1. President Lamerato called the regular meeting of the Police and Fire Retirement System to order at 3:32 p.m.

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1 REGULAR MEETING MINUTES OF THE STERLING HEIGHTS POLICE AND FIRE RETIREMENT SYSTEM, ACT 345 NOVEMBER 19, 2015 FIRE DEPARTMENT CONFERENCE ROOM RYAN ROAD STERLING HEIGHTS, MI President Lamerato called the regular meeting of the Police and Fire Retirement System to order at 3:32 p.m. 2. Board Members Present: Lamerato, Wellhausen, Schwarb, Maleszyk, Varney. Also present: Denise Jones representing Rodwan Consulting Co.; Tim Brice, representing The Brice Group/Morgan Stanley Graystone Consulting; Tom Michaud, Legal Counsel; and Nancy Duyck, Pension Technician. 3. APPROVAL OF CONSENT AND S Motion by Wellhausen, supported by Maleszyk, to approve the consent agenda as presented. Motion by Wellhausen, supported by Maleszyk, to approve the regular agenda as presented.

2 Page Two 4. APPROVAL OF MINUTES No corrections were made to the draft minutes of the regular meeting of October 8, Motion by Maleszyk, supported by Varney, to approve the minutes as presented. 5. CITIZEN PARTICIPATION There was no Citizen participation. 6. REPORT FROM LEGAL COUNSEL No formal legal report was presented. Mr. Michaud commented on items of new business as they were considered. PRESENTATION ANNUAL ACTUARIAL VALUATION REPORT BY RODWAN CONSULTING COMPANY L Denise Jones from Rodwan Consulting Company was in attendance to present the 47th annual actuarial report dated June 30, The report was discussed at length. The Board reviewed the comments by the actuary. After discussion, the following resolution was considered: RE: APPROVAL OF 47TH ANNUAL ACTUARIAL VALUATION WHEREAS, the Board is in receipt of the 47th Annual Actuarial Valuation, dated June 30, 2015, which has been submitted by the actuary to the Board of Trustees for consideration and approval, and WHEREAS, representatives of the Board s actuary have appeared before the Board at its 19, 2015 meeting and presented and reviewed the valuation report with the Board, and November WHEREAS, the Board of Trustees has the legal and fiduciary obligation to assure that employer contributions are in accordance with Article 9, Section 24 of the State of Michigan Constitution, and Page Three PRESENTATION ANNUAL ACTUARIAL VALUATION RESOLUTION cont. WHEREAS, Michigan Public Act 345 of 1937, as amended, requires the Board of Trustees to certify to the governing body the amount to be contributed by the employer, and

3 WHEREAS, the Board has the duty to (1) to approve or disapprove the Actuarial Valuation dated June 30, 2015, and (2) to certify to the employer-city the amount of employer contribution required for the fiscal year beginning July 1, 2016 (as reflected by the June 30, 2015 Actuarial Valuation), and WHEREAS, the Board notes that the Sterling Heights Police and Fire Retirement System is 69.3% funded as of the June 30, 2015 valuation, and THEREFORE BE IT RESOLVED, that the Board hereby approves the 47th Annual Actuarial Valuation, dated June 30, 2015, and further RESOLVED, the Board hereby certifies to the employer-city the employer contribution required for the fiscal year beginning July 1, 2016 (as reflected by the June 30, 2015 Actuarial Valuation) in the amount of $7,994,747.00, consisting of the City contribution and the 8% contained in the Police Command Officers Association contract, the Police Officers Association contract, and the Fire Fighters Association contract, and further RESOLVED, that the recommended transfer in the amount of $602, to the Reserve for Retired Benefit Payments from the Reserve for Employer Contributions be made, and further RESOLVED, that a copy of this resolution and the 47th Annual Actuarial Report, dated June 30, 2015, be forwarded to the employer-city. Motion by Wellhausen, supported by Schwarb, to approve the resolution as presented. The motion carried; the resolution is hereby adopted. The Board discussed with the actuary an experience study to be done, since the last one was done in The actuary will prepare a proposal for the December 17, 2015 meeting. CONSENT AGENDA 7. CORRESPONDENCE a. Correspondence to Tim Brice dated October 13, 2015 re: termination of NFJ/Allianz and the hiring of Cambiar Investors LLC. b. Correspondence from Intercontinental dated October 26, 2015 re: distribution in Intercontinental Real Estate Investment Fund III. Page Four CONSENT AGENDA 7. CORRESPONDENCE cont. c. Other correspondence received from: 1. Morgan Stanley market value weekly updates 2. Pomerantz LLP 3. Robbins Geller Rudman & Dowd LLP d. Magazines received: 1.Institutional Investor for November Pensions & Investments for October 19 and November 2 and 16, BILLS AND EXPENDITURES c. Checking Account Summary Beginning Balance $5, /01/15

4 Additions (1) 1. 10/27 $ 5, Subtractions (4) $ 1, /28 Check AT & T phone bill 10/16/ /09 Check Contract Payment Nancy Duyck 3. 10/13 Check Contract fee Gurin & Gurin 4. 10/23 Check Contract Payment Nancy Duyck Electronic withdrawals (4) $1, / IRA contribution 2. 10/ IRS Fed. tax w/h 3. 10/ Michigan St. tax w/h 4. 10/ IRS Fed. tax w/h Ending Balance $6, /31/15 d. Transmittal of Checks 1. There were no checks received this month. a. The current value of funds as of October 31, 2015 is detailed below: Clearing account $ 6,379, Intercontinental $ 4,516, Winslow $ 15,932, Page Five CONSENT AGENDA a. The current value of funds as of October 31, 2015 is detailed below: cont. Janus $ 16,734, Eagle $ 15,936, Herndon $ 15,349, Earnest Partners $ 13,998, Cambiar $ 14,272, AIM/Invesco $ 16,389, Western $ 27,239, Met West $ 25,339, London Co. $ 30,855, MS Cash $ Checking account $ 6, TOTAL FUNDS $ 202,950, b. The Board received a copy of the Summary of Employer Contributions to the Police and Fire Retirement System for the 2015 tax year as of 10/28/15. The System has received $7,513, of the 2015/16 budget of $7,986,312.00, leaving a $473, balance. c. Benefit Register Listing as of November 1, 2015 from Comerica Bank showing 337 retirees/beneficiaries with a payout for November of $1,423, and a year-to-date of $16,947,

5 d. The current Merrill Lynch Bond index for October 2015 is 2.25%. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business None. 8. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills) 1. Disbursement to Rodwan Consulting Company in the total amount of $7, for the June 30, 2015 GASB Statement 67 ($6,200.00) and GASB Statement 68 ($1,200.00) reports. 2. Disbursement to Comerica Bank in the total amount of $1, for services rendered to the Clearing and Intercontinental accounts for the third quarter Regular Meeting Minutes - November 19, 2015 Page Six 8. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills) cont. 3. Disbursement to the City of Sterling Heights in the amount of $ for accounting services rendered for the Fergerson EDRO. 4. Disbursement to Eagle Capital Management in the amount of $27, for investment management fees for the third quarter Disbursement to Morgan Stanley in the total amount of $251, for investment management fees for the third quarter 2015 for all ten accounts. 6. Disbursement to Metropolitan West Asset Management, LLC in the amount of $22, for investment management fees for the third quarter Motion by Varney, supported by Wellhausen, to approve the bills as presented. b. Disbursements to retirees/members other than monthly benefit payments 1. Annual Benefit Allowances Disbursements to the following retirees for annual benefit allowance payable January 1, 2016 will be considered per applicable collective bargaining contracts, as detailed below: COA (21) - $ Frank Bayones George Belkowski Gerald Brzeg Douglas Cedras James Coffin Robert Cory David Grabb Philip Hay Ronald Kokesh Eugene Lane Leroy Lang Ronald May

6 John Meister James Morgan Wayne Orlando Walter Reghi Thomas Rossman Alan Savela Frederick Schoenrock Richard Stokes Norman Thomas Regular Meeting Minutes - November 19, 2015 Page Seven 8. BILLS AND EXPENDITURES b. Disbursements to retirees/members other than monthly benefit payments cont. 1. Annual Benefit Allowances FFA (24) - $ Ronald Atkinson Paul Backus Chester Beasley Robert Beels Douglas Cashman Larry Crawford Irvin Droste Kenneth Durham Arthur Fernandez Lary Gregory Thomas Jones Sandy Korich William Lopez William Miller Joseph Myny Merle Newberry Frederick Pawlowski Charles Pereny Stanley Poterek Donald Sitko William Webster Ronald Wiegand Thomas Wisniewski Gerald Zupan MAP (5) - $ Gene Blanchard Terence Burns Bobby Collins Claude Girardi Ralph Goode Motion by Wellhausen, supported by Schwarb, to approve the disbursements as presented. 2. Patrick Paradise refund of contributions discussion Fire Fighter Patrick Paradise was hired on May 4, 2015 and terminated employment on June 26, He has requested a refund of contributions and interest. Walt Hessell has calculated the amount of the refund. All required paperwork is on file in the Pension Office. Motion by Wellhausen, supported by Schwarb, to approve the refund of contributions and interest to Patrick Paradise.

7 Page Eight e. Quarterly Performance Report 1. The Brice Group Tim Brice reviewed the summary report of manager performance. Enclosed in this report was the Board s summary of investment policies and objectives, third quarter 2015 AIM Market Focus report. Also included was an executive summary of the Composite, NFJ/Allianz, Eagle, Earnest, and Herndon, Intercontinental, Invesco, Janus, London, MetWest, Western and Winslow reports. The following manager specific comments were discussed: MetWest a. The total portfolio return in the third quarter was 1.1%, ranking in the 39th percentile of the IM U.S. Broad Market Fixed Sample. It trailed the BC Aggregate Bond index (1.2%). b. Their total portfolio return was -0.9% since inception (4/1/15). This trailed the BC Aggregate Bond index (-0.5%). c. The market value as of September 30, 2015 was $25,310,308, which represented 13.5% of the total portfolio. Western Asset Management a. The total portfolio return in the third quarter was 1.0%, ranking in the 48th percentile of the IM U.S. Broad Market Fixed Sample. It trailed the BC Aggregate Bond index (1.2%). b. Their total portfolio return was 4.2% since inception (7/1/11). This exceeded the BC Aggregate Bond index (3.3%). c. The market value as of September 30, 2015 was $27,040,410, which represented 14.5% of the total portfolio. Intercontinental Real Estate a. The Intercontinental Real Estate return for the third quarter was -1.0%. b. The market value as of September 30, 2015 was $4,870,562, which represented 2.6% of the total portfolio. Page Nine e. Quarterly Performance Report 1. The Brice Group cont. The London Company

8 a. The total portfolio return in the third quarter was -5.9%, ranking in the 30th percentile of the IM U.S. Large Cap Core Equity. It exceeded the S & P 500 Index (-6.4%). b. Their total portfolio return was -6.4% since inception (4/1/15). This trailed the S & P 500 Index (-6.2%). c. The market value as of September 30, 2015 was $28,595,557, which represented 15.3% of the total portfolio. Herndon Investment Counsel a. The total portfolio return in the third quarter was -8.7%, ranking in the 59th percentile of the IM U.S. Large Cap Value Equity. It trailed the Russell 1000 Value Index (-8.4%). b. Their total portfolio return was 7.9% since inception (10/1/12). This trailed the Russell 1000 Value Index (11.6%). c. The market value as of September 30, 2015 was $14,449,314, which represented 7.7% of the total portfolio. Eagle Investment Counsel a. The total portfolio return in the third quarter was -7.3%, ranking in the 31 st percentile of the IM U.S. Large Cap Value Equity. It exceeded Russell 1000 Value Index (-8.4%). b. Their total portfolio return was 14.4% since inception (10/1/12). This exceeded the Russell 1000 Value Index (11.6%). c. The market value as of September 30, 2015 was $14,777,450, which represented 7.9% of the total portfolio. Winslow Investment Counsel a. The total portfolio return in the third quarter was -6.1%, ranking in the 57th percentile of the IM U.S. Large Cap Growth Equity. It trailed the Russell 1000 Growth Index (-5.3%). b. Their total portfolio return was 11.1% since inception (4/1/12). This trailed the Russell 1000 Growth Index (12.1%). c. The market value as of September 30, 2015 was $14,652,629, which represented 7.8% of the total portfolio. Page Ten e. Quarterly Performance Report 1. The Brice Group cont. Janus Investment Counsel a. The total portfolio return in the third quarter was -3.6%, ranking in the 10th percentile of the IM U.S. Large Cap Growth Equity. It exceeded the Russell 1000 Growth Index (-5.3%). b. Their total portfolio return was 13.3% since inception (1/1/10). This equaled the Russell 1000 Growth Index (13.3%). c. The market value as of September 30, 2015 was $15,475,382, which represented 8.3% of the total portfolio. Earnest Partners

9 a. The total portfolio return in the third quarter was -10.8%, ranking in the 92nd percentile of the IM U.S. SMID Cap Core Equity. It trailed therussell 2500 Index (-10.3%). b. Their total portfolio return was 8.1% since inception (10/1/06). This exceeded the Russell 2500 Index (7.2%). c. The market value as of September 30, 2015 was $13,024,632, which represented 7.0% of the total portfolio. Invesco Capital Management a. The total portfolio return in the third quarter was -10.7%, ranking in the 51st percentile of the IM International Equity. It exceeded the MSCI AC World x US net (-12.2%). b. Their total portfolio return was 4.3% since inception (1/1/11). This exceeded the MSCI AC World x US net (0.4%). c. The market value as of September 30, 2015 was $15,447,347, which represented 8.3% of the total portfolio. The following table details the Investment Performance Review for the third quarter ending September 30, Market value of the funds under management as of September 30, 2015 was $187,033,515. The total fund return for the third quarter was -5.7%, ranking in the 81st percentile of Public Plans less than $500 million, as summarized below: 6/15 9/14 9/12 9/10 9/05 1/92 To 9/15 to 9/15 to 9/15 to 9/15 to 9/15 to 9/15 Total fund* -5.7/81-0.8/64 7.9/26 7.9/47 4.7/90 n/a *Ranked against Public Plans less than $500 million Page Eleven e. Quarterly Performance Report 1. The Brice Group cont. The following manager specific return information is detailed separately from the other long-term data: 6/15 4/15 MetWest to 9/15 to 9/15 Total Fund* 1.1/39-0.9/67 *Ranked against the IM U.S. Broad Market Fixed 6/15 9/14 9/12 7/11 Western to 9/15 to 9/15 to 9/15 to 9/15 Total Fund* 1.0/48 2.3/69 2.6/21 4.2/39 *Ranked against the IM U.S. Broad Market Fixed 6/15 9/14 9/12 9/10 9/05 7/04 To 9/15 to 9/15 to 9/15 to 9/15 to 9/15 to 9/15 Intercontinental /15 4/15 London Co. to 9/15 to 9/15

10 Total Fund* -5.9/30-6.4/52 *Ranked against the IM U.S. Large Cap Core Equity 6/15 9/14 10/12 Herndon to 9/15 to 9/15 9/15 Total Fund* -8.7/59-8.3/90 7.9/95 *Ranked against the IM U.S. Large Cap Value Equity 6/15 9/14 10/12 Eagle to 9/15 to 9/15 to 9/15 Total Fund* -7.3/31 0.5/ /20 *Ranked against the IM U.S. Large Cap Value Equity 6/15 9/14 9/12 4/12 Winslow to 9/15 to 9/15 to 9/15 to 9/15 Total Fund* -6.1/57 4.2/ / /67 *Ranked against the IM U.S. Large Cap Growth Equity Page Twelve e. Quarterly Performance Report 1. The Brice Group cont. 6/15 9/14 9/12 9/10 1/10 Janus to 9/15 to 9/15 to 9/15 to 9/15 to 9/15 Total Fund* -3.6/ /4 14.5/ / /46 *Ranked against the IM U.S. Large Cap Growth Equity 6/15 9/14 9/12 9/10 10/06 Earnest Part. to 9/15 to 9/15 to 9/15 to 9/15 to 9/15 Total Fund* -10.8/92-1.9/ / /77 8.1/65 *Ranked against the IM U.S. SMID Cap Core Equity 6/15 9/14 9/12 1/11 Invesco to 9/15 to 9/15 to 9/15 to 9/15 Total Fund* -10.7/51-7.6/48 5.8/48 4.3/38 *Ranked against the IM International Equity The Board requested that Intercontinental be at the next quarterly meeting in February 2016 to discuss the recap of the investment. 10. BENEFITS & PLAN ADMINISTRATION a. New Business 11. TRUSTEE COMMENTS 1. Morgan Stanley invoice timing - discussion Varney stated that a change in the invoice timing is not needed. No further action required.

11 Wellhausen gave an update on the boxes of material from former Board Member Padovini. Two boxes have been picked up for shredding. Page Thirteen 12. ADJOURNMENT Motion by Wellhausen, supported by Varney, to adjourn at 4:53 p.m. The motion carried; the meeting is hereby adjourned. Mark Wellhausen Secretary