activities, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication, and other activities. In the ordinary course of its business, Morgan Stanley Wealth Management therefore engages in activities where Morgan Stanley Wealth Managements interests may conflict with the interests of its clients, including the private investment funds it manages. Morgan Stanley Wealth Management can give no assurance that conflicts of interest will be resolved in favor of its clients or any such fund. Alternative investments involve complex tax structures, tax inefficient investing, and delays in distributing important tax information. Individual funds have specific risks related to their investment programs that will vary from fund to fund. Clients should consult their own tax and legal advisors as Morgan Stanley Wealth Management does not provide tax or legal advice.While the HFRI indices are frequently used, they have limitations (some of which are typical of other widely used indices). These limitations include survivorship bias (the returns of the indices may not be representative of all the hedge funds in the universe because of the tendency of lower performing funds to leave the index); heterogeneity (not all hedge funds are alike or comparable to one another, and the index may not accurately reflect the performance of a described style); and limited data (many hedge funds do not report to indices, and the index may omit funds, the inclusion of which might significantly affect the performance shown. The HFRI indices are based on information self-reported by hedge fund managers that decide on their own, at any time, whether or not they want to provide, or continue to provide, information to HFR Asset Management, L.L.C. Results for funds that go out of business are included in the index until the date that they cease operations. Therefore, these indices may not be complete or accurate representations of the hedge fund universe, and may be biased in several ways.It should be noted that the majority of hedge fund indexes are comprised of hedge fund manager returns. This is in contrast to traditional indexes, which are comprised of individual securities in the various market segments they represent and offer complete transparency as to membership and construction methodology. As such, some believe that hedge fund index returns have certain biases that are not present in traditional indexes. Some of these biases inflate index performance, while others may skew performance negatively. However, many studies indicate that overall hedge fund index performance has been biased to the upside. Some studies suggest performance has been inflated by up to 260 basis points or more annually depending on the types of biases included and the time period studied. Although there are numerous potential biases that could affect hedge fund returns, we identify some of the more common ones throughout this paper.Self-selection bias results when certain manager returns are not included in the index returns and may result in performance being skewed up or down. Because hedge funds are private placements, hedge fund managers are able to decide which fund returns they want to report and are able to opt out of reporting to the various databases. Certain hedge fund managers may choose only to report DISCLOSURES returns for funds with strong returns and opt out of reporting returns for weak performers. Other hedge funds that close may decide to stop reporting in order to retain secrecy, which may cause a downward bias in returns.Survivorship bias results when certain constituents are removed from an index. This often results from the closure of funds due to poor performance, blow ups, or other such events. As such, this bias typically results in performance being skewed higher. As noted, hedge fund index performance biases can result in positive or negative skew. However, it would appear that the skew is more often positive. While it is difficult to quantify the effects precisely, investors should be aware that idiosyncratic factors may be giving hedge fund index returns an artificial lift or upwards bias.Hedge Funds of Funds and many funds of funds are private investment vehicles restricted to certain qualified private and institutional investors. They are often speculative and include a high degree of risk. Investors can lose all or a substantial amount of their investment. They may be highly illiquid, can engage in leverage and other speculative practices that may increase volatility and the risk of loss, and may be subject to large investment minimums and initial lockups. They involve complex tax structures, tax-inefficient investing and delays in distributing important tax information. Categorically, hedge funds and funds of funds have higher fees and expenses than traditional investments, and such fees and expenses can lower the returns achieved by investors. Funds of funds have an additional layer of fees over and above hedge fund fees that will offset returns. An investment in an exchange-traded fund involves risks similar to those of investing in a broadly based portfolio of equity securities traded on an exchange in the relevant securities market, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in stock and bond prices. An investment in a target date portfolio is subject to the risks attendant to the underlying funds in which it invests, in these portfolios the funds are the Consulting Group Capital Market funds. A target date portfolio is geared to investors who will retire and/or require income at an approximate year. The portfolio is managed to meet the investors goals by the pre-established year or target date. A target date portfolio will transition its invested assets from a more aggressive portfolio to a more conservative portfolio as the target date draws closer. An investment in the target date portfolio is not guaranteed at any time, including, before or after the target date is reached. Managed futures investments are speculative, involve a high degree of risk, use significant leverage, are generally illiquid, have substantial charges, subject investors to conflicts of interest, and are suitable only for the risk capital portion of an investors portfolio. Managed futures investments do not replace equities or bonds but rather may act as a complement in a well diversified portfolio. Managed Futures are complex and not appropriate for all investors. Rebalancing does not protect against a loss in declining financial markets. There may be a potential tax implication with a rebalancing strategy. Asset allocation and diversification do not assure a profit or protect against loss in declining financial markets. Past performance is no guarantee of future results. Actual results may vary.Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (Morgan Stanley), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not fiduciaries (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Morgan Stanley and/or as described at www.morganstanley.com/disclosures/dol. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.Insurance products are offered in conjunction with Morgan Stanley Smith Barney LLCs licensed insurance agency affiliates.Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustration purposes only and do not show the performance of any specific investment. Reference to an index does not imply that the portfolio will achieve return, volatility or other results similar to the index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility, or tracking error target, all of which are subject to change over time.This material is not a financial plan and does not create an investment advisory relationship between you and your Morgan Stanley Financial Advisor. We are not your fiduciary either under the Employee Retirement Income Security Act of 1974 (ERISA) or the Internal Revenue Code of 1986, and any information in this report is not intended to form the primary basis for any investment decision by you, or an investment advice or recommendation for either ERISA or Internal Revenue Code purposes. Morgan Stanley Private Wealth Management will only prepare a financial plan at your specific request using Private Wealth Management approved financial planning signature.We may act in the capacity of a broker or that of an advisor. As your broker, we are not your fiduciary and our interests may not always be identical to yours. Please consult with your Private Wealth Advisor to discuss our obligations to disclose to you any conflicts we may from time to time have and our duty to act in your best interest. We may be paid both by you and by others who compensate us based on what you buy. Our compensation, including that of your Private Wealth Advisor, may vary by product and over time.Investment and services offered through Morgan Stanley Private Wealth Management, a division of Morgan Stanley Smith Barney LLC, Member SIPC.Investment, insurance and annuity products offered through Morgan Stanley Smith Barney LLC are: NOT FDIC INSURED | MAY LOSE VALUE | NOT BANK GUARANTEED | NOT A BANK DISCLOSURES DEPOSIT | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCYMorgan Stanley Smith Barney LLC is a registered Broker/Dealer, Member SIPC, and not a bank. Where appropriate, Morgan Stanley Smith Barney LLC has entered into arrangements with banks and other third parties to assist in offering certain banking related products and services.For index, indicator and survey definitions referenced in this report please visit the following: http://www.morganstanleyfa.com/public/projectfiles/id.pdfGLOBAL INVESTMENT COMMITTEE (GIC) ASSET ALLOCATION MODELS: The Asset Allocation Models are created by Morgan Stanley Wealth Managements GIC.HYPOTHETICAL MODEL PERFORMANCE (GROSS): Hypothetical model performance results do not reflect the investment or performance of an actual portfolio following a GIC Strategy, but simply reflect actual historical performance of selected indices on a real-time basis over the specified period of time representing the GICs strategic and tactical allocations as of the date of this report. The past performance shown here is simulated performance based on benchmark indices, not investment results from an actual portfolio or actual trading. There can be large differences between hypothetical and actual performance results achieved by a particular asset allocation or trading strategy. Hypothetical performance results do not represent actual trading and are generally designed with the benefit of hindsight. Actual performance results of accounts vary due to, for example, market factors (such as liquidity) and client-specific factors (such as investment vehicle selection, timing of contributions and withdrawals, restrictions and rebalancing schedules). Clients would not necessarily have obtained the performance results shown here if they had invested in accordance with any GIC Asset Allocation Model for the periods indicated. Despite the limitations of hypothetical performance, these hypothetical performance results allow clients and Financial Advisors to obtain a sense of the risk/return trade-off of different asset allocation constructs. The hypothetical performance results in this report are calculated using the returns of benchmark indices for the asset classes, and not the returns of securities, fund or other investment products. Models may contain allocations to Hedge Funds, Private Equity and Private Real Estate. The benchmark indices for these asset classes are not issued on a daily basis. When calculating model performance on a day for which no benchmark index data is issued, we have assumed straight line growth between the index levels issued before and after that date.FEES REDUCE THE PERFORMANCE OF ACTUAL ACCOUNTS: None of the fees or other expenses (e.g. commissions, mark-ups, mark-downs, fees) associated with actual trading or accounts are reflected in the GIC Asset Allocation Models. The GIC Asset Allocation Models and any model performance included in this presentation are intended as educational materials. Were a client to use these models in connection with investing, any investment decisions made would be subject to transaction and other costs which, when compounded over a period of years, would decrease returns. Information regarding Morgan Stanleys standard advisory fees is available in the Form ADV Part 2, which is available at www.morganstanley.com/adv. The following hypothetical illustrates the compound effect fees have on investment returns: For example, if a portfolios annual rate of return is 15% for 5 years and the account pays 50 basis points in fees per annum, the gross cumulative five-year return would be 101.1% and the five-year return net of fees would be 96.8%. Fees and/or expenses would apply to clients who invest in investments in an account based on these asset allocations, and would reduce clients returns. The impact of fees and/or expenses can be material.Variable annuities are long-term investments designed for retirement purposes and may be subject to market fluctuations, investment risk, and possible loss of principal. All guarantees, including optional benefits, are based on the financial strength and claims-paying ability of the issuing insurance company and do not apply to the underlying investment options. Optional riders may not be able to be purchased in combination and are available at an additional cost. Some optional riders must be elected at time of purchase. Optional riders may be subject to specific limitations, restrictions, holding periods, costs, and expenses as specified by the insurance company in the annuity contract. If you are investing in a variable annuity through a tax-advantaged retirement plan such as an IRA, you will get no additional tax advantage from the variable annuity. Under these circumstances, you should only consider buying a variable annuity because of its other features, such as lifetime income payments and death benefits protection. Taxable distributions (and certain deemed distributions) are subject to ordinary income tax and, if taken prior to age 59‰, may be subject to a 10% federal income tax penalty. Early withdrawals will reduce the death benefit and cash surrender value.Equity securities may fluctuate in response to news on companies, industries, market conditions and general economic environment. Ultrashort-term fixed income asset class is comprised of fixed income securities with high quality, very short maturities. They are therefore subject to the risks associated with debt securities such as credit and interest rate risk.Master Limited Partnerships (MLPs) are limited partnerships or limited liability companies that are taxed as partnerships and whose interests (limited partnership units or limited liability company units) are traded on securities exchanges like shares of common stock. Currently, most MLPs operate in the energy, natural resources or real estate sectors. Investments in MLP interests are subject to the risks generally applicable to companies in the energy and natural resources sectors, including commodity pricing risk, supply and demand risk, depletion risk and exploration risk. Individual MLPs are publicly traded partnerships that have unique risks related to their structure. These include, but are not limited to, their reliance on the capital markets to fund growth, adverse ruling on the current tax treatment of distributions (typically mostly tax deferred), and commodity volume risk. The potential tax benefits from investing in MLPs depend on their being treated as partnerships for federal DISCLOSURES income tax purposes and, if the MLP is deemed to be a corporation, then its income would be subject to federal taxation at the entity level, reducing the amount of cash available for distribution to the fund which could result in a reduction of the funds value. MLPs carry interest rate risk and may underperform in a rising interest rate environment. MLP funds accrue deferred income taxes for future tax liabilities associated with the portion of MLP distributions considered to be a tax-deferred return of capital and for any net operating gains as well as capital appreciation of its investments; this deferred tax liability is reflected in the daily NAV, and, as a result, the MLP funds after-tax performance could differ significantly from the underlying assets even if the pre-tax performance is closely tracked.Investing in commodities entails significant risks. Commodity prices may be affected by a variety of factors at any time, including but not limited to, (i) changes in supply and demand relationships, (ii) governmental programs and policies, (iii) national and international political and economic events, war and terrorist events, (iv) changes in interest and exchange rates, (v) trading activities in commodities and related contracts, (vi) pestilence, technological change and weather, and (vii) the price volatility of a commodity. In addition, the commodities markets are subject to temporary distortions or other disruptions due to various factors, including lack of liquidity, participation of speculators and government intervention. Physical precious metals are non-regulated products. Precious metals are speculative investments, which may experience short-term and long term price volatility. The value of precious metals investments may fluctuate and may appreciate or decline, depending on market conditions. Unlike bonds and stocks, precious metals do not make interest or dividend payments. Therefore, precious metals may not be suitable for investors who require current income. Precious metals are commodities that should be safely stored, which may impose additional costs on the investor.REITs investing risks are similar to those associated with direct investments in real estate: property value fluctuations, lack of liquidity, limited diversification and sensitivity to economic factors such as interest rate changes and market recessions. Risks of private real estate include: illiquidity; a long-term investment horizon with a limited or nonexistent secondary market; lack of transparency; volatility (risk of loss); and leverage. Principal is returned on a monthly basis over the life of a mortgage-backed security. Principal prepayment can significantly affect the monthly income stream and the maturity of any type of MBS, including standard MBS, CMOs and Lottery Bonds. Asset-backed securities generally decrease in value as a result of interest rate increases, but may benefit less than other fixed-income securities from declining interest rates, principally because of prepayments.Yields are subject to change with economic conditions. Yield is only one factor that should be considered when making an investment decision. Credit ratings are subject to change. Duration, the most commonly used measure of bond risk, quantifies the effect of changes in interest rates on the price of a bond or bond portfolio. The longer the duration, the more sensitive the bond or portfolio would be to changes in interest rates. The majority of $25 and $1000 par preferred securities are callable meaning that the issuer may retire the securities at specific prices and dates prior to maturity. Interest/dividend payments on certain preferred issues may be deferred by the issuer for periods of up to 5 to 10 years, depending on the particular issue. The investor would still have income tax liability even though payments would not have been received. Price quoted is per $25 or $1,000 share, unless otherwise specified. Current yield is calculated by multiplying the coupon by par value divided by the market price. The initial interest rate on a floating-rate security may be lower than that of a fixed-rate security of the same maturity because investors expect to receive additional income due to future increases in the floating securitys underlying reference rate. The reference rate could be an index or an interest rate. However, there can be no assurance that the reference rate will increase. Some floating-rate securities may be subject to call risk. The market value of convertible bonds and the underlying common stock(s) will fluctuate and after purchase may be worth more or less than original cost. If sold prior to maturity, investors may receive more or less than their original purchase price or maturity value, depending on market conditions. Callable bonds may be redeemed by the issuer prior to maturity. Additional call features may exist that could affect yield. Some $25 or $1000 par preferred securities are QDI (Qualified Dividend Income) eligible. Information on QDI eligibility is obtained from third party sources. The dividend income on QDI eligible preferreds qualifies for a reduced tax rate. Many traditional dividend paying perpetual preferred securities (traditional preferreds with no maturity date) are QDI eligible. In order to qualify for the preferential tax treatment all qualifying preferred securities must be held by investors for a minimum period 91 days during a 180 day window period, beginning 90 days before the ex-dividend date.Companies paying dividends can reduce or cut payouts at any time.Nondiversification: For a portfolio that holds a concentrated or limited number of securities, a decline in the value of these investments would cause the portfolios overall value to decline to a greater degree than a less concentrated portfolio. The indices selected by Morgan Stanley Wealth Management to measure performance are representative of broad asset classes. Morgan Stanley Wealth Management retains the right to change representative indices at any time. Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies.Growth investing does not guarantee a profit or eliminate risk. The stocks of these companies can have relatively high valuations. Because of these high valuations, an investment in a growth stock can be more risky than an investment in a company with more modest growth expectations. Value investing does not guarantee a profit or eliminate risk. Not all companies whose stocks are considered to be value stocks are able to turn their business around or successfully employ corrective strategies which would result in stock prices that do not rise as initially expected.DISCLOSURES Any type of continuous or periodic investment plan does not assure a profit and does not protect against loss in declining markets. Since such a plan involves continuous investment in securities regardless of fluctuating price levels of such securities, the investor should consider his financial ability to continue his purchases through periods of low price levels.This material is disseminated in the United States of America by Morgan Stanley Smith Barney LLC. Morgan Stanley Wealth Management is not acting as a municipal advisor to any municipal entity or obligated person within the meaning of Section 15B of the Securities Exchange Act (the Municipal Advisor Rule) and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of the Municipal Advisor Rule. This material, or any portion thereof, may not be reprinted, sold or redistributed without the written consent of Morgan Stanley Smith Barney LLC.'2018 Morgan Stanley Smith Barney LLC. Member SIPC.DISCLOSURES AllocationMarketValue($)%Performance(%)CurrentQuarterFiscalYTD1Year3Years5Years7YearsSinceInceptionInceptionDateTotal Fund 14,570,622 100.00 1.66 4.33 7.10 6.67 7.78 7.52 7.23 02/01/2011Policy Index 12.41 5.21 8.66 7.55 8.51 8.37 8.31Domestic EquityHighland - Large Cap Value 3,282,719 22.53 1.80 4.64 N/A N/A N/A N/A 7.65 08/01/2017Russell 1000 VL1.18 3.55 N/A N/A N/A N/A 5.37Highland - Large Cap Growth 2,788,388 19.14 5.45 13.97 N/A N/A N/A N/A 17.73 08/01/2017Russell 1000 Gr5.76 15.69 N/A N/A N/A N/A 19.34Boston Partners - SMID Value 712,242 4.89 2.65 5.47 N/A N/A N/A N/A 8.06 08/01/2017Russell 2500 VL5.80 7.37 N/A N/A N/A N/A 10.63Fiera Capital - SMID Growth 793,493 5.45 1.69 15.88 N/A N/A N/A N/A 19.48 08/01/2017Russell 2500 GR5.53 14.90 N/A N/A N/A N/A 19.94International EquityHighland - Intl Value 723,428 4.96 -1.07 2.64 N/A N/A N/A N/A 3.79 08/01/2017MSCI EAFE Net-1.24 1.36 N/A N/A N/A N/A 3.85Renaissance - International Growth 1,005,529 6.90 -5.40 -1.69 N/A N/A N/A N/A -0.47 08/01/2017MSCI AC World ex US Net-2.61 1.05 N/A N/A N/A N/A 3.46Fixed IncomeHighland - Fixed Income 3,550,598 24.37 -0.15 -1.15 N/A N/A N/A N/A -0.75 08/01/2017Barclays Aggregate-0.16 -1.24 N/A N/A N/A N/A -0.82Alternative InvestmentsCenter Coast - MLP 608,456 4.18 9.69 -6.09 N/A N/A N/A N/A -8.90 08/01/2017Alerian MLP Index11.80 -1.58 N/A N/A N/A N/A -5.79City of Sebastian Police Officers' Retirement PlanAsset Allocation & Time Weighted Performanceas of June 30, 2018The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 1 City of Sebastian Police Officers' Retirement PlanAsset Allocation & Time Weighted Performanceas of June 30, 2018AllocationMarketValue($)%Performance(%)CurrentQuarterFiscalYTD1Year3Years5Years7YearsSinceInceptionInceptionDateIntercontinental - Private Real Estate 681,630 4.68 3.12 9.13 N/A N/A N/A N/A 9.13 10/01/2017NCREIF Property Idx1.81 5.40 N/A N/A N/A N/A 5.40CashReceipt & Disbursement 424,139 2.91 0.36 1.37 N/A N/A N/A N/A 1.46 08/01/201790-Day T-Bills0.44 1.07 N/A N/A N/A N/A 1.24The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 2 %CurrentQuarterFiscalYTD1Year3Years5Years7YearsSinceInceptionInceptionDateTotal Fund 100.00 1.43 3.72 6.48 5.99 7.13 6.94 6.6901/31/2011Domestic EquityHighland - Large Cap Value 22.53 1.68 5.40 N/A N/A N/A N/A 8.7907/31/2017Highland - Large Cap Growth 19.14 5.32 12.03 N/A N/A N/A N/A 15.5207/31/2017Boston Partners - SMID Value 4.89 2.12 4.47 N/A N/A N/A N/A 7.0407/31/2017Fiera Capital - SMID Growth 5.45 1.49 15.29 N/A N/A N/A N/A 18.8807/31/2017International EquityHighland - Intl Value 4.97 -1.19 2.08 N/A N/A N/A N/A 3.2207/31/2017Renaissance - International Growth 6.90 -5.55 -2.13 N/A N/A N/A N/A -0.9207/31/2017Fixed IncomeHighland - Fixed Income 24.37 -0.28 -1.61 N/A N/A N/A N/A -1.1607/31/2017Alternative InvestmentsCenter Coast - MLP 4.18 9.56 -6.43 N/A N/A N/A N/A -9.2407/31/2017Intercontinental - Private Real Estate 4.68 2.85 8.70 N/A N/A N/A N/A 8.7010/15/2017CashReceipt & Disbursement 2.91 -2.43 -3.89 N/A N/A N/A N/A -3.8907/31/2017City of Sebastian Police Officers' Retirement PlanAsset Allocation & Net Dollar Weighted Performance (IRR)as of June 30, 2018The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 3 Manager Performance ChartManager Risk & ReturnModern Portfolio StatisticsHistoric Asset GrowthManager Annualized Performance0.04.08.012.016.0ReturnCurrent QuarterFiscal YTD1Year3Years5Years7YearsSinceInceptionTotal Fund Policy Index 190-Day T-Bills-4.0-2.00.02.04.06.08.010.012.0Return (%)-4.0-2.00.02.04.06.08.0 10.0Risk (Standard Deviation %)CurrentQuarterFiscalYTD1Year3Years5Years7YearsInception02/01/2011Total Fund 1.66 4.33 7.10 6.67 7.78 7.527.23Policy Index 1 2.41 5.21 8.66 7.55 8.51 8.378.31Differences -0.75 -0.88 -1.56 -0.88 -0.73 -0.85-1.08CurrentQuarterFiscalYTD1Year3Years5Years7YearsInception02/01/2011Total FundBeginning Market Value 14,117 14,003 13,571 11,924 9,649 8,018 7,730Net Contributions 249 48 118 336 766 1,282 1,505Fees/Expenses -34 -88 -88 -258 -362 -455 -466Income 91 259 344 944 1,411 1,845 1,929Gain/Loss 148 349 626 1,624 3,107 3,881 3,872Ending Market Value 14,571 14,571 14,571 14,571 14,571 14,571 14,571ReturnStandardDeviationBetaMaximumDrawdownUpMarketCaptureDownMarketCaptureAlphaSharpeRatioR-SquaredInceptionDateTotal Fund 7.23 6.89 1.02 -10.71 97.09 111.00 -1.13 1.01 0.9202/01/2011Policy Index 1 8.31 6.51 1.00 -8.54 100.00 100.00 0.00 1.22 1.0002/01/201190-Day T-Bills 0.29 0.13 0.00 0.00 1.77 -0.89 0.29 N/A 0.0002/01/2011as of June 30, 2018Total Fund - Executive SummaryCity of Sebastian Police Officers' Retirement PlanThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 4 Historic Change in AssetsDistribution of ReturnsQuarterly Change in AssetsTotal Fund Policy Index 1Net Cash Flow$0.0$4.0$8.0$12.0$16.0$20.0Market Value In Millions1/117/111/127/121/137/131/147/141/157/151/167/161/177/171/186/18$8.8$15.6$14.6Market ValueAs of04/01/2018NetTransfersContributions Distributions Fees Expenses IncomeReturn OnInvestmentMarket ValueAs of06/30/2018Total Fund 14,116.69 - 3,525.62 -3,277.04 -33.66 - 91.47 239.02 14,570.6208162432Frequency< -5-5 To -4-4 To -3-3 To -2-2 To -1-1 To 00 To 11 To 22 To 33 To 44 To 5> 5Returns (%)0243101020238621City of Sebastian Police Officers' Retirement Planas of June 30, 2018Total Fund - Change in Assets & Distribution of ReturnsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 5 Manager Performance ChartManager Risk & ReturnModern Portfolio StatisticsHistoric Asset GrowthManager Annualized Performance0.03.06.09.012.0ReturnCurrent QuarterFiscal YTDSinceInceptionHighland - Large Cap ValueRussell 1000 VL90-Day T-Bills-2.00.02.04.06.08.010.012.0Return (%)-0.8-0.40.00.40.81.21.62.02.42.8 3.2Risk (Standard Deviation %)CurrentQuarterFiscalYTDInception08/01/2017Highland - Large Cap Value 1.80 4.64 7.65Russell 1000 VL 1.18 3.55 5.37Differences 0.62 1.09 2.28CurrentQuarterFiscalYTDInception08/01/2017Highland - Large Cap ValueBeginning Market Value 3,229 4,4674,342Net Contributions -1 -1,377-1,377Fees/Expenses -4 -22-22Income21 6582Gain/Loss 38 149257Ending Market Value 3,283 3,2833,283ReturnStandardDeviationBetaMaximumDrawdownUpMarketCaptureDownMarketCaptureAlphaSharpeRatioR-SquaredInceptionDateHighland - Large Cap Value 7.65 2.27 0.95 -6.36 110.08 89.67 0.22 0.26 0.9708/01/2017Russell 1000 VL 5.37 2.35 1.00 -6.45 100.00 100.00 0.00 0.17 1.0008/01/201790-Day T-Bills 1.24 0.02 0.00 0.00 6.87 -4.23 0.11 N/A 0.0508/01/2017as of June 30, 2018Highland - Large Cap Value - Executive SummaryCity of Sebastian Police Officers' Retirement PlanThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 6 Historic Change in AssetsDistribution of ReturnsQuarterly Change in AssetsHighland - Large Cap ValueRussell 1000 VLNet Cash Flow$1.6$2.4$3.2$4.0$4.8$5.6Market Value In Millions7/178/179/1710/1711/1712/171/182/183/184/185/186/18$2.9$3.2$3.3Market ValueAs of04/01/2018NetTransfersContributions Distributions Fees ExpensesReturn OnInvestmentMarket ValueAs of06/30/2018Highland - Large Cap Value 3,228,984.09 - 591,942.17 -592,549.39 -3,831.14 - 58,173.75 3,282,719.480246Frequency< -5-5 To -4-4 To -3-3 To -2-2 To -1-1 To 00 To 11 To 22 To 33 To 44 To 5> 5Returns (%)010101321200City of Sebastian Police Officers' Retirement Planas of June 30, 2018Highland Large Cap Value - Change in Assets & Distribution of ReturnsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 7 AllocationHighland - Large Cap ValueRussell 1000 VL0.08.016.024.032.0 40.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryPerformanceHighland - Large Cap ValueRussell 1000 VL0.08.016.024.0 32.0-8.0-16.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryTotal Attribution0.00.10.20.30.40.50.60.70.8 0.9-0.1-0.2-0.3-0.4UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryCity of Sebastian Police Officers' Retirement PlanHighland - Large Cap Value - Quarterly Performance Attributesas of June 30, 2018The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 8 Allocation - 04/01/2018Portfolio BenchmarkPerformance - Quarter EndingJune 30, 2018Portfolio BenchmarkAttributionSector Stock Interaction TotalConsumer Discretionary 2.08 6.76 12.08 4.19 -0.14 0.53 -0.37 0.02Consumer Staples 6.89 8.09 -3.18 -3.51 0.06 0.03 0.00 0.08Energy 13.20 10.72 16.41 14.46 0.33 0.21 0.05 0.59Financials 24.66 27.09 -3.36 -3.46 0.11 0.03 0.00 0.14Health Care 13.97 13.63 4.80 2.33 0.00 0.34 0.01 0.35Industrials 9.80 8.23 -1.59 -2.89 -0.06 0.11 0.02 0.06Information Technology 13.66 9.26 -0.40 -1.10 -0.10 0.07 0.03 0.00Materials 5.62 2.92 0.66 1.94 0.02 -0.04 -0.03 -0.05Real Estate 2.73 4.57 10.83 8.40 -0.13 0.11 -0.04 -0.07Telecommunication Services 3.56 2.87 -1.84 -2.83 -0.03 0.03 0.01 0.01Utilities 3.84 5.86 6.43 4.17 -0.06 0.13 -0.05 0.03Total 100.00 100.00 2.35 1.19 0.00 1.54 -0.39 1.15City of Sebastian Police Officers' Retirement PlanHighland - Large Cap Value - Quarterly Performance Attributesas of June 30, 2018All the values for Allocation, Performance and Attribution are expresssed in Percentage(%) termsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 9 Portfolio CharacteristicsPortfolio BenchmarkWtd. Avg. Mkt. Cap ($000) 145,844,274.87 117,081,350.33Median Mkt. Cap ($000) 53,904,297.16 9,900,411.78Price/Earnings ratio14.89 16.10Price/Book ratio2.16 2.155 Yr. EPS Growth Rate (%) 7.84 8.54BetaN/A 1.00Number of Stocks79 729Debt to Equity0.43 0.66Top Ten Equity HoldingsPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)JPMorgan Chase & Co 4.45 2.71 1.74 -4.77Exxon Mobil Corp 3.12 2.69 0.43 12.00Cisco Systems Inc 2.97 1.59 1.38 1.13Bank of America Corp 2.87 2.05 0.82 -5.61Wells Fargo & Co 2.79 1.87 0.92 6.58Intel Corp 2.59 1.78 0.81 -4.01Chevron Corp 2.53 1.85 0.68 11.82Pfizer Inc 2.40 1.62 0.78 3.22Citigroup Inc 2.37 1.31 1.06 -0.39Merck & Co Inc. 2.27 1.17 1.10 12.31% of Portfolio 28.36 18.64 9.72Ten Best PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Murphy Oil Corp 0.56 0.04 0.52 31.78Occidental Petroleum Corp 0.85 0.49 0.36 29.98Marathon Oil Corp 1.44 0.14 1.30 29.63Macy's Inc 0.74 0.09 0.65 27.12Valero Energy Corp 1.20 0.37 0.83 20.29Conocophillips 0.61 0.63 -0.02 17.90Phillips 66 1.21 0.36 0.85 17.87Omega Healthcare Investors 1.35 0.04 1.31 17.58Premier Inc 0.98 0.01 0.97 16.19Dell Technologies Inc 0.46 0.12 0.34 15.53% of Portfolio 9.40 2.29 7.11Ten Worst PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Hewlett Packard Enterprise Co 0.92 0.17 0.75 -16.11Lincoln National Corp 0.76 0.10 0.66 -14.39Ingredion Inc 1.12 0.06 1.06 -13.67Mylan NV 1.04 0.14 0.90 -12.22Goldman Sachs Group Inc 1.71 0.60 1.11 -12.12Lockheed Martin Corp 1.00 0.05 0.95 -12.02Raytheon Co. 0.98 0.00 0.98 -10.13Prudential Financial Inc 0.98 0.30 0.68 -8.90Oshkosh Corp 1.45 0.04 1.41 -8.70AT&T Inc 1.82 1.79 0.03 -8.65% of Portfolio 11.78 3.25 8.53City of Sebastian Police Officers' Retirement PlanHighland - Large Cap Value - Portfolio Characteristicsas of June 30, 2018Page 10 Manager Performance ChartManager Risk & ReturnModern Portfolio StatisticsHistoric Asset GrowthManager Annualized Performance0.08.016.024.032.0ReturnCurrent QuarterFiscal YTDSinceInceptionHighland - Large Cap GrowthRussell 1000 Gr90-Day T-Bills-10.0-5.00.05.010.015.020.025.030.0Return (%)-1.5-1.0-0.50.00.51.01.52.02.53.03.5 4.0Risk (Standard Deviation %)CurrentQuarterFiscalYTDInception08/01/2017Highland - Large Cap Growth 5.45 13.97 17.73Russell 1000 Gr 5.76 15.69 19.34Differences -0.31 -1.72 -1.61CurrentQuarterFiscalYTDInception08/01/2017Highland - Large Cap GrowthBeginning Market Value 2,649 1,5731,523Net Contributions -2 945945Fees/Expenses -3 -10-10Income10 2427Gain/Loss 134 256303Ending Market Value 2,788 2,7882,788ReturnStandardDeviationBetaMaximumDrawdownUpMarketCaptureDownMarketCaptureAlphaSharpeRatioR-SquaredInceptionDateHighland - Large Cap Growth 17.73 2.77 0.99 -5.93 96.95 112.23 -0.12 0.51 0.99 08/01/2017Russell 1000 Gr 19.34 2.77 1.00 -5.29 100.00 100.00 0.00 0.56 1.00 08/01/201790-Day T-Bills 1.24 0.02 0.00 0.00 4.23 -4.44 0.11 N/A 0.02 08/01/2017as of June 30, 2018Highland - Large Cap Growth - Executive SummaryCity of Sebastian Police Officers' Retirement PlanThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 11 Historic Change in AssetsDistribution of ReturnsQuarterly Change in AssetsHighland - Large Cap GrowthRussell 1000 GrNet Cash Flow$0.6$1.2$1.8$2.4$3.0$3.6Market Value In Millions7/178/179/1710/1711/1712/171/182/183/184/185/186/18$2.5$2.8$2.8Market ValueAs of04/01/2018NetTransfersContributions Distributions Fees ExpensesReturn OnInvestmentMarket ValueAs of06/30/2018Highland - Large Cap Growth 2,649,236.89 - 1,431,552.29 -1,433,189.51 -3,309.17 - 144,097.102,788,387.600246Frequency< -5-5 To -4-4 To -3-3 To -2-2 To -1-1 To 00 To 11 To 22 To 33 To 44 To 5> 5Returns (%)001100312201City of Sebastian Police Officers' Retirement Planas of June 30, 2018Highland Large Cap Growth - Change in Assets & Distribution of ReturnsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 12 AllocationHighland - Large Cap GrowthRussell 1000 Gr0.015.030.045.0 60.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryPerformanceHighland - Large Cap GrowthRussell 1000 Gr0.06.012.0 18.0-6.0-12.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryTotal Attribution0.00.10.20.3 0.4-0.1-0.2-0.3-0.4-0.5-0.6UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryCity of Sebastian Police Officers' Retirement PlanHighland - Large Cap Growth - Quarterly Performance Attributesas of June 30, 2018The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 13 Allocation - 04/01/2018Portfolio BenchmarkPerformance - Quarter EndingJune 30, 2018Portfolio BenchmarkAttributionSector Stock Interaction TotalConsumer Discretionary 19.00 18.61 8.38 9.29 0.01 -0.17 0.00 -0.16Consumer Staples 6.11 6.37 3.01 0.49 0.01 0.16 -0.01 0.17Energy 0.88 0.83 9.62 9.97 0.00 0.00 0.00 0.00Financials 3.52 3.49 0.93 -0.18 0.00 0.04 0.00 0.04Health Care 12.31 12.51 6.10 5.45 0.00 0.08 0.00 0.08Industrials 12.67 12.70 -4.57 -2.59 0.00 -0.25 0.00 -0.25Information Technology 38.79 38.68 8.42 8.60 0.00 -0.07 0.00 -0.07Materials 3.56 3.48 1.20 3.29 0.00 -0.07 0.00 -0.08Real Estate 2.00 2.40 5.41 5.34 0.00 0.00 0.00 0.00Telecommunication Services 1.15 0.91 4.99 5.70 0.00 -0.01 0.00 -0.01Utilities 0.00 0.01 0.00 0.65 0.00 0.00 0.00 0.00Total 100.00 100.00 5.54 5.81 0.03 -0.29 -0.01 -0.27City of Sebastian Police Officers' Retirement PlanHighland - Large Cap Growth - Quarterly Performance Attributesas of June 30, 2018All the values for Allocation, Performance and Attribution are expresssed in Percentage(%) termsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 14 Portfolio CharacteristicsPortfolio BenchmarkWtd. Avg. Mkt. Cap ($000) 258,918,705.02 267,911,293.60Median Mkt. Cap ($000) 45,391,225.18 12,043,105.02Price/Earnings ratio24.76 28.75Price/Book ratio6.02 7.165 Yr. EPS Growth Rate (%) 24.48 21.26BetaN/A 1.00Number of Stocks151 542Debt to Equity3.13 3.36Top Ten Equity HoldingsPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Apple Inc 5.72 7.12 -1.40 10.76Microsoft Corp 5.65 5.53 0.12 8.51Amazon.com Inc 5.25 5.40 -0.15 17.44Facebook Inc 3.87 3.61 0.26 21.61Alphabet Inc 2.62 2.65 -0.03 8.13Alphabet Inc 2.57 2.64 -0.07 8.87Unitedhealth Group Inc 2.03 1.83 0.20 15.05Visa Inc 1.86 1.85 0.01 10.90Home Depot Inc. (The) 1.73 1.76 -0.03 10.06Boeing Co 1.68 1.44 0.24 2.84% of Portfolio 32.98 33.83 -0.85Ten Best PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Pandora Media Inc 0.34 0.00 0.34 56.66Twenty-First Century Fox Inc 0.48 0.00 0.48 35.43Netflix Inc 1.42 1.27 0.15 32.53First Data Corp. 0.47 0.08 0.39 30.81Tesla Inc 0.34 0.36 -0.02 28.87NetApp Inc 0.53 0.16 0.37 27.70ONEOK Inc. 0.49 0.09 0.40 24.31Facebook Inc 3.87 3.61 0.26 21.61SVB Financial Group 0.36 0.09 0.27 20.31Nike Inc 0.79 0.78 0.01 20.26% of Portfolio 9.09 6.44 2.65Ten Worst PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)American Airlines Group Inc 0.32 0.00 0.32 -26.77Spectrum Brands Holdings Inc 0.23 0.00 0.23 -20.85Applied Materials Inc. 0.70 0.38 0.32 -16.61Qurate Retail Inc 0.22 0.00 0.22 -15.69Huntington Ingalls Industries Inc 0.32 0.06 0.26 -15.63Starbucks Corp 0.54 0.51 0.03 -15.17Lam Research Corp 0.48 0.22 0.26 -14.46Lockheed Martin Corp 0.50 0.52 -0.02 -12.02Bristol-Myers Squibb Co 0.35 0.38 -0.03 -11.94Northrop Grumman Corp 0.66 0.39 0.27 -11.54% of Portfolio 4.32 2.46 1.86City of Sebastian Police Officers' Retirement PlanHighland - Large Cap Growth - Portfolio Characteristicsas of June 30, 2018Page 15 Manager Performance ChartManager Risk & ReturnModern Portfolio StatisticsHistoric Asset GrowthManager Annualized Performance0.04.08.012.016.0ReturnCurrent QuarterFiscal YTDSinceInceptionBoston Partners - SMID ValueRussell 2500 VL90-Day T-Bills-3.00.03.06.09.012.015.0Return (%)-1.2-0.8-0.40.00.40.81.21.62.02.42.83.2 3.6Risk (Standard Deviation %)CurrentQuarterFiscalYTDInception08/01/2017Boston Partners - SMID Value 2.65 5.47 8.06Russell 2500 VL 5.80 7.37 10.63Differences -3.15 -1.90 -2.57CurrentQuarterFiscalYTDInception08/01/2017Boston Partners - SMID ValueBeginning Market Value 700 689672Net Contributions -2 -7-7Fees/Expenses -4 -7-7Income3 1011Gain/Loss 15 2743Ending Market Value 712 712712ReturnStandardDeviationBetaMaximumDrawdownUpMarketCaptureDownMarketCaptureAlphaSharpeRatioR-SquaredInceptionDateBoston Partners - SMID Value 8.06 2.53 0.94 -4.16 87.15 102.74 -0.16 0.25 0.9108/01/2017Russell 2500 VL 10.63 2.57 1.00 -4.91 100.00 100.00 0.00 0.33 1.0008/01/201790-Day T-Bills 1.24 0.02 0.00 0.00 6.06 -2.95 0.11 N/A 0.0108/01/2017as of June 30, 2018Boston Partners - SMID Value - Executive SummaryCity of Sebastian Police Officers' Retirement PlanThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 16 Historic Change in AssetsDistribution of ReturnsQuarterly Change in AssetsBoston Partners - SMID ValueRussell 2500 VLNet Cash Flow$0.6$0.7$0.8Market Value In Millions7/178/179/1710/1711/1712/171/182/183/184/185/186/18$0.7$0.7$0.7Market ValueAs of04/01/2018NetTransfersContributions Distributions Fees ExpensesReturn OnInvestmentMarket ValueAs of06/30/2018Boston Partners - SMID Value 699,687.79 - 50,398.85 -52,642.45 -3,545.89 - 18,343.72 712,242.020123Frequency< -5-5 To -4-4 To -3-3 To -2-2 To -1-1 To 00 To 11 To 22 To 33 To 44 To 5> 5Returns (%)010102221101City of Sebastian Police Officers' Retirement Planas of June 30, 2018Boston SMID Value - Change in Assets & Distribution of ReturnsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 17 AllocationBoston Partners - SMID ValueRussell 2500 VL0.010.020.030.040.0 50.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryPerformanceBoston Partners - SMID ValueRussell 2500 VL0.010.020.0 30.0-10.0-20.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryTotal Attribution0.00.20.40.6 0.8-0.2-0.4-0.6-0.8-1.0-1.2-1.4-1.6UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryCity of Sebastian Police Officers' Retirement PlanBoston Partners - SMID Value - Quarterly Performance Attributesas of June 30, 2018The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 18 Allocation - 04/01/2018Portfolio BenchmarkPerformance - Quarter EndingJune 30, 2018Portfolio BenchmarkAttributionSector Stock Interaction TotalConsumer Discretionary 6.80 10.43 -2.13 5.54 0.00 -0.80 0.28 -0.52Consumer Staples 1.76 3.16 11.57 6.09 -0.01 0.17 -0.08 0.09Energy 10.91 7.00 6.40 20.39 0.58 -0.98 -0.55 -0.95Financials 32.22 25.29 2.29 1.99 -0.25 0.08 0.02 -0.16Health Care 5.19 5.63 12.98 8.42 -0.01 0.26 -0.02 0.22Industrials 14.33 13.54 0.98 0.60 -0.04 0.05 0.00 0.01Information Technology 16.41 8.58 0.55 1.03 -0.36 -0.04 -0.04 -0.44Materials 9.92 5.56 2.51 4.92 -0.03 -0.13 -0.11 -0.27Real Estate 1.77 14.06 -3.27 11.03 -0.66 -2.01 1.76 -0.91Telecommunication Services 0.00 0.32 0.00 7.18 0.00 0.00 0.00 0.00Utilities 0.69 6.44 14.49 7.12 -0.08 0.47 -0.42 -0.03Total 100.00 100.00 2.69 5.65 -0.88 -2.93 0.85 -2.96City of Sebastian Police Officers' Retirement PlanBoston Partners - SMID Value - Quarterly Performance Attributesas of June 30, 2018All the values for Allocation, Performance and Attribution are expresssed in Percentage(%) termsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 19 Portfolio CharacteristicsPortfolio BenchmarkWtd. Avg. Mkt. Cap ($000) 4,643,850.13 4,736,772.77Median Mkt. Cap ($000) 3,481,152.62 1,246,861.35Price/Earnings ratio14.81 16.83Price/Book ratio1.99 1.845 Yr. EPS Growth Rate (%) 10.93 10.35BetaN/A 1.00Number of Stocks162 1,727Debt to Equity1.75 -0.65Top Ten Equity HoldingsPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)SLM Corp 1.76 0.19 1.57 2.14Walker & Dunlop Inc 1.62 0.05 1.57 -5.92RSP Permian Inc 1.38 0.11 1.27 -6.10Arrow Electronics Inc 1.34 0.25 1.09 -2.26Navient Corp 1.34 0.13 1.21 0.46Air Lease Corp 1.30 0.14 1.16 -1.31Diamondback Energy Inc 1.30 0.00 1.30 4.09SunCoke Energy Inc 1.26 0.03 1.23 24.54Parsley Energy Inc 1.25 0.09 1.16 4.45Lithia Motors Inc. 1.23 0.03 1.20 -5.63% of Portfolio 13.78 1.02 12.76Ten Best PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Insight Enterprises Inc 0.78 0.04 0.74 40.08Universal Corp 0.61 0.06 0.55 37.69WildHorse Resource Development Corp 0.75 0.00 0.75 32.84Syneos Health Inc 0.74 0.09 0.65 32.11Kosmos Energy Ltd 0.33 0.06 0.27 31.27Gulfport Energy Corp 0.33 0.08 0.25 30.26PQ Group Holdings Inc 0.73 0.02 0.71 28.85Extraction Oil & Gas Inc 0.51 0.06 0.45 28.19Engility Holdings Inc 0.35 0.02 0.33 25.57QEP Resources Inc 0.48 0.11 0.37 25.23% of Portfolio 5.61 0.54 5.07Ten Worst PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)CommScope Holding Co Inc 0.36 0.21 0.15 -26.93Arconic Inc 0.32 0.00 0.32 -25.91ManpowerGroup Inc 0.25 0.21 0.04 -24.39Skechers U.S.A. Inc 0.69 0.08 0.61 -22.83Owens-Illinois Inc. 0.43 0.10 0.33 -22.39Owens Corning 0.72 0.26 0.46 -21.18Entercom Communications Corp. 0.34 0.04 0.30 -20.79Ferroglobe PLC 0.27 0.00 0.27 -19.67SYNNEX Corp 0.73 0.11 0.62 -18.21World Fuel Services Corp 1.11 0.05 1.06 -16.64% of Portfolio 5.22 1.06 4.16City of Sebastian Police Officers' Retirement PlanBoston Partners - SMID Value - Portfolio Characteristicsas of June 30, 2018Page 20 Manager Performance ChartManager Risk & ReturnModern Portfolio StatisticsHistoric Asset GrowthManager Annualized Performance0.08.016.024.032.0ReturnCurrent QuarterFiscal YTDSinceInceptionFiera Capital - SMID GrowthRussell 2500 GR90-Day T-Bills-10.0-5.00.05.010.015.020.025.030.0Return (%)-0.8-0.40.00.40.81.21.62.02.42.83.2 3.6Risk (Standard Deviation %)CurrentQuarterFiscalYTDInception08/01/2017Fiera Capital - SMID Growth 1.69 15.88 19.48Russell 2500 GR 5.53 14.90 19.94Differences -3.84 0.98 -0.46CurrentQuarterFiscalYTDInception08/01/2017Fiera Capital - SMID GrowthBeginning Market Value 782 690669Net Contributions -1 -2-2Fees/Expenses -1 -4-4Income1 34Gain/Loss 12 106126Ending Market Value 793 793793ReturnStandardDeviationBetaMaximumDrawdownUpMarketCaptureDownMarketCaptureAlphaSharpeRatioR-SquaredInceptionDateFiera Capital - SMID Growth 19.48 2.28 0.83 -2.21 96.12 89.19 0.24 0.67 0.8408/01/2017Russell 2500 GR 19.94 2.52 1.00 -3.28 100.00 100.00 0.00 0.63 1.0008/01/201790-Day T-Bills 1.24 0.02 0.00 0.00 4.40 -6.21 0.11 N/A 0.0008/01/2017as of June 30, 2018Fiera Capital SMID Growth - Executive SummaryCity of Sebastian Police Officers' Retirement PlanThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 21 Historic Change in AssetsDistribution of ReturnsQuarterly Change in AssetsFiera Capital - SMID GrowthRussell 2500 GRNet Cash Flow$0.6$0.7$0.8$0.9Market Value In Millions7/178/179/1710/1711/1712/171/182/183/184/185/186/18$0.7$0.8$0.8Market ValueAs of04/01/2018NetTransfersContributions Distributions Fees ExpensesReturn OnInvestmentMarket ValueAs of06/30/2018Fiera Capital - SMID Growth 782,317.68 - 75,390.82 -75,893.04 -1,466.85 - 13,144.62793,493.230246Frequency< -5-5 To -4-4 To -3-3 To -2-2 To -1-1 To 00 To 11 To 22 To 33 To 44 To 5> 5Returns (%)000022020401City of Sebastian Police Officers' Retirement Planas of June 30, 2018Fiera Capital SMID Growth - Change in Assets & Distribution of ReturnsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 22 AllocationFiera Capital - SMID GrowthRussell 2500 GR0.010.020.030.040.0 50.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryPerformanceFiera Capital - SMID GrowthRussell 2500 GR0.08.016.0 24.0-8.0-16.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryTotal Attribution0.00.30.6 0.9-0.3-0.6-0.9-1.2-1.5-1.8-2.1-2.4-2.7-3.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryCity of Sebastian Police Officers' Retirement PlanFiera Capital - SMID Growth - Quarterly Performance Attributesas of June 30, 2018The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 23 Allocation - 04/01/2018Portfolio BenchmarkPerformance - Quarter EndingJune 30, 2018Portfolio BenchmarkAttributionSector Stock Interaction TotalConsumer Discretionary 20.60 14.30 7.79 9.14 0.23 -0.19 -0.09 -0.05Consumer Staples 0.00 2.22 0.00 9.81 -0.10 0.00 0.00 -0.10Energy 3.70 1.43 7.68 10.25 0.11 -0.04 -0.06 0.01Financials 7.93 7.65 -3.95 0.68 -0.01 -0.35 -0.01 -0.38Health Care 12.38 18.22 6.63 8.17 -0.16 -0.28 0.09 -0.35Industrials 17.54 19.70 -3.51 0.38 0.11 -0.77 0.08 -0.57Information Technology 33.66 26.29 0.62 6.95 0.11 -1.66 -0.47 -2.02Materials 4.18 5.91 -5.20 -0.22 0.10 -0.29 0.09 -0.11Real Estate 0.00 3.28 0.00 9.21 -0.12 0.00 0.00 -0.12Telecommunication Services 0.00 0.62 0.00 8.20 -0.02 0.00 0.00 -0.02Utilities 0.00 0.37 0.00 5.25 0.00 0.00 0.00 0.00Total 100.00 100.00 1.77 5.47 0.25 -3.59 -0.36 -3.70City of Sebastian Police Officers' Retirement PlanFiera Capital - SMID Growth - Quarterly Performance Attributesas of June 30, 2018All the values for Allocation, Performance and Attribution are expresssed in Percentage(%) termsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 24 Portfolio CharacteristicsPortfolio BenchmarkWtd. Avg. Mkt. Cap ($000) 8,448,104.98 4,900,885.89Median Mkt. Cap ($000) 7,125,837.92 1,311,430.40Price/Earnings ratio22.88 26.43Price/Book ratio4.84 4.955 Yr. EPS Growth Rate (%) 22.58 17.70BetaN/A 1.00Number of Stocks69 1,473Debt to Equity0.69 1.71Top Ten Equity HoldingsPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Arista Networks Inc 2.98 0.00 2.98 0.86Nutanix Inc 2.77 0.25 2.52 5.01Broadridge Fin. Solutions 2.64 0.00 2.64 5.27PulteGroup Inc 2.59 0.11 2.48 -2.23Copart Inc 2.49 0.00 2.49 11.05Live Nation Entertainment Inc 2.39 0.31 2.08 15.26United Rentals Inc. 2.23 0.00 2.23 -14.54Veeva Systems Inc 2.22 0.43 1.79 5.26Fortinet Inc 2.20 0.40 1.80 16.52Total System Services Inc. 2.19 0.00 2.19 -1.87% of Portfolio 24.70 1.50 23.20Ten Best PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)TripAdvisor Inc 1.65 0.27 1.38 36.24Supernus Pharmaceuticals Inc 1.95 0.13 1.82 30.68Huazhu Group Ltd 1.74 0.00 1.74 27.52Vail Resorts Inc. 1.53 0.51 1.02 24.33Cheniere Energy Inc. 1.31 0.00 1.31 21.96Tractor Supply Co 1.70 0.00 1.70 21.89Evercore Inc 1.19 0.20 0.99 21.48Wabtec Corp 1.40 0.14 1.26 21.26Domino's Pizza Inc 1.81 0.55 1.26 21.05Fortinet Inc 2.20 0.40 1.80 16.52% of Portfolio 16.48 2.20 14.28Ten Worst PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Hilton Grand Vacations Inc 1.08 0.16 0.92 -19.34Berry Global Group Inc 1.28 0.14 1.14 -16.18MercadoLibre Inc 2.08 0.00 2.08 -16.12Middleby Corp (The) 1.12 0.16 0.96 -15.65United Rentals Inc. 2.23 0.00 2.23 -14.54Legg Mason Inc 0.71 0.00 0.71 -13.78BorgWarner Inc 1.32 0.00 1.32 -13.78Crane Co. 1.34 0.00 1.34 -13.24Reinsurance Group of Amer. 1.89 0.00 1.89 -13.04Advanced Energy Industries Inc. 0.94 0.10 0.84 -9.09% of Portfolio 13.99 0.56 13.43City of Sebastian Police Officers' Retirement PlanFiera Capital - SMID Growth - Portfolio Characteristicsas of June 30, 2018Page 25 Manager Performance ChartManager Risk & ReturnModern Portfolio StatisticsHistoric Asset GrowthManager Annualized Performance0.03.06.0-3.0-6.0ReturnCurrent QuarterFiscal YTDSinceInceptionHighland - Intl Value MSCI EAFE Net90-Day T-Bills0.00.51.01.52.02.53.03.54.04.55.0Return (%)-1.5-1.0-0.50.00.51.01.52.02.53.03.5 4.0Risk (Standard Deviation %)CurrentQuarterFiscalYTDInception08/01/2017Highland - Intl Value -1.07 2.64 3.79MSCI EAFE Net -1.24 1.36 3.84Differences 0.17 1.28 -0.05CurrentQuarterFiscalYTDInception08/01/2017Highland - Intl ValueBeginning Market Value 732 709 701Net Contributions 1 - -Fees/Expenses -1 -4 -4Income 6 12 14Gain/Loss -14 7 12Ending Market Value 723 723 723ReturnStandardDeviationBetaMaximumDrawdownUpMarketCaptureDownMarketCaptureAlphaSharpeRatioR-SquaredInceptionDateHighland - Intl Value 3.79 2.71 0.99 -6.79 97.67 96.75 0.00 0.10 0.8608/01/2017MSCI EAFE Net 3.84 2.54 1.00 -7.40 100.00 100.00 0.00 0.10 1.0008/01/201790-Day T-Bills 1.24 0.02 0.00 0.00 4.37 -6.37 0.11 N/A 0.1408/01/2017as of June 30, 2018Highland - International Value - Executive SummaryCity of Sebastian Police Officers' Retirement PlanThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 26 Historic Change in AssetsDistribution of ReturnsQuarterly Change in AssetsHighland - Intl Value MSCI EAFE NetNet Cash Flow$0.6$0.7$0.8$0.9Market Value In Millions7/178/179/1710/1711/1712/171/182/183/184/185/186/18$0.7$0.7$0.7Market ValueAs of04/01/2018NetTransfersContributions Distributions Fees ExpensesReturn OnInvestmentMarket ValueAs of06/30/2018Highland - Intl Value 731,624.02 - 22,104.34 -21,588.08 -913.81 - -7,798.53 723,427.940123Frequency< -5-5 To -4-4 To -3-3 To -2-2 To -1-1 To 00 To 11 To 22 To 33 To 44 To 5> 5Returns (%)100022121101City of Sebastian Police Officers' Retirement Planas of June 30, 2018Highland - International Value - Change in Assets & Distribution of ReturnsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 27 AllocationHighland - Intl Value MSCI EAFE Net0.08.016.024.032.040.0 48.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryPerformanceHighland - Intl Value MSCI EAFE Net0.010.020.0 30.0-10.0-20.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryTotal Attribution0.00.20.40.60.81.0 1.2-0.2-0.4-0.6-0.8UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryCity of Sebastian Police Officers' Retirement PlanHighland - Intl Value - Quarterly Performance Attributesas of June 30, 2018The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 28 Allocation - 04/01/2018Portfolio BenchmarkPerformance - Quarter EndingJune 30, 2018Portfolio BenchmarkAttributionSector Stock Interaction TotalConsumer Discretionary 28.64 12.61 -1.59 -2.48 -0.19 0.11 0.14 0.07Consumer Staples 11.57 11.06 -1.94 0.42 0.01 -0.26 -0.01 -0.27Energy 7.48 5.31 5.40 11.16 0.27 -0.31 -0.13 -0.16Financials 11.83 21.05 -11.53 -6.34 0.46 -1.09 0.48 -0.15Health Care 8.89 10.17 9.16 1.80 -0.04 0.75 -0.09 0.61Industrials 8.29 14.60 -2.54 -2.32 0.06 -0.03 0.01 0.05Information Technology 13.73 6.57 4.32 -0.28 0.07 0.30 0.33 0.71Materials 4.06 8.01 -0.80 0.61 -0.08 -0.11 0.06 -0.13Real Estate 0.00 3.52 0.00 -0.38 -0.03 0.00 0.00 -0.03Telecommunication Services 4.61 3.83 -9.91 -4.77 -0.03 -0.20 -0.04 -0.26Utilities 0.91 3.27 2.63 0.52 -0.04 0.07 -0.05 -0.02Total 100.00 100.00 -0.91 -1.31 0.47 -0.77 0.70 0.41City of Sebastian Police Officers' Retirement PlanHighland - Intl Value - Quarterly Performance Attributesas of June 30, 2018All the values for Allocation, Performance and Attribution are expresssed in Percentage(%) termsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 29 Portfolio CharacteristicsPortfolio BenchmarkWtd. Avg. Mkt. Cap ($000) 95,222,303.00 59,946,964.61Median Mkt. Cap ($000) 40,175,183.34 11,374,751.69Price/Earnings ratio14.61 14.10Price/Book ratio2.34 2.155 Yr. EPS Growth Rate (%) 15.11 10.98BetaN/A 1.00Number of Stocks39 926Debt to Equity-5.83 -0.76Top Ten Equity HoldingsPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Sony Corp 8.40 0.45 7.95 6.04Philips Electronics NV 6.58 0.28 6.30 12.95Anheuser-Busch InBev SA/NV 5.91 0.54 5.37 -6.11Siemens AG 5.71 0.71 5.00 3.83SAP AG 5.66 0.79 4.87 11.59Royal Caribbean Cruises Ltd 5.15 0.00 5.15 -11.51BP PLC 4.73 1.06 3.67 14.10STMicroelectronics NV 4.58 0.11 4.47 -0.53Honda Motor Co Ltd 4.20 0.33 3.87 -15.72Intercontinental Hotels Group PLC 4.03 0.08 3.95 3.61% of Portfolio 54.95 4.35 50.60Ten Best PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Twenty-First Century Fox Inc 2.61 0.00 2.61 35.47Encana Corp 2.45 0.00 2.45 18.78BP PLC 4.73 1.06 3.67 14.10Philips Electronics NV 6.58 0.28 6.30 12.95SAP AG 5.66 0.79 4.87 11.59Baidu Inc 1.19 0.00 1.19 8.88McDermott International Inc. 1.15 0.00 1.15 7.55Diageo PLC 2.70 0.62 2.08 6.34Sony Corp 8.40 0.45 7.95 6.04Barrick Gold Corp 1.17 0.00 1.17 5.70% of Portfolio 36.64 3.20 33.44Ten Worst PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Petrobras 1.32 0.00 1.32-28.95Copa Holdings SA 1.00 0.00 1.00-25.87Daimler AG 3.35 0.41 2.94-24.32Deutsche Bank AG 0.56 0.15 0.41-24.03Invesco Ltd 1.41 0.00 1.41-16.14Honda Motor Co Ltd 4.20 0.33 3.87-15.72ING Groep NV 2.77 0.39 2.38-15.42Royal Caribbean Cruises Ltd 5.15 0.00 5.15-11.51BT Group PLC 3.21 0.17 3.04-10.52Aegon NV 0.70 0.07 0.63-10.42% of Portfolio 23.67 1.52 22.15City of Sebastian Police Officers' Retirement PlanHighland - Intl Value - Portfolio Characteristicsas of June 30, 2018Page 30 Manager Performance ChartManager Risk & ReturnModern Portfolio StatisticsHistoric Asset GrowthManager Annualized Performance0.04.08.0-4.0-8.0-12.0ReturnCurrent QuarterFiscal YTDSinceInceptionRenaissance - International GrowthMSCI AC World ex US Net90-Day T-Bills-2.7-1.8-0.90.00.91.82.73.64.55.4Return (%)-1.5-1.0-0.50.00.51.01.52.02.53.03.5 4.0Risk (Standard Deviation %)CurrentQuarterFiscalYTDInception08/01/2017Renaissance - International Growth -5.40 -1.69 -0.47MSCI AC World ex US Net -2.61 1.05 3.46Differences -2.79 -2.74 -3.93CurrentQuarterFiscalYTDInception08/01/2017Renaissance - International GrowthBeginning Market Value 1,065 1,0291,016Net Contributions - -1-1Fees/Expenses -2 -5-5Income10 1819Gain/Loss-68 -35-24Ending Market Value 1,006 1,0061,006ReturnStandardDeviationBetaMaximumDrawdownUpMarketCaptureDownMarketCaptureAlphaSharpeRatioR-SquaredInceptionDateRenaissance - International Growth -0.47 2.67 0.95 -10.16 71.48 97.78 -0.34 -0.04 0.9108/01/2017MSCI AC World ex US Net 3.46 2.69 1.00 -8.84 100.00 100.00 0.00 0.09 1.0008/01/201790-Day T-Bills 1.24 0.02 0.00 0.00 4.82 -5.04 0.11 N/A 0.1808/01/2017as of June 30, 2018Renaissance - International Growth - Executive SummaryCity of Sebastian Police Officers' Retirement PlanThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 31 Historic Change in AssetsDistribution of ReturnsQuarterly Change in AssetsRenaissance - International GrowthMSCI AC World ex US NetNet Cash Flow$0.9$1.0$1.1$1.2$1.3Market Value In Millions7/178/179/1710/1711/1712/171/182/183/184/185/186/18$1.0$1.0$1.0Market ValueAs of04/01/2018NetTransfersContributions Distributions Fees ExpensesReturn OnInvestmentMarket ValueAs of06/30/2018Renaissance - International Growth 1,064,971.83 - 257,990.80 -258,313.02 -1,701.77 - -57,419.29 1,005,528.550246Frequency< -5-5 To -4-4 To -3-3 To -2-2 To -1-1 To 00 To 11 To 22 To 33 To 44 To 5> 5Returns (%)011102230001City of Sebastian Police Officers' Retirement Planas of June 30, 2018Renaissance - International Growth - Change in Assets & Distribution of ReturnsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 32 AllocationRenaissance - International GrowthMSCI AC World ex US Net0.08.016.024.032.0 40.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryPerformanceRenaissance - International GrowthMSCI AC World ex US Net0.010.0 20.0-10.0-20.0UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryTotal Attribution0.00.30.60.91.2 1.5-0.3-0.6-0.9-1.2-1.5-1.8-2.1UtilitiesTelecommunication ServicesReal EstateMaterialsInformation TechnologyIndustrialsHealth CareFinancialsEnergyConsumer StaplesConsumer DiscretionaryCity of Sebastian Police Officers' Retirement PlanRenaissance - International Growth - Quarterly Performance Attributesas of June 30, 2018The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 33 Allocation - 04/01/2018Portfolio BenchmarkPerformance - Quarter EndingJune 30, 2018Portfolio BenchmarkAttributionSector Stock Interaction TotalConsumer Discretionary 19.24 11.36 -9.75 -3.34 -0.06 -0.73 -0.51 -1.29Consumer Staples 0.00 9.46 0.00 -0.76 -0.18 0.00 0.00 -0.18Energy 4.78 6.70 -0.06 7.22 -0.19 -0.49 0.14 -0.54Financials 15.44 23.13 -8.79 -7.34 0.36 -0.33 0.11 0.14Health Care 5.79 7.69 10.72 1.34 -0.08 0.72 -0.18 0.47Industrials 15.77 11.77 -4.61 -2.82 -0.01 -0.21 -0.07 -0.29Information Technology 18.16 11.83 -6.86 -2.86 -0.01 -0.47 -0.25 -0.74Materials 15.09 8.00 -2.88 -0.44 0.16 -0.20 -0.17 -0.21Real Estate 0.00 3.17 0.00 -2.75 0.00 0.00 0.00 0.00Telecommunication Services 5.72 3.92 -9.00 -5.99 -0.06 -0.12 -0.05 -0.23Utilities 0.00 2.96 0.00 -1.37 -0.04 0.00 0.00 -0.04Total 100.00 100.00 -5.54 -2.63 -0.10 -1.83 -0.99 -2.91City of Sebastian Police Officers' Retirement PlanRenaissance - International Growth - Quarterly Performance Attributesas of June 30, 2018All the values for Allocation, Performance and Attribution are expresssed in Percentage(%) termsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 34 Portfolio CharacteristicsPortfolio BenchmarkWtd. Avg. Mkt. Cap ($000) 35,608,057.92 65,830,632.13Median Mkt. Cap ($000) 19,697,549.81 8,122,062.92Price/Earnings ratio12.56 14.05Price/Book ratio2.39 2.225 Yr. EPS Growth Rate (%) 17.29 11.91BetaN/A 1.00Number of Stocks54 2,154Debt to Equity0.66 -0.22Top Ten Equity HoldingsPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Oil Co LUKOIL PJSC 3.25 0.14 3.11 -0.06Teck Resources Ltd 2.99 0.06 2.93 -1.07Stora Enso OYJ, Helsinki 2.80 0.05 2.75 9.54Icon PLC 2.80 0.00 2.80 12.18Arkema 2.75 0.04 2.71 -7.16Capgemini SE 2.67 0.10 2.57 9.79CRH PLC 2.64 0.14 2.50 3.91Magna International Inc. 2.57 0.10 2.47 3.69AerCap Holdings NV 2.39 0.03 2.36 6.76Jazz Pharmaceuticals Plc 2.36 0.00 2.36 14.11% of Portfolio 27.22 0.66 26.56Ten Best PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Stars Group Inc 2.26 0.00 2.26 31.76Safran SA 2.23 0.19 2.04 16.78Jazz Pharmaceuticals Plc 2.36 0.00 2.36 14.11Canadian National Railway 2.08 0.29 1.79 12.26Icon PLC 2.80 0.00 2.80 12.18Capgemini SE 2.67 0.10 2.57 9.79Stora Enso OYJ, Helsinki 2.80 0.05 2.75 9.54Baidu Inc 2.23 0.32 1.91 8.88olseley PLC 2.33 0.09 2.24 8.44Kddi Corp 2.23 0.24 1.99 7.56% of Portfolio 23.99 1.28 22.71Ten Worst PerformersPortfolioWeight(%)BenchmarkWeight(%)ActiveWeight(%)QuarterlyReturn(%)Advanced Semiconductor Eng 1.87 0.04 1.83 -36.64Pandora AS 1.44 0.04 1.40 -34.84Renault SA 1.86 0.08 1.78 -26.56Mitsubishi Electric Corp 1.91 0.12 1.79 -16.70Toray Industries Inc 1.96 0.05 1.91 -16.17Valeo SA 1.56 0.06 1.50 -15.11Taiwan Semiconductor 2.16 0.84 1.32 -13.37Orix Corp 2.14 0.10 2.04 -12.07Carnival PLC 1.82 0.05 1.77 -11.32Bridgestone Corp 1.92 0.11 1.81 -10.11% of Portfolio 18.64 1.49 17.15City of Sebastian Police Officers' Retirement PlanRenaissance - International Growth - Portfolio Characteristicsas of June 30, 2018Page 35 Manager Performance ChartManager Risk & ReturnModern Portfolio StatisticsHistoric Asset GrowthManager Annualized Performance-2.0-1.5-1.0-0.50.0ReturnCurrent QuarterFiscal YTDSinceInceptionHighland - Fixed Income Barclays Aggregate90-Day T-Bills-2.0-1.5-1.0-0.50.00.51.01.52.02.5Return (%)-0.4-0.20.00.20.40.60.8 1.0Risk (Standard Deviation %)CurrentQuarterFiscalYTDInception08/01/2017Highland - Fixed Income -0.15 -1.15 -0.75Barclays Aggregate -0.16 -1.24 -0.82Differences 0.01 0.09 0.07CurrentQuarterFiscalYTDInception08/01/2017Highland - Fixed IncomeBeginning Market Value 3,561 3,8853,980Net Contributions - -275-386Fees/Expenses -4 -19-19Income 28 90116Gain/Loss -33 -131-140Ending Market Value 3,551 3,5513,551ReturnStandardDeviationBetaMaximumDrawdownUpMarketCaptureDownMarketCaptureAlphaSharpeRatioR-SquaredInceptionDateHighland - Fixed Income -0.75 0.68 1.01 -2.20 104.01 100.92 0.01 -0.26 0.9908/01/2017Barclays Aggregate -0.82 0.67 1.00 -2.28 100.00 100.00 0.00 -0.281.0008/01/201790-Day T-Bills 1.24 0.02 0.00 0.00 20.12 -19.01 0.11 N/A 0.0008/01/2017as of June 30, 2018Highland - Fixed Income - Executive SummaryCity of Sebastian Police Officers' Retirement PlanThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 36 Historic Change in AssetsDistribution of ReturnsQuarterly Change in AssetsHighland - Fixed Income Barclays AggregateNet Cash Flow($8.0)$0.0$8.0$16.0$24.0Market Value In Millions1/117/111/127/121/137/131/147/141/157/151/167/161/177/171/186/18($1.4)$0.6$3.6Market ValueAs of04/01/2018NetTransfersContributions Distributions Fees ExpensesReturn OnInvestmentMarket ValueAs of06/30/2018Highland - Fixed Income 3,560,643.68 - 313,120.21 -313,231.83 -4,455.85 --5,477.753,550,598.4608162432Frequency< -5-5 To -4-4 To -3-3 To -2-2 To -1-1 To 00 To 11 To 22 To 33 To 44 To 5> 5Returns (%)0233101422198521City of Sebastian Police Officers' Retirement Planas of June 30, 2018Highland - Fixed Income - Change in Assets & Distribution of ReturnsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 37 Manager Performance ChartManager Risk & ReturnModern Portfolio StatisticsHistoric Asset GrowthManager Annualized Performance0.010.020.0-10.0-20.0ReturnCurrent QuarterFiscal YTDSinceInceptionCenter Coast - MLPAlerian MLP Index90-Day T-Bills-15.0-12.0-9.0-6.0-3.00.03.06.0Return (%)-2.7-1.8-0.90.00.91.82.73.64.55.46.37.2 8.1Risk (Standard Deviation %)CurrentQuarterFiscalYTDInception08/01/2017Center Coast - MLP 9.69 -6.09 -8.90Alerian MLP Index 11.80 -1.58 -5.80Differences -2.11 -4.51 -3.10CurrentQuarterFiscalYTDInception08/01/2017Center Coast - MLPBeginning Market Value 556 651 672Net Contributions - -1 -1Fees/Expenses -1 -2 -2Income 11 34 46Gain/Loss 43 -74 -106Ending Market Value 608 608 608ReturnStandardDeviationBetaMaximumDrawdownUpMarketCaptureDownMarketCaptureAlphaSharpeRatioR-SquaredInceptionDateCenter Coast - MLP -8.90 5.38 0.96 -17.72 87.61 101.28 -0.32 -0.15 0.9608/01/2017Alerian MLP Index -5.80 5.51 1.00 -15.96 100.00 100.00 0.00 -0.09 1.0008/01/201790-Day T-Bills 1.24 0.02 0.00 0.00 2.38 -2.29 0.11 N/A 0.0708/01/2017as of June 30, 2018Center Coast - MLP - Executive SummaryCity of Sebastian Police Officers' Retirement PlanThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 38 Historic Change in AssetsDistribution of ReturnsQuarterly Change in AssetsCenter Coast - MLPAlerian MLP IndexNet Cash Flow$0.5$0.6$0.7$0.8Market Value In Millions7/178/179/1710/1711/1712/171/182/183/184/185/186/18$0.7$0.6$0.6Market ValueAs of04/01/2018NetTransfersContributions Distributions Fees ExpensesReturn OnInvestmentMarket ValueAs of06/30/2018Center Coast - MLP 555,735.31 - 199,724.41 -200,101.63 -685.15 - 53,783.38 608,456.320123Frequency< -5-5 To -4-4 To -3-3 To -2-2 To -1-1 To 00 To 11 To 22 To 33 To 44 To 5> 5Returns (%)220010110112City of Sebastian Police Officers' Retirement Planas of June 30, 2018Center Coast - MLP - Change in Assets & Distribution of ReturnsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 39 Manager Performance ChartManager Risk & ReturnModern Portfolio StatisticsHistoric Asset GrowthManager Annualized Performance0.04.08.012.016.0ReturnCurrent QuarterFiscal YTDSinceInceptionIntercontinental - Private Real EstateNCREIF Property Idx90-Day T-Bills-2.00.02.04.06.08.010.012.014.0Return (%)-0.6-0.30.00.30.60.91.21.51.8 2.1Risk (Standard Deviation %)CurrentQuarterFiscalYTDInception10/01/2017Intercontinental - Private Real Estate 3.12 9.13 9.13NCREIF Property Idx 1.81 5.40 5.40Differences1.31 3.73 3.73CurrentQuarterFiscalYTDInception10/01/2017Intercontinental - Private Real EstateBeginning Market Value 669 112112Net Contributions -7 531531Fees/Expenses -2 -4-4Income- --Gain/Loss21 4343Ending Market Value 682 682682ReturnStandardDeviationBetaMaximumDrawdownUpMarketCaptureDownMarketCaptureAlphaSharpeRatioR-SquaredInceptionDateIntercontinental - Private Real Estate 9.13 1.33 0.79 0.00 166.84 N/A 0.52 0.65 0.2410/01/2017NCREIF Property Idx 5.40 0.83 1.00 0.00 100.00 N/A 0.00 0.57 1.0010/01/201790-Day T-Bills 1.07 0.02 0.01 0.00 20.00 N/A 0.11 N/A 0.0810/01/2017as of June 30, 2018Intercontinental - Private Real Estate - Executive SummaryCity of Sebastian Police Officers' Retirement PlanThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 40 Historic Change in AssetsDistribution of ReturnsQuarterly Change in AssetsIntercontinental - Private Real EstateNCREIF Property IdxNet Cash Flow($0.3)$0.0$0.3$0.6$0.9$1.2Market Value In Millions10/1711/1712/171/182/183/184/185/186/18$0.6$0.7$0.7Market ValueAs of04/01/2018NetTransfersContributions Distributions Fees ExpensesReturn OnInvestmentMarket ValueAs of06/30/2018Intercontinental - Private Real Estate 669,350.00 - - -6,608.00 -1,783.00 - 20,671.00 681,630.000369Frequency< -5-5 To -4-4 To -3-3 To -2-2 To -1-1 To 00 To 11 To 22 To 33 To 44 To 5> 5Returns (%)000000602000City of Sebastian Police Officers' Retirement Planas of June 30, 2018Intercontinental - Private Real Estate - Change in Assets & Distribution of ReturnsThe prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, its accuracy cannot be guaranteed. Past performance is not aguarantee of future results.Page 41 Portfolio NameYTD1Year3Years5Years10YearsSinceInceptionInceptionDatePerformance AppendixQTDBoston Partners - SMID Value-0.11 6.56 -- -- -- 6.5607/01/20172.12Center Coast - MLP-4.72 -9.70 -- -- -- -9.7007/01/20179.56Fiera Capital - SMID Growth5.96 17.83 -- -- -- 17.8307/01/20171.49Highland - Fixed Income-2.14 0.01 3.79 5.82 -- 5.6001/01/2011-0.28Highland - Intl Value-2.29 5.54 -- -- -- 5.5407/01/2017-1.19Highland - Large Cap Growth5.62 17.63 -- -- -- 17.6307/01/20175.32Highland - Large Cap Value-1.59 7.26 -- -- -- 7.2607/01/20171.68Intercontinental - Private Real Estate5.61 -- -- -- -- 8.2810/01/20172.85Receipt & Disbursement0.41 1.38 -- -- -- 1.3807/01/20170.26Renaissance - International Growth-4.75 -0.58 -- -- -- -0.5807/01/2017-5.55 Glossary of TermsActive Contribution Return: The gain or loss percentage of an investment relative to the performance ofthe investment benchmark.Active Exposure: The percentage difference in weight of the portfolio compared to its policy benchmark.Active Return: Arithmetic difference between the manager’s return and the benchmark’s return over aspecified time period.Actual Correlation: A measure of the correlation (linear dependence) between two variables X and Y, witha value between +1 and -1 inclusive. This is also referred to as coefficient of correlation.Alpha: A measure of a portfolio's time weighted return in excess of the market’s return, both adjusted forrisk. A positive alpha indicates that the portfolio outperformed the market on a risk-adjusted basis, and anegative alpha indicates the portfolio did worse than the market.Best Quarter: The highest quarterly return for a certain time period.Beta: A measure of the sensitivity of a portfolio’s time weighted return (net of fees) against that of themarket. A beta greater than 1.00 indicates volatility greater than the market.Consistency: The percentage of quarters that a product achieved a rate of return higher than that of itsbenchmark. The higher the consistency figure, the more value a manager has contributed to the product’sperformance.Core: Refers to an investment strategy mandate that is blend of growth and value styles without apronounced tilt toward either style.Cumulative Selection Return (Cumulative Return): Cumulative investment performance over a specifiedperiod of time.Distribution Rate: The most recent distribution paid, annualized, and then divided by the current marketprice. Distribution rate may consist of investment income, short-term capital gains, long-term capital gains,and/or return of capital.Down Market Capture: The ratio of average portfolio returns over the benchmark during periods ofnegative benchmark return. Lower values indicate better product performance.Downside Risk: A measure similar to standard deviation, but focuses only on the negative movements ofthe return series. It is calculated by taking the standard deviation of the negative quarterly set of returns. Thehigher the value, the more risk the product has.Downside Semi Deviation:A statistical calculation that measures the volatility of returns below aminimum acceptable return. This return measure isolates the negative portion of volatility: the larger thenumber, the greater the volatility.Drawdown:A drawdown is the peak-to-trough decline during a specific period of an investment, fund orcommodity.Excess over Benchmark: The percentage gain or loss of an investment relative to the investment'sbenchmark.Excess Return: Arithmetic difference between the manager’s return and the risk-free return over aspecified time period.Growth: A diversified investment strategy which includes investment selections that have capitalappreciation as the primary goal, with little or no dividend payouts. These strategies can includereinvestment in expansion, acquisitions, and/or research and development opportunities.Growth of Dollar: The aggregate amount an investment has gained or lost over a certain time period, alsoreferred to as Cumulative Return, stated in terms of the amount to which an initial dollar investment wouldhave grown over the given time period.Investment Decision Process (IDP): A model for structuring the investment process and implementing thecorrect attribution methodologies. The IDP includes every decision made concerning the division of theassets under management over the various asset categories. To analyze each decision‘s contribution to thetotal return, a modeling approach must measure the marginal value of every individual decision. In thisrespect, the hierarchy of the decisions becomes very important. We therefore use the IDP model, whichserves as a proper foundation for registering the decisions and relating them to each other.Information Ratio: Measured by dividing the active rate of return by the tracking error. The higher theInformation Ratio, the more value-added contribution by the manager.Jensen’s Alpha: The Jensen's alpha measure is a risk-adjusted performance measure that represents theaverage return on a portfolio or investment above or below that predicted by the capital asset pricing model(CAPM) given the portfolio's or investment's beta and the average market return. This metric is alsocommonly referred to as alpha..Kurtosis: A statistical measure that is used to describe the distribution, or skewness, of observed dataaround the mean, sometimes referred to as the volatility of volatility.Maximum Drawdown: The drawdown is defined as the percent retrenchment from a fund's peak to thefund's trough value. It is in effect from the time the fund's retrenchment begins until a new fund high isreached. The maximum drawdown encompasses both the period from the fund's peak to the fund's valley(length), and the time from the fund's valley to a new fund high (recovery). It measures the largestpercentage drawdown that has occurred in any fund's data record.Modern Portfolio Theory (MPT):An investment analysis theory on how risk-averse investors canconstruct portfolios to optimize or maximize expected return based on a given level of market risk,emphasizing that risk is an inherent part of higher reward.Mutual Fund (MF):An investment program funded by shareholders that trade in diversified holdings andis professionally managed.Peer Group: A combination of funds that share the same investment style combined as a group forcomparison purposes.Peer/ Plan Sponsor Universe: A combination of asset pools of total plan investments by specific sponsorand plan types for comparison purposes.Performance Ineligible Assets: Performance returns are not calculated for certain assets because accuratevaluations and transaction data for these assets are not processed or maintained by us. Common examples ofthese include life insurance, some annuities and some assets held externally. these include life insurance, some annuities and some assets held externally.Performance Statistics: A generic term for various measures of investment performance measurementterms.Portfolio Characteristics: A generic term for various measures of investment portfolio characteristics.Preferred Return:A term used in the private equity (PE) world, and also referred to as a “Hurdle Rate.” Itrefers to the threshold return that the limited partners of a private equity fund must receive, prior to the PEfirm receiving its carried interest or "carry."Ratio of Cumulative Wealth: A defined ratio of the Cumulative Return of the portfolio divided by theCumulative Return of the benchmark for a certain time period.Regression Based Analysis:A statistical process for estimating the relationships among variables. Itincludes many techniques for modeling and analyzing several variables, when the focus is on therelationship between a dependent variable and one or more independent variablesResidual Correlation: Within returns-based style analysis, residual correlation refers to the portion of astrategy’s return pattern that cannot be explained by its correlation to the asset-class benchmarks to which itis being compared.Return: A rate of investment performance for the specified period.Rolling Percentile Ranking:A measure of an investment portfolio’s ranking versus a peer group for aspecific rolling time period (i.e. Last 3 Years, Last 5 years, etc.).R-Squared: The percentage of a portfolio's performance explained by the behavior of the appropriatebenchmark. High R-Squared means a higher correlation of the portfolio's performance to the appropriatebenchmark.SA/CF (Separate Account/Comingled Fund): Represents an acronym for Separate Account andCommingled Fund investment vehicles.Sector Benchmark: A market index that serves as a proxy for a sector within an asset class.Sharpe Ratio:Represents the excess rate of return over the risk free return divided by the standarddeviation of the excess return. The result is the absolute rate of return per unit of risk. The higher the value,the better the product’s historical risk-adjusted performance results in.Standard Deviation: A statistical measure of the range of a portfolio's performance; the variability of areturn around its average return over a specified time period.Total Fund Benchmark:The policy benchmark for a complete asset pool that could consist of multipleinvestment mandates.Total Fund Composite: The aggregate of multiple portfolios within an asset pool or household.Tracking Error: A measure of standard deviation for a portfolio's investment performance, relative to theperformance of an appropriate market benchmark.Treynor Ratio: A ratio that divides the excess return (above the risk free rate) by the portfolio’s beta toarrive at a unified measure of risk adjusted return. It is generally used to rank portfolios, funds andbenchmarks. A higher ratio is indicative of higher returns per unit of market risk. This measurement canhelp determine if the portfolio is reaching its goal of increasing returns while managing market risk.Up Market Capture: The ratio of average portfolio returns over the benchmark during periods of positivebenchmark return. Higher values indicate better product performance.Upside Semi Deviation: A statistical calculation that measures the volatility of returns above an acceptablereturn. This return measure isolates the positive portion of volatility: the larger the number, the greater thevolatility.Value: A diversified investment strategy that includes investment selections which tend to trade at a lowerprice relative to its dividends, earnings, and sales. Common attributes are stocks that include high dividend,low price-to-book ratio, and/or low price-to-earnings ratio.Worst Quarter: The lowest rolling quarterly return for a certain time period.Information DisclosuresThe performance data shown reflects past performance, which does not guarantee future results.Investment return and principal will fluctuate so that an investor’s shares when redeemed may be worthmore or less than original cost. Please note, current performance may be higher or lower than theperformance data shown. For up to date month-end performance information, please contact yourFinancial Advisor or visit the funds’ company website.Investors should carefully consider the fund’s investment objectives, risks, charges and expenses beforeinvesting. The prospectus and, if available the summary prospectus, contains this and other informationthat should be read carefully before investing. Investors should review the information in the prospectuscarefully. To obtain a prospectus, please contact your Financial Advisor or visit the funds’ companywebsite.Past performance is no guarantee of future results.Investing involves market risk, including possible loss of principal.Growth investing does not guarantee aprofit or eliminate risk. The stocks of these companies can have relatively high valuations. Because of thesehigh valuations, an investment in a growth stock can be more risky than an investment in a company withmore modest growth expectations.Value investing involves the risk that the market may not recognize thatsecurities are undervalued and they may not appreciate as anticipated.Small and mid-capitalizationcompanies may lack the financial resources, product diversification and competitive strengths of largercompanies. The securities of small capitalization companies may not trade as readily as, and be subject tohigher volatility than those of larger, more established companies.Bond funds and bond holdings have thesame interest rate, inflation and credit risks that are associated with the underlying bonds owned by thefunds. The return of principal in bond funds, and in funds with significant bond holdings, is not guaranteed.International securities’ prices may carry additional risks, including foreign economic, political, monetaryand/or legal factors, changing currency exchange rates, foreign taxes and differences in financial andaccounting standards. International investing may not be for everyone. These risks may be magnified inemerging markets.Alternative investments, including private equity funds, real estate funds, hedge funds,managed futures funds, and funds of hedge funds, private equity, and managed futures funds, arespeculative and entail significant risks that can include losses due to leveraging or\other speculativeinvestment practices, lack of liquidity, volatility of returns, restrictions on transferring interests in a fund,potential lack of diversification, absence and/or delay of information regarding valuations and pricing,complex tax structures and delays in tax reporting, less regulation and higher fees than mutual funds andrisks associated with the operations, personnel and processes of the advisor.Master Limited Partnerships(MLPs) are limited partnerships or limited liability companies that are taxed as partnerships and whoseinterests (limited partnership units or limited liability company units) are traded on securities exchanges likeshares of common stock. Currently, most MLPs operate in the energy, natural resources or real estatesectors. Investments in MLP interests are subject to the risks generally applicable to companies in the sectors. Investments in MLP interests are subject to the risks generally applicable to companies in theenergy and natural resources sectors, including commodity pricing risk, supply and demand risk, depletionrisk and exploration risk; and MLP interests in the real estate sector are subject to special risks, includinginterest rate and property value fluctuations, as well as risks related to general and economic conditions.Because of their narrow focus, MLPs maintain exposure to price volatility of commodities and/orunderlying assets and tend to be more volatile than investments that diversify across many sectors andcompanies. MLPs are also subject to additional risks including: investors having limited control and rightsto vote on matters affecting the MLP, limited access to capital, cash flow risk, lack of liquidity, dilutionrisk, conflict of interests, and limited call rights related to acquisitions.Mortgage backed securities also involve prepayment risk, in that faster or slower prepayments thanexpected on underlying mortgage loans can dramatically alter the yield-to-maturity of a mortgage-backedsecurity and prepayment risk includes the possibility that a fund may invest the proceeds at generally lowerinterest rates.Tax managed funds may not meet their objective of being tax-efficient.Real estate investments are subject to special risks, including interest rate and property value fluctuations,as well as risks related to general and economic conditions.High yield fixed income securities, also knownas “junk bonds”, are considered speculative, involve greater risk of default and tend to be more volatile thaninvestment grade fixed income securities.Credit quality is a measure of a bond issuer’s creditworthiness, or ability to repay interest and principal tobondholders in a timely manner. The credit ratings shown are based on security rating as provided byStandard & Poor’s, Moody’s and/or Fitch, as applicable. Credit ratings are issued by the rating agencies forthe underlying securities in the fund and not the fund itself, and the credit quality of the securities in thefund does not represent the stability or safety of the fund. Credit ratings shown range from AAA, being thehighest, to D, being the lowest based on S&P and Fitch’s classification (the equivalent of Aaa and C,respectively, by Moody(s). Ratings of BBB or higher by S&P and Fitch (Baa or higher by Moody’s) areconsidered to be investment grade-quality securities. If two or more of the agencies have assigned differentratings to a security, the highest rating is applied. Securities that are not rated by all three agencies arelisted as “NR”.“Alpha tilt strategiescomprise a core holding of stocks that mimic a benchmark type index such as theS&P 500 to which additional securities are added to help tilt the fund toward potentially outperforming themarket in an effort to enhance overall investment returns. Tilt strategies are subject to significant timingrisk and could potentially expose investors to extended periods of underperformance.”Custom Account Index:The Custom Account Index is an investment benchmark based on your historicaltarget allocations and/or manager selection that you may use to evaluate the performance of your account.The Custom Account index does take into consideration certain changes that may have occurred in yourportfolio since the inception of your account, i.e., asset class and/or manager changes. However, in somecircumstances, it may not be an appropriate benchmark for use with your specific account composition. Fordetailed report of the historical composition of this blend please contact your Financial Advisor.Peer GroupsPeer Groups are a collection of similar investment strategies that essentially group investment products thatshare the same investment approach. Peer Groups are used for comparison purposes to compare andillustrate a clients investment portfolio versus its peer across various quantitative metrics like performanceand risk. Peer Group comparison is conceptually another form of benchmark comparison whereby theactual investment can be ranked versus its peer across various quantitative metrics.actual investment can be ranked versus its peer across various quantitative metrics.All Peer Group data are provided by Investment Metrics, LLC.The URL below provides all the definitions and methodology about the various Peer Groupshttps://www.invmetrics.com/style-peer-groupsPeer Group Ranking MethodologyA percentile rank denotes the value of a product in which a certain percent of observations fall within a peergroup. The range of percentile rankings is between 1 and 100, where 1 represents a high statistical value and100 represents a low statistical value.The 30th percentile, for example, is the value in which 30% of the highest observations may be found, the65th percentile is the value in which 65% of the highest observations may be found, and so on.Percentile rankings are calculated based on a normalized distribution ranging from 1 to 100 for all productsin each peer group, where a ranking of 1 denotes a high statistical value and a ranking of 100 denotes a lowstatistical value. It is important to note that the same ranking methodology applies to all statistics, implyingthat a ranking of 1 will always mean highest value across all statistics.For example, consider a risk/return assessment using standard deviation as a measure of risk. A percentileranking equal to 1 for return denotes highest return, whereas a percentile ranking of 1 for standard deviationdenotes highest risk among peers.In addition, values may be used to demonstrate quartile rankings. For example, the third quartile is alsoknown as the 75th percentile, and the median is the 50th percentile.AlternativesGraystone Consulting is a business of Morgan Stanley Smith Barney LLC. (“Morgan Stanley”) Thismaterial is not to be reproduced or distributed to any other persons (other than professional advisors of theinvestors) and is intended solely for the use of the persons to whom it has been delivered. This material isnot for distribution to the general public.The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation topurchase or sell any security, other investment or service, or to attract any funds or deposits. Investmentsmentioned may not be suitable for all clients. Any product discussed herein may be purchased only after aclient has carefully reviewed the offering memorandum and executed the subscription documents. MorganStanley has not considered the actual or desired investment objectives, goals, strategies, guidelines, orfactual circumstances of any investor in any fund(s). Before making any investment, each investor shouldcarefully consider the risks associated with the investment, as discussed in the applicable offeringmemorandum, and make a determination based upon their own particular circumstances, that the investmentis consistent with their investment objectives and risk tolerance.This information is being provided as a service of your Graystone Institutional Consultant and does notsupersede or replace your Morgan Stanley customer statement. The information is as of the date(s) notedand subject to daily market fluctuation. Your interests in Alternative Investments, which may have beenpurchased through us, are generally not held here, and are generally not covered by SIPC. The informationprovided to you: 1) is included as a service to you, and certain transactions may not be reported; 2) isderived from you or another external source for which we are not responsible, and may have been modifiedto take into consideration capital calls or distributions to the extent applicable; 3) may not reflect actualshares, share prices or values; 4) may include invested or distributed amounts in addition to a fair valueestimate; and 5) should not be relied upon for tax reporting purposes. Notwithstanding the foregoing, 1) to estimate; and 5) should not be relied upon for tax reporting purposes. Notwithstanding the foregoing, 1) tothe extent this report displays Alternative Investment positions within a Morgan Stanley IndividualRetirement Account (“IRA”), such positions are held by Morgan Stanley Smith Barney LLC as thecustodian of your Morgan Stanley IRA; and 2) if your Alternative Investment positon(s) is held by us and isregistered pursuant to the Securities Act of 1933, as amended, your Alternative Investment position(s) iscovered by SIPC.Alternatives may be either traditional alternative investment vehicles or non-traditional alternative strategyvehicles. Traditional alternative investment vehicles may include, but are not limited to, Hedge Funds,Fund of Funds (both registered and unregistered), Exchange Funds, Private Equity Funds, Private CreditFunds, Real Estate Funds, and Managed Futures Funds. Non-traditional alternative strategy vehicles mayinclude, but are not limited to, Open or Closed End Mutual Funds, Exchange-Traded and Closed-EndFunds, Unit Investment Trusts, exchange listed Real Estate Investment Trusts (REITs), and Master LimitedPartnerships (MLPs). These non-traditional alternative strategy vehicles also seek alternative-like exposurebut have significant differences from traditional alternative investment vehicles. Non-traditional alternativestrategy vehicles may behave like, have characteristics of, or employ various investment strategies andtechniques for both hedging and more speculative purposes such as short-selling, leverage, derivatives, andoptions, which can increase volatility and the risk of investment loss. Characteristics such as correlation totraditional markets, investment strategy, and market sector exposure can play a role in the classification of atraditional security being classified as alternative.Traditional alternative investment vehicles are illiquid and usually are not valued daily. The estimatedvaluation provided will be as of the most recent date available and will be included in summaries of yourassets. Such valuation may not be the most recent provided by the fund in which you are invested. Norepresentation is made that the valuation is a market value or that the interest could be liquidated at thisvalue. We are not required to take any action with respect to your investment unless valid instructions arereceived from you in a timely manner. Some positions reflected herein may not represent interests in thefund, but rather redemption proceeds withheld by the issuer pending final valuations which are not subjectto the investment performance of the fund and may or may not accrue interest for the length of thewithholding. Morgan Stanley does not engage in an independent valuation of your alternative investmentassets. Morgan Stanley provides periodic information to you including the market value of an alternativeinvestment vehicle based on information received from the management entity of the alternative investmentvehicle or another service provider.Traditional alternative investment vehicles often are speculative and include a high degree of risk. .Investors should carefully review and consider potential risks before investing. Certain of these risks mayinclude but are not limited to:• Loss of all or a substantial portion of the investment due to leveraging, short-selling, or other speculative practices;• Lack of liquidity in that there may be no secondary market for afund;• Volatility of returns;• Restrictions on transferring interests in a fund;• Potential lack of diversificationand resulting higher risk due to concentration of trading authority when a single advisor is utilized;•Absence of information regarding valuations and pricing;• Complex tax structures and delays in taxreporting;• Less regulation and higher fees than mutual funds; and• Risks associated with the operations,personnel, and processes of the manager. As a diversified global financial services firm, Morgan StanleyWealth Management engages in a broad spectrum of activities including financial advisory services,investment management activities, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, researchpublication, and other activities. In the ordinary course of its business, Morgan Stanley Wealth Managementtherefore engages in activities where Morgan Stanley Wealth Management’s interests may conflict with theinterests of its clients, including the private investment funds it manages. Morgan Stanley WealthManagement can give no assurance that conflicts of interest will be resolved in favor of its clients or anysuch fund.Indices are unmanaged and investors cannot directly invest in them. Composite index results are shown forillustrative purposes and do not represent the performance of a specific investment. Past performance is noguarantee of future results. Actual results may vary. Diversification does not assure a profit or protectagainst loss in a declining market. Any performance or related information presented has not been adjustedto reflect the impact of the additional fees paid to a placement agent by an investor (for Morgan Stanleyplacement clients, a one-time upfront Placement Fee of up to 3%, and for Morgan Stanley investmentadvisory clients, an annual advisory fee of up to 2.5%), which would result in a substantial reduction in theadvisory clients, an annual advisory fee of up to 2.5%), which would result in a substantial reduction in thereturns if such fees were incorporated.For most investment advisory clients, the program account will be charged an asset-based wrap fee everyquarter (“the Fee”). In general, the Fee covers investment advisory services and reporting. In addition to theFee, clients will pay the fees and expenses of any funds in which their account is invested. Fund fees andexpenses are charged directly to the pool of assets the fund invests in and impact the valuations. Clientsmust understand that these fees and expenses are an additional cost and will not be included in the Feeamount in the account statements.As fees are deducted quarterly, the compounding effect will be to increase the impact of the fees by anamount directly related to the gross account performance. For example, for an account with an initial valueof $100,000 and a 2.5% annual fee, if the gross performance is 5% per year over a three year period, thecompounding effect of the fees will result in a net annual compound rate of return of approximately 2.40%per year over a three year period, and the total value of the client’s portfolio at the end of the three yearperiod would be approximately $115,762.50 without the fees and $107,372.63 with the fees. Please see theapplicable Morgan Stanley Smith Barney LLC Form ADV Part 2A for more information including adescription of the fee schedule. It is available atwww.morganstanley.com/ADV<http://www.morganstanley.com/ADV> <http://www.morganstanley.com/ADV> or from your FinancialAdvisor/Private Wealth Advisor.Alternative investments involve complex tax structures, tax inefficient investing, and delays in distributingimportant tax information. Individual funds have specific risks related to their investment programs that willvary from fund to fund. Clients should consult their own tax and legal advisors as Morgan Stanley does notprovide tax or legal advice. Interests in alternative investment products are offered pursuant to the terms ofthe applicable offering memorandum, are distributed by Morgan Stanley Smith Barney LLC and certain ofits affiliates, and (1) are not FDIC-insured, (2) are not deposits or other obligations of Morgan Stanley orany of its affiliates, (3) are not guaranteed by Morgan Stanley and its affiliates, and (4) involve investmentrisks, including possible loss of principal. Morgan Stanley Smith Barney LLC is a registered broker-dealer,not a bank.SIPC insurance does not apply to precious metals, other commodities, or traditional alternative investments.© 2018 Morgan Stanley Smith Barney LLC. Member SIPC.Money Market FundsYou could lose money in Money Market Funds. Although MMFs classified as government funds (i.e.,MMFs that invest 99.5% of total assets in cash and/or securities backed by the U.S government) and retailfunds (i.e., MMFs open to natural person investors only) seek to preserve value at $1.00 per share, theycannot guarantee they will do so. The price of other MMFs will fluctuate and when you sell shares they maybe worth more or less than originally paid. MMFs may impose a fee upon sale or temporarily suspend salesif liquidity falls below required minimums. During suspensions, shares would not be available forpurchases, withdrawals, check writing or ATM debits. A MMF investment is not insured or guaranteed bythe Federal Deposit Insurance Corporation or other government agency.