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Home My WebLink About12-10- 2019 Agendaun9 SEBASTt � HOME OF PELICAN ISLAND PUBLIC NOTICE — POLICE PENSION BOARD MEETING December 10, 2019 The Police Pension Board will hold a regular quarter meeting Tuesday, December 10, 2019 at 10:00 a.m. in the City Council Chambers, City Hall, 1225 Main St. Sebastian, Florida. AGENDA 1. CALL TO ORDER Chairperson 2. ROLL CALL Chairperson 3. VOTE TO EXCUSE ABSENT BOARD MEMBER(S) Chairperson 4. APPROVAL OF MINUTES: A. September 17 Regular Meeting Chairperson 5. OLD BUSINESS A. Approval of Payments: Ken Killgore, Plan Administrator a. Salem Trust —July/September $4,715.00 b. Highland Capital — July/September Fixed Income $ 2,920.45 c. Highland Capital — July/September Equities $ 9,719.84 d. Boston Partners — July/September $ 1,930.29 e. Fiera Capital — July/September $ 1,497.53 f. Renaissance —July/September $ 1,723.97 g. Brookfield Public Securities Group - July/September $ 803.34 h. Morgan Stanley Consulting — July/September $ 3,375.00 i. Klausner, Kaufman, Jensen & Levinson — September $ 2,561.25 j. Travelers Insurance — Year Beginning November 1, 2019 $ 2,585.00 k. City of Sebastian — Minutes Preparation for September $ 216.00 1. City of Sebastian — Administration October/December $ 6,000.00 B. Correspondence from Salem Trust on Block Trades and Basis Point Fees Ken Killgore, Plan Administrator C. Approval of Deferred Retirement Option Plan (DROP) Calculations Ken Killgore, Plan Administrator 6. PUBLIC INPUT Chairperson 7. NEW BUSINESS A. Presentation of October 1, 2019 Actuarial Report by Actuary Doug Lozen, Foster & Foster B. Report from Investment Monitor/Continue Discussion on Manager Search Scott Owens, Morgan Stanley C. Report from Investment Managers - Highland Capital Todd Wishnia, Highland Capital D. Discussion of Cyber Liability Insurance Ken Killgore, Plan Administrator a. Amendments to Current Contracts Requiring $5 million Coverage b. Acquisition of Cyber Liability Insurance for Pension Fund E. Legal Updates — Klausner, Kaufman, Jensen & Levinson Bourn S. Jensen, Board Attorney a. Status on Update of the Summary Plan Description b. Other Legal Matters 8. BOARD MEMBER REPORTS AND COMMENTS Chairperson 9. PLAN ADMINISTRATOR REPORTS AND COMMENTS Ken Killgore, Plan Administrator a. Review of Administrative Expenses b. Review of Annual Calendar of Board Activities c. Other Administrative Matters 10. NEXT SCHEDULED OUARTERLY MEETING: March 17, 2020 Chairperson ADJOURN Please note: In accordance with Florida Statue 286.0105: any person who desires to appeal any decision at this meeting will need a record of the proceedings and for this purpose may need to ensure that a verbatim record of the proceedings is made which includes the testimony and evidence upon which the appeal is based. In accordance with Florida Statute 286.26: Persons with disabilities needing assistance to participate in any of these proceedings should contact the Administrative Services Department at 1225 Main Street, Sebastian, Florida 32958, or telephone 772-388-8205. Kenneth Killqore From: Kenneth Killgore Sent: Monday, November 25, 2019 8:09 AM To: 'Christine Vicars' Subject: RE: Police Pension Board Dec loth Okay - Thanks for the heads -up. Have a nice Thanksgiving! Ken Killgore -----Original Message ----- From: Christine Vicars Imailto:vicarschristineCc)email.coml Sent: Friday, November 22, 2019 9:36 PM To: Kenneth Killgore Subject: Police Pension Board Dec 10th CAUTION: This email originated from outside your organization. Exercise caution when opening attachments or clicking links, especially from unknown senders. Ken, I will be unable to attend the Dec 10th meeting due to a work training session. Christine 3-1 Kenneth Killqore From: Randall Moyer <phillytransplant99@gmail.com> Sent: Monday, December 02, 2019 5:43 AM To: Kenneth Killgore Subject: Police Pension Board. CAUTION: This email originated from outside your organization. Exercise caution when opening attachments or clicking links, especially from unknown senders. Ken, I apologize for getting you this at the last minute. I resign my position as a member on the Police Pension Board, It is unfortunate that I could not continue because of my relationship and involvement with The Veteran's Advisory Committee, I wish you the best with your role as the Administrator Take Care. Randy Moyer., 3-oL CITY OF SEBASTIAN POLICE PENSION BOARD MINUTES OF REGULAR QUARTERLY MEETING SEPTEMBER 17, 2019 I. Call to Order -- Acting Chairperson Christine Vicars called the meeting to order at 10:18 a.m. II. Roll Call Present Board Members: w� Christine Vicars (� Randy Moyer Paul Williamson Tim Wood Absent Jason Gillette -- Excused Also Present Bonni Jensen, Klausner, Kaufman, Jensen & Levinson, Attorney for the Board of Trustees Ken Killgore, Plan Administrator Cynthia Watson, Human Resources Manager Doug Lozen, Foster & Foster Scott Owens, Morgan Stanley Grant McMurray, Highland Capital Todd Wishnia, Highland Capital Janet Graham, Technical Writer III. Vote to Excuse Absent Board Member Motion to excuse absentee was made by Mr. Wood and seconded by Mr. Moyer. Motion carried unanimously by voice vote. IV. Approval of Minutes -- Regular Meeting of March 12, 2019 Acting Chairperson Vicars asked if there were any changes or corrections to the Minutes of May 29, 2019, Hearing none, Ms. Vicars called for a Motion to accept the Minutes as written. Motion to accept the Minutes as presented was made by Mr. Williamson, seconded by Mr. Moyer, and approved unanimously by voice vote. V. Old Business �'A.I POLICE PENSION BOARD PAGE 2 MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 A. Approval of Payments 1. Salem Trust -- April/June $ 5,145.00 2. Highland Capital -- April/June Fixed Income 2,862.71 3. Highland Capital -- April/June Equities 9,300.68 4. Boston Partners -- April/June 1,717.07 5. Fiera Capital -- December 1,270.83 6. Fiera Capital -- January/March 1,512.33 7. Fiera Capital -- April/June 1,588.48 8. Renaissance -- April/June 1,740.59 9. Brookfield Public Securities Group -- April/June 808.24 10. Graystone Consulting -- April/June 3,375.00 11. Klausner, Kaufman, Jensen & Levinson -- November 467.50 12. Klausner, Kaufman, Jensen & Levinson -- May 3,692.50 13. Klausner, Kaufman, Jensen & Levinson -- J une/Parker 1,360.00 14. Klausner, Kaufman, Jensen & Levinson -- August 127.50 15. Foster & Foster -- Preparation of State Annual Report 3,000.00 16. Foster & Foster -- Work on State Disclosures/Parker 3,700.00 17. City of Sebastian -- Minutes Preparation for May 198.00 18. City of Sebastian -- July/September 6,000.00 Motion to approve the payments as listed above was made by Mr. Williamson, seconded by Mr. Wood, and approved unanimously by voice vote. B. Review of Expense Analysis Received from Salem Trust Mr. Killgore reviewed that at the last quarterly meeting, Mindy Johnson from Salem Trust indicated that they would give the Board an analysis of its investment expenses in comparison to previous years. Mr. Killgore has handwritten in the current year-to-date expenses for comparison. Mr. Killgore stated that it was expected for the management fees to be higher than in the past as well as the Salem Trust custodial expenses. The expectation was that the increase in expenses would be more than offset by additional returns. Mr. Williamson recalled that Ms. Johnson was going to investigate whether there was an alternative method of charging the pension Plan as opposed to the way it's done now. She was to look at maybe a basis -points charge, and she was going to answer the 44P POLICE PENSION BOARD I PAGE 3 MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 question as to whether they could block trades or not. Mr. Killgore stated he would follow up with Ms. Johnson on that question, as that was not addressed in her email. Mr. Williamson stated that the way it is now being done the pension fund is being charged for each of the trades, and it's adding up to quite a bit. C. Presentation of Experience Study Performed by the Actuary -- Doug Lozen, Foster & Foster Mr. Lozen reviewed the purpose for the actuary's report and how it is compiled. He stated that every year this exercise is required, as this is a defined -benefit Plan, and those benefits are calculated by a formula and are paid out for the lifetime of the retiree. The job of the actuary is to make sure that assumptions are selected properly to make sure that the monies are flowing in to pay for those future benefits. He listed the factors that go into making those assumptions. Every five years or so the actuary studies how true the assumptions have been and whether they need slight changes that will be in place for the next five years or so. Mr. Lozen presented the Board members with copies of a report that he brought for review and went through the report item by item. The first part of his presentation he described as "Scenario A." He explained how the City funds the Plan as a percent of payroll of 23.1%. This percentage changes some from year to year. How the unfunded liability is paid down was also explained. The actuary is now recommending that, to accelerate the funded status improvement, the Plan go to a strict principal and interest on the unfunded liability, which is called level -dollar amortization. By doing that, it will cause the City's requirement to go up 2% of payroll from 23.1 % to 25.1%. It doesn't change the unfunded liability, but it will change in the future. If the Board approves the level -dollar amortization going forward, the funded ratio grows faster. He then called for questions or comments. Mr. Wood inquired where the money comes from for the 2% increase. Mr. Lozen stated it will come from the City. Mr. Williamson inquired why is it recommended to accelerate the funding if the Plan is presently at 80% funding. Mr. Lozen stated the Plan is not required to increase it, but by doing this the Plan will become healthier because the funded status grows faster, but this is entirely the Board's decision. Extended discussion was had among the Board members, Ms. Jensen, and Mr. Lozen as Mr. Lozen explained in depth other assumptions that are made and how they affect the Pension Plan. Mr. Lozen then went on to describe "Scenario B." POLICE PENSION BOARD PAGE 4 MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 He explained that by not adopting the amortization method change and choosing all of the assumptions as listed, including an immediate reduction to 7% investment, the City's requirement would increase from 23.1 % to 27.7%. He also explained that the 7.3% being phased down to 7% is also an option. He stated that he will be asking the Board to make some decision, because he intends to be back in December with a valuation report. This would be built into the 10-01-2019 report. So this would not affect the City's budget, whatever the Board's decision is, until beginning October 1st of 2020. So the City would have a lot of advance notice to make any budget changes. Right now it's 23.1%. Any change the Board would make would go into the next valuation which the City would not be required to start funding until October 1 st of 2020. Mr. Killgore asked Mr. Lozen to keep in mind that the effect all these matters would have on the City's contribution would mean going from 14% before those benefit changes were enacted. The City is already at a level that exceeds the history. Mr. Lozen asked if the Board has a good understanding of what they are being asked to decide and what the implications are. He is aware this is complicated. Ms. Jensen also asked if none of this takes into account this year's actual experience. Mr. Lozen stated it does not, that this is all forward looking. When he presents the December report, he has to factor in everything that happened this last year on investments, turnover, salaries, etc. He does not expect any big differences from the 23.1 % when he presents that report. He feels it is going to be fairly close. Mr. Williamson asked how often the Board is to make changes to the Plan. Mr. Lozen stated the recommendation is about every five years or so. Mr. Williamson asked if the Board is asked to make a decision today. Mr. Lozen stated yes, because he is typically here in December with the valuation report, so if the Board is comfortable with it, today would be the best time to make that decision. For example, the Board could adopt everything, leaving the amortization methodology alone, and decide to do a three-year glidepath into that, with the first being the next report which would be 7.2%. The City's requirement is estimated to be almost a push. The City is currently at 23.1 %. If the Board adopted all the assumptions with no change in the amortization method with the next report but begin the glidepath on investment so it would be 7.2% in the first year, the initial change to the City would be virtually no change. It would still be right around 23.1 %. Mr. Williamson asked if, with doing that, the Plan would still be 80% funded. Mr. Lozen stated yes, it would be. Y,A-y ,l) POLICE PENSION BOARD PAGE 5 MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 It was the consensus of the Board that they would like to hear from the investment representatives before making a decision. D. Report on Results of Manager Search for Alternative Investments Mr. Owens then reviewed manager performance. Highland Capital has a little bit lower return short term, but over the longer term has a larger return. Boston Partners shows SMID value, which is small and mid in the value style. For the quarter it is somewhat better. The one-year number shows a decrease due to volatility. Fiera Capital is a lower -risk manager. The return is lower, but it is actually beating the benchmark because of the level of risk. Renaissance had a large negative, and the monitor has had quite a few conversations with Renaissance about this. He reported that Renaissance has adjusted their model to put more weight on the volatility of an asset class. The monitor is watching this investor closely. Center Coast, the master limited partnership, responds to the market differently. They have a negative correlation with bonds and a correlation of about a half percent with equities. They struggled during 2018, but they are starting to recover nicely. Intercontinental, which is private real estate, has been very positive. They have been one of the better performers since this Plan diversified its portfolio. Mr. Owens reviewed the balance of his handouts, and an extended discussion ensued among all parties with questions by the Board and explanations by the Monitor. Mr. Owens stated he was asked to conduct a review of the large -cap growth manager, Highland Capital. He presented an information packet which summarizes the differences in the managers, shows what the differences are in risk, return, fees, how they go about it, etc. The Board members asked for input from Mr. McMurray from Highland Capital. Mr. McMurray reviewed the history of his company's theories and management practices. He suggested that it would not be a mistake for this Pension Plan to get a growth stock manager, in spite of the fact that it will take money away from Highland. y.R � POLICE PENSION BOARD op 4p PAGE 6 MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 Ms. Vicars asked, if the Board decides to lower the assumptions, the expectation is that the City is going to have to budget for more. However, if the rate of return comes in better, the City is not required to contribute at the same level. Mr. Lozen stated that long-term what Ms. Vicars stated is how all assumptions work. An assumption is your best guess. Mr. Williamson is in favor of keeping the Plan funded at the 79%-80% level. He likes going down one -tenth of one percent. The other Board members agreed. Mr. Moyer suggested doing it for one year and then revisit it each year thereafter. That rate would not go into effect until October of 2020, which would allow the City time to budget for it. Mr. Williamson asked how often the actuary gives the Board a report on this matter. Mr. Lozen stated that every year the Board is provided with a report on how the Plan did on its assumptions. He also explained that the impact of every tenth of a percent is about 1.3% or 1.4% of payroll. Discussion was held among Mr. Lozen and the Board members regarding this matter. Mr. Lozen stated he is very comfortable with the one -tenth of a percent change. Mr. Williamson made a motion that the Board adopt the changes that Mr. Lozen has recommended with the exception of the UAAL amortization method change, and also the Plan will go down from 7.3% to 7.2% as the assumed rate of return. Mr. Moyer seconded the motion. The motion carried unanimously by voice vote. After hearing all the information from Mr. Lozen, Mr. Owens and Mr. McMurray, it was the consensus of the Board members that they should study all the material a bit more and address this matter at the next meeting. E. Information on Divorcing Members/Spouses Alimony Tax Rules Ms. Jensen called attention to a memo that was talked about at the last meeting that can be provided to members who are going through a divorce. The memo just describes that the Plan is a governmental Pension Plan and therefore not subject to the Employment Retirement Income Security Act (ERISA). So the rules regarding qualified domestic relations orders, which is the most common way to divide up a pension, do not apply to this Pension Plan. This is intended for the member and for the member to give to his/her lawyer, who will understand in Florida there are income withholding orders (IWOs). So the Plan can honor those for purposes of paying alimony and/or child support. Members are also provided with the case law in Florida that has decided those types of issues. There are also explained the changes in alimony and the treatment of alimony for purposes of these types of payments. The last item is that they are provided with a copy of an order that her firm can accept. This is a way to streamline the payments that are VA.� . ei Q7 POLICE PENSION BOARD PAGE 7 MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 being made to the surviving spouse which doesn't require a qualified domestic relations order or an income withholding order; it just allows the parties through agreement to make these changes. The order would make, subject to contempt, the requirement that the member keep in place the payments to their spouse. She stated the Board does not have to take any action unless the Board doesn't want this memo to go out. Ms. Vicars asked if the Board members had any question about this matter. No one did. F. 2018-19 Budget/Actual Expenses and Proposed Budget Adjustment Mr. Killgore stated there is contained in the agenda packet a schedule showing the current year expenditures as compared to the amended budget. The driving force in the adjustments has been the disability cases, attorney fees, and capacity assessments that were necessary during that process. The year began with a $15,000.00 contingency. So those funds have been used to shift to the accounts so that the various line items are shown to be within budget for the year. He asked for a motion to amend the budget. A motion was made by Mr. Williamson and seconded by Mr. Moyer to approve the adjustment to the budget. The motion was approved unanimously by voice vote. G. Initial Election to Use Deferred Retirement Option Plan (DROP) Mr. Killgore reviewed that the Plan has its first DROP participant. He is scheduled to go into the DROP on October 27th. The actuarial calculations are not available until the participant's final check. The Board has been asked to approve the calculations. Mr. Killgore stated this matter will be on the agenda for December's meeting. H. Full Execution of Military Time Buyback Contract Mr. Killgore stated that the calculations are done. The Plan did receive the payment and deposited it to the trust fund. The member bought back three years of service. Mr. Killgore stated the participant can come back at a later time and buy another year if desired. VI. Public Input Mr. Todd Wishnia, a representative of Highland Capital, introduced himself as beginning to provide the services that have been handled by Mr. McMurray. Mr. McMurray will be retiring soon, and Mr. Wishnia will then be working with the Pension Plan. POLICE PENSION BOARD pP PAGE 8 MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 VII. New Business A. Notification of Charles Mulfinger's Retirement from Morgan Stanley Mr. Killgore stated he wanted to make note that Charlie Mulfinger from Morgan Stanley has retired, and everyone wished him luck. B. Report from Investment Monitor -- Scott Owens, Morgan Stanley Mr. Owens recapped the activity to date. He stated that the quarter that he is reporting on now has been about middle of the road, in the 3% to 4% range. The manufacturing index was below 50. Anything above 50 indicates that the economy is expanding. The trade issues with China are having an impact on that. The service index is continuing to do well. The consumer index remains strong. Presently, the attitude is cautiously optimistic. He described what causes volatility in the market. He expects lower equity returns going forward. Morgan Stanley's recommendation is to lower the assumption rate. It is expected that in the next five to seven years a 7% range will be at the high end of the range. They are not suggesting going to 7% right now. His company's goal is to build an efficient portfolio --a portfolio that pays for the level of risk that you're comfortable with. In recap, he is of the opinion that the economy is going to continue to go higher. However, it is also his opinion that the market is going to have a lot of volatility going forward. Unless there is a "Black Swan" event, he expects the market to remain stable. Mr. Owens reviewed the handouts that were presented to the Board. He pointed out that the value of the portfolio as of June 30th was $15,564,589.00, which represents a gain net of fees and transaction costs of $451,900.00. C. Report from Investment Managers -- Grant McMurray, Highland Capital Mr. McMurray is of the opinion that it's time to lower expectations as to what the market can do. He stated it is very difficult to preview what the markets are going to do. He suggested the Board be as informed as possible, and that is the best that can be expected of them. D. Vote on Approval of Proposed 2019-2020 Budget Mr. Killgore reviewed the spreadsheet included in the agenda packet which shows what is being proposed for next year's budget based on actual experiences. The grand total is 4.a.g POLICE PENSION BOARD PAGE 9 MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 at the same budgeted amount as it was for this year. He asked for a motion on this matter. Motion was made by Mr. Williamson, seconded by Mr. Moyer, to accept the proposed budget. Motion passed unanimously by voice vote. E. Scheduled Quarterly Meetings Set for Calendar Year 2020 Mr. Killgore reviewed the schedule that is included in the agenda packet. This schedule was proposed by Ms. Jensen's firm: March 17th, June 16th, September 15th, and December 15th, 2020. Other special meetings can be scheduled as necessary. F. Legal Updates -- Klausner, Kaufman, Jensen & Levinson 1. Recommendation on Cyber Liability Insurance Ms. Jensen addressed this subject. Cyber hacking has become a huge problem for municipalities. She discussed examples of certain municipalities who were held hostage. These municipalities were out for a significant period of time. They did not have cyber liability insurance, so they were not able to buy themselves out of the situation where their information was held hostage. This year many municipalities in Florida were held hostage. Some of these municipalities had liability insurance and were able to pay the ransom and get themselves back in business quickly. She reviewed that Georgia and Texas have been the victims of widespread attacks, which has been widely reported. She reiterated that the League of Cities is taking a position of examining whether the ransom should be paid and whether that is encouraging the hackers to repeat their actions. As a result of these instances, her firm is recommending that the Board take a look at the City's circumstances and how is it protected, how the entities that house the Plan's information is protected, how much insurance do they have, and should the Board have a discussion about backups versus paying a ransom. The City has the Plan's information, as well as Highland Capital, and the actuary has a fair amount of the Plan's information. Her firm has some information. Her firm has cyber liability insurance of $1 million. They are looking at increasing it to $5 million. That's basically their recommendation at this point. She stated at this point they are not really sure what the appropriate number is, but this Plan has a responsibility if its information is hacked, regardless of where it's hacked. Within 30 days of knowledge of that hack it must get information out to its participants letting them know that their personal identifiable information has been exposed, giving them the opportunity to have access to a credit reporting bureau for a year. The cyber liability insurance that her firm is recommending would have notification �.A.l POLICE PENSION BOARD PAGE 10 MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 coverage, would cover that incident, would bring with it some people who are experienced in getting that information out, and experienced with getting the Plan access to those credit reporting bureaus for its members. Whether the Plan would ultimately be responsible for the expense of that or whether it would be able to pass it on to the City, to Salem Trust, to wherever it was hacked, is another question. Her firm feels it is important to make sure that the Plan is prepared to respond to any kind of hack that happens to its members' information. Some Plans are considering more widespread coverage. The reason they're doing that is because a municipality in Florida about a month ago got a fake email from a person who was providing work for the municipality. The email said to send them $700,000.00 to a certain bank account, and someone did it. So that money is gone. It is possible to buy insurance against those types of claims. She said that some of the Plans she looked at are pretty expensive, have high deductibles, and don't cover as much as $700,000.00. So it's a business decision. Her firm is recommending that if any of the Board members gets an email that isn't something that was talked about at a meeting, or if he or she just has a question about it, give Mr. Killgore a call, give her a call, give Salem Trust a call, wherever it's coming from, to make sure that it's valid, and don't use the telephone number or link in the email. She is recommending: • that the Board find out about the insurance that its various vendors have. • that the Board make some business decision about how much insurance it has or is needed. The minimum amount that it should have is enough to cover the notification process. She stated it's not if it happens, but when it happens. It's not necessary to do it immediately, but as you renew your insurance and talk to the various service providers, to make sure to be included in that process. Ms. Vicars asked Mr. Killgore if the City has cyber liability insurance that covers not only this Board, but all the Boards of the City, and if the insurance that Ms. Jensen mentioned would be in addition to that. Mr. Killgore could not answer that, but he stated he would investigate that question. Ms. Jensen stated that, if the City is providing coverage to the Pension Board, that you are added as an additional insured. State statutes say that the Pension Board is separate from the municipality for purposes of operation of the pension fund. This needs to be verified. �.pf,10 POLICE PENSION BOARD' c PAGE 11 MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 Mr. Williamson suggested Mr. Killgore get an explanation of what Salem Trust/TMI has for cyber security protection, and if they have any liability insurance that would cover this Plan for that. 2. Status on Update of the Summary Plan Description Ms. Jensen stated the summary plan description is due to be updated in December. She is hoping to have it out to Mr. Killgore by November 1 st. 3. Other Legal Matters Ms. Jensen asked Mr. Killgore about the status of the annual report and whether it has been received from the State. Mr. Killgore said he has received it, and the report is in order. Vill. Board Member Reports and Comments -- None IX. Plan Administrator Reoorts and Comments -- None A. TMI Trust Company Acquisition of Salem Trust Company Mr. Killgore reported on TMI acquiring Salem. B. 2018 Comparative Analysis of Other Plans Mr. Killgore reviewed that Foster & Foster has made the comparative analysis of other plans of their clients. C. Review of Annual Calendar of Board Activities Mr. Killgore stated those items that were due to be covered have been covered at this stage. D. Other Administrative Matters -- None X. Next Scheduled Quarterly Meetino A. December 10, 2019 XI. Adiourn YAJI POLICE PENSION BOARD MINUTES OF REGULAR MEETING OF SEPTEMBER 17, 2019 PAGE 12 Ms. Vicars called for any further business. Hearing none, the meeting was adjourned at 12:56 p.m. an Jason Gillette 19 �'A.l'�- ity of Sebastian Debbie Krueger 1225 Main Street Sebastian, FL 32958 a SALEM TRUST C 0 Ni P A N V — Fee Advice for Period Detail of Calculation: Flat Fee $500 for 6 additional accounts July 1, 2019 to $5.00 Security Transactions Current Period 9/30/2019 12/31/2019 3/31 /2020 6/30/2020 (300 included in annual fee) October 4, 2019 M05348 Sebastian Police September 30, 2019 Annual Fee $5,000.00 $3,000.00 Year To Date 843 843 $5.00 Total Total Amount Due These fees will automatically be charged to your account. If you have any questions, please contact Mindy Johnson at 813,288.4990 HOLLYWOOD TAMPA 1715 N. WESTSHORE BLVD., S= 750 TAWA, FL 33607 TEL (877) 382-5268 FAX (813)301-1295 w .salemtmsfxom Quarterly Fee $1,250.00 $750.00 $2,715.00 $4,715.00 $4,715.00 <! i.0. . i Nmd Capital MANAGEMENT, LLC October 5, 2019 MANAGEMENT FEE: 9/30/2019 Portfolio Value: Quarterly Fee Based On: $ 3,893,931 @ 0.30% per annum Invoice Number: 21835 SEBASTIAN POLICE OFFICERS' RETIREMENT FIXED INCOME Quarterly Fee: For the Period 7/1/2019 through 9/30/2019 Wiring Instructions: First Tennessee Bank ABA# 084000026 Acct# 22.0001278809 For Credit to: Highland Capital Management, LLC. *****Note new checking account number******* $ 3,893,931.16 $ 2,920.45 Paid by Debit Direct Please Remit Mailing Check: Highland Capital Management, LLC 6075 Poplar Ave, Suite 703 Memphis, TN 38119 $ 2,920.45 ($ 0.00) $ 2,920.45 ili d Capital MANAGEMENT, LLC October 5, 2019 Invoice Number: 21891 MANAGEMENT FEE: SEBASTIAN POLICE OFFICERS' RETIREMENT 9/30/2019 Portfolio Value: $ 7,778,501.95 Exclude Dividend Accrual - 2,630.07 Billable Value $ 7,775,871.88 Quarterly Fee Based On: $ 7,775,872 @ 0.50% per annum $ 9,719.84 Quarterly Fee: $ 9,719.84 For the Period 7/1/2019 through 9/30/2019 Paid by Debit Direct ($ 0.00) Please Rennit $ 9.719.84 ccouut Account Value Ouartuly Fee (sebast0l) SEBASTIAN POLICE OFFICERS' RETEiF.MENT VALUE $ 3,531,016.14 $ 4,413.77 (wbasti3) SEBASTIAN POLICE OFFICERS' RETE2EMENT GROWTH $ 3,519,010.63 $ 4,398.76 (sebas04) SEBASTLAN POLICE OFFICERS' RETIREMENT ADR $ 725,845.11 $ 90731 Total $ 7,775,871.88 $ 9,719.84 Wiring Instructions: First Tennessee Bank ABA# 084000026 Acct# 22.0001278809 For Credit to: Highland Capital Management, LLC. *****Nate new checking account number******* Mailing Check: Highland Capital Management, LLC 6075 Poplar Ave, Suite 703 Memphis, TN 38119 /�Iga-lu C BostonPartners Ken Kilgore City of Sebastian 1225 Main Street Sebastian, FL 32958 Invoice Date: 09/30/2019 Invoice Number: 20190930-690-A Billing Portfolio(s): 00844 - City of Sebastian Police Officers' Retirement System Billing Period: 07/01/2019 to 09/30/2019 SUMMARY FOR INVESTMENT SERVICES QUARTEREND Fee Current Period Amount Due: Current Invoice Period Due City of Sebastian Police Officers' Retirement 20190930-690-A System jTotal Amount Due 1,930.29 1,930.29 $1,930.29 30-60 Days 60-90 Days Over 90 Days Total 1.930.29 Please contact James Vitelli directly at 212-908-0149 with any billing inquiries. As always, you may also direct any questions to your Relationship Manager. /,93o,a� �t/ lr We would appreciate receiving your payment along with the remittance slip within 30 days of receipt of this Invoice. WIRE / TRANSFER FUNDS TO: JP Morgan Chase; ABA #021000021; ACCT #066-654610 REFERENCE: Boston Partners Ref Acct#: 00844 MAIL REMITTANCES TO: Accounts Receivable Boston Partners One Grand Central Place, 60 East 42nd Street, Suite 1550 New York, NY 10165 Email jvitelli@boston-partners.com Thank You 1,930.29 i eriod Rule - Custom (USD) City of Sebastian Police Officers' Retirement System - 00844 Monthly Values 06/302019 Market Value 07/31/2019 Market Value 08/27/2019 Capital Change 08/31/2019 Market Value 09/262019 Capital Change 09/302019 Market Value Adjusted Input Annual Fee Schedule (IMFEE - USD) 0.00 to 25,000,000.00 702,653.75 716,875.64 135,000.00 820,396.08 (0.02) 855,597.17 26,000,000.01 and above Quarterly Fee Calculation (IMFEE - USD) 772,115.73 - 100.00 BPS 90 / 360 = Fee Detatb: Total IMFEE (00844) Fee Total: Invoice Summary Fee Totals: Schedule Total: Fee Total For IMFEE: Total Amount Due: 702,553.75 716,875.64 820,396.08 855,597.17 $ 772,115.73 100.00 BPS 80.00 BPS 1,930.29 $ 1,930.29 1,930.29 $ 1,930.29 1,930.29 $ 1,930.29 ERAC"rrm, October 16, 2019 Ken Killgore 1225 Main Street Sebastian, FL 32958 City of Sebastian Police Officer's Retirement System - 3040002573 FIERA CAPITAL INC. SUMMARY OF MANAGEMENT FEES For The Period July 1 thru September 30, 2019 Portfolio Value as of 09-30-19 $ 798,680.42 798,680 @0.75%per annum 1,497.53 Quarterly Management Fee $ 1,497.53 TOTAL DUE AND PAYABLE $ 1,497.53 As per SEC Rule 206(4)-2, we urge you to compare this report with your custodian statements. It is the client's responsibility to verify the accuracy of the computation. The custodian will not do an independent verification of the accuracy of the computation of fees. ACH Instructions: Citi Private Bank 1 Court Square, 22nd Floor Long Island City, NY 11120 Routing #: 021000089 Acct. #: 4974013748 Account Name: Fiera Capital Inc. To pay by check: Payable to Fiera Capital Inc. Attn: Myron Charas 10050 Innovation Dr, Suite 120 Dayton, OH 45342 Billing inquiries should be directed to: Myron Charas ..,... and BillingFCI@fieracapital.com 937-388-1437 naissance Investment Management October 03, 2019 Mr. Kenneth W. ICillgore Administrative Services Director City of Sebastian 1225 Main Street Sebastian, FL 32958 Billing Period: FROM 07/01/2019 TO 09/30/2019 Custodian Account No: Account #: IE0496 - City of Sebastian Police Officers Retirement System PortfolioValue ................................................... Amount Due, PAYABLE UPON RECEIPT: . . ........................ . FEE CALCULATION `(Rate x Portfolio Value) x (# of days In quarter I # of days In year) Rate Applied, FQ[Assets Under Management Amount Due 0.6500 % On the remainder: 1,052,256 1,723.97 Total Fee: 1,723.97 $1,052,255.74 $1,723.97 Lease compare this fee bill prepared by our Him to year custodial neammt statement for nay discrepancies. Alloor variations may occur because of reporting dotes, merual hods oriot ... st and dividends, and other Radars, Yuur c metal statement Is the oMile] rectied f,mu acessun.Ifyou are not receiving statements from your wsmdionat least quarterly, If there have been nay changes In year a....1.1 dbral e, Investment objectives, ov If you wish to Initiate or modify any ecasoobhe restrictions on the management of your account, picnic riot]ry Mary\telners a1513-733-4554 or men©renhur earn. #- �a 5 Return this section with your fee to the address below or in the enclosed envelope: RENAISSANCE INVESTMENT MANAGEMENT 3551 Solutions Center #773551 Chicago, IL 60677-3005 Acet:IE0496 Custodian Account No: 50 EAST RIVERCENTER BOULEVARD . SUITE 1200 /�'� COVINGTON, KY 4 101 1 . 800.837.3863. 513.723.4500. FAX 513.723.4512. waw,.en lnv.com j ity of Sebastian Police Officers Retirement System 3040002617 1225 Main Street Sebastian, FL 32958 SUMMARY FOR INVESTMENT MANAGEMENT SERVICES Invoice Date 11/07/2019 Invoice Number 20190930-350-A Billing Period 07/01/2019 to 09/30/2019 Billing Portfolios SEBASTIAN - City of Sebastian Police Officers Retirement System Total Amount Due I $803.34 l * See attached worksheet for calculation details PAYMENT DUE UPON RECEIPT PLEASE INCLUDE INVOICE # WITH REMIT PAYMENT JPMorgan Chase Bank, NA Bank Account # 907-153925265 ABA # 021000021 Account Name Brookfield Public Securities Group LLC Should you have any questions regarding this invoice, please email BPSGaccountsreceivable@brookfield.com /^ ct + Page 1 of 2 J 11 J, I Invoice Date 111/07/2019 Invoice Number 120190930-350-A iPeriod Market Value (USD) 09/30/2019 City of Sebastian Police Officers Retirement System - SEBASTIAN Market Value 637,435.88 Total Adjusted Market Values $637,435.88 Quarterly Fee Calculation (Investment Management Fee - USD) Billable Assets Basis Points Billable Days Fee 637,435.88 50.000 92/365 803.34 Invoice Summary 09/30 Fee Total for Investment Management Fee 803.34 Total Fee 803.34 Total Amount Due 1 $803.34 Page 2 of 2 ctober 25, 2019 'IIIIJIII�pll.lull'(III'Itll"IIIIIIIIII'I"IIII'llll"'ll"II 000072 MSH89KAI OD0000 745 070 CITY OF SEBASTIAN POLICE ATTN: KENNETH KILLGORE 1225 MAIN ST. SEBASTIAN FL 32958 Graystone Consuking- A business of Morgan Stanley Invoice Number: 10129919298 Morgan Stanley Financial Advisor www.morganstanley.com IMPORTANT NOTICE (INVESTMENT ADVISORY FEE PAYMENT REQUIRED ACTION REQUIRED — PLEASE REMIT PAYMENT IN THE ENCLOSED BUSINESS REPLY ENVELOPE We value you as a client and thank you for the opportunity to serve your investment needs. Please see below for the investment advisory fee(s) due. ACCOUNT CLIENT NAME 745-038962 CITY OF SEBASTIAN POLICE Total Fee: Prior Balance: Net Amount: For additional details please see Invoice Detail and Remittance Instructions on pages to follow. TOTAL FEE AMOUNT $3,375.00 $3,375.00 $0.00 $3,375.00 I of lip Investments and services offered tbrougb Morgan Stanley Smitb Barney LLC, Member SIPC. a +::. Graystone Consulting is a business of Morgan Stanley. DVISORY INVOICE DETAILS Account: 745-038962 Billing Period Number of Days Hard Dollar Fee Fee Amount Graystone Consulting - A business of Morgan Stanley Invoice Number: 10129919298 07/01/2019 — 09/30/2019 92 $13, 500.00 $3,375.00 3 of Investments and services offered tbrougb Morgan Stanley Smab Barney LLC, Member SIPC. Graystone Consulting is a business of Morgan Stanley. EMITTANCE INSTRUCTIONS Graystone Consulting - A business of Morgan Stanley Invoice Number: 10129919298 Payment Due: 11/24/2019 Please return payment using this page and include it with your check in the enclosed business reply envelope. Please note that cash payments cannot be accepted — wire and check information are below. If you have any questions, please contact your Financial Advisor. Account 745-038962 Total Fee: Prior Balance: Net Amount: Total Fee Amount $3,375.00 $3,375.00 $0.00 $3,375.00 By Wire Bank Name: Citibank, New York ABA:021000089 For Benefit Of Morgan Stanley & Co. Incorporated Beneficiary Account: 40611172 For Further Credit to: 980000163 Ref: Invoice 0101299 By Check Morgan Stanley Global Banking Operations ATTN: Advisory Fee Billing 1300 Thames Street Wharf, 4th Floor Baltimore, MD 21231-9907 Ref: Invoice 10129919298 Mp Investments and services offered tbrougb Morgan Stanley Smitb Barney LLC. Member SIPC. ? Graystone Consulting is a business of Morgan Stanley 5 of 6Xk,3 iausner, Kaufman, Jensen & Levinson A Partnership of Professional Associations Attorneys At Law 7080 N.W. 4th Street Plantation, Florida 33317 Tel. (954) 916-1202 www.klausnerkauftnan.com Fax (954) 916-1232 Tax I.D.: 45-4083636 SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM September 30, 2019 Attn: KEN KILLGORE Bill # 24635 1225 MAIN STREET SEBASTIAN, FL 32958 CLIENT: SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM :170042 MATTER: SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM :170042 Professional Fees Date Attorney Description Hours Amount 09/06/19 BSJ REVIEW AND RESPOND TO EMAIL 0.70 297.50 FROM ANN-MARIE FRASER REGARDING INVESTMENT MANAGER CONTRACTS; REVIEW CONTRACTS (5); TELEPHONE CALL WITH KEN KILLGORE 09/13/19 BSJ REVIEW AGENDAAND MEETING 0.50 212.50 BACKUP 09/15/19 BSJ REVIEW AND RESPOND TO EMAIL 0.50 212.50 FROM ANN-MARIE FRASER 09/17/19 BSJ TRAVEL TO AND FROM MEETING 2.10 446.25 (DIVIDED WITH PORT ST. LUCIE POLICE) 09/17/19 BSJ ATTEND MEETING 3.00 1,275.00 09/17/19 PARA PREPARATION OF MEETING 0.30 37.50 MATERIALS FOR UPCOMING MEETING. 09/24/19 BSJ REVIEW TMI CERTIFICATE OF 0.10 42.50 INSURANCE; TELEPHONE CALL WITH MARK RHEIN REGARDING INSURANCE AMOUNTAND NAME OF INSURED 09/25/19 PARA PROVIDE ACTUARY AND CUSTODIAN 0.30 37.50 CONTRACTS TO ANN-MARIE FRASER Total for Services 7.50 $2,661.25 a'-h Continued ... J, / I . i lient: SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM September 30, 2019 Matter: 170042 - SEBASTIAN POLICE OFFICERS' RETIREMENT Page 2 CURRENT BILL TOTAL AMOUNT DUE $ 2,661.26 Past Due Balance ►_luIS111al-011A 1 IM $2,561.25 .-5�,A, '.).- wl. TRAVELERSJ LSJ INSURANCE AGENCY INC 100 E SYBELIA AVE 375 MAITLAND FL 32751 12019 -L7 Page 01 of 03 Account Bill Account No. 9860K9214 _ Date of This Bill 10/14/19 CITY OF SEBASTIAN POLICE OFFICERS' RETIR 1201 MAIN STREET SEBASTIAN FL 32958 Account Name CITY OF SEBASTIAN POLICE OFFIC ACCOUNT BILLING SUMMARY POLICY PRINCIPAL/INSURF❑ POLICY PERIOD 0106195885 LB CITY OF SEBASTIAN POLICE 0 11/01/19 TOTAL BALANCE TRANSACTIONS SINCE LAST STATEMENT Total Transactions (See Transaction Detail Section) TOTAL BALANCE TRANSACTION DETAIL POLICY NUMBER 0106195885 LB Liability 11/01/19 Renewal TOTAL TRANSACTIONS CONTINUED ON NEXT PAGE TOTAL BALANCE $2,685.00 MINIMUM DUE 52,685.00 PAYMENT MUST BE RECEIVED BY: NOVEMBER 01, 2019 MIN. DUE $2.685.00 $2,685.00 BALANCE CO 52 685.00 12 $L�",685.00 +2.685.00 52,685.00 0Ia11.53'ts60 Ti 100' a 2,685.00 CJl71J�r�1' ll5i:� 9 ` Z, 5d5'.ui 685.0� $2,685.00 Please detach the payment coupon and mail with your payment in the enclosed envelope to: TRAVELERS CL REMITTANCE CENTER, PO BOX 660317, DALLAS, TX 75266-0317. ................................................................................................................. 648842H 2O19287 9499 247 OOFG24 Payment Coupon Make checks payable to: TRAVELERS LSJ INSURANCE AGENCY INC CITY OF SEBASTIAN POLICE OFFIC 9860K9214 ❑ Include Account Number on the check. Change of Address? Place an "X' here. Print changes on reverse side PAYMENT MUST BE RECEIVED BY TRAVELERS CL REMITTANCE CENTER NOVEMBER 01, 2019 PO BOX 660317 /y DALLAS, TX 75266-0317 W o2 5 �fep 'IhI.III,.II..Illlllpq.u„m,l,l"II'IP.I"II'lll''ullll'I a 9939383630113932313440393939393800026850000026850086 TOTAL BALANCE $2,685.00 MINIMUM DUE $2,685.00 AMOUNT ENCLOSED PL-9837 JANET M. GRAHAM 97 OVERLOOK DRIVE SEBASTIAN, FL 32976 INVOICE FOR SEPTEMBER 2019 9-5-2019 Planning & Zoning Commission 6 pages $108.00 9-17-2019 Police Pension Board 12 pages 216.00 9-23-2019 Parks and Recreation 6 pages 108.00 TOTAL $432.00 5P1, K cf S AST HOME OF PELICAN ISLAND City of Sebastian 1225 Main Street Sebastian, Florida 32958 INVOICE TO: Sebastian Police Pension Trust Fund 1225 Main Street Sebastian, FL 32958 DESCRIPTION INVOICE: Date: Amount: Agreement With City of Sebastian Dated June 14, 2017 for Plan Administrator Services for October, November and December 2019. PAYMENT DUE UPON RECEIPT. PLEASE RETURN COPY OF INVOICE WITH PAYMENT THANK YOU. TOTAL AMOUNT DUE Remit To: City of Sebastian - Attention Ken Killgore 1225 Main Street Sebastian, Florida 32958 Account Code 001501-349620 10/22/2019 $6,000.00 AMOUNT DUE $6,000.00 $6,000.00 5 H,I Kenneth Killqore From: Mindy Johnson <mindyjohnson@salemtrust.com> Sent: Thursday, September 26, 2019 4:08 PM To: Kenneth Killgore Subject: RE: Questions from May 29th Police Pension Board Meeting CAUTION: This email originated from outside your organization. Exercise caution when opening attachments or clicking links, especially from unknown senders. Thinking more on this, In our current cost structure it wouldn't make sense to do away with the per trade charge. I would recommend adjusting the fee to a basis point, + a per trade fee. We could get rid of the per account charges and the base fee charge which is currently part of the fee structure. This way, if the managers change and the trading volume decreases, the fees would naturally decrease as well. Right now that would be roughly 6.5 basis points and $5 per trade. This is if they wanted to change right now. I'd like to see if things will look better next year! Sr ALEXI TRIUST Mindy R. Johnson, CPPTI Senior Vice President, Relationship Manager Salem Trust Company — A Division of TMI Trust Company 1715 N. Westshore Blvd • Suite 750 1 Tampa • FL 33607 2 813.288.4990 1® mindv.iohnsonPsalemtrust.com j www.salemtrust.com Think before you print and/or forward. CONFIDENTIALITY: This e-mail (including any attachments) may contain confidential, proprietary and privileged information, and unauthorized disclosure or use is prohibited. If you receive this e-mail in error, please notify the sender and delete this e-mail from your system From: Kenneth Killgore<kkill¢oreC@CitvofSebastian.ore> Sent: Thursday, September 26, 2019 3:10 PM To: Mindy Johnson <mindv.iohnsonPsalemtrust.com> Subject: Questions from May 29th Police Pension Board Meeting ATTN: This message was sent from outside of TMI. If this message appears to come from a TMI employee DO NOT click on links or open attachments. Hi Mindy, I was asked to follow up on questions posed to you at our May 29`h meeting. At the latest Police Pension Board Meeting, one of our members asked whether you reported back on the possibility of a basis -point plan in order to reduce our costs of trades. He also wanted an reply to his question about doing block trades. Attached is the page from our May 29`h minutes that the Recording Clerk made note about those two questions. Please let me know, so I can pass on any information to the Pension Board. Thanks, Ken Killgore Administrative Services Director/CFO City of Sebastian Florida has a very broad Public Records Law (Florida Statute Title X, Chapter 119: Public Records). Most written communications to or from State and Local Officials and agencies regarding State or Local business are public records available to the public and media upon request. Your email communications, including your email address, may therefore be subject to public disclosure. If you do not want your e-mail address released in response to a public records request, do not send electronic mail to this entity. Instead, contact this office by phone or in writing. Think Green! Please do not print this e-mail unless necessary. 5,6. ol- Kenneth Killqore From: Mindy Johnson <mindyjohnson@salemtrust.com> Sent: Thursday, September 26, 2019 3:43 PM To: Kenneth Killgore Subject: RE: Questions from May 29th Police Pension Board Meeting CAUTION: This email originated from outside your organization. Exercise caution when opening attachments or clicking links, especially from unknown senders. HI Ken, I'm so sorry I haven't gotten back to you on this. Regarding the block trades — that is something that is typically done by a broker. In our world, it doesn't work because it would require extensive manual intervention. So unfortunately, the short answer on that is no. Regarding the basis point fee. I've been purposely waiting to come up with a number. As you know, Salem was acquired by TMI trust in April. This has been a very good thing for us, and we're seeing a lot of positive changes in our company. Currently, our operations support is being provided by our previous owner, so our costs are still the same. Our operation support will be changing to TMI in February, and our new costs will be more apparent as we move forward in that environment. My hope is that in our new structure, our costs will improve and I can pass that on to the plan. I can come up with something now, but it will probably look very high. If they Board wants me to do that I can, but if they'd like to defer until later next year we may have better news! Feel free to give me a call if you'd like to talk more. Thanks 1`11ALE�1" 1" T . Mindy R. Johnson, CPPT1 Senior Vice President, Relationship Manager Salem Trust Company — A Division of TMI Trust Company 1715 N. Westshore Blvd • Suite 750 1 Tampa • FL 33607 W 813.288.4990 1® mindv.iohnson(@salemtrust.com I www.salemtrust.com Think before you print and/or forward. CONFIDENTIALITY: This e-mail (including any attachments) may contain confidential, proprietary and privileged information, and unauthorized disclosure or use is prohibited. If you receive this e-mail in error, please notify the sender and delete this e-mail from your system From: Kenneth Killgore <kkilleorePCitvofSebastian.ore> Sent: Thursday, September 26, 2019 3:10 PM To: Mindy Johnson <mindv.iohnson(@salemtrust.com> Subject: Questions from May 29th Police Pension Board Meeting 5.6,3 ATTN: This message was sent from outside of TMI. If this message appears to come from a TMI employee DO NOT click on links or open attachments. Hi Mindy, I was asked to follow up on questions posed to you at our May 29th meeting. At the latest Police Pension Board Meeting, one of our members asked whether you reported back on the possibility of a basis -point plan in order to reduce our costs of trades. He also wanted an reply to his question about doing block trades. Attached is the page from our May 29th minutes that the Recording Clerk made note about those two questions. Please let me know, so I can pass on any information to the Pension Board. Thanks, Ken Killgore Administrative Services Director/CFO City of Sebastian Florida has a very broad Public Records Law (Florida Statute Title X, Chapter 119: Public Records). Most written communications to or from State and Loral Officials and agencies regarding State or Local business are public records available to the public and media upon request. Your email communications, including your email address, may therefore be subject to public disclosure. If you do not want your e-mail address released in response to a public records request, do not send electronic mail to this entity. Instead, contact this office by phone or in writing. Think Green! Please do not print this e-mail unless necessary. City of Sebastian Police Officers' Retirement System Deferred Retirement Option Plan (DROP) Administrative Procedures I. Participation: In lieu of terminating their employment as a Police Officer, any Member of the Police Officers' Retirement System eligible for normal retirement and who is not on unpaid leave status may elect to defer receipt of such service retirement pension and to participate in the DROP. A Member's credited service and accrued normal retirement benefit shall be determined as of the effective date of entry into the DROP and shall be calculated by the Plan Actuary in the same manner as would be done had the Member not elected DROP participation, except for the option of taking a percentage of the benefit in a lump sum. A Member must provide written notification to the Plan Administrator of their election to participate in the DROP no less than ninety (90) days prior to the date they intend to enter the DROP. Such notice is required, such that it can be formally received by the Board at a scheduled meeting at least fifteen (15) business days before the first day of the first calendar month it becomes effective. This also allows sufficient time for the Plan Actuary to make calculations estimating the Members optional forms of benefits and for the Member to make a preliminary selection of the benefit option they expect to take. The election to participate in the DROP shall constitute an irrevocable election to resign from the service of the City not later than sixty (60) months from the date their DROP first becomes effective. If a Participant fails to terminate employment after participating in the DROP for the permissible period, the DROP account will no longer be credited. To assist with the Members financial planning and to fully inform interested parties of the DROP features, the Plan Administrator will complete a Drop Credits Worksheet (Attachment 1.) that reflects: a.) estimated monthly credits of the retirement benefits based on the preliminarily selected option, b.) the credits for the one and three tenths percent (1.3%) per annum compounded monthly interest determined on the last business day of the prior month's DROP accumulated balance, and c.) if applicable, the scheduled annual cost -of -living adjustments. After the effective date of entry into the DROP, the Plan Administrator shall obtain final calculations of the benefit options from the Actuary and have the Participant make a final selection of their benefit option. The Participant must promptly notify the Plan Administrator of their choice. The Plan Administrator will then update the Drop Credits Worksheet (Attachment 1.) to reflect final calculations of credits for monthly retirement benefits, monthly interest and any anticipated cost -of -living adjustments. This Worksheet will be maintained in the Plan Administrator's Office and provided to the Participant, as well as the Plan Actuary. In instances where the selected retirement benefit option required a Joint Pensioner to be named and a different Joint Pensioner is subsequently named, this process may be repeated. A Member with a minimum of fifteen (15) years of credited service shall receive an annual one percent (1%) automatic cost -of -living adjustment to the future retirement benefit credits beginning on the first October 1 following their reaching the age of fifty-eight (58). An election to participate in the DROP shall constitute an irrevocable election to resign from the service of the City not later than sixty (60) months from the date their DROP first becomes effective. A Member may participate only once. If a Participant fails to terminate employment after participating in the DROP for the permissible period, the DROP account will no longer be credited. Page 1 of 2 II. Termination of Particioation: Upon termination, the elected amount of retirement benefit shall cease to be credited to the DROP and will instead be paid to the Participant in accordance with the terms of the benefit option they elected when they entered the DROP. Participation in the DROP shall cease at the earlier of the end of the permissible period or their termination of employment as a Police Officer. The DROP account final account value shall be the value at the end of the month immediately preceding termination or death of the Participant. No amounts shall be paid from the DROP account prior to termination of employment as a Police Officer. A lump sum distribution of any portion of the DROP account final accumulated balance shall be made as soon as administratively practicable. A Request for Distribution Rollover Form (Attachment 2.) shall be completed and submitted to the Plan Administrator within sixty (60) days before distribution to the Participant in order to rollover the lump sum amount to an eligible retirement plan. III. Other Forms of Distribution If a Participant dies before his benefit is paid, the DROP account accumulated balance shall be paid in lump sum to his beneficiary, or if no beneficiary designation is made, the DROP account shall be distributed to the Participant's estate. Each beneficiary or other person entitled to a benefit shall file with the Pension Board the information that is required to establish their rights and benefits under the DROP. The Pension Board may require and rely upon such proof of death and such evidence of the right of any beneficiary or other person to receive the value of the DROP account as the Pension Board may deem proper and their determination shall be conclusive. If a Participant or other person entitled to a benefit under the DROP is unable to care for their affairs because of illness or accident or is a minor, the Pension Board shall direct that any benefit be made only to a duly appointed legal representative. Any payment so made shall be a complete discharge of the liabilities of the DROP for that benefit. Beneficiaries may elect to have their lump sum amounts paid as a direct rollover to an eligible retirement plan. IV. Reauired Notifications and Canceled Pavments The Participant shall be responsible for furnishing the Pension Board with their current address and any subsequent changes in address. The Participant shall also be responsible to provide prompt notice should it be necessary to change a person named previously as a Joint Pensioner. Any notice required to be given shall be deemed given if directed to the Participant at the last such address provided by the Participant and mailed by registered or certified United States mail. If any payment mailed by registered or certified United States mail to such address is returned, payment will be suspended until such time as the Participant notifies the Pension Board of the correct address. If the Pension Board cannot ascertain the whereabouts of any person to whom a payment is due under the DROP, the Pension Board may, no earlier than three (3) years from the date such payment is due, mail a notice of such due and owing payment to the last known address of such person, as shown on the records of the Pension Board or the City. If such person has not made written claim therefor within three (3) months of the date of the mailing, the Pension Board may, if it so elects and upon receiving advice from Counsel to the system, direct that such payment and all remaining payments otherwise due such person be canceled on the records of the system. Upon such cancellation, the system shall have no further liability therefor except that, in the event such person or his beneficiary later notifies the Pension Board of their whereabouts and requests the payments due under the DROP, the amount shall be paid in accordance with the above procedures. Page 2 of 2 ROP Credits Worksheet Greg Witt Based on Selection of Retiree's Lifetime With 120 Payments Guaranteed Form of Benefit Assumptions: DROP Entered October 27, 2019. 2019 2020 1st Year Nov.1 Dec.1 Jan.1 Feb.1 Mar.1 Apr.1 May.1 Jun.1 Jul.1 Aug.1 Sep.1 Oct.1 Credit Selected Monthly Benefit 10,548.27 10,548.27 10,S48.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 Cumulative Benefit Credits 10,548.27 21,096.54 31,644.81 42,193.08 52,741.35 63,289.62 73,837.89 84,386.16 94,934.43 10S,482.70 116,030.97 126,579.24 Credit for 1.3% Compounded Interest - 11.43 22.87 34.32 45.78 57.26 68.75 80.25 91.77 103.29 114.83 126.38 Cumulative Interest Credits - 11.43 34.29 68.61 114.40 17I.66 240.41 320.66 412.42 515.72 630.55 756.93 Drop Balance on 1st of the Month 10,548.27 21,107.97 31,679.10 42,261.69 52,85S.75 63,461.28 74,078.30 84,706.82 95,346.85 105,998.42 116,661.52 127,336.17 2020 2021 2nd Year Nov.1 Dec.1 Jan.1 Feb.1 Mar.1 Apr.1 May.1 Jun.I Jul.1 Aug.1 Sep.1 Oct.1 Credit Selected Monthly Benefit 10,548.27 10,548.27 10,548-27 10,548.27 10,548.27 10,548.27 10,548.27 10,54&27 10,548.27 10,548.27 10,548.27 10,548.27 Cumulative Benefit Credits 137,127.S1 147,675.78 158,224.05 168,772.32 179,320.59 189,868.86 200,417.13 210,965.40 221,513.67 232,061.94 242,610.21 2S3,158.48 Credit for 1.3% Compounded Interest 137.95 149.52 161.11 172.72 184.33 195.96 207.60 219.25 Cumulative Interest Credits 894.88 1,044.40 1,205.52 1,378.23 1,562.56 1,758.52 1,966.11 2,185.36 230.91 242.59 254.28 265.98 2,416.28 2,658.87 2,913.15 3,179.13 Drop Balance on 1st of the Month 138,022.39 148,720.18 159,429.57 170,150.55 180,883.15 191,627.38 202,383.24 213,150.76 223,929.95 234,720.81 245,523.36 256,337.61 2021 2022 3rd Year Nov.1 Dec.1 Jan.1 Feb.1 Mar.1 Apr.1 May.1 Jun.1 Jul.1 Aug.1 Sep.1 Oct. 1. Credn Selected Monthly Benefit 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,548.27 10,653.75 Cumulative Benefit Credits 263,706.75 274,255.02 284,803.29 29S,351.56 305,899.83 316,448.10 326,996.37 337,544.64 348,092.91 358,641.18 369,189.45 379,843.20 Credit for 1.3% Compounded Interest 277.70 289.43 301.17 312.92 324.69 336.47 348.26 360.06 371.88 Cumulative Interest Credits 3,456.83 3,746.26 4,047.43 4,360.35 4,685.04 5,021.50 5,369.76 5,729.82 6,101.71 383.71 6,485.42 395.55 6,880.97 407.41 7,288.38 Drop Balance on 1st of the Month 267,163.58 278,001.28 288,850.72 299,711.91 310,584.87 321,469.60 332,366.13 343,274.46 354,194.62 365,126.60 376,070.42 387,131.58 2022 2023 4th Year Nov.I Dec.1 Jan.1 Feb.1 Mar.1 Apr.l May.I Jun.1 Jul.l Aug.1 Sep.1 Oct.1 Credit Selected Monthly Benefit 10,653.75 10,653.75 10,653.75 10,653.75 10,653.75 10,653.75 10,653.75 10,653.75 10,653.75 10,653.75 10,6S3.75 10,760.29 Cumulative Benefit Credits 390,496.96 401,150.71 411,804.46 422,458.21 433,111.97 443,765.72 454,419.47 465,073.22 475,726.98 486,380.73 497,034.48 507,794.77 Credit for 1.3% Compounded Interest 419.39 431.39 443.40 455.42 467.45 479.50 491,56 503.64 515.72 527.82 539.94 S52.06 Cumulative Interest Credits 7,707.77 8,139.16 8,582.56 9,037.98 9,505.43 9,984.93 10,476.50 10,980.13 11,495.86 12,023.68 12,563.62 13,115.69 Drop Balance on 1st of the Month 398,204.73 409,289.87 420,387.02 431,496.19 442,617.40 453,750.65 464,895.97 476,053.36 487,222.84 498,404.41 509,598.10 520,910.46 2023 2024 5th Year Nov.1 Dec.1 Jan.1 Feb.1 Marl Apr.1 May.1 Jun.1 Jul.1 Aug.1 Sep.1 Oct. 1" Credit Selected Monthly Benefit 10,760.29 10,760.29 10,760.29 10,760.29 10,760.29 10,760.29 10,760.29 10,760.29 10,760.29 10,760.29 10,760.29 10,867.89 Cumulative Benefit Credits 518,555.06 529,315.35 540,075.64 550,835.93 561,596.22 572,356.51 583,116.80 593,877.09 604,637.38 615,397.67 626,157.97 637,025.86 Credit for 1.3% Compounded Interest 564.32 576.59 588.87 601.16 613.47 625.79 638.13 650.48 662.94 675.21 687.60 700.00 ^ `^\ Cumulative Interest Credits 13,680.01 14,256.59 14,845.46 15,446.63 16,060.10 16,685.90 17,324.02 17,974.50 18,637.34 19,312.56 20,000.16 20,700.16 Drop Balance on 1st of the Month 532,235.07 543,571.95 554,921.11 566,282.56 577,656.32 589,042.41 600,440.83 611,851.60 623,274.73 634,710.23 646,158.12 657,726.02 Worksheet is Based on the Member's Selected Benefit. * WThis I Note: Increased by 1.00%Cost-of-Living Adjustment on October lst. ITY OF SEBAS'IIAN POLIG'EOFFICERS' REIIREMENI'SYSMI MEMBER'S FLECIIONOF BEN9W OFIION (Service Retirements and Terminated Vested) 1, Gregory Witt , have received the calculation of my retirement benefit options and I elect retirement benefits payable as follows: A PARTIAL LUMP SUM BENMT. A hmtp sum benefit of 5°/u, 10%, 15%, 20% or 25% of the value of my total benefit which will reduce the benefits paid under B below. I elect a partial lump sum benefit of % equal to $ Enter $0 if no hemp sum is elected a In addition to any partial hump sum benefit selected in A above, I elect to receive a benefit under the following option (initial one): NORMAL FORM, TEN YEAR CERTAIN AND LIFE ANNUITY - These monthly benefits are Paid to the retiree until death. If the retiree dies before 10 years from the date of retirement, the benefits continue to the surviving bcmfkary for the balance of the 10 year period. (if the retiree lives beyond the 10 year period, no benefits will be paid to the surviving beneficiary upon the retiree's death.) Monthly amount $ /0. ! 5Yg. Z7 Please indicate the name of your beneficiary: 'PAUL li IJAJIJ I n� tit (Member's Designation of Beneficiary (PF-3) must be completed to con£rm this designation) LIFE AMUITY - These benefits are paid to the retiree for as long as he or she lives. Monthly amount JOINT AND SURVIVOR - These monthly benefits are paid to the retiree unto death. At death, the applicable percentage will continue to the retirce's,pmt annuitant until his or her death. Retiree's Amount $ Percentage - circle one (1001/a, 751/u, 66-2/3%, 501/6) Joint Annuitant's Amount (Name of Jomt Annuitant SOCIAL SECURITY OPTION - These benefits provide for a larger amount to be paid to a social security eligibility date determined by the member and a reduced amount thezeafter, with benefits ceasing upon the death of the Retiree. Amount S paid to and S thereafter, until death (date) Signature: -,(I � b STATBOF FIW/ WUNTYOF-_Lv,t ,,y-Ava The foregoing instrument was acknowledged ��/ ) �; who is pets id who did not take an oath--` ._. fib ` PF-9 05-13-15 Date: ///Ro% /9 before me this day of rA(iv2V+� 201` by ��'"-'•" ANGEL1ASMITH MY COMMISSION # GG 181060 EXPIRES: March 2,2022 •.�o ;how Sondad TMu Notary Pubt WJJ 5 c,y z FOSTER &FOSTER ACTUAR; I ..[ANTS November 13, 2019 VIA EMAIL CONFIDENTIAL Ms. Cynthia R. Watson City of Sebastian 1225 Main Street Sebastian, FL 32958 Re: City of Sebastian Police Officers' Retirement Trust Fund Dear Cynthia: As requested, please find enclosed the Notification of Retirement Benefits form for the following Member of the referenced Plan: WITT, Gregory (DROP) Please note benefits outlined on the enclosure are based on data provided by you and the City of Sebastian, including precise Average Final Compensation and Credited Service through October 27, 2019 and current Plan provisions. If you have any questions, please let me know. Sincerely, Ntzte"-t- ray, G, Mateusz M. Wajda Enclosure 184 Shuman Blvd., Suite 305 Naperville, IL 60563 • (630) 620-0200 - Fax (239) 481-0634 • www.foster-foster.com ity of Sebastian Police Officers' Retirement Trust Fund Notification of DROP Retirement Benefits (Final as of November 13, 2019) Member's Name: Gregory Witt Date of Birth: July 20, 1964 Years of Credited Service: 34.1452 (100% of Average Final Compensation cap applies.) Benefit Rate: 3.00% per Year of Credited Service Form of Benefit For Retiree's Lifetime Only For Retiree's Lifetime with 120 Payments Guaranteed Social Security Option' to Age 67 (For Retiree's Lifetime Only) Fiscal Year Earnings History 2020 72,811.48' 2019 122,171.11 2018 117,732.22 2017 114,154.40 2016 110,776.97 2015 95,250.08 (Partial Year) 'Pay for 2020 includes a lump sum amount of $55,755.90. Average Final Compensation: $10,548.27 Monthly Benefits Payable to DROP as of November 1, 2019' Before 8/1/31 10,959.57 10,672.40 10,548.27 8/1/31 and After 10,152.51 Before 8/1/28 8/l/28 and After Social Security Option' to Age 64 10,979.05 10,333.40 (For Retiree's Lifetime Only) ' The Member may obtain an accurate determination of Social Security benefits from the Social Security Administration. ' The amounts shown are payable regardless of actual Social Security benefits. To Survivine Joint To Retiree Annuitant For Retiree's Lifetime with 9,579.13 9,579.13 100% continued to Joint Annuitant For Retiree's Lifetime with 9,830.88 7,373.16 75% continued to Joint Annuitant For Retiree's Lifetime with 9,917.76 6,612.17 66 2/3% continued to Joint Annuitant For Retiree's Lifetime with 10,096.22 5,048.11 50% continued to Joint Annuitant (Joint Annuitant Information for Survivorship Options: Paula Ann Witt, Female, Bom: July 4, 1966) 2 Please note benefits shown are subject to 1.00% annual cost -of -living adjustments effective October 1, 2022. Prepared By: i""'""' bd,� vl- Reviewed By: W'a'" 61k Foster &Foster. Inc. �'C, ORDINANCE NO. 0-17-03 AN ORDINANCE OF THE CITY OF SEBASTIAN, FLORIDA, AMENDING CHAPTER 58, LAW ENFORCEMENT, ARTICLE III, POLICE OFFICERS' RETIREMENT SYSTEM, OF THE CODE OF ORDINANCES OF THE CITY OF SEBASTIAN; AMENDING SECTION 58-46, DEFINITIONS; AMENDING SECTION 58-48, BOARD OF TRUSTEES; AMENDING SECTION 58-50, CONTRIBUTIONS; AMENDING SECTION 58-51, BENEFIT AMOUNTS AND ELIGIBILITY; AMENDING SECTION 58-55, OPTIONAL FORMS OF BENEFITS; ADDING SECTION 58-70.1, MILITARY SERVICE PRIOR TO EMPLOYMENT; ADDING SECTION 58-70.2, PRIORPOLICE SERVICE; ADDING SECTION 58-70.3, DEFERRED RETIREMENT OPTION PLAN; ADDING SECTION 58-70.4, REEMPLOYMENT AFTER RETIREMENT; PROVIDING FOR CODIFICATION; PROVIDING FOR SEVERABILITY OF PROVISIONS; REPEALING ALL ORDINANCES IN CONFLICT HEREWITH AND PROVIDING AN EFFECTIVE DATE. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SEBASTIAN, FLORIDA, that; SECTION 1: That Chapter 58, Law Enforcement, Article III, Police Officers' Retirement System, of the Code of Ordinances of the City of Sebastian, is amended by amending Section 58-46, Definitions, to amend the definition of "Retirement", to read as follows: Retirement means a members separation from city employment with eligibility for immediate receipt of benefits under the system (or entry into the Deferred Retirement Option Planj. *m* SECTION 2: That Chapter 58, Law Enforcement, Article III, Police Officers' Retirement System, of the Code of Ordinances of the City of Sebastian, is amended by amending Section 58-48, Board of trustees, subsection (a), to read as follows: Sec. 5848. Board of trustees. (a) The sole and exclusive administration of and responsibility for the proper operation of the system and for making effective the provisions of this ordinance is hereby vested in a board of trustees. The board is hereby designated as the plan administrator. The board shall consist of five (5) trustees, two (2) ofwhom, unless otherwise prohibited by law, shall be legal residents of the city, who shall be appointed by the Sebastian City Council, and two (2) of whom shall be members of the system, who shall be elected by a majority of the police officers who are members of the system. The fifth trustee shall be chosen by a majority of the previous four (4) trustees as provided for herein, and such person's name shall be submitted to the Sebastian City Council. Upon receipt of the fifth person's name, the Sebastian City Council shall, as a ministerial duty, appoint such person to the board as its fifth trustee. The fifth trustee shall have the same rights as each of the other four (4) trustees appointed or elected as herein provided and shall serve a four (4) year term unless he sooner vacates the office. Each resident trustee shall serve as trustee for a period of four (4) years, unless he sooner vacates the office or is sooner replaced by the Sebastian City Council at whose pleasure he shall serve. Each member trustee shall serve as trustee for a period of four (4) years, unless he sooner leaves the employment of the city as a police officer or otherwise vacates his office as trustee, whereupon a successor shall be chosen in the same manner as the departing trustee. Each trustee may succeed himself in office. DROP participants can be elected as but not vote for elected trustees. The board shall establish and administer the nominating and election procedures for each election. The board shall meet at least quarterly each year. The board shall be a legal entity with, in addition to other powers and responsibilities contained herein, the power to bring and defend lawsuits of every kind, nature, and description. *** SECTION 3: That Chapter 58, Law Enforcement, Article III, Police Officers' Retirement System, of the Code of Ordinances of the City of Sebastian, is amended by amending Section 58-50, Contributions, subsection (a) Member contributions, to read as follows: (a) Member contributions. (1) Amount. tafhe-ftmd-in-1l.. u...:..::a .cftvc?ercent-(7,Wj ✓'Li. xl y, �� ci/ Effective on the date of the adoption of the ordinance adopting this gdttlegt�_ !, - each member of the system, La G Y.:�l fJ� J . 1, ; shall be required to make regular contributions to the fund in the amount of eight percent (8%) of his salary. Police officer contributions withheld by the city on behalf of the member shall be deposited with the board immediately after each pay period. The contributions made by each member to the fund shall be designated as employer contributions pursuant to §414(h) of the code. Such designation is contingent upon the contributions being excluded from the members' gross income for Federal Income Tax purposes. For all other purposes of the system, such contributions shall be considered to be member contributions. *** SECTION 4: That Chapter 58, Law Enforcement, Article III, Police Officers' Retirement System, of the Code of Ordinances of the City of Sebastian, is amended by amending Section 58-5 1, Benefit amounts and eligibility, subsection (b) Normal retirement benefit and adding subsection (f) Cost -of -Living Adjustment, to read as follows: *** (b) Normal retirement benefit. The amount of the monthly retirement income payable to a member hired prior to October 1, 2011 who retires J1VJb rU ll.. /.uy Y., 2302-and on or afterhis normal retirement date shall be an amount equal to the number ofthe members years of credited service multiplied by three (3) percent of his average final compensation. ...6 f For members hired on or after Apt { it, 2612 October 1, 2011_ the amount of the monthly retirement income payable to a member who retires on or after his normal retirement date shall be an amount equal to the number of d. years of credited service multiplied by two (2) percent of his average final compensation for the nears of credited service beginning on or after April 11, 2012 and ending October 1, 2016 and three Q) percent of average final compensation for all credited service before April 11, 2012 and after October 1, 2016. -2- 5.�,8 fO Cost-of-Livine Adiusunew. Future retirees with a minimum of fifteen ff 15 vears of credited service shall receive a one percent (1 %) automatic cost-of-livine ad1justment beg ine on the first October 1 following the attainment of age fifty-eight (58). The COLA is applicable to all forms ofretirement, includine normal and earlv retirement, terminated vested, disabilitv retirees and pre -retirement death beneficiaries. SECTION 5: That Chapter 58, Law Enforcement, Article III, Police Officers' Retirement System, of the Code of Ordinances of the City of Sebastian, is amended by amending section 58-55, Optional Forms of Benefits, subsection (a)(4), to read as follows: (4) For members who do not participate in the DROP pursuant to Section 58-70.3, the A member may elect a percentage of benefit in a lump sum as follows: a. Five (5) percent of the total actuarial equivalent value of the benefit paid as a lump sum with the remaining ninety-five (95) percent paid under the normal form or as per (1), (2) or (3) above. b. Ten (10) percent of the total actuarial equivalent value of the benefit paid as a lump sum with the remaining ninety (90) percent paid under the normal form or as per (1), (2) or (3) above. C. Fifteen (15) percent of the total actuarial equivalent value of the benefit paid as a lump sum with the remaining eighty-five (85) percent paid under the normal form or as per (1), (2) or (3) above. d. Twenty (20) percent of the total actuarial equivalent value of the benefit paid as a lump sum with the remaining eighty (80) percent paid under the nornial form or as per (1), (2) or (3) above. e. Twenty-five (25) percent of the total actuarial equivalent value of the benefit paid as a lump sum with the remaining seventy-five (75) percent paid under the normal form or as per (1), (2) or (3) above. SECTION 6: That Chapter 58, Law Enforcement, Article III, Police Officers' Retirement System, of the Code of Ordinances of the City of Sebastian, is amended by adding Section 58-70.1, Military service prior to employment, to read as follows: Sec. 58-70.1. Military service prior to employment. The vears or fractional parts of vears that a olice officer serves or has served on active dutv in the military service of the Armed Forces of the United States, the United States Merchant Marine or the United States Coast Guard, voluntarily or involuntarilv and honorablv or under honorable conditions, grior to first and initial emplovment with the city police department shall be added to his vears of credited service provided that: The member contributes to the fund the sum that he would have contributed, based on his salary and the member contribution rate in effect at the time that the credited service is requested, had he been a member of the system for the vears or fractional Parts of vears for which he is reouestine credit plus amounts actuarial)� determined such that the crediting of service does not result in an cost to the fund Rlus payment of costs for all Professional services rendered to the board in connection with the Purchase of vears of credited service. -3- Multiple requests to purchase credited service pursuant to this section may be made at any time prior to retirement, in one year increments, upon the completion of five (5) years of credited service. (3) Payment by the member of the required amount shall be made within six (6) months of his request for credit, but not later than the retirement date, and shall be made in one lump sum payment upon receipt of which credited service shall be given. (4) The maximum credit under this section shall be four (4) years. Credited service purchased pursuant to this section shall count for all purposes, except vesting. SECTION 7: That Chapter 58, Law Enforcement, Article III, Police Officers' Retirement System, of the Code of Ordinances of the City of Sebastian, is amended by adding Section 58-70.2, Prior police service, to read as follows: Sec. 58-70.2. Prior police service. Unless otherwise prohibited bylaw. and except as}�rovided for in section 58-46, the years or fractional parts of years that a m tuber orevip��„ssIv served as a full-time police officer with the city, during a period of previous emn�ovment and for which period accumulated contributions were, withdrawn from the fund, or the ears and fractionalyarts of years that a member served as a full- time police officer or the years and fractional parts ofvears that a merpb }}'' s Fved as a police officer for any other municipal, county or state law enforcement department rn �Iie Mate of Florida shalt be added to his Years of credited service provided that: The member contributes to the fund the sum that he would have contributed, based on his salary and the member contribution rate in effect at the time that the credited service is requested, had he been a member of the system for the years or fractional parts of years for which he is requesting credit plus amounts actuarially� determined such that the crediting of service does not result in any cost to the fund nlus navfnent of costs for all professional services rendered to the board in connection with the purchase of years of credited service. (2) Multiple reau5�ts to purchase credited service pursuant to this section may be made at any timeprror to retirement, in one Year increments, upon the completion of five (5) years of credited service. (3) Payment by the police officer of the required amount shall be made within six (6) months of his request for credit, but not later than the retirement date, and shall be made in one lump sum payment upon receipt of which credited service shall be ig yen. The maximum credit under this section for service other than with the City of Sebastian shall be four (4) years of credited service and shall count for all purposes, except vestirkg. There shall bg no tgax`M purchase of credit forpgor service with the City of Sebastian and such credit shall count for all purposes, including vesting. In no event, however, may credited service be purchased pursuant to this section for prior service with any other municipal, county or state law epfojceme% department. police department, if such prior service forms or will form the basis of a retirement benefit or pension from a different emolover's retirement system or plan as set forth in section 58-60, subsection (1)(2). -4- 6'7�G' /D Foryu��yy9ses Qf determining credit for prior service as a police officer as provided for to this section, in addition to service as a police officer in this state, credit may be purchased by the member in the a ma�ttner as provided above for federal, other state, county,,r Tunicip1l service ri the Dqo� service jp repog� ed by the Criminal Justice Standards and Training Commission within the 13evartment of Law, Enforcement, as Drovided under Chanter 943, Florida Statutes, or the Dolice officer Provides proof to the board that such service is egtuva ent —to—the service reouired to. meet the definition of a police officer under Sec. 58- 6, above. SECTION 8: That Chapter 58, Law Enforcement, Article III, Police Officers' Retirement System, of the Code of Ordinances of the City of Sebastian, is amended by adding Section 58-70.3, Deferred retirement option plan, to read as follows: Sec. 58-70.3. Deferred Retirement Option Plan. (a) Definitions. As used in this section 58-70.3. the following definitions aDDly: M "DROP" -- The City of Sebastian Deferred Retirement Option Plan. "DROP account" -- The account established for each DROP oarticioant under subsection (c). bS) Participation. Elizibility to participate. In lieu of terminating his employment as a notice officer. any member who is eligible for normal retirement under the system and who is not on unpaid leave status may elect to defer receipt of such service retirement oensioti and to participate in the DROP. Election to garticivate. A member's election to particioate in the DROP must be made in writing in a time and manner determined by the board and shall be effective on the first day of the first calegdar month which is at least fifteen (15) business days, after it is received by the board. Period of Participation. A member who elects to narticipate in the DROP under subsection (b)(2), shall participate in the DROP for a Deriod not to exceed sixty (60) months beginning at the time his election to particinate in the DROP first becomes effective. An election to participate in the DROP shall constitute an irrevocable election to resign from the service of the city not later than the date Drovided for in the previous sentence. A member may particinate only once. (4) Termination ofparticivation. a. A member's participation in the DROP shall cease at the earlier of: 1. the end of his permissible Deriod of participation in the DROP as determined under subsection (b)(3): or 2. termination of his emolovment as a oolice officer. b. Upon the member's termination of nartic' ation in the DROP,dpursuant to subsection I above, all amount p�gvided for in subsection (c)( ), including monthly benefits and interest, s�all cease to be transferred from the system to his DROP account. Any amounts remaining in his DROP account shall be paid to him in accordance with the provisions of subsection (d) when he terminates his emplovment as a police officer. C. A member who terminates his participation in the DROP under this subsection (b)(4) shall not be permitted to again become a participant in the DROP. Effect of DROP participation on the system. a. A member's credited service and his accrued benefit under the system shall be determined on the date his election to partici ate in the DROP first becomes effective. Forpurooses of determining the accrued benefit, the member's salgy for the purposes of calculating his average final compensation shall include an amount equal to any lump sum oavments which would have been paid to the member and included as salary as defined herein, had the member retired under normal retirement and not elected DROP Qarticivation. Member contributions attributable to any lump sums used in the benefit calculation and not actually received by the member shall be deducted from the first pavments to the member's DROP account. The member shall not accrue any additional credited service or any additional benefits under the system (except for any supplemental benefit navable to DROP pparticipants or any additional benefits provided under any cost -of living ad'ustment for retirees in the system) while he is a participant in the DROP. Tfter a member commences gat-ticigation, he shall not be permitted to again contribute to the system nor shall he be eligible for disability or pre - retirement death benefits. b. No amounts shall be Raid to a member from the system while the member is a participant in the DROP. Unless otherwise specified in the system. if a members particination in the DROP is terminated other than by terminating his emolovment as a police officer, no amounts shall be raid to him from the system until he terminates his emolovment as a noltce officer. Unless otherwise slLecified in the system, amounts transferred from the system to the members DROP account shall be paid directly to the member only on the termination of his emplovment as a police officer. (c) Funding. Establishment of DROP account. A DROP account shall be established for each member partici atme in the DROP. A member's DROP account shall consist of amounts transferred to the DROP under subsection (c)(2), and interest on those amounts. Transfers front retirement system. a. As of the first day of each month of a member's period of particigation in the DROP, the monthly retirement benefit he would have received under the system had he terminated his emolovment as a police officer and elected to receive monthly benefit va ents thereunder shall be transferred to his DROP account, except as otherwise provided for in subsection Wb 4)b. A members neriod of participation in the DROP shall be determined in accordance with the provisions of subsections (b)(3) and (b)(4), but in no event shall it continue past the date he terminates his emplovment as a police officer. -6- c,12- b. Except as otherwise provided in subsection (b)(4)b., a member's DROP account under this subsection (c)(2) shall be credited with interest at an effective rate of one and three tenths percent (1.3%l per apnum cc Douj�cd monthly determined on the last business day of the prior mont s en mg balance and credited to the member's DROP account as of such date. C. A member's DROP account shall onIX be credited with interest and monthly benefits while the member is a participant in the DROP. A member's final DROP account value for distribution to the member upon termination of varticigation in the DROP shall be the value of the account at the end of the month immediately preceding termination ofparti ioation plus any monthly periodic additions made to the DROP account su9sequent to the end of the previous month, and Rtrior to distribution. If a member fails to terminate em lP%ent after participating in the DROP for the permissible period of D)participation, then beginning with the member's first month of employment following the last month of the permissible period of DROP Participation. the member's DROP account will no longer be credited with interest, nor will monthly benefits be transferred to the DROP account. Alf such non -transferred amounts shall be forfeited and continue to be forfeited while the member is employed by the police department, and no cost -of - living adiustments shall be apqplied to the members credit during such period of continued emplovment. A member employed by the Notice department after the permissible period of DROP participation will still not be eligible for pre -retirement death or disability benefits and will not accrue additional credited service. (d) Distribution ofDROP accounts on termination ofemplovinent. M Eligibility for bene f ts. A member shall receive the balance in his DROP account in accordance with the provisions of this subsection (d) upon his termination of emplovinent as a police officer. Except as provided in subsection (d1(5), no amounts shall be paid to a member from the DROP prior to his termination of employment as a police officer. Form of distribution. a. Unless the member elects otherwise. distribution of his DROP account shall be made in a lump sum, subiect to the direct rollover rovisions set forth in subsection f d)(6). Elections under this paragraph shall be in writing and shall be made within sixty (60) days. b. Notwithstanding the preceding. if a member dies before his benefit is paid, his DROP account shall be Raid to his beneficiary in such optional form as his beneficiary may select. if no beneficiary desienation_is made. the DROP account shall be distributed to the member's estate. (3) Date ofDawnent ofdistribution. Except as otherwise provided in this subsection (d). distribution of a members DROP account shall be made as soon as administratively practicable following the member's termination of employment. Distribution of the amount in a Member's DROP account will not be made unless the Member completes a written request for distribution and a written election, on forms designated by the Board, to either receive a cash lump sum or a rollover of the lump sum amount. -7- C,13 Proofofdeath and right ofbeneficiary or other oerson. The board may require and rely upon such nroof of death and such evidence of the right of any beneficiary or other person to receive the value of a deceasedmember's DROP account as the board may deem nroner and its determination of the right of that beneficiary or other person to receive pavinent shall be conclusive. Distribution: limitation. Notwithstanding any other provision of subsection fd). all distributions from the DROP shall conform to the "Minimum Distribution Of Benefits" provisions as provided for herein. (,66) Direct rollover ofcertain distributions. This subsection applies to distributions made on or after January 1, 2002. Notwithstanding any provision of the DROP to the contrary, a distributee may elect to have any portion of an eli�lble rollover distribution aid in a direct rollover as otherwise orovided under the system in section 58-69. (e) Administration ofDROP. Board administers the DROP. The general drip ?tio of the DROP the responsibility for carrying out the ppr�'ovisions of t e DROP and the responsibilit of overs eing a investment of the DROP's assets shall be placed in the board. The members of the board may appoint from their number such subcommittees with such powers as they shall determine; may adopt suchr}�in'WtoJive procedures and regulations as they deem desirable for the conduct o? eir atitairs: may authorize one or more of their number or any agent to execute or deliver any instrument or make any pa ent on their behalf; ma retain counsel, employ( agents and provide for such clerical, accounting, actuarial and consulting services as Itiey may require in carrying out the provisions of the DROP; and may allocate among themselves or delegate to other persons all or such portion of their duties under the DROP, other than those granted to them as trustee under anvtrust agreement adopted for use in implementing the DROP, as they, in their sole discretion, shall decide. A trustee shall not vote on any question relating exclusively to himself. 22)) Individual accounts. records and rettorts. The board shall maintain records showing the operation and condition of the DROP, inclu a ecor� showing the individual balances in each member's DROP account, and the �oard shall keep inconvenient form such data as may be necessary for the valuation of the assets and liabilities of the DROP. The board shall prege and distribute to members nartic}{nating in the DROP and other individuals or file with the appropriate governmental agencies, as the case may be, all necessary descriptions, reports, information returns, and data, required to be distributed or filed for the DROP _pursuant to the Code and any other applicable laws. (3) Establishment ofrules. Subject to the limitations of the DROP, the board from time to time shall establish ndes for the aiiinisPation of the DROP and the transaction of its business. The board shall have ikScrchogarv;Luthority to construe and interoret the DROP (including but not limited to determination ofan individual's eligibility for DROP R icinat IA the right and amount of any benefit payable under the DROP and the ate on w�ich an individual ceases to be a artici ant in the DROP). The determination of the board as to the interpretation o1 e OP or its determination of any disputed questions shall be conclusive and final to the extent permitted by applicable law. Q ,mac. I y Limitation of liability. a. The trustees shall not incur any liability individually or on behalf of anN(other individuals for any act or failure to act, made in good faith in relation to the DROP or the funds of the DROP. b. Neither the board nor any trustee of the board shall be resoonsible for any reyorts furnished by any expert retaine, or emDloved by the board. but they shall be entitled to rely thereon as well as on certificates furnished by an accountant or an actuary, and on all oninions of counsel. The board shall be fullyprotected with respect to any action taken or suffered by it in pod faith in reliance p� on such expert, accountant, actuary or counsel, and all actions taken or suffered in such reliance shall be conclusive unon any Derson with any interest in the DROP. (f General provisions. The DROP is not a separate retirement olan. Instead_ it is a nrooram under which a member who is eligible for normal retirement under the system- ma �jeFt o fc e, future retirement benefits in the manner provided in this sections-7b. for the remainder of his ernDlovineq rather than in the normal planner nrovided under the, plan. U'Pon termination of emDlovment, a member is entitled to a lump sum distribution of his or her DROP account balance or may elect a rollover. The DROP account distribution is in addition to the member's monthly benefit. Notional account. The DROP account established for such a member is a notional account, used only for the Du ose of calculation of the DROP distribution amount. It is not a seoarajp gopt in the system. There is no change in the sNstem's assets,. and there is no distn ution available to the member until P member ss��termination. from the DROP. The member has no control over the investment of the DROP account. No emolover discretion. The DROP benefit is determined Dursuant to a soecific formula which does not involve ernglover discretion. IRC limit. The DROP account distribution, along with other benefits payable from the system, is subject to limitation under Internal Revenue Code Section 415(b). Amendment o DROP. The DROP may be amended by an ordinance of the ciV at any time and from time to time, and retroactively if deemed necessary oC aDpfonnate, to amend in whole or in part any( or all of the r�rovisiok of the DROP. However, exceDt as otherwise provided by law, no amendment shall make it possible for any part of the DROP's finds to be used for, or diverted to, pu oses other than for the exclusive benefit of persons entitled to benefits under the DROP. No amendment shall be made which has the effect of decreasing the balance of the DROP account of any member. Facility of vavment. If a member or other nerson entitled to a benefit under the DROP is unable to care for his affairs because -of illness or accident or is a minor. the board shall direct that any benefit due him shall be made only to a duly anoointed le Pl representative. Any Qavrr)ent so made shall be a comolete discharge of the liabilities of the DROP for that benefit. Information. Each member, beneficiary or other Derson entitled to a benefit, before any benefit shall be Davable to him or on his account under the DROP, shall file with the board the information that it shall reouire to establish his rights and benefits under the DROP. -9- C ./s' Prevention of escheat. If the board cannot ascertain the whereabouts of any person to whom a payment is due under the DROP, the board may. no earlier than three (3) years from the date such Dayinent is due, mail a notice of such due and owing. ravment to the last known address of such person, as shown on the records of the, board or the city. If such person has not made written claim therefor within three (31. months of the date of the mailing, the board may, if it so elects and uqon receiving advice from counsel to the system, direct that such navment and all remaining va ents otherwise due such person be canceled on the records of the system. Unon, such cancellation, the system shall have no further liability tn��ol except that, in the event such person or his beneficiary later notifies the board o is whereabouts and requests the payment or payments due to him under the DROP, the amount so auplied shall be paid to him in accordance with the provisions of the DROP. (9) Written elections. notification. a. Any elections, notifications or designations made by a member pursuant to the provisions of the DROP shall be made in writing and filed with the board in a time and manner determined by the board under rules uniformly applicable to all emolo ees similarly situated. The board reserves the right to change from time to time the manner for making notifications, elections or designations by members under the DROP if it determines after due deliberation that such action is justified in that it improves the adnpnistr t*oq of the DROP. In the event of a conflict between the rovisions tor ma�ng an election, notification or designation set forth in the DROP and such new administrative procedures, those new administrative procedures shall prevail. b. Each member or Retiree who has a DROP account shall be responsible for furnishing the board with his current address and any subsequent changes in his address. Any notice required to be given to a member or Retiree hereunder shall be deemed given if directed to him at the last such address given to the board and mailed by registered or certified United States mail. If any check mailed by registered or certified United States mail to such address is returned, mailing of checks will be sus ended until such time as, the member or Retiree notifies the board of his address. Benefits not guaranteed. All benefits oavable to a member from the DROP shall be paid only from the assets of the member's DROP account and neither the city nor the board shall have any duty or liability to furnish the DROP with any funds, securities or other assets except to the extent required by any applicable law. (1 l) Construction. a. The DROP shall be construed, regulated and administered under the laws of Florida, except where other applicable law controls. b. The titles and headings of the subsections in this section 58-70.3 are for Enq ielie only. In the case of ambiguity or inconsistency. the text rather than the titles or headings shall control. Forfeiture oCretirenient bene�ts. Nothing in this section shall be construed to remove DROP participants from the application of any forfeiture provisions aptlicable to the system. DROP participants shall be subject to forfeiture of all retirement benefits, including DROP benefits. -10- J,G.��o (13) Effect of DROP DarticiDatfon on em lovment. Participation in the DROP is not a guarantee of emRIovment and DROP participants shall be subject to the same employment standards and policies that are applicable to employees who are not DIP participants. SECTION 9: That Chapter 58, Law Enforcement, Article III, Police Officers' Retirement System, of the Code of Ordinances of the City of Sebastian, is amended by adding Section 58-70.4, Reemployment After Retirement, to read as follows: See. 58-70.4. Reemployment After Retirement. .(a) AnVetiree under this system. except for disability retirement as previously provided for, may be reemployed by any public or private employer, except the city, and may receive pomgensatiog from that employment without limiting, or restricting in any way the retirement benefits payable under this system. Reemployment by the city shall be subject to the limitations set forth in this section. Afternormalretirement. Any retiree who is retired under normal (or early) retirement pursuant to this system and who is reemployed as a olice officer and, by virtue of that reen)ploy{�ent, is eligible to participate in this system, sha� upon being reelgloved, discontinue receipt of benefits. Oxon reemoloyt ent, the member shall be deemed to be luIIX vested and the additional credited service accrued during the subsequent employment period shall be used in computing a second benefit amount attributable to the s1eggfiltFninlovment period, which benefit amount shall be added to the benefit determined upon thhe mitia retirement to determine the total benefit payable upon final retirement. Calculations of benefits upon retirement shall be based upon the benefit accrual rate, average final c9rpoergation, and credited service (and early retirement reduction factor, if applicable) as of that date and the retirement benefit apoynt for any subse uent en to ent genod shall be based upon the benefit accrual rate, average final qq��gnsatiop (based on von the subsequent emglovntent period and not including any period of I�RUP participation), and credited service (and early relge ent r d ction factor, if applicable) as ofthe date ofsubseauent retirement. The amount of any death or d sahility benefit received during a subsequent➢eriod of employment shall be reduced by the amount of accrued benefit eligible to be paid for a gqnoryeriod ofemployment. The optional form ofbenefit and any joint pensioner selected upon initial retirement shall not be subject to change upon subsequent retirement except as otherwise grovided herein, but thet retiree}av select a different optional form and joint pensioner applicable only to the subseauent retirement benefit. (c) Any retiree who is retired under normal retirement pursuant to this system who is reemployed by the City in a yosition other than as a police officer, shall upon being reemployed, continue receipt of benefits for the period of any subsequent employment period. Former DROP participants shall begin receipt of benefits under these circumstances. After early retirement. Any retiree who is retired under early retirement Rursuant to this system and who subsepuentivbecQes an emglovee ofthe city in any canacisv, shall discontinue recept of benefits from the system. [t"the reemployed person, by virtue of his reemployrtient, is eligible to w iccate in this system, that person shall accrue a second benefit as provided for in subsection abbove and benefit gavments shall remain suspended durine any such subsequent emploYinent Period. If the reemployed person is not eligible to Participate in this system, that person s pension benefit q vm@nts shall be suspended until the earlier of termination of employment or such time as the reemp�oved retiree reaches the date that he would have been eligible for normal retirement under this system had he continued employment and not elected early retirement. "Normal retirement" as used in this subsection shall be the current normal retirement date provided for under this system. (e) Reemnlownent o(terminated vestedoersons. Reemployed terminated vested persons shall not be subiect to the provisions of this section until such time as they begin to actually receive benefits. Upon receipt of'benefits, terminated vested persons shall be treated as normal or early retirees for urposes of applving the provisions of this section and their status as an early or normal retiree shale determined by the date they elect to begin to receive their benefit. ff) DROP Participants. Members or retirees who are or were in the deferred retirement option plan shall have the options provided for in this section for reemployment upon termination of employment. SECTION 10: Specific authority is hereby granted to codify and incorporate this Ordinance in the existing Code of Ordinances of the City of Sebastian. SECTION 11: All Ordinances or parts of Ordinances in conflict herewith be and the same are hereby repealed. SECTION 12: If any section, subsection, sentence, clause, phrase of this ordinance, or the particular application thereof shall be held invalid by any court, administrative agency, or other body with appropriate jurisdiction, the remaining section, subsection, sentences, clauses, or phrases under application shall not be affected thereby. SECTION 13: That this Ordinance shall become effective immediately upon adoption by the City Council. The foregoing Ordinance was moved for adoption by Councilmember Hill The motion was seconded by Councilmember Cov and upon being put to a vote, the vote was as follows: Mayor Bob McPartlan aye Vice Mayor Andrea Coy aye Councilmember Jim Hill aye Councilmember Ed Dodd aye Councilmember Linda Kinchen aye PASSED ON FIRST READING, this 26th day of July 2017. PASSED AND ADOPTED ON SECOND READING, this 23rd day of August 2017. MAYOR ATTEST: Gc) &&M- - C ERK Approved as to form: ITY ATTORNEY ksh-,d Wscbm\poh06-05-17.ord -12- 5"'G. /7 *AGREEMENT 6/20/2017 Boston Partners *ERRORS & OMISSIONS - EUR $50,000,000 *FEE NOT TO INCREASE FOR 3 YEARS *MANAGER SHALL ATTEND A BOARD MEETING ANNUALLY *AGREEMENT 4/19/2017 Brookfield Public Securities Group LLC - *ERRORS & OMISSIONS - USD $20,000,000 prev. Center Coast *FEE NOT TO INCREASE FOR 3 YEARS *MANAGER SHALL ATTEND A BOARD MEETING ANNUALLY *AGREEMENT 6/29/2017 Fiera Capital/Apex *ERRORS & OMISSIONS - NO $ *FEE NOT TO INCREASE FOR 3 YEARS *MANAGER SHALL ATTEND A BOARD MEETING ANNUALLY *AGREEMENT 5/30/2017 Foster & Foster *ERRORS & OMISSIONS - $1,000,000 *FEE GUARANTEED FOR 2 YEARS *MANAGER SHALL ATTEND A BOARD MEETING ANNUALLY *AGREEMENT 12/1/2015 Highland Capital Management *ERRORS & OMISSIONS - USD $10,000,000 *FEE NOT TO INCREASE FOR 3 YEARS *MANAGER SHALL ATTEND A BOARD MEETING QUARTERLY *AGREEMENT NOT THE SAME AS OTHERS 6/20/2017 *ERRORS & OMISSIONS - USD $10,000,000 Intercontinental *FEE NOT TO INCREASE FOR 3 YEARS *MANAGER SHALL ATTEND A BOARD MEETING QUARTERLY *PROFESSIONAL LIABILITY $15,000,000 �Klausner, Kaufman, Jensen & Levinson UNABLE TO LOCATE`" *AGREEMENT 12/11/2012 & 6/20/17 (Morgan Stanley I*ERRORS & OMISSIONS - USD $1,000,000 *AGREEMENT 5/10/2017 *ERRORS & OMISSIONS - USD $5,000,000 Renaissance *FEE NOT TO INCREASE FOR 3 YEARS *MANAGER SHALL ATTEND A BOARD MEETING NO TIME *AGREEMENT 12/14/2010 Salem Trust *ERRORS & OMISSIONS - USD $10,000,000 *FEE NOT TO INCREASE FOR 2 YEARS from 7/1/2010 *MANAGER SHALL ATTEND A BOARD MEETING 2/YEAR Traveler's Insurance UNABLE TO LOCATE / tA- Kenneth Killqore From: Kenneth Killgore Sent: Thursday, November 21, 2019 2:56 PM To: 'Jonathan Jallad' Subject: RE: Police Pension Board and Cyber Liability Hilonathan, Let me discuss it with the Pension Board when we meet on December 10th Ken Killgore Administrative Services Director/CFO City of Sebastian From: Jonathan Jallad [mailto:Jonathan@jalladinsurance.com] Sent: Thursday, November 21, 2019 2:40 PM To: Kenneth Killgore Subject: FW: Police Pension Board and Cyber Liability Ken, I have a follow up response from Travelers regarding our conversation relating to board members coverage for Fiduciary Liability. ALL board members are covered on the Fiduciary Liability policy in place with the Travelers. However, Travelers doesn't offer Cyber for police pension boards, and due to Preferred excluding coverage we have a potential gap in coverage. Would you like me to pursue a standalone Cyber policy for the board? I believe the premium will be around $10,000-12,000 per $iM limit. However, final figure will be after we submit to underwriting. Let me know and I will work on the applications. Best Regards, Jonathan Jallad Vice President D 407.775.7350 M 407.644.4423 C 407.864.1983 100 E. Sybelia Avenue, Suite 375, Maitland, FL 32751 (WJALLAD INSURANCE PLEASE NOTE: You cannot bind, alter or cancel coverage without speaking to an authorized representative of Jallad Insurance Services. Coverage cannot be assumed to be bound without confirmation from an authorized representative of Jallad Insurance Services. **DISCLAIMER* *The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential, proprietary, and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this !• b"b. l information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the material from all computers �,5oi1 Find us on ri From: Jonathan Jallad Sent: Wednesday, November 20, 2019 2:28 PM To: 'Kenneth Killgore' <kkillgore@CityofSebastian.org> Subject: Police Pension Board and Cyber Liability Hi Ken, I hope you are well. I have been digging in with Preferred underwriting regarding the Police Pension Board (PPB) and Cyber Liability exposure and subsequent coverage extending from the City's Public Officials Liability policy. Bottom line is that the Police Pension Board (PPB) is not covered for Cvber Liabilitv or Public Officials Liabilitv from the Preferred Governmental Insurance Trust oolicv the City has, because the PPB it is considered a separate entitv. The City emplovees that sit on the board are covered, but the other non-citv employee board members and the actual PPB is not covered as it's a separate entitv oer the CAFR. See details below: I've reviewed the Auditor's notes pertaining the Police Pension Board (PPB) contained in the Cities 09130118 certified audited financial statement (CAFR). Based on what I read in the CAFR and in Florida Statute 185, l believe that the PPB is a separate entity and could not be included as a covered party on the City's POL/EPLI and Cyber Liability coverage. In the notes on page 51, of the CAFR, the PPB is listed as a blended component unit of the City, because there is a financial benefit/burden relationship between the primary government and the component unit. The City Council only appoints two of the five members of the PPB's governing board, but it is financially responsible for funding the pension benefits. Page 62 states that the City's pension trust fund's investment policy is adopted by the fund's Board of Trustees. The State of Fl also provides contribution to the PPB, as specified in Florida Statute 185. Noted on page 74, This plan is administered by a separate local Board of Trustees. Florida Statute 185.31 Municipalities and boards independent of other municipalities and boards and of each other. — In the enforcement and interpretation of the provision of this chapter for any municipality, chapter plan, local law municipality, or local law plan under this chapter, each municipality shall be independent of any other municipality, and the board of trustees of the municipal police officers'retirement trust fund of each municipality shall function for the municipality which they are to serve as trustees. Each board of trustees shall be independent of each municipality for which it serves as board of trustees to the extent required to accomplish the intent requirements, and responsibility provided for in this chapter. The ERISA/Securities exclusion contained in the Public Officials coverage form PGIT MN500, exclusion K, and the Cyber Liability coverage form PGIT MN400, exclusion H. also applies to any rules, regulations or amendments issued in relation to such acts, or any similar state of federal states or regulations, including any claim based upon common law principles of liability. Based on these exclusions, it would be best for you to place separate coverage for the PPB. Solutions: We could go to the private marketplace for Cyber/D&O Coverage on the PPB. 7 N b, 2-- Consideration: While the PPB is being administer by 3rd party vendors (financial institutions, advisors etc. they will/should have Cyber Liability as well as Professional Liability) the city could be exposed from personal information passing from City to PPB lie. Paper file of SS#'s and Names/DOB's etc.). We can discuss what the actual exposure could be and determine if it makes sense to purchase insurance to transfer the risk or to self insure. Please call me when you get a chance to discuss. Best Regards, Jonathan Jallad Vice President D 407.775.7350 M 407.644.4423 C 407.864.1983 100 E. Sybelia Avenue, Suite 375, Maitland, FL 32751 V'*)JALLAD INSURANCE PLEASE NOTE: You cannot bind, alter or cancel coverage without speaking to an authorized representative of I Ilad Insurance Services. Coverage cannot be assumed to be bound without confirmation from an authorized representative of Jallad Insurance Services. "*DISCLAIMER**The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential, proprietary, and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the material from all computers 'Iron Find us on D.b,-3 M ER AN ON Client Memorandum To: All Pension Plans From: Klausner, Kaufman, Jensen & Levinson Date: July 2019 Re: Cyberattack and Cyber Liability Insurance Coverage The purpose of this memo is to heighten awareness of the possibility of a cyberattack for retirement plans and the importance of carrying cyber liability insurance. The Federal Bureau of Investigation warns that "state and local governments can be impacted by ransomware, an insidious type of malware that encrypts, or locks, valuable digital files and demands a ransom to release them." Several Florida municipalities have already been hit by cyberattacks; these attacks have cost hundreds of thousands of dollars to fight, or alternatively, to pay the requested ransom. III -prepared retirement plans are extremely vulnerable to devastating cyberattacks. Because there is never a good time for a cyberattack, bridging the gap early between attack and recovery is paramount. Bridqinq the Gap Between Attack and Recovery: Segal Consulting ("Segal'), a firm dedicated to providing services to retirement plans and other public sector clients, recommends creating an "incident response plan" to combat a cyberattack or strike. According to Segal, an incident response plan should consist of three major components: (a) contain, (b) eradicate, and (c) recover from the incident. Segal also suggests taking the following preparatory steps to assist with cyberattack recovery: 1. Create a list of critical business functions; 2. Identify when those critical business functions are during the calendar year and how much time they usually take to complete; and -I D, 6,` Client Memorandum Re: Cyberattack and Cyber Liability Insurance Coverage Page 2 3. Identity the criteria used to determine if alternate arrangements must be made to meet your critical business obligations. A carefully crafted incident response plan can help retirement plans address the problems experienced after a cyberattack and work swiftly to find a resolution. A good plan is essential for business continuity. Ensuring business continuity during a cyberattack can help a retirement plan maintain its critical functions at all times, except after a major disaster. Other ways to prepare for a cyberattack include backing -up all computer networks and securing alternate methods to have retirement benefits timely processed. Such alternate methods may include contracting with an off -site third -party to handle the processing of retirement benefits in the event of an emergency. All retirement plans should reach out to plan sponsors seeking the procedures it has in place in the event of a cyberattack. Cvber Liabilitv Insurance: We recommend that all retirement plans require vendors to have or to purchase cyber liability insurance in the amount of $5,000,000.00. All current agreements with vendors that do not already include cyber liability insurance should have the policy amended to include a cyber liability rider adding such coverage. We also recommend adding the following language, or similar language, to all vendor contracts: The vendor agrees to obtain and maintain in full force and effect under the terms of this Agreement, at least a $5,000,000.00 cyber liability policy. The policy shall include coverage for breach response expenses, security and privacy liability, regulatory investigation coverage for covered losses resulting from a data breach of related claims. The vendor will endeavor to notify the Board, in writing, in the event of any change in its cyber liability policy and to immediately notify the Board if said insurance is terminated, canceled or discontinued, in whole or in part. The vendor agrees to periodically provide confirmation to the Board that coverage continues. The vendor will add the Board as an additional insured. This language will be included in vendor agreements drafted by our office on the retirement plan's behalf. Section 501.171, Florida Statutes, governs "security and confidential personal information." Under this statute, a governmental entity is considered a "covered entity" D, 6,5- Client Memorandum Re: Cyberattack and Cyber Liability Insurance Coverage Page 3 and must take steps to notify those affected by a cyberattack and to 'restore the reasonable integrity of the data system that was breached." Section 501.171(4), Florida Statutes, provides: [A] covered entity shall provide notice to each individual in this state whose personal information was, or the covered entity reasonably believes to have been, accessed as a result of the breach. Notice to individuals shall be made expeditiously as practicable and without unreasonable delay, taking into account the time necessary to allow the covered entity to determine the scope of the breach of security, to identify the individuals affected by the breach, and to restore the reasonable integrity of the data system that was breached, but no later than 30 days after the determination of a breach or reason to believe a breach occurred unless subject to a delay authorized... Florida Statute, Section 501.171, may be read in its entirety at httD://www.lea.state.fl.us/statutes/index.cfm?ADD mode=DisDlav Statute&Search Strin ci&URL=0500-0599/0501/Sections/0501.171.html. The Federal Trade Commission provides a useful guide outlining steps an organization should take after a breach has occurred. This guide can be accessed by clicking the following link: httos://www_ftc.aov/system/files/documents/plain-lanauaae/Ddf- 0154 data-breach-response-guide-for-business-042519-508.pdf. Any retirement plan in need of assistance choosing a cyber liability insurance policy may contact James Martinez, with Gallagher at James_Martinez@ajg.com. Gallagher has developed a cyber liability insurance program with the National Conference on Public Employee Retirement Systems ("NCPERS"). NCPERS membership is not required for assistance with this matter. For additional information concerning new developments in cyber security policy please contact John Reidy, with the Pension Technology Group at iohn(@).Dtq-usa.com or by telephone at (617) 977-8408, ext. 18. As always, feel free to contact our office if you have any cyberattack or cyber liability insurance questions. Annual Operating Expenses Investment Managers: Highland Capital Boston Parners Fiera Capital (APEX) Renaissance Center Coast (Brookfield) Intercontinental Performance Manager-Graystone Salem Trust Company ADR Agent Fee - Foreign Dividends Sub -total Investment Expense Actuarial - Foster & Foster Experience Study Update - Foster & Foster State Report Preparation - Foster $ Foster Legal Services Administrative Fee to City Insurance Miscellaneous: Minutes Preparation Codification of Approved Ordinance(s) Functional Capacity Assessments Travel Contingency Sub -total Administrative Expense Total Operating Expenses CITY OF SEBASTIAN, FLORIDA POLICE PENSION FUND - 2019/2020 BUDGET VERSUS ACTUAL CASH BASIS Amended 2019/2020 2019/2020 Actual 2019/2020 Payments To Date Budget Budget 1011-12/31 1 1-3 31 4/1-6/3 7/1-9/3 $ 47,000 $ 47,000 $ 12,640.30 7,000 7,000 1,930.29 6,000 6,000 1,497.53 7,000 7,000 1,723.97 3,400 3,400 803,34 13,500 13,500 3,375.00 27,000 27,000 4,715.00 1,500 1,500 $ 212,400 $ 112,400 $ 26,685.43 $ - $ - $ - 17,000 17,000 3,DD0 3,000 40,000 40,000 2,561.25 24,000 24,000 2,600 2,600 2,585.00 1,050 1,050 216.00 600 600 2,700 2,700 15,000 15,000 $ 105,950 $ 105,950 $ 5,362.25 $ - $ $ 218,350 $ 218,3S0 $ 32,047.68 $ - $ Previous Year's Annual Total 2019/2020 2018/2019 2017/2018 2016/2017 2015/2016 2014/2015 Actual Actual Actual Actual Actual Actual $ 12,640.30 $ 34,621.51 $ 67,754.39 $ 60,479.85 $ 42,352.99 $ 64,402.32 1,930.29 6,885.81 6,763.47 - - - 1,497.53 5,943.76 5,386.84 - - - 1,723.97 6,874.16 6,451.11 - - - 803.34 3,113.51 2,909.69 - - - 3,375.00 13,500.00 13,500.00 13,500.00 13,500.00 16,875.00 4,715.00 26,480.00 28,250.00 7,245.00 6,265.00 6,615.00 - 1,140.85 1,643.74 581.24 451.80 141.44 $ 26,685.43 $ 98,559.60 $132,659.24 $ 81,806.09 $ 62,569.79 $ 88,033.76 - 16,756.00 17,834.00 13,331.00 14,765.00 21,398.00 - 3,000.00 - - - - 2,561.25 39,362AS 25,138.90 29,011.01 18,294.60 17,189.16 - 24,000.00 24,0D0.00 2,585.00 2,585.00 2,585.00 3,021.05 3,121.05 3,121.05 216.00 694.00 1,042.00 - - 598.20 1,222.07 2,700.00 1,344.00 - - 695.50 101.90 $ 5,362.25 $ 89,097.45 $ 72,542.00 45,363A6 $ 36,876.15 $ 43,032.13 $ 32,047.68 $ 187,657.05 $205,201.24 127,169.15 $ 99,445.94 $ 131,065.94 CITY OF SEBASTIAN POLICE OFFICERS' PENSION PLAN CALENDAR OF BOARD ACTIVITIES — Updated September 2019 JANUARY: No Board activity. FEBRUARY: No Board activity. MARCH: 1" Quarter Board Meeting: • Update and Review Calendar of Activities. • Request update of Summary Plan Description (every two years). • Investment Report and Performance Review. • Receive Annual Report to Division of Retirement. APRIL: No Board activity. MAY: No Board activity. JUNE: 2nd Quarter Board Meeting: • Review Calendar of Board Activities. • Investment Report and Performance Review. • Select Board Chairperson and Secretary (every two years). • Approve and Distribute to Members the Summary Plan Description (if needed). JULY: Board Members should file Financial Disclosure forms by Julylst. AUGUST: Receive State premium tax monies. SEPTEMBER: • 3rd Quarter Board Meeting: • Agree on Quarterly Meeting dates for following year. • Review Calendar of Board Activities • Approve Election Process for Police Officer Members (if needed). • Select Board appointed Member and request City Council confirmation (if needed). • Investment Report and Performance Review. • Report on year-to-date expenses and approve budget for the next year. OCTOBER: No Board activity. NOVEMBER: No Board activity. DECEMBER • 4`h Quarter Board Meeting: • Review Calendar of Board Activities. • Consider changes to Operating Rules (if needed). • Report on Actual Operating Expenses for the year. • Investment Report and Performance Review. • Update Investment Policy and Allocation Strategy. • Accept the Actuarial Report. • Approve Expected Rate of Return. • Confirm renewal of Liability Insurance Policy. Page 1 of 1 AMENDMENT #1 TO THE RENAISSANCE GROUP LLC D.B.A. RENAISSANCE INVESTMENT MANAGEMENT/BOWLING PORTFOLIO INVESTMENT MANAGEMENT AGREEMENT AN AMENDMENT TO THE INVESTMENT MANAGEMENT AGREEMENT MADE BY AND BETWEEN THE BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM ("TRUSTEES") AND THE RENASSIANCE GROUP LLC D.B.A. RENAISSANCE INVESTMENT MANAGEMENT/BOWLING PORTFOLIO ("MANAGER"). WHEREAS, Trustees and Manager entered into that certain Investment Management Agreement, dated 10th day of May 2017; WHEREAS, due to statute modifications, industry and administrative changes, and to ensure continued protection of Trustees, items listed below are for Managers to additionally adhere to; WHEREAS, Trustees and Managers desire to amend the Investment Manager Agreement as set forth herein. NOW, THEREFORE, in consideration of the promises, representations, warranties, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows: SECTION 1. Consent. The Board of Trustees of The City of Sebastian hereby consents to the modification of that certain Investment Management Agreement, dated 10'h day of May 2017, to require the following: Cyber Liability Insurance in the amount of $5,000,000 shall be obtained and maintained for the duration of the Agreement, in addition to the Insurance required by the Investment Management Agreement. The Manager agrees to notify the Trustees, in writing, in the event of any material change in its policy within ten (10) days following any such material change. A material change shall include, but not be limited to, a change in the insurance carrier, coverage amounts, covered risks or the termination, cancellation or discontinuance of coverage in whole or in part. It is the Managers responsibility to ensure that the Trustees are provided a current Insurance Certificate at all times. 2. Additional Insured: All liability insurance policies shall name and endorse the following as additional insured(s): the Board of Trustees of the City of Sebastian and its members, officers, employees and agents. 3. Pension Trust Attorney: Any notices sent to the Trustees should also be provided to the legal counsel: Klausner, Kaufman, Jensen & Levinson 7080 N.W. 4h Street Plantation, FL 33317 954-917-1202 bsjteam@robertdklausner.com 4. Consultation: The Manager shall attend one (1) Board meeting a year, upon request, and consult with the Trustees regarding the investment performance of the Investment Account. 5. The Manager shall make best efforts to assist the Board in ADA compliance, if required by the City or other governmental entity. SECTION 2. Consent. THE RENAISSANCE GROUP LLC D.B.A. RENAISSANCE INVESTMENT MANAGEMENT/BOWLING PORTFOLIO hereby consents and agrees that THE RENAISSANCE GROUP LLC D.B.A. RENAISSANCE INVESTMENT MANAGEMENT/BOWLING PORTFOLIO shall comply with and fulfill all the terms, requirements and conditions of the Agreement and associated Amendment(s) referenced herein. SECTION 3. Effective Date. This amendment shall take effect immediately upon its execution. IN WITNESS WHEREOF, the parties have signed on this day of 2019. THE RENAISSANCE GROUP LLC ("Manager") D.B.A. RENAISSANCE INVESTMENT MANAGEMENT/BOWLING PORTFOLIO Title: Name: CITY OF SEBASTIAN, FLORIDA ("Trustees" BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM By: Title: Chairperson Name: Jason Gillete ATTEST: By: Title: Administrative Assistant Name: Kenneth Killgore AMENDMENT #1 TO BOSTON PARTNERS, LLC INVESTMENT MANAGEMENT AGREEMENT AN AMENDMENT TO THE INVESTMENT MANAGEMENT AGREEMENT MADE BY AND BETWEEN THE BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM ("TRUSTEES") AND BOSTON PARTNERS, LLC ("MANAGER"). WHEREAS, Trustees and Manager entered into that certain Investment Management Agreement, dated 201h day of June 2017; WHEREAS, due to statute modifications, industry and administrative changes, and to ensure continued protection of Trustees, items listed below are for Managers to additionally adhere to; WHEREAS, Trustees and Managers desire to amend the Investment Management Agreement as set forth herein. NOW, THEREFORE, in consideration of the promises, representations, warranties, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows: SECTION 1. Consent. The Board of Trustees of The City of Sebastian hereby consents to the modification of that certain Investment Management Agreement, dated 20th day of June 2017, to require the following: Cyber Liability Insurance in the amount of $5,000,000 shall be obtained and maintained for the duration of the Agreement, in addition to the Insurance required by the Investment Management Agreement. The Manager agrees to notify the Trustees, in writing, in the event of any material change in its policy within ten (10) days following any such material change. A material change shall include, but not be limited to, a change in the insurance carrier, coverage amounts, covered risks or the termination, cancellation or discontinuance of coverage in whole or in part. It is the Managers responsibility to ensure that the Trustees are provided a current Insurance Certificate at all times. 2. Additional Insured: All liability insurance policies shall name and endorse the following as additional insured(s): the Board of Trustees of the City of Sebastian and its members, officers, employees and agents. 3. Pension Trust Attorney: Any notices sent to the Trustees should also be provided to the legal counsel: Klausner, Kaufman, Jensen & Levinson 7080 N.W. 4' Street Plantation, FL 33317 954-917-1202 bsjteam@robertdkiausner.com Consultation: The Manager shall attend one (1) Board meeting a year, upon request, and consult with the Trustees regarding the investment performance of the Investment Account. 5. The Manager shall make best efforts to assist the Board in ADA compliance, if required by the City or other governmental entity. 7 D,o-,3 SECTION 2. Consent. BOSTON PARTNERS, LLC hereby consents and agrees that BOSTON PARTNERS, LLC shall comply with and fulfill all the terms, requirements and conditions of the Agreement and associated Amendment(s) referenced herein. SECTION 3. Effective Date. This amendment shall take effect immediately upon its execution. IN WITNESS WHEREOF, the parties have signed on this day of 2019. BOSTON PARTNERS, LLC ("Manager") zi Title: Name: CITY OF SEBASTIAN, FLORIDA ("Trustees") BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM By: Title: Chairperson Name: Jason Gillete ATTEST: By: Title: Administrative Assistant Name: Kenneth Killgore AMENDMENT #1 TO BROOKFIELD PUBLIC SECURITIES GROUP LLC INVESTMENT MANAGEMENT AGREEMENT AN AMENDMENT TO THE INVESTMENT MANAGEMENT AGREEMENT MADE BY AND BETWEEN THE BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM ("TRUSTEES") AND BROOKFIELD PUBLIC SECURITIES GROUP LLC — PREVIOUSLY CENTER COAST CAPITAL ADVISORS ("MANAGER"). WHEREAS, Trustees and Manager entered into that certain Investment Management Agreement, dated 19th day of April 2017; WHEREAS, due to statute modifications, industry and administrative changes, and to ensure continued protection of Trustees, items listed below are for Managers to additionally adhere to; WHEREAS, Trustees and Managers desire to amend the Investment Management Agreement as set forth herein. NOW, THEREFORE, in consideration of the promises, representations, warranties, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows: SECTION 1. Consent. The Board of Trustees of The City of Sebastian hereby consents to the modification of that certain Investment Management Agreement, dated 19y' day of April 2017, to require the following: Cyber Liability Insurance in the amount of $5,000,000 shall be obtained and maintained for the duration of the Agreement, in addition to the Insurance required by the Investment Management Agreement. The Manager agrees to notify the Trustees, in writing, in the event of any material change in its policy within ten (10) days following any such material change. A material change shall include, but not be limited to, a change in the insurance carrier, coverage amounts, covered risks or the termination, cancellation or discontinuance of coverage in whole or in part. It is the Managers responsibility to ensure that the Trustees are provided a current Insurance Certificate at all times. 2. Additional Insured: All liability insurance policies shall name and endorse the following as additional insured(s): the Board of Trustees of the City of Sebastian and its members, officers, employees and agents. 3. Pension Trust Attorney: Any notices sent to the Trustees should also be provided to the legal counsel: Klausner, Kaufman, Jensen & Levinson 7080 N.W. 4t' Street Plantation, FL 33317 954-917-1202 bsjteam@robertdklausner.com 4. Consultation: The Manager shall attend one (1) Board meeting a year, upon request, and consult with the Trustees regarding the investment performance of the Investment Account. 5. The Manager shall make best efforts to assist the Board in ADA compliance, if required by the City or other governmental entity. 7b,a,5 SECTION 2. Consent. BROOKFIELD PUBLIC SECURITIES GROUP LLC hereby consents and agrees that BROOKFIELD PUBLIC SECURITIES GROUP LLC shall comply with and fulfill all the terms, requirements and conditions of the Agreement and associated Amendment(s) referenced herein. SECTION 3. Effective Date. This amendment shall take effect immediately upon its execution. IN WITNESS WHEREOF, the parties have signed on this day of 2019. BROOKFIELD PUBLIC SECURITIES GROUP LLC ("Manager") in Title: Name: CITY OF SEBASTIAN, FLORIDA ("Trustees" BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM By: Title: Chairperson Name: Jason Gillete ATTEST: By: Title: Administrative Assistant Name: Kenneth Killgore 7 D.a.� AMENDMENT #1 TO FIERA CAPITAL CORPORATION INVESTMENT MANAGEMENT AGREEMENT AN AMENDMENT TO THE INVESTMENT MANAGEMENT AGREEMENT MADE BY AND BETWEEN THE BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM ("TRUSTEES") AND FIERA CAPITAL CORPORATION ("MANAGER"). WHEREAS, Trustees and Manager entered into that certain Investment Management Agreement, dated 29th day of June 2017; WHEREAS, due to statute modifications, industry and administrative changes, and to ensure continued protection of Trustees, items listed below are for Managers to additionally adhere to; WHEREAS, Trustees and Managers desire to amend the Investment Management Agreement as set forth herein. NOW, THEREFORE, in consideration of the promises, representations, warranties, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows: SECTION 1. Consent. The Board of Trustees of The City of Sebastian hereby consents to the modification of that certain Investment Management Agreement, dated 29v' day of June 2017, to require the following: Errors and Omissions in the amount of $10,000,000 shall be obtained and maintained for the duration of the Agreement. 2. Cyber Liability Insurance in the amount of $5,000,000 shall be obtained and maintained for the duration of the Agreement, in addition to the Insurance required by the Investment Management Agreement. The Manager agrees to notify the Trustees, in writing, in the event of any material change in its policy within ten (10) days following any such material change. A material change shall include, but not be limited to, a change in the insurance carrier, coverage amounts, covered risks or the termination, cancellation or discontinuance of coverage in whole or in part. It is the Managers responsibility to ensure that the Trustees are provided a current Insurance Certificate at all times. 3. Additional Insured: All liability insurance policies shall name and endorse the following as additional insured(s): the Board of Trustees of the City of Sebastian and its members, officers, employees and agents. 4. Registered to do Business in Florida: The Manager must be registered to do business in Florida or have a Florida registered agent for service. Registration as a Foreign Corporation in Florida will be permitted. 5. Pension Trust Attorney: Any notices sent to the Trustees should also be provided to the legal counsel: Klausner, Kaufman, Jensen & Levinson 7080 N.W. 41h Street Plantation, FL 33317 954-917-1202 bsjteam@robertdkiausner.com 6. Consultation: The Manager shall attend one (1) Board meeting a year, upon request, and consult with the Trustees regarding the investment performance of the Investment Account. -10/0.-1 7. The Manager shall make best efforts to assist the Board in ADA compliance, if required by the City or other governmental entity. SECTION 2. Consent. FIERA CAPITAL CORPORATION hereby consents and agrees that FIERA CAPITAL CORPORATION shall comply with and fulfill all the terms, requirements and conditions of the Agreement and associated Amendment(s) referenced herein. SECTION 3. Effective Date. This amendment shall take effect immediately upon its execution. IN WITNESS WHEREOF, the parties have signed on this day of 2019. FIERA CAPITAL CORPORATION CITY OF SEBASTIAN, FLORIDA ("Trustees") BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM By: By: Title: Title: Chairperson Name: Name: Jason Gillete ATTEST: Title: Administrative Assistant Name: Kenneth Kilgore 1,b,e.,8 AMENDMENT #1 TO HIGHLAND CAPITAL MANAGEMENT, LLC INVESTMENT MANAGEMENT AGREEMENT AN AMENDMENT TO THE INVESTMENT MANAGEMENT AGREEMENT MADE BY AND BETWEEN THE BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM ("TRUSTEES") AND HIGHLAND CAPITAL MANAGEMENT, LLC ("MANAGER"). WHEREAS, Trustees and Manager entered into that certain Investment Management Agreement, dated 18T day of December 2015; WHEREAS, due to statute modifications, industry and administrative changes, and to ensure continued protection of Trustees, items listed below are for Managers to additionally adhere to; WHEREAS, Trustees and Managers desire to amend the Investment Manager Agreement as set forth herein. NOW, THEREFORE, in consideration of the promises, representations, warranties, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows: SECTION 1. Consent. The Board of Trustees of The City of Sebastian hereby consents to the modification of that certain Investment Management Agreement, dated 1n day of December 2015, to require the following: Cyber Liability Insurance in the amount of $5,000,000 shall be obtained and maintained for the duration of the Agreement, in addition to the Insurance required by the Investment Management Agreement. The Manager agrees to notify the Trustees, in writing, in the event of any material change in its policy within ten (10) days following any such material change. A material change shall include, but not be limited to, a change in the insurance carrier, coverage amounts, covered risks or the termination, cancellation or discontinuance of coverage in whole or in part. It is the Managers responsibility to ensure that the Trustees are provided a current Insurance Certificate at all times. 2. Additional Insured: All liability insurance policies shall name and endorse the following as additional insured(s): the Board of Trustees of the City of Sebastian and its members, officers, employees and agents. 3. Pension Trust Attorney: Any notices sent to the Trustees should also be provided to the legal counsel: Klausner, Kaufman, Jensen & Levinson 7080 N.W. 41h Street Plantation, FL 33317 954-917-1202 b s i to a m l)ro b e rtd k l a u s n e r. co m 4. Consultation: The Manager shall attend one (1) Board meeting a year, upon request, and consult with the Trustees regarding the investment performance of the Investment Account. 5. The Manager shall make best efforts to assist the Board in ADA compliance, if required by the City or other governmental entity. /. D, 0., •1 6. Public Records: In accordance with the provisions of Chapter 119.0701(2), Florida Statutes: (1) IF THE MANAGER HAS QUESTIONS REGARDING THE APPLICATION OF CHAPTER 119, FLORIDA STATUTES, TO THE MANAGER'S DUTY TO PROVIDE PUBLIC RECORDS RELATING TO THIS CONTRACT, CONTACT THE CUSTODIAN OF PUBLIC RECORDS AT: KEN KILLGORE, 772388-8205, KKILLGORE@CITYOFSEBASTIAN.ORG, 1225 MAIN STREET, SEBASTIAN, FL 32958. (2) The manager must comply with public records laws, specifically to: a. Keep and maintain public records required by the Trustees to perform the service b. Upon request from the Trustees' Custodian of Public Records, provide the Trustees with a copy of the requested records or allow the records to be inspected or copied within a reasonable time at a cost that does not exceed the cost provided in Chapter 119, Florida Statutes, or as otherwise provided by law. c. Ensure that the public records that are exempt or confidential and exempt from public records disclosure requirements are not disclosed except as authorized by law for the duration of the term of the Agreement and following completion of the Agreement if the Manager does not transfer the records to the Trustees. d. Upon completion of the Agreement, transfer, at no cost to the Trustees, all public records in possession of the Manager or keep and maintain public records required by the Trustees to perform the service. If the Manager transfers all public records to the Trustees upon completion of the Agreement, the Manager shall destroy any duplicate public records that are exempt to confidential and exempt from public records disclosure requirements. If the Manager keeps and maintains public records upon completion of the Agreement, the Manager shall meet all applicable requirements for retaining public records. All records stored electronically must be provided to the Trustees, upon request from the Trustees' Custodian of Public Records, in a format that is compatible with the information technology systems of the Trustees. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SECTION 2. Consent. HIGHLAND CAPITAL MANAGEMENT, LLC hereby consents and agrees that HIGHLAND CAPITAL MANAGEMENT, LLC shall comply with and fulfill all the terms, requirements and conditions of the Agreement and associated Amendment(s) referenced herein. SECTION 3. Effective Date. This amendment shall take effect immediately upon its execution. IN WITNESS WHEREOF, the parties have signed on this day of 2019. HIGHLAND CAPITAL MANAGEMENT, LLC CITY OF SEBASTIAN, FLORIDA ("Trustees") BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM By: By: Title: Title: Chairperson Name: Name: Jason Gillete ATTEST: M Title: Administrative Assistant Name: Kenneth Killgore -7,0,0.,11 AMENDMENT #2 TO MORGAN STANLEY SMITH BARNEY LLC INVESTMENT PERFORMANCE MONITORING AND ADVISORY SERVICES AGREEMENT AN AMENDMENT TO THE INVESTMENT PERFORMANCE MONITORING AND ADVISORY SERVICES AGREEMENT MADE BY AND BETWEEN THE BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM ("TRUSTEES") AND MORGAN STANLEY SMITH BARNEY LLC ("MSSB" or "MONITOR") THROUGH ITS GRAYSTONE CONSULTING BUSINESS UNIT. WHEREAS, Trustees and MSSB entered into that certain Investment Performance Monitoring and Advisory Services Agreement, dated 111h day of December 2012, and Amendment, dated 201h day of June 2017; WHEREAS, due to statute modifications, industry and administrative changes, and to ensure continued protection of Trustees, items listed below are for MSSB to additionally adhere to; WHEREAS, Trustees and MSSB desire to amend the Investment Performance Monitoring and Advisory Services Agreement as set forth herein. NOW, THEREFORE, in consideration of the promises, representations, warranties, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows: SECTION 1. Consent. The Board of Trustees of The City of Sebastian hereby consents to the modification of that certain Investment Performance Monitoring and Advisory Services Agreement, dated 11th day of December 2012, and Amendment, dated 20th day of June 2017, to require the following: Cyber Liability Insurance in the amount of $5,000,000 shall be obtained and maintained for the duration of the Agreement, in addition to the Insurance required by the Investment Performance Monitoring and Advisory Services Agreement. The MSSB agrees to notify the Trustees, in writing, in the event of any material change in its policy within ten (10) days following any such material change. A material change shall include, but not be limited to, a change in the insurance carrier, coverage amounts, covered risks or the termination, cancellation or discontinuance of coverage in whole or in part. It is the MSSB's responsibility to ensure that the Trustees are provided a current Insurance Certificate at all times. 2. Additional Insured: All liability insurance policies shall name and endorse the following as additional insured(s): the Board of Trustees of the City of Sebastian and its members, officers, employees and agents. 3. Pension Trust Attorney: Any notices sent to the Trustees should also be provided to the legal counsel: Klausner, Kaufman, Jensen & Levinson 7080 N.W. 4th Street Plantation, FL 33317 954-917-1202 bsjteam@robertdklausner.com 4. Consultation: The MSSB shall attend one (1) Board meeting a year, upon request, and consult with the Trustees regarding the investment performance of the Investment Account. 5. The MSSB shall make best efforts to assist the Board in ADA compliance, if required by the City or other governmental entity. 7 D, a. o.- 6. Public Records: In accordance with the provisions of Chapter 119.0701(2), Florida Statutes: (1) IF THE MSSB HAS QUESTIONS REGARDING THE APPLICATION OF CHAPTER 119, FLORIDA STATUTES, TO THE MSSB'S DUTY TO PROVIDE PUBLIC RECORDS RELATING TO THIS CONTRACT, CONTACT THE CUSTODIAN OF PUBLIC RECORDS AT: KEN KILLGORE, 772-388-8205, KKILLGORE@CITYOFSEBASTIAN.ORG, 1225 MAIN STREET, SEBASTIAN, FL 32958. (2) The MSSB must comply with public records laws, specifically to: a. Keep and maintain public records required by the Trustees to perform the service. b. Upon request from the Trustees' Custodian of Public Records, provide the Trustees with a copy of the requested records or allow the records to be inspected or copied within a reasonable time at a cost that does not exceed the cost provided in Chapter 119, Florida Statutes, or as otherwise provided by law. c. Ensure that the public records that are exempt or confidential and exempt from public records disclosure requirements are not disclosed except as authorized by law for the duration of the term of the Agreement and following completion of the Agreement if the MSSB does not transfer the records to the Trustees. d. Upon completion of the Agreement, transfer, at no cost to the Trustees, all public records in possession of the MSSB or keep and maintain public records required by the Trustees to perform the service. If the MSSB transfers all public records to the Trustees upon completion of the Agreement, the MSSB shall destroy any duplicate public records that are exempt to confidential and exempt from public records disclosure requirements. If the MSSB keeps and maintains public records upon completion of the Agreement, the MSSB shall meet all applicable requirements for retaining public records. All records stored electronically must be provided to the Trustees, upon request from the Trustees' Custodian of Public Records, in a format that is compatible with the information technology systems of the Trustees. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 7 D, 13 SECTION 2. Consent. MORGAN STANLEY SMITH BARNEY LLC, through its Graystone Consulting Business Unit hereby consents and agrees that MORGAN STANLEY SMITH BARNEY LLC, through its Graystone Consulting Business Unit shall comply with and fulfill all the terms, requirements and conditions of the Agreement and associated Amendment(s) referenced herein. SECTION 3. Effective Date. This amendment shall take effect immediately upon its execution. IN WITNESS WHEREOF, the parties have signed on this day of 2019. MORGAN STANLEY SMITH BARNEY LLC, THROUGH ITS GRAYSTONE CONSULTING BUSINESS UNIT Title: Name: CITY OF SEBASTIAN, FLORIDA ("Trustees") BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM By: Title: Chairperson Name: Jason Gillete ATTEST: By: Title: Administrative Assistant Name: Kenneth Kilgore 7D,0.,1ly AMENDMENT #1 TO TMI TRUST COMPANY CUSTODIAL SERVICES AGREEMENT AN AMENDMENT TO THE CUSTODIAL SERVICES AGREEMENT MADE BY AND BETWEEN THE BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM ("TRUSTEES") AND TMI TRUST COMPANY — PREVIOUSLY SALEM TRUST COMPANY ("CUSTODIAN"). WHEREAS, Trustees and Custodian entered into that certain Custodial Services Agreement, dated 14th day of December 2010; WHEREAS, due to statute modifications, industry and administrative changes, and to ensure continued protection of Trustees, items listed below are for Custodian to additionally adhere to; WHEREAS, Trustees and Custodian desire to amend the Custodial Services Agreement as set forth herein. NOW, THEREFORE, in consideration of the promises, representations, warranties, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows: SECTION 1. Consent. The Board of Trustees of The City of Sebastian hereby consents to the modification of that certain Custodial Services Agreement, dated 141h day of December 2010, to require the following: Cyber Liability Insurance in the amount of $5,000,000 shall be obtained and maintained for the duration of the Agreement, in addition to the Insurance required by the Custodial Services Agreement. The Custodian agrees to notify the Trustees, in writing, in the event of any material change in its policy within ten (10) days following any such material change. A material change shall include, but not be limited to, a change in the insurance carrier, coverage amounts, covered risks or the termination, cancellation or discontinuance of coverage in whole or in part. It is the Custodian's responsibility to ensure that the Trustees are provided a current Insurance Certificate at all times. 2. Additional Insured: All liability insurance policies shall name and endorse the following as additional insured(s): the Board of Trustees of the City of Sebastian and its members, officers, employees and agents. 3. Pension Trust Attorney: Any notices sent to the Trustees should also be provided to the legal counsel: Klausner, Kaufman, Jensen & Levinson 7080 N.W. 4th Street Plantation, FL 33317 954-917-1202 bsjteam@robertdklausner.com 4. Consultation: The Custodian shall attend one (1) Board meeting a year, upon request, and consult with the Trustees. 5. The Custodian shall make best efforts to assist the Board in ADA compliance, if required by the City or other governmental entity. 7D,0., Is 6. Public Records: In accordance with the provisions of Chapter 119.0701(2), Florida Statutes: (1) IF THE CUSTODIAN HAS QUESTIONS REGARDING THE APPLICATION OF CHAPTER 119, FLORIDA STATUTES, TO THE CUSTODIAN'S DUTY TO PROVIDE PUBLIC RECORDS RELATING TO THIS CONTRACT, CONTACT THE CUSTODIAN OF PUBLIC RECORDS AT: KEN KILLGORE, 772-388-8205, KKILLGORE@CITYOFSEBASTIAN.ORG, 1225 MAIN STREET, SEBASTIAN, FL 32958. (2) The Custodian must comply with public records laws, specifically to: a. Keep and maintain public records required by the Trustees to perform the service b. Upon request from the Trustees' Custodian of Public Records, provide the Trustees with a copy of the requested records or allow the records to be inspected or copied within a reasonable time at a cost that does not exceed the cost provided in Chapter 119, Florida Statutes, or as otherwise provided by law. c. Ensure that the public records that are exempt or confidential and exempt from public records disclosure requirements are not disclosed except as authorized by law for the duration of the term of the Agreement and following completion of the Agreement if the Custodian does not transfer the records to the Trustees. d. Upon completion of the Agreement, transfer, at no cost to the Trustees, all public records in possession of the Custodian or keep and maintain public records required by the Trustees to perform the service. If the Custodian transfers all public records to the Trustees upon completion of the Agreement, the Custodian shall destroy any duplicate public records that are exempt to confidential and exempt from public records disclosure requirements. If the Custodian keeps and maintains public records upon completion of the Agreement, the Custodian shall meet all applicable requirements for retaining public records. All records stored electronically must be provided to the Trustees, upon request from the Trustees' Custodian of Public Records, in a format that is compatible with the information technology systems of the Trustees. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 7 Dc., Ili SECTION 2. Consent. TMI TRUST COMPANY hereby consents and agrees that TMI TRUST COMPANY shall comply with and fulfill all the terms, requirements and conditions of the Agreement and associated Amendment(s) referenced herein. SECTION 3. Effective Date. This amendment shall take effect immediately upon its execution. IN WITNESS WHEREOF, the parties have signed on this day of 2019. FOSTER & FOSTER CONSULTING ACTUARUES, INC. Title: Name: CITY OF SEBASTIAN, FLORIDA ("Trustees") BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM By: Title: Chairperson Name: Jason Gillete ATTEST: By: Title: Administrative Assistant Name: Kenneth Kilgore 1,D,a.11 AMENDMENT #1 TO FOSTER & FOSTER CONSULTING ACTUARIES, INC. ACTUARIAL SERVICES AGREEMENT AN AMENDMENT TO THE ACTUARIAL SERVICES AGREEMENT MADE BY AND BETWEEN THE BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM ("TRUSTEES") AND FOSTER & FOSTER CONSULTING ACTUARIES, INC. ("ACTUARY"). WHEREAS, Trustees and Actuary entered into that certain Actuarial Services Agreement, dated 30th day of May 2012; WHEREAS, due to statute modifications, industry and administrative changes, and to ensure continued protection of Trustees, items listed below are for Actuary to additionally adhere to; WHEREAS, Trustees and Actuary desire to amend the Actuarial Services Agreement as set forth herein. NOW, THEREFORE, in consideration of the promises, representations, warranties, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows: SECTION 1. Consent. The Board of Trustees of The City of Sebastian hereby consents to the modification of that certain Actuarial Services Agreement, dated 301h day of May 2012, to require the following: Cyber Liability Insurance in the amount of $5,000,000 shall be obtained and maintained for the duration of the Agreement, in addition to the Insurance required by the Actuarial Services Agreement. The Actuary agrees to notify the Trustees, in writing, in the event of any material change in its policy within ten (10) days following any such material change. A material change shall include, but not be limited to, a change in the insurance carrier, coverage amounts, covered risks or the termination, cancellation or discontinuance of coverage in whole or in part. It is the Actuarys responsibility to ensure that the Trustees are provided a current Insurance Certificate at all times. 2. Additional Insured: All liability insurance policies shall name and endorse the following as additional insured(s): the Board of Trustees of the City of Sebastian and its members, officers, employees and agents. 3. Pension Trust Attorney: Any notices sent to the Trustees should also be provided to the legal counsel: Klausner, Kaufman, Jensen & Levinson 7080 N.W. 4th Street Plantation, FL 33317 954-917-1202 bsiteam@robertdklausner.com 4. Consultation: The Actuary shall attend one (1) Board meeting a year, upon request, and consult with the Trustees at no hourly charge for travel as provided in paragraph 4 of the Actuarial Services Agreement. 5. The Manager shall make best efforts to assist the Board in ADA compliance, if required by the City or other governmental entity. 1, D, a- 1,7 6. Public Records: In accordance with the provisions of Chapter 119.0701(2), Florida Statutes: (1) IF THE ACTUARY HAS QUESTIONS REGARDING THE APPLICATION OF CHAPTER 119, FLORIDA STATUTES, TO THE ACTUARY'S DUTY TO PROVIDE PUBLIC RECORDS RELATING TO THIS CONTRACT, CONTACT THE CUSTODIAN OF PUBLIC RECORDS AT: KEN KILLGORE, 772-388-8205, KKILLGORE@CITYOFSEBASTIAN.ORG, 1225 MAIN STREET, SEBASTIAN, FL 32958. (2) The Actuary must comply with public records laws, specifically to: a. Keep and maintain public records required by the Trustees to perform the service b. Upon request from the Trustees' Custodian of Public Records, provide the Trustees with a copy of the requested records or allow the records to be inspected or copied within a reasonable time at a cost that does not exceed the cost provided in Chapter 119, Florida Statutes, or as otherwise provided by law. c. Ensure that the public records that are exempt or confidential and exempt from public records disclosure requirements are not disclosed except as authorized by law for the duration of the term of the Agreement and following completion of the Agreement if the Actuary does not transfer the records to the Trustees. d. Upon completion of the Agreement, transfer, at no cost to the Trustees, all public records in possession of the Actuary or keep and maintain public records required by the Trustees to perform the service. If the Actuary transfers all public records to the Trustees upon completion of the Agreement, the Actuary shall destroy any duplicate public records that are exempt to confidential and exempt from public records disclosure requirements. If the Actuary keeps and maintains public records upon completion of the Agreement, the Actuary shall meet all applicable requirements for retaining public records. All records stored electronically must be provided to the Trustees, upon request from the Trustees' Custodian of Public Records, in a format that is compatible with the information technology systems of the Trustees. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 7D,a.li SECTION 2. Consent. FOSTER & FOSTER CONSULTING ACTUARIES, INC. hereby consents and agrees that FOSTER & FOSTER CONSULTING ACTUARIES, INC. shall comply with and fulfill all the terms, requirements and conditions of the Agreement and associated Amendment(s) referenced herein. SECTION 3. Effective Date. This amendment shall take effect immediately upon its execution. IN WITNESS WHEREOF, the parties have signed on this day of 2019. FOSTER & FOSTER CONSULTING ACTUARUES, INC. In Title: Name: CITY OF SEBASTIAN, FLORIDA ("Trustees" BOARD OF TRUSTEES OF THE CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM By: Title: Chairperson Name: Jason Gillete ATTEST: By: Title: Administrative Assistant Name: Kenneth Killgore -71), a, ao City of Sebastian Police Officers' Retirement System Large Capitalization Growth Manager Search Summary Information as of June 30, 2019 GIMA Status I I Focus I Focus I Focus Forecasted PIE (1 Year) 24.4 23.4 27.0 20.1 22.2 vs. Russell 1000 Growth Higher Higher Higher Lower Market Cap ($M) $316.9 Billion $296.7 Billion $316.9 Billion $266.4 Billion $308.3 Billion vs. Russell 1000 Growth Higher Lower Higher Lower Security Selection Bottom -up Bottom -up Bottom -up Bottom -up # of Securities 77 49 21 49 546 Foreign Securities Permitted Yes (10% Max) Yes (10% Max) Yes (20% Max) No Market Timer Cash < 10% Cash < 10% Cash < 10% Cash < 5% RISK (5 year - Monthly) Standard Deviation 12.88 12.81 12.50 10.74 13.03 PERFORMANCE (as of 12131/18) Eguity 1 year 7.54 14.21 20.18 16.91 11.56 3 year 16.16 18.39 21.76 15.31 18.07 5 year 10.33 14.98 18.01 12.07 13.39 10 year 14.48 17.10 17.97 15.52 16.28 OTHERIMPORTANT CONSIDERATIOf1S Year Firm Established 1987 2005 1979 1998 Commitment Well Paid Well Paid Owners/Well Paid Owners/Well Paid Total Assets $2.913 Firm/$186M Strategy $142.313 Firm/$37.5B Strategy $30.713 Firm/$27.66 Strategy $3.913 Firm/$1.913 Strategy Total Key Professionals 1 31 9 6 Pooled vs. Separate Separate Separate Separate Separate Performance calculated Gross of Fees The prices, quotes or statistics contained herein have been obtained from sources believed to be reliable, however, the accuracy cannot be guaranteed. Graystone Consulting INVESTMENT MANAGER SEARCH Prepared for: September 2019 Graystone Consulting Tampa Scott Owens, CFA®, CIMA° Andrew Mcllvaine Vice President Institutional Consultant Institutional Consulting Director 100 North Tampa Street, Suite 3000 Tampa, FL 33602 800-282-0655, ext. 2061 / 813-227-2061 Investment M ana pr pna�ysis prepared for: $ebostian Police Prep nding6j30/2019 ustbeaccomp mortanthe the period Ending al Consultant• It mentcontains is intended or For In, ocu uesta e consulting Such disclosafed at Your req GrMston titreferences. s with ducttha document has been Prep one-on-ppe presenea`h Investment Pry expenses. This un it in r inform p ones indicatednformatio on1Y In ° ertus) for and fees and a%pen g t is to be used t e.g• - prosp less dudes aN 0 This documen document d strategies t is not complete t for furthe inc le disclosure t objectives an this documen apPlicab out investmen This documenthe end of of Information about on1Y• decision. ctions at o ato n.1 P make an investmentatiori' se do not reflect the ded action inform ce Inform .ons at the end of this d cnmentfor which t°, and' erforman orm sufficient basis on based on gross a 10 at,ona se It is not „Important Disclosures ce. 'Performance Inform will differ. to the erforman 1 sis are calculated t results refer he impact °f fees on P this an a Y t Disclosure dividuaV account rmance and statis seethe the °Importan Its. Actual in about t future results. IMPORTANT No �emle tfee and exponses, does not g ntee uara formation. Past performance investment man g further in Graystone Consulting Trailing Periods Return Analysis Manager vs Benchmark: Return July 2008 -June 2019 (not annualized if less than 1 year) 25. 2 c 1 N � 1 1 quarter 1 year 3 years 5 years Manager vs Benchmark: Return July 2008 - June 2019 (not annualized if less than 1 year) 1 quarter 1 year Highland Capital Large Cap Growth (Gross) 3.83% 7.54% Clearbridge Large Cap Growth (MA) (Gross) 5.28% 1421% Polen Capital Polen Focus Grow (Gross) 6.18 % 20.18% Sawgrass Asset Diversified Lang (Gross) 4.58 % 16.91 % Russell 1000 Growth 4.64% 11.56% Graystone Consulting ■ Highland Capital: Large Cap Grauth (Gross) ■ Cleaibndge Large Cap Growth (MA) (Gross) ■ Palen Capital Poled FMLs Grow (Gross) ■ Sawgrass Asset: piverssified Larg (Gross) ■ Russell 1000 Growth 7 years 10 years 11 years 3 years 5 years 7 years 10 years 11 years 16.16% 10.33% 14.24% 14.48% 11.03 % 18.39% 14.98% 18.23% 17.10% 13.63 % 21.76% 18.01% 17.51% 17.97% 1470% 15.31 % 12.07% 14.82 % 15.52 % 11 29% 18.07% 13.39% 15.76% 16.28% 11.80% 4 stone Calendar -Year Return Analysis Consult ng Calendar Year Return As of June 2019 YTD 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Highland Capital Large Cap Growth (Gross) 19.16% -4.38% 28.96% 4.47% 2.98% 8.62% 36.76% 15.62% -5.25% 16.65 % 49.28% Clearbridge Large Cap Growth (MA) (Gross) 22.15% 0.25% 26.36% 8.37% 10.54% 14.59% 38.83% 21.26% 1 11% 10.49% 36.37 % Polen Capital Polen Focus Grow (Gross) 24.36% 8.98% 27 72% 1.75% 15.89% 17.60 % 23 77% 12.43% 9.04 % 15.65 % 39.71 % Sawgrass Asset Diversified Larg(Gross) 18.24% 3.45% 23.04% 6.54% 2.27% 13.91% 35.53% 14.28% 9.29% 1087% 2834% Russell 1000 Growth 21.49% -1.51% 30.21% 7.08% 5.67% 13.05% 33.48% 15.26% 2.64% 16.71% 37.21% 5 t� Graystone 3-Year Rolling Periods Return Analysis Consulting Manager vs Benchmark: Return - July 2008 - done 2019 (36-Month Moving Windows, Computed Monthly) 30- 25- lb 4b dio 4FA c + + + • j - • • �� • Highland Capital: Larr9e Cap Growth (Gross) 15-_ • ClearPoled ndge Capital Large Poled Focus m (GrGross) • Polen ass As etDin Focus Grow (Gross) • Sassell I Asset Diversifietl Larg (Gross) 10- •��~� Russell ta0o Growth -L 5_ 0- Jun 2011 Dec2013 Dec2015 Dec2017 Jun 2019 Manager vs Benchmark: Return July 2008 - June 2019 (36-Month Moving Windows, Computed Quarterly) Mar2019 Mar2018 Mar2017 Mar2016 Mar2015 Mar2014 Mar2013 Mar2012 Highland Capital Large Cap Growth (Gross) 14.54% 9.71% 7.93 % 9.94% 16.96% 11.83% 11.21 % 22.54% Clearbridge Large Cap Growth (MA) (Gross) 17.11 % 14,05% 13 12% 16.03% 20.35% 18.72% 12.98% 21.33 % Polen Capital: Polen Focus Grow (Gross) 18.30% 14.52% 14,60% 16.70% 13.42% 13.94% 13.51% 26.65% Sawgrass Asset: Diversified Lafg(Gross) 14.14% 9,70% 9.21% 13.33% 16.71% 17.21% 14.20% 22.53% Russell 1000 Growth 16.53% 12.90% 1127% 13.61% 16.34% 14.62% 13.06% 25,28% 6 lA J Risk/Return Analysis — 3 Years Risk / Return July 2016 - June 2019 (Single Computation) zo O Graystone Consulting • 20%- r w 15%- • • Highland Capital Large Cap Growth (Gross) • Clearbddge Large Cap Growth (MA) (Gross) N • Palen Capital: Polen Focus G. (Gross) 100/0 _ • Sawgrass Asset Diversified Larg (Gross) _ Mallet Benchmark Russell 1000 Growth 0 5 /o 0 Cash Equivalent Citigmup a -month T-ell =a Olt 0% 2% 4% 6% 8% 10% 12% 14% Standard Deviation Return & Risk Analysis July 2016 - June 2019: Summary Statistics Returnvs Excess Return Standard Beta vs Treynor Ratio Maximum Up Capture Down Capture Alpha Sortmo Sharpe Ratio R-Squaretl Market Deviation Market vs Dmwdown vs vs Market Ratio (MAR= Market Market Markel Markel a 00%) Highland Captal: Large Cap Gmwth(Gross) 16.16% -1.91% 13.48% 1.00 14.78 -16.27% 94.91% 103.26%g -1.63% 1.10 1.83 98.87% Clearbntlge Large Cap Growth(MA)(Gross) 18.39% 0.32% 13.25% 0.95 17.86 -13.73% 97.10% 92.72% 1.07% 1.29 2.24 93.17% Posen Capital Paten Focus Grow (Groan) 21.76% 3.69% 12.58% 0.91 22.51 -12.59% 103.60% 82.51 % 4.74% 1.62 3.05 93.40%p SawgrassAsset .DiwrsifiedLarg(Gross) 15.31% -2.75% 10.78% 0.77 18.26 -10.36% 82.55% 85.83% 1.44% 1.29 2.28 90.48% Russell 000 Growth 18.07% 0.00% 13.40% 1.00 16.71 -15.89% 100.00% 100.00%p 0.00% 1.25 2.14 100.00%p 7 Risk/Return Analysis - 5 Years Risk / Return July 2014 -: une 2019 (Single Computation) LJ%o- 18%- 16%- 14%- c 12%- to%- 8% 6% 4% 2%- oa = 0 7 E Graystone Consulting ♦ • Highland CapitalLarge Cap Growth (Gross) • • Clearbndge Large Cap Growth Cut (Gross) • Polan Capital. Palen Focus Grew (Gross) 0 Sawgrass Asset. Dw eified Larg (Gross) It Market Benchmark Russell 1000 Growth 0 Cash Equivalent QOgroup 3-month T-bill 0% 2% 4% 6% 8% 10% 12% 14! o Standard Deviation Return & Risk Analysis July 2014 - June 2019: Summary Statistics Return Excess Return Standard Beta Traynor Ratio Up Maximum Capture Down Capture Npha Sharpe w, Market Demation vs Market w Drawdown vs. vs. Markel Rate Market Market Market Highland Capital Large Cap Growth(Gross) 10.33% -3.06% 12.88% 0.97 9.81 -16.27% 90.88% 105.94% -2.31% 0.74 Clearbrldge Large Cap Growth (MA)(Gross) 14.98% 1.59% 12.81% 0.95 14.83 -13.73% 100.31% 90.38% 2.02% 1.10 Polen Capital Polen Feces Grew(Groes) 18.01% 4.62% 12.50% 0.91 18.80 -1259% 106.17% 79.75% 5.25% 1.37 Sawgrass Asset Dlversiflea Larg (Grose) 12.07% -1.32% 10.74% 0.79 14.28 -10.36% 83.63% 83.52% 1.43% 1.05 Russell IDOa Growth 13.39% 0.00% 13.03% 1.00 12.55 -15.89% 100.00% 100.00% 0.00% 0.96 Serino R_Squared Ratio (MAR= sa aro%) Market 1.25 95.77% 2.00 94.10% 2.80 90.73% 1.92 91.31% 1.72 100.00% Risk/Return Analysis — 7 Years Risk / Return July 2012 - June 2019 (Single Computation) 20% 18%- 16%- 14%- C 12%- 10%- N 8%- 6%- 4%- 2%- 011: 0 N. 2% 4% 6% Standard Deviation Return & Risk Analysis July 2012 - June 2019: Summary Statistics Excess Return Standard Beta Return vs. Market Deviation ei Market Highland Capital. Large Cap Growlh(Gross) 14.24% -1.52% 11.85% 0.97 Clearbddge Large Cap Grows(MA)(Grew) 18.23% 2.48% 11.98% 0.97 Polen Capital. Polen Focus Grow (Gross) 17.51 % 1.75% 11.71 % 0.92 Sawgrass Asset. Diverstf d Lem (Gross) 14.82% -0.93% 10.01 % 0.80 Russell 1000 Growth 15.76% 0.00% 11.89%q 1.00 Graystone Consulting • Highland Capital Large Cap Growth (Gross) • Clearbndge Large Cap Growth (MA) (Gross) • Poled Capital Peen Focus Grow )Gross) • Sawgrass Asset Diversified Lang (Gross) Market Benchmark: Russell 1000 Growth 0 Cash Equivalent Ciligroup 3montb T-bill 8% 10% 12% Treyner Ratio Maprnurn Up Capture Down Capture Sharpe Sodino Ratio R-Squared � VS Market Dnawtlown vs Market vs. Market vaha Market Ratio (M/+R= 0 Wl Market 14.08 -16.27% 94.00% 100.63% -0.82% 1.15 1.99 93.94% 18.11 -13.73% 105.16% 90.81% 2.62% 1.47 2.75 92.95% 18.44 -12.59% 98.73% 84.54% 2.81% 1.44 2.96 86.67% 17.70 -10.36% 86.38% 81.80% 2.04% 1.42 2.69 90.80% 15.14 -15.89% 100.00% 100.00°% 0.00% 1.27 2.30 100.00% Graystone Risk/Return Analysis -10 Years Consulting Risk / Return July 2009 - June 2019 (Single Computation) 20% 18-A- 16%- �• 12% • Highland Captal, Large Cap Growth (Gross) C • Clearbntlge Laye Cap Growth (MA) (Grass) r 10°A N •Poles Capital: Poles Focus Grow (Gross) 8%- • Sawgress Asset: Duersified Larg (Gross) 6oA_4 Market Benchmark. Russell lBW Growth 4°A- Cash Equivalent. d Cikgroup 3,month T-0wll 2%- 0^l - 0% 2% 4% 6% 8% 10°A 12% 14% Standard Deviation Return & Risk Analysis July 2009 - June 2019: Summary Statistics Euess Return Standard sera Treynor Ratio Mawmum Up Capture Down Capture Alpha Sodded R-Squared ed Sharpe Ratio ReturnMarks[ Vs Deviationse Market vs. Dian wdow vs. vs Vs Market Redo (MAR= Ma w Market Market Markel aoms) Highland Capital. Large Cap Growth (Gross) 14.48% -1.8 % 14.18% 1.03 13.65 -22.54% 99.11 % 109.51 % -1.87% 0.99 1.70 93.52% Clearbndge Large Cap Growth (MA) (Gross) 17.10% 0.82% 13.62% 0.99 16.82 -15.83% 100.99% 96.52% 0.93% 1.22 2.23 94.11 % Poled Capital Polar Focus Grow (Gross) 17.97% 1.69% 13.11% 0.92 1911 -12.59% 95.47% 81.96% 2.79% 1.34 2.68 87.32% Sawgrass Asset. Diversified Larg(Gross) 15.52% -0.76% 10.98% 0.79 18.96 -11.34% 84.28% 78.41% 2.38% 1.37 2.59 93.48% Russell i000Growth 16.28% 0.00% 13.36% 1.00 15.82 -15.89% 100.00% 100.00% 0.00% 1.18 2.13 100.00% 10 V) Risk/Return Analysis —11 Years Risk / Return July 2008 - June 2019 (Single Computation) 16%- 14%- 12%- 10%- C J m 8%: 4%- 2% Olt -0 0% 2% 4% 6% 8% 10% Standard Deviation Return & Risk Analysis July 2008 -June 2019: Summary Statistics Return 6 ss Return vi. Standard Beta vs. Market Deflation Market Highland CapitalLarge Cap Growth(Gross) 11.03% -0.77% 16.04% 1.00 Clearbndge Large Cap Growth (MA)(Gross) 13.63%g 1.83% 15.57%p 0.97 Polen Capital Polen Focus Grow(Gross) 14.70% 2.89% 14.39% 0.87 Sawgrass Asset Diversified Lang (Gross) 11.29% -0.51 % 12.97% 0.81 Russell IWO Growth 11.80%p 0.00% 15.54% 1.00 J 12% 14% 16% Graystone Consulting • Highland Capital Large Cap Growth (Gross) • Clearbndge Large Cap Growth (MA) (Gross) • Poled Capital Polen Focus Grew (Gross) Sawgrass Asset. Diversified Lang (Gross) Market Benchmark Russell IWO Growth e Cash Equivalent. Citigroup 3mono T-tiill Torpor Ratio Up Mepmuln Capture Down Capture Alpha Sha rpe vs Market Drdwcown vs. Market vs. Market Market Rar do 10.57 -36.02%p 100.73% 104.29%p -0.59%q 0.66 13.52 -37.31 % 102.15% 94.06% 2.00% 0.84 16.36 -30.93%p 94.20% 79.40% 4.10% 0.99 13.28 -36.47% 82.91%g 81.86% 1.50% 0.83 11.31 -40.41 % 100.00%p 100.00%g 0.00% 0.73 Bodine Ratio R-Squared Ratio (MAR= s aodi Market 1.05 93.33% 1.37 94.21 % 1.69 87.95% 1.30 94.98% 1.14 100.00% 11 Style Analysis Manager Style July 2008 - June 2019 (36-Month Moving Windows, Computed Monthly) Large Russell 1000 Value Russell 1000 Growth 4 1— • q%oy W. 0- 1 Russell2000 Value Russell2000 Growth Small I Va ue 1 0 Growt i Graystone Consulting 0 Highland Capital_ Large Cap Growth (Gross) • Clearbridge Large Cap Growth (MA) (Gross) 0 Polen Capital'. Polen Focus Grow (Gross) 0 Sawgrass Asset- Diversified Lang (Gross) ♦ Russell 1000 Growth ❑ Russell Generic Corners W Graystone Consulting e- Summary of Opinion • Global Investment Analysis (GIMA) has a favorable view of the long -tenured, experienced investment team, which includes Peter Bourbeau and Margaret Vitrano. Mr. Bourbeau has served as co -portfolio manager for the strategy since 2003 and Ms. Vitrano since 2012; they joined the firm in 1991 and 1997, respectively. • GIMA finds the investment approach flexible as the team seeks different types of growth stocks, which they categorize as Cyclical Growth, Stable Growth, and Select Growth. This balanced approach has helped the strategy perform well in multiple market environments. • As a result of their investment process and portfolio construction approach, the products have generated attractive excess and risk -adjusted (alpha) performance across multiple market environments over the tenure of the current co -portfolio managers. BILL BRIDGE Vice President Bill. Bridge@ms.com +1 212 296-1177 STRATEGY DETAILS Investment Style: US Large Cap Growth Sub -Style: Traditional Growth Benchmark: Russell 1000 Growth GIMA Status: Focus List Product Type: SMA & Mutual Fund Ticker Symbol: SBLYX (TRAK FS, UMA) Strategy Description ClearBridge Large Cap Growth seeks to invest in companies with consistent growth of capital and lower volatility, and attempts to outperform over a full market cycle. This report is only to be used in connection with investment advisory programs and not brokerage accounts. Before investing, consider the fund's investment objectives, risks, charges and expenses. Contact your Financial Advisor for a prospectus containing this and other information about the fund. Read it carefully before investing More information regarding the fees, expenses and performance (but not including the Morgan Stanley Wealth Management program fee) is available at the website noted above. Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker -dealer in the United States. This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Past performance is not necessarily a guide to future performance. This Manager Analysis Report does not constitute investment advice and the provision of this report itself does not create an investment advisory relationship between you and Morgan Stanley Wealth Management. This is not a "research report" as defined by FINRA Rule 2241 and was not prepared by the Research Departments of Morgan Stanley Smith Barney LLC or its affiliates. INVESTMENT PRODUCTS: NOT FDIC INSURED*NO BANK GUARANTEE* MAY LOSE VALUE © 2019 Morgan Stanley Smith Barney LLC. Member SIPC. Morgan Stanley WEALTH MANAGEMENT Strategy Snapshot INVESTMENT BUSINESS CAPABILITIES EVALUATION Above Average Average GLOBAL INVESTMENT MANAGER ANALYSIS / FEBRUARY 12. 2019 PORTFOLIO INVESTMENT CONSTRUCTION HIGH ADVERSE RESOURCES CAPABILITIES ACTIVE ALPHA Above Average Above Average Yes See Strategy Snapshot description at the end of this report. Strategy Attributes Positive Attributes • GIMA considers the two co -portfolio managers experienced and tenured investment professionals. • In addition to the two co -portfolio managers, the strategy is supported by ClearBridge's centralized fundamental research team that GIMA considers to be experienced and well- resourced. • The research team consists of approximately 13 research analysts organized as sector specialists and averaging approximately 16 years of investment experience. Points to Consider • GIMA considers this strategy to have a more Traditional to Conservative Growth tilt, given its bias toward higher -quality stocks with larger market capitalizations, and a growth -at -a - reasonable price framework. • The team utilizes valuation as part of their investment process seeking to identify stock risks and potential downside, prior to making an investment. Valuation criteria include free cash flow yield, P/E, EV/Sales, and PEG ratio. • The team may also pay a premium for companies with what they believe to exhibit sustainable growth characteristics and attractive returns on invested capital (ROIC). • Historically, the portfolio has had an overweight to Health Care and Financials. Underweights included Consumer Staples and Industrials. • Low turnover of less than 20%. Areas of Concern • The two co -portfolio managers are in separate locations, as Peter Bourbeau relocated to Nashville, TN. from New York in late 2013, and Ms. Vitrano remains in New York. Performance Expectations • The portfolio is structured in a way that seeks to provide diversification across different types of growth stocks (Cyclical Growth, Stable Growth and Select Growth), with Stable Growth the largest allocation. • This diversified structure has helped the strategy generally perform well in multiple market environments, including SHORT—TERM LONG-TERM PERFORMANCE PERFORMANCE ANALYSIS I ANALYSIS (5 3 YRS) I (> 3 YRS) In -Line In -Line periods favoring value (2016) as well as growth (2013 and 2015). Close to half of the strategy's sector exposure is in Information Technology and Health Care, therefore results may be impacted by the performance of these two sectors. Please refer to important information, disclosures and qualifications at the end of this material Morgan Stanley WEALTH MANAGEMENT Investment Capabilities Overview Portfolio Management Team & Decision -Making • The strategy is managed by co -portfolio managers Peter Bourbeau and Margaret Vitrano. Mr. Bourbeau has been with the strategy since 2003, while Ms. Vitrano assumed co - portfolio management responsibilities in 2012. • Scott Glasser joined as co -manager of the strategy in October 2009 and left the team in early 2013 after a six-month transition of his responsibilities to Mr. Bourbeau and Ms. Vitrano. • The portfolio managers are supported by ClearBridge's fundamental equity research team, which supports all strategies across the firm. • Mr. Bourbeau and Ms. Vitrano make all final purchase and sell decisions. Investment Process & Portfolio Construction • The strategy seeks long-term growth of capital utilizing a fundamental bottom -up investment process within a growth - at -a -reasonable price (GARP) framework. • The process begins with an investable universe of companies with market capitalizations similar to their benchmark, the Russell 1000 Growth Index. • Fundamental and business model analysis seeks to identify companies with competitive advantages that have the potential to sustain a high growth rate and maintain margins. The team focuses primarily on profitability (revenue mix, margins, pricing, competition), leverage (management quality, distribution strategy), and management execution (financial strategy, capital allocation). This analysis enables the team to identify and define the key investment drivers: a two-year estimated EPS forecast, estimated growth rate forecast, and peak margin assumptions. • The next step of the investment process is valuation. The team believes market -based multiples and discounted cash flow approaches are related by the same value determinants: growth rate, reinvestment rate, and discount rate (risk). ClearBridge utilizes relative valuation frameworks that are typically sector specific and market driven. Further, growth rates are determined by returns on capital, reinvestment rates, and competitive advantage. • At this point in the investment process, the team generates a "Best Ideas" list from which the PMs either construct the portfolio or put the company on a "watch" list for further consideration or elimination. • In terms of portfolio construction, a multi -tiered approach capitalizes on the team's highest -conviction ideas through active weighting. GLOBAL INVESTMENT MANAGER ANALYSIS / FEBRUARY 12, 2019 Another aspect of their portfolio construction process is that they seek diversification across different types of growth stocks which they categorize as Cyclical Growth, Stable Growth, and Select Growth, with Stable Growth having the larger number of positions. Portfolio managers monitor and manage risk by controlling sector, industry and security exposures on an absolute and relative basis. Track Record Reliability • GIMA views the track record reliability as moderate given the portfolio management turnover since 2009 along with process modifications. • The track record prior to the retirement of former co -portfolio manager, Alan Blake in 4Q09 is considered less representative of the current strategy. • The current co -PM structure, which includes Mr. Bourbeau and Ms. Vitrano, has been in place since early 2013. Please refer to important information, disclosures and qualifications at the end of this material. 1,9W Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS I FEBRUARY 12, 2019 Portfolio Traits Ownership And Parent Company EQUITY NAME OF OWNER PERCENT OWNED Range of Holdings 40-50 Legg Mason 100% Maximum Position Size +/- 5% active weight Econ Sector Constraints +/- 50% of the Russell PUBLICLY TRADED TICKER SYMBOL 1000 Growth Index Yes LM Tracking Error Target No target Typical Annual Turnover <20% Source: ClearBridge Invests in ADRs Yes, limited to 10% Invests in ETFs No Assets Under Management ($ Millions) Invests in Derivatives No Invests in IPOs No YEAR FIRM STRATEGY Liquidity Constraints None 3Q18 $147,926 $32,434 Maximum Cash 5% 2017 $137,000 $24,400 Typical Cash Position 0-5% 2016 $112,395 $15,737 Est. Product Capacity $50b 2015 $107,487 $10,423 Source: ClearBridge 2014 $114,570 $8.811 2013 $90,000 $7,329 2012 $57,168 $5,417 Source: ClearBridge Legal/Compliance • In November 2012, the New York Regional Office of the SEC commenced a routine examination of LMPPG. On April 30, 2013, LMPPG received a letter from the SEC. According to the firm, no deficiencies cited were material in nature. 4 Please refer to important information, disclosures and qualifications at the end of this material. 78,17 Morgan Stanley WEALTH MANAGEMENT Definitions GLOBAL INVESTMENT MANAGER ANALYSIS/FEBRUARY 12,2019 Sub -Styles: Subjective classifications designed to assist with manager selection and performance evaluation based on GIMA's understanding of a manager's long-term investment philosophy and portfolio structuring biases and techniques. At points in time managers may display attributes of other sub -style classifications, and these classifications may change due to changes in the capital markets, evolution of performance benchmarks, industry trends, or changes involving a manager's personnel or process. Traditional Growth: Generally invest in a mix of lower and higher growth companies, portfolios and performance likely to be more highly correlated to the respective growth benchmark than peers and may demonstrate the flexibility at times to take on characteristics of more Conservative or Aggressive growth peers. Russell 1000 Growth - Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price -to -book ratios and higher forecasted growth values. Strategy Snapshot Investment Capabilities — Represents GIMA's opinion of the investment manager's investment capabilities with respect to the product under evaluation. This section covers the areas of quality of investment professionals, portfolio management, research and process execution. As these areas are not mutually exclusive, but rather Interrelated, it is important to render a cohesive opinion on these areas of an organization. This section has three potential opinion outcomes: Above Average, Average and Needs Improvement. Business Evaluation - Represents GIMA's opinion of the state of the investment managers overall business condition. This area reviews items such as ownership structure, trends in assets under management, legal and/or compliance issues, investment professional incentives and trading policies. This area has three potential opinion outcomes: Above Average, Average and Needs Improvement. Investment Resources — Represents several important components dedicated to a strategy, such as the level and quality of investment personnel (portfolio managers, analysts, etc.), analytical tools and methodologies, and the parent fiirm's overall commitment to support of the strategy. This area has three potential opinion outcomes: Above Average, Average and Needs Improvement. Portfolio Construction Capabilities — Represents an assessment of a managers ability to utilize its investment resources and select securities in order to effectively build portfolios. This includes elements of diversification, risk management, sell discipline, position sizing, and turnover management. This area has three potential opinion outcomes: Above Average, Average and Needs Improvement. Hieh Adverse Active Aloha* — High Adverse Active Alpha rankings are generally defined as falling into the top two quintiles (40%). Separately Managed Account and mutual fund rankings could differ. In some cases where the separately managed account product and mutual fund are substantially similar, the separately managed account rating may be applied to the mutual fund and vice versa. This area has three potential opinion outcomes: Yes, No, and NA. Short -Term & Lona Term Performance Analysis — The opinion for performance is broken into two components: 1) Short -Term Performance Analysis represents GIMAs opinion of the investment product's performance typically over a time period of the trailing three years or less, 2) Long - Term Performance Analysis represents GIMA's opinion of the investment product's performance typically over a time period of more than the trailing three years. These areas have three potential opinion outcomes: Above Expectations, In -Line and Below Expectations. GIMA defines the Adverse Active Alpha (AAA) ranking model as follows: Global Investment Manager Analysis provides comprehensive manager analysis for Morgan Stanley's investment advisory platforms on a wide range of investment products, including separately managed accounts, mutual funds and exchange -traded funds in the equity, fixed income and alternative investment categories. Adverse Active Alpha (AAA) Adverse refers to the demonstrated ability to outperform in a variety of market environments and when conditions were difficult for active manager relative performance. "Difficult" periods were times when active management did not perform well relative to the index, as opposed to down market periods. At various times, active management has experienced difficult relative performance periods in up, down, and flat markets. We developed a set of factors to help discern which periods were more difficult for active managers that we utilize to identify managers that were able to overcome these headwinds and outperformed in the face of adversity. Active refers to managers with portfolios that looked different from the index and had moderate to low tracking error. For all products, r2 is used to measure the degree of differentiation from the benchmark in conjunction with tracking error. The ranking seeks to find managers that were active, but not taking outsized bets, and that had some degree of style consistency. The combination of r2 and low tracking error is fairly uncommon among active managers, but we believe these traits may point toward managers with strong stock picking skills. Alpha refers to the demonstrated ability to add value relative to an index and/or peers. Back tests indicate that highly ranked managers as a group outperformed the index and style peer group over subsequent periods and relative to active share alone. By combining the "adverse" component with the "active" component, we believe we increase the odds of finding some of the most proficient stock pickers. Important Considerations Regarding the Adverse Active Alpha and Value Score ranking models: In our view, the Adverse Active Alpha and Value Score manager rankings are an important part of evaluating managers for consideration. However, we do recognize that these ranking models cannot, in and of themselves, tell us which managers' strategies to invest in or when to buy or sell the strategies. While highly ranked managers historically performed well as a group in our analysis, past performance is not a guarantee of future results for any manager or strategy. Index returns assume reinvestment of dividends and, unlike fund or strategy returns, do not reflect any fees or expenses. Indices are unmanaged and not available for direct investment. GIMA strives to evaluate other material and forward looking factors as part of the overall manager evaluation process. Factors such as but not limited to manager turnover and changes to investment process can partially or fully negate a positive Adverse Active Alpha or Value Score ranking. Additionally, highly ranked managers can have differing risk profiles that might not be suitable for all investors. For more information on the ranking models, please see Adverse Active Alphas"' 2.0: Scoring Active Managers According to Potential Alpha. This Special Report is available by request from your Financial Advisor or Private Wealth Advisor. Please refer to important information, disclosures and qualifications at the end of this material. -ISA Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS / FEBRUARY 12. 2019 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. 'High Adverse Active Alpha is generally defined as falling into the top two quintiles (40%) within the ranking model. Separately Managed Account and mutual fund rankings could differ. In some cases where the separately managed account product and mutual fund are substantially similar, the separately managed account rating may be applied to the mutual fund and vice versa. Glossary of Terms Active Share — is a measure of the percentage of stock holdings In a managers portfolio that differ from the benchmark index; Active Share is calculated by taking the sum of the absolute value of the differences of the weight of each holding in the manager's portfolio versus the weight of each holding in the benchmark index and dividing by two. ADRs — American Depositary Receipts are U.S. dollar denominated forms of equity ownership in non-U.S. companies. These shares are issued against the local market shares held in the home market. ADRs are typically listed on U.S. exchanges such as NYSE, AMEX and NASDAQ. Alpha — measures the difference between a portfolio's actual returns and its expected performance, given its level of risk as measured by Beta. A positive Alpha figure indicates the portfolio has performed better than its Beta would predict. A negative Alpha indicates the portfolio's underperformance given the expectations established by the Beta. The accuracy of the Alpha is therefore dependent on the accuracy of the Beta. Alpha is often viewed as a measurement of the value added or subtracted by a portfolio's manager. Beta — measures a portfolio's volatility relative to its benchmark. A portfolio with a Beta higher than 1 0 has historically been more volatile than the benchmark, while a portfolio with a Beta lower than 1.0 has been less volatile. The accuracy of the Beta is dependent on R-Squared. Correlation — measures the degree to which the returns of two securities or indices are related. The range of possible correlations is between 1.0 and -1.0. Positive correlation indicates that returns tend to move in the same direction. Negative correlation indicates that returns tend to move in opposite directions. Zero correlation implies that there is no relationship between the securities' returns. EPS Growth — Forecast — a measure of one year earnings (cash flow or dividends) per share growth from the prior fiscal year (FYO) to the current fiscal year (FYI) using analyst consensus forecasts. Growth is expressed as a percent. The FYI EPS (earnings per share) growth rate for the portfolio is a weighted average of the forecasts for the individual stocks in the portfolio. EPS Growth — 5 Year Historical — The weighted average annualized earnings per share growth for a portfolio over the past five years Excess Return — represents the average quarterly total return of the portfolio relative to its benchmark. A portfolio with a positive Excess Return has on average outperformed its benchmark on a quarterly basis. This statistic is obtained by subtracting the benchmark return from the portfolio's return. Historical EPS Growth - calculated by regressing over time the quarterly earnings per share for the past 20 quarters to determine the share's historical growth rate In earnings. The quarterly historical growth rate for each share is then annualized and the Historical EPS Growth shown in this report is the weighted average of these results. Information Ratio — represents the Excess Return divided by the Tracking Error. It provides a measure of the historical consistency of the portfolio's outperformance or underperformance relative to its benchmark. A higher, positive Information Ratio suggests that the portfolio's excess returns may have been the result of making measured or moderate bets against the relevant benchmark's risk exposures. Long Term EPS Growth Rate — analyst consensus of expected annual increase in operating earnings per share over the company's next full business cycle - usually three to five years. The Long Term EPS Growth Rate for the portfolio is a weighted average of the results for the individual stocks in the portfolio. PIE - Forecast 12-Mo. — The price/earnings ratio for the stock based on the most recent closing price divided by the annual mean expected earnings for the current fiscal year (FYI EPS forecast). P/E for the portfolio is a weighted average of the results for the individual stocks in the portfolio. PIE — Trailing 12-Mo. — the current price of a stock divided by the most recent 12 months trailing earnings per share P/E for the portfolio is a weighted average of the results for the individual stocks in the portfolio. Price -to -Book — price per share divided by book value per share. Price -to -Book for the portfolio Is a weighted average of the results for the individual stocks in the portfolio. RSquared (R2) — represents the percentage of the volatility of returns that is attributable to movements of the benchmark. It is a measure of "co - movement" between portfolio returns and benchmark returns. The closer the portfolio's R2 is to 100%, the more closely the portfolio correlates to, or follows, the benchmark. Generally, highly diversified portfolios have higher R2 percentages. Return on Equity (ROE) — is another profitability ratio which gauges return on investment by measuring how effectually stockholder money is being employed by the company. ROE is calculated by dividing a company's net income by average total equity. Unlike Return on Assets (ROA), ROE considers the degree to which a company uses leveraging, as interest expense paid to creditors is generally deducted from earnings to arrive at net income. ROE for the portfolio is a weighted average of the results for the individual stocks in the portfolio. Sharpe Ratio — measures a portfolio's rate of return based on the risk it assumed and is often referred to as its risk -adjusted performance Using Standard Deviation and returns in excess of the returns of T-bills, it determines reward per unit of risk. This measurement can help determine if the portfolio is reaching its goal of increasing returns while managing risk. Standard Deviation — quantifies the volatility associated with a portfolio's returns. The statistic measures the variation in returns around the mean return. Unlike Beta, which measures volatility relative to the aggregate market, Standard Deviation measures the absolute volatility of a portfolio's return. Tracking Error — represents the Standard Deviation of the Excess Retum. This provides a historical measure of the variability of the portfolio's returns relative to its benchmark. A portfolio with a low Tracking Error would have quarterly Excess Returns that have exhibited very low volatility. Please refer to important information, disclosures and qualifications at the end of this material. /, 9. .1-4) Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS I FEBRUARY 12, 2019 Important Disclosures Report for Use Only in Investment Advisor Prgr�rams This report is only to be used in Morgan Stanley Wealth Management investment advisory programs and not in connection with brokerage accounts. The Global Investment Mane ar Analysis (GIMA) services Only Aoolv to Certain Investment Adviso�v Pro{�ams GIMA evaluates certain investment products for the purposes of some — but not all — of Morgan Stanley Smith Barney LLC's 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. Focus List Aooroved List and Tactical Oonortunities List: Watch Policv GIMA uses 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. GIMA may, but is not obligated to, note the Watch status in this report with a "W" or "Watch" next to the "Status" on the cover page. 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 "GIMA at a Glance." No Obligation to Urkoate Morgan Stanley Wealth Management has no obligation to update you when any information or opinion in this report changes Strate9v Mav Be Available as a Separately Mane ad 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. Consider Your Own Investment Needs This report is not intended to be a client -specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities (includes securities of Morgan Stanley, and/or their affiliates if shown in this report). Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. Perfomfance and Other Portfolio Information General Past performance does not guarantee future results. There is no guarantee that this investment strategy will work under all market conditions. As a result of recent market activity, current performance may vary from the performance referenced in this report. For mutual funds, the investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost To obtain performance information, current to the most recent month -end, please contact the fund directly at the website set out on the cover page of this report Benchmark index Depending on the composition of your account and your investment objectives, any indices shown in this report may not be an appropriate measure for comparison purposes and are therefore presented for illustration only. Indices are unmanaged. They do not reflect any management, custody, transaction or other expenses, and generally assume reinvestment of dividends, accrued income and capital gains. Past performance of indices does not guarantee future results. You cannot invest directly in an index Performance of indices may be more or less volatile than any investment product. The risk of loss in value of a specific investment (such as with an investment manager or in a fund) is not the same as the risk of loss in a broad market index. Therefore, the historical returns of an index will not be the same as the historical returns of a particular investment product. Please refer to important information, disclosures and qualifications at the end of this material. -7,6,aI Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS / FEBRUARY 12, 2019 Other data Portfolio analysis may be based on information on less than all of the securities held in the portfolio. For equity portfolios, the analysis typically reflects securities representing at least 95% of portfolio assets. This may differ for other strategies, including those in the fixed income and specialty asset classes, due to availability of portfolio information. Other data in this report is accurate as of the date this report was prepared unless stated otherwise. Data in this report may be calculated by the investment manager, Morgan Stanley Wealth Management or a third party service provider, and may be based on a representative account or a composite of accounts. Securities holdings Holdings are subject to change daily, so any securities discussed in this report may or may not be included in your portfolio if you invest in this investment product. Your portfolio may also include other securities in addition to or instead of any securities discussed in this report. Do not assume that any holdings mentioned were, or will be, profitable. Sources of Data 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. Asset Class and Other Risks Investing in stocks, mutual funds and exchange -traded funds ("ETFs') entails the risks of market volatility. The value of all types of investments may increase or decrease over varying time periods. Besides the general risk of holding securities that may decline in value, closed -end funds may have additional risks related to declining market prices relative to net asset values (NAVs), active manager underperformance, and potential leverage. Some funds also invest in foreign securities, which may involve currency risk. Value and growth investing also carry risks. Value investing involves the risk that the market may not recognize that securities are undervalued and they may not appreciate as anticipated. 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. International securities may carry additional risks, Including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes and differences in financial and accounting standards. International investing may not be for everyone These risks may be magnified in emerging markets. Small- and mid- capitalization companies may lack the financial resources, product diversification and competitive strengths of larger companies. The securities of small capitalization companies may not trade as readily as, and be subject to higher volatility than, those of larger, more established companies. No Tax Advice 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. If any investments in this report are described as "tax free", the income from these investments may be subject to state and local taxes and (if applicable) the federal Alternative Minimum Tax. Realized capital gains on these investments may be subject to federal, state and local capital gains lax. Conflicts of Interest GIMA's 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 relafionship 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 GIMA's 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. © 2019 Morgan Stanley Smith Barney LLC. Member SIPC. Please refer to important information, disclosures and qualifications at the end of this material. 76,aa Summary of Opinion P Global Investment Manager Analysis (GIMA) has a favorable opinion of Polen's investment capabilities based on the portfolio managers' depth of knowledge of the strategy's holdings and the transparent, repeatable investment process that has been consistently implemented over time. • The portfolio is concentrated, with 15 to 25 stocks. Polen seeks companies with durable earnings profiles, sustainable competitive advantage, strong financials, and proven management teams. Portfolio turnover is low (25%), which translates to a four to five-year investment time horizon. GIMA views positively the significant broadening of employee ownership over the years since founder David Polen passed away in 2012. In January 2019, employee ownership increased further, from 60% to 71 %. GIMA also notes that nearly all of the firm's assets are in the Focus Growth strategy, which represents potential business risk should the strategy underperform for an extended period. • The SMA soft -closed to new investors in June 2017. The mutual fund remains open. JOSE CRUZ Vice President Jose.VCmz@ms.com +1 212 296-1593 STRATEGY DETAILS Investment Style: US Large Cap Growth Sub -Style: Traditional Growth Benchmark: Russell 1000 Growth Index GIMA Status: Focus List Product Type: Separately Managed Account & Mutual Fund Ticker Symbol: POLIX (LIMA) www.polencapital.com Strategy Description Polen seeks higher quality, large cap growth companies, that have above average sustainable growth potential, and are trading at a discount to their estimated intrinsic valuation. This report is only to be used in connection with investment advisory programs and not brokerage accounts. Before investing, consider the fund's investment objectives, risks, charges and expenses. Contact your Financial Advisor for a prospectus containing this and other information about the fund. Read it carefully before investing. More information regarding the fees, expenses and performance (but not including the Morgan Stanley Wealth Management program fee) is available at the website noted above. Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker -dealer in the United States. This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy Past performance is not necessarily a guide to future performance. This Manager Analysis Report does not constitute investment advice and the provision of this report itself does not create an investment advisory relationship between you and Morgan Stanley Wealth Management. This is not a "research report" as defined by FINRA Rule 2241 and was not prepared by the Research Departments of Morgan Stanley Smith Barney LLC or its affiliates. INVESTMENT PRODUCTS: NOT FDIC INSURED*NO BANK GUARANTEE* MAY LOSE VALUE © 2019 Morgan Stanley Smith Barney LLC. Member SIPC. L 3 Morgan Stanley WEALTH MANAGEMENT Strategy Snapshot INVESTMENT BUSINESS CAPABILITIES EVALUATION Above Average Average GLOBAL INVESTMENT MANAGER ANALYSIS / JULY S, 2019 SHORT-TERM LONG-TERM PORTFOLIO PERFORMANCE PERFORMANCE INVESTMENT CONSTRUCTION HIGH ADVERSE ANALYSIS ANALYSIS RESOURCES CAPABILITIES ACTIVE ALPHA (5 3 YRS) (> 3 YRS) Average Average Yes Above In -Line Expectations See Strategy Snapshot description at the end of this report. Strategy Attributes Positive Attributes • Polen adopts a disciplined and repeatable investment process, which has been consistently implemented over time. • The portfolio managers have demonstrated in-depth knowledge of the portfolio holdings, and a strong ability to articulate their investment thesis. • Employee ownership has increased significantly over the years since founder David Polen passed away in 2012, when the Polen family had previously owned 90% of the firm. • The firm has expanded its research resources, hiring several analysts to the investment team. Points to Consider • The SMA soft -closed to new investors in June 2017. The mutual fund remains open. • The portfolio is highly concentrated, with 15 to 25 holdings. • Polen has a long-term investment horizon. Thus, annual portfolio turnover is low, at approximately 25%. • Sector weightings can vary materially from the benchmark. The portfolio has historically been significantly overweight to technology, with little or zero exposure to energy, materials, real estate, and utilities. • While Polen seeks a discount to intrinsic value, valuation metrics are of secondary importance as Polen is willing to pay a premium for quality growth companies that can compound returns over time. Thus, the portfolio's price -to - earnings and price -to -book ratios have tended to be higher than the benchmark. • Former Focus Growth co -PM Damon Ficklin relinquished his day-to-day responsibilities on the strategy, effective July 2019. Mr. Ficklin remains at the firm and continues as lead PM on Polen's Global Growth strategy. CIO and Focus Growth lead PM Dan Davidowitz remains in his role. • iM Global Partner, which owns a 20% passive stake in Polen, invests in asset managers based in the US, Europe and Asia. Areas of Concern • Nearly all of the firm's assets are in the Focus Growth strategy, which represents potential product concentration risk. Should the strategy underperform for an extended period, the firm could lose a substantial amount of assets. Performance Expectations • Due to the portfolio's tilt towards higher quality (as reflected in S&P Quality rating), the strategy may struggle during speculative, "risk -on" market environments, typically led by lower quality, highly -levered companies. • Conversely, the portfolio's high quality and lower beta profile should help towards capturing less of the downside in market declines. Historically, volatility has been in line with the benchmark. • The portfolio's concentration, coupled with its significant sector over/underweights, has translated into elevated tracking error historically. • The significant overweight to technology sector may be a headwind when the sector is broadly out of favor. • The portfolio may at times fall between a Traditional Growth and a Conservative Growth sub -style, due to its lower beta and downside capture. GIMA assigns the strategy to Traditional Growth, driven in part by its elevated tracking error and its concentration. Please refer to important information, disclosures and qualifications at the end of this material. -/, Ig; ay Morgan Stanley WEALTH MANAGEMENT Investment Capabilities Overview Portfolio Management Team & Decision -Making • Lead portfolio Dan Davidowitz and co -portfolio manager Brandon Ladoff manage the Polen Focus Growth strategy. • Mr. Davidowitz, who is also the firm's Chief Investment Officer, joined the firm in 2005 as an analyst. He became a co -PM in 2007 and was named CIO in 2012, when founder David Polen passed away. Prior to Polen, Mr. Davidowitz was an analyst at Osprey Partners. • Brandon Ladoff, who also Director of Research, joined the firm in 2013 and was named a co -PM for Focus Growth in 2018. Previously, Mr. Ladoff was a corporate lawyer at Willkie Farr & Gallagher. • Investment decisions are made jointly by the PMs, though Mr. Davidowitz has final authority. • The PMs are supported by eight analysts, who act as generalists. Investment Process & Portfolio Construction • Polen seeks higher quality, large cap growth companies, that have above average sustainable growth potential, and are trading at a discount to Puler's estimated intrinsic valuation. • Such companies should have a sustainable competitive advantage, strong financials, proven management teams, and be of high quality. Polen defines high quality companies as those that have lower levels of volatility and risk because of more stable earnings, above -average cash flows, and low levels of debt. • The initial universe is the Russell 1000 Index. The universe is screened weekly and the quantitative screens include: o Market cap greater than $4 billion o Better than average earnings growth expectations o High levels of free cash flow o Retum-on-Equity (ROE) consistently above 20% o Stable to improving profit margins o Strong balance sheet • The screens tend to result in 100-150 companies, which are assigned to the investment team members for further analysis. • Fundamental analysis includes a review of SEC filings, management presentations, conference calls, and assessment of sell -side reports. • The investment team evaluates companies on the strength and sustainability of their competitive advantages. • An initial position is typically 2-3% of the portfolio's market value. An average position is typically 5-6% and the maximum position size is generally 10%. GLOBAL INVESTMENT MANAGER ANALYSIS /JULY 8, 2019 • Polen will review a holding for a sell if there is a potential threat to the company's competitive advantage, if there is degradation in earnings growth, or if valuation becomes unattractive. Track Record Reliability • Mr. Davidowitz has been a portfolio manager on the strategy since 2007, and the lead PM since 2012. Damon Ficklin was co -PM from 2012 to 2019, and Brandon Ladoff was named a co -PM in 2018. Due to the continuity of Mr. Davidowitz, track record reliability is on the high end. • Founder David Polen managed the strategy from 1989 to 2012. Please refer to important information, disclosures and qualifications at the end of this material. Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS/JULY 8, 2019 Portfolio Traits Ownership And Parent Company EQUITY NAME OF OWNER PERCENT OWNED Range of Holdings 15-25 Polen Capital Employees 71% Maximum Position Size 10% Econ Sector Constraints 50% maximum Polen Family Trusts 9% Tracking Error Target No target iM Global Partner 20% Typical Annual Turnover Approximately 25% PUBLICLY TRADED TICKER SYMBOL Invests in ADRs 15%maximum Invests in ETFs No No N/A Invests in Derivatives No Source Polen Capital Invests in IPOs No Liquidity Constraints None Assets Under Management ($ Millions) Maximum Cash 10% Typical Cash Position Less than 5% YEAR FIRM STRATEGY Est. Product Capacity None stated (SMA is soft- 1019 $25,574 $25,044 closed) 2018 $20,591 $20,230 Source: Polen Capital 2017 $17,422 $17,242 2016 $11,251 $11,209 2015 $7,451 $7,439 2014 $5,328 $5,325 2013 $5,014 $4,989 Source. Polen Capital Legal/Compliance • The last routine SEC exam occurred in May 2007. According. to Polen, the firm took corrective actions to address noted deficiencies or areas for improvement. • There were no criminal, civil or regulatory items noted on the most recent ADV. a Please refer to important information, disclosures and qualifications at the end of this material. -/ is, a(a Morgan Stanley WEALTH MANAGEMENT GLOBAL I NVESTM ENT MANAGER ANALYSIS /JULY 6, 2019 Definitions Sub -Styles: Subjective classifications designed to assist with manager selection and performance evaluation based on GIMA's understanding of a managers long-term investment philosophy and portfolio structuring biases and techniques. At points in time managers may display attributes of other sub -style classifications, and these classifications may change due to changes in the capital markets, evolution of performance benchmarks, industry trends, or changes involving a manager's personnel or process. Traditional Growth: Generally invest in a mix of lower and higher growth companies, portfolios and performance likely to be more highly correlated to the respective growth benchmark than peers and may demonstrate the flexibility at times to take on characteristics of more Conservative or Aggressive growth peers. Russell 1000 Growth - Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price -to -book ratios and higher forecasted growth values. Strategy Snapshot Investment Capabilities — Represents GIMA's opinion of the investment manager's investment capabilities with respect to the product under evaluation. This section covers the areas of quality of investment professionals, portfolio management, research and process execution. As these areas are not mutually exclusive, but rather interrelated, it is important to render a cohesive opinion on these areas of an organization. This section has three potential opinion outcomes: Above Average, Average and Needs Improvement. Business Evaluation - Represents GIMA's opinion of the state of the investment managers overall business condition. This area reviews items such as ownership structure, trends in assets under management, legal and/or compliance issues, investment professional incentives and trading policies. This area has three potential opinion outcomes: Above Average, Average and Needs Improvement. Investment Resources — Represents several important components dedicated to a strategy, such as the level and quality of investment personnel (portfolio managers, analysts, etc ), analytical tools and methodologies, and the parent firm's overall commitment to support of the strategy. This area has three potential opinion outcomes: Above Average, Average and Needs Improvement. Portfolio Construction Caoabllities — Represents an assessment of a managers ability to utilize its investment resources and select securities in order to effectively build portfolios. This includes elements of diversification, risk management, sell discipline, position sizing, and turnover management. This area has three potential opinion outcomes: Above Average, Average and Needs Improvement. Hiah Adverse Active Aloha* — High Adverse Active Alpha rankings are generally defined as falling into the top two quintiles (40%). Separately Managed Account and mutual fund rankings could differ. In some cases where the separately managed account product and mutual fund are substantially similar, the separately managed account rating may be applied to the mutual fund and vice versa. This area has three potential opinion outcomes: Yes, No, and NA. Short -Term & Lon@Term Performance Analysis — The opinion for performance is broken into two components: 1) Short -Term Performance Analysis represents GIMA's opinion of the investment product's performance typically over a time period of the trailing three years or less, 2) Long - Term Performance Analysis represents GIMA's opinion of the investment product's performance typically over a time period of more than the trailing three years. These areas have three potential opinion outcomes. Above Expectations, In -Line and Below Expectations GIMA defines the Adverse Active Alpha (AAA) ranking model as follows: Global Investment Manager Analysis provides comprehensive manager analysis for Morgan Stanley's investment advisory platforms on a wide range of investment products, including separately managed accounts, mutual funds and exchange -traded funds in the equity, fixed income and alternative investment categories. Adverse Active Alpha (AAA) Adverse refers to the demonstrated ability to outperform in a variety of market environments and when conditions were difficult for active manager relative performance. "Difficult" periods were times when active management did not perform well relative to the index, as opposed to down market periods. At various times, active management has experienced difficult relative performance periods in up, down, and flat markets. We developed a set of factors to help discern which periods were more difficult for active managers that we utilize to identify managers that were able to overcome these headwinds and outperformed in the face of adversity. Active refers to managers with portfolios that looked different from the index and had moderate to low tracking error. For all products, r2 is used to measure the degree of differentiation from the benchmark in conjunction with tracking error. The ranking seeks to find managers that were active, but not taking outsized bets, and that had some degree of style consistency The combination of 2 and low tracking error is fairly uncommon among active managers, but we believe these traits may point toward managers with strong stock picking skills. Alpha refers to the demonstrated ability to add value relative to an index and/or peers. Back tests indicate that highly ranked managers as a group outperformed the index and style peer group over subsequent periods and relative to active share alone. By combining the "adverse" component with the "active" component, we believe we increase the odds of finding some of the most proficient stock pickers. Important Considerations Regarding the Adverse Active Alpha and Value Score ranking models: In our view, the Adverse Active Alpha and Value Score manager rankings are an important part of evaluating managers for consideration However, we do recognize that these ranking models cannot, in and of themselves, tell us which managers' strategies to invest in or when to buy or sell the strategies. While highly ranked managers historically performed well as a group in our analysis, past performance is not a guarantee of future results for any manager or strategy. Index returns assume reinvestment of dividends and, unlike fund or strategy returns, do not reflect any fees or expenses. Indices are unmanaged and not available for direct investment. GIMA strives to evaluate other material and forward looking factors as part of the overall manager evaluation process Factors such as but not limited to manager turnover and changes to investment process can partially or fully negate a positive Adverse Active Alpha or Value Score ranking. Additionally, highly ranked managers can have differing risk profiles that might not be suitable for all investors. For more information on the ranking models, please see Adverse Active Alphasm 2.0: Scoring Active Managers According to Potential Alpha. This Special Report is available by request 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 Please refer to important information, disclosures and qualifications at the end of this material. Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGERANALYBS I JULY 8,2819 'High Adverse Active Alpha is generally defined as falling into the top two quintiles (40%) within the ranking model. Separately Managed Account and mutual fund rankings could differ. In some cases where the separately managed account product and mutual fund are substantially similar, the separately managed account rating may be applied to the mutual fund and vice versa. Glossary of Terms Active Share — is a measure of the percentage of stock holdings in a manager's portfolio that differ from the benchmark index; Active Share is calculated by taking the sum of the absolute value of the differences of the weight of each holding in the manager's portfolio versus the weight of each holding in the benchmark Index and dividing by two. ADRs — American Depositary Receipts are U.S. dollar denominated forms of equity ownership in non-U.S. companies. These shares are issued against the local market shares held in the home market. ADRs are typically listed on U.S. exchanges such as NYSE, AMEX and NASDAQ. Alpha — measures the difference between a portfolio's actual returns and Its expected performance, given its level of risk as measured by Beta. A positive Alpha figure indicates the portfolio has performed better than its Beta would predict. A negative Alpha indicates the portfolio's underperformance given the expectations established by the Beta. The accuracy of the Alpha is therefore dependent on the accuracy of the Bela. Alpha is often viewed as a measurement of the value added or subtracted by a portfolio's manager. Beta — measures a portfolio's volatility relative to its benchmark. A portfolio with a Beta higher than 1.0 has historically been more volatile than the benchmark, while a portfolio with a Beta lower than 1.0 has been less volatile. The accuracy of the Beta is dependent on R-Squared. Correlation — measures the degree to which the returns of two securities or indices are related. The range of possible correlations is between 1.0 and -1.0. Positive correlation indicates that returns tend to move in the same direction. Negative correlation indicates that returns tend to move in opposite directions. Zero correlation implies that there is no relationship between the securities' returns. EPS Growth — Forecast — a measure of one year earnings (cash flow or dividends) per share growth from the prior fiscal year (FYO) to the current fiscal year (FYI) using analyst consensus forecasts. Growth is expressed as a percent. The FYI EPS (earnings per share) growth rate for the portfolio is a weighted average of the forecasts for the individual stocks in the portfolio. EPS Growth — 5 Year Historical — The weighted average annualized earnings per share growth for a portfolio over the past five years. Excess Return — represents the average quarterly total return of the portfolio relative to its benchmark. A portfolio with a positive Excess Return has on average outperformed its benchmark on a quarterly basis. This statistic is obtained by subtracting the benchmark return from the portfolio's return Historical EPS Growth - calculated by regressing over time the quarterly earnings per share for the past 20 quarters to determine the share's historical growth rate in earnings. The quarterly historical growth rate for each share is then annualized and the Historical EPS Growth shown in this report is the weighted average of these results. Information Ratio — represents the Excess Return divided by the Tracking Error. It provides a measure of the historical consistency of the portfolio's outperformance or underperformance relative to its benchmark. A higher, positive Information Ratio suggests that the portfolio's excess returns may have been the result of making measured or moderate bets against the relevant benchmark's risk exposures. Long Term EPS Growth Rate — analyst consensus of expected annual increase in operating earnings per share over the company's next full business cycle - usually three to five years The Long Term EPS Growth Rate for the portfolio is a weighted average of the results for the individual stocks in the portfolio. PIE - Forecast 12-Mo. — The price/earnings ratio for the stock based on the most recent closing price divided by the annual mean expected earnings for the current fiscal year (FYI EPS forecast). PIE for the portfolio is a weighted average of the results for the individual stocks in the portfolio. PIE — Trailing 12-Mo. — the current price of a stock divided by the most recent 12 months trailing earnings per share. PIE for the portfolio is a weighted average of the results for the individual stocks in the portfolio. Price -to -Book — price per share divided by book value per share. Price -to -Book for the portfolio is a weighted average of the results for the individual stocks in the portfolio. R-Squared (R) — represents the percentage of the volatility of returns that is attributable to movements of the benchmark. It is a measure of "co - movement" between portfolio returns and benchmark returns. The closer the portfolio's R' is to 100%, the more closely the portfolio correlates to, or follows, the benchmark. Generally, highly diversified portfolios have higher R' percentages. Return on Equity (ROE) — is another profitability ratio which gauges return on investment by measuring how effectually stockholder money is being employed by the company. ROE is calculated by dividing a company's net income by average total equity. Unlike Return on Assets (ROA), ROE considers the degree to which a company uses leveraging, as interest expense paid to creditors is generally deducted from earnings to arrive at net income. ROE for the portfolio is a weighted average of the results for the Individual stocks in the portfolio. Sharpe Ratio — measures a portfolio's rate of return based on the risk it assumed and is often referred to as its risk -adjusted performance. Using Standard Deviation and returns in excess of the returns of T-bills, it determines reward per unit of risk. This measurement can help determine if the portfolio is reaching its goal of increasing returns while managing risk. Standard Deviation — quantifies the volatility associated with a portfolio's returns The statistic measures the variation in returns around the mean return. Unlike Beta, which measures volatility relative to the aggregate market, Standard Deviation measures the absolute volatility of a portfolio's return. Tracking Error — represents the Standard Deviation of the Excess Return. This provides a historical measure of the variability of the portfolio's returns relative to its benchmark. A portfolio with a low Tracking Error would have quarterly Excess Returns that have exhibited very low volatility. Please refer to important information, disclosures and qualifications at the end of this material. '-i ly Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS /JULY 8, 2019 Important Disclosures Report for Use OnIY in Investment Advisory ProJJrams This report is only to be used in Morgan Stanley Wealth Management investment advisory programs and not in connection with brokerage accounts. The Global Investment Man or Analgis tGIMAI services Only Aoolv to Certain Investment Advisorvv Proprams GIMA evaluates certain investment products for the purposes of some — but not all — of Morgan Stanley Smith Barney LLC's 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. Focus List. Aouroved List and Tactical O000rtunities 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. GIMA may, but is not obligated to, note the Watch status in this report with a W" or "Watch" next to the "Status" on the cover page. 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 Disdosure Document for Morgan Stanley Wealth Management. Your Financial Advisor or Private Wealth Advisor can also provide upon request a copy of a publication entitled "GIMA at a Glance' No Obll(�atlon to Uridate Morgan Stanley Wealth Management has no obligation to update you when any information or opinion in this report changes. StratecY Mav Be Available as a Seraratelv, 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. Consider Your Own Investment Needs This report is not intended to be a client -specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities (includes securities of Morgan Stanley, and/or their affiliates if shown in this report). Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. �erforrrtance and Other Portfolio Information enenll Past performance does not guarantee future results. There is no guarantee that this investment strategy will work under all market conditions. As a result of recent market activity, current performance may vary from the performance referenced in this report. For mutual funds, the investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. To obtain performance information, current to the most recent month -end, please contact the fund directly at the website set out on the cover page of this report Benchmark index Depending on the composition of your account and your investment objectives, any indices shown in this report may not be an appropriate measure for comparison purposes and are therefore presented for illustration only. Indices are unmanaged. They do not reflect any management, custody, transaction or other expenses, and generally assume reinvestment of dividends, accrued income and capital gains. Past performance of indices does not guarantee future results You cannot invest directly in an index. Performance of indices may be more or less volatile than any investment product The risk of loss in value of a specific investment (such as with an investment manager or in a fund) is not the same as the risk of loss in a broad market index. Therefore, the historical returns of an index will not be the same as the historical returns of a particular investment product. Please refer to important information, disclosures and qualifications at the end of this material. I.S.a9 Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS/JULY 8,2019 Other data Portfolio analysis may be based on information on less than all of the securities held in the portfolio. For equity portfolios, the analysis typically reflects securities representing at least 95% of portfolio assets. This may differ for other strategies, including those in the fixed income and specialty asset classes, due to availability of portfolio information. Other data in this report is accurate as of the date this report was prepared unless stated otherwise. Data in this report may be calculated by the investment manager, Morgan Stanley Wealth Management or a third party service provider, and may be based on a representative account or a composite of accounts. Securities holdings Holdings are subject to change daily, so any securities discussed in this report may or may not be included in your portfolio if you invest in this investment product. Your portfolio may also include other securities In addition to or instead of any securities discussed in this report. Do not assume that any holdings mentioned were, or will be, profitable. Sources of Data 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. Asset Class and Other Risks Investing in stocks, mutual funds and exchange -traded funds ("ETFs'9 entails the risks of market volatility. The value of all types of investments may increase or decrease over varying time periods. Besides the general risk of holding securities that may decline in value, closed -end funds may have additional risks related to declining market prices relative to net asset values (NAVs), active manager underperformance, and potential leverage. Some funds also invest in foreign securities, which may involve currency risk. Value and growth investing also carry risks. Value Investing involves the risk that the market may not recognize that securities are undervalued and they may not appreciate as anticipated. 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. International securities may carry additional risks, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes and differences in financial and accounting standards. International investing may not be for everyone. These risks may be magnified in emerging markets. Small. and mid. capitalization companies may lack the financial resources, product diversification and competitive strengths of larger companies. The securities of small capitalization companies may not trade as readily as, and be subject to higher volatility than, those of larger, more established companies. No Tax Advice 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. If any investments in this report are described as "tax free", the income from these investments may be subject to state and local taxes and (if applicable) the federal Alternative Minimum Tax. Realized capital gains on these investments may be subject to federal, state and local capital gains tax. Conflicts of Interest GIMA's 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 GIMA's 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. © 2019 Morgan Stanley Smith Barney LLC. Member SIPC a Please refer to important information, disclosures and qualifications at the end of this material. Summary Opinion KEISNA BARROW of Vice President • Sawgrass Asset Management (Sawgrass) is a 100% Keisha.Barrow@morganstantey.com employee -owned boutique asset management firm with a +1 212 296-9185 long history managing growth equities since its founding in STRATEGY DETAILS 1998. Investment Style: US Large Cap Growth • Global Investment Manager Analysis (GIMA) considers the Sub -Style: investment team, led by Martin LaPrade, experienced with Conservative Growth an average 25 years of investment experience, and long- Benchmark: tenured, as three of the six investment professionals on the Russell 1000 Growth Diversified Large Cap Growth Equity strategy have worked GIMA Status: together since the firm's inception in 1998. Focus List • Sawgrass' investment approach focuses on quality Product Type: Separately Managed Account companies with stable growth trading at attractive Ticker Symbol: valuations (e.g., growth at a reasonable price or GARP). N/A • As a result of the investment process, GIMA generally expects the strategy to exhibit a lower beta and lower Strategy Description downside capture, and conversely, lower upside capture The Sawgrass Diversified Large Cap relative to the benchmark over multiple rolling periods. Growth portfolio focuses on companies with above average appreciation potential through an investment process which identifies companies with more consistent growth profiles, higher earnings quality, and reasonable valuations. The process combines both quantitative models and bottom -up fundamental research. This report is only to be used in connection with investment advisory programs and not brokerage accounts Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker -dealer in the United States. This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Past performance is not necessarily a guide to future performance. This Manager Analysis Report does not constitute investment advice and the provision of this report itself does not create an investment advisory relationship between you and Morgan Stanley Wealth Management. This is not a "research report" as defined by FINRA Rule 2241 and was not prepared by the Research Departments of Morgan Stanley Smith Barney LLC or its affiliates. INVESTMENT PRODUCTS: NOT FDIC INSURED"NO BANK GUARANTEE' MAY LOSE VALUE © 2019 Morgan Stanley Smith Barney LLC. Member SIPC. 7g.31 Morgan Stanley WEALTH MANAGEMENT Strategy Snapshot PORTFOLIO INVESTMENT BUSINESS INVESTMENT CONSTRUCTION CAPABILITIES EVALUATION RESOURCES CAPABILITIES Above Average I Average I Above Average I Average See Strategy Snapshot description at the end of this report. Strategy Attributes Positive Attributes • Sawgrass has a long history of managing growth equity assets dating back to the firm's founding in 1998. The team implements the same investment approach across three strategies. • The firm is 100% employee owned, including the ownership of three portfolio managers. • The investment team is seasoned, with an average 25 years of investment experience, and long -tenured, as three of the six investment professionals on the Diversified Large Cap Growth Equity strategy have worked together since the fire's inception in 1998. Additionally, the team has had no investment professional turnover since its inception. Points to Consider • As a result of the portfolio's emphasis on companies with quality attributes, the strategy has historically exhibited lower beta and downside capture, as well as lower upside capture over multiple rolling periods. • Further, the strategy's investment approach results in a portfolio with valuation multiples (trailing P/E and 1-year forward estimated P/E) that have historically been in -line to below the benchmark, while quality (S&P Quality ratings) and weighted average market capitalization have historically been higher than or close to the benchmark. These portfolio characteristics are consistent with a Conservative Growth sub -style. The strategy has generally maintained overweights to the Consumer Staples and Health Care sectors and underweights to the Consumer Discretionary and Information Technology sectors. Areas of Concern • Dean McQuiddy, Director of Research, also serves as the firm's Chief Compliance Officer (CCO). GIMA considers the separation of investment functions and compliance roles as best practice. However, Sawgrass employs a third -party consulting firm for assistance with their compliance -related operations and also has a full-time employee dedicated to compliance operations, which helps mitigate this risk. GLOBAL INVESTMENT MANAGER ANALYSIS / MARCH 22, 2019 SHORT—TERM LONG-TERM PERFORMANCE PERFORMANCE HIGH ADVERSE ANALYSIS ANALYSIS ACTIVE ALPHA Is 3 YRS) I> 3 YRS) Yes I In -Line I In -Line • Although the strategy is managed as a team, the departures of the senior members, including lead portfolio manager, Martin LaPrade, may result in GIMA reconsidering its opinion of the strategy. Performance Expectations • With a lower risk profile (beta, standard deviation) relative to the Russell 1000 Growth, the strategy has historically performed well in weaker equity market environments (e.g., 2011) and generally underperformed in market environments favoring more aggressive growth stocks (e.g., 2017). • Given the historical underweights to the Information Technology and Consumer Discretionary sectors, strategy performance may be impacted when results in these sectors materially deviate from the benchmark. Please refer to important information, disclosures and qualifications at the end of this material. 7g, 3a- Morgan Stanley WEALTH MANAGEMENT Investment Capabilities Overview Portfolio Management Team & Decision -Making • The investment team is made up of six investment professionals: Martin LaPade, Marc Davis, Anthony Brooks, Dean McQuiddy, Rusty Creighton, and Patrick Riley. • Each member of the investment team has a specific role in the process; Patrick Riley (new idea generation from quantitative model), Marc Davis (fundamental review of new ideas), Rusty Creighton (portfolio construction and ongoing review of current holdings), Dean McQuiddy (macroeconomic critique of the portfolio) and Martin LaPrade (lead portfolio manager). • As lead portfolio manager, Mr. LaPrade has final decision making for all purchases and sales. Investment Process & Portfolio Construction • The firm's philosophy centers on companies with attractive valuations, and consistent/stable growth, which may compound value over time, particularly during periods of weakness. • The investment process combines both quantitative and fundamental criteria to identify stocks. • The team uses a proprietary factor model to sift through the investable universe, which includes stocks in the Russell 1000 Index with a market capitalization greater than $2 billion. • The model consists of 24 factors grouped into six groups: profitability, sales earnings and margin stability, earnings quality, price volatility, business valuation, and equity valuation. • The 24 factors have different weights in each sector. For example, price volatility has a higher weight for Information Technology than Utilities. • The fundamental analysis seeks to confirm that the quantitative attributes are repeatable. • The team reviews the overall quantitative scoring (e.g. understanding where the stock scored well and didn't score well), financial statement analysis (e.g. looking for earnings and margin stability), evaluation of management's growth outlook, review of analyst research and estimate revisions, and a risk/reward analysis. • Approximately 70% of the research is generated in-house through proprietary models, and the remaining 30% is from external resources, primarily through sell -side analysts. The sell -side research is used to better understand the Street's view of a particular company rather than rely on the underlying rating of the security. GLOBAL INVESTMENT MANAGER ANALYSIS I MARCH U. 2019 Important fundamental criteria to purchase a stock include: o Strong record of demonstrated earnings growth o Positive change in projected future earnings o Reasonable earnings growth valuations o Strong balance sheet and financial statement data o Viability of continued earnings growth The sell discipline is driven by deteriorating quantitative rankings, significant changes to company fundamentals, changes to portfolio's risk profile and a more attractive security identified. Track Record Reliability • GIMA believes the track record reliability to be high, as there have been no investment professional turnover on the equity team since its inception in 1998, and GIMA believes the investment process has been consistently applied over time. Please refer to important information, disclosures and qualifications at the end of this material. -7, +8 , __T-3 Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS / MARCH 22, 2019 Portfolio Traits Ownership And Parent Company EQUITY NAME OF OWNER PERCENT OWNED Range of Holdings 40-60 Employees 100% Maximum Position Size 10% Econ Sector Constraints +1- 10%of Index PUBLICLYTRADED TICKER SYMBOL Econ Industry Constraints +/- 5% of Index No N/A Tracking Error Target 3-6% Source. Sawgrass Typical Annual Turnover 50% Invests in ADRs No Invests in ETFs No Assets Under Management ($ Millions) Invests in Derivatives No YEAR FIRM STRATEGY Invests in IPOs No 2018 $3,522 $1,752 Liquidity Constraints >$40mm average 30-day trading volume 2017 $3,852 $1,908 Maximum Cash <5% 2016 $3,800 $1,907 Typical Cash Position <5% 2015 $3,758 $1,912 Est. Product Capacity $10B 2014 $3,810 $1,870 Source. Sawgrass 2013 $3,297 $1,412 2012 $2,809 $1,052 Source: Sawgrass Legal/Compliance • The SEC completed a review of Sawgrass in March 2017 and according to the firm, no material deficiencies were identified at that time. • According to Sawgrass, there have not been any regulatory issues or litigation since the firm's inception in 1998. 4 Please refer to important information, disclosures and qualifications at the end of this material. -16,3i Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS/MARCH 22,2019 Definitions Russell 1000 Growth -Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price -to -book ratios and higher forecasted growth values Sub -Styles: Subjective classifications designed to assist with investment product selection and performance evaluation based on GIMA's understanding of the long term investment philosophy and portfolio structuring biases and techniques. At points in time investment products may display attributes of other sub -style classifications, and these classifications may change due to changes in the capital markets, evolution of performance benchmarks, industry trends, or changes involving a managers personnel or process. Conservative Growth: Growth managers that generally follow a more valuation -sensitive approach and focus on more established companies that frequently have longer earnings histories and greater visibility and perceived sustainability in earnings. Portfolios may display lower valuation levels and less exposure to the highest growth and more speculative companies and performance may display less volatility than the benchmark and peers. Strategy Snapshot Investment Cppabtlities — Represents GIMA's opinion of the investment managers investment capabilities with respect to the product under evaluation. This section covers the areas of quality of investment professionals, portfolio management, research and process execution. As these areas are not mutually exclusive, but rather interrelated, it is important to render a cohesive opinion on these areas of an organization. This section has three potential opinion outcomes: Above Average, Average and Needs Improvement. Business Evaluation - Represents GIMA's opinion of the state of the investment managers overall business condition. This area reviews items such as ownership structure, trends in assets under management, legal and/or compliance issues, investment professional incentives and trading policies. This area has three potential opinion outcomes: Above Average, Average and Needs Improvement. Investment Resources — Represents several important components dedicated to a strategy, such as the level and quality of investment personnel (portfolio managers, analysts, etc.), analytical tools and methodologies, and the parent firm's overall commitment to support of the strategy. This area has three potential opinion outcomes Above Average, Average and Needs Improvement. Portfolio Construction Cacahilitles — Represents an assessment of a manager's ability to utilize its investment resources and select securities in order to effectively build portfolios. This includes elements of diversification, risk management, sell discipline, position sizing, and turnover management. This area has three potential opinion outcomes. Above Average, Average and Needs Improvement. Hiah Adverse Active Alyha* — High Adverse Active Alpha rankings are generally defined as falling into the top two quintiles (40%). Separately Managed Account and mutual fund rankings could differ. In some cases where the separately managed account product and mutual fund are substantially similar, the separately managed account rating may be applied to the mutual fund and vice versa. This area has three potential opinion outcomes: Yes, No, and NA. Short -Term & LonrpTerm Performance Analysis — The opinion for performance is broken into two components: 1) Short -Term Performance Analysis represents GIMA's opinion of the investment product's performance typically over a time period of the trailing three years or less, 2) Long - Term Performance Analysis represents GIMA's opinion of the investment product's performance typically over a time period of more than the trailing three years. These areas have three potential opinion outcomes: Above Expectations, In -Line and Below Expectations. GIMA defines the Adverse Active Alpha (AAA) ranking model as follows: Global Investment Manager Analysis provides comprehensive manager analysis for Morgan Stanley's investment advisory platforms on a wide range of investment products, including separately managed accounts, mutual funds and exchange -traded funds in the equity, fixed income and alternative investment categories Adverse Active Alpha (AAA) Adverse refers to the demonstrated ability to outperform in a variety of market environments and when conditions were difficult for active manager relative performance. "Difficult" periods were times when active management did not perform well relative to the index, as opposed to down market periods. At various times, active management has experienced difficult relative performance periods in up, down, and flat markets. We developed a set of factors to help discern which periods were more difficult for active managers that we utilize to identify managers that were able to overcome these headwinds and outperformed in the face of adversity. Active refers to managers with portfolios that looked different from the index and had moderate to low tracking error. For all products, r2 is used to measure the degree of differentiation from the benchmark in conjunction with tracking error. The ranking seeks to find managers that were active, but not taking outsized bets, and that had some degree of style consistency. The combination of 2 and low tracking error is fairly uncommon among active managers, but we believe these traits may point toward managers with strong stock picking skills Alpha refers to the demonstrated ability to add value relative to an index and/or peers. Back tests indicate that highly ranked managers as a group outperformed the index and style peer group over subsequent periods and relative to active share alone. By combining the "adverse" component with the "active" component, we believe we increase the odds of finding some of the most proficient stock pickers Important Considerations Regarding the Adverse Active Alpha and Value Score ranking models: In our view, the Adverse Active Alpha and Value Score manager rankings are an important part of evaluating managers for consideration However, we do recognize that these ranking models cannot, in and of themselves, tell us which managers' strategies to invest in or when to buy or sell the strategies While highly ranked managers historically performed well as a group in our analysis, past performance is not a guarantee of future results for any manager or strategy. Index returns assume reinvestment of dividends and, unlike fund or strategy returns, do not reflect any fees or expenses. Indices are unmanaged and not available for direct investment. GIMA strives to evaluate other material and forward looking factors as part of the overall manager evaluation process. Factors such as but not limited to manager turnover and changes to investment process can partially or fully negate a positive Adverse Active Alpha or Value Score ranking. Additionally, highly ranked managers can have differing risk profiles that might not be suitable for all investors. For more information on the ranking models, please see Adverse Active Alphas"' 2.0. Scoring Active Managers According to Potential Alpha. This Special Report is available by request from your Financial Advisor or Private Wealth Advisor. Please refer to important information, disclosures and qualifications at the end of this material. 7¢,3S Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS I MARCH 22, 2019 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. 'High Adverse Active Alpha is generally defined as falling into the top two quintiles (40%) within the ranking model. Separately Managed Account and mutual fund rankings could differ. In some cases where the separately managed account product and mutual fund are substantially similar, the separately managed account rating may be applied to the mutual fund and vice versa. Glossary of Terms Active Share — is a measure of the percentage of stock holdings in a manager's portfolio that differ from the benchmark index; Active Share Is calculated by taking the sum of the absolute value of the differences of the weight of each holding In the manager's portfolio versus the weight of each holding in the benchmark index and dividing by two. ADRs — American Depositary Receipts are U.S. dollar denominated forms of equity ownership in non-U.S. companies. These shares are issued against the local market shares held in the home market. ADRs are typically listed on U.S. exchanges such as NYSE, AMEX and NASDAQ. Alpha — measures the difference between a portfolio's actual returns and its expected performance, given its level of risk as measured by Beta. A positive Alpha figure indicates the portfolio has performed better than its Beta would predict. A negative Alpha indicates the portfolio's underperformance given the expectations established by the Beta. The accuracy of the Alpha is therefore dependent on the accuracy of the Beta. Alpha is often viewed as a measurement of the value added or subtracted by a portfolio's manager. Beta — measures a portfolio's volatility relative to its benchmark. A portfolio with a Beta higher than 1.0 has historically been more volatile than the benchmark, while a portfolio with a Beta lower than 1.0 has been less volatile. The accuracy of the Beta is dependent on R-Squared. Correlation — measures the degree to which the returns of two securities or indices are related. The range of possible correlations is between 1.0 and -1.0. Positive correlation indicates that returns lend to move in the same direction. Negative correlation indicates that returns tend to move in opposite directions. Zero correlation implies that there is no relationship between the securities' returns. EPS Growth — Forecast — a measure of one year earnings (cash flow or dividends) per share growth from the prior fiscal year (FYO) to the current fiscal year (FY1) using analyst consensus forecasts. Growth is expressed as a percent. The FYI EPS (earnings per share) growth rate for the portfolio is a weighted average of the forecasts for the individual stocks in the portfolio. EPS Growth — 5 Year Historical — The weighted average annualized earnings per share growth for a portfolio over the past five years. Excess Return — represents the average quarterly total return of the portfolio relative to its benchmark. A portfolio with a positive Excess Return has on average outperformed its benchmark on a quarterly basis. This statistic is obtained by subtracting the benchmark return from the portfolio's return. Historical EPS Growth - calculated by regressing over time the quarterly earnings per share for the past 20 quarters to determine the share's historical growth rate in earnings. The quarterly historical growth rate for each share is then annualized and the Historical EPS Growth shown in this report is the weighted average of these results. Information Ratio — represents the Excess Return divided by the Tracking Error. It provides a measure of the historical consistency of the portfolio's oulperformance or underperformance relative to its benchmark. A higher, positive Information Ratio suggests that the portfolio's excess returns may have been the result of making measured or moderate bets against the relevant benchmark's risk exposures. Long Term EPS Growth Rate — analyst consensus of expected annual increase in operating earnings per share over the company's next full business cycle - usually three to five years. The Long Term EPS Growth Rate for the portfolio is a weighted average of the results for the individual stocks in the portfolio. P/E - Forecast 12-Mo. — The price/earnings ratio for the stock based on the most recent closing price divided by the annual mean expected earnings for the current fiscal year (FY1 EPS forecast). PIE for the portfolio is a weighted average of the results for the individual stocks in the portfolio. PIE — Trailing 12-Mo. — the current price of a stock divided by the most recent 12 months trailing earnings per share. P/E for the portfolio is a weighted average of the results for the individual stocks in the portfolio. Price -to -Book — price per share divided by book value per share. Price -to -Book for the portfolio is a weighted average of the results for the individual stocks in the portfolio. R-Squared (R) — represents the percentage of the volatility of returns that is attributable to movements of the benchmark. It is a measure of 'Co - movement" between portfolio returns and benchmark returns. The closer the portfolio's R2 is to 100%, the more closely the portfolio correlates to, or follows, the benchmark. Generally, highly diversified portfolios have higher R2 percentages. Return on Equity (ROE) — is another profitability ratio which gauges return on investment by measuring how effectually stockholder money is being employed by the company. ROE is calculated by dividing a company's net income by average total equity. Unlike Return on Assets (ROA), ROE considers the degree to which a company uses leveraging, as interest expense paid to creditors is generally deducted from earnings to arrive at net income. ROE for the portfolio is a weighted average of the results for the individual stocks in the portfolio. Sharpe Ratio — measures a portfolio's rate of return based on the risk it assumed and is often referred to as its risk -adjusted performance. Using Standard Deviation and returns In excess of the returns of T-bills, it determines reward per unit of risk. This measurement can help determine if the portfolio is reaching its goal of increasing returns while managing risk. Standard Deviation — quantifies the volatility associated with a portfolio's returns. The statistic measures the variation in returns around the mean return. Unlike Beta, which measures volatility relative to the aggregate market, Standard Deviation measures the absolute volatility of a portfolio's return. Tracking Error — represents the Standard Deviation of the Excess Return. This provides a historical measure of the variability of the portfolio's returns relative to its benchmark. A portfolio with a low Tracking Error would have quarterly Excess Returns that have exhibited very low volatility. Please refer to important information, disclosures and qualifications at the end of this material. 7 r3;3� Morgan Stanley WEALTH MANAGEMENT Important Disclosures GLOBAL INVESTMENT MANAGER ANALYSIS / MARCH 22, 2019 Report for Use OnIY In Investment Adviso�v Pro/�rams This report is only to be used in Morgan Stanley Wealth Management investment advisory programs and not in connection with brokerage accounts. The Global Investment Mansper Analysts [GIMAI services Only Aoolv to Certain Investment Advis I Pr4Rams GIMA evaluates certain investment products for the purposes of some — but not all — of Morgan Stanley Smith Barney LLC's 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. Focus List\Aooroved List and Tactical O000rtunities List: Watch Policv 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. GIMA may, but is not obligated to, note the Watch status in this report with a "W' or "Watch" next to the "Status" on the cover page. 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 "GIMA at a Glance." No Obligation to Urtdate Morgan Stanley Wealth Management has no obligation to update you when any information or opinion in this report changes. Strate{(v Mav Be Available as a Srarately Manaped 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. Consider Your Own Investment Needs This report is not intended to be a client -specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities (includes securities of Morgan Stanley, and/or their affiliates if shown in this report). Do not use this report as the sole basis for investment decisions. Do not select an asset Gass or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, dsk tolerance, liquidity needs and investment time horizon Perforrc(ance and Other Portfolio Information eners Past performance does not guarantee future results There is no guarantee that this investment strategy will work under all market conditions. As a result of recent market activity, current performance may vary from the performance referenced in this report. For mutual funds, the investment return and principal value of an investment will fluctuate so that an investors shares, when redeemed, may be worth more or less than their original cost. To obtain performance information, current to the most recent month -end, please contact the fund directly at the website set out on the cover page of this report. Benchmark index Depending on the composition of your account and your investment objectives, any indices shown in this report may not be an appropriate measure for comparison purposes and are therefore presented for illustration only. Indices are unmanaged. They do not reflect any management, custody, transaction or other expenses, and generally assume reinvestment of dividends, accrued income and capital gains. Past performance of indices does not guarantee future results. You cannot invest directly in an index. Performance of indices may be more or less volatile than any investment product. The risk of loss in value of a specific investment (such as with an investment manager or in a fund) is not the same as the risk of loss in a broad market index. Therefore, the historical returns of an index will not be the same as the historical returns of a particular investment product. Please refer to important information, disclosures and qualifications at the end of this material. 76,3% Morgan Stanley WEALTH MANAGEMENT GLOBAL INVESTMENT MANAGER ANALYSIS/MARCH 22.2019 Other data Portfolio analysis may be based on information on less than all of the securities held in the portfolio. For equity portfolios, the analysis typically reflects securities representing at least 95% of portfolio assets. This may differ for other strategies, including those in the fixed income and specialty asset classes, due to availability of portfolio information. Other data in this report is accurate as of the date this report was prepared unless slated otherwise. Data in this report may be calculated by the investment manager, Morgan Stanley Wealth Management or a third party service provider, and may be based on a representative account or a composite of accounts. Securities holdings Holdings are subject to change daily, so any securities discussed in this report may or may not be included in your portfolio if you invest in this investment product Your portfolio may also include other securities in addition to or instead of any securities discussed in this report. Do not assume that any holdings mentioned were, or will be, profitable. Sources of Data 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. Asset Class and Other Risks Investing in stocks, mutual funds and exchange -traded funds ("ETFs') entails the risks of market volatility. The value of all types of investments may increase or decrease over varying time periods. Besides the general risk of holding securities that may decline in value, closed -end funds may have additional risks related to declining market prices relative to net asset values (NAVs), active manager underperformance, and potential leverage. Some funds also invest in foreign securities, which may involve currency risk. Value and growth investing also carry risks. Value investing involves the risk that the market may not recognize that securities are undervalued and they may not appreciate as anticipated. 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 International securities may carry additional risks, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes and differences in financial and accounting standards. International investing may not be for everyone. These risks may be magnified in emerging markets. Small- and mid- capitalization companies may lack the financial resources, product diversification and competitive strengths of larger companies. The securities of small capitalization companies may not trade as readily as, and be subject to higher volatility than, those of larger, more established companies. No Tax Advice 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. If any investments in this report are described as "tax free", the income from these investments may be subject to state and local taxes and (if applicable) the federal Alternative Minimum Tax. Realized capital gains on these investments may be subject to federal, state and local capital gains tax. Conflicts of Interest GIMA's 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 GIMA's 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. © 2019 Morgan Stanley Smith Barney LLC. 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In this report, Morgan sales charges that ff ypou 1purchas at on Moreover, For anv fund Shown has not been verified by illustrates fig, real time' invest of any maximum fees that aPP ce inform when m FOR FUNof , r information, netIL advisory to_date Per{°,man erformance li•e. retur nnual investMe'.n more uP- OF PERFORMANhE1da �R s been Included ou ort for starIda,di o de ums net of the da rof esawhreh Mal SOUR MorganStanleY er){un p m the reprograms} read the manag mend sucb Investmen ANCE fund advisory Programs) recom star pr°files for each s you should ent option NEf PERFORMMorning of our investmen ya n have incentive t° s. g r attached e fund outside ent advisory Prog Morgan stanleY may In other investor 2 may not See the nvestm an Stanley ou invest rovider$" l ) purchase to of our Morgan Stanley os than if Y d or its content P . fund in °n. with Morg with star anresponsible for any damn es s report• or Affiliated or affiliated . nvestor tban m th ed b1, oPrfetarY t° Morning rov,ders arev be Managed by snag f ou invest in these 11 is P or its content p t ions that are rmpensaYon Y to {unds: ( Motion n Barney Gra ston tmentOptionsMay a earn more relating NeltherM y Inver investment OP f Morgan Staple Smith report may into dbecause we m Y this e OctP ¢te or timely. This rep The data comae ac urate, o{future results• options to Y services are businesses ° Inc. All Rights R3 ?5 no warranerfo n'ance rs no guarantee visory star, and (1 Past p and Investment Ad © 2012 Morrned or distributed se of this data. Group from Member SIPS-, consulting tC lossesarismg any BarneV i-LC, an Stanley sin,th BarneV th p2012Consua gt Spa busleV iness unR of Morg --� Graystone Consulting7i ort{olio's actual returns and what it might be expected to deliver based on its Stanley Disclosures er failed to match Important Morgan alpha measures the difference betweenap expectations. A negative alpha means that the mana adjusted) measurement. Officially, p her alpha. StyIeADVISOR uses the standard intercept calculation. er would have a higher Alpha: Alpha is a risk (beta adj means higher reward. A positive alpha means the fund has beaten ex as the benchmark and would level of risk. Higher risk generally ens had the same return but one had a lower beta, that manager risky as the mmuch as the performance with risk. If two managers benchmark. A and down p portfolio with a beta of two would move approximately the systematic risk of a portfolio and measures itsb ih uiptyto a benchmark. A portfoliowith a beta of one is considered as ns Y Beta: Beta represents sk f those of the market during er s return and the return of a benchmarkfor that therefore provide expected returns eq benchmark. er or market benchmark and Tbills. negative in the benchmark. The difference between the returns of two portfolios. Usually excess return is the difference between a man Excess Return - excess return refers to the difference between a manager considering only per, that are manager. In the context of a beta benchmark, outperformed its er s overall performance to the benchmark's overall performance, erwith a positive Excess Return has on averageP Down capture Ratio: the ratio of the manag e s return. relative to its benchmark. A manag products e uarterly total returns b the managergroup of benchmarks. For example, Domestic Equity p rns:representtheaverag q subtracting thebenhmarkreturn fromthemana er'sstylewas Excess ark s 'track" a g p to measure the manag benchmarkon a quarterly basis. This statistic is obtained Y portfolio holding) � then the attempt Graph: an at to depict how the manager's historical returns (not actual Value benchmarks. If the R2 of the Style Benchmark is lower than 80 a, in data, or Manager style and Small, Growth and five 1-year values with non-overlapp g will be presented versus Largeportfolios, or eclectic Investment disciplines. period you can display is referred to as a "moving en with non- diversified p For example, in a S Year pe in or not, problematic (this will often happen le 'Pan of time. period, either overlapping ear values cu moving each 3-Year ,moving wMOW F1 one quarter at a time. Each discrete time p Moving window' multiple data calculations can be done within a sing P you can display nine 3-V window:' style benchmark has been able compounded and annualized rate of return. es between zero and 100%. An R-squared of 100%Indicates perfect tracking, Return: A comp ortfolios track each other. R-squared rang R-Squared: (correlation Sq uared) - A measure of how well uaored is used in style analysis to determine how much information about a return series the s y cates no tracking a while an R-squared of zero'nd� uared, the better the benchmark, to capture. The higher the R-square Consulu�'�'N xcess Itis a Portf°liothe r. "C fee the better-n return ° er the Sharpe Raue,geometric ea �rPi ward per unit of rime the mean return min us th Ci1Os S easure o{ re is its g and the mean return 1 Qi�f D1s is a m cess re<ur n Morga Profess° de ,ation olio sex varia turnsaro hmark Up C> Stan r William F The portf tiron in r lmp°rta�'t e Ratio, develoPYhe P°rtfolio s standard e statistic measures the QuaRerlY s turns reeanto arUr,;yer5e benc a Peer TbeShae dfvldedbY t.Th retu ohms patio: {ree rate iven Prod st,trackfngerror) of the ma nag ,rive in th Sbarpe the risk- t w%) with a g to Ne variabllftY that are Po return over b default, - associated e s returns l ofthe eriods ent l Y e volatfllty anag r cal measore g Y instrum atchesthem rsto consderin onl quantifies th rovides a h on: t best m erformance Stan Deviati benchmarktha on of the Rhe ben h P overall p dard Excess marks encb the blended mark: dard Deviati cterlstics. Style B overall Perform•, mile char. Error:represell"s my n sonabN nagers patio. ent Prhe odu w th rea TJackirrs , ,neasur cts Capt'll g oup of managed rnvestm LAUSN'ER AUPn4AN ENSEN ; EVINSON MEMORANDUM TO: Florida Pension Clients FROM: Klausner, Kaufman, Jensen & Levinson DATE: November 2019 RE: Uniformed Services Employment and Reemployment Rights Act of 1994 This memo discusses the rights and responsibilities of employers and retirement plans under the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"). USERRA is a federal law intended to protect the rights of those who have served or those who will serve in the United States Armed Forces, Reserve, or National Guard. Florida law provide more generous rules, however, federal law preempts state law in this area of regulation; any inconsistencies between state law and federal law will be governed by USERRA. USERRA has three main objectives: (1) ensuring employees are not disadvantaged in their careers based on their time in the military; (2) prompt reemployment in an employee's pre -military position upon return from duty; and (3) eliminating discrimination based on military service. All public retirement plans "that provide retirement income to employees or that defer payment of income to employees until after employment has ended" must comply with USERRA. (20 C.F.R. §1002.259). MILITARY RELATED BREAK(S) IN SERVICE Managing military related breaks in service can be difficult. Under USERRA, single breaks in service and consecutive breaks are treated equally. Employers and retirement 7080 NORTHWEST 4TH STREET, PLANTATION, FLORIDA 33317 PHONE: (954) 916-1202 • FAX: (954) 916-1232 www.klausnerkaufman.com Uniformed Services Employment and Reemployment Rights Act of 1994 Page 2 plans must treat an employee's entire "period of absence from employment due to or necessitated by" military service as continuous employment. (20 C.F.R. §1002.259). Generally, to qualify for reemployment under USERRA, service members must show that they: (1) notified their employer in advance of departure; (2) have a cumulative length of absence from employment due to voluntary or involuntary military service of less than five years; (3) made a timely request for reemployment accompanied by proper documentation; and (4) have separated from military service under honorable conditions. (38 U.S.C. §4312). Under certain situations, qualifying pre and post military service time will also be treated as continuous service. USERRA is only applicable to active employees. Employees who have separated employment and retirees have no reemployment rights. DETERMINING A REEMPLOYED SERVICE MEMBER'S BENEFIT ENTITLEMENT Under Florida law, firefighters and police officers are entitled to receive, at no cost, credited service of up to five years for intervening military service when they are: (1) an active plan member immediately before a voluntary or involuntary military break in service; (2) entitled to reemployment under USERRA; and (3) return to employment as a firefighter or police officer within one year of being honorably discharged from the military (Fla. Stat. §175.025(6)(d) and §185.02(7)(d)). Prior nonintervening military service may be purchased and added to a firefighter's or police officer's actual service only when permitted pursuant to local law. Id. Upon return from military service, employers must rehire employees into the position and provide the benefits they would have attained, with "reasonable certainty," but for their military related break in service. This means employees are entitled to the seniority, rights, and benefits they would have received had they remained continuously employed. In Huhmann v. Federal Express Corporation, the court explained that when applying the Uniformed Services Employment and Reemployment Rights Act of 1994 Page 3 reasonable certainty test, courts use both a forward -looking and a backward -looking approach. First the court determines whether it appears as a matter of foresight, that individuals like a given claimant who successfully completed training would have obtained a certain position had employment not been interrupted by military service. The court next analyzes whether, as a matter of hindsight, a particular claimant either has, or would have, completed the necessary prerequisites for a position. 874 F.3d 1102, 1106 (91h Cir. 2017). Once rehired, "[E]mployers must determine a reemployed service member's eligibility for participation in a pension plan and the vesting and accrual of the service member's pension benefits as if he or she never left." (30 U.S.C. §4318(2)(b)). Pursuant to 20 C.F.R. §1002.5(b), rehired employees are entitled to and must not be denied a "benefit of employment." Id. Benefits of employment include "any advantage, profit, privilege, gain, status, account, or interest... that accrues by reason of an employment contract or agreement..." Id. Employers and retirement plans must determine what pension benefits a reemployed service member would have received but for their military related break in service. This requires an analysis of an employee's rate(s) of pay and whether such pay can be determined with "reasonable certainty." For employees who have a consistent rate of pay, employers must make a projection as to the number of hours the employee would have worked and how much they would have earned but for the military related break in service. (38 U.S.C. §4318(b)(3)(A)). This projection is "based on the service member's work history leading up to the military -related absence." Id. The focus must be on the number of hours an employee consistently works per week. For employees who work varying hours and shifts, employers must determine the average rate of pay for the employee's proceeding twelve months leading up to the break in service. On occasion, employees may have worked less than twelve months priorto their military related break. In this scenario, employers and retirement plans will use the "period of employment immediately preceding the military service" to determine what pension benefits are owed. (38 U.S.C. §4318(b)(3)(B)). CONCLUSION Florida firefighters and police officers who serve or who will serve in the military have substantial protections under USERRA and Florida law. Employers and retirement plans may face challenges navigating the requirements imposed under USERRA due to the unique Uniformed Services Employment and Reemployment Rights Act of 1994 Page 4 features found in each plan. Please contact our office if your retirement plan has any questions regarding the application of USERRA. 2 LAUSN'ER AUPn4AN ENSEN ; EVINSON MEMORANDUM TO: Florida Pension Clients FROM: Klausner, Kaufman, Jensen & Levinson DATE: November 2019 RE: Uniformed Services Employment and Reemployment Rights Act of 1994 This memo discusses the rights and responsibilities of employers and retirement plans under the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"). USERRA is a federal law intended to protect the rights of those who have served or those who will serve in the United States Armed Forces, Reserve, or National Guard. Florida law provide more generous rules, however, federal law preempts state law in this area of regulation; any inconsistencies between state law and federal law will be governed by USERRA. USERRA has three main objectives: (1) ensuring employees are not disadvantaged in their careers based on their time in the military; (2) prompt reemployment in an employee's pre -military position upon return from duty; and (3) eliminating discrimination based on military service. All public retirement plans "that provide retirement income to employees or that defer payment of income to employees until after employment has ended" must comply with USERRA. (20 C.F.R. §1002.259). MILITARY RELATED BREAK(S) IN SERVICE Managing military related breaks in service can be difficult. Under USERRA, single breaks in service and consecutive breaks are treated equally. Employers and retirement 7080 NORTHWEST 4TH STREET, PLANTATION, FLORIDA 33317 PHONE: (954) 916-1202 • FAX: (954) 916-1232 www.klausnerkaufman.com Uniformed Services Employment and Reemployment Rights Act of 1994 Page 2 plans must treat an employee's entire "period of absence from employment due to or necessitated by" military service as continuous employment. (20 C.F.R. §1002.259). Generally, to qualify for reemployment under USERRA, service members must show that they: (1) notified their employer in advance of departure; (2) have a cumulative length of absence from employment due to voluntary or involuntary military service of less than five years; (3) made a timely request for reemployment accompanied by proper documentation; and (4) have separated from military service under honorable conditions. (38 U.S.C. §4312). Under certain situations, qualifying pre and post military service time will also be treated as continuous service. USERRA is only applicable to active employees. Employees who have separated employment and retirees have no reemployment rights. DETERMINING A REEMPLOYED SERVICE MEMBER'S BENEFIT ENTITLEMENT Under Florida law, firefighters and police officers are entitled to receive, at no cost, credited service of up to five years for intervening military service when they are: (1) an active plan member immediately before a voluntary or involuntary military break in service; (2) entitled to reemployment under USERRA; and (3) return to employment as a firefighter or police officer within one year of being honorably discharged from the military (Fla. Stat. §175.025(6)(d) and §185.02(7)(d)). Prior nonintervening military service may be purchased and added to a firefighter's or police officer's actual service only when permitted pursuant to local law. Id. Upon return from military service, employers must rehire employees into the position and provide the benefits they would have attained, with "reasonable certainty," but for their military related break in service. This means employees are entitled to the seniority, rights, and benefits they would have received had they remained continuously employed. In Huhmann v. Federal Express Corporation, the court explained that when applying the Uniformed Services Employment and Reemployment Rights Act of 1994 Page 3 reasonable certainty test, courts use both a forward -looking and a backward -looking approach. First the court determines whether it appears as a matter of foresight, that individuals like a given claimant who successfully completed training would have obtained a certain position had employment not been interrupted by military service. The court next analyzes whether, as a matter of hindsight, a particular claimant either has, or would have, completed the necessary prerequisites for a position. 874 F.3d 1102, 1106 (91h Cir. 2017). Once rehired, "[E]mployers must determine a reemployed service member's eligibility for participation in a pension plan and the vesting and accrual of the service member's pension benefits as if he or she never left." (30 U.S.C. §4318(2)(b)). Pursuant to 20 C.F.R. §1002.5(b), rehired employees are entitled to and must not be denied a "benefit of employment." Id. Benefits of employment include "any advantage, profit, privilege, gain, status, account, or interest... that accrues by reason of an employment contract or agreement..." Id. Employers and retirement plans must determine what pension benefits a reemployed service member would have received but for their military related break in service. This requires an analysis of an employee's rate(s) of pay and whether such pay can be determined with "reasonable certainty." For employees who have a consistent rate of pay, employers must make a projection as to the number of hours the employee would have worked and how much they would have earned but for the military related break in service. (38 U.S.C. §4318(b)(3)(A)). This projection is "based on the service member's work history leading up to the military -related absence." Id. The focus must be on the number of hours an employee consistently works per week. For employees who work varying hours and shifts, employers must determine the average rate of pay for the employee's proceeding twelve months leading up to the break in service. On occasion, employees may have worked less than twelve months priorto their military related break. In this scenario, employers and retirement plans will use the "period of employment immediately preceding the military service" to determine what pension benefits are owed. (38 U.S.C. §4318(b)(3)(B)). CONCLUSION Florida firefighters and police officers who serve or who will serve in the military have substantial protections under USERRA and Florida law. Employers and retirement plans may face challenges navigating the requirements imposed under USERRA due to the unique Uniformed Services Employment and Reemployment Rights Act of 1994 Page 4 features found in each plan. Please contact our office if your retirement plan has any questions regarding the application of USERRA. 2