Retirement Systems 150 Frank H. Ogawa Plaza Oakland, California AGENDA

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1 All persons wishing to address the Board must complete a speaker's card, stating their name and the agenda item (including "Open Forum") they wish to address. The Board may take action on items not on the agenda only if findings pursuant to the Sunshine Ordinance and Brown Act are made that the matter is urgent or an emergency. Oakland Police and Fire Retirement Board meetings are held in wheelchair accessible facilities. Contact Retirement Systems, 150 Frank Ogawa Plaza, Suite 3332 or call (510) for additional information. Retirement Systems 150 Frank H. Ogawa Plaza Oakland, California AGENDA AUDIT COMMITTEE MEMBERS John C. Speakman Chairman Christine Daniel Member Robert J. Muszar Member *In the event a quorum of the Board participates in the Committee meeting, the meeting is noticed as a Special Meeting of the Board; however, no final Board action can be taken. In the event that the Audit Committee does not reach quorum, this meeting is noticed as an informational meeting between staff and the Chair of the Audit Committee. SPECIAL MEETING of the AUDIT / OPERATIONS COMMITTEE of the OAKLAND POLICE AND FIRE RETIREMENT SYSTEM ( PFRS ) ORDER OF BUSINESS Subject: December 21, 2016 PFRS Audit Committee Meeting Minutes From: Staff of the PFRS Board Recommendation: APPROVE December 21, 2016 Audit Committee meeting minutes. 2. Subject: Administrative Expenses Report From: Staff of the PFRS Board Recommendation: ACCEPT an informational report regarding PFRS Administrative Expenses from July 1, 2016 through December 31, Subject: Resolution No Resolution to amend the fiscal year Police and Fire Retirement System s Administrative Budget to accommodate budgetary needs for understated staff costs and the addition of two new budget line items: (1) Staff Training Tuition Reimbursement and (2) Outside Counsel - Probate/Estate From: Staff of the PFRS Board Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Resolution to amend the fiscal year Police and Fire Retirement System s Administrative Budget to accommodate budgetary needs for understated staff costs and the addition of two new budget line items: (1) Staff Training Tuition Reimbursement and (2) Outside Counsel - Probate/Estate. 4. Subject: Proposed PFRS Administrative Budget for Fiscal Years and From: Staff of the PFRS Board Recommendation: ACCEPT proposed PFRS Administrative Budget for Fiscal Years and Subject: Annual Report for Fiscal Year ending June 30, 2016 From: Staff of the PFRS Board Recommendation: Wednesday, February 22, :00 am One Frank H. Ogawa Plaza, Hearing Room 3 Oakland, California RECOMMEND BOARD APPROVAL of printing and publication of the Annual Report of the Oakland Police and Fire Retirement System for the Fiscal Year ending June 30, 2016.

2 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL AUDIT COMMITTEE MEETING FEBURARY 22, 2017 ORDER OF BUSINESS, continued 6. Subject: Resolution No Travel authorization for Board Member R. Steven Wilkinson to Travel and Attend the 2017 RG & Associates Consortium West Conference ( 2017 Consortium West Conference ) from/on January 25-26, 2017 in Los Angeles, CA with an estimated budget of Seven Hundred Eighty Seven Dollars ($787.00) From: Staff of the PFRS Board Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Travel authorization for Board Member R. Steven Wilkinson to Travel and Attend the 2017 RG & Associates Consortium West Conference ( 2017 Consortium West Conference ) from/on January 25-26, 2017 in Los Angeles, CA with an estimated budget of Seven Hundred Eighty Seven Dollars ($787.00). 7. Subject: Resolution No Travel Authorization for Board Member Robert Muszar to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00) From: Staff of the PFRS Board Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Travel Authorization for Board Member Robert Muszar to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00). 8. Subject: Resolution No Travel Authorization for Board Member R. Steven Wilkinson to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00) From: Staff of the PFRS Board Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Trav Travel Authorization for Board Member R. Steven Wilkinson to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00). 9. Subject: Resolution No Travel Authorization for Board Member John Speakman to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00) From: Staff of the PFRS Board Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Travel Authorization for Board Member John Speakman to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00). Page 2 of 3

3 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL AUDIT COMMITTEE MEETING FEBURARY 22, 2017 ORDER OF BUSINESS, continued 10. Subject: Resolution No Travel Authorization for Board Member Robert Muszar to Travel and Attend the 2017 Pension Bridge Conference ( 2017 Pension Bridge Conference ) from/on April 18, 2017 to April 19, 2017 in San Francisco, CA with an Estimated Budget of Nine Hundred Eighty-Nine Dollars ($989.00) From: Staff of the PFRS Board Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Travel Authorization for Board Member Robert Muszar to Travel and Attend the 2017 Pension Bridge Conference ( 2017 Pension Bridge Conference ) from/on April 18, 2017 to April 19, 2017 in San Francisco, CA with an Estimated Budget of Nine Hundred Eighty-Nine Dollars ($989.00). 11. Subject: Resolution No Travel and Reimbursement Authorization for Investment Committee Chairman Jaime Godfrey for Travel for Due Diligence Meeting with Rice Hall James and Associates, LLC on January 17-18, 2017 in San Diego, CA with an Estimated Budget of Eight Hundred Twenty-Three Dollars ($823.00) From: Staff of the PFRS Board Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Travel and Reimbursement Authorization for Investment Committee Chairman Jaime Godfrey for Travel for Due Diligence Meeting with Rice Hall James and Associates, LLC on January 17-18, 2017 in San Diego, CA with an Estimated Budget of Eight Hundred Twenty-Three Dollars ($823.00). 12. Subject: Resolution No Travel Authorization for Staff Member Katano Kasaine to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of One Thousand Twenty-five Dollars ($1,025.00) From: Staff of the PFRS Board Recommendation: 13. Open Forum 14. Future Scheduling RECOMMEND BOARD APPROVAL of Resolution No Travel Authorization for Staff Member Katano Kasaine to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of One Thousand Twenty-five Dollars ($1,025.00). Page 3 of 3

4 DRAFT PFRS Audit/Operations Committee Meeting Minutes December 21, 2016 Page 1 of 2 A SPECIAL AUDIT/OPERATIONS COMMITTEE MEETING of the Oakland Police and Fire Retirement System ( PFRS ) was on held Wednesday, December 31, 2016 in Hearing Room 4, One Frank Ogawa Plaza, Oakland, California. Committee Members Present: John C. Speakman, Chairman Christine Daniel, Member Robert J. Muszar, Member Additional Attendees: The meeting was called to order at 9:12 AM Katano Kasaine, Plan Administrator David Low & Teir Jenkins, Staff Members Pelayo Llamas, PFRS Legal Counsel 1. Approval of Audit Committee meeting minutes Member Muszar made a motion to approve the November 30, 2016 Audit Committee meeting minutes, second by Member Daniel. Motion passed. [SPEAKMAN Y / DANIEL Y / MUSZAR Y ] ( AYES: 3 / NOES: 0 / ABSTAIN: 0 ) 2. PFRS Monthly Administrative Expenses Report Investment Officer Teir Jenkins presented the details of the PFRS administrative expenses report from July 1, 2016 through October 31, Following committee discussion, Member Muszar made a motion to accept the Administrative Expenses Report from July 1, 2016 through October 31, 2016, second by Member Daniel. Motion passed. [SPEAKMAN Y / DANIEL Y / MUSZAR Y ] ( AYES: 3 / NOES: 0 / ABSTAIN: 0 ) 3. Resolution No Travel Authorization for Member Jaime Godfrey Chairman Speakman said that resolution no authorizing the travel and reimbursement for Member Jaime Godfrey for the Due Diligence Meeting in New York, NY was verbally approved by President Johnson. He said his travel request occurred following the publishing of the November 2016 Agendas and could not be added to that agenda for approval. Member Daniel made a motion to recommend Board approval of Resolution No. 6943, second by Member Muszar. Motion passed. [SPEAKMAN Y / DANIEL Y / MUSZAR Y ] ( AYES: 3 / NOES: 0 / ABSTAIN: 0 ) 4. PFRS Budget Report For Fiscal Years and Members Muszar and Daniel requested staff to submit a preliminary 2-year PFRS administrative budget in February 2017 for committee discussion and action in advance of the audit committee presentation of the final proposed budget in March Member Muszar wanted to know how much time the Committee and Board members needed to give Staff if they have budget questions in advance of the Staff Report. Member Daniel also asked staff about the timeline for staff reporting on the Budget planning where the Audit Committee and Board can provide input to staff. Member Daniel made a motion to continue discussion of the budget report to the January 2017 meeting, second by member Muszar. Motion passed. [SPEAKMAN Y / DANIEL Y / MUSZAR Y ] ( AYES: 3 / NOES: 0 / ABSTAIN: 0 ) During Future Scheduling, the committee and staff clarified that staff will bring a preliminary 2-year budget to the PFRS February 2017 meeting and the final 2-year budget will be brought to the PFRS board for approval in March DRAFT

5 DRAFT PFRS Audit/Operations Committee Meeting Minutes December 21, 2016 Page 2 of 2 5. Open Forum No Report. 6. Future Scheduling The next audit committee meeting was scheduled for January 25, The meeting adjourned at 9:27 AM JOHN C. SPEAKMAN, COMMITTEE CHAIRMAN DATE DRAFT

6 Table 1 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM Administrative Budget Spent to Date Fiscal Year as of December 31, 2016 Approved Budget December 2016 FYTD Remaining Percent Remaining Internal Administrative Costs PFRS Staff Salaries $ 807,548 $ 70,639 $ 415,208 $ 392, % Board Travel Expenditures 52,500-1,301 51, % Staff Training 15,000 1,974 2,947 12, % Annual Report & Duplicating Services 4, , % Board Hospitality 2, , % Payroll Processing Fees 35, , % Miscellaneous Expenditures 25,000 8,947 18,298 6, % Contract Services Contingency 50,000-1,200 48, % Internal Administrative Costs Subtotal : $ 991,648 $ 81,714 $ 439,869 $ 551, % Actuary and Accounting Services Audit $ 45,000 $ 15,227 $ 41,750 $ 3, % Actuary 45,000 7,950 26,371 18, % Actuary and Accounting Subtotal: $ 90,000 $ 23,177 $ 68,121 $ 21, % Legal Services City Attorney Salaries $ 138,338 $ 10,980 $ 67,983 $ 70, % Legal Contingency 150,000 19,554 29, , % Legal Services Subtotal: $ 288,338 $ 30,534 $ 97,845 $ 190, % Investment Services Money Manager Fees $ 1,535,581 $ - $ 265,791 $ 1,269, % Custodial Fee 116,500-4, , % Investment Consultant (PCA) 100,000 25,000 50,000 50, % PCA: Asset & Liability Study 30, , % Investment Subtotal: $ 1,782,081 $ 25,000 $ 320,466 $ 1,461, % Total Operating Budget $ 3,152,067 $ 160,425 $ 926,301 $ 2,225, %

7 Table 2 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM Cash in Treasury (Fund 7100) As of December 31, 2016 FY Beginning Cash as of 11/30/2016 $ 2,531,277 Additions: City Contributions $ - Investment Draw (Incoming Wire) 5,000,000 Misc. Receipts 9,047 Total Additions: $ 5,009,047 Deductions: Pension Payment (November Pension Paid in December) (4,710,511) Expenditures Paid (177,541) Total Deductions $ (4,888,052) Ending Cash Balance as of 12/31/2016 $ 2,652,272

8 Table 3 CITY OF OAKLAND POLICE AND FIRE RETIREMENT SYSTEM Census As of December 31, 2016 COMPOSITION POLICE FIRE TOTAL Retired Member: Retiree Beneficiary Total Retired Members Total Membership: COMPOSITION POLICE FIRE TOTAL Retired Member: Service Retirement Disability Retirement Death Allowance Total Retired Members: Total Membership as of December 31, 2016: Total Membership as of June : Annual Difference:

9 Oakland Police and Fire Retirement System Pension Plan Membership Count As of December 31, 2016 (FY FY 2017) FYTD Police Fire Total

10 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM Approved Budget FY $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- Internal Administrative Costs Actuary and Accounting Services Legal Services Investment Services

11 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM Budget vs Actual as of December 31, 2016 Internal Administrative Costs $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 Budget Actual $400,000 $300,000 $200,000 $100,000 $- Staff (Salaries & Training) Board (Travel & Hospitality) Misc (Annual Rpt, Payroll Proc & Misc)

12 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM Budget vs. Actual as of December 31, 2016 Actuary and Accounting Services $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $- Audit Actuary

13 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM Budget vs. Actual as of December 31, 2016 Legal Services $160,000 $140,000 $120,000 $100,000 $80,000 Budget Actual $60,000 $40,000 $20,000 $- City Attorney Salaries Legal Contingency (Outside Counsel)

14 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM Budget vs. Actual as of December 31, 2016 Investment Services $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 Budget Actual $400,000 $200,000 $- Money Manager Fees Custodial Fee: Northern Trust Investment Consultant: PCA Asset & Liability Study: PCA

15 CITY OF OAKLAND AGENDAREPORT TO: Board of the Oakland Police and Fire Retirement System FROM: Katano Kasaine SUBJECT: Resolution No Proposed Mid Year Proposed Changes to FY Administrative Budget DATE: January 17, 2017 RECOMMENDATION Staff has analyzed the current FY 2016/2017 adjusted budget and is recommending some adjustments to the line items. Staff recommends that the Board approve the reallocations of the FY 2016/2017 as attached in Table 1. The proposed budget changes will not change the overall approved adjusted annual budget of $3,152,067 for FY 2016/2017. BACKGROUND At their March 25, 2015 Board meeting, the Oakland Police and Fire Retirement System Board ("PFRS Board") approved a 2-year PFRS Administrative Staff Budget for FY 2015/2016 and FY 2016/2017. The Board approved an overall annual budget of $3,075,610 in FY 2015/2016 and $3,253,222 in FY 2016/2017. At the May 25, 2016 meeting, the PFRS Board approved and adjusted the budget for FY 2016/2017 administrative budget. The Board approved a revised annual budget of $3, 152,067 for FY 2016/2017, which reduced the adopted the annual budget by $101,155. PROPOSED CHANGES Staff recommends proposed changes to the FY 2016/2017 budget as shown in Table 1. The new proposed change reallocates budgeted funds to accurately reflect actual costs within the specified line items. The proposed changes do not result to a change to the overall budget. The total approved annual budget is approximately 0.89% of the Plan's existing investment portfolio. Increase - Administrative Costs The previously approved adjusted staff budget understated staff costs, mainly because it did not reflect the current benefit costs. These costs include costs for items such as health premiums, retirement costs and paid administrative leave as mandated in the current City of Oakland miscellaneous employee contract (MOU). The new proposed staff budget more accurately reflects the actual staff benefit costs per the current MOU. The proposed staff budget adds an additional $177,317 costs to cover existing staff salaries and benefits. Item: --- E2 PFRS Board meeting February 22, 2017

16 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM BOARD Subject: Resolution No Mid-Year Proposed Changes To The FY Administrative Budget Date: January 17, 2017 Page 2 Legal services are proposed to increase $31,618 mainly due to corrected attorney staff benefit costs, as previously discussed. PFRS budget pays for 0.5 FTE of a Deputy City Attorney IV (DCA IV). New Line Item Staff proposes adding a line item entitled Staff Training - Tuition Reimbursement. This money is proposed to be funded by reallocating $5,000 from the existing Staff Training budget, which was originally $15,000. This change is to accommodate the tuition reimbursement terms of labor MOUs. The Retirement Division currently has staff seeking tuition reimbursement and the reallocation would authorize the plan administrator to reimburse said cost. In addition, staff proposes adding an additional allocation of $10,000 for an Outside Attorney to advise specifically on PFRS growing probate and estate related matters. Those costs are proposed to be allocated from the existing Legal Contingency. These changes have no impact to the overall budget. Decrease - Money Manager Fees Money Manager Fees are currently projected to be $1,573,146. The main reason for this reduction is a projected decrease in Investment Manager Fees, which is due to a decrease in the Fund's overall investment portfolio. The overall projected savings is $208,935. Respectfully submitted, Attachments (2) : Prepared by: Teir Jenkins, Investment Officer 1. Resolution No Resolution to amend the fiscal year Police And Fire Retirement System's administrative budget to accommodate budgetary needs for understated staff costs and the addition of two new budget line items: (1) staff training- tuition reimbursement and (2) outside counsel, probate/estate 2. Table 1: Proposed Administrative Budget Changes for FY 2016/2017 Item: --- E2 PFRS Board meeting February 22, 2017

17 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION NO ON MOTION OF MEMBER SECONDED BY MEMBER RESOLUTION TO AMEND THE FISCAL YEAR POLICE AND FIRE RETIREMENT SYSTEM'S ADMINISTRATIVE BUDGET TO ACCOMMODATE BUDGETARY NEEDS FOR UNDERSTATED STAFF COSTS AND THE ADDITION OF TWO NEW BUDGET LINE ITEMS: (1) STAFF TRAINING - TUITION REIMBURSEMENT AND (2) OUTSIDE COUNSEL - PROBATE/ESTATE WHEREAS, pursuant to the Oakland City Charter Section 2601 (d), "The Board shall make an annual estimate of the cost of administering the Retirement System and shall transmit the same to the City Administrator at such time as he may direct. The amount necessary for the administration of the System shall be paid out of the Police and Fire Retirement Fund", and WHEREAS, pursuant to the Oakland City Charter Section 2601 (e), "The Board shall possess power to make all necessary rules and regulations for its guidance and shall have exclusive control of the administration and investment of the fund established for the maintenance and operation of the system, subject to the terms, conditions, limitations and restrictions hereinafter set forth", and WHEREAS, at its March 25, 2015 meeting, the Oakland Police and Fire Retirement System Board ("PFRS Board") approved a 2-year PFRS Administrative Staff Budget for Fiscal Year ("FY") and FY of $3,075,610 and $3,253,222, respectively, and WHEREAS, at its May 25, 2016 meeting, the PFRS Board approved and adjusted the FY Administrative Staff Budget to $3, 152,067, reducing the prior adopted annual budget by $101, 155, and WHEREAS, the previously approved FY adjusted Administrative Staff Budget understated staff costs, including costs for items such as health premiums, retirement costs and paid administrative leave as mandated in the current City of Oakland miscellaneous employee memorandum of understanding (MOU) as well as Staff Training and Tuition Reimbursement costs and Outside Attorney Costs, and WHEREAS, legal services are proposed to increase $31,618 mainly due to corrected attorney staff benefit costs, and WHEREAS, the new, proposed amendment to the FY adjusted staff budget adds an additional $177,317 costs to cover existing staff salaries and benefits, and

18 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA WHEREAS, a new budget line item, Staff Training - Tuition Reimbursement, is proposed to be added to reallocate $5,000 from the existing staff training budget of $15,000, to accommodate the tuition reimbursement terms of labor MOUs, and WHEREAS, a new budget line item, Outside Counsel - Probate/Estate, is proposed to be added to allocate an additional $10,000 for an Outside Attorney to advise specifically on PFRS growing probate and estate related legal needs, to be allocated from the existing Legal Contingency line item, and WHEREAS, expenditures for PFRS money manager fees (calculated as a percentage of the portfolio value) are expected to decrease by $208,935 due to a decrease in the investment portfolio value; and WHEREAS, the proposed increased and expected decreased expenditures described above will offset each other, and not change the total approved adjusted annual budget of $3,152,067 for FY , and WHEREAS, staff recommends proposed changes to the FY budget as shown in Table 1 attached hereto; now therefore, be it RESOLVED: that the PFRS Board approves the adjustments to the FY budget as described in the recitals above and as shown in Table 1 attached hereto. IN BOARD MEETING, CITY HALL, OAKLAND, CA F-=E=B-.R=U--A R Y 2=2._., 2"""'0:...;1'-'-7 PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, GODFREY, MUSZAR, SPEAKMAN, WILKINSON, AND PRESIDENT JOHNSON NOES: ABSENT: ATTEST: PRESIDENT ATTEST:,, SECRETARY

19 Table 1 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM Administrative Budget Changes FY 2016 / 2017 Approved Budget Budget Changes Amended Budget FY 2016/2017 FY 2016/2017 FY 2016/2017 Internal Administrative Costs PFRS Staff Salaries $ 807,548 $ 177,317 $ 984,865 Board Travel Expenditures 52,500 52,500 Staff Training 15,000 (5,000) 10,000 Staff Training Tuition Reimb 5,000 5,000 Annual Report 4,000 4,000 Board Hospitality 2,600 2,600 Payroll Processing Fees 35,000 35,000 Miscellaneous Expenditures 25,000 25,000 Contract Services Contingency 50,000 50,000 Internal Administrative Subtotal : $ 991,648 $ 177,317 $ 1,168,965 Actuary and Accounting Services Audit $ 45,000 $ $ 45,000 Actuary 45,000 45,000 Actuary and Accounting Subtotal: $ 90,000 $ $ 90,000 Legal Services City Attorney Salaries $ 138,338 $ 31,618 $ 169,956 Outside Legal Services Probate $ 10,000 10,000 Legal Contingency 150,000 (10,000) 140,000 Legal Services Subtotal: $ 288,338 $ 31,618 $ 319,956 Investment Services Money Manager Fees $ 1,535,581 $ (208,935) $ 1,326,646 Custodial Fee: Northern Trust 116, , Investment Consultant (PCA) 100, , PCA: Asset & Liability Study 30,000 30,000 Investment Services Subtotal: $ 1,782,081 $ (208,935) $ 1,573,146 Total Operating Budget $ 3,152,067 $ $ 3,152,067

20 CITY OF OAKLAND AGENDA REPORT TO: Oakland Police and Fire Retirement FROM: Katano Kasaine System Board SUBJECT: Proposed 2-year PFRS DATE: February 10, 2017 Administrative Staff Budget for FY 2017/2018 and FY 2018/2019 SUMMARY In order to be consistent with the City of Oakland budget process, PFRS staff is presenting a two year administrative budget that reflects proposed PFRS expenditures for FY 2017/2018 and FY 2018/2019. Staff will work to incorporate the Board approved budget into the City of Oakland overall budget. The overall PFRS budget is projected to be $3,204,100 in FY 2017/2018 and $3,260,100 in FY 2018/2019. INTERNAL ADMINISTRATIVE COSTS Internal Administrative costs are expected to increase by $9,135 in FY 2017/2018. This includes projected increases in staff salaries and miscellaneous expenditures. Staff salaries are projected to increase by $4,135 due to anticipated MOU mandated step increases and cost of living adjustments. In addition, a portion of the budget line item for Staff Training has been reallocated to Tuition Reimbursement. Finally, projected increases in Miscellaneous Expenditures are to accommodate the projected IT maintenance and support costs. INVESTMENT SERVICES The proposed Investment Services budget includes (1) Investment Manager fees (2) Custodial fees and (3) Investment Consultant fees. The total Investment Services budget is projected to be $1,612,000 in FY 2017/2018 and $1,663,000 in FY 2018/2019. Investment Service fees are projected to increase in FY 2017/2018 due to projected City contributions and the System's annual projected rate of return on the PFRS investment portfolio. The Custodial fee budget was increased by $7,500 to accommodate an increase in Custodial costs. This increase in fees was previously approved by the Board at their August 31, 2016 meeting (Resolution No. 6932). The Investment Consultant's fee is a fixed annual amount of $100,000. In FY 2018/2019 Money Manager fees are projected to increase. An increase in the PFRS investment portfolio would result in a corresponding increase to Money Manager fees. Agenda Item E3 _ PFRS Board Meeting February 22, 2017

21 OAKLAND POLICE & FIRE RETIREMENT SYSTEM AGENDA REPORT - Proposed 2-year PFRS Administrative Staff Budget for FY 2017 /20 l 8 and FY 20 l 8/20 l 9 FEBRUARY 10,2017 PAGE2 LEGAL SERVICES Total Legal Services is budgeted at $324,000 in FY 2017/2018 and in FY 2018/2019. The only projected increase in FY is based on an increase in legal staff salaries as mandated in the current MOU. Respectfully submitted, Attachments (1): Katano Kasaine, Plan Administrator Oakland Police and Fire Retirement System Table I: Oakland Police and Fire Retirement System - Two-year Proposed Administrative Budgets Agenda Item E3 _ PFRS Board Meeting February 22, 2017

22 Table 1 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM Two Year Proposed Administrative Budgets FY and FY Amended Budget Proposed Budget Budget Change Budget Change from FY FY FY FY 18 vs FY 17 FY 19 vs FY 18 Internal Administrative Costs PFRS Staff Salaries $ 984,865 $ 989,000 $ 994,000 $ 4,135 $ 5,000 Board Travel Expenditures 52,500 52,500 52, Staff Training 10,000 7,500 7,500 (2,500) - Staff Training - Tuition Reimb 5,000 7,500 7,500 2,500 - Annual Report 4,000 4,000 4, Board Hospitality 2,600 2,600 2, Payroll Processing Fees 35,000 35,000 35, Miscellaneous Expenditures 25,000 30,000 30,000 5,000 - Contract Services Contingency 50,000 50,000 50, Internal Administrative Subtotal : $ 1,168,965 $ 1,178,100 $ 1,183,100 $ 9,135 $ 5,000 Actuary and Accounting Services Audit $ 45,000 $ 45,000 $ 45,000 $ - $ - Actuary 45,000 45,000 45, Actuary and Accounting Subtotal: $ 90,000 $ 90,000 $ 90,000 $ - $ - Legal Services City Attorney Salaries $ 169,956 $ 174,000 $ 174,000 $ 4,044 $ - Outside Legal Services - Probate 10,000 10,000 10,000 Legal Contingency 140, , , Legal Services Subtotal: $ 319,956 $ 324,000 $ 324,000 $ 4,044 $ - Investment Services Money Manager Fees $ 1,326,646 $ 1,388,000 $ 1,439,000 $ 61,354 $ 51,000 Custodial Fee: Northern Trust 116, , ,000 7,500 - Investment Consultant (PCA) 100, , , PCA: Asset & Liability Study 30, (30,000) - Investment Services Subtotal: $ 1,573,146 $ 1,612,000 $ 1,663,000 $ 38,854 $ 51,000 Total Operating Budget $ 3,152,067 $ 3,204,100 $ 3,260,100 $ 52,033 $ 56,000 1 Pending Board Approval

23 CITY OF OAKLAND AGENDA REPORT TO: Oakland Police and Fire Retirement System Board FROM: Katano Kasaine, Plan Administrator Oakland Police and Fire Retirement Systems SUBJECT: Approve Printing and Distribution of PFRS Annual Report for the Fiscal Year ended June 30, 2016 DATE: January 17, 2017 RECOMMENDATION The PFRS Annual Report for the Fiscal Year ended June 30, 2016 has been completed and is submitted here for Board approval. The cost to print 41 copies of the annual report is estimated to be $ with production turnaround of approximately one week. Respectfully submitted, ~hi> /?z111~' Katano Kasaine, Plan Administrator Oakland Police and Fire Retirement System Board For questions please contact Teir Jenkins, Investment Officer, at Attachments (1): Attachment 1: DRAFT Annual Report of the Oakland Police and Fire Retirement System for the Fiscal Year Ended June 30, 2016 Item: ---- E4 PFRS Board Meeting February 22, 2017

24 POLICE & FIRE RETIREMENT SYSTEM ANNUAL REPORT Fiscal Year Ended June 30, 2016 DRAFT VERSION - FINAL

25 DRAFT VERSION - FINAL

26 CONTENTS SECTION 1: INTRODUCTION President of the Board: Letter of Transmittal to the City Council... 4 Plan Administrator: Letter of Transmittal to the Board of Administration... 5 Members of the Board of Administration... 8 Administrative Staff... 9 Professional Services... 9 Board Meeting Information... 9 SECTION 2: FINANCIAL Independent Auditor s Report for Years Ended June 30, 2016 and Management s Discussion and Analysis Financial Statements Statements of Fiduciary Net Position June 30, 2016 and Statements of Changes in Fiduciary Net Position Years Ended June 30, 2016 and Notes to Basic Financial Statements 1. Description of the Oakland Police and Fire Retirement System Summary of Significant Accounting Policies Contributions Cash, Deposits and Investments Net Pension Liability Reserves Administrative Expenses Receivable from Retired Members and Beneficiaries Contingencies Required Supplementary Information Schedule of Changes in Employer s Net Pension Liability and Related Ratios (Unaudited) Schedule of Employer Contributions (Unaudited) Schedule of Investment Returns (Unaudited) DRAFT VERSION - FINAL 1

27 SECTION 3: INVESTMENT CONTENTS (Continued) Investment Consultant s Report Investment Performance List of Investment Professionals Investment Manager Fees and Other Investment Expenses Asset Allocation as of June 30, Largest Stock Holdings, as of June 30, Largest Bond Holdings, as of June 30, Investments by Manager SECTION 4: ACTUARIAL Actuary s Certification Letter Summary of Actuarial Value, Assumptions and Funding Methods Purpose of Actuarial Valuation Valuation Summary Actuarial Definitions Actuarial Methods and Assumptions Actuarial Methods Actuarial Value of Plan Assets Actuarial Assumptions Rate of Return Inflation Cost of Living Adjustments Rates of Termination, Disability and Retirement Retirement Healthy Mortality (for service retirees and beneficiaries) Disabled Mortality (for disability retirees) Mortality Improvement Survivor Continuances Administrative Expenses Service Retired Participants Disability Retired Participants Beneficiaries Participant Data Summary Production Credits -Layout: David Low, Retirement Systems, City of Oakland -Print Production: City of Oakland Copy Services DRAFT VERSION - FINAL 2

28 SECTION 1 INTRODUCTION DRAFT VERSION - FINAL

29 LETTERS OF TRANSMITTAL CITY OF OAKLAND 150 FRANK H.OGAWA PLAZA, 3RD FLOOR OAKLAND, CALIFORNIA Finance Department (510) Treasury Bureau FAX (510) Retirement Systems TDD (510) January 31, 2017 Oakland City Council 1 Frank H. Ogawa Plaza Oakland, CA Honorable Mayor Schaaf and Members of the City Council: In compliance with Ordinance Number 713 C.M.S., I am pleased to present the annual report of the Oakland Police and Fire Retirement System for the fiscal year ended June 30, Provided in this report are the Plan s Financial information, Investment Performance, Actuarial Valuations and Statistical information for the corresponding year. The members of the Board express their appreciation to the Mayor and City Council, City Manager, City Attorney, the various City Agencies and Departments and the members of their staff for their cooperation and assistance. Respectfully submitted, Walter L. Johnson, Sr., President Oakland Police and Fire Retirement System DRAFT VERSION - FINAL 4

30 LETTERS OF TRANSMITTAL CITY OF OAKLAND 150 FRANK H.OGAWA PLAZA, 3RD FLOOR OAKLAND, CALIFORNIA Finance Department (510) Treasury Bureau FAX (510) Retirement Systems TDD (510) January 31, 2017 Oakland Police and Fire Retirement Board 150 Frank H. Ogawa Plaza, Suite 3332 Oakland CA Board of Administration: I am pleased to present the Annual Report of the Oakland Police and Fire Retirement System for the fiscal year ended June 30, ACCOUNTING SYSTEM The accompanying financial statements have been prepared in compliance with Section 2600 of the City Charter and in accordance with the accounting and reporting principles set forth in Governmental Accounting Standards Board (GASB) statements for financial reporting of pension plans. These statements establish financial reporting standards for defined benefits plans and for the notes to the financial statements of defined contribution plans of state and local entities. The method for recording revenues and expenses is on an accrual basis. Revenue is taken into account when earned, regardless of the date of the collection, and expenses are recorded when the corresponding liabilities are incurred instead of when payment is made. Amortization of bond premiums and discounts are over the life of the investment security and actuarial reserves are funded via the entry age normal cost method. DRAFT VERSION - FINAL 5

31 LETTERS OF TRANSMITTAL ADDITIONS Additions to the plan includes all income received into the Plan for the Fiscal Year. Pension Plan's sources of income include items such as contributions and investment income. Total additions for the fiscal year ended June 30, 2016 were $2,174,451. This amount includes a net investment loss of $1,418,645. Net investment includes appreciation or depreciation in fair value of investments, interest income and dividend income less investment expenses during the fiscal year. As of June 30, 2016 the System membership consisted of only retirees and beneficiaries. On July 30, 2012, the City deposited $210 million from the issuance of Pension Obligation Bonds into the System. As a result of a funding agreement entered into between the System s Board and the City of Oakland, no additional contributions are required until July 1, DEDUCTIONS Total deductions from the plan in the fiscal year ended June 30, 2016 were $59,817,102. The primary deductions are for pension payments to members and qualified beneficiaries. RESERVES AND FUNDING The Police and Fire Retirement System s most recent actuarial study was as of July 1, Details regarding this actuarial study can be found in Section 4 of this annual report. As of July 1, 2015 the Plan was 65.3% funded with an actuarial present value of future City contributions of $247.5 million. The funded status is defined as the difference between the projected City liability and the actuarial value of assets. In July 2012, the City contributed $210 million in Pension Obligation Bond proceeds into the System, which lowered the unfunded liability. INVESTMENTS The Police and Fire Retirement System Investment Policy is used as a guideline for all investment activities. The Investment Policy includes an asset allocation plan. The plan consists of six asset classes: Domestic Stocks, International Stocks and Fixed Income, Covered Calls, Real Returns and Private Equity Instruments. In addition, the Policy also allocates among the different investment management styles. DRAFT VERSION - FINAL 6

32 LETTERS OF TRANSMITTAL In November 2006, Oakland voters passed Measure M, which modified the City Charter to allow the PFRS Board to invest in non-dividend paying stocks and to switch the asset allocation structure from 50% equities and 50% fixed income to the Prudent Person Standard. Total investment income resulted in a loss of $1,418,645 in fiscal year The actual time-weighted annual investment return for fiscal year 2016 was -0.03%. GASB Statement No. 67 required that investments be reported at fair value. The appreciation (depreciation) in fair value of investments held by PFRS is recorded as an increase (decrease) in investment income based on the valuation of investments at year-end. The historical rates of return on the portfolios are as follows: Total Returns % 1 Year 3 Year 5 Year Total Fund -0.3 % 6.5 % 6.0 % ACKNOWLEDGEMENTS The compilation of this report reflects the combined efforts of the Retirement System Administration Staff, the Board of Administration, and various professional consultants. Its intent is to provide complete and reliable information to the beneficiaries of the Plan, to serve as a basis for making management decisions, and to ensure compliance with legal provisions affecting the administration of the Plan. Respectfully submitted, Katano Kasaine Plan Administrator DRAFT VERSION - FINAL 7

33 MEMBERS OF THE BOARD OF ADMINISTRATION Jaime T. Godfrey Vice President Bank Representative Walter L. Johnson President Community Representative Staff Liaison Katano Kasaine Plan Administrator Legal Advisor, City of Oakland Pelayo Llamas Deputy City Attorney John C. Speakman Fire Department Representative James F. Cooper Police Department Representative (replaced by Robert J. Muszar on August 31, 2016) R. Steven Wilkinson Insurance Representative Christine Daniel Mayoral Designate (replaced Osborn Solitei on August 19, 2015) Steven J. Bernard Alternating Police / Fire Representative (replaced Ronald Oznowicz on August 31, 2016) DRAFT VERSION - FINAL 8

34 ADMINISTRATIVE STAFF PROFESSIONAL SERVICES Over the past year the Board of Administration has engaged the following consultants to assist in making investments and in developing a sound retirement plan: Actuary Auditors Custodial Service Investment Consultant Cheiron, Inc. Macias Gini & O Connell LLP The Northern Trust Company Pension Consulting Alliance, Inc. A complete list of Investment Professionals is included on page 52 of this Annual Report. BOARD MEETING INFORMATION Meeting Location.. 1 Frank H. Ogawa Plaza, Oakland, CA Date... Last Wednesday of each month (except in November & December) Time... 1:00 PM For more information, visit our website at DRAFT VERSION - FINAL 9

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36 SECTION 2 FINANCIAL DRAFT VERSION - FINAL

37 INDEPENDENT AUDITOR S REPORT For The Years Ended June 30, 2016 and 2015 DRAFT VERSION - FINAL 12

38 INDEPENDENT AUDITOR S REPORT For The Years Ended June 30, 2016 and 2015 DRAFT VERSION - FINAL 13

39 Management s Discussion & Analysis As management of the Oakland Police and Fire Retirement System (System), we offer readers of the System s financial statements this narrative overview and analysis of the financial activities of the System for the fiscal years ended June 30, 2016 and We encourage readers to consider the information presented here in conjunction with the System s financial statements that follow this section. This discussion and analysis is presented in the following sections: Organizational Overview and Highlights Financial Statement Overview Financial Analysis: 2016 vs Financial Analysis: 2015 vs Requests For Additional Information ORGANIZATIONAL OVERVIEW AND HIGHLIGHTS The City of Oakland City Charter established the System and provides for its funding. Accordingly, the System is an integral part of the City of Oakland (City) and its operations have been reported as a Pension Trust Fund in the City s basic financial statements. The System is a closed, single employer, defined benefit pension plan that provides retirement, disability and survivor benefits for eligible sworn safety employees of the City. The System serves the City s sworn employees hired prior to July 1, 1976 who have not transferred to the California Public Employees Retirement System (CalPERS). The System is governed by a board of seven trustees; the Mayor or his/her designate, three Mayoral appointees approved by the City Council, an elected active or retired member of the Police Department, an elected active or retired member from the Fire Department, and an elected member position which alternates between the Police Department and Fire Department membership. Trustees receive no compensation. The System has been funded by periodic employee and City contributions at actuarially determined amounts sufficient to accumulate the necessary assets to pay benefits when due as specified by the City Charter, unless the Board and the City have agreed to other funding options. In accordance with the City Charter, active members hired after July 1, 1951, and prior to July 1, 1976, contribute a percentage of their earned salaries based upon entry age as determined by consulting actuaries. During the years ended DRAFT VERSION - FINAL 14

40 June 30, 2016 and 2015, the employee contribution rates was 0% for both years. The City Charter limits employee contributions to 13.00% of earned salaries. Employee contributions are refundable with interest at 4.00% if an employee elects to withdraw from the System upon termination with the City. There are no active participants in the Plan as of June 30, 2016 and In July 2012, the City deposited $210 million in pension obligation bond proceeds into the System and entered into a funding agreement with the System Board, which suspended contributions until the fiscal year beginning July 1, As of June 30, 2016, the total pension liability of $670.1 million less the fiduciary net position of $361.6 million results in a net pension liability of approximately $308.5 million. The fiduciary net position as a percentage of the total pension liability is 54.0%. As of June 30, 2015, the total pension liability of $635.6 million less the fiduciary net position of $419.3 million results in a net pension liability of approximately $216.3 million. The fiduciary net position as a percentage of the total pension liability is 66.0%. The System membership at June 30, 2016 is 929, which includes 639 retirees and 290 beneficiaries. The System membership at June 30, 2015 was 961. The following are the significant assumptions used to compute contribution requirements in the July 1, 2015 Actuarial Valuation Report: Select and ultimate rates, equal to 6.44% single equivalent investment rate of return 2.75% inflation rate, US 2.85% inflation rate, Bay Area 3.25% long-term post-retirement benefit increases City contributions are based on spreading costs as a level percentage of the City s total uniform payroll to July 1, The System uses the entry age normal cost method for its disclosure and reporting. The next required City contribution is projected to be approximately $37.3 million in FY 2017/2018. DRAFT VERSION - FINAL 15

41 FINANCIAL STATEMENT OVERVIEW This annual financial report consists of three parts management s discussion and analysis (this section), the financial statements and required supplementary information. The financial statements include Statements of Fiduciary Net Position; Statements of Changes in Fiduciary Net Position; and the Notes to the Basic Financial Statements. The Statements of Fiduciary Net Position and the Statements of Changes in Fiduciary Net Position report information to assist readers in determining whether the System s finances as a whole have improved or deteriorated as a result of the year s activities. These statements report the net position of the System and the activities that caused the changes in the net position during the year, respectively. The Statements of Fiduciary Net Position present information on all System assets and liabilities, with the difference between the two reported as net position restricted for pensions. Over time, increases or decreases in net position restricted for pensions may serve as a useful indicator of whether the financial condition of the System is improving or deteriorating. While the Statements of Fiduciary Net Position provide information about the nature and amount of resources and obligations at year-end, the Statements of Changes in Fiduciary Net Position present the results of the System s activities during the fiscal year and information on the change in the net position restricted for pensions during the fiscal year. The Statements of Changes in Fiduciary Net Position measure the results of the System s investment performance as well as its additions from contributions and investment income and deductions for payment of benefits and administrative expenses. The Statements of Changes in Fiduciary Net Position can be viewed as indicators of the System s progress on the set goals of fully funding all current and past service costs and possessing sufficient additional resources to pay for current refunds of contributions and administrative and investment expenses. The Notes to the Basic Financial Statements and Required Supplementary Information provide explanations and other information that is helpful to a full understanding of the data provided in the financial statements. The Notes to Financial Statements and Required Supplementary Information are found starting on page 24 and page 45, respectively. DRAFT VERSION - FINAL 16

42 FINANCIAL ANALYSIS: 2016 VS Table 1 summarizes net position restricted for pensions as of June 30, 2016 and 2015: Table 1 Statements of Fiduciary Net Position As of June 30, 2016 and 2015 June 30 Change Amount Percentage Assets: Cash and deposits $ 2,535,941 $ 3,107,965 $ (572,024) -18.4% Receivables 8,754,618 8,206, , % Investments 403,682, ,158,231 (70,475,574) -14.9% Total Assets 414,973, ,472,549 (70,499,333) -14.5% Liabilities: Benefits payable 42,160 58,590 (16,430) -28.0% Accounts payable 4,833,586 4,767,304 66, % Investments payable 3,108,675 5,771,685 (2,663,010) -46.1% Accrued investment management fees 335, ,693 (59,276) -15.0% Securities lending liabilities 45,042,141 55,226,389 (10,184,248) -18.4% Total liabilities 53,361,979 66,218,661 (12,856,682) -19.4% Net position: Restricted for pensions $ 361,611,237 $ 419,253,888 $ (57,642,651) -13.7% Net position restricted for pensions decreased $57,642,651 from June 30, 2015 to June 30, The main sources of this decrease was benefit payments of $58,441,353. As of June 30, 2016, the System has $3.3 million of receivables from retired members and beneficiaries for overpayments of excessive holidays and the shift differential premium. The remaining fluctuations in receivables and investments payable are primarily due to investment trading at year end, where the outstanding balances represent investments either sold or purchased, but not yet settled. DRAFT VERSION - FINAL 17

43 Table 2 summarizes changes in net position restricted for pensions for the years ended June 30, 2016 and 2015: Table 2 Statements of Changes in Fiduciary Net Position For the Years Ended June 30, 2016 and 2015 June 30 Change Amount Percentage Additions: Net investment income/(loss) $ (1,418,645) $ 15,335,097 $ (16,753,742) % Other additions 3,593, ,489 3,489, % Total additions 2,174,451 15,438,586 (13,264,135) -85.9% Deductions: Benefits to members and beneficiaries 58,441,353 59,007,536 (566,183) -1.0% Administrative expenses 1,307, , , % Other expenses 68,180-68,180 n/a Total deductions 59,817,102 59,992,763 (175,661) -0.3% Changes in net position (57,642,651) (44,554,177) (13,088,474) 29.4% Net position restricted for pensions: Beginning of year 419,253, ,808,065 (44,554,177) -9.6% End of year $361,611,237 $419,253,888 $ (57,642,651) -13.7% The System s net investment loss for the year ended June 30, 2016 was $1,418,645, mainly due to net depreciation in fair value and investment drawdowns for the purposes of paying benefit payments. The time-weighted annual returns for the year ended June 30, 2016 was -0.3%, compared to a benchmark return of 2% and an actuarial expected rate of return of 6.44%. Other additions increased by $3,489,607 in fiscal year 2016 due to a court decision that resulted in the initiation of collections of overpayments from certain police retirees over 48 months. The System paid $58,441,353 in pension benefits in fiscal year 2016 and $59,007,536 in fiscal year This decrease reflects the ongoing reduction in the System s membership. DRAFT VERSION - FINAL 18

44 FINANCIAL ANALYSIS: 2015 VS Table 3 summarizes net position restricted for pensions as of June 30, 2015 and 2014: Table 3 Statements of Fiduciary Net Position As of June 30, 2015 and 2014 June 30 Change Amount Percentage Assets: Cash and deposits $ 3,107,965 $ 4,223,005 $ (1,115,040) -26.4% Receivables 8,206,353 9,076,292 (869,939) -9.6% Investments 474,158, ,473,040 (62,314,809) -11.6% Total Assets 485,472, ,772,337 (64,299,788) -11.7% Liabilities: Benefits payable 58,590 4,708,124 (4,649,534) -98.8% Accounts payable 4,767,304 4,610 4,762, % Investments payable 5,771,685 6,641,174 (869,489) -13.1% Accrued investment management fees 394,693 31, , % Securities lending liabilities 55,226,389 74,579,082 (19,352,693) -25.9% Total liabilities 66,218,661 85,964,272 (19,745,611) -23.0% Net position: Restricted for pensions $419,253,888 $ 463,808,065 $ (44,554,177) -9.6% Net position restricted for pensions decreased $44,554,177 from June 30, 2014 to June 30, The main sources of this decrease was benefit payments of $59,007,536. The System s security lending was lower as a result of a reduction in lendable assets and loan volume. The fluctuations in receivables and investments payable are primarily due to investment trading at year end, where the outstanding balances represent investments either sold or purchased, but not yet settled. DRAFT VERSION - FINAL 19

45 Table 4 summarizes changes in net position restricted for pensions for the years ended June 30, 2015 and 2014: Table 4 Statements of Changes in Fiduciary Net Position For the Years Ended June 30, 2015 and 2014 June 30 Change Amount Percentage Additions: Contributions $ - $ 4,441 $ (4,441) % Net investment income 15,335,097 66,233,018 (50,897,921) -76.8% Other Income 103, ,391 (55,902) Total additions 15,438,586 66,396,850 (50,902,362) -76.7% Deductions: Benefits to members and beneficiaries 59,007,536 57,409,113 1,598, % Administrative expenses 985, , , % Total deductions 59,992,763 58,185,225 1,807, % Changes in net position (44,554,177) 8,211,625 (52,765,802) % Net position restricted for pensions: Beginning of year 463,808, ,596,440 8,211, % End of year $ 419,253,888 $ 463,808,065 $ (44,554,177) -9.6% The System s investment income for the years ended June 30, 2015 and 2014 were $15,335,097 and $66,233,018, respectively. The corresponding time-weighted annual returns for these two years were 4.0% and 16.4%, respectively, compared to benchmark returns of 4.0% and 14.6%, respectively. The System paid $59,007,536 in pension payments in fiscal year 2015 and $57,409,113 in fiscal year This increase is due to mandated increases in pension benefits and the expiration of fire retiree concessions. DRAFT VERSION - FINAL 20

46 REQUESTS FOR ADDITIONAL INFORMATION This financial report is designed to provide a general overview of the System s finances and to account for the money that the System receives. Questions concerning any of the information provided in this report or requests for additional information should be addressed to: Retirement Systems City of Oakland 150 Frank H Ogawa Plaza, Suite 3332 Oakland, CA DRAFT VERSION - FINAL 21

47 Oakland Police and Fire Retirement System Statements of Fiduciary Net Position June 30, 2016 and 2015 Assets Cash and Cash Equivalents $ 2,535,941 $ 3,107,965 2,535,941 3,107,965 Receivables: Interest Receivable 271, ,702 Dividends Receivable 261, ,684 Investments Receivable 4,766,696 7,403,868 Retired Members and Beneficiaries 3,288,355 - Miscellaneous 166, ,099 Total Receivables 8,754,618 8,206,353 Investments, at Fair Value: Short-Term Investments 6,897,102 8,970,199 Bonds 63,787,187 71,538,669 Domestic Equities and Mutual Funds 174,112, ,303,231 International Equities and Mutual Funds 40,222,512 48,115,329 Alternative Investments 73,591,572 83,969,658 Foreign Currency Contracts, Net 29,281 34,756 Securities Lending Collateral 45,042,141 55,226,389 Total Investments 403,682, ,158,231 Liabilities Total Assets 414,973, ,472,549 Accounts Payable 42,160 58,590 Benefits Payable 4,833,586 4,767,304 Investments Payable 3,108,675 5,771,685 Investment Management Fees Payable 335, ,693 Securities Lending Liabilities 45,042,141 55,226,389 Total Liabilities 53,361,979 66,218,661 Net Position Restricted for Pensions $ 361,611,237 $ 419,253,888 See accompanying notes to basic financial statements. DRAFT VERSION - FINAL 22

48 Oakland Police and Fire Retirement System Statements of Changes in Fiduciary Net Position Years Ended June 30, 2016 and 2015 Additions Investment Income: Net Appreciation (Depreciation) in Fair Value of Investments $ (6,463,104) $ 9,131,946 Interest 1,948,103 2,414,795 Dividend 4,436,573 5,344,494 Less: Investment Expenses (1,520,860) (1,748,592) Net Appreciation (Depreciation) in Fair Value of Investments (1,599,288) 15,142,643 Securities Lending Income: Securities Lending Earnings 272, ,953 Securities Lending Expenses (91,805) (81,499) Net Securities Lending Income 180, ,454 Net Investment Income (Loss) (1,418,645) 15,335,097 Claims and Settlements 3,593, ,489 Total Additions 2,174,451 15,438,586 Deductions Benefits to Members and Beneficiaries: Retirement 35,664,078 35,669,056 Disability 21,070,856 21,537,455 Death 1,706,419 1,801,025 Total Benefits to Members and Beneficiaries 58,441,353 59,007,536 Administrative Expenses 1,307, ,227 Other Expenses 68,180 - Total Deductions 59,817,102 59,992,763 Change in Net Position (57,642,651) (44,554,177) Net Position Restricted for Pensions Beginning of Year 419,253, ,808,065 End of Year $ 361,611,237 $ 419,253,888 See accompanying notes to basic financial statements. DRAFT VERSION - FINAL 23

49 Notes to Basic Financial Statements For Years Ended June 30, 2016 and Description of the Oakland Police and Fire Retirement System The Oakland Police and Fire Retirement System (System) is a closed, single-employer defined benefit pension plan (Plan) established by the City of Oakland (City) Charter. The System is governed by a board of seven trustees (Board); the City Mayor or his/her designate, three Mayoral appointees approved by the City Council, an elected active or retired member of the Police Department, an elected active or retired member from the Fire Department, and an elected member position which alternates between the Police Department and Fire Department membership. Trustees receive no compensation. As a result of a City Charter amendment, known as Measure R approved by the electorate on June 8, 1976, membership in the Plan is limited to uniformed employees hired prior to July 1, The System is exempt from the regulations of the Employee Retirement Income Security Act of The System is also exempt from federal and California income taxes. a) System Membership At June 30, 2016 and 2015, the System membership consisted of only retirees and beneficiaries. The System s membership is as follows: Retirees and beneficiaries currently receiving benefits: Police Fire Total b) Basic Benefit Provisions The City Charter establishes plan membership, contribution, and benefit provisions. The System provides that any member who completes at least 25 years of service, regardless of age, or completes 20 years of service and attains age 55, or has attained age 65, is eligible for retirement benefits. The basic retirement allowance equals 50% of the compensation attached to the average rank held during the three years immediately preceding retirement, plus an additional allowance of 1 and 2/3% of such compensation for each year of service (up to ten) subsequent to (a) qualifying for retirement and (b) July 1, However, any member retiring at age 65 with less than 20 years of service shall receive a reduced retirement allowance based upon the number of years of service. A member is eligible for early retirement benefits after 20 DRAFT VERSION - FINAL 24

50 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 to 24 years of service with a retirement allowance based upon 40% to 48% of the compensation attached to the average rank held during the three years preceding retirement. Additionally, a member with 10 to 19 years of service may retire and, on or after the 25th anniversary of his/her date of employment may receive a retirement allowance based upon 20% to 38% of the compensation attached to the average rank held during the three years preceding retirement. The System also provides for various death, disability, and survivors benefits. Death and disability benefits are paid to eligible members who became disabled or passed away prior to retirement. If the member s death or disability is duty related, then the surviving spouse or member is paid a pension equivalent to an immediate service retirement. The duty related death or disability pension is paid at a level no less than 50% of the pay attached to the rank. If a death occurs after retirement, then a one-time payment of $1,000 is paid to the member s designated beneficiary. After retirement, members receive benefits based on a fixed monthly dollar amount. Pension amounts change based on changes to the compensation attached to the average rank. Upon a retiree s death, benefits are continued to an eligible surviving spouse at a two-thirds level for service and non-duty disabled retirees and at a 100% level for retirements for duty disability. 2. Summary of Significant Accounting Policies a) Basis of Presentation The System is reported as a pension trust fund in the City s basic financial statements. The financial statements of the System present only the financial activities of the System and are not intended to present the financial position and changes in financial position of the City in conformity with accounting principles generally accepted in the United States of America. b) Measurement Focus and Basis of Accounting The financial statements are prepared on a flow of economic resources measurement focus using the accrual basis of accounting. Contributions are recognized in the period in which the contributions are due pursuant to formal commitments as well as statutory or contractual requirements, and benefits and refunds are recognized when payable under plan provisions. DRAFT VERSION - FINAL 25

51 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 c) Methods Used to Value Investments Investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments that do not have an established market are reported at estimated fair values based on the net asset value as determined by the fund manager based on quoted market prices of fund holdings or values provided by the custodian or the applicable money manager. d) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. e) Implementation of New Accounting Pronouncements In fiscal year 2016, the System adopted Governmental Accounting Standards Board Statement No. 72, Fair Value Measurement and Application (GASB 72). GASB 72 requires the use of valuation techniques which are appropriate under the circumstances and are either a market approach, a cost approach or income approach. GASB 72 establishes a hierarchy of inputs used to measure fair value consisting of three levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs, and typically reflect management s estimates of assumptions that market participants would use in pricing the asset or liability. There was no material impact on the System s financial statements as a result of the implementation of GASB 72. Disclosures on the hierarchy of inputs can be found in note 4.e) to the financial statements. f) Reclassifications Certain amounts in the 2015 basic financial statements have been reclassified for comparative purposes to conform to the presentation in the 2016 basic financial statements. The fiduciary net position was not affected by such reclassifications. DRAFT VERSION - FINAL 26

52 3. Contributions Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 In accordance with the City Charter, active members hired after July 1, 1951, and prior to July 1, 1976, contribute a percentage of their earned salaries based upon entry age as determined by consulting actuaries. During the year ended June 30, 2016 there were no employee contributions. In March 1997, the City issued pension obligation bonds and deposited $417 million into the System to pay the City s contributions through June In accordance with an agreement entered into at the time the pension obligation bonds were issued in 1997, the City was not expected to contribute until July In the year ended June 30, 2005, the City transferred excess proceeds of $17.7 million from the Oakland Joint Powers Financing Authority Refunding Revenue 2005 Series B Bond to fund a portion of the City s future obligation to the System. Effective July 1, 2011, the City resumed contributing to the System. The City contributed $45.5 million in the year ended June 30, Using the current actuarial cost method, these contributions are based on spreading costs as a level percentage of all uniformed employees compensation through June 30, Budgeted administrative expenses are included in the City contribution rates. The City must contribute, at a minimum, such amounts as are necessary, on an actuarial basis, to provide assets sufficient to meet benefits to be paid to plan members. On July 30, 2012, the City contributed $210 million to the System. As a result of a funding agreement entered into between the System s Board and the City no additional contributions are required until July 1, Cash, Deposits and Investments a) Investment Policy The System s investment policy authorizes investment in U.S. equities, international equities, U.S. fixed income instruments including U.S. Treasury notes and bonds, government agency mortgage backed securities, U.S. corporate notes and bonds, collateralized mortgage obligations, Yankee bonds and non U.S.-issued fixed income securities denominated in foreign currencies. The System s investment portfolio is managed by external investment managers, except for the bond ishares which are managed internally. During the years ended June 30, 2016 and 2015, the number of external investment managers was eleven and twelve, respectively. DRAFT VERSION - FINAL 27

53 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 The System investments are also restricted by the City Charter. In November 2006, City voters passed Measure M to amend the City Charter to allow the System s Board to invest in nondividend paying stocks and to change the asset allocation structure from 50% equities and 50% fixed income to the Prudent Person Standard as defined by the California Constitution. The System s Investment Policy limits fixed income investments to a maximum average duration of 10 years and a maximum remaining term to maturity (single issue) at purchase of 30 years, with targeted portfolio duration of between 3 to 8 years and targeted portfolio maturity of 15 years. The System s investment policy allows the fixed income managers to invest in securities with a minimum rating of B- or higher as long as the portfolio maintains an average credit quality of BBB (investment grade using Standard & Poor s, Moody s or Fitch ratings). The System s investment policy states that investments in securities known as collateralized mortgage obligations (CMOs) shall be limited to a maximum of 20% of a broker account s fair value with no more than 5% in any one issue. CMOs are mortgage-backed securities that create separate pools of pass-through rates for different classes of bondholders with varying maturities. The fair values of CMOs are considered sensitive to interest rate changes because they have embedded options. The Investment Policy allows for each fixed income asset manager to have a maximum of 10% of any single security investment in their individual portfolios with the exception of U.S. government securities, which is allowed to have a maximum of 25% in each manager s portfolio. The following was the Board s adopted asset allocation policy as of June 30, 2016: Asset Class Target Allocation Fixed Income 20% Real Return 10 Covered Calls 10 Domestic Equity 43 International Equity 12 Private Equity 5 Total 100% The Board s target allocation does not include cash and cash equivalents, which are designated for approved administrative budget purposes. DRAFT VERSION - FINAL 28

54 b) Concentrations Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 GASB Statement No. 40 and GASB Statement No. 67 require the disclosure of investments in any one organization that represent 5 percent or more of the System s fiduciary net position. As of June 30, 2016 and 2015, the System did not hold investment in any single issuer that exceeded 5% of its fiduciary net position. c) Rate of Return The money-weighted rate of return is a measure of the rate of return for an asset or portfolio of assets that incorporates the size and timing of cash flows. For the years ended June 30, 2016 and 2015, the annual money-weighted rates of return on pension plan investments, net of pension plan investment expenses, were -0.75% and 3.9%, respectively. d) Cash and Cash Equivalents As of June 30, 2016 and 2015, cash and cash equivalents consisted of cash in treasury held in the City s cash and investment pool as well as cash deposits held in bank and with a custodian. Funds in the City Treasury are invested according to the investment policy adopted by the City Council. Interest earned in the City Treasury is allocated monthly to all participants based on the average daily cash balance maintained by the respective funds. Information regarding the characteristics of the entire investment pool can be found in the City s June 30, 2016 basic financial statements. As of June 30, 2016 and 2015, the System s share of the City s investment pool totaled $2,528,794 and $3,047,327, respectively. The System also had cash not included in the City s investment pool. As of June 30, 2016 and 2015, the System s cash and cash deposits not held in the City s investment pool totaled $7,147 and $60,638, respectively. e) Hierarchy of Inputs The System categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. DRAFT VERSION - FINAL 29

55 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 The System has the following recurring fair value measurements as of June 30, 2016: 2016 Level One Level Two Level Three Total Investments by fair value level: Short-Term Investments $ - $ 1,675,992 $ - $ 1,675,992 Bonds - 55,706, ,249 55,876,478 Domestic Equities and Mutual Funds 117,502, ,502,276 International Equities and Mutual Funds 27,991, , ,355 28,494,929 Alternative Investments 73,591, ,591,572 Total investments by fair value level $ 219,085,115 $ 57,725,528 $ 330, ,141,247 Investments measured at net asset value (NAV): Short-Term Investments 5,221,110 Fixed Income Funds 7,910,709 Domestic Equities and Mutual Funds 56,610,586 International Equities and Mutual Funds 11,727,583 Securities Lending Collateral 45,042,141 Total investments measured at NAV 126,512,129 Total investments measured at fair value $403,653,376 The System has the following recurring fair value measurements as of June 30, 2015: 2015 Level One Level Two Level Three Total Investments by fair value level: Short-Term Investments $ - $ 2,007,553 $ - $ 2,007,553 Bonds - 61,091, ,228 61,273,766 Domestic Equities and Mutual Funds 146,017, , ,143,762 International Equities and Mutual Funds 33,463, ,478 5,062 33,991,879 Alternative Investments 43,145, ,145,667 Total investments by fair value level $ 222,626,837 $ 63,748,500 $ 187, ,562,627 Investments measured at net asset value (NAV): Short-Term Investments 6,962,646 Fixed Income Funds 10,264,903 Domestic Equities and Mutual Funds 60,159,469 International Equities and Mutual Funds 14,123,450 Alternative Investments 40,823,991 Securities Lending Collateral 55,226,389 Total investments measured at NAV 187,560,848 Total investments measured at fair value $474,123,475 DRAFT VERSION - FINAL 30

56 f) Interest Rate Risk Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. As described previously, the System s Investment Policy limits fixed income investments to a maximum average duration of 10 years and a maximum remaining term to maturity (single issue) at purchase of 30 years, with targeted portfolio duration of between 3 to 8 years and targeted portfolio maturity of 15 years. The weighted average duration for the System s fixed income investment portfolio excluding fixed income short-term investments and securities lending investments was 5.39 years as of June 30, 2016 and 5.19 years as of June 30, The following summarizes the System s fixed income investments by category as of June 30, 2016 and 2015: Short-Term Investment Duration Investment Type Modified Modified Duration Duration Fair Value (Years) Fair Value (Years) Short-Term Investment Funds $ 6,897,102 n/a $ 8,970,199 n/a Foreign Currency Exchange Contracts, Net 29,281 n/a 34,756 n/a Long-Term Investment Duration Investment Type Modified Modified Duration Duration Fair Value (Years) Fair Value (Years) Fixed Income Investments U.S. Government Bonds U.S. Treasuries $14,908, $13,338, Government Agencies 17,403, ,743, Total U.S. Government Bonds 32,311,447 32,082,266 Corporate and Other Bonds Corporate Bonds $30,988, $38,785, Other Government Bonds 487, , Total Corporate and Other Bonds 31,475,740 39,456,403 Total Fixed Income Investments $63,787, $71,538, Securities Lending $45,042,141 0 $55,226,389 0 DRAFT VERSION - FINAL 31

57 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 g) Fair Value Highly Sensitive to Change in Interest Rates The terms of a debt investment may cause its fair value to be highly sensitive to interest rate changes. The System has invested in CMOs, which are mortgage-backed bonds that pay passthrough rates with varying maturities. The fair values of CMOs are considered sensitive to interest rate changes because they have embedded options, which are triggers related to quantities of delinquencies or defaults in the loans backing the mortgage pool. If a balance of delinquent loans reaches a certain threshold, interest and principal that would be used to pay junior bondholders is instead directed to pay off the principal balance of senior bondholders, shortening the life of the senior bonds. The following are the System s investments in CMOs at June 30, 2016: Investment Type Weighted Average Coupon Rate Weighted Average Maturity (Years) Fair Value Percent of Total Investments Fair Value Mortgage-backed securities 3.37% $20,455, % The following are the System s investments in CMOs at June 30, 2015: Investment Type Weighted Average Coupon Rate Weighted Average Maturity (Years) Fair Value Percent of Total Investments Fair Value Mortgage-backed securities 3.52% $20,744, % DRAFT VERSION - FINAL 32

58 h) Credit Risk Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligation. The following provides information concerning the credit risk of fixed income securities as of June 30, 2016 and June 30, 2015: Short-Term Investment Ratings Investment Type S&P Moody s/ Fitch Rating Fair Value S&P Moody s/ Fitch Rating Fair Value Short-Term Investment Funds Not Rated $6,897,102 Not Rated $8,970,199 Foreign Currency Exchange Contracts, Net Not Rated 29,281 Not Rated 34,756 Long-Term Investment Ratings Percentage of Total Percentage of Total S&P / Moody s Rating Fair Value Fair Value Fair Value Fair Value AAA/Aaa $37,457, % $36,382, % AA/Aa 2,539, % 2,886, % A/A 6,172, % 9,733, % BBB/Baa 9,313, % 11,359, % BB/Ba 241, % 252, % B/B % 10,414, % CCC/Caa % % Not Rated 152, % 509, % $63,787, % $ 71,538, % Securities Lending Ratings S&P / Moody's Rating 2016 Fair Value 2015 Fair Value Not Rated $ 45,042,141 $ 55,226,389 DRAFT VERSION - FINAL 33

59 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 i) Custodial Credit Risk Custodial credit risk is the risk that, in the event of a failure of a depository financial institution or counterparty to a transaction, there will be an inability to recover the value of deposits, investments, or collateral securities in the possession of an outside party. The California Government Code requires that governmental securities or first trust deed mortgage notes be used as collateral for demand deposits and certificates of deposit at 110 percent and 150 percent, respectively, of all deposits not covered by federal deposit insurance. As the City holds cash and certificates of deposit on behalf of the System, the collateral must be held by the pledging financial institution s trust department and is considered held in the City s name. For all other System deposits, the collateral must be held by the pledging financial institution s trust department and is considered held in the System s name. The City, on behalf of the System, does not have any funds or deposits that are not covered by depository insurance, which are either uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with securities held by the pledging financial institution s trust department or agent, but not in the City s name. The System does not have any investments that are not registered in the name of the System and are either held by the counterparty or the counterparty s trust department or agent but not in the System s name. j) Foreign Currency Risk Foreign currency risk is the risk that changes in foreign exchanges rates will adversely affect the fair values of an investment or deposit. Currency hedging is allowed under the System s investment policy for defensive purposes only. The investment policy limits currency hedging to a maximum of 25% of the portfolio value. DRAFT VERSION - FINAL 34

60 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 The following summarizes the System s investments denominated in foreign currencies as of June 30, 2016 and 2015: Fair Value Foreign Currency June 30, 2016 June 30, 2015 Australian Dollar $ 320,983 $ 524,535 Brazilian Real 220, ,368 British Pound 4,348,654 6,073,474 Canadian Dollar 594, ,477 Danish Krone 697, ,901 Euro 7,801,015 7,759,012 Hong Kong Dollar 2,982,622 3,580,939 Indonesian Rupiah 390, ,032 Japanese Yen 2,994,927 3,788,553 Mexican Peso 614, ,627 Norwegian Krone 195, ,907 Singapore Dollar 219, ,606 Swedish Krona 295, ,986 Swiss Franc 2,187,429 3,307,765 Turkish Lira 103, ,092 Total $ 23,966,656 $ 28,985,274 k) Securities Lending Transactions The System s investment policy authorizes participation in securities lending transactions, which are short-term collateralized loans of the System s securities to broker-dealers with a simultaneous agreement allowing the System to invest and receive earnings on the collateral received. All securities loans can be terminated on demand by either the System or the borrower, although the average term of loans is one week. The administrator of the System s securities lending activities is responsible for maintaining an adequate level of collateral in an amount equal to at least 102% of market value of loaned U.S. government securities, common stock and other equity securities, bonds, debentures, corporate debt securities, notes, and mortgages or other obligations. Collateral received may include cash, letters of credit, or securities. The term to maturity of the loaned securities is generally not matched with the term to maturity of the investment of the said collateral. If securities collateral is received, the System cannot pledge or sell the collateral securities unless the borrower defaults. DRAFT VERSION - FINAL 35

61 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 As of June 30, 2016 and 2015, management believes the System has minimized its credit risk exposure to borrowers because the amounts held by the System as collateral exceeded the securities loaned by the System. The System s contract with the administrator requires it to indemnify the System if the borrowers fail to return the securities (and if the collateral is inadequate to replace the securities borrowed) or fails to pay the System for income distributions by the securities issuers while the securities are on loan. The following summarizes investments in securities lending transactions and collateral received at June 30, 2016 and 2015: Investment Type June 30, 2016 June 30, 2015 Investments in securities lending transactions: U.S. Government and agencies $6,519,862 $11,374,859 U.S. Corporate bonds 2,015,149 2,866,423 U.S. Equity 35,779,208 39,307,641 Non-U.S. Fixed Income 133, ,393 Non-U.S. equity 80, ,831 Total investments in securities lending transactions $ 44,528,171 $ 54,081,147 Cash collateral received $ 45,042,141 $ 55,226,389 l) Derivative Instruments The Retirement System reports its derivative instruments under the provisions of GASB Statement No. 53, Accounting and Financial Reporting for Derivatives Instruments. Pursuant to the requirements of this statement, the Retirement System has provided a summary of derivative instrument activities during the reporting periods presented and the related risks. As of June 30, 2016 and 2015, the derivative instruments held by the Retirement System are considered investments and not hedges for accounting purposes. All investment derivatives are reported as investments at fair value in the statements of fiduciary net position. The gains and losses arising from this activity are recognized as incurred in the statement of changes in fiduciary net position. All investment derivatives discussed below are included within the investment risk schedules, which precede this subsection. Investment derivative instruments are disclosed separately to provide a comprehensive and distinct view of this activity and its impact on the overall investment portfolio. DRAFT VERSION - FINAL 36

62 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 Valuation methods used by the System are described in more detail in Note 2.c). The fair value of the exchange traded derivative instruments, such as futures, options, rights, and warrants are based on quoted market prices. The fair values of forward foreign currency contracts are determined using a pricing service, which uses published foreign exchange rates as the primary source. The fair values of swaps are determined by the System s investment managers based on quoted market prices of the underlying investment instruments. The tables below present the notional amounts, the fair values, and the related net appreciation (depreciation) in the fair value of derivative instruments that were outstanding at June 30, 2016 and 2015: As of and for the Year Ended June 30, 2016 Notional Amount Net Appreciation (Depreciation) in Fair Value Derivative Type / Contract Fair Value Forwards Foreign Currency Exchange Contracts $ - $ 29,289 $ 29,289 Options Equity Contracts 325 (579,530) 120,543 Swaps Credit Contracts 2,720,000 26,403 7,681 Total $ 2,720,325 $ (523,838) $ 157,513 As of and for the Year Ended June 30, 2015 Notional Amount Net Appreciation (Depreciation) in Fair Value Derivative Type / Contract Fair Value Forwards Foreign Currency Exchange Contracts $ - $ 31,631 $ 31,631 Options Equity Contracts 195 (82,590) 332,823 Swaps Credit Contracts 118,800 7,533 (1,348) Total $ 118,995 $ (43,426) $ 363,106 DRAFT VERSION - FINAL 37

63 Counterparty Credit Risk Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 The System is exposed to credit risk on non-exchange traded derivative instruments that are in asset positions. As of June 30, 2016, the fair value of forward currency contracts to purchase and sell international currencies were $29,377 and $88, respectively. The System s counterparties to these contract held credit ratings of A, as assigned by one or more of the major credit rating organizations (S&P, Moody s and/or Fitch). As of June 30, 2015, the fair value of forward currency contracts to purchase and sell international currencies were $32,543 and $913, respectively. The System s counterparties to these contract held credit ratings of A or better, as assigned by one or more of the major credit rating organizations (S&P, Moody s and/or Fitch). Custodial Credit Risk The custodial credit risk disclosure for exchange traded derivative instruments is made in accordance with the custodial credit risk disclosure requirements of GASB Statement No. 40. At June 30, 2016 and 2015, all of the System s investments in derivative instruments are held in the System s name and are not exposed to custodial credit risk. Interest Rate Risk The tables below describe the maturity periods of the derivative instruments exposed to interest rate risk at June 30, 2016 and Derivative Interest Rate Risk as of June 30, 2016 Maturities Derivative Type / Contract Fair Value Less than 1-5 years Forwards Forward Foreign Currency Exchange Contracts $ 29,289 $ 29,289 $ - Options Equity Contracts (579,530) (579,530) - Swaps Credit Contracts 26,403-26,403 Total $ (523,838) $ (550,241) $ 26,403 DRAFT VERSION - FINAL 38

64 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 Derivative Interest Rate Risk as of June 30, 2015 Maturities Less than Derivative Type / Contract Fair Value 1 Year 1-5 years Forwards Forward Foreign Currency Exchange Contracts $ 31,631 $ 31,631 $ - Options Equity Contracts (82,590) (82,590) - Swaps Credit Contracts 7,533-7,533 Total $ (43,426) $ (50,959) $ 7,533 Foreign Currency Risk At June 30, 2016 and 2015, the System is exposed to foreign currency risk on its investments in forwards denominated in foreign currencies. Contingent Features At June 30, 2016 and 2015, the Retirement System held no positions in derivatives containing contingent features. Currency At June 30, 2016 At June 30, 2015 Australian Dollar $ - $ 5,728 Canadian Dollar 37,861 2,412 Total $ 37,861 $ 8, Net Pension Liability The components of the net pension liability of the City at June 30, 2016 and 2015, are as follows: June 30, 2016 June 30, 2015 Total pension liability $ 670,085,983 $ 635,589,240 Less: Plan fiduciary net position (361,611,237) (419,253,888) City s net pension liability $ 308,474,746 $ 216,335,352 Plan fiduciary net position as a percentage of the total pension liability 54.00% 66.00% DRAFT VERSION - FINAL 39

65 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 a) Actuarial Method and Assumptions The total pension liability as of June 30, 2016 was determined based on an actuarial valuation as of July 1, 2015, using the entry age normal actuarial cost method and the following actuarial assumptions, applied to all periods included in the measurement. Investment Rate of Return 6.44% Inflation Rate, U.S. 2.75% Inflation Rate, Bay Area 2.85% Long-term Post-Retirement Benefit Increases 3.25% Measurements as of the reporting date are based on the fair value of assets as of June 30, 2016 and the total pension liability as of the valuation date, June 30, 2015, updated to June 30, New Memorandums of Understanding (MOUs) went into effect for Police members between the valuation date and the measurement date, increasing Police retirees Cost of Living Adjustments (COLAs). The update procedures included the additional liability due to the new Police MOUs, and the addition of interest cost, offset by actual benefit payments. There are no active members of the Plan, and thus no service cost. Mortality rates for healthy lives were based on the CalPERS Healthy Table from the Experience Study, excluding the 20-year projection using Scale BB. Mortality rates for disabled lives were based on the CalPERS Industrial Disability Mortality Table from the Experience Study, excluding the 20-year projection using Scale BB. The mortality tables are projected to improve with MP-2014 mortality improvement tables, with improvements projected from a base year of 2009 (the mid-point of the CalPERS base tables). The total pension liability as of June 30, 2015 was determined based on an actuarial valuation as of July 1, 2014, using the entry age normal actuarial cost method and the actuarial assumptions as described above for the July 1, 2015 valuation, except for the assumed investment rate of return was 6.54%. Measurements as of June 30, 2015 are based on the fair value of assets as of June 30, 2015 and the total pension liability as of the valuation date, June 30, 2014, updated to June 30, The actuarial assumptions used in the July 1, 2015 and July 1, 2014 valuations were based on the results of an actuarial experience study for the period July 1, 2011 June 30, DRAFT VERSION - FINAL 40

66 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target allocation percentage and by adding expected inflation. Best estimates of geometric real rates of return for each major class included in the pension plan s target asset allocation as of June 30, 2016 and 2015 are summarized in the following table: Long-Term Expected Real Rate of Return Asset Class June 30, 2016 June 30, 2015 Fixed Income 2.90% 2.65% Domestic Equity International Equity Real Return Covered Calls Private Equity Cash b) Discount Rate The discount rates used to measure the total pension liability were 6.44% and 6.54% as of June 30, 2016 and 2015, respectively. The projection of cash flows used to determine the discount rate assumed that the City would contribute to the Plan based on its July 1, 2012 funding agreement with the System. This agreement suspends City contributions until the fiscal year beginning July 1, 2017, after which they will resume, based upon the recommendation of the actuary, with a City Charter requirement that the Plan s liabilities be fully funded by July 1, A cash flow projection showed that the projected fiduciary net position would be greater than or equal to the benefit payments projected for each future period. Therefore, the long-term expected rate of return on Plan investments was applied to all periods of projected benefit payments to determine the total pension liability. DRAFT VERSION - FINAL 41

67 Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 c) Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City, calculated using the discount rate, as well as what the Plan s net pension liability would be if it were calculated using a discount rate of 1-percentage-point lower or 1-percentage-point higher than the discount rate. June 30, % Decrease (5.44%) Current Discount Rate (6.44%) 1% increase (7.44%) City s net pension liability $373,903,149 $308,474,746 $252,937,960 June 30, % Decrease (5.54%) Current Discount Rate (6.54%) 1% increase (7.54%) City s net pension liability $278,662,554 $216,335,352 $163,583, Reserves Active Member Contributions Reserve represents total accumulated member contributions. Additions include member contributions and investment earnings; deductions include refunds of member contributions and transfers to the Retired Member Contribution Reserve. Retired Member Contribution Reserve represents the total accumulated transfers from active member contributions and investments, less payments to retired members and beneficiaries. Employer Reserve represents the total accumulated employer contributions for retirement payments. Additions include contributions from the employer, investment earnings and other income; deductions include payments to retired members and beneficiaries and administrative expenses. The aggregate total of the System s major reserves as of June 30, 2016 and 2015 equals net position restricted for pensions and comprises the following: Retired member contribution reserve $39,409,147 $42,130,490 Employer reserve 322,202, ,123,398 Total $ 361,611,237 $ 419,253,888 DRAFT VERSION - FINAL 42

68 7. Administrative Expenses Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 The City provides the System with accounting and other administrative services. Staff salaries included in administrative expenses for the years ended June 30, 2016 and 2015 were $898,814 and $677,791, respectively. Other administrative expenses including accounting and audit services, legal fees, annual report and miscellaneous expense for the years ended June 30, 2016 and 2015 were $408,755 and $307,436, respectively. 8. Receivable from Retired Members and Beneficiaries The City filed a lawsuit (City of Oakland v. Oakland Police and Fire Retirement System, et al., Alameda County Superior Court case number RG ) in June 2011, and sought to stop the System from paying retirement benefits based on certain holidays and shift differential premium pay (7.25%) to many police retirees. The City also sought an order requiring the System to collect overpayments. The trial court ruled in favor of the City and the decision was partially upheld upon appeal. The Court of Appeal agrees that those elements were overpayments, but limited the extent to which shift differential overpayments could be recovered back from retirees. The writ and judgment entered by the trial court after the appeals process directed the System s board to cease paying excessive holidays and the shift differential premium. In September and October 2014, the System s Board passed Resolutions No and No to seek 100% recovery of the combined overpayments, which totals approximately $3.9 million. On October 28, 2015, the System s Board approved a collection methodology to recover the overpayments from police members over a 48-month period. The System began deducting these repayments from benefit disbursement commencing in June Eleven payees were granted a delayed repayment date, which will commence on May 1, Nine payees received a discharge of their debt totaling $51,886. These actions are expected to increase fund assets by approximately $3.3 million, and are recorded as a receivable in the statements of fiduciary net position. DRAFT VERSION - FINAL 43

69 9. Contingencies Notes to Basic Financial Statements For Years Ended June 30, 2016 and 2015 Retired Oakland Police Officers Association v. Oakland Police and Fire Retirement System, et al., Alameda County Superior Court Action No. RG A lawsuit was filed on December 30, 2014, by the Retired Oakland Police Officers Association (ROPOA) and several System retirees against the System, the System s Board, and the City of Oakland. The lawsuit argues that Master Police Officer 5% Premium Pay ( MPO Pay ) should be considered compensation attached to rank and should be included in the pension pay of certain police retirees per the City of Oakland Charter. A judgment in favor of the plaintiffs was entered by the Alameda County Superior Court on June 8, 2016, granting plaintiffs claims. The underpayment amount to be paid by the System to some police retirees (spanning December 30, 2011 through December 18, 2015) is estimated to be between $1.5 million and $5 million plus interest. The System and the City have filed an appeal of the judgment, and it is pending before the First District Court of Appeal, Case No. A DRAFT VERSION - FINAL 44

70 Required Supplementary Information For Years Ended June 30, 2016 and 2015 Schedule of Changes in the Employer s Net Pension Liability and Related Ratios (Unaudited) Total Pension Liability Service cost (MOY) $ - $ - $ - Interest (includes interest on service cost) 42,480,394 41,262,826 42,333,496 Changes of benefit terms Differences between expected and actual experience 6,977,470 (21,208,627) - Changes of assumptions 43,480,232 34,219,433 - Benefit payments, including refunds of member contributions (58,441,353) (59,007,536) (57,409,113) Net change in total pension liability 34,496,743 (4,733,904) (15,075,617) Total pension liability beginning 635,589, ,323, ,398,761 Total pension liability ending (a) $ 670,085,983 $ 635,589,240 $ 640,323,144 Plan fiduciary net position Contributions - employer $ - $ - $ - Contributions - member - - 4,441 Net investment income (1,418,645) 15,438,586 66,392,409 Benefit payments, including refunds of member contributions (58,441,353) (59,007,536) (57,409,113) Administrative expense (1,375,749) (985,227) (776,112) Claims and settlements 3,593, Net change in plan fiduciary net position (57,642,651) (44,554,177) 8,211,625 Plan fiduciary net position beginning 419,253, ,808, ,596,440 Plan fiduciary net position ending (b) $ 361,611,237 $ 419,253,888 $ 463,808,065 City s net pension liability ending (a) (b) $ 308,474,746 $ 216,335,352 $ 176,515,079 Plan fiduciary net position as a percentage of the total pension liability 54% 66% 72% Covered employee payroll $ - $ - $ - Net pension liability as a percentage of covered employee payroll N/A N/A N/A Note: This is a 10-year schedule. Information for additional years will be presented when available. DRAFT VERSION - FINAL 45

71 Required Supplementary Information For Years Ended June 30, 2016 and 2015 Schedule of Employer Contributions (Unaudited) (dollars in millions) 2016* ** Actuarially determined contribution N/A N/A $ 20.3 $ 34.2 $ 45.1 $ 41.4 $ 37.5 $ 32.1 $ 28.6 $ 23.6 Contributions in relation to the actuarially determined contribution $ - $ - $ - $ $ 45.5 $ - $ - $ - $ - $ - Contribution deficiency/(excess) N/A N/A $ 20.3 $ (175.8) $ (0.4) $ 41.4 $ 37.5 $ 32.1 $ 28.6 $ 23.6 Covered employee payroll $ - $ - $ - $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.4 $ 0.4 $ 0.3 Contributions as a percentage of covered employee payroll N/A N/A N/A % 45500% 0% 0% 0% 0% 0% Although actuarial valuations were performed as of June 30, 2013, June 30th, 2014 and June 30, 2015, no Actuarially Determined Contribution was determined for FY , based on the City's funding policy. ** In July 2012, the City of Oakland contributed $210 million in Pension Obligation Bond (POB) proceeds to the Plan. DRAFT VERSION - FINAL 46

72 Required Supplementary Information For Years Ended June 30, 2016 and 2015 Schedule of Investment Returns (Unaudited) Annual money-weighted rate of return net of investment expense -0.75% 3.90% 16.40% 9.70% 1.40% 24.50% 17.20% % -5.60% 14.30% DRAFT VERSION - FINAL 47

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74 SECTION 3 INVESTMENT DRAFT VERSION - FINAL

75 INVESTMENT CONSULTANT S REPORT DRAFT VERSION - FINAL 50

76 INVESTMENT PERFORMANCE Segment Manager Since Inception Benchmark Style 2Q year 3-year 5-year Inception 8 Date 9 Total Plan (Gross of Fees) Total Plan (Net of Fees) Policy Benchmark Asset Allocation Benchmark (actual broad asset class weightings) Asset Allocation Benchmark (actual manager weightings) Public Equity Public Equity Benchmark Domestic Equity Russell 3000 (blend) Large Cap Northern Trust Large Cap Core /2010 Russell 1000 Large Cap Core SSgA Russell 1000 Value Large Cap Value /2014 Russell 1000 Value Large Cap Value SSgA Russell 1000 Growth Large Cap Growth /2014 Russell 1000 Growth Large Cap Growth Midcap Earnest Partners Mid Cap Core /2006 Russell Mid Cap Mid Cap Core Small Cap NWQ Small Cap Value /2006 Russell 2000 Value Small Cap Value Lord Abbett Small Cap Growth /2010 Russell 2000 Growth Small Cap Growth International Equity MSCI ACWI Ex US (blend) Hansberger International /2006 MSCI ACWI Ex US ACWI ex US Fisher International /2011 MSCI ACWI Ex US ACWI ex US State Street Global International /2002 MSCI EAFE Developed Markets Fixed Income BC Universal (blend) Reams Core Plus /1998 BC Universal (blend) 7 Core Plus T Rowe Price Core /2011 BC Aggregate Core DDJ High Yield/Bank Loans /2015 BofAML US HY Master II High Yield/Bank Loans Covered Calls Parametric 50% BXM Replication / 50% Delta /2014 CBOE BXM Source of Blended Benchmarks: LDZ Group 1. Starting on 5/1/2016, Policy Benchmark consists of 48% Russell 3000, 12% MSCI ACWI ex U.S., 20% BC Universal, 20% CBOE BXM 2. Asset Allocation Benchmark by Asset Class consists of 46.4% Russell 3000, 11.4% MSCI ACWI ex U.S., 19% BC Universal, 20.1% CBOE BXM, 3% CPI+3%, and 0.1% Tbills. 3. Asset Allocation Benchmark by Manager consists of weighted average return of individual manager benchmarks, based on managers' actual allocations. 4. Public Equity Benchmark consists of 76% Russell 3000 and 24% MSCI ACWI ex U.S. 5. Domestic Equity Benchmark consists of S&P 500 thru 3/31/98, 10% R1000, 20% R1000V, 5% RMC from 4/1/98-12/31/04, and Russell 3000 from 1/1/05 to the present. 6. International Equity Benchmark consists of MSCI EAFE thru 12/31/04, and MSCI ACWI x US thereafter. 7. Fixed Income Benchmark consists of BC Aggregate prior to 4/1/06, and BC Universal thereafter. 8. Performance is calculated based on the first full month of performance since funding. 9. Inception date reflects the month when portfolio received initial funding. 10. Annual investment manager fees estimated at 44 basis points DRAFT VERSION - FINAL 51

77 List of Investment Professionals Domestic Equity Managers: EARNEST Partners Northern Trust Nuveen NWQ State Street Global Advisors International Equity Managers: Hansberger Global Investor State Street Global Advisors Fisher Investments Institutional Group Covered Calls: Parametric Portfolio Associates, LLC. Fixed Income Managers: Reams Asset Management T. Rowe Price Associates DDJ Capital Management Investment Consultant: Pension Consultant Alliance Custodian: Northern Trust Security Lending: Northern Trust Investment Manager Fees and Other Investment Expenses Periods ending June 30, 2015 and June 30, Investment Manager Fees Domestic Equity Managers $ 477,621 $ 629,819 International Equity Managers 265, ,024 Domestic Fixed Income Managers 147, ,165 Domestic Fixed Income Managers 414, ,585 Total Investment Manager Fees $ 1,304,360 $ 1,534,592 Other Investment Fees Investment Consulting $ 100,000 $ 97,500 Custodian Fees 116, ,500 Total Other Investment Fees $ 216,500 $ 214,000 Total Investment Fees $ 1,520,860 $ 1,748,592 Asset Allocation As of June 30, 2016 DRAFT VERSION - FINAL 52

78 Largest Stock Holdings (by Market Value) As of June 30, 2016 Stock Market Value 1 APPLE $ 3,949,045 2 MICROSOFT 2,977,940 3 EXXON MOBIL CORP 2,928,156 4 JOHNSON & JOHNSON 2,505,694 5 GENERAL ELECTRIC 2,184,555 6 AMAZON 2,091,757 7 BERKSHIRE HATHAWAY 2,052,977 8 AT&T INC 2,005,938 9 FACEBOOK 1,964, VERIZON COMMUNICATIONS 1,708,536 Note: The above schedules do not reflect holdings in index funds. A complete list is available upon request. Largest Bond Holdings (by Market Value) As of June 30, 2016 Description Interest Rate Maturity Date Market Value 1 GNMA POOL #MA % 4/20/2046 $ 889,846 2 UNITED STATES TREASURY 1.18% 2/15/ ,396 3 FNMA POOL #AB % 1/1/ ,514 4 FEDERAL HOME LN MTG CORP POOL #A % 10/1/ ,582 5 FNMA POOL #MA % 2/1/ ,084 6 PVTPL CROWN CASTLE TOWERS 144A 6.11% 1/15/ ,326 7 GNMA POOL #AD % 6/15/ ,933 8 FNMA POOL #AM % 1/1/ ,383 9 GNMA POOL #MA % 5/20/ , FHLMC # % 2/25/ ,311 Note: The above schedules do not reflect holdings in index funds. A complete list is available upon request. DRAFT VERSION - FINAL 53

79 Investments by Manager Year Ended June 30, 2016 Investment Firm Portfolio Type Amount Fixed Income Managers Reams Asset Management Core Plus $ 23,775,073 T. Rowe Price Associates Core 36,474,473 DDJ High Yield/ Bank Loans 7,910,710 Cash Account Short Term 558,998 Transition Account Short Term 44,780 Total Fixed Income $ 68,764,034 Domestic Equity Managers Northern Trust Global Investments Large Cap Core $ 70,479,453 EARNEST Partners Mid Cap Core 30,228,278 SSGA - Russell 1000 Growth Index Large Cap Growth 28,583,643 SSGA - Russell 1000 Value Index Large Cap Value 28,026,943 Lord, Abbett & Co. Small Cap Growth 8,297,173 Nuveen Investments Small Cap Value 9,746,379 Total Domestic Equity $ 175,361,870 International Equity Managers Hansberger Global Investors International 14,722,293 Fisher Investments Institutional Group International 14,052,907 State Street Global Advisors Non-US Developed Core 11,727,584 Total International Equity $ 40,502,784 Alternative Managers Parametric Covered Calls $ 74,011,828 Total Alternative Investments $ 74,011,828 Total Investment $ 358,640,516 DRAFT VERSION - FINAL 54

80 SECTION 4 ACTUARIAL DRAFT VERSION - FINAL

81 ACTUARY S CERTIFICATION LETTER DRAFT VERSION - FINAL 56

82 ACTUARY S CERTIFICATION LETTER DRAFT VERSION - FINAL 57

83 ACTUARY S CERTIFICATION LETTER DRAFT VERSION - FINAL 58

84 SUMMARY OF ACTUARIAL VALUE, ASSUMPTIONS AND FUNDING METHODS PURPOSE OF ACTUARIAL VALUATION The Oakland Police and Fire Retirement System (PFRS) is a closed defined benefit pension plan. It was closed to new members on June 30, As of July 1, 2015, there are no active member. All members are retirees and beneficiaries. The actual costs of a defined benefit plan are determined entirely by the amount of the benefit promise, the actual salaries and service of the plan participants, and how long they and their beneficiaries live to receive payments. In addition, the actuarial methodology provides a reasonable plan, or method, towards funding the expected costs of the plan. This information assists the plan trustees so they can make informed decisions regarding plan investments and how much in contributions will be required from the employer to eventually fully pay for the plan s costs. The most recent actuarial valuation was as of July 1, The Key Results of the actuarial valuation are as follows: The City of Oakland issued Pension Obligation Bonds (POBs) in July The City then contributed $210 million from the bond proceeds to the Plan. These proceeds act as prepayments for Oakland PFRS contributions from the fiscal year beginning July 1, 2012 through the fiscal year beginning July 1, Contributions are expected to resume during the fiscal year beginning July 1, 2017, in accordance with the funding agreement dated July 1, 2012 between the City and the PFRS. In accordance with the 2012 funding agreement, the employer contribution amount remains at $0 for Fiscal Year due to the $210 million contribution from the POBs. During the year ended June 30, 2015, the return on Plan assets was 3.53% on a market value basis net of investment expenses, as compared to the 7.00% assumption for the Plan year. This resulted in a market value loss on investments of $15.1 million. The Actuarial Value of Assets (AVA) is calculated as the expected Actuarial Value of Assets plus 20% of the difference between the Market Value and the expected Actuarial Value of Assets. This smoothed value of assets returned 8.59%, for an actuarial asset gain of $6.2 million. DRAFT VERSION - FINAL 59

85 The Plan experienced a loss on the actuarial liability of $6.5 million, the net result of changes in the population and the timing of COLA increases. Combining the liability and asset gains, the Plan experienced a total loss of $0.3 million. The Plan s smoothed funded ratio, the ratio of actuarial assets over actuarial liability, decreased from 64.6% last year to 61.4% on an AVA basis as of June 30, The reduction in the funded ratio is primarily the result of no contribution being made to the fund during the year. The Plan s funded ratio decreased from 71.2% to 65.3% on a Market Value of Assets (MVA) basis. The decrease in the Market Value funded ratio was primarily the result of the lack of contributions, as well as the market value loss on investments, compared to the 7.00% assumption. The unfunded actuarial liability (UAL) is the excess of the Plan s actuarial liability over the actuarial value of assets. The Plan experienced an increase in the UAL from $230.2 million to $247.5 million as of July 1, Overall participant membership decreased compared to last year. 32 members died, 13 of whom who had their benefits continue to a surviving spouse. In addition, 26 surviving beneficiaries died. There are no active members of the Plan. As was done in the prior actuarial valuation, we have projected an actuarially determined contribution amount for the Fiscal Year , the first year after the POB-based prepayments have expired, according to the 2012 funding agreement. The estimated contribution for FY is $37.3 million, based on the projected value of the liabilities and the projected Actuarial Value of Assets. This represents an increase of $2.2 million from the amount determined in the prior valuation for the same Fiscal Year. The increase in the projected contribution is the combined result of the asset and liability losses described above. If the contribution were determined using a projected asset value based on the current market (i.e., non-smoothed) value of assets, the estimated contribution for FY would be $34.9 million. The contribution is smaller than that determined using the projected AVA, because the current market value reflects the full amount of the investment gains experienced in FY and prior years, while under the AVA projection a portion of those gains are deferred until years after FY DRAFT VERSION - FINAL 60

86 VALUATION SUMMARY The table below is a summary of the results of the valuation. See notes following the table for a definition of terms. Below we present Table I-1 which summarizes all the key results of the valuation with respect to membership, assets and liabilities, and contributions. The results are presented and compared for both the current and prior plan year. Table I-1 Summary of Principal Plan Results ($ in Thousands) July 01, 2014 July 01, 2015 % Change Participant Counts Active Participants 0 0 Participants Receiving a Benefit 1, % Total 1, % Annual Pay of Active Members $ 0 $ 0 Assets and Liabilities Actuarial Liability (AL) $ 651,053 $ 642, % Actuarial Value of Assets (AVA) 420, , % Unfunded Actuarial Liability (UAL) $ 230,163 $ 247, % Funded Ratio (AVA) 64.6% 61.4% -3.20% Funded Ratio (MVA) 71.2% 65.3% -5.95% Contributions Employer Contribution (FY ) $ 0 $ % Employer Contribution (FY ) $ 35,148 $ 37, % ACTUARIAL DEFINITIONS The Present Value of Projected Benefits (PVPB) is the present value of all future benefits for current plan participants. The Actuarial Liability (AL) represents the portion of the PVPB attributable to past service. Since all participants in this plan are either retired or assumed to retire at the valuation date, the Actuarial Liability is equal to the Present Value of Projected Benefits for this plan. The Actuarial Value of Assets is a smoothed value of assets used to even out market fluctuations in asset values. The Unfunded Actuarial Liability (UAL) is equal to the difference between the Actuarial Liability and the Actuarial Value of Assets. DRAFT VERSION - FINAL 61

87 ACTUARIAL METHODS AND ASSUMPTIONS ACTUARIAL METHOD The actuarial funding method used to determine the System s normal cost and the unfunded actuarial liability is the Entry Age Normal cost method. The normal cost rate is determined with the normal cost percentage equal to the total Projected Value of Benefits at Entry Age, divided by Present Value of Future Salary at Entry Age. Since there are no longer any active employees, the normal cost for this plan is $0. Actuarial Value of Plan Assets The excess of the AL over the Actuarial Value of Assets (AVA) is the Unfunded Actuarial Liability (UAL). In accordance with the Plan s funding agreement with the City of Oakland, the UAL must be amortized by July 1, 2026, with contributions resuming in the fiscal year. The projected fiscal year contribution has been calculated using level percent of pay amortization, based on total projected City payroll for all Safety employees. ACTUARIAL ASSUMPTIONS Rate of Return The expected annual rates of return, net of investment expenses, on all Plan assets are shown in the table below. The equivalent single discount rate for these returns using the Plan s expected projected benefit payments is 6.54%. Benefit Payment Year Expected Return (%) DRAFT VERSION - FINAL 62

88 Inflation The assumed rate of general inflation is 2.75% (entire US) and local inflation is 2.85% (Bay Area). The general inflation rate is used in the determination of the investment return assumptions. The local inflation rate is used in the determination of the growth in expenses and salaries (which determine the COLA increases). Cost of Living Adjustments Cost-of-living adjustments are based on salary increases for a retiree s rank at retirement. The long-term rate of salary increase is assumed to be 3.25% (2.85% inflation plus 0.4% productivity). The following schedule shows salary increases based on the current Police and Fire contracts, which expire on June 30, 2015 and October 31, 2017, respectively. All assumed increases after those dates are as follows: Post-Retirement Benefit Increases (Based on Salary Increases for Rank at Retirement) Date of Increase Police Fire November 01, 2015 n/a 1.000% March 01, 2016 n/a 1.000% July 01, % 2.000% Annual Increase Starting July 01, % 3.250% Rates of Termination, Disability and Retirement: None Retirement: None DRAFT VERSION - FINAL 63

89 Healthy Mortality (for service retirees and beneficiaries) CalPERS Health Table from the Experience Study, excluding the 20 year projection using Scale BB. Disabled Mortality (for disability retirees) CalPERS Industrial Disability from the Experience Study, excluding the 20 year projection using Scale BB. Mortality Improvement The mortality tables are projected to improve with the MP-2014 mortality improvement tables, with improvements projected from a base year of 2009 (the mid-point of the CalPERS base tables). Survivor Continuance 30% of disabled retirees deaths are duty-related and thus entitle the surviving spouse to 100% continuance of the retirees allowance. Administrative Expenses Annual administrative expenses are assumed to be $925,650, growing at 2.85% per year. Service Retired Participants Police Fire Total Number Total Annual Benefit Number Total Annual Benefit Number Total Annual Benefit < 50 0 $0 0 $0 0 $ $0 0 $0 0 $ $0 0 $0 0 $ $1,489,950 0 $0 24 $1,489, $5,458, $1,420, $6,878, $5,359, $2,522, $7,881, $2,113, $1,260, $3,373, $1,258, $1,538, $2,796, $1,056, $1,910, $2,967, $707, $1,181, $1,889, $0 3 $213,884 3 $213, $0 1 $82,099 1 $82,099 Total 275 $17,442, $10,129, $27,572,344 DRAFT VERSION - FINAL 64

90 Disability Retired Participants Beneficiaries Number Police Fire Total Total Total Total Annual Annual Annual Benefit Number Benefit Number Benefit < 50 0 $0 0 $0 0 $ $0 0 $0 0 $ $0 0 $0 0 $ $288,744 9 $546, $835, $3,285, $1,784, $5,069, $2,183, $2,465, $4,648, $933, $1,391, $2,324, $536, $689, $1,225, $266,802 7 $520, $787, $473,105 6 $367, $840, $0 1 $68,460 1 $68, $0 0 $0 0 $0 Total 131 $7,966, $7833, $15,799,518 Number Police Fire Total Total Total Total Annual Annual Annual Benefit Number Benefit Number Benefit < 50 0 $0 0 $0 0 $ $0 1 $74,358 1 $74, $98,580 3 $147,387 5 $245, $533,319 2 $136, $669, $774, $604, $1,378, $892, $575, $1,467, $476, $847, $1,323, $1,020, $1,211, $2,231, $1,658, $1,559, $3,218, $1,014, $1,325, $2,340, $403,207 7 $445, $,848, $0 1 $75,268 1 $75,268 Total 152 $6,872, $7,001, $13,873,299 DRAFT VERSION - FINAL 65

91 PARTICIPANT DATA SUMMARY Data Summary July 1, 2014 July 1, 2015 Active Participants Police Fire Total Police Fire Total Number Number Vested Average Age Average Service Average Pay $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Service Retirees Number Average Age Average Annual Benefit $ 62,468 $ 70,858 $ 65,519 $ 63,427 $ 70,838 $ 65,963 Disabled Retirees Number Average Age Average Annual Benefit $ 59,327 $ 64,391 $ 61,665 $ 60,810 $ 65,827 $ 63,198 Beneficiaries Number Average Age Average Annual Benefit $ 44,793 $ 49,207 $ 46,899 $ 45,212 $ 49,653 $ 47,349 All Inactives Number , Average Age Average Annual Benefit $ 56,876 $ 61,670 $ 58,901 $ 57,851 $ 61,946 $ 59,568 Data pertaining to active and inactive Members and their beneficiaries as of the valuation date was supplied by the Plan Administrator on electronic media. DRAFT VERSION - FINAL 66

92 CITY OF OAKLAND MEMORANDUM TO: Oakland Police & Fire Retirement Board FROM: Katano Kasaine SUBJECT: Authorization and Reimbursement of Board/Staff Travel/Education Expenses DATE: January 25, 2017 R. Steven Wilkinson, Board member of the Oakland Police and Fire Retirement System board, requests authorization for reimbursement of travel and/or board education related funds for the event detailed below. Staff has verified that budgeted funds are available for this board member to be reimbursed. Staff recommends the reimbursement of travel/education funds for the event below be approved by board motion. Travel I Education Event: RG & Associates 2017 Consortium West Confrerence Event Location: UCLA Luskin Conference Center, Los Angeles, CA Event Date: January 25-26, 2017 Estimated Event Expense*: _$"'-'-7-=-86= =8-=-8_,_(e=s=ti=m=a=te=d"'"") Notes: The memo was not included on the Dec Board meeting agenda due to time; President Johnson auth. this trip and asked staff to add to Jan Agenda * If enrollment, registration or admission expenses are required, the fund will process a check in advance and pay vendor directly; all other board-approved reimbursements will be made upon delivery of receipts to staff by the traveling party. Cancelation of event attendance requires return of all reimbursed funds paid to attendee to the fund. Respectfully submitted, Katano Kasine, Ian Administrator Oakland Police and Fire Retirement System For questions please contact David Low, Administrative Assistant, at Attachments (if any): Resolution #6944 Program Agenda RGA 2017 ConsortiumWest - CA Memo Wilkinson

93 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION No Approved to Form ~;;; ON MOTION OF MEMBER SECONDED BY MEMBER TRAVEL AUTHORIZATION FOR BOARD MEMBER R. STEVEN WILKINSON TO ATTEND THE 2017 RG & ASSOCIATES CONSORTIUM WEST CONFERENCE FROM/ON JANUARY 25 26, 2017 IN LOS ANGELES, CA WITH AN ESTIMATED BUDGET OF SEVEN HUNDRED EIGHTY SEVEN DOLLARS ($787.00} WHEREAS, Board Member R. Steven Wilkinson wishes to attend the 2017 Consortium West Conference in Los Angeles, CA from/on January 25, 2017 through January 26, 2017; and WHEREAS, Board Member Wilkinson is expected to seek reimbursement of expenses from the Board; and WHEREAS, in compliance with the Board Travel Policy, which requires that PFRS Board/Staff Members seek PFRS Board approval prior to travel; and WHEREAS, due to timing of agenda notices for the December 21, 2016 meeting Member Wilkinson's travel request was not submitted in time for the December 21, 2016 Board meeting agenda for approval; and WHEREAS, PFRS Board President Walter Johnson provided advanced authorization for Member Wilkinson to travel to the 2017 Consortium West Conference while directing staff to add his travel request at the next Board meeting for approval; now, therefore, be it RESOLVED: Board Member R. Steven Wilkinson's travel request and estimated budget of $ to attend the January 25, 2017 through January 26, 2017 Consortium West Conference is hereby approved. IN BOARD MEETING, CITY HALL, OAKLAND, CA E......,F... B..._R... U'"'"A... R... Y._.2_.,2.,..,_...2.._ PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, GODFREY, MUSZAR, SPEAKMAN AND PRESIDENT JOHNSON NOES: ABSTAIN: WILKINSON ABSENT: ATIEST:,, PRESIDENT ATIEST: -----,,.SE-CRE-T-AR_Y

94 RG+A Site EVENTS REQUEST INFORMATION SPONSOR ABOUT CONTACT EVENT DETAILS AGENDA SUPPORTERS SPONSORS HOTEL REGISTE AGENDA ConsortiumWEST is unique in its focus on bringing together active allocators primarily based in the Western United States, including a growing num county and major metro pension plans, foundations/endowments and family of ces all with a growing commitment to investing with emerging mana Inspired by our UCLA business school venue and an ongoing desire to drive candid, meaningful conversations, our interactive educational session fo will be heavy on timely content and often-overlooked issues. Download the Participant List for ConsortiumWEST 2017 DAY 1 WEDNESDAY, JANUARY 25, :00 PM Welcome Introduction: Renae Grif n, CEO RG + Associates Feature Program Foundation & Endowment: A 360-Degree View 1:00 3:00 PM

95 Our pre-consortium kick-off features an interactive forum with all stakeholders in the foundation and endowment investment process from F&E CEOs, CIOs to consultant/advisors and emerging managers. We ll focus on three cor areas to provide a full circle view backed by speci c actions and insights: 1:15 PM Current Landscape: Study on Foundation Diversity An examination of key ndings from several recent industry studies provides us with a view of the current landscape, who leading the way, what challenges need to be addressed, and what approaches are driving strong engagement and returns Presenter: Jason Lamin, Founder & CEO Lenox Park Solutions 1:25 2:15 PM Leading the Way: Endowments & Foundations CEO Seeking Alpha through Emerging Managers Investment, a Top Approach Leaders from top foundations and endowments will share their tone at the top and what s driving CEOs and CIOs to see greater diversity among managers? What are their pivot points and drivers? What challenges have they navigated? Learn many adhere to a strong ESG mandate as a core part of their strategy. Moderator: Leslie B. Kautz, CFA, Principal Angeles Investment Advisors; Trustee The California Endowment Speakers: Steve Algert, Managing Director and Assistant Treasurer The J. Paul Getty Trust Mary E. McClymont, President Public Welfare Foundation Srinivas Pulavarti, President & CIO UCLA Investment Company 2:15 3:00 PM Making it Happen: Key to Unlocking and Increasing F&E Diverse Manager Investments Our nal discussion team will provide a look at the broader eco system from the role of consultants, to emerging mana support. What due diligence and outreach are successful consultants using to identify and forge relationships with manag What factors are weighed in presenting a slate of managers for consideration? How can all stakeholders work more effec together to grow the diverse manager community and foster stronger connections with foundations and endowments? Speakers: David Druley, Chairman & CEO Cambridge Associates, LLC Renaye Manley, Deputy Director SEIU Capital Stewardship Program Bert Feuss, Senior Vice President, Investments Silicon Valley Community Foundation Calvin H. Baker, Director Walter Arts Museum 3:00 3:30 PM Card+ Seat Swap Consortium is the ultimate place for making real connections. Let s take a break, exchange cards and circulate!

96 LP & GP Master Classes (Full audience participation) 3:30 5:30 PM During our afternoon sessions, we ll follow an interactive business school learning format to examine real issues and b practices via PowerPoint presentations, case studies, analysis and robust Socratic-style audience exchange. The sessi will bring together both LPs and GPs for a deep dive into effective approaches being used to build investment platfor strengthen operations and generate performance. Follow along for what decision factors were considered, what prior were set, trade-offs weighed and strategies pursued. The focus is on in-depth investigation for both LPs and GPs a approach that will lay the foundation for ongoing exchanges on Day 2. Special Conference Facilitator & Host: Dr. Alfred E. Osborne, Jr., Senior Associate Dean UCLA Anderson School of Management 3:30 4:15 PM GP Emerging Manager Master Class Under the Hood: Start-Up to Accelerated Growth A Master Class offering an inside look on the path from start up to $1bn+ AUM within ve years. We ll explore how the fund operations, client base and investment team were built out, challenges faced and how opportunities were assessed a pursued. The presentation will also offer a post-growth review and analysis that will prove informative to GP and LPs sea for ascending emerging manager talent. Facilitator: Thomas Henley, Senior Managing Director UAW Retiree Medical Bene ts Trust Case Study Presenter: Damien Dwin, Co-CEO and Co-Founder Brightwood Capital Advisors, LLC 4:30 5:30 PM LP Emerging Manager Investment Master Class Building it Right for Expansion and Longevity From the workbook of institutional investors, we ll explore how their teams developed and how each is actively deploying to emerging managers. The insights will provide LPs starting out with a modern how-to approach and those with existin programs a framework for review and re nement. For emerging managers, you hear what really matters and how to posit your rm to compete. What political challenges were faced and how were they overcome? What drivers led to implementing their EM strategy? How did they on-board consultants? What speci c investment strategies are being deployed and why (asset allocation, portfolio construction)? What factors in uenced allocation size, use or no use of fund of funds, stand-alone versus portfolio integrated approac Facilitator: Kathlika T. Fontes, Director of Investor Relations Grain Management Case Study Presenters: Kenyatta K. Matheny, CIO EquiTrust Life Insurance Company Kirk Sims, CFA, Investment Of cer, Public Pension Teachers Retirement System of the State of Illinois

97 Closing Remarks: Dr. Alfred E. Osborne, Jr., Senior Associate Dean UCLA Anderson School of Management 5:30 7:00 PM Welcome Reception Mix, mingle and continue the conversations sparked in our afternoon discussions. 7:00 PM Institutional Investor Dinner By invitation only DAY 2 THURSDAY, JANUARY 26, :00 AM Registration 8:00 8:10 AM Welcome 8:20 8:30 AM Keynote Address We ll tap a provocative opener to set the stage for our full-day program. Come prepared to hear and participate. 8:30 9:30 AM Emerging + Diverse Manager Showcase LP/GP New Models, New Approaches We ll explore a range of innovative investment structures and models utilizing emerging and diverse managers. Are these approaches the starting point for new models of investing between GPs/LPs or simply anomalies? Join in the discussion a explore the pros and cons and how these approaches may provide a foundation for new investment and capital raising opportunity. Facilitator: Derek K. Jones, Managing Director GCM Grosvenor Model 1 Real Estate JV and Programmatic Partnerships Where Do R.E. Funds Fit In? Michael DiRe, Director, Investments Real Estate CalSTRS Neville Rhone, Managing Partner Arc Capital Partners, LLC Model 2 LP Syndication/Club Deals How Do They Work? Eric Woo, Principal Top Tier Capital Partners LLC Alina Libova, General Partner Initialized Capital Model 3 Shadow Investing Co-Investments on the Rise Pros/Cons for EMS Bryan Lewis, CIO Pennsylvania State Employees' Retirement System 9:40 10:40 AM Active Learning Session: Stimulating Out ows and In ows of Capital What Does It Take? We will build this session based on the most pressing issues LPs, consultants and managers are facing in today s investme environment of underfunded pensions, low interest rates, manager consolidation, fee reductions, indexing, increased governance and so much more. How do these issues impact LP investment decisions and deployment of capital? Using an active learning format, we will team up in small groups to analyze and propose actionable solutions while also examining

98 managers can do to stimulate allocations. As new facts and twists are revealed, new ideas will be stimulated making this not-to-be missed discussion. Special Facilitator: Dr. Alfred E. Osborne, Jr., Senior Associate Dean UCLA Anderson School of Management Active Learning Session Discussion Facilitators: Tarrell Gamble, Trustee Alameda County Employees Retirement Association Diego Carillo, Investment Of cer CalPERS Candace Ronan, Global Equity Portfolio Manager CalSTRS Angela Matheny, SHRM-CP Candidate, Client and Consultant Coordinator Colonial Consulting LLC Martin Dirks, Board Member Federated Retirement System for City of San José Rodney June, CIO Los Angeles City Employees Retirement System Tom Lopez, CIO Los Angeles Fire and Police Pensions Colleen Smiley, Senior Vice President/Assistant Director of Public Markets Research Meketa Investment Group, Inc. Michael Moy, Managing Director Pension Consulting Alliance, LLC Elizabeth Campbell, Senior Vice President Portfolio Advisors, LLC Jose Fernandez, Partner StepStone Group Christopher Cunningham, CAIA, Vice President The Townsend Group Margaret Jadallah, Managing Director/Senior Consultant Verus Investments John P. Alouf, Director of Public Equity Virginia Retirement System 10:40 11:00 AM Break / VIP Connect Transition 11:00 1:00 PM VIP Connect One-On-One Meetings Networking Lounge Focused and fast-paced, VIP Connect meetings are a de ning difference of ConsortiumWEST. For some, the focus is on meetings; for others the 18-minute one-on-ones are an invaluable touch point for continued relationship building. Mutual meetings are arranged between managers, institutional investors, fund of funds, and consultants and the conver ow. For asset allocators, the format is a highly ef cient way to meet a number of quali ed managers and begin conversat that may lead to successful partnerships. 1:00 2:15 PM Power Networking Luncheon With active allocators and consultants as table hosts, lunch offers an opportunity for small group dialogue and exchange BREAKOUT SESSIONS

99 2:30 3:30 PM Meet the Allocators Engage with a broad mix of active allocators decision makers from public and corporate pensions, foundations and endowments, union plans, insurance companies, and family of ces. With each, we ll learn more about speci c investment practices, manager due diligence, communications do s and don ts. The result? A better understanding by both allocators emerging managers in attendance about ways to interact and build relationships in the current landscape. Foundations and Endowments Utility/Transportation/Insurance Companies Western Region City and County Pension Plans Family Of ces 3:30 4:30 PM Asset Classes Exchanges Join peers, clients and prospects in mix and mingle style exchanges gather ideas, discuss hot topics all in your asset class area. These informal exchanges offer an opportunity to connect with allocators, consultants and managers you may have earlier in the Consortium. (wine and cheese served) Exchange 1 Private Equity / Venture Capital Exchange 2 Hedge / Public Equity / Fixed Income Exchange 3 Real Estate / Infrastructure 4:30 PM Consortium Concludes Download the Participant List for ConsortiumWEST 2017 Copyright 2016 site design: seven5 seven3 marketing All Rights Reserved photography by Mao Carrera

100 CITY OF OAKLAND MEMORANDUM TO: Oakland Police & Fire Retirement Board FROM: Katano Kasaine SUBJECT: Authorization and Reimbursement of Board/Staff Travel/Education Expenses DATE: February22,2017 Robert J. Muszar, Board member of the Oakland Police and Fire Retirement System board, requests authorization for reimbursement of travel and/or board education related funds for the event detailed below. Staff has verified that budgeted funds are available for this board member to be reimbursed. Staff recommends the reimbursement of travel/education funds for the event below be approved by board motion. Travel I Education Event: 2017 CALAPRS General Assembly Event Location: Monterey Marriott, Monterey, CA Event Date: March Estimated Event Expense*: -'$"--"-94""'"'5~ =88::...>..:(e=st=im=at=e=d"-) Notes: * If enrollment, registration or admission expenses are required, the fund will process a check in advance and pay vendor directly; all other board-approved reimbursements will be made upon delivery of receipts to staff by the traveling party. Cancelation of event attendance requires return of all reimbursed funds paid to attendee to the fund. Katano Kasine, Plan Administrator Oakland Police and Fire Retirement System For questions please contact David Low, Administrative Assistant, at 5 l Attachments (if any): Resolution #6951 Program Agenda CALAPRS GenAssmbly- CA Memo Muszar

101 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION No ON MOTION OF MEMBER SECONDED BY MEMBER TRAVEL AUTHORIZATION FOR BOARD MEMBER ROBERT MUSZAR TO TRAVEL AND ATTEND THE 2017 CALAPRS GENERAL ASSEMBLY CONFERENCE ("2017 CALAPRS CONFERENCE") FROM/ON MARCH 4, 2017 TO MARCH 7, 2017 IN MONTEREY, CA WITH AN ESTIMATED BUDGET OF NINE HUNDRED FORTY-SIX DOLLARS ($946.00) WHEREAS, Board Member Robert Muszar wishes to attend the 2017 CALAPRS Conference in Monterey, CA from/on March 4, 2017 to March 7, 2017; and WHEREAS, Board Member Muszar is expected to seek reimbursement of expenses from the Board; and WHEREAS, in compliance with the Board Travel Policy, which requires that PFRS Board/Staff Members seek PFRS Board approval prior to travel; and WHEREAS, in compliance with the Board Travel Policy, the Board/Staff Member has presented costs for travel, lodging and/or registration fees to the 2017 CALAPRS Conference in the amount of approximately $946.00; and WHEREAS, Board Member Muszar seeks Board approval of the fore mentioned estimated costs to travel to Monterey, CA to attend the 2017 CALAPRS Conference from/on March 4, 2017 to March 7, 2017; now, therefore, be it RESOLVED: Board Member Robert Muszar's travel request and estimated budget of $ to attend the March 4, 2017 to March 7, 2017 CALAPRS Conference is hereby approved. IN BOARD MEETING, CITY HALL, OAKLAND, CA..F... E=B R.._.U... A... R..._Y-...;;;;;.;22...,., ;;..;7~--- PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, GODFREY, SPEAKMAN, WILKINSON AND PRESIDENT JOHNSON NOES: ABSTAIN: MUSZAR ABSENT: ATTEST: --= PREs10ENT ATTEST: SECRETARY

102 CALAPRS General Assembly March 4-7, 2017 Monterey Marriott The California Association of Public Retirement Systems, CALAPRS, invites you to attend the General Assembly on March 4-7, 2017 in Monterey, CA. The General Assembly is an educational conference for retirement system trustees, senior staff, and annual sponsors of CALAPRS. 3-WAYS TO REGISTER: HOTEL ACCOMMODATIONS: Monterey Marriott 350 Calle Principal Monterey, CA Phone: ; refer to CALAPRS when making a reservation. Online: bit.ly/calaprs2017_lodging Room Rate: $204.00/night Cut-Off: February 17, 2017 or until rooms sell out, whichever comes first. Book your room early!

103 CALAPRS GENERAL ASSEMBLY 2017 PROGRAM SATURDAY, MARCH 4, :00 PM 6:00 PM Early-Bird Registration SUNDAY, MARCH 5, :00 AM 12:00 PM Golf (optional) CALAPRS has arranged for discounted tee times at the Del Monte Golf Course, between 7:00 AM 7:40 AM. The course takes about 4.5 hours to play. Interested participants should reserve their own tee time by calling (831) , and reference CALAPRS. Golf attendees are responsible for all fees related to their participation, including transportation. Important: This is not a formal golf tournament. Once you reserve your time, you may play with other General Assembly attendees or other participants from the general public. Golf Fee: $110/person including golf cart rental Reservation Deadline: February 26, 2017 *Participants will have up until 72 hours to cancel their tee time, without penalty. Cancellations received after that time will be subject to the full reservation fee amount, plus taxes and service charges. 10:00 AM 5:00 PM Registration 2:00 PM 2:15 PM Opening Remarks Featuring: Mark Hovey, CEO, SDCERS, CALAPRS President and Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust, Conference Chair 2:15 PM 3:15 PM A National Perspective on the Future of Pension Management Nearly every state has made meaningful changes in recent years to its pension plans benefit structure, financing arrangements, or both. Meanwhile, challenging capital markets are forcing many plans to consider lowering their investment return assumption, which increases plan costs and unfunded liabilities. This opening session will feature an overview of these and other key trends affecting the public pension community, including the recent reforms, funding issues, actuarial assumptions, and discussion of other challenges facing public pensions. Speakers: Keith Brainard, Research Director, National Association of State Retirement Administrators (NASRA) Moderator: Steve Delaney, CEO, OCERS 3:15 PM 3:30 PM Afternoon Refreshment Break 3:30 PM 5:00 PM Securing CalPERS Future: Managing our Assets and Liabilities Managing funding risk to CalPERS, in the ever-changing economic and demographic climate, has never been more challenging. This session will walk you through the creation and development of CalPERS current asset liability management process, the Risk Mitigation Policy, and what s on the horizon. Learn how CalPERS actuarial, financial, and investment offices are working together to develop an integrated framework to manage assets and liabilities, as well as help prepare CalPERS for what lies ahead. Speakers: Eric Baggesen, Managing Investment Director, Asset Allocation/Risk Assessment and Scott Terando, Deputy Chief Actuary, CalPERS Moderator: Donna Lum, Deputy Executive Officer, Customer Services and Support, CalPERS

104 7:00 PM 9:30 PM Strolling Dinner at the Monterey Bay Aquarium Transportation will be provided for dinner participants. Buses will depart starting at 6:30pm. Guests welcome. MONDAY, MARCH 6, :00 AM 4:00 PM Registration 7:30 AM 8:25 AM Breakfast 8:30 AM 8:45 AM Opening Remarks CALAPRS President Mark Hovey / Conference Chair Carl Nelson 8:45 AM 9:45 AM The Big Investment Issues of the Day Speakers: Don Pierce, CIO, SBCERA and Vijoy Chattergy, CIO, Hawaii Employees Retirement System (ERS) Moderator: Gary Amelio, CEO, SBCERA 9:45 AM 10:45 AM Captivating and Capitalizing for California Pensions: A Panel Discussion Panelists will discuss how California s pension funds can boost returns and save taxpayer dollars by Captivating the money management process and Capitalizing on California s innovation industries. Panelists: Allan Emkin, Managing Director, Pension Consulting Alliance; Ashby Monk, Ph.D., Executive and Research Director of the Stanford University Global Projects Center; and James Meketa, Managing Principal and Chairman of Meketa Investment Group Moderator: Tim Price, CIO, CCCERA 10:45 AM 11:15 AM Morning Refreshment Break 11:15 AM 12:00 PM The Actuarial Challenges of Adequate Funding Speaker: Paul Angelo, Senior Vice President and Actuary, Segal Consulting Moderator: Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System 12:00 PM 1:15 PM Networking Lunch 1:30 PM 2:45 PM Legal Update on CA DB Pension Plans Panelists will discuss vested rights, implications of the Marin Appellate Court ruling and other current legal topics. Speakers: Russ Richeda, Shareholder and Lead Counsel, Public Retirement Law Practice, Salzman & Johnson and Chris Waddell, Senior Attorney, Public Retirement Law Practice, Olson Hagel & Fishburn, LLP Moderator: Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System 2:45 PM 3:00 PM Afternoon Refreshment Break 3:00 PM 4:00 PM The Governance Side of Effectively Managing Disability Cases Panelists: Jackie Purter, Retirement Analyst, SCERA; Lita Payne, Assistant General Manager, LACERS; Jan Garner, Disability Unit Manager, SDCERA Moderator: Suzanne Jenike, Assistant CEO External Operations, OCERS 5:00 PM 6:00 PM Hosted Reception at the Monterey Marriott Hotel, Ferrantes Ballroom

105 TUESDAY, MARCH 7, :30 AM 8:25 AM Breakfast 8:30 AM 9:30 AM Power and Politics Best intentions, facts, logic, and analysis are great; however, they can lead to a myopic perspective and blind spots. Join us to engage and discover how political capital can be earned and leveraged to avoid blind spots, build trust, and help you gain momentum. Speaker: Brian R Beamish, Ph.D. Candidate, M.S., M.Ed., Consultant, The Centre for Organization Effectiveness Moderator: Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust 9:30 AM 9:45 AM Morning Refreshment Break 9:45 AM 11:00 AM A Macro Economic Outlook on the Future Speaker: William Coaker, CIO, SFERS Moderator: Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust 11:00 AM Closing Remarks & Adjourn CALAPRS GENERAL ASSEMBLY 2017 PLANNING COMMITTEE Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust (Chair) Gary Amelio, CEO, San Bernardino County Employees Retirement Association Donna Lum, Deputy Executive Officer, Customer Services and Support, CA Public Employees Retirement System Steve Delaney, CEO, Orange County Employees Retirement System Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System California Association of Public Employees Retirement Systems (CALAPRS) 575 Market Street, Suite 2125 San Francisco, CA P: F: info@calaprs.org

106 CITY OF OAKLAND MEMORANDUM TO: Oakland Police & Fire Retirement Board FROM: Katano Kasaine SUBJECT: Authorization and Reimbursement of Board/Staff Travel/Education Expenses DATE: February 22, 2017 R. Steven Wilkinson, Board member of the Oakland Police and Fire Retirement System board, requests authorization for reimbursement of travel and/or board education related funds for the event detailed below. Staff has verified that budgeted funds are available for this board member to be reimbursed. Staff recommends the reimbursement of travel/education funds for the event below be approved by board motion. Travel I Education Event: 2017 CALAPRS General Assembly Event Location: Monterey Marriott, Monterey, CA Event Date: March Notes: * If enrollment, registration or admission expenses are required, the fund will process a check in advance and pay vendor directly; all other board-approved reimbursements will be made upon delivery of receipts to staff by the traveling party. Cancelation of event attendance requires return of all reimbursed funds paid to attendee to the fund. Respectfully submitted, Katano Kasine, Plan Administrator Oakland Police and Fire Retirement System For questions please contact David Low, Administrative Assistant, at Attachments (if any): Resolution #6952 Program Agenda CALAPRS GenAssmbly - CA Memo Wilkinson

107 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION No ON MOTION OF MEMBER SECONDED BY MEMBER TRAVEL AUTHORIZATION FOR BOARD MEMBER R. STEVEN WILKINSON TO TRAVEL AND ATTEND THE 2017 CALAPRS GENERAL ASSEMBLY CONFERENCE ("2017 CALAPRS CONFERENCE") FROM/ON MARCH 4, 2017 TO MARCH 7, 2017 IN MONTEREY, CA WITH AN ESTIMATED BUDGET OF NINE HUNDRED FORTY-SIX DOLLARS ($946.00) WHEREAS, Board Member R. Steven Wilkinson wishes to attend the 2017 CALAPRS Conference in Monterey, CA from/on March 4, 2017 to March 7, 2017; and WHEREAS, Board Member Wilkinson is expected to seek reimbursement of expenses from the Board; and WHEREAS, in compliance with the Board Travel Policy, which requires that PFRS Board/Staff Members seek PFRS Board approval prior to travel; and WHEREAS, in compliance with the Board Travel Policy, the Board/Staff Member has presented costs for travel, lodging and/or registration fees to the 2017 CALAPRS Conference in the amount of approximately $946.00; and WHEREAS, Board Member Wilkinson seeks Board approval of the fore mentioned estimated costs to travel to Monterey, CA to attend the 2017 CALAPRS Conference from/on March 4, 2017 to March 7, 2017; now, therefore, be it RESOLVED: Board Member R. Steven Wilkinson's travel request and estimated budget of $ to attend the March 4, 2017 to March 7, 2017 CALAPRS Conference is hereby approved. IN BOARD MEETING, CITY HALL, OAKLAND, CA F... E=B-..R U A-.:R=--Y..-2=2..._., 2=0;:;...;1;..;;..7 PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, GODFREY, MUSZAR, SPEAKMAN, AND PRESIDENT JOHNSON NOES: ABSTAIN: WILKINSON ABSENT: AITEST: ,, PRes10ENT AITEST: SECRETARY

108 CALAPRS General Assembly March 4-7, 2017 Monterey Marriott The California Association of Public Retirement Systems, CALAPRS, invites you to attend the General Assembly on March 4-7, 2017 in Monterey, CA. The General Assembly is an educational conference for retirement system trustees, senior staff, and annual sponsors of CALAPRS. 3-WAYS TO REGISTER: HOTEL ACCOMMODATIONS: Monterey Marriott 350 Calle Principal Monterey, CA Phone: ; refer to CALAPRS when making a reservation. Online: bit.ly/calaprs2017_lodging Room Rate: $204.00/night Cut-Off: February 17, 2017 or until rooms sell out, whichever comes first. Book your room early!

109 CALAPRS GENERAL ASSEMBLY 2017 PROGRAM SATURDAY, MARCH 4, :00 PM 6:00 PM Early-Bird Registration SUNDAY, MARCH 5, :00 AM 12:00 PM Golf (optional) CALAPRS has arranged for discounted tee times at the Del Monte Golf Course, between 7:00 AM 7:40 AM. The course takes about 4.5 hours to play. Interested participants should reserve their own tee time by calling (831) , and reference CALAPRS. Golf attendees are responsible for all fees related to their participation, including transportation. Important: This is not a formal golf tournament. Once you reserve your time, you may play with other General Assembly attendees or other participants from the general public. Golf Fee: $110/person including golf cart rental Reservation Deadline: February 26, 2017 *Participants will have up until 72 hours to cancel their tee time, without penalty. Cancellations received after that time will be subject to the full reservation fee amount, plus taxes and service charges. 10:00 AM 5:00 PM Registration 2:00 PM 2:15 PM Opening Remarks Featuring: Mark Hovey, CEO, SDCERS, CALAPRS President and Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust, Conference Chair 2:15 PM 3:15 PM A National Perspective on the Future of Pension Management Nearly every state has made meaningful changes in recent years to its pension plans benefit structure, financing arrangements, or both. Meanwhile, challenging capital markets are forcing many plans to consider lowering their investment return assumption, which increases plan costs and unfunded liabilities. This opening session will feature an overview of these and other key trends affecting the public pension community, including the recent reforms, funding issues, actuarial assumptions, and discussion of other challenges facing public pensions. Speakers: Keith Brainard, Research Director, National Association of State Retirement Administrators (NASRA) Moderator: Steve Delaney, CEO, OCERS 3:15 PM 3:30 PM Afternoon Refreshment Break 3:30 PM 5:00 PM Securing CalPERS Future: Managing our Assets and Liabilities Managing funding risk to CalPERS, in the ever-changing economic and demographic climate, has never been more challenging. This session will walk you through the creation and development of CalPERS current asset liability management process, the Risk Mitigation Policy, and what s on the horizon. Learn how CalPERS actuarial, financial, and investment offices are working together to develop an integrated framework to manage assets and liabilities, as well as help prepare CalPERS for what lies ahead. Speakers: Eric Baggesen, Managing Investment Director, Asset Allocation/Risk Assessment and Scott Terando, Deputy Chief Actuary, CalPERS Moderator: Donna Lum, Deputy Executive Officer, Customer Services and Support, CalPERS

110 7:00 PM 9:30 PM Strolling Dinner at the Monterey Bay Aquarium Transportation will be provided for dinner participants. Buses will depart starting at 6:30pm. Guests welcome. MONDAY, MARCH 6, :00 AM 4:00 PM Registration 7:30 AM 8:25 AM Breakfast 8:30 AM 8:45 AM Opening Remarks CALAPRS President Mark Hovey / Conference Chair Carl Nelson 8:45 AM 9:45 AM The Big Investment Issues of the Day Speakers: Don Pierce, CIO, SBCERA and Vijoy Chattergy, CIO, Hawaii Employees Retirement System (ERS) Moderator: Gary Amelio, CEO, SBCERA 9:45 AM 10:45 AM Captivating and Capitalizing for California Pensions: A Panel Discussion Panelists will discuss how California s pension funds can boost returns and save taxpayer dollars by Captivating the money management process and Capitalizing on California s innovation industries. Panelists: Allan Emkin, Managing Director, Pension Consulting Alliance; Ashby Monk, Ph.D., Executive and Research Director of the Stanford University Global Projects Center; and James Meketa, Managing Principal and Chairman of Meketa Investment Group Moderator: Tim Price, CIO, CCCERA 10:45 AM 11:15 AM Morning Refreshment Break 11:15 AM 12:00 PM The Actuarial Challenges of Adequate Funding Speaker: Paul Angelo, Senior Vice President and Actuary, Segal Consulting Moderator: Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System 12:00 PM 1:15 PM Networking Lunch 1:30 PM 2:45 PM Legal Update on CA DB Pension Plans Panelists will discuss vested rights, implications of the Marin Appellate Court ruling and other current legal topics. Speakers: Russ Richeda, Shareholder and Lead Counsel, Public Retirement Law Practice, Salzman & Johnson and Chris Waddell, Senior Attorney, Public Retirement Law Practice, Olson Hagel & Fishburn, LLP Moderator: Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System 2:45 PM 3:00 PM Afternoon Refreshment Break 3:00 PM 4:00 PM The Governance Side of Effectively Managing Disability Cases Panelists: Jackie Purter, Retirement Analyst, SCERA; Lita Payne, Assistant General Manager, LACERS; Jan Garner, Disability Unit Manager, SDCERA Moderator: Suzanne Jenike, Assistant CEO External Operations, OCERS 5:00 PM 6:00 PM Hosted Reception at the Monterey Marriott Hotel, Ferrantes Ballroom

111 TUESDAY, MARCH 7, :30 AM 8:25 AM Breakfast 8:30 AM 9:30 AM Power and Politics Best intentions, facts, logic, and analysis are great; however, they can lead to a myopic perspective and blind spots. Join us to engage and discover how political capital can be earned and leveraged to avoid blind spots, build trust, and help you gain momentum. Speaker: Brian R Beamish, Ph.D. Candidate, M.S., M.Ed., Consultant, The Centre for Organization Effectiveness Moderator: Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust 9:30 AM 9:45 AM Morning Refreshment Break 9:45 AM 11:00 AM A Macro Economic Outlook on the Future Speaker: William Coaker, CIO, SFERS Moderator: Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust 11:00 AM Closing Remarks & Adjourn CALAPRS GENERAL ASSEMBLY 2017 PLANNING COMMITTEE Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust (Chair) Gary Amelio, CEO, San Bernardino County Employees Retirement Association Donna Lum, Deputy Executive Officer, Customer Services and Support, CA Public Employees Retirement System Steve Delaney, CEO, Orange County Employees Retirement System Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System California Association of Public Employees Retirement Systems (CALAPRS) 575 Market Street, Suite 2125 San Francisco, CA P: F: info@calaprs.org

112 CITY OF OAKLAND MEMORANDUM TO: Oakland Police & Fire Retirement Board FROM: Katano Kasaine SUBJECT: Authorization and Reimbursement of Board/Staff Travel/Education Expenses DATE: February 22, 2017 John C. Speakman, Board member of the Oakland Police and Fire Retirement System board, requests authorization for reimbursement of travel and/or board education related funds for the event detailed below. Staff has verified that budgeted funds are available for this board member to be reimbursed. Staff recommends the reimbursement of travel/education funds for the event below be approved by board motion. Travel I Education Event: 2017 CALAPRS General Assembly Event Location: Monterey Marriott, Monterey, CA Estimated Event Expense*: _$~94_5~.8~8~<-e~st~im_a~t~ed,)~ Notes: If enrollment, registration or admission expenses are required, the fund will process a check in advance and pay vendor directly; all other board-approved reimbursements will be made upon delivery of receipts to staff by the traveling party. Cancelation of event attendance requires return of all reimbursed funds paid to attendee to the fund. Respectfully submitted, ltj,,n D /t:w/ W Katano Kasine, Plan Administrator Oakland Police and Fire Retirement System For questions please contact David Low, Administrative Assistant, at Attachments (ifany): Resolution #6953 Program Agenda CALAPRS GenAssmbly - CA Memo Speakman

113 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION No Approved to Form r11 J~ ON MOTION OF MEMBER SECONDED BY MEMBER TRAVEL AUTHORIZATION FOR BOARD MEMBER JOHN C. SPEAKMAN TO TRAVEL AND ATTEND THE 2017 CALAPRS GENERAL ASSEMBLY CONFERENCE ("2017 CALAPRS CONFERENCE") FROM/ON MARCH 4, 2017 TO MARCH 7, 2017 IN MONTEREY, CA WITH AN ESTIMATED BUDGET OF NINE HUNDRED FORTY-SIX DOLLARS ($946.00) WHEREAS, Board Member John Speakman wishes to attend the 2017 CALAPRS Conference in Monterey, CA from/on March 4, 2017 to March 7, 2017; and WHEREAS, Board Member Speakman is expected to seek reimbursement of expenses from the Board; and WHEREAS, in compliance with the Board Travel Policy, which requires that PFRS Board/Staff Members seek PFRS Board approval prior to travel; and WHEREAS, in compliance with the Board Travel Policy, the Board/Staff Member has presented costs for travel, lodging and/or registration fees to the 2017 CALAPRS Conference in the amount of approximately $946.00; and WHEREAS, Board Member Speakman seeks Board approval of the fore mentioned estimated costs to travel to Monterey, CA to attend the 2017 CALAPRS Conference from/on March 4, 2017 to March 7, 2017; now, therefore, be it RESOLVED: Board Member John Speakman's travel request and estimated budget of $ to attend the March 4, 2017 to March 7, 2017 CALAPRS Conference is hereby approved. IN BOARD MEETING, CITY HALL, OAKLAND, CA F'-"E=B=R'--U=A;;.-=-oR-..Y...-2=2""", 2=0"-'1-..7 PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, GODFREY, MUSZAR, WILKINSON, AND PRESIDENT JOHNSON NOES: ABSTAIN: SPEAKMAN ABSENT: ATTEST: ,,..PRE_S_IOE_NT ATTEST: SECRETARY

114 CALAPRS General Assembly March 4-7, 2017 Monterey Marriott The California Association of Public Retirement Systems, CALAPRS, invites you to attend the General Assembly on March 4-7, 2017 in Monterey, CA. The General Assembly is an educational conference for retirement system trustees, senior staff, and annual sponsors of CALAPRS. 3-WAYS TO REGISTER: HOTEL ACCOMMODATIONS: Monterey Marriott 350 Calle Principal Monterey, CA Phone: ; refer to CALAPRS when making a reservation. Online: bit.ly/calaprs2017_lodging Room Rate: $204.00/night Cut-Off: February 17, 2017 or until rooms sell out, whichever comes first. Book your room early!

115 CALAPRS GENERAL ASSEMBLY 2017 PROGRAM SATURDAY, MARCH 4, :00 PM 6:00 PM Early-Bird Registration SUNDAY, MARCH 5, :00 AM 12:00 PM Golf (optional) CALAPRS has arranged for discounted tee times at the Del Monte Golf Course, between 7:00 AM 7:40 AM. The course takes about 4.5 hours to play. Interested participants should reserve their own tee time by calling (831) , and reference CALAPRS. Golf attendees are responsible for all fees related to their participation, including transportation. Important: This is not a formal golf tournament. Once you reserve your time, you may play with other General Assembly attendees or other participants from the general public. Golf Fee: $110/person including golf cart rental Reservation Deadline: February 26, 2017 *Participants will have up until 72 hours to cancel their tee time, without penalty. Cancellations received after that time will be subject to the full reservation fee amount, plus taxes and service charges. 10:00 AM 5:00 PM Registration 2:00 PM 2:15 PM Opening Remarks Featuring: Mark Hovey, CEO, SDCERS, CALAPRS President and Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust, Conference Chair 2:15 PM 3:15 PM A National Perspective on the Future of Pension Management Nearly every state has made meaningful changes in recent years to its pension plans benefit structure, financing arrangements, or both. Meanwhile, challenging capital markets are forcing many plans to consider lowering their investment return assumption, which increases plan costs and unfunded liabilities. This opening session will feature an overview of these and other key trends affecting the public pension community, including the recent reforms, funding issues, actuarial assumptions, and discussion of other challenges facing public pensions. Speakers: Keith Brainard, Research Director, National Association of State Retirement Administrators (NASRA) Moderator: Steve Delaney, CEO, OCERS 3:15 PM 3:30 PM Afternoon Refreshment Break 3:30 PM 5:00 PM Securing CalPERS Future: Managing our Assets and Liabilities Managing funding risk to CalPERS, in the ever-changing economic and demographic climate, has never been more challenging. This session will walk you through the creation and development of CalPERS current asset liability management process, the Risk Mitigation Policy, and what s on the horizon. Learn how CalPERS actuarial, financial, and investment offices are working together to develop an integrated framework to manage assets and liabilities, as well as help prepare CalPERS for what lies ahead. Speakers: Eric Baggesen, Managing Investment Director, Asset Allocation/Risk Assessment and Scott Terando, Deputy Chief Actuary, CalPERS Moderator: Donna Lum, Deputy Executive Officer, Customer Services and Support, CalPERS

116 7:00 PM 9:30 PM Strolling Dinner at the Monterey Bay Aquarium Transportation will be provided for dinner participants. Buses will depart starting at 6:30pm. Guests welcome. MONDAY, MARCH 6, :00 AM 4:00 PM Registration 7:30 AM 8:25 AM Breakfast 8:30 AM 8:45 AM Opening Remarks CALAPRS President Mark Hovey / Conference Chair Carl Nelson 8:45 AM 9:45 AM The Big Investment Issues of the Day Speakers: Don Pierce, CIO, SBCERA and Vijoy Chattergy, CIO, Hawaii Employees Retirement System (ERS) Moderator: Gary Amelio, CEO, SBCERA 9:45 AM 10:45 AM Captivating and Capitalizing for California Pensions: A Panel Discussion Panelists will discuss how California s pension funds can boost returns and save taxpayer dollars by Captivating the money management process and Capitalizing on California s innovation industries. Panelists: Allan Emkin, Managing Director, Pension Consulting Alliance; Ashby Monk, Ph.D., Executive and Research Director of the Stanford University Global Projects Center; and James Meketa, Managing Principal and Chairman of Meketa Investment Group Moderator: Tim Price, CIO, CCCERA 10:45 AM 11:15 AM Morning Refreshment Break 11:15 AM 12:00 PM The Actuarial Challenges of Adequate Funding Speaker: Paul Angelo, Senior Vice President and Actuary, Segal Consulting Moderator: Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System 12:00 PM 1:15 PM Networking Lunch 1:30 PM 2:45 PM Legal Update on CA DB Pension Plans Panelists will discuss vested rights, implications of the Marin Appellate Court ruling and other current legal topics. Speakers: Russ Richeda, Shareholder and Lead Counsel, Public Retirement Law Practice, Salzman & Johnson and Chris Waddell, Senior Attorney, Public Retirement Law Practice, Olson Hagel & Fishburn, LLP Moderator: Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System 2:45 PM 3:00 PM Afternoon Refreshment Break 3:00 PM 4:00 PM The Governance Side of Effectively Managing Disability Cases Panelists: Jackie Purter, Retirement Analyst, SCERA; Lita Payne, Assistant General Manager, LACERS; Jan Garner, Disability Unit Manager, SDCERA Moderator: Suzanne Jenike, Assistant CEO External Operations, OCERS 5:00 PM 6:00 PM Hosted Reception at the Monterey Marriott Hotel, Ferrantes Ballroom

117 TUESDAY, MARCH 7, :30 AM 8:25 AM Breakfast 8:30 AM 9:30 AM Power and Politics Best intentions, facts, logic, and analysis are great; however, they can lead to a myopic perspective and blind spots. Join us to engage and discover how political capital can be earned and leveraged to avoid blind spots, build trust, and help you gain momentum. Speaker: Brian R Beamish, Ph.D. Candidate, M.S., M.Ed., Consultant, The Centre for Organization Effectiveness Moderator: Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust 9:30 AM 9:45 AM Morning Refreshment Break 9:45 AM 11:00 AM A Macro Economic Outlook on the Future Speaker: William Coaker, CIO, SFERS Moderator: Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust 11:00 AM Closing Remarks & Adjourn CALAPRS GENERAL ASSEMBLY 2017 PLANNING COMMITTEE Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust (Chair) Gary Amelio, CEO, San Bernardino County Employees Retirement Association Donna Lum, Deputy Executive Officer, Customer Services and Support, CA Public Employees Retirement System Steve Delaney, CEO, Orange County Employees Retirement System Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System California Association of Public Employees Retirement Systems (CALAPRS) 575 Market Street, Suite 2125 San Francisco, CA P: F: info@calaprs.org

118 CITY OF OAKLAND MEMORANDUM TO: Oakland Police & Fire Retirement Board FROM: Katano Kasaine SUBJECT: Authorization and Reimbursement of Board/Staff Travel/Education Expenses DATE: February 22, 2017 Robert J. Muszar, Board member of the Oakland Police and Fire Retirement System board, requests authorization for reimbursement of travel and/or board education related funds for the event detailed below. Staff has verified that budgeted funds are available for this board member to be reimbursed. Staff recommends the reimbursement of travel/education funds for the event below be approved by board motion. Travel I Education Event: 2017 Pension Bridge Conference Event Location: Four Seasons Hotel, San Francisco, CA Estimated Event Expense*: --'$"'-"-9=89'-'._,_4_,_l """'(e=s=ti=m=a=te=d,,_) Notes: * If enrollment, registration or admission expenses are required, the fund will process a check in advance and pay vendor directly; all other board-approved reimbursements will be made upon delivery of receipts to staff by the traveling party. Cancelation of event attendance requires return of all reimbursed funds paid to attendee to the fund. Respectfully submitted, Katano Kasine, Plan Administrator Oakland Police and Fire Retirement System For questions please contact David Low, Administrative Assistant, at Attachments (if any): Resolution #6954 Program Agenda Pension Bridge - CA Memo Muszar

119 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION No ON MOTION OF MEMBER SECONDED BY MEMBER TRAVEL AUTHORIZATION FOR BOARD MEMBER ROBERT MUSZAR TO TRAVEL AND ATTEND THE 2017 PENSION BRIDGE CONFERENCE ("2017 PENSION BRIDGE CONFERENCE") FROM/ON APRIL 18, 2017 TO APRIL 19, 2017 IN SAN FRANCISCO, CA WITH AN ESTIMATED BUDGET OF NINE HUNDRED EIGHTY-NINE DOLLARS ($989.00) WHEREAS, Board Member Robert Muszar wishes to attend the 2017 Pension Bridge Conference in San Francisco, CA from/on April 18, 2017 through April 19, 2017; and WHEREAS, Board Member Muszar is expected to seek reimbursement of expenses from the Board; and WHEREAS, in compliance with the Board Travel Policy, which requires that PFRS Board/Staff Members seek PFRS Board approval prior to travel; and WHEREAS, in compliance with the Board Travel Policy, the Board/Staff Member has presented costs for travel, lodging and/or registration fees to the 2017 Pension Bridge Conference in the amount of approximately $989.00; and WHEREAS, Board Member Muszar seeks Board approval of the fore mentioned estimated costs to travel to San Francisco, CA to attend the 2017 Pension Bridge Conference from/on April 18, 2017 through April 19, 2017; now, therefore, be it RESOLVED: Board Member Robert Muszar's travel request and estimated budget of $ to attend the April 18, 2017 through April 19, 2017 Pension Bridge Conference is hereby approved. IN BOARD MEETING, CITY HALL, OAKLAND, CA F E=B-...R----..U;;...;;A-..R;...;;.Y 2=2"'""', 2=0;;...;1;...;;.7 PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, GODFREY, SPEAKMAN, WILKINSON AND PRESIDENT JOHNSON NOES: ABSTAIN: MUSZAR ABSENT: ATTEST:. PRESIOENT ATTEST: ---- SECRETARY

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121 The Pension Bridge Annual Conference provides the highest level of education and networking to the institutional investment community. A mix of Public Funds, Corporate Funds, Foundations, Endowments, Union Funds, Taft-Hartleys, Family Offices, Sovereign Wealth Funds, Consultants and Investment Managers will come together for this exclusive event. The Pension Bridge Annual provides the industry s only controlled attendance structured event. This helps The Pension Bridge to maintain the best conference ratio in the industry. There will be over 200 Pension Fund Representatives and Non-Discretionary Consultants in attendance. We have allowed for only 100 Manager Firms. This better than 2:1 ratio, combined with participation from the most influential industry figures, creates a more enjoyable environment for all. Learn from the experts about the most important issues, challenges, trends, opportunities and strategies that will shape our industry for today and the future: The Canadian Model What U.S. Structural Changes are Necessary for Long-Term Fiscal Sustainability? Macroeconomic View of the Economy How to Increase Returns in a Low Return Environment Understanding Risk Parity and LDI Asset Allocation Models which one will be Most Effective? Best Practices for Constructing a Liability Hedging Portfolio What should Boards Consider when Adopting a Risk Culture? What are the Top Pension Risks to be Most Wary of? Key Considerations for a Risk Allocation Framework Approach Executive Director s/ceo s View on the Current and Future State of the Industry Smart Beta Strategies Proceed with Caution The Benefits and Criticisms of Multi-Asset Strategies The Changing Landscape of Fixed Income and the Shift into Next Generation Strategies In-Depth Analysis of Emerging Markets As a Plan Sponsor, Should You Consider Implementing a Currency Hedging Program? Recent Developments and Approaches to ESG Most Attractive Sectors, Strategies and Geographies within Opportunistic/Special Situations A Close-Up Look at the Hedge Fund Industry Current and Future Trends How should a Credit Portfolio Should be Structured? Best Approach to Commodities with the Current Deflationary Cycle Best Opportunities in Energy and Infrastructure Is a Real Estate Correction on the Horizon? Strategies with the Biggest Risk/Reward How to Protect your Private Equity Portfolio and Avoid Getting Involved in Expensive Deals Perspectives from Influential Pension Plan CIOs Finding the Best Non-Correlated Investments to Prevent Portfolio Drawdowns A Glimpse of what our Industry will look like in the Future Strategies that will Outperform in the Next Few Years

122 We remain in a low growth, low return environment with unfavorable demographics. The Pension Bridge Annual will uncover various structural transformations and investment ideas that will be beneficial for long-term fiscal sustainability. In addition to the listed themes above, we will be covering many more challenging issues that are crucial to the investment decision making process during these uncertain economic times. We will learn from the best about how to adapt in our industry which is always evolving and transforming. The Pension Bridge Annual has two goals in mind. First is to provide the highest level of education with the top speaker faculty. This highly regarded group will bring forth influential insights and concepts. The second goal is to help build relationships between the pension plans, consultants and investment managers. We have provided the best possible environment for this event which is designed to be conducive for networking. We will cap off the event with a fun and enjoyable networking outing necessary for maintaining relationships and connecting with your peers and prospective business contacts. We look forward to a strong event and a very productive one from both an educational and relationship perspective. We have structured this conference in a manner that will be most productive and beneficial for you. We hope that you will join us to be amongst your industry peers to learn about the most up-to-date insights, investment strategies and trends.

123 Tuesday, April 18th 7:00 AM Breakfast Sponsored By: 8:05 AM Opening Remarks 8:15 AM Keynote Speaker - Best Practices in Pension Fund Management: The Canadian Model The industry is dealing with a low return environment along with rising longevity and unfavorable demographics. With many asset classes fully priced in this low growth environment, investors have entered into a world of complacency. Adaptation and structural transformation are required for pension fiscal sustainability and the long-term fund management process. Statistical Success of the Canadian Model with Assets Managed Internally Key Components Keep Fees to a Minimum, Hunt for Cash Flow, Innovative Private and Co-Investment Deals, Reluctance to Overpay Difficulty for U.S. Plans Shifting to Canadian Model Independence Requirement and the Restrictions from Political Appointees and ERISA Budget and Resources as a Concern Salary Structure, Investing in Talent Pool Are there Ways to Overcome the Skepticism that the Canadian Model can be Imported to the U.S? Which of the Barricades need to Come Down for Implementation? Which Program or Asset Class might be Best to Start with for the Transition to In-House Investment Management? Which Allocations are Best Served by an Outsourced Specialist Fund Manager? Understanding the Necessary Industry Changes Required for Fiscal Sustainability, regardless of model Compensation Linked to Performance, Transparency and a Long-Term Strategic Vision Speaker: Jim Keohane, CFA, President & Chief Executive Officer, Healthcare of Ontario Pension Plan, (HOOPP) 8:45 AM Macroeconomic View State of the Markets Current Macro Environment Recent Public Equity and Fixed Income Returns Bull Market Length and Returns High Valuations Reasons for Remaining in a Long-Term Low Return Environment Global Working Age Population and Challenging Demographics China Credit Explosion as a Concern Taking Risk More Efficiently Asset Class Risk and Returns Areas of Caution? Investment Ideas on how to Increase Returns How to Better Protect Capital in a Down Market Speaker: William J. Coaker Jr., CFA, MBA, Chief Investment Officer, San Francisco Employees Retirement System

124 9:15 AM Executive Director/CEO Roundtable (A) Pension Health/Governance How are Demographics Affecting Retirement Systems? How do you approach Increases in Longevity and Costs for Healthcare Drugs for Retirees? Any possible Solutions? What does the Future hold for Raising the Retirement Age, Reducing Benefits and Increasing Employee Contributions? What can a Fund do to adequately Protect for Liquidity and Cash Flow Requirements? Does your Funded Status alter your Long Term Decisions with regards to Liquid or Illiquid Investments? Best Governance Practices to Keep Plans Optimally Invested, Managed, Funded, and in Regulatory Compliance Do you believe Plans in general will be able to Meet or Beat the Assumed Rate of Return over the next 10 Years? Should we be Spending Political Capital to Lower Assumed Rate of Return Targets? Dealing with Legislature what is your Biggest Concern? Is Trust a Factor? Do you see the Benefits of Adopting a Hybrid DB/DC Plan? What are the Drawbacks? Explain the Argument as to why States should not offer a 401(k) DC Plan as a Solution Truth or Myth: Defined Benefit Plans are Expensive and Defined Contribution Plans are Cheap Thoughts on Outsourcing the CIO Function? How do you ensure your Board Members receive Continual Education of their Fiduciary Roles/Duties and keep them Updated on Risk Factors? Have you Educated Internally on the Risks or Steps for Cybersecurity Protection? Do you have Cybersecurity Questions or Guidelines in your Due Diligence of your Managers? What is your Biggest Threat to your DB Plan? What keeps you up at night? (B) Long-Term Structural Changes for Fiscal Sustainability Do you see a Shift towards the Canadian Model with more Assets being Managed Internally to Lower Investment Costs? If so, which Mandates should be Outsourced to External Managers? Have we made Strides to Solve the Talent and Compensation Struggle? Will we see more Compensation-Based Pay to Attract and Retain Talent to be Competitive with the Private Sector? To Cut Costs, will we Shift towards Investing in Passive, Low-Cost Vehicles, Index Funds and ETFs over Actively Managed Funds? Will we see a Shift to Hunt for Long-Term Cash Flow Investments through Partnerships and Co-Investment Structures? Greater Competition to Follow? Requirement for Better Transparency Do you believe we ll see a Consolidation of Public Pension Plans Under One Entity, (such as INPRS or IMCO in Canada)? What are the Benefits? Making Governance more Effective Identifying Key Board Member Roles with Expertise in Particular Areas with an Independent Board Speakers: Steve Yoakum, Executive Director, Public School and Education Employee Retirement Systems of Missouri, (PSRS/PEERS) Brian Guthrie, Executive Director, Teacher Retirement System of Texas Ruth Ryerson, Executive Director, Wyoming Retirement System 10:10 AM Refreshment Break 10:40 AM Risk Management and Adopting a Risk Culture (A) Key Considerations for Managing Risks Overview of the Shift from an Asset Allocation-Centered Process to a more Comprehensive Risk Allocation-Based Process. Explain the Transformation to Risk Allocation Decisions What s the Biggest Challenge that has Prevented Wide-Spread Adoption of a Risk Allocation Framework? What are the Characteristics a Plan would need in order to Implement this type of Approach? What s the most Important Change to make? What are the Key Challenges as it relates to Measuring Risk?

125 How can considering Diversification and Risk Independently help Investors Build more Efficient Portfolios? What Developments have we seen for Combining Several Risk Premiums as a part of Portfolio Diversification? How has taking a Risk Allocation Approach changed the Structure of your Plan s Fixed Income Investments? Understanding Return Seeking Fixed Income and Traditional Risk Reducing Fixed Income What Irregularities have we seen in Portfolios as Asset Classes are Redrawn and Renamed via Risk Allocation? Are we still too heavy with the Equities Allocation? (B) Top Pension Risks we should be Most Wary of Understanding Asset Class Correlation and Behavior Risk Tendency of Interest Rate and Inflation Shocks Driving Both Equities and Bonds in the Same Direction, (Correlations Change) Drawdown Risk Transparency and Liquidity Risk Basing it on a Cost/Benefit Evaluation What s the best Approach to Liquidity Risk as it applies to Meeting Future Cash Flow Obligations? Leverage Risk what are the Best Approaches to keep these Risks within Acceptable Parameters? Monitoring Counterparty Risk being taken by Managers any New Measures? Equity, Credit, Duration, Inflation/Deflation, Currency, Geopolitical Risk Considerations How does Stress Testing or Scenario Analysis factor into your Process? (C) Communication How do you Communicate your Risk Tolerances with your Board, Managers and Media? How has the Role of Fiduciary Responsibility Changed in this new Era of Risk? What should Boards/Organizations Consider when Building a Risk Culture? How can Fiduciaries Adapt and Safeguard against today s Challenges? Have you Developed a Process for Monitoring Risk being taken by your Money Managers? How do you go about Educating a Board on Risk? What Metrics Aid in the Decision Making Process? How does a Plan s Size affect the Approach to Pension Risk Management? Speakers: Eugene L. Podkaminer, CFA, Senior Vice President, Capital Markets Research, Callan Associates, Inc. Freeman Wood, Partner, North American Head, Mercer Bruce H. Cundick, CFA, CPA, Chief Investment Officer, Utah Retirement Systems 11:30 PM Keynote Speaker - Multi-Asset Strategies (A) Construction and Skills Why is Multi-Asset Investing Attractive to Investors? What are the Common Sub-Asset Classes Included in Multi-Asset Strategies? Do these Strategies Reduce Correlation, Lower Volatility and Limit Downside Risk or Drawdown? If so, by How Much? How do Investors utilize Multi-Asset Strategies in their Portfolios? With Dynamic and Tactical Asset Allocation Skills yet to be Put to the Test in recent years, how do you see this Space Evolving in a more Treacherous/Volatile Market? Aside from Asset Allocation Skills, what other Skills are Required for the Ability to Generate Alpha and be Successful? Constructing the Portfolio Risk Factor Approach How do you Measure Performance? (B) Criticism Trailing Returns Underperformance of Multi-Asset Strategies to the Traditional 60/40 Mix. Is it possible Central Bank Policy has Limited the Ability of Multi-Asset Managers? Do these Strategies Rely Too Heavily on Market Timing? Do you Agree or Disagree with the Willis Towers Watson Report saying Multi-Asset Managers have actually

126 Harmed Performance via Tactical Asset Allocation Decisions? The Skill of Moving Opportunistically Between Markets, a Function of Asset Allocation Alpha is an All-to-Rare Commodity any Truth to this? Do you believe that many Multi-Asset Funds have Not Sufficiently Incorporated Risk Controls into the Design of their Products as the Willis Towers Watson Report Noted? Reliance on Stable Correlation Relationships although there is No Certainty those Relationships will Persist Is Excessive Leverage a Concern? High Fees Is Transparency often Obscure or Hazy? Speaker: Myron Scholes, Ph.D., Chief Investment Strategist, Janus Capital Group Sponsored By: 12:00 Noon Tail Risk Hedging Understanding Tail Risk Frequency, Severity and Impact why are the Markets Vulnerable to a Substantial Decline Today? Understanding the Risk of Correlated Global Markets for Developed Countries Why is this a Good Time to Mitigate Equity Tail Risk? If Tail Risk Hedging is a Good Idea, why isn t Everyone Doing It? What are the Expected Costs of a Tail Risk Hedge vs. the Expected Benefits? Is Raising Cash a Proper Tail-Risk Strategy? Limits of Diversification and Beta Hedging Importance of Understanding where in the Market your Existential Tail Risks come from and how Big they Could Be Analysis of your Liquidity and Leverage. What Liquidity Considerations should Investors pay attention to? Implicit vs Explicit Hedging what are the Advantages and Disadvantages of each? What Types of Strategies and Approaches are used to Hedge? Using Information from the Derivatives Markets to assess Stress Points where we are seeing Tail Risks building? Option Overlay Strategy Cash Flow Generation in Down Markets but can you Maintain Upside Exposure in Rising Markets? Does the Growth in the VIX Universe pose a Risk? Active Management Pension Plans developing a Contingency Plan What are the Best Practices to Navigate through Stressful Periods? Why is there often Difficulty Implementing a Tail Risk Program within the context of a Committee and how can we overcome this? Any other Implementation Challenges? Any Real World Experiences you can share among your Clients with Tail Risk Hedging? 12:30 PM Lunch 1:40 PM Liability Driven Investment, (LDI) What is LDI and how is it Interpreted in the Market? What have Plans done to address the Hurdles of Low Pension Funded Status and Low Interest Rates over the past few years? Does LDI Make Sense Now Considering Current and Future Market Conditions? What is the Risk/Return? Reducing Funding Ratio Volatility Are Plan Liabilities the only appropriate Benchmark? Understanding the Components of Performance Measurement and Evaluation Risk Budgeting, Scenario Analysis, Liquidity Analysis and Performance Reporting

127 What are some Industry Trends that Clients should be should be aware of in the LDI Market? Beyond the Ability to Earn Excess Returns, what should Investors look for in Selecting LDI Managers? Understanding Implementation Approaches, Strategies and Issues. Are some Approaches More Appropriate in a Less Liquid Fixed Income World? Understanding that a Partial LDI Strategy only Partially Reduces the Pension Risk How to Implement LDI in a Pubic Fund Context are the LDI Methods Applicable? Pension Risk Transfer Lump Sum Payments, Buy-Outs, Buy-Ins. What Trends are we seeing? Will we see a Strategy More Common in Europe with Plan Sponsors Combining an LDI Strategy with the Purchase of Longevity Insurance to Further Reduce Risk? Speakers: Brian McDonnell, Managing Director, Head of Global Pension Practice, Cambridge Associates Kevin Zhu, Managing Director, Head of Portfolio Construction, OPTrust, OPSEU Pension Trust 2:15 PM Risk Parity Risk Parity Explained Does Risk Parity Make Sense Now Considering Current and Future Market Conditions? Performance in the Past Decade and Longer How does Risk Parity look over time Compared to Other Asset Mix Models? Scenario Analysis for Risk Parity Performance (a) Gradual Rise in Interest Rates, (b) Sharp Decline in Equity Markets, (c) Global Commodity Deflation Continues, (d) Sharply Rising Inflation Is it possible that Bonds will become Less Likely to Protect against Volatility in Equities? Should we be Worried about Leverage or Leveraging the Inappropriate Assets? Is there an Over-Reliance on Bonds with Current Valuations? Do you Consider it a Drawback that there s Only a Positive Weight to an Asset with No Ability to go Short? Leverage and Illiquidity Do Not Mix any Approaches to Avoid this Combination? Do you View it as a Flaw that Portfolio Construction Approaches only consider Volatility Risk, Not Tail Risk or Drawdown Risk? Can Tail Risk Parity be the newest Trend? Thoughts on the Concept of Measuring Expected Tail Loss rather than Volatility Cheaper Hedges for Protection, Reducing Tail Risks while Retaining More Upside than Risk Parity? Aside from the Money Concentrated in the Top Founding Firms, how should we Approach Managers with Short Track Records? Speaker: Steven J. Foresti, Chief Investment Officer, Wilshire Consulting 2:50 PM Refreshment Break 3:20 PM Unconstrained Fixed Income Strategies Assessing the Current Environment Fed and Global Central Bank Policy, Interest Rates, Spreads, U.S. Dollar, Foreign Investment in US Treasuries, Global Fixed Income Landscape and Default Rate Expectations What are your Best Ideas for ways to Simplify the Sub-Allocations within the Fixed Income Space? Any preferred Allocation Breakdowns or Weightings? With the Proliferation of Products which are Diverse, what is the Return Objective? Portfolio Construction Need for Increased Disaggregation of Alpha Sources Understanding Return Sources/Attribution and Correlation that Unconstrained Funds have had with other Fixed Income Sectors and Equity Markets Impact of the Non-Linearity of Risk Correlations and Volatility Not Being Stable through time. Is that something you look to Measure in case of Market Dislocations? How are you Taking Advantage of Current Market Dislocations? What are the Implications of Reduced Liquidity? From a Risk Factor Approach, what Asset Class replaces Duration as a Deflation Hedge in a Portfolio? Modern Risk Management what Progress have we seen for Developing a Risk Premium Approach? Do you see a Supply/Demand Imbalance in Long-Duration Fixed Income?

128 Using Structured Products, Swaps and Derivatives to Create Alpha and Hedge Volatility Opportunities in Global and Emerging Market Debt why is it appealing? Emerging Markets Local Fixed Income what are the Currency Risk Factors? What are your Expectations and Outlook for Corporate Debt? Bank Loans Attractive or Not a Good Hedge in Rising Rate Environment? Are Taxable Municipals a good Alternative to Corporate Bonds? Landscape for MBS Market with GSE Reform Considerations Risk/Reward for TIPS, Interest Rate and Inflation Swaps, Inflation Bonds and Overlays Where do you see the Greatest Risks in the Debt Markets and what might be the Trigger Points that enhance that potential? Understanding how to Select Alternative Managers Multi-Sector, Multi-Region and Multi-Currency Skill Set Moderator: Keith M. Berlin, Director of Global Fixed Income and Credit, Fund Evaluation Group Speaker: Leighton A. Shantz, CFA, Director of Fixed Income, Employees Retirement System of Texas 4:05 PM Smart Beta Proceed with Caution Smart Beta maven Rob Arnott, one of the founders of this strategy, has voiced concern about a reasonable probability of a smart-beta crash and that many smart beta strategies are poised to go horribly wrong. Bill Sharpe, Nobel Laureate and the inventor of beta, stated that smart beta makes me sick. Rick Ferri, an index-investing pioneer, has referred to smart beta as silly talk. We ll examine why the growing popularity of smart beta can result in possible unexpected returns. Smart Beta Flashy Name Misconception Misleading Marketing Limits of Diversification Smart Beta often Promoted as a Good Diversifier but has exhibited a High Correlation with the S&P 500 Lower Volatility Aspect does it Reduce Risk if it still shows a High Correlation to S&P? The Likelihood of Selecting the Wrong Smart Beta Variation Excess Returns mean Extra Risk Factor Exposures often Create Undesirable Tilts Extended Periods of Underperformance with Hypothetical Back-Testing Prior to the Launch of Smart Beta High Fees Are High Valuation Levels Reducing the Potential for Future Performance? Should Liquidity be a Consideration with Some Products? What is your Best Advice when Allocating to Smart Beta? 4:20 PM Environmental, Social and Governance, (ESG) What are the Recent Market Developments in ESG for the U.S. and Abroad? How do you Approach ESG from a Fiduciary Standpoint and for the Development of your Plan s Investment Beliefs? How should ESG be best Incorporated into the Investment and Due Diligence Process? Climate Change and Investment what s the Relationship and how do you Integrate Climate Risks into your Process? What are the Alternatives to Divestment? What should Pension Funds be asking their Existing Active Managers in terms of whether they are looking at Climate Risk or Opportunity? What are the Perceived Obstacles to applying an ESG Framework to the Stock Selection Process? Considerations for Investing in a Passive ESG Index thoughts on Low Carbon Index? Combining ESG with Smart Beta? Understanding UNPRI Principals. Will there come a time when Plan Sponsors Only Invest with UNPRI Investment Manager Signatory Firms? Do we have Proof that ESG Integration Adds Value?

129 ESG Fund Performance vs. Traditional Funds What Progress have we seen with Portfolio Decarbonization? Will Supply Chain Management be the new Normal? Looking past the Portfolio Company with a View on its Relationship with Large Enterprise Customers What are some ESG Misconceptions? Factors Needed to make ESG Mainstream and Integrated into Every Investment Process Agreement on Weightings, Scoring and Definitions Relevant Benchmarks for ESG Risk Measurement and Assessing ESG Factors What type of ESG Research or Data is most helpful? Moderator: Alex Bernhardt, Principal, Head of Responsible Investment, U.S., Mercer Speaker: Travis Antoniono, Investment Officer, Corporate Governance, California State Teachers Retirement System, (CalSTRS) 5:00 PM Cocktail Reception

130 Wednesday, April 19th 7:00 AM Breakfast 8:00 AM Emerging Markets Macro Environment and Recent Developments Knowing the Historical Correlation of Commodity Prices and Emerging Markets, should we be Hesitant to Increase Allocations? Is there More Remaining in the Deflationary Cycle? What Factors do we need to see for us to Believe that Emerging Market Assets have Bottomed? How have EM Headwinds Impacted your Deployment? How have Emerging Market Economies fared under Global Central Bank Monetary Policy? Inflows? What would be the Effects on Emerging Markets if we see Weak or Negative Growth in the U.S or Instability in Eurozone, (including Brexit)? Given the Current Environment, will Emerging Markets Outperform Developed Markets? What are Realistic Return Expectations? How might that Differ based on Region? What is an Appropriate Long-Term Allocation to Emerging Markets? What Impact have we seen as a Result of the Strong U.S. Dollar? What can be done to Mitigate Currency Risks? How do Valuations look Relative to Risk? Outlook for China are you Concerned about their Credit and Real Estate Bubbles? India to Benefit from its Fast Rate of Urbanization? Still in Need of Substantial Reform? Are you Investing in Higher Growth Markets such as Southeast Asia, Africa or Latin America? Which particular Countries? Do you see Higher Risk, Returns and Diversification Factors here? Which Markets in Frontier Countries can you Profit from Strong Growth and Access a Lower Correlation? The Case for Emerging Markets Corporate Debt What Metrics are you using to Determine Relative Value in Sovereign Bonds? Public vs. Private Emerging Markets Benefits and Drawbacks of each Choosing an Emerging Markets Fund or Manager should you be Investing by Region, Country or Sector? Active vs. Passive Debate 8:40 AM Currency and Currency Alpha (A) Currency Market Overview Central Bank Intervention and other Factors Driving Currencies. More or Less Volatility and Liquidity? What is the Relationship Between Volatility and Currency Returns? Can Currencies be Forecasted via Fundamentals, Cycles and Trends? If so, how can this Information be Incorporated into a Currency Hedging Program or into Active Currency Management? Benefits of Active Management Widely Confused Difference Between Currency Hedging and Currency as an Asset Class how do they Differ in terms of Implementation Approaches? Different Skills Required for Currency Hedging vs. Currency Alpha should a Different Manager be used for Each Approach or is it Possible to be Skilled in Both? (B) Currency Overlay Hedging Given Plan Sponsors Non-U.S. Exposure, how do you know if you should Consider Implementing a Currency Hedging Program? What Factors should be considered in this Determination? How much of a Reduction in Portfolio Volatility and Risk should be Expected? Can it be More Beneficial to be Unhedged? Hedging Costs how should this factor into your Decision? When Hedging against a Further Dollar Rise, what are the Risks if the Dollar has a Significant Decline? Various Implementation Approaches Passive vs. Dynamic? (C) Currency Alpha Goals of a Currency Program

131 Benefits of Non-Correlated Returns to Equities, Fixed Income and Alternative Investments How does Investing in Currency Diversify and Reduce Risk? Natural Diversifier for the Duration Risk in Bonds? How do you Manage Risk Factors? What are the Return Expectations? When considering Investing in an Active Currency Strategy, what should you look for in a Manager? Speaker: Ian Toner, CFA, Managing Director, Verus 9:15 AM Distressed Investing Opportunistic and Special Situations Where are we in the Distressed Cycle? When will the Vast Sums of Undeployed Capital come in off the Sidelines? How does the Current Economic and Interest Rate Environment affect the Attractiveness of Distressed Strategies? What are your Expectations for Default Rates going forward? Has the Fed and Easy Credit Masked Fundamentals? Prevalent Covenant-Lite Deals are we seeing Bubble Conditions setting us up for Problems during the Next Cycle? What are your thoughts on the Recent Leverage Trends? Has the Regulatory Environment Changed the Opportunity Set? Any Adverse Effects or Liquidity Issues it may cause? Scope of the Distressed Market and Segments Corporate Credit, Structured Credit, Commercial Real Estate, Hard Assets, Liquidations, Segmentation by Deal Size, etc. Which Sectors, Strategies and Geographies will create the Best Opportunities? Any Areas that should be Avoided? What Distressed Opportunities are we seeing the Energy Sector? What s the Potential Impact of the Debt Piled up by Corporations for their Share Buybacks? Do you find Europe Attractive? What are the Opportunities and Risks? Any Countries, Sectors or Types of Deals that Stand Out? Marketable Distressed Strategies how Correlated are they to Public Equities? How do Investors go about Choosing the Right Distressed Strategy, Investment Style and Approach? How will the Different Implementation Approaches affect Expected Returns? Control vs. Non-Control? Private vs. Public? Distressed Debt Vehicles in Hedge Fund Format vs. Private Equity Drawdown Structures what are the Pros and Cons of Each? What Skill Sets/Characteristics should Pension Plans look for in a Distressed Manager? What are the Return and Risk Expectations? What are the Biggest Challenges you face to Delivering Returns? Moderator: Scottie D. Bevill, Senior Investment Officer - Global Bonds and Real Return, Teachers Retirement System of Illinois 9:50 AM Refreshment Break 10:20 AM Credit Strategies Current State of the Credit Market Where are we in the Credit Cycle and how does it Differ from the Past? With Global Central Bank Monetary Policy Heavily Influencing Rates and Credit Markets, how do you see this Developing as far as Risk and Opportunities Across Credit going forward? What will be the Catalyst that will cause Credit Spreads to Widen and Defaults to Rise? How much should Plan Sponsors be Allocating to Credit? What is the Optimal Structure to a Credit Portfolio? What Subsectors of Credit are Most Attractive? What are your Best Ideas for Finding Value? Any Areas you are Avoiding? High Yield Market is it possible to see a High Yield Meltdown with a Lack of Liquidity? Understanding the Risk Factors and the Strong Correlation to Equities

132 Bank Loans Overview High Risk in Covenant-Lite Loans? State of Securitized Markets how Cheap is Securitized Risk vs. Unsecuritized Risk and how do you measure that? Long-Term Prognosis for Spreads? Outlook and Considerations for Structured CDO, CDS, CLO, CMBS, RMBS, ABL, ABS Outlook for Emerging Market Debt Liquidity and its Implications for Multi-Strat. What might be some of the Pitfalls? Do you see Investors being more willing to Trade Liquidity for Yield and should that be of Concern? Regulatory Changes and Leverage what will be the Market Consequences? European Market are there Opportunities Now or More Downside Risk? Considerations for Selecting a Manager and Strategy How will the Sector you Invest in Perform when Rates Rise? Is that a Concern and how do you Manage that? What are the Trade-offs between Mid-Market and Large Market Credit Investing? Credit Investment Mandates are they Too Narrow? Which Bucket or Asset Class does it fit into and should it be Defined as Opportunistic Credit? Moderator: Zeke L. Loretto, Director, Head of Global Investments, ebay 11:00 AM Hedge Funds (A) Current and Future State of the Hedge Fund Industry Why have Hedge Funds Underperformed? Will we see More Hedge Funds Shutting Down? Is the 2 and 20 Model Broken? Is it Dead for Larger Pension Funds? What Trends have you seen as far as Pressure on Fees? How do you assess the Tradeoff between Lower Fees and Longer Lock-ups? Inverse Correlation Between Assets Size and Performance on both an Industry Basis and Manager Level do you Agree or Disagree this could be mean it s More Difficult for Managers to Generate Strong Returns? Do you Believe Smaller Hedge Funds will Continue to Outperform? What Pension Inflow Trends have you seen? What is Driving the Increase in Demand for Strategies Uncorrelated with the Capital Markets? Which Low Correlated Strategies do you think will Continue to see Increased Interest? How do you see Succession Planning playing out? What Tends to Work and what Does Not? (B) Implementation Options What is the Future of the Fund of Funds Space? How is it Changing? Where will Fees be? What will it take to Stay Competitive? Considerations for Selecting the right Hedge Fund or Fund of Funds Due Diligence and Manager Selection. What are the Key Traits you should be looking for? Deciding Between Fund of Funds vs. Direct what are the Key Considerations? Long-Short Equity Hedge Funds what Differentiates Managers that have been able to Outperform? Which Strategies offer more Transparency and Liquidity? Do you find Opportunities within the Global Macro Space Attractive and if so, why? Liquid Hedge Fund Products such as UCITS, 40 Act and Hedge Fund Replication are they a Viable Alternative and Under which Circumstances? How has their Performance and the Lower Fees Fared to Hedge Funds? If the S&P loses 30%, what Downside Protection, Drawdown or Return Range do you expect we ll see from each of the Different Hedge Fund Strategies? If there was a Hedge Fund Strategy you would Invest in over the next Few Years, which one would it be and why? (C) Portfolio Construction and Risk Management Importance of Operations Due Diligence. Any recent Developments? How often should Operations be Reviewed? Transparency and Risk Aggregation Data are they Accurate? How many Hedge Fund Strategies do you need? Should you focus on a few better Strategies or is the Size of your Portfolio a Factor?

133 Can Hedge Fund Strategies be Tactically Managed? How should we View a Long/Short Manager s Performance when a Portion of the Return Comes from Market Beta? What Trends do you see Developing in Regards to the way we Evaluate Liquidity Provisions for Hedge Funds? Blurring of the Lines Between Hedge Funds and Private Equity? Should you ask for a Separate Account? Is the Trend towards Managed Accounts the Future? Understanding the Benefits of Increased Transparency and Control, more Liberal Liquidity Terms for Redemption/Termination, Outsourcing Operational Oversight/Support Moderator: Jim Vos, Chief Executive Officer, Aksia LLC Speaker: Neil Messing, Head of Hedge Funds, New York City Office of the Comptroller, Bureau of Asset Management 11:50 AM Managed Futures Global Macro s place in the Hedge Fund Industry what are the key Differences from other Hedge Fund Strategies? Attributes Diversification, Uncorrelated, Liquid, Transparent and Regulated Historical Performance of Managed Futures Performance during Periods of Market Stress or Crisis Events How much can it Decrease the Depth of Portfolio Drawdowns and Volatility? Volatility is usually Perceived as Risk within Portfolios is this the same within Managed Futures? Increasing your Exposure to Global Markets and Non-Financial Sectors How to Implement an Allocation to Managed Futures How do you Manage Risk and Volatility? What Questions should an Investor ask a Prospective Manager? Size of the CTA in terms of Assets Under Management any considerations to factor in? Is the Proliferation of Managed Futures as a Risk Premia going to Change the Landscape? 12:05 PM Lunch Real Asset Strategies 1:10 PM Commodities Current Market Environment Deflationary Pressures how should this affect our Allocation and Approach? What Factors do we need to see for us to Believe that Commodities have Bottomed? Any Long Term Cycles or Patterns to go by? Based on Previous Down Equity Markets, what Performance can we Expect from Commodities if we have Market Turbulence? How Strong is the Correlation? What are your Views on particular Sub-Sectors and Where are the Pockets of Value? How are Renewables Affecting Specific Commodities? What Currency or Weather Related Impacts are you seeing on Specific Commodities? Understanding the Different Approaches to Investing in Commodities Equities, MLPs, Indexes, Futures, Physical Commodities, Private Equity Real Assets Investing in Commodities through Private Equity vs. Stocks or Indexes Benefits and Drawbacks of Each True or False Natural Resource Stocks are Not an Efficient Way to get Commodities Exposure Are MLPs more Highly Correlated to Commodity Prices than We Thought? Roll Effects and its Impact on Returns Investing in Long/Short vs. Long Only Active vs. Passive

134 Any Recent Developments in Commodities Risk Premia? Smart Beta as applied to Commodities? What are the Key Criteria that would lead to Manager Outperformance? Risk Factors 1:45 PM Energy How will we know when Oil Prices have Bottomed? Dry Powder what will be the Trigger for Capital to be Deployed? Are you hoping for a Second Washout to Deploy more Capital and Profit in the Long Run? How Important are the Credit Markets in the Deployment of Private Capital? How do you think about the Risk and Approach to this Space in a Climate Changed Focused World? Where are the Best Opportunities to Deploy Capital in this Environment? How has the Current Commodity Market Distress Impacted the Balance Sheets of Oil and Gas Companies? What are the Advantages of Investing in Private Energy? Upstream, Midstream and Downstream Overview How has the Oilfield Service Industry Impacted Upstream Oil and Gas Operators? Thoughts on Midstream MLPs with their Business of Oil Storage Services and its Cashflow? What Type of Investments are there with Returns Independent of Oil and Gas Prices? What does the Future Hold for Shale? Portfolio Decarbonization how do you Deal with LP Concerns on this Issue? Has it Impacted your Fund Commitments? Access Public (Stocks and MLPs), Indexes, Futures, Private, (Direct, Funds, Fund of Funds). Which one is most likely to Benefit? Big vs. Small Funds, Deal Size Moderator: John Nicolini, CFA, Managing Director, Verus Speaker: Tom Masthay, CFA, CAIA, FRM, Director, Real Assets, Texas Municipal Retirement System, (TMRS) 2:15 PM Infrastructure Market Outlook Why should Investors consider Committing Capital to the Infrastructure Space? State of Development of the Infrastructure Asset Class Where are we now in terms of Appetite/Penetration amongst Investors Allocations? How much Room to Run is there for the Asset Class to Continue to Develop? Is there Too Much Money Chasing Too Few Opportunities? What will Cause High Valuations to Ease and Dry Powder to be Deployed? What Effects have we seen from Monetary Easing? Brexit? Terror Attacks? How has Performance been and what are the Recent Return Expectations? How will Returns be Impacted by Low Oil Prices for an Extended Period? Which Geographies and Sectors are Most Appealing? How have Risk/Return Expectations Changed with Global Sovereign Debt Trading at Zero or at Negative Rates? Have these Views Changed Investment Approaches for Developed vs. Emerging, U.S. vs. Non-U.S., Listed vs. Unlisted or Greenfield vs. Brownfield? Infrastructure Debt as a Growing Area will it deliver for Investors Searching for Yield? What are the Biggest Challenges/Risks associated with Infrastructure Investing? Any Advantages or Limitations of Particular Implementation Approaches? What are the Advantages of Open-Ended Funds over Closed-Ended Funds? Will we see a Surge in Open-Ended Funds in the Coming Years? Is the Rise in Public-Private Partnerships Inevitable due to Lack of Gov t Funding and High Debt? What Opportunities will this Create? Debt Heavy/Equity Shortage Deals how and when will Pension Investors Overcome this Highly Leveraged Roadblock?

135 2:30 PM Real Estate Current State of the Real Estate Market Is a Correction on the Horizon and How Significant? If so, what is the Single Biggest Risk Factor? What would be the Impact of Rising Rates on your Real Estate Portfolio? What are the Short-Term and Long-Term Implications? With Recent FIRPTA Changes, how has Foreign Investment Influenced U.S. Real Estate Investment? Effects on Valuations? Is U.S. Core Too Expensive? What are your Return Expectations for the Sector? Do you see Capital Moving Out of Core and Into Higher Risk Segments? Within Non-Core, which Value-Added and Opportunistic Strategies are Most Appealing? Do you believe Commercial is Fully Priced and Not Pricing in Risk or Disruption? Is the Bridge Financing Opportunity Attractive from Maturing CMBS? Multifamily Conditions might it become Less Desirable compared to the past few years? Which Property Types are At Risk Today? Is there still Opportunity in Niche Property Types such as Senior Housing, Student Housing, Storage or Datacenters? What s happening with Leverage? Analysis of Cap Rates and Vacancy/Occupancy Rates any Conclusions you can draw? Asia and European Real Estate Outlook Opportunities, Investment Trends and Capital Flows Has the Popularity of Closed Ended Funds Declined? Will Co-Investments become more Common? Current State of the Real Estate Secondary Market Programmatic Joint Ventures why are these Joint Ventures being done? Will more Pension Plans Team up with Commercial REITs? Larger vs. Smaller Fund Size which ones will Outperform going forward? Entry Issues with Open-Ended Funds and Concentration into Fewer Funds? What Strategies do you see as the Biggest Risks and the Biggest Rewards/Relative Value for the Future? Moderator: Jennifer Young Stevens, Principal, The Townsend Group Speaker: Peter H. Collins, Vice Chair, Investment Advisory Council, State Board of Administration of Florida 3:15 PM Refreshment Break 3:40 PM Private Equity Are High Levels of Dry Powder Here to Stay? Will it take a Sustained Market Correction or Crisis to Bring Undeployed Capital off the Sidelines? Considering the Current High Valuations, Low Interest Rates, Ample Leverage and a Strong Fundraising Environment, what Similarities and Differences do you see Compared to ? Protecting your Current Portfolio are you making Investment Decisions or Managing your Portfolios Differently in this Environment? How do you Avoid Possible Pitfalls or Getting Involved in Expensive Deals? If we have an Economic Slowdown or a Recession, how would you Approach New Investments? What are your Views on GP Restructurings and are you More Accepting of them? For Buyouts, what Sectors or Geographies do you Favor? What Sectors do you tend to Avoid in this Environment and why? Do you Prefer Buyouts or Growth Equity over the next few years and why? Are we Currently in a Venture Capital Bubble? What are your thoughts on Co-Investments? Do you Worry about the Outcome if this Cycle Turns? Secondaries Deal Volume, Pricing, Pressures and Futures Expectations Have you taken steps to Diversify your PE Portfolio and find Investments with a Non-Correlation to the PE Space in General? Which of these Non-Correlation Strategies have you Allocated to or favor? As an LP, are you willing to Pay Higher Fees for Managers with the Best/Proven Track Records?

136 Do you believe Charging Fees on Invested Capital rather than Committed Capital can Hurt Returns? Outlook/Issues for European PE Post-Brexit? After a Long and Extended SEC Crackdown and a Trend towards Increased Transparency, what Impacts are you expecting on the industry going forward? Speaker: Rodney June, Chief Investment Officer, Los Angeles City Employees Retirement System, (LACERS) 4:25 PM CIO Roundtable (A) Risks, Allocations and Macro-Based Decisions In this Low Growth, Low Return and Fully-Valued Environment, how has it Impacted your Investment Program and your Asset Allocation? What s your Opinion on the Sustainability of the Fed-Induced Stock Market Rally? Thoughts on the Fed and Global Central Banks Monetary Policy? Are there any Strategies you like that provide a Low or Non-Correlation to Traditional Investments that can Provide Outsized Returns during Periods of Market Stress? With the Collapse of Commodities, Oil, the Slowdown in China, the Troubles of the European Union and more, are you Hedging Against the Risk of Further Deflation? What Strategies does your Fund utilize that will Protect against Interest Rate Risk and Duration Risk? What sort of De-Risking Strategies or Risk Management Approaches has your Fund Integrated into the Investment Decision Process? Does LDI or Risk Parity Make Sense Now Considering Current and Future Market Conditions? Do you Incorporate Multi-Asset Investing and do you believe it can Limit Downside Risk? Do you believe your Hedge Fund Strategies will provide a Cushion for the next Market Downturn? How do you use them to Reduce Risk? Have you Allocated Funds to take Advantage of the Dislocation in Energy/Oil? Which Sectors or Strategies do you favor? What do you feel is the proper Emerging Markets Allocation and are there any Regional or Frontier Strategies that interest you? Have you made Long-Term Cash Flow Investments through Partnerships and Co-Investment Structures? Do you Believe the Impact of Regulation has Created a Reduction in Market Liquidity? Has it Impacted your Fund or Decisions? Will there be Sufficient Liquidity in the System to Cope with Conditions of Market Stress? (B) Alignment of Interests What Changes or Trends have you noticed in Fee Structures/Terms and your Bargaining Power? What Tactics work best for you when attempting to Negotiate Private Placement Agreements? Given the Low Return Environment, shouldn t there be an Industry-Wide Threshold (perhaps 3% - 4%), before Carried Interest Kicks In? How can we go about Making Progress with this Issue? Have you Trended Towards a Passive Equity Allocation with a Lower Cost? What Support would help you to do a better job of Addressing and Solving Investment Problems? What Discretion and Authority do you have with those Problems? Any Progress in granting you and your Investment Departments more Latitude in Tactically Managing your Portfolios in response to Extreme Economic Conditions? Any important Lessons Learned that you can share from your Individual Plan Experiences? Moderator: Kristen Doyle, CFA, Partner, Head of Public Pension Funds, Aon Hewitt Investment Consulting Speakers: Deborah Spalding, CFA, Chief Investment Officer, Connecticut State Treasury; Connecticut Retirement Plans and Trust Funds, (CRPTF) Tom Tull, CFA, Chief Investment Officer, Employees Retirement System of Texas John D. Skjervem, CFA, Chief Investment Officer, Oregon State Treasury; Oregon Investment Council

137 Craig Husting, CFA, Chief Investment Officer, Public School and Education Employee Retirement Systems of Missouri, (PSRS/PEERS) 5:20 PM Conference Concludes 5:20 PM Tickets for Networking Event handed out in Conference Room - attendees must be present to attend event 6:00 PM Wine Tasting Networking Event & Dinner Hosted by The Pension Bridge Join our group for a wine tasting and dinner at the Press Club, located just next door to the Four Seasons. Meet your industry peers in great setting as California Wine Country comes to the heart of the city. Experience the finest winemakers with new and rare vintages. We ll have a fun wine tasting reception, followed by a tasteful dinner with the highest quality organic ingredients. The Pension Bridge will utilize the 9000 square feet of the award winning Best Restaurant Design event space for networking for our high quality conference group.

138 REGISTRATION: To register or receive more information on The 2017 Pension Bridge Annual: Florida Office Contact: Brett Semel (561) New York Office Contact: Andrew Blake (516) Please visit for additional details. Registration is not available online due to the controlled attendance structure. About The Pension Bridge: We are an innovative company offering educational conferences of the highest quality. Our objective is to provide an education to the institutional investment community while providing an impressive speaker faculty in a setting that is conducive to great networking. We help institutional money managers connect with Pension Funds and Consultants across the country in a fun, enjoyable environment. Our events can act as a stepping stone to a successful financial relationship or simply help build the investment education. Our management team s unique skills, operating experience, and industry relationships help to make our events the main attraction in the industry. We pride ourselves on being there to cater to our clients wants and needs. Our ratio of plan sponsor to investment manager allows our events to be the most desirable and accommodating in the conference industry. The Pension Bridge is known for its strength, stability, relationships and operational excellence. The Pension Bridge, Inc Bel Air Drive, Building 1 Highland Beach, FL (561)

139 CITY OF OAKLAND MEMORANDUM TO: Oakland Police & Fire Retirement Board FROM: Katano Kasaine SUBJECT: Authorization and Reimbursement of Board/Staff Travel/Education Expenses DATE: February 22, 2017 Jaime Godfrey, Board member of the Oakland Police and Fire Retirement System board, requests authorization for reimbursement of travel and/or board education related funds for the event detailed below. Staff has verified that budgeted funds are available for this board member to be reimbursed. Staff recommends the reimbursement of travel/education funds for the event below be approved by board motion. Travel I Education Event: Due Diligence Visit to Rice Hall James and Assoicates Event Location:~S~a~n~D~i~eg..,_o~,-'C~A~ Estimated Event Expense*: -'$"'--=82=3"-'.-=-00"-'-'(e=s=ti=m=at=e=d"""") Notes: The memo was not included on the Nov Board meeting agenda due to time; President Johnson auth. this trip and asked staff to add to Feb Agenda * If enrollment, registration or admission expenses are required, the fund will process a check in advance and pay vendor directly; all other board-approved reimbursements will be made upon delivery of receipts to staff by the traveling party. Cancelation of event attendance requires return of all reimbursed funds paid to attendee to the fund. Respectfully submitted, ~&~ Katano Kasine, Plan Administrator Oakland Police and Fire Retirement System For questions please contact David Low, Administrative Assistant, at Attachments (if any): Resolution #6955 ~ DD RiceHallJames '~:-CA Memo Godfrey

140 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION NO ON MOTION OF MEMBER SECONDED BY MEMBER TRAVEL AND REIMBURSEMENT AUTHORIZATION FOR INVESTMENT COMMITTEE CHAIRMAN JAIME GODFREY FOR TRAVEL FOR DUE DILIGENCE. MEETING WITH RICE HALL JAMES AND ASSOCIATES, LLC ON JANUARY 17-18, 2017 IN SAN DIEGO, CA WITH AN ESTIMATED BUDGET OF EIGHT HUNDRED TWENTY-THREE DOLLARS ($823.00} WHEREAS, after a competitive search, the PFRS Board selected Rice Hall James and Associates, LLC to serve PFRS as its Small Cap Growth Domestic Equities Asset Class Investment Manager at its December 21, 2016 Board meeting ; and WHEREAS, as part of the due diligence investigation recommended by the System's consultant, Pension Consulting Alliance (PCA), Investment Committee Chairman Jaime Godfrey noted the necessity of a site visit to Rice Hall James and Associates' offices prior to the board authorizing PFRS entering into a professional service agreement with Rice Hall James and Associates; and WHEREAS, the Board Travel Policy requires that PFRS Board/Staff Members see~k Board approval prior to travel; and PFRS WHEREAS, due to timing of agenda notices for the January 2017 meeting and the scheduling of the site visit, Chairman Godfrey's travel request was not submitted in time for the January 25, 2017 Board meeting agenda for approval; and WHEREAS, PFRS Board President Walter Johnson provided advanced authoriz:ation for Chairman Godfrey to travel for the site visit while directing staff to add his travel request at the next Board meeting for approval; now, therefore, be it RESOLVED: Investment Committee Chairman Jaime Godfrey's travel and reimbursement request and estimated budget of $ to travel for due diligence site inspection with Rice Hall James and Associates on January 17-18, 2017 in San Diego, CA is hereby approved. IN BOARD MEETING, CITY HALL, OAKLAND, CA F_E_..B_R_..U, A_...R Y, 2_ PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, MUSZAR, SPEAKMAN, WILKINSON AND PRESIDENT JOHNSON NOES: ABSTAIN: GODFREY ABSENT: ATTEST; P_RE-SIO-EN-T ATTEST: SECRETARY

141 CITY OF OAKLAND MEMORANDUM TO: Oakland Police & Fire Retirement Board FROM: Teir Jenkins SUBJECT: Authorization and Reimbursement of Board/Staff Travel/Education Expenses DATE: February 22, 2017 Katano Kasaine, Plan Administrator of the Oakland Police and Fire Retirement System board, requests authorization for reimbursement of travel and/or board education related funds for the event detailed below. Staff has verified that budgeted funds are available for this board member to be reimbursed. Staff recommends the reimbursement of travel/education funds for the event below be approved by board motion. Travel I Education Event: 2017 CALAPRS General Assembly Event Location: Monterey Marriott, Monterey, CA Event Date: March Estimated Event Expense*: _$~1,~0~24~ ~8~8 ~<e~s~tim~at~e...,d) Notes: * If enrollment, registration or admission expenses are required, the fund will process a check in advance and pay vendor directly; all other board-approved reimbursements will be made upon delivery of receipts to staff by the traveling party. Cancelation of event attendance requires return of all reimbursed funds paid to attendee to the fund. Teir, Jenki s, Inv ent Officer Oakland Police and Fire Retirement System For questions please contact David Low, Administrative Assistant, at Attachments (if any): Resolution #6956 Program Agenda CALAPRS GenAssmbly - CA Memo Kasaine

142 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION NO ON MOTION OF MEMBER SECONDED BY MEMBER TRAVEL AUTHORIZATION FOR PFRS STAFF MEMBER KATANO KASAINE TO TRAVEL AND ATTEND THE 2017 CALAPRS GENERAL ASSEMBLY CONFERENCE ("2017 CALAPRS CONFERENCE"} FROM/ON MARCH 4, 2017 TO MARCH 7, 2017 IN MONTEREY, CA WITH AN ESTIMATED BUDGET OF ONE THOUSAND TWENTY FIVE DOLLARS ($1,025.00} WHEREAS, PFRS Staff Member Katano Kasaine wishes to attend the 2017 CALAPRS Conference in Monterey, CA from/on March 4, 2017 to March 7, 2017; and WHEREAS, Staff Member Kasaine is expected to seek reimbursement of expenses from the Board; and WHEREAS, in compliance with the Board Travel Policy, which requires that PFRS Board/Staff Members seek PFRS Board approval prior to travel; and WHEREAS, in compliance with the Board Travel Policy, the Board/Staff Member has presented costs for travel, lodging and/or registration fees to the 2017 CALAPRS Conference in the amount of approximately $1,025.00; and WHEREAS, Staff Member Kasaine seeks Board approval of the fore mentioned estimated costs to travel to Monterey, CA to attend the 2017 CALAPRS Conference from/on March 4, 2017 to March 7, 2017; now, therefore, be it RESOLVED: Staff Member Katano Kasaine's travel request and estimated budget of $ 1, to attend the March 4, 2017 to March 7, 2017 CALAPRS Conference is hereby approved. IN BOARD MEETING, CITY HALL, OAKLAND, CA...;;F...;;E=B~R...;;.;U=A...:..:Rc..;;..Y-=-=22=,:...;2=0...;..17" PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, GODFREY, MUSZAR, SPEAKMAN, WILKINSON AND PRESIDENT JOHNSON NOES: ABSTAIN: ABSENT: ATTEST: PR-ES-IDe-NT----- ATTEST: --= SEcRETARY

143 CALAPRS General Assembly March 4-7, 2017 Monterey Marriott The California Association of Public Retirement Systems, CALAPRS, invites you to attend the General Assembly on March 4-7, 2017 in Monterey, CA. The General Assembly is an educational conference for retirement system trustees, senior staff, and annual sponsors of CALAPRS. 3-WAYS TO REGISTER: HOTEL ACCOMMODATIONS: Monterey Marriott 350 Calle Principal Monterey, CA Phone: ; refer to CALAPRS when making a reservation. Online: bit.ly/calaprs2017_lodging Room Rate: $204.00/night Cut-Off: February 17, 2017 or until rooms sell out, whichever comes first. Book your room early!

144 CALAPRS GENERAL ASSEMBLY 2017 PROGRAM SATURDAY, MARCH 4, :00 PM 6:00 PM Early-Bird Registration SUNDAY, MARCH 5, :00 AM 12:00 PM Golf (optional) CALAPRS has arranged for discounted tee times at the Del Monte Golf Course, between 7:00 AM 7:40 AM. The course takes about 4.5 hours to play. Interested participants should reserve their own tee time by calling (831) , and reference CALAPRS. Golf attendees are responsible for all fees related to their participation, including transportation. Important: This is not a formal golf tournament. Once you reserve your time, you may play with other General Assembly attendees or other participants from the general public. Golf Fee: $110/person including golf cart rental Reservation Deadline: February 26, 2017 *Participants will have up until 72 hours to cancel their tee time, without penalty. Cancellations received after that time will be subject to the full reservation fee amount, plus taxes and service charges. 10:00 AM 5:00 PM Registration 2:00 PM 2:15 PM Opening Remarks Featuring: Mark Hovey, CEO, SDCERS, CALAPRS President and Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust, Conference Chair 2:15 PM 3:15 PM A National Perspective on the Future of Pension Management Nearly every state has made meaningful changes in recent years to its pension plans benefit structure, financing arrangements, or both. Meanwhile, challenging capital markets are forcing many plans to consider lowering their investment return assumption, which increases plan costs and unfunded liabilities. This opening session will feature an overview of these and other key trends affecting the public pension community, including the recent reforms, funding issues, actuarial assumptions, and discussion of other challenges facing public pensions. Speakers: Keith Brainard, Research Director, National Association of State Retirement Administrators (NASRA) Moderator: Steve Delaney, CEO, OCERS 3:15 PM 3:30 PM Afternoon Refreshment Break 3:30 PM 5:00 PM Securing CalPERS Future: Managing our Assets and Liabilities Managing funding risk to CalPERS, in the ever-changing economic and demographic climate, has never been more challenging. This session will walk you through the creation and development of CalPERS current asset liability management process, the Risk Mitigation Policy, and what s on the horizon. Learn how CalPERS actuarial, financial, and investment offices are working together to develop an integrated framework to manage assets and liabilities, as well as help prepare CalPERS for what lies ahead. Speakers: Eric Baggesen, Managing Investment Director, Asset Allocation/Risk Assessment and Scott Terando, Deputy Chief Actuary, CalPERS Moderator: Donna Lum, Deputy Executive Officer, Customer Services and Support, CalPERS

145 7:00 PM 9:30 PM Strolling Dinner at the Monterey Bay Aquarium Transportation will be provided for dinner participants. Buses will depart starting at 6:30pm. Guests welcome. MONDAY, MARCH 6, :00 AM 4:00 PM Registration 7:30 AM 8:25 AM Breakfast 8:30 AM 8:45 AM Opening Remarks CALAPRS President Mark Hovey / Conference Chair Carl Nelson 8:45 AM 9:45 AM The Big Investment Issues of the Day Speakers: Don Pierce, CIO, SBCERA and Vijoy Chattergy, CIO, Hawaii Employees Retirement System (ERS) Moderator: Gary Amelio, CEO, SBCERA 9:45 AM 10:45 AM Captivating and Capitalizing for California Pensions: A Panel Discussion Panelists will discuss how California s pension funds can boost returns and save taxpayer dollars by Captivating the money management process and Capitalizing on California s innovation industries. Panelists: Allan Emkin, Managing Director, Pension Consulting Alliance; Ashby Monk, Ph.D., Executive and Research Director of the Stanford University Global Projects Center; and James Meketa, Managing Principal and Chairman of Meketa Investment Group Moderator: Tim Price, CIO, CCCERA 10:45 AM 11:15 AM Morning Refreshment Break 11:15 AM 12:00 PM The Actuarial Challenges of Adequate Funding Speaker: Paul Angelo, Senior Vice President and Actuary, Segal Consulting Moderator: Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System 12:00 PM 1:15 PM Networking Lunch 1:30 PM 2:45 PM Legal Update on CA DB Pension Plans Panelists will discuss vested rights, implications of the Marin Appellate Court ruling and other current legal topics. Speakers: Russ Richeda, Shareholder and Lead Counsel, Public Retirement Law Practice, Salzman & Johnson and Chris Waddell, Senior Attorney, Public Retirement Law Practice, Olson Hagel & Fishburn, LLP Moderator: Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System 2:45 PM 3:00 PM Afternoon Refreshment Break 3:00 PM 4:00 PM The Governance Side of Effectively Managing Disability Cases Panelists: Jackie Purter, Retirement Analyst, SCERA; Lita Payne, Assistant General Manager, LACERS; Jan Garner, Disability Unit Manager, SDCERA Moderator: Suzanne Jenike, Assistant CEO External Operations, OCERS 5:00 PM 6:00 PM Hosted Reception at the Monterey Marriott Hotel, Ferrantes Ballroom

146 TUESDAY, MARCH 7, :30 AM 8:25 AM Breakfast 8:30 AM 9:30 AM Power and Politics Best intentions, facts, logic, and analysis are great; however, they can lead to a myopic perspective and blind spots. Join us to engage and discover how political capital can be earned and leveraged to avoid blind spots, build trust, and help you gain momentum. Speaker: Brian R Beamish, Ph.D. Candidate, M.S., M.Ed., Consultant, The Centre for Organization Effectiveness Moderator: Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust 9:30 AM 9:45 AM Morning Refreshment Break 9:45 AM 11:00 AM A Macro Economic Outlook on the Future Speaker: William Coaker, CIO, SFERS Moderator: Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust 11:00 AM Closing Remarks & Adjourn CALAPRS GENERAL ASSEMBLY 2017 PLANNING COMMITTEE Carl Nelson, Executive Secretary and CIO, San Luis Obispo County Pension Trust (Chair) Gary Amelio, CEO, San Bernardino County Employees Retirement Association Donna Lum, Deputy Executive Officer, Customer Services and Support, CA Public Employees Retirement System Steve Delaney, CEO, Orange County Employees Retirement System Hugo Wildmann, Retirement System Manager, AC Transit Employees Retirement System California Association of Public Employees Retirement Systems (CALAPRS) 575 Market Street, Suite 2125 San Francisco, CA P: F: info@calaprs.org

147 All persons wishing to address the Board must complete a speaker's card, stating their name and the agenda item (including "Open Forum") they wish to address. The Board may take action on items not on the agenda only if findings pursuant to the Sunshine Ordinance and Brown Act are made that the matter is urgent or an emergency. Oakland Police and Fire Retirement Board meetings are held in wheelchair accessible facilities. Contact Retirement Systems, 150 Frank Ogawa Plaza, Suite 3332 or call (510) for additional information. Retirement Systems 150 Frank H. Ogawa Plaza Oakland, California AGENDA INVESTMENT COMMITTEE MEMBERS Jaime T. Godfrey Chairman R. Steve Wilkinson Member Steven J. Bernard Member *In the event a quorum of the Board participates in the Committee meeting, the meeting is noticed as a Special Meeting of the Board; however, no final Board action can be taken. In the event that the Investment Committee does not reach quorum, this meeting is noticed as an informational meeting between staff and the Chair of the Investment Committee. SPECIAL MEETING of the INVESTMENT AND FINANCIAL MATTERS COMMITTEE of the OAKLAND POLICE AND FIRE RETIREMENT SYSTEM ( PFRS ) Wednesday, February 22, :00 am One Frank H. Ogawa Plaza, Hearing Room 3 Oakland, California ORDER OF BUSINESS Subject: December 21, 2016 PFRS Investment Committee Meeting Minutes From: Staff of the PFRS Board Recommendation: APPROVE December 21, 2016 Investment Committee meeting minutes. 2. Subject: Investment Fund Performance Report for the Quarter Ending December 31, 2016 From: Pension Consulting Alliance Recommendation: RECOMMEND BOARD APPROVAL of the Investment Fund Performance Report for the Quarter Ending December 31, Subject: Investment Market Overview From: Pension Consulting Alliance (PCA) Recommendation: ACCEPT an Informational Report regarding overview of the global investment market through January Subject: Resolution No Resolution authorizing a professional service agreement with Rice Hall James and Associates, LLC to serve as Investment Manager of the Small Cap Growth Asset Class Investment for the Oakland Police and Fire Retirement System over the term of five (5) years at a fee rate not to exceed 1.00% percent of the portfolio s assets value each year From: Staff of the PFRS Board Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Resolution authorizing a professional service agreement with Rice Hall James and Associates, LLC to serve as Investment Manager of the Small Cap Growth Asset Class Investment for the Oakland Police and Fire Retirement System over the term of five (5) years at a fee rate not to exceed 1.00% percent of the portfolio s assets value each year. Page 1 of 3

148 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL INVESTMENT COMMITTEE MEETING FEBRUARY 22, 2017 ORDER OF BUSINESS, continued 5. Subject: PFRS Fund Asset-Liability Study From: Pension Consulting Alliance Recommendation: RECOMMEND BOARD APPROVAL of the recommendation by Pension Consulting Alliance regarding selection of asset classes to be considered for PFRS Fund Asset-Liability Study. 6. Subject: 2017 Strategic Investment Agenda From: Pension Consulting Alliance (PCA) Recommendation: RECOMMEND BOARD APPROVAL of the PCA 2017 strategic Investment Agenda. 7. Subject: Resolution No Resolution exercising a one-year option to extend the agreement with Earnest Partners, LLC, to provide Mid Cap Core Asset Class Investment Manager services for the City of Oakland Police and Fire Retirement System board commencing March 24, 2017 From: Staff of the PFRS Board and Pension Consulting Alliance Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Resolution exercising a one-year option to extend the agreement with Earnest Partners, LLC, to provide Mid Cap Core Asset Class Investment Manager services for the City of Oakland Police and Fire Retirement System board commencing March 24, Subject: Resolution No Resolution exercising a one-year option to extend the agreement with Fisher Investment, to provide International Equity Asset Class Investment Manager services for the City of Oakland Police and Fire Retirement System board commencing February 16, 2017 From: Staff of the PFRS Board and Pension Consulting Alliance Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Resolution exercising a one-year option to extend the agreement with Fisher Investment, to provide International Equity Asset Class Investment Manager services for the City of Oakland Police and Fire Retirement System board commencing February 16, Subject: Resolution No Renewal of Service Agreement Resolution exercising a one-year option to extend the agreement with Northern Trust Investments, N.A., to provide Large Cap Core Asset Class Investment Manager services for the City of Oakland Police And Fire Retirement System Board commencing April 19, 2017 From: Staff of the PFRS Board and Pension Consulting Alliance Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Resolution exercising a one-year option to extend the agreement with Northern Trust Investments, N.A., to provide Large Cap Core Asset Class Investment Manager services for the City of Oakland Police And Fire Retirement System Board commencing April 19, Page 2 of 3

149 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL INVESTMENT COMMITTEE MEETING FEBRUARY 22, 2017 ORDER OF BUSINESS, continued 10. Subject: Assignment of PFRS Participation Agreement(s) by State Street Bank and Trust Company to SSGA Trust Company From: Pension Consulting Alliance (PCA) Recommendation: 11. Open Forum 12. Future Scheduling RECOMMEND BOARD APPROVAL of State Street Global Advisors request for completion of approval of assignment of PFRS Participation Agreement(s) by State Street Bank and Trust Company to SSGA Trust Company. Page 3 of 3

150 DRAFT PFRS Investment & Financial Matters Committee Minutes December 21, 2016 Page 1 of 2 A SPECIAL INVESTMENT AND FINANCIAL MATTERS COMMITTEE MEETING of the Oakland Police and Fire Retirement System ( PFRS ) was held December 21, 2016 in Hearing Room 4, One Frank Ogawa Plaza, Oakland, California. Committee Members Present: Additional Attendees: Jaime T. Godfrey, Chairman Steven Wilkinson, Member Steven J. Bernard, Member Katano Kasaine, Plan Administrator Pelayo Llamas, Deputy City Attorney / PFRS Legal Counsel David Low & Teir Jenkins, Staff Member David Sancewich and Sean Copus, Pension Consulting Alliance (PCA) Member Wilkinson was absent at the start of the Investment Committee Meeting. Chairman Godfrey addressed the agenda out of order. The meeting was called to order at 10:00 AM. 1. Approval of Investment Committee meeting minutes Member Bernard made a motion to approve the November 30, 2016 investment committee meeting minutes, second by Chairman Godfrey. Motion passed. [ GODFREY Y / WILKINSON ABSENT / BERNARD Y ] ( AYES: 2 / NOES: 0 / ABSTAIN: 0 ) 3. $15 million 1st Quarter 2017 Member Benefits Drawdown Sean Copus from PCA reported the planned $15 million dollar drawdown of funds to pay retirement benefits from overbalanced investment accounts for the PFRS retirees and beneficiaries for the period from January 2017 through March Member Bernard made a motion to recommend board approval of PCA s recommendation of the $15 million dollar drawdown of funds to pay retirement benefits for the PFRS retirees and beneficiaries for the period from January 2017 through March 2017, second by Chairman Godfrey. Motion passed. [ GODFREY Y / WILKINSON ABSENT / BERNARD Y ] ( AYES: 2 / NOES: 0 / ABSTAIN: 0 ) 4. Investment Market Overview David Sancewich reported on the global economic factors affecting the PFRS Fund. Member Bernard made a motion accept the informational Report from PCA, second by Chairman Godfrey. Motion passed. [ GODFREY Y / WILKINSON ABSENT / BERNARD Y ] ( AYES: 2 / NOES: 0 / ABSTAIN: 0 ) 5. Board Education - Crisis Risk Offset David Sancewich gave a presentation describing an asset class which PCA would like the PFRS board to consider adding to its current asset allocation planning model. Member Wilkinson arrived at the PFRS Investment Committee meeting at 10:28 am. Following some board discussion, Member Bernard made a motion to accept the informational report from PCA, second by Chairman Godfrey. Motion passed. [ GODFREY Y / WILKINSON Y / BERNARD Y ] ( AYES: 3 / NOES: 0 / ABSTAIN: 0 ) DRAFT

151 DRAFT PFRS Investment & Financial Matters Committee Minutes December 21, 2016 Page 2 of 2 2. Small Cap Growth Asset Class Investment Manager Interview and Selection Chairman Godfrey reported that the Small Cap Growth Asset Class Investment Manager Interview and Selection matter was tabled from the November 30, 2016 meeting. Chairman Godfrey asked the investment committee members if they had any additional information since the previous investment committee meeting to add to today s discussion. Hearing none, Chairman Godfrey made motion to recommend board approval of the selection of Rice Hall James and Associates, LLC to be the Small Cap Growth Asset Class Investment Manager for the PFRS fund, second by member Bernard. Following some committee discussion, Chairman Godfrey called for the question. Motion passed. [ GODFREY Y / WILKINSON Y / BERNARD Y ] ( AYES: 3 / NOES: 0 / ABSTAIN: 0 ) 6. Resolution No Authorization for service contract between Ramirez Asset Management and PFRS The Committee discussed PCA and Chairman Godfrey s Due Diligence inspection at the offices of Ramirez Asset Management and explained the reason for the late inclusion of this resolution on today s agenda. Member Wilkinson made a motion recommend Board approval of Resolution No. 6941, second by member Bernard. Motion passed. 7. Open Forum No Report. [ GODFREY Y / WILKINSON Y / BERNARD Y ] ( AYES: 3 / NOES: 0 / ABSTAIN: 0 ) 8. Future Scheduling The next investment committee meeting was scheduled for January 25, The meeting adjourned at 10:38 PM JAIME T. GODFREY, COMMITTEE CHAIRMAN DATE DRAFT

152 Q Oakland Police and Fire Retirement System Quarterly Report This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Pension Consulting Alliance, LLC. Nothing herein is intended to serve as investment advice, a recommendation of any particular investment or type of investment, a suggestion of purchasing or selling securities, or an invitation or inducement to engage in investment activity.

153 TABLE OF CONTENTS Tab A B C D E F Section TOTAL PORTFOLIO SUMMARY INVESTMENT MARKET RISK METRICS ECONOMIC OVERVIEW TOTAL PORTFOLIO REVIEW MANAGER MONITORING / PROBATION LIST INDIVIDUAL MANAGER PERFORMANCE Appendix 1

154 TOTAL PORTFOLIO SUMMARY As of December 31, 2016, the City of Oakland Police and Fire Retirement System (OPFRS) portfolio had an aggregate value of $355.6 million. This represents a ($7.6) million decrease in value, which includes ($15) million in benefit payments, over the quarter. During the previous one-year period, the OPFRS Total Portfolio decreased by ($31.1) million, including ($60) million in withdrawals during the period. Asset Allocation Trends The asset allocation targets (see table on page 20) reflect those as of December 31, Target weightings reflect the Plan s evolving asset allocation (effective 3/31/2014). With respect to policy targets, the portfolio ended the latest quarter overweight Domestic Equity, International Equity, Covered Calls, and Cash, while underweight Fixed Income. Recent Investment Performance During the most recent quarter, the OPFRS Total Portfolio generated an absolute return of 2.1%, gross of fees, outperforming its policy benchmark. The portfolio underperformed its benchmark over the 1- and 3-year periods while outperforming over the 5-year period. The Total Portfolio outperformed the Median fund s return over the most recent quarter, Fiscal YTD, 1-, and 3-year periods while trailing the Median fund over the 5-year period. Performance differences with respect to the Median Fund continue to be attributed largely to differences in asset allocation. Quarter Fiscal YTD 1 Year 3 Year 5 Year Total Portfolio Policy Benchmark Excess Return (0.5) (0.7) 0.4 Reference: Median Fund Reference: Total Net of Fees Gross of Fees. Performance since 2005 includes securities lending. 2 Evolving Policy Benchmark consists of 48% Russell 3000, 12% MSCI ACWI ex U.S., 20% BC Universal, and 20% CBOE BXM 3 Investment Metrics < $1 Billion Public Plan Universe. 4 Net of fee returns are estimated based on OPFRS manager fee schedule (approximately 42 bps). 2

155 12/31/2016 Investment Market Risk Metrics Takeaways U.S. public equity and private equity valuation became even more extended in December. U.S. credit spreads narrowed in both investment grade and high yield in December. Non-U.S. developed and emerging market valuations are historically cheap relative to their own histories and relative to U.S. levels, even after appreciating into year-end. At quarter-end, the 10-year Treasury interest rate moved up sharply from earlier in the year to 2.5%. Fundamental momentum remains positive in most U.S. markets and rents are expected to move up with interest rates. However, historically high private-real-estate valuations may be worth examining, given the 100 basis point rise in rates since October. Real estate financing tends to be driven by expectations for the 10-year Treasury rates. Inflation indicators moved up at year-end off of decade low levels. Real yields moved up and into positive territory for the first time in over a year, indicating growth concerns easing somewhat in the U.S. The yield curve slope steepened, potentially indicting higher levels of uncertainty concerning rates / growth / inflation. PCA s sentiment indicator became significantly more positive by year end, as risk assets rallied strongly from earlier in the year. The sentiment indicator remains green. 1 See Appendix for the rationale for selection and calculation methodology used for the risk metrics. 3

156 Top Decile Valuation Metrics versus Historical Range A Measure of Risk 12/31/2016 Unfavorable Pricing Average Neutral Bottom Decile Favorable Pricing US Equity (Ex. 1) Dev ex US Equity (Ex. 2) EM Equity Relative to DM Equity (Ex. 3) Private Equity (Ex. 4, 5) Private Real Estate Cap Rate (Ex. 6) Private Real Estate Spread (Ex. 7) US IG Corp Debt Spread (Ex. 9) US High Yield Debt Spread (Ex. 10) Other Important Metrics within their Historical Ranges Pay Attention to Extreme Readings Top Decile Attention! Average Neutral Bottom Decile Attention! Equity Volatility (Ex. 11) Yield Curve Slope (Ex. 12) Breakeven Inflation (Ex. 13, 14) Interest Rate Risk (Ex. 15, 16) 4

157 12/31/2016 Information Behind Current Sentiment Reading Bond Spread Momentum Trailing Twelve Months Positive Equity Return Momentum Trailing Twelve Months Positive Positive Agreement Between Bond and Equity Momentum Measures? Agree Growth Risk Visibility (Current Overall Sentiment) 5

158 12/31/2016 Developed Public Equity Markets Exhibit 1 P/E Ratio U.S. Equity Market P/E Ratio 1 versus Long Term Historical Average US Markets Current P/E as of 12/2016 =27.8x US Markets Long term Average (since 1880) P/E = 16.7x 1 P/E ratio is a Shiller P/E 10 based on 10 year real S&P 500 earnings over S&P 500 index level. (Please note different time scales) Exhibit 2 P/E Ratio Developed ex U.S. Equity Market P/E Ratio 1 versus Long Term Historical Average 2 Average /2016 EAFE Only P/E = 23.5x Long term Average Historical 2 P/E = 16.9x Intl Developed Markets Current P/E as of 12/2016 = 14.0x 1 P/E ratio is a Shiller P/E 10 based on 10 year real MSCI EAFE earnings over EAFE index level. 2 To calculate the LT historical average, from 1881 to 1982 U.S. data is used as developed market proxy. From 1982 to present, actual developed ex US market data (MSCI EAFE) is used. 6

159 12/31/2016 Emerging Markets Public Equity Markets Exhibit 3 275% Emerging Markets PE / Developed Markets PE (100% = Parity between PE Ratios) 250% 225% 200% Russian crisis, LTCM implosion, currency devaluations EM/DM relative PE ratio is slightly below the historical average 175% 150% Mexican Peso crisis Technology and telecom crash World financial crisis 125% 100% 75% 50% 25% 0% Asian crisis Commodityprice run up Source: Bloomberg, MSCIWorld, MSCI EMF EM/DM PE Average EM/DM PE Parity 7

160 12/31/2016 U.S. Private Equity Markets 8

161 12/31/2016 Exhibit 6 Cap Rates Source: NCRIEF Exhibit % 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 5.0% 4.0% Core Cap Rate 30 Year Average Cap Rate 10 Year Treasury Rate Current Value Cap Rates A cap rate is the current annual income of the property divided by an estimate of the current value of the property. It is the current yield of the property. dlow cap rates indicate high valuations. Private Real Estate Markets Quarterly Data, Updated to Dec. 31st Core Cap Rate Spread over 10 Year Treasury Interest Rate Core real estate cap rates remain low by historical standards (expensive). Spread to the 10 year Treasury fell during the fourth quarter due to an increase in the 10 Year Treasury. Cap Rate Spread 3.0% 2.0% Core Cap Rate Spread to Treasuries 1.0% LT Average Spread 0.0% Exhibit % Transactions as a % of Market Value Trailing Four Quarters 15.0% Activity has been slowly increasing since Q % 5.0% 0.0% Source: NCREIF, PCA calculation

162 12/31/2016 Exhibit 9 Spread Over Treasuries (basis points) Credit Markets U.S. Fixed Income Investment Grade Corporate Bond Spreads Investment grade spreads narrowed during December and remain marginally below the long term average level. Investment Grade Bond Spreads Average spread since 1994 (IG Bonds) Source: LehmanLive: Barclays Capital US Corporate Investment Grade Index Intermediate Component. Exhibit 10 Spread Over Treasuries (basis points) High Yield Corporate Bond Spreads Likewise, high yield spreads decreased in December and remain below the long term average level. High Yield Bond Spreads Average spread since 1994 (HY Bonds) Source: LehmanLive: Barclays Capital U.S. Corporate High Yield Index. 10

163 12/31/2016 Other Market Metrics Exhibit VIX a measure of equity market fear / uncertainty Equity market volatility (VIX) ticked up in December but remained meaningfully below the long term average level ( 20)at Source: (Please note different time scales) Exhibit Yield Curve Slope The average 10 year Treasury interest rate increased in December. The average one y ear Treasury interest rate also increased during the month. The slope increased for the month, and the yield curve remains upward sloping. Yield curve slopes that are negative (inverted) portend a recession. Source: (10 yeartreasury yield minus 1 year treasury yield) 11

164 12/31/2016 Measures of Inflation Expectations Exhibit % 10 Year Breakeven Inflation (10 year nominal Treasury yield minus 10 year TIPS yield) 2.50% 2.00% 1.50% 1.00% 0.50% Breakeven inflation ended December at 1.95%, increasing from the end of November. The 10 year TIPS real yield rose to 0.50%, and the nominal 10 year Treasury yi eld increased to 2.45%. 0.00% Source: Daily Yield Curve Rates (10 year nominal treasury yield minus 10 year TIPs yield) (Please note different time scales) Exhibit Inflation Adjusted Bloomberg Commodity Price Index (1991 = 100) Broad commodity prices ticked up in December and continue to remain above the historical lows set in early Source: Bloomberg Commodity Index, St. Louis Fed for US CPI all urban consumers. 12

165 12/31/2016 Exhibit 15 Expected Real Yield of 10 Year Treasury Average since Measures of U.S. Treasury Interest Rate Risk Estimate of 10 Year Treasury Forward Looking Real Yield Sources: 10 year constant maturity rates *Federal Reserve Bank of Philadelphia survey of professional forecasts for inflation estimates The forward looking annual real yield on 10 year Treasuries is estimated at approximately 0.27% real, assuming 10 year annualized inflation of 2.22%* per year. Exhibit Year Treasury Bond Duration Higher Risk Lower Risk 10 Year Treasury Duration (Change in Treasury price with a change in interest rates) Interest rate risk is still near all time highs. If the 10 year Treasury yield rises by 100 basis points from today's levels, the capital loss from the change in price is expected to be 8.8%. Source: for 10 year constant maturity rates, calculation of duration 13

166 Economic & Market Overview Overview: US GDP growth increased by 1.9% in the fourth quarter. GDP growth during the quarter was driven mostly by consumer spending, private inventory investment, and state and local government spending. The unemployment rate decreased during the fourth quarter to 4.7%. The seasonally adjusted Consumer Price Index for All Urban Consumers increased by 3.4% on an annualized basis during the quarter. Commodities increased during the fourth quarter, and are now up 11.7% over the trailing 1-year period. Global equities were positive for the quarter, 1.3% (MSCI ACWI). The US dollar appreciated against the Euro, Pound, and the Yen. Bond markets produced a negative return over the quarter as the BC Universal decreased by (2.6%). Economic Growth Annualized Quarterly GDP Growth Real GDP increased at an annualized rate of 1.9 percent in the fourth quarter of Real GDP growth was driven by increases in consumer spending, private inventory investment, and state and local government spending. 2.0% 0.9% 0.8% 1.4% 3.50% 1.9% 6.0% 3.0% 0.0% GDP growth gains were partially offset during the quarter by declines in exports and federal government spending. Imports, which detract from GDP, increased Q Q Q Q Q Q4 Adv. -3.0% -6.0% Inflation The Consumer Price Index for All Urban Consumers (CPI-U) increased 3.4 percent in the quarter on an annualized basis after seasonal adjustment. Quarterly percentage changes may be adjusted between data publications due to periodic updates in seasonal factors. Core CPI-U increased by 2.1 percent for the quarter on an annualized basis after seasonal adjustment. Over the last 12 months, core CPI-U increased 2.2 percent after seasonal adjustment. 0.1% 2015 Q3 CPI-U After Seasonal Adjustment 3.4% 3.4% 1.8% 0.9% -0.2% 2015 Q Q Q Q Q4 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% Unemployment The US economy gained approximately 495,000 jobs in the quarter. The unemployment rate decreased to 4.7% at quarter end. The majority of jobs gained occurred in education and health services, professional and business services, and health care and social assistance. The majority of jobs lost occurred mining and logging, nondurable goods, and information. 5.1% 2015 Q3 5.0% 2015 Q4 Unemployment Rate 4.9% 4.9% 4.9% 2016 Q Q Q3 4.7% 2016 Q4 10.0% 8.0% 6.0% 4.0% 14

167 Interest Rates & US Dollar Treasury Yield Curve Changes US Treasury yields rose on average over the quarter. The Federal Reserve has increased the federal funds rate to between 0.50 percent and 0.75 percent. The US dollar appreciated against the Euro, Pound and the Yen by 6.4%, 4.9%, and 15.4%, respectively. 6.0% 4.0% 2.0% 9/30/ /30/ % 3 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr Source: US Treasury Department Fixed Income US bonds delivered mostly negative returns for the quarter, with high yield performing the best, returning 1.8%, while government performed the worst at (3.7%). Over the trailing 1-year period, high yield materially outperformed all other sectors producing a 17.1% return. Credit also performed favorably with an annual return of 5.6%. 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -3.0% -3.7% -3.0% -2.0% 1.8% 2.6% 1.0% 5.6% 1.7% QTR Fixed Income Returns 1-Year BC Agg BC Govt* BC Credit BC Mortgage BC High Yield *US Treasuries and Agencies 17.1% US Fixed Income Sector Performance (BC Aggregate Index) Sector Weight QTR 1 Year Governments* 40.0% -3.7% 1.3% Agencies 3.9% -2.1% 2.3% Inv. Grade Credit 25.7% -2.8% 6.1% MBS 28.1% -2.0% 1.7% ABS 0.5% -0.7% 2.0% CMBS 1.7% -3.0% 3.3% *US Treasuries and Government Related 15

168 US Equities During the quarter, value stocks dominated growth stocks across the market capitalization spectrum. In terms of market capitalization, small cap stocks provided the strongest returns across styles. Large cap growth stocks returned this quarter s weakest return at 1.0%, and small cap value provided the best results (+14.1%). During the 1-year period, US equities provided positive double digit returns, with the top performer, small cap value, returning 31.7%. Conversely, large cap growth trailed all other market caps and styles with a return of 7.1%. 0.4% US Equity Sector Performance U.S. Equity Returns (Russell 3000 Index) 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% 4.2% 1.2% 7.2% 3.8% 1.0% 6.7% 8.8% 3.6% 14.1% QTR 12.7% 7.4% 18.4% 12.1% 7.1% 17.3% 21.3% 11.3% 1 Year R3000 (Broad Core) R3000G (Broad Gr) R3000V (Broad Val) R1000 (Lg Core) R1000G (Lg Gr) R1000V (Lg Val) R2000 (Sm Core) R2000G (Sm Gr) R2000V (Sm Val) 31.7% Sector Weight QTR 1 Year Information Tech. 19.9% 2.2% 16.4% Financials 15.5% 22.3% 23.2% Health Care 13.0% -2.9% 1.4% Consumer Disc. 12.5% 4.1% 8.9% Industrials 10.9% 9.2% 22.6% Consumer Staples 8.3% -1.0% 6.3% Energy 7.0% 8.4% 33.8% Real Estate 4.0% -1.9% 9.7% Utilities 3.1% 1.0% 17.6% Materials 3.4% 7.5% 31.0% Telecomm. Serv. 2.4% 5.7% 24.1% International Equities International equities performed poorly over the quarter as each region provided negative returns. The best performer was Europe, with a return of minus (0.4%). Emerging markets trailed all other regions with a return of minus (4.1%). Over the trailing 1-year period, international equities were positive across the board. Emerging markets provided a double digit return of 11.6%, while Europe underperformed all other regions with a 0.2% 1-year return. 20% 15% 10% 5% 0% -5% -10% -1.2% International Equity Returns (in USD) -0.7% -0.4% QTR -1.0% -4.1% 5.0% 1.5% 0.2% 1 Year MSCI ACW Ex U.S. MSCI EAFE MSCI Europe MSCI Pacific MSCI EM 4.5% 11.6% International Equity Region Performance (in USD) (MSCI ACW Index ex US) Sector Weight QTR 1 Year Europe Ex. UK 31.6% -0.2% 0.3% Emerging Markets 22.8% -4.1% 11.6% Japan 17.0% -0.1% 2.7% United Kingdom 13.0% -0.9% -0.0% Pacific Ex. Japan 8.6% -2.7% 8.0% Canada 7.1% % 3.4% 25.5% 16

169 Market Summary Long-term Performance* Indexes Month Quarter 1 Year 3 Years 5 Years 10 Years 20 Years Global Equity MSCI AC World Index 2.2% 1.3% 8.5% 3.7% 10.0% 4.1% 6.1% Domestic Equity S&P % 3.8% 12.0% 8.9% 14.7% 6.9% 7.7% Russell % 4.2% 12.7% 8.4% 14.7% 7.1% 7.9% Russell 3000 Growth 1.2% 1.2% 7.4% 8.3% 14.4% 8.3% 6.8% Russell 3000 Value 2.6% 7.2% 18.4% 8.6% 14.8% 5.8% 8.4% Russell % 3.8% 12.1% 8.6% 14.7% 7.1% 7.9% Russell 1000 Growth 1.2% 1.0% 7.1% 8.6% 14.5% 8.3% 6.9% Russell 1000 Value 2.5% 6.7% 17.3% 8.6% 14.8% 5.7% 8.3% Russell % 8.8% 21.3% 6.7% 14.5% 7.1% 8.2% Russell 2000 Growth 1.4% 3.6% 11.3% 5.1% 13.7% 7.8% 6.3% Russell 2000 Value 4.1% 14.1% 31.7% 8.3% 15.1% 6.3% 9.7% Russell Microcap 4.6% 10.0% 20.4% 5.8% 15.6% 5.5% --- CBOE BXM Index 0.1% 2.6% 7.1% 6.0% 7.2% 4.3% 6.8% International Equity MSCI AC World Index ex USA 2.6% -1.2% 5.0% -1.3% 5.5% 1.4% 5.0% MSCI EAFE 3.4% -0.7% 1.5% -1.2% 7.0% 1.2% 4.6% MSCI Pacific 5.3% -0.4% 0.2% -2.6% 6.9% 1.0% 5.8% MSCI Europe 0.5% -1.0% 4.5% 1.7% 7.4% 1.8% 2.6% MSCI EM (Emerging Markets) 0.3% -4.1% 11.6% -2.2% 1.6% 2.2% 5.7% Fixed Income BC Universal 0.3% -2.6% 3.9% 3.3% 2.8% 4.6% 5.5% Global Agg. - Hedged 0.3% -2.3% 3.9% 4.1% 3.6% 4.4% 5.3% BC Aggregate Bond 0.1% -3.0% 2.6% 3.0% 2.2% 4.3% 5.3% BC Government -0.1% -3.7% 1.0% 2.3% 1.2% 3.9% 4.9% BC Credit Bond 0.6% -3.0% 5.6% 4.1% 3.8% 5.3% 5.9% BC Mortgage Backed Securities 0.0% -2.0% 1.7% 3.1% 2.1% 4.3% 5.2% BC High Yield 1.8% 1.8% 17.1% 4.7% 7.4% 7.5% 7.0% BC WGIL All Maturities - Hedged 1.4% -2.1% 10.2% 5.9% 3.5% 5.1% --- Emerging Markets Debt 1.1% -2.6% 9.9% 5.3% 5.7% 6.7% 8.8% Real Estate NCREIF 0.7% 2.1% 8.8% 12.1% 12.2% 5.8% 9.3% FTSE NAREIT All Equity Index 4.2% -2.9% 9.3% 12.4% 12.0% 4.7% 9.1% Commodity Index Bloomberg Commodity Index 1.8% 2.7% 11.7% -11.3% -9.0% -5.6% 0.5% * Performance is annualized for periods greater than one year. 17

170 Performance and Market Values As of December 31, 2016 Investment Performance 16.0 Return Quarter Year Years Years 7 Years Years Portfolio Valuation (000's) 1 Quarter 1 Year OPFRS Total Plan Beginning Market Value 363, ,001 Net Contributions -15,000-60,497 Gain/Loss 7,404 32,068 Ending Market Value 355, ,573 Total Plan (Gross) OPFRS Policy Benchmark All Public Plans < $1B-Total Fund Asset Class Performance (gross of fees) 1 Quarter OPFRS Total Plan OPFRS Policy Benchmark* Domestic Equity Russell 3000 (Blend)** International Equity MSCI ACWI Ex US (Blend)^ Fixed Income Bloomberg Barclays Universal (Blend)^^ Covered Calls CBOE BXM Cash Citigroup 3 Month T-Bill Index Year 3 Years 5 Years 7 Years 10 Years * Starting on 5/1/2016, Policy Benchmark consists of 48% Russell 3000, 12% MSCI ACWI ex U.S., 20% BC Universal, 20% CBOE BXM ** Domestic Equity Benchmark consists of S&P 500 thru 3/31/98, 10% R1000, 20% R1000V, 5% RMC from 4/1/98-12/31/04, and Russell 3000 from 1/1/05 to present ^ International Equity Benchmark consists of MSCI EAFE thru 12/31/04, and MSCI ACWI x US thereafter. ^^ Fixed Income Benchmark consists of Bbg BC Aggregate prior to 4/1/06, and Bbg BC Universal thereafter. Oakland Police and Fire Retirement System 18

171 OPFRS Portfolio Relative Performance Results As of December 31, 2016 Trailing Period Perfomance (annualized) Return Quarter 1 Year 3 Years 5 Years Total Plan (Gross of Fees) OPFRS Policy Benchmark All Public Plans < $1B-Total Fund 12-month Performance- As of December 31, Return OPFRS Total Plan OPFRS Policy Benchmark All Public Plans < $1B-Total Fund Oakland Police and Fire Retirement System 19

172 Actual vs. Target Allocation As of December 31, 2016 Asset Allocation ($000) Asset Allocation (%) Target Allocation* (%) Variance (%) OPFRS Total Plan 355, Domestic Equity 173, International Equity 43, Total Fixed Income 64, Covered Calls 71, Cash 3, *Target weightings reflect the Plan s evolving asset allocation (effective 3/31/2014). Actual Asset Allocation Comparison December 31, 2016 : $355,525,830 September 30, 2016 : $363,123,202 Cash 0.9 Fixed Income 18.1 Cash 0.9 Fixed Income 18.6 Covered Calls 20.1 Domestic Equity 48.8 Covered Calls 19.1 Domestic Equity 49.3 International Equity 12.1 International Equity 12.1 Oakland Police and Fire Retirement System 20

173 Manager Performance - Gross of Fees As of December 31, 2016 Domestic Equity Manager - Style Large Cap Core Mkt Value ($000) 1 Quarter 1 Year 3 Years 5 Years Since Inception* Northern Trust Russell 1000 Index 71, /2010 Russell 1000 Index Excess Return Large Cap Value SSgA Russell 1000 Value Index 26, /2014 Russell 1000 Value Index Excess Return Large Cap Growth SSgA Russell 1000 Growth Index 24, /2014 Russell 1000 Growth Index Excess Return Mid Cap Core EARNEST Partners - Active 30, /2006 Russell Midcap Index Excess Return Small Cap Value NWQ - Active 11, /2006 Russell 2000 Value Index Excess Return Small Cap Growth Russell 2000 Growth ETF 9, /2016 Russell 2000 Growth Index Excess Return Inception Date During the latest three-month period ending December 31, 2016, one of OPFRS's two active Domestic Equity managers outperformed its respective benchmark. All of OPFRS"s passive Domestic Equity mandates performed in-line with their respective benchmarks. Northern Trust, the Plan s passive large cap core transition account, continues to perform in-line with its benchmark over all time periods measured. This performance is within expectations for a passive mandate. SSgA Russell 1000 Value, the Plan s passive large cap value account, has continued to perform within expectations for a passive mandate. Oakland Police and Fire Retirement System 21

174 Manager Performance - Gross of Fees As of December 31, 2016 Domestic Equity SSgA Russell 1000 Growth, the Plan s passive large cap growth account, has continued to perform within expectations for a passive mandate. EARNEST Partners, the Plan s mid cap core manager, completed the quarter with an 5.2% return, outperforming the Russell Midcap Index by 2.0%. Over the latest 1- and 3-year periods, Earnest outperformed its benchmark by 2.6% and 1.3%, respectively, while matching the benchmark over the 5-year period. NWQ, the Plan s small cap value manager, underperformed the Russell 2000 Value Index by (3.8%) over the latest quarter. Over the 1-year period, NWQ underperformed its benchmark by (10.0%), but has outperformed over the 3- and 5-year periods by 0.6% and 1.7%, respectively. Russell 2000 Growth ETF, the Russell 2000 Growth ETF continues to be used as a stand-in until OPFRS's new small cap growth manager, Rice Hall James, is funded sometime during the 1Q2017. Oakland Police and Fire Retirement System 22

175 Manager Performance - Gross of Fees As of December 31, 2016 International Equity Manager - Style Mkt Value ($000) 1 Quarter 1 Year 3 Years 5 Years Since Inception Inception Date Active International Fisher Investments 15, /2011 MSCI AC World ex USA Excess Return Hansberger 15, /2006 MSCI AC World ex USA Excess Return Passive International SSgA 12, /2002 MSCI EAFE Index Excess Return During the latest three-month period ending December 31, 2016, both of OPFRS's active International Equity managers underperformed their respective benchmarks. The SSgA account has performed roughly in-line with its benchmark over all time periods measured. This performance is within expectations for a passive mandate. Hansberger, one of OPFRS active international equity managers, underperformed the MSCI ACWI x US Index during the quarter by (2.8%). The portfolio also underperformed the benchmark by (2.5%) over the 1-year period, but has outperformed over the 3-, and 5-year periods by 0.2% and 1.1%, respectively. Fisher, one of OPFRS active international equity managers, underperformed the MSCI ACWI x US Index by (40) basis points during the quarter. Over the latest 1-year period, Fisher trailed its benchmark target by (2.7%), but outperformed over the 3- and 5-year periods by 90 and 70 basis points, respectively. Oakland Police and Fire Retirement System 23

176 Manager Performance - Gross of Fees As of December 31, 2016 Fixed Income Manager - Style Mkt Value ($000) 1 Quarter During the latest three-month period, ending December 31, 2016, two of OPFRS three active Fixed Income managers outperformed their respective benchmarks. 1 Year 3 Years 5 Years Since Inception Inception Date Core Fixed Income T. Rowe Price 33, /2011 Bloomberg Barclays U.S. Aggregate Index Excess Return Core-Plus Fixed Income Reams 21, /1998 Bbg Barclays Universal (Blend) Excess Return High Yield / Bank Loans DDJ Capital 8, /2015 BofA Merrill Lynch High Yield Master II Excess Return T. Rowe Price, the Plan s core fixed income manager, produced a quarterly loss of (2.9%), but outperformed the Bbg BC Aggregate Index by 10 basis points. The portfolio outperformed its benchmark over the 1-year period by 60 basis points, while beating the benchmark over the 3- and 5- year periods by 50 and 60 basis points, respectively. Reams, the Plan s core plus fixed income manager, produced a quarterly loss of (2.8%), underperforming the Bbg BC Universal (Blend) Index by (20) basis points. During the latest 1-year period, the portfolio slightly outperformed its benchmark by 10 basis points while underperforming its benchmark by (20) basis points over the 3-year period. Reams outperformed its benchmark over the 5-year period by 60 basis points. DDJ, the Plan s High Yield & Bank Loan manager, outperformed its benchmark, the BofAML US High Yield Master II index, by 1.5% over the most recent quarter, but has underperformed over the latest 1-year period by (1.5%). Oakland Police and Fire Retirement System 24

177 Manager Performance - Gross of Fees As of December 31, 2016 Covered Calls Manager - Style Mkt Value ($000) 1 Quarter 1 Year 3 Years 5 Years Since Inception Inception Date Covered Calls Composite Covered Calls 71, /2014 CBOE BXM Excess Return CC - Passive Allocation Parametric BXM 35, /2014 CBOE BXM Excess Return CC - Active Allocation Parametric DeltaShift 36, /2014 CBOE BXM Excess Return During the latest three-month period ending December 31, 2016, OPFRS aggregate Covered Calls portfolio has outperformed its benchmark over all time periods measured. Parametric BXM Portfolio, the Plan s passive covered calls allocation slightly underperformed its CBOE BXM index by (10) basis points over the most recent quarter. Over the most recent 1-year period, the passive replication strategy has outperformed the index by 1.5%. Parametric Delta Shift Portfolio, the Plan's active covered calls allocation has outperformed the CBOE BXM benchmark by 0.9% over the most recent quarter, and has outperformed the benchmark by 4.4% over the most recent 1-year period. Oakland Police and Fire Retirement System 25

178 OPFRS Total Portfolio 5-Year Performance As of December 31, 2016 Growth of $1 (5-year) $1.80 $1.60 $1.49 $1.40 $1.20 $1.00 $ /11 6/12 12/12 6/13 12/13 6/14 12/14 6/15 12/15 6/16 12/16 OPFRS Total Plan OPFRS Policy Benchmark Actuarial Rate (6.5%)* * The actuarial expected rate of return was 8% through 6/30/2009, 7.5% through 6/30/2010, 7% through 6/30/2011, 6.75% through 6/30/2014, and 6.5% currently Risk/Return Performance (5-year) 16.0 Dom. Equity Bench. Domestic Equity Annualized Return (%) Fixed Income Median Portfolio OPFRS Policy Benchmark OPFRS Total Portfolio Intl. Equity Bench. International Equity Fixed Income Bench. Risk Free Rate Risk (Standard Deviation %) Oakland Police and Fire Retirement System 26

179 Plan Sponsor Peer Group Analysis As of December 31, Annualized Return Quarter Fiscal YTD 1 Year 3 Years 5 Years 7 Years 10 Years OPFRS Total Plan 2.1 (7) 6.4 (4) 8.7 (15) 5.1 (27) 8.3 (63) 8.1 (47) 5.1 (74) OPFRS Policy Benchmark 1.9 (10) 5.5 (13) 9.2 (11) 5.8 (9) 7.9 (74) 7.6 (68) 4.7 (84) 5th Percentile st Quartile Median rd Quartile th Percentile Population Parentheses contain percentile rankings. Calculation based on monthly periodicity. 27

180 MANAGER MONITORING / PROBATION LIST Monitoring/Probation Status As of December 31, 2016 Return vs. Benchmark since Corrective Action Portfolio Status Concern Months Since Corrective Action ^ Annualized performance if over one year. * Approximate date based on when Board voted to either monitor a manager at a heightened level or place it on probation. Investment Performance Criteria For Manager Monitoring/Probation Status Performance^ Since Corrective Action Date of Corrective Action* DDJ Capital On Watch Organizational % 5/25/2016 BofAML US High Yield M % --- Asset Class Short-term (rolling 12 mth periods) Medium-term (rolling 36 mth periods) Long-term (60 + months) Active Domestic Equity Fd return < bench return 3.5% Fd annlzd return < bench annlzd return 1.75% for 6 consecutive months VRR < 0.97 for 6 consecutive months Active International Equity Fd return < bench return 4.5% Fd annlzd return < bench annlzd return 2.0% for 6 consecutive months VRR < 0.97 for 6 consecutive months Passive International Equity Tracking Error > 0.50% Tracking Error > 0.45% for 6 consecutive months Fd annlzd return < bench annlzd return 0.40% for 6 consecutive months Fixed Income Fd return < bench return 1.5% Fd annlzd return < bench annlzd return 1.0% for 6 consecutive months VRR < 0.98 for 6 consecutive months All critelized basis. VRR Value Relative Ratio is calculated as: manager cumulative return / benchmark cumulative return. 28

181 Northern Trust Russell gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date Northern Trust Russell /01/2010 Russell 1000 Index /01/2010 Trailing Period Performance 20.0 Growth of $1 - Since Inception $ $2.4 $2.3 Return $1.8 $1.2 $ $ Quarter 1 Year 3 Years 5 Years $0.0 4/10 1/11 10/11 7/12 4/13 1/14 10/14 7/15 4/16 12/16 Northern Trust Russell 1000 Russell 1000 Index Northern Trust Russell 1000 Russell 1000 Index Calendar Year Performance Risk/Return - Since Inception Return Return (%) Risk (Standard Deviation %) Northern Trust Russell 1000 Russell 1000 Index Return Standard Deviation Northern Trust Russell pr Russell 1000 Index ¾ Median Oakland Police and Fire Retirement System 29

182 SSgA Russell 1000 Growth - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date SSgA Russell 1000 Growth /01/2014 Russell 1000 Growth Index /01/2014 Trailing Period Performance 20.0 Growth of $1 - Since Inception $ $1.2 $1.2 Return $ $ Quarter 1 Year 3 Years 5 Years $0.9 10/14 1/15 4/15 7/15 10/15 1/16 4/16 7/16 12/16 SSgA Russell 1000 Growth Russell 1000 Growth Index SSgA Russell 1000 Growth Russell 1000 Growth Index Calendar Year Performance Risk/Return - Since Inception Return Return (%) SSgA Russell 1000 Growth Russell 1000 Growth Index Risk (Standard Deviation %) Return Standard Deviation SSgA Russell 1000 Growth pr Russell 1000 Growth Index ¾ Median Oakland Police and Fire Retirement System 30

183 SSgA Russell 1000 Value - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date SSgA Russell 1000 Value /01/2014 Russell 1000 Value Index /01/2014 Trailing Period Performance 24.0 Growth of $1 - Since Inception $ Return $1.2 $1.0 $1.2 $ Quarter 1 Year 3 Years 5 Years $0.8 10/14 1/15 4/15 7/15 10/15 1/16 4/16 7/16 12/16 SSgA Russell 1000 Value Russell 1000 Value Index SSgA Russell 1000 Value Russell 1000 Value Index Calendar Year Performance 45.0 Risk/Return - Since Inception 15.0 Return Return (%) SSgA Russell 1000 Value Russell 1000 Value Index Risk (Standard Deviation %) Return Standard Deviation SSgA Russell 1000 Value pr Russell 1000 Value Index ¾ Median Oakland Police and Fire Retirement System 31

184 NWQ - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date NWQ /01/2006 Russell 2000 Value Index /01/2006 Trailing Period Performance 40.0 Growth of $1 - Since Inception $ $2.4 $2.3 Return $1.6 $0.8 $2.1 $ Quarter 1 Year 3 Years 5 Years ($0.8) 1/06 4/07 7/08 10/09 1/11 4/12 7/13 10/14 12/16 NWQ Russell 2000 Value Index NWQ Russell 2000 Value Index Calendar Year Performance 60.0 Risk/Return - Since Inception 15.0 Return Return (%) Risk (Standard Deviation %) NWQ Russell 2000 Value Index Return Standard Deviation NWQ pr Russell 2000 Value Index ¾ Median Oakland Police and Fire Retirement System 32

185 Russell 2000 Growth ETF - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date Russell 2000 Growth ETF /01/2016 Russell 2000 Growth Index /01/2016 Trailing Period Performance 20.0 Growth of $1 - Since Inception $ $1.1 $1.1 Return $ Quarter 1 Year 3 Years 5 Years $0.9 7/16 8/16 9/16 10/16 11/16 12/16 Russell 2000 Growth ETF Russell 2000 Growth Index Russell 2000 Growth ETF Russell 2000 Growth Index Calendar Year Performance Risk/Return - Since Inception Return Return (%) Risk (Standard Deviation %) Russell 2000 Growth ETF Russell 2000 Growth Index Return Standard Deviation Russell 2000 Growth ETF pr Russell 2000 Growth Index ¾ Median Oakland Police and Fire Retirement System 33

186 Fisher Investments - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date Fisher Investments /01/2011 MSCI AC World ex USA /01/2011 Trailing Period Performance 9.0 Growth of $1 - Since Inception $1.4 Return $1.2 $1.0 $0.8 $1.1 $ Quarter 1 Year 3 Years 5 Years $0.6 2/11 11/11 8/12 5/13 2/14 11/14 8/15 12/16 Fisher Investments MSCI AC World ex USA Fisher Investments MSCI AC World ex USA Calendar Year Performance 30.0 Risk/Return - Since Inception 10.0 Return Return (%) Risk (Standard Deviation %) Fisher Investments MSCI AC World ex USA Return Standard Deviation Fisher Investments pr MSCI AC World ex USA ¾ Median Oakland Police and Fire Retirement System 34

187 Hansberger - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date Hansberger /01/2006 MSCI AC World ex USA /01/2006 Trailing Period Performance 10.0 Growth of $1 - Since Inception $2.0 Return $1.6 $1.2 $0.8 $1.4 $ $ Quarter 1 Year 3 Years 5 Years $0.0 1/06 4/07 7/08 10/09 1/11 4/12 7/13 10/14 12/16 Hansberger MSCI AC World ex USA Hansberger MSCI AC World ex USA Calendar Year Performance 30.0 Risk/Return - Since Inception 8.0 Return Return (%) Risk (Standard Deviation %) Hansberger MSCI AC World ex USA Return Standard Deviation Hansberger pr MSCI AC World ex USA ¾ Median Oakland Police and Fire Retirement System 35

188 SSgA Passive EAFE - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date SSgA Passive EAFE /01/2002 MSCI EAFE Index /01/2002 Trailing Period Performance 12.0 Growth of $1 - Since Inception $4.0 Return $3.0 $2.0 $2.6 $ $ Quarter 1 Year 3 Years 5 Years $0.0 7/02 4/04 1/06 10/07 7/09 4/11 1/13 10/14 12/16 SSgA Passive EAFE MSCI EAFE Index SSgA Passive EAFE MSCI EAFE Index Calendar Year Performance 45.0 Risk/Return - Since Inception 9.9 Return Return (%) Risk (Standard Deviation %) SSgA Passive EAFE MSCI EAFE Index Return Standard Deviation SSgA Passive EAFE pr MSCI EAFE Index ¾ Median Oakland Police and Fire Retirement System 36

189 T. Rowe Price - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date T. Rowe Price /01/2011 Bbg Barclays U.S. Aggregate Index /01/2011 Trailing Period Performance 6.0 Growth of $1 - Since Inception $1.6 Return $1.4 $1.2 $1.2 $ $1.0 1 Quarter 1 Year 3 Years 5 Years $0.8 T. Rowe Price 4/11 1/12 10/12 7/13 4/14 1/15 10/15 12/16 Bbg Barclays U.S. Aggregate Index T. Rowe Price Bbg Barclays U.S. Aggregate Index Calendar Year Performance 12.0 Risk/Return - Since Inception 4.8 Return Return (%) Risk (Standard Deviation %) Return Standard Deviation T. Rowe Price T. Rowe Price Bbg Barclays U.S. Aggregate Index pr Bbg Barclays U.S. Aggregate Index ¾ Median Oakland Police and Fire Retirement System 37

190 Reams - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date Reams /01/1998 Bbg Barclays Universal (Blend) /01/1998 Trailing Period Performance Growth of $1 - Since Inception 6.0 $4.0 Return $3.0 $2.0 $2.9 $ $1.0 1 Quarter 1 Year 3 Years 5 Years $0.0 Reams 1/98 4/00 7/02 10/04 1/07 4/09 7/11 10/13 12/16 Bbg Barclays Universal (Blend) Reams Bbg Barclays Universal (Blend) Calendar Year Performance 12.0 Risk/Return - Since Inception 7.2 Return Return (%) Risk (Standard Deviation %) Return Standard Deviation Reams Reams Bbg Barclays Universal (Blend) pr Bbg Barclays Universal (Blend) ¾ Median Oakland Police and Fire Retirement System 38

191 DDJ Capital - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date DDJ Capital /01/2015 BofA Merrill Lynch High Yield Master II /01/2015 Trailing Period Performance 24.0 Growth of $1 - Since Inception $ $1.1 $1.1 $1.1 Return $1.0 $ Quarter 1 Year 3 Years 5 Years $0.8 1/15 4/15 7/15 10/15 1/16 4/16 7/16 12/16 DDJ Capital BofA Merrill Lynch High Yield Master II DDJ Capital BofA Merrill Lynch High Yield Master II Calendar Year Performance 24.0 Risk/Return - Since Inception 10.0 Return Return (%) Risk (Standard Deviation %) Return Standard Deviation DDJ Capital DDJ Capital BofA Merrill Lynch High Yield Master II pr BofA Merrill Lynch High Yield Master II ¾ Median Oakland Police and Fire Retirement System 39

192 Covered Calls - Parametric - gross of fees As of December 31, 2016 Alpha Beta Information Ratio Sharpe Ratio Tracking Error R-Squared Up Market Capture Down Market Capture Inception Date Covered Calls - Parametric /01/2014 CBOE BXM Index /01/2014 Trailing Period Performance 16.0 Growth of $1 - Since Inception $1.3 Return $1.2 $1.1 $1.2 $ $ Quarter 1 Year 3 Years 5 Years $0.9 3/14 9/14 3/15 9/15 3/16 12/16 Covered Calls - Parametric CBOE BXM Index Covered Calls - Parametric CBOE BXM Index Calendar Year Performance Risk/Return - Since Inception Return Return (%) Risk (Standard Deviation %) Covered Calls - Parametric CBOE BXM Index Return Standard Deviation Covered Calls - Parametric pr CBOE BXM Index ¾ Median Oakland Police and Fire Retirement System 40

193 Domestic Equity Analysis As of December 31, 2016 Style Map (5-Year) $2.2 Growth of $1 (5-Year) Russell 1000 Value Russell 1000 Growth $2.0 Capitalization $1.8 $1.4 Russell 2000 Value Russell 2000 Growth Manager Style $1.0 12/11 9/12 6/13 3/14 12/14 9/15 6/16 12/16 Style History Most Recent Average Style Exposure Domestic Equity Russell 3000 (Blend) Style Exposure 100 Style History (5-Year) Russell 2000 Growth Russell 2000 Value 75 Russell Mid Cap Growth 50 Russell Midcap Value 25 Russell 1000 Growth 0 2/13 8/13 2/14 8/14 2/15 8/15 2/16 12/16 Russell 1000 Value 0.0% 20.0% 40.0% 60.0% 80.0% Russell 1000 Value Russell Midcap Value Russell 2000 Value Russell 1000 Growth Russell Mid Cap Growth Russell 2000 Growth Oakland Police and Fire Retirement System 41

194 International Equity Analysis As of December 31, 2016 Style Map (5-Year) Growth of $1 (5-Year) $1.8 MSCI EAFE Value MSCI EAFE Growth Developed/Emerging $1.5 $1.2 $0.9 $1.4 MSCI EM Value MSCI EM Growth Manager Style $0.6 12/11 9/12 6/13 3/14 12/14 9/15 12/16 Style History Dec-2016 Average Style Exposure Style Exposure International Equity MSCI ACWI Ex US (Blend) Style History (5-Year) 100 MSCI EM Value 75 MSCI EM Growth 50 MSCI EAFE Value 25 MSCI EAFE Growth 0 2/13 8/13 2/14 8/14 2/15 8/15 2/16 12/16 MSCI Japan MSCI Canada MSCI U.K. MSCI Australia MSCI Europe MSCI Pacific ex Japan 0.0% 20.0% 40.0% 60.0% 80.0% MSCI EM Oakland Police and Fire Retirement System 42

195 Fixed Income Analysis As of December 31, 2016 Style Map (5-Year) $1.3 Growth of $1 (5-Year) Short Treasuries Long Treasuries $1.2 $1.2 Qu ality $1.1 $1.0 Short Credit Long Credit Maturity $0.9 12/11 9/12 6/13 3/14 12/14 9/15 6/16 12/16 Style History Dec-2016 Average Style Exposure Fixed Income Bbg Barclays Universal (Blend) Style Exposure 100 Style History (5-Year) Bbg BC U.S. Credit 5-10y 75 Bbg BC U.S. Credit Short 50 Bbg BC U.S. Treasury Short 25 Bbg BC U.S. Treasury Long 0 2/13 8/13 2/14 8/14 2/15 8/15 2/16 12/16 Bbg BC U.S. Govt. Long Bbg BC U.S. Govt. Interm. 0.0% 20.0% 40.0% 60.0% 80.0% Bbg BC U.S. Govt. Short Bbg BC U.S. Corp. IG Bbg BC U.S. Securitized BofAML US High Yield Oakland Police and Fire Retirement System 43

196 Glossary Alpha The premium an investment earns above a set standard. This is usually measured in terms of a common index (i.e., how the stock performs independent of the market). An Alpha is usually generated by regressing excess return on the S&P 500 excess return. Annualized Performance The annual rate of return that when compounded (t) times generates the same (t) period holding return as actually occurred from periods (1) to period (t). Batting Average Percentage of periods a portfolio outperforms a given index. Beta The measure of an asset s risk in relation to the Market (for example, the S&P 500) or to an alternative benchmark or factors. Roughly speaking, a security with a Beta of 1.5 will have moved, on average, 1.5 times the market return. Bottom-up A management style that de-emphasizes the significance of economic and market cycles, focusing instead on the analysis of individual stocks. Dividend Discount Model A method to value the common stock of a company that is based on the present value of the expected future dividends. Growth Stock Common stock of a company that has an opportunity to invest money and earn more than its opportunity cost of capital. Information Ratio The ratio of annualized expected residual return to residual risk. A central measurement for active management, value added is proportional to the square of the information ratio. R - Squared Square of the correlation coefficient. The proportion of the variability in one series that can be explained by the variability of one or more other series in a regression model. A measure of the quality of fit. 100% R-square means a perfect predictability. Standard Deviation The square root of the variance. A measure of dispersion of a set of data from its mean Sharpe Ratio A measure of a portfolio s excess return relative to the total variability of the portfolio. Style Analysis A returns-based analysis using a multi-factor attribution model. The model calculates a product s average exposure to particular investment styles over time (i.e., the products normal style benchmark). Top-Down Investment style that begins with an assessment of the overall economic environment and makes a general asset allocation decision regarding various sectors of the financial markets and various industries. Tracking Error The standard deviation of the difference between the returns of a portfolio and an appropriate benchmark. Turnover For mutual funds, a measure of trading activity during the previous year, expressed as a percentage of the average total assets of the fund. A turnover rate of 25% means that the value of trades represented (1/4) of the assets of the fund. Value Stock Stocks with low price/book ratios or price/earnings ratios. Historically, value stocks have enjoyed higher average returns than growth stocks (stocks with high price/book or price/earnings ratios) in a variety of countries. 44

197 Benchmark Definitions Bloomberg Barclays Capital Universal: includes market coverage by the Aggregate Bond Index fixed rate debt issues, which are rated investment grade or higher by Moody s Investor Services, Standard and Poor s Corporation, or Fitch Investor s Service, in that order with all issues having at least one year to maturity and an outstanding par value of at least $100 million) and includes exposures to high yield CMBS securities. All returns are market value weighted inclusive of accrued interest. MSCI ACWI x US: MSCI ACWI (All Country World Index) Free excluding US (gross dividends): is a free-floating adjusted market capitalization index designed to measure equity performance in the global developed and emerging markets. As of April 2002, the index consisted of 49 developed and emerging market country indices. MSCI EAFE (Europe, Australasia, Far East): is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the US & Canada. Russell 1000: measures the performance of the 1,000 largest securities in the Russell 3000 Index. Russell 1000 is highly correlated with the S&P 500 Index and capitalization-weighted. Russell 1000 Growth: measures the performance of those Russell 1000 securities with a greater-than-average growth orientation. Securities in this index tend to exhibit higher price-to-book and price-earnings ratios, lower dividend yields and higher forecasted growth values than the Value universe. Russell 1000 Value: measures the performance of those Russell 1000 securities with a less-than-average growth orientation. Securities in this index tend to exhibit lower price-to-book and price-earnings ratios, higher dividend yields and lower forecasted growth values than the Growth universe. Russell Mid-Cap: measures the performance of the smallest 800 companies in the Russell 1000 Index, as ranked by total market capitalization. Russell 2000: measures the performance of the 2,000 smallest securities in the Russell 3000 Index. Russell 2000 is market capitalization-weighted. Russell 2000 Growth: measures the performance of those Russell 2000 securities with a greater-than-average growth orientation. Securities in this index tend to exhibit higher price-to-book and price-to-earnings ratios. Russell 2000 Value: measures the performance of those Russell 2000 securities with a less-than-average growth orientation. Securities in this index tend to exhibit lower price-to-book and price-to-earnings ratios. CBOE BXM: measures the performance of a hypothetical buy-write strategy on the S&P 500 Index. BofA ML U.S. High Yield Master II: Tracks the performance of US dollar denominated below investment grade rated corporate debt publically issued in the US domestic market. To qualify for inclusion in the index, securities must have a below investment grade rating (based on an average of Moody's, S&P, and Fitch) and an investment grade rated country of risk (based on an average of Moody's, S&P, and Fitch foreign currency long term sovereign debt ratings). Each security must have greater than 1 year of remaining maturity, a fixed coupon schedule, and a minimum amount outstanding of $100 million. 45

198 RISK METRIC DESCRIPTION Rationale for selection and calculation methodology US Equity Markets: Metric: P/E ratio = Price / Normalized earnings for the S&P 500 Index To represent the price of US equity markets, we have chosen the S&P 500 index. This index has the longest published history of price, is well known, and also has reliable, longterm, published quarterly earnings. The price=p of the P/E ratio is the current price of the market index (the average daily price of the most recent full month for the S&P 500 index). Equity markets are very volatile. Prices fluctuate significantly during normal times and extremely during periods of market stress or euphoria. Therefore, developing a measure of earnings power (E) which is stable is vitally important, if the measure is to provide insight. While equity prices can and do double, or get cut in half, real earnings power does not change nearly as much. Therefore, we have selected a well known measure of real, stable earnings power developed by Yale Professor Robert Shiller known as the Shiller E-10. The calculation of E-10 is simply the average real annual earnings over the past 10 years. Over 10 years, the earnings shenanigans and boom and bust levels of earnings tend to even out (and often times get restated). Therefore, this earnings statistic gives a reasonably stable, slow-to-change estimate of average real earnings power for the index. Professor Shiller s data and calculation of the E-10 are available on his website at We have used his data as the base for our calculations. Details of the theoretical justification behind the measure can be found in his book Irrational Exuberance [Princeton University Press 2000, Broadway Books 2001, 2nd ed., 2005]. Developed Equity Markets Excluding the US: Metric: P/E ratio = Price / Normalized earnings for the MSCI EAFE Index To represent the price of non-us developed equity markets, we have chosen the MSCI EAFE index. This index has the longest published history of price for non-us developed equities. The price=p of the P/E ratio is the current price of the market index (the average daily price of the most recent full month for the MSCI EAFE index). The price level of this index is available starting in December Again, for the reasons described above, we elected to use the Shiller E-10 as our measure of earnings (E). Since 12/1972, a monthly price earnings ratio is available from MSCI. Using this quoted ratio, we have backed out the implied trailing-twelve month earnings of the EAFE index for each month from 12/1972 to the present. These annualized earnings are then inflation adjusted using CPI-U to represent real earnings in US dollar terms for each time period. The Shiller E-10 for the EAFE index (10 year average real earnings) is calculated in the same manner as detailed above. However, we do not believe that the pricing and earnings history of the EAFE markets are long enough to be a reliable representation of pricing history for developed market equities outside of the US. Therefore, in constructing the Long-Term Average Historical P/E for developed ex-us equities for comparison purposes, we have elected to use the US equity market as a developed market proxy, from 1881 to This lowers the Long-Term Average Historical P/E considerably. We believe this methodology provides a more realistic historical comparison for a market with a relatively short history. Emerging Market Equity Markets Metric: Ratio of Emerging Market P/E Ratio to Developed Market P/E Ratio To represent the Emerging Markets P/E Ratio, we have chosen the MSCI Emerging Market Free Index, which has P/E data back to January 1995 on Bloomberg. To represent the Developed Markets PE Ratio, we have chosen the MSCI World Index, which also has data back to January 1995 on Bloomberg. Although there are issues with published, single time period P/E ratios, in which the denominator effect can cause large movements, we feel that the information contained in such movements will alert investors to market activity that they will want to interpret. 46

199 RISK METRIC DESCRIPTION Rationale for selection and calculation methodology US Private Equity Markets: Metrics: S&P LCD Average EBITDA Multiples Paid in LBOs and US Quarterly Deal Volume The Average Purchase Price to EBITDA multiples paid in LBOs is published quarterly by S&P in their LCD study. This is the total price paid (both equity and debt) over the trailingtwelve month EBITDA (earnings before interest, taxes, depreciation and amortization) as calculated by S&P LCD. This is the relevant, high-level pricing metric that private equity managers use in assessing deals. Data is published monthly. US quarterly deal volume for private equity is the total deal volume in $ billions (both equity and debt) reported in the quarter by Thomson Reuters Buyouts. This metric gives a measure of the level of activity in the market. Data is published quarterly. U.S Private Real Estate Markets: Metrics: US Cap rates and Annual US Real Estate Deal Volume Real estate cap rates are a measure of the price paid in the market to acquire properties versus their annualized income generation before financing costs (NOI=net operating income). The date is published by NCREIF. We chose to use current value cap rate. These are capitalization rates from properties that were revalued during the quarter. While this data does rely on estimates of value and therefore tends to be lagging, (estimated prices are slower to rise and slow to fall than transaction prices), the data series goes back to1979, providing a long data series for valuation comparison. Data is published quarterly. Annual US real estate deal volume is the total deal transaction volume in $ billions (both equity and debt) reported by Real Capital Analytics during the trailing-twelve months. This metric gives the level of activity inthe market. Data is published monthly. Measure of Equity Market Fear / Uncertainty Metric: VIX Measure of implied option volatility for U.S. equity markets The VIX is a key measure of near-term volatility conveyed by implied volatility of S&P 500 index option prices. VIX increases with uncertainty and fear. Stocks and the VIX are negatively correlated. Volatility tends to spike when equity markets fall. Measure of Monetary Policy Metric: Yield Curve Slope We calculate the yield curve slope as the 10 year treasury yield minus the 1 year treasury yield. When the yield curve slope is zero or negative, this is a signal to pay attention. A negative yield curve slope signals lower rates in the future, caused by a contraction in economic activity. Recessions are typically preceded by an inverted (negatively sloped) yield curve. A very steep yield curve (2 or greater) indicates a large difference between shorter-term interest rates (the 1 year rate) and longer-term rates (the 10 year rate). This can signal expansion in economic activity in the future, or merely higher future interest rates. 47

200 RISK METRIC DESCRIPTION Rationale for selection and calculation methodology Definition of extreme metric readings A metric reading is defined as extreme if the metric reading is in the top or bottom decile of its historical readings. These extreme reading should cause the reader to pay attention. These metrics have reverted toward their mean values in the past. Credit Markets US Fixed Income: Metric: Spreads The absolute level of spreads over treasuries and spread trends (widening / narrowing) are good indicators of credit risk in the fixed income markets. Spreads incorporate estimates of future default, but can also be driven by technical dislocations in the fixed income markets. Abnormally narrow spreads (relative to historical levels) indicate higher levels of valuation risk, wide spreads indicate lower levels of valuation risk and / or elevated default fears. Investment grade bond spreads are represented by the Barclays Capital US Corporate Investment Grade Index Intermediate Component. The high yield corporate bond spreads are represented by the Barclays Capital US Corporate High Yield Index. Measures of US Inflation Expectations Metrics: Breakeven Inflation and Inflation Adjusted Commodity Prices Inflation is a very important indicator impacting all assets and financial instruments. Breakeven inflation is calculated as the 10 year nominal treasury yield minus the 10 year real yield on US TIPS (treasury inflation protected securities). Abnormally low long-term inflation expectations are indicative of deflationary fears. A rapid rise in breakeven inflation indicates acceleration in inflationary expectations as market participants sell nominal treasuries and buy TIPs. If breakeven inflation continues to rise quarter over quarter, this is a signal of inflationary worries rising, which may cause Fed action and / or dollar decline. Commodity price movement (above the rate of inflation) is an indication of anticipated inflation caused by real global economic activity putting pressure on resource prices. We calculate this metric by adjusted in the Dow Jones UBS Commodity Index (formerly Dow Jones AIG Commodity Index) by US CPI-U. While rising commodity prices will not necessarily translate to higher US inflation, higher US inflation will likely show up in higher commodity prices, particularly if world economic activity is robust. These two measures of anticipated inflation can, and often are, conflicting. Measures of US Treasury Bond Interest Rate Risk Metrics: 10-Year Treasury Forward-Looking Real Yield and 10-Year Treasury Duration The expected annualized real yield of the 10 year US Treasury Bond is a measure of valuation risk for US Treasuries. A low real yield means investors will accept a low rate of expected return for the certainly of receiving their nominal cash flows. PCA estimates the expected annualized real yield by subtracting an estimate of expected 10 year inflation (produced by the Survey of Professional Forecasters as collected by the Federal Reserve Bank of Philadelphia), from the 10 year Treasury constant maturity interest rate. Duration for the 10-Year Treasury Bond is calculated based on the current yield and a price of 100. This is a measure of expected percentage movements in the price of the bond based on small movements in percentage yield. We make no attempt to account for convexity. 48

201 RISK METRIC DESCRIPTION Rationale for selection and calculation methodology What is the PCA Market Sentiment Indicator (PMSI)? The PMSI is a measure meant to gauge the market s sentiment regarding economic growth risk. Growth risk cuts across most financial assets, and is the largest risk exposure that most portfolios bear. The PMSI takes into account the momentum (trend over time, positive or negative) of the economic growth risk exposure of publicly traded stocks and bonds, as a signal of the future direction of growth risk returns; either positive (risk seeking market sentiment), or negative (risk averse market sentiment). How do I read the PCA Market Sentiment Indicator (PMSI) graph? Simply put, the PMSI is a color coded indicator that signals the market s sentiment regarding economic growth risk. It is read left to right chronologically. A green indicator on the PMSI indicates that the market s sentiment towards growth risk is positive. A gray indicator indicates that the market s sentiment towards growth risk is neutral or inconclusive. A red indicator indicates that the market s sentiment towards growth risk is negative. The black line on the graph is the level of the PMSI. The degree of the signal above or below the neutral reading is an indication the signal s current strength. How is the PCA Market Sentiment Indicator (PMSI) Constructed? The PMSI is constructed from two sub-elements representing investor sentiment in stocks and bonds: 1.Stock return momentum: Return momentum for the S&P 500 Equity Index (trailing 12-months) 2.Bond yield spread momentum: Momentum of bond yield spreads (excess of the measured bond yield over the identical duration U.S. Treasury bond yield) for corporate bonds (trailing 12-months) for both investment grade bonds (75% weight) and high yield bonds (25% weight). The scale of this measure is adjusted to match that of the stock return momentum measure. The black line reading on the graph is calculated as the average of the stock return momentum measure and the bonds spread momentum measure. The color reading on the graph is determined as follows: 1.If both stock return momentum and bond spread momentum are positive = GREEN (positive) 2.If one of the momentum indicators is positive, and the other negative = GRAY (inconclusive) 3.If both stock return momentum and bond spread momentum are negative = RED (negative) What does the PCA Market Sentiment Indicator (PMSI) mean? Why might it be useful? There is strong evidence that time series momentum is significant and persistent. In particular, across an extensive array of asset classes, the sign of the trailing 12-month return (positive or negative) is indicative of future returns (positive or negative) over the next 12 month period. The PMSI is constructed to measure this momentum in stocks and corporate bond spreads. A reading of green or red is agreement of both the equity and bond measures, indicating that it is likely that this trend (positive or negative) will continue over the next 12 months. When the measures disagree, the indicator turns gray. A gray reading does not necessarily mean a new trend is occurring, as the indicator may move back to green, or into the red from there. The level of the reading (black line) and the number of months at the red or green reading, gives the user additional information on which to form an opinion, and potentially take action. Momentum is defined as the persistence of relative performance. There is a significant amount of academic evidence indicating that positive momentum (e.g., strong performing stocks over the recent past continue to post strong performance into the near future) exists over near-to-intermediate holding periods. See, for example, Understanding Momentum, Financial Analysts Journal, Scowcroft, Sefton, March,

202 DISCLOSURES: This document is provided for informational purposes only. It does not constitute an offer of securities of any of the issuers that may be described herein. Information contained herein may have been provided by third parties, including investment firms providing information on returns and assets under management, and may not have been independently verified. The past performance information contained in this report is not necessarily indicative of future results and there is no assurance that the investment in question will achieve comparable results or that the Firm will be able to implement its investment strategy or achieve its investment objectives. The actual realized value of currently unrealized investments (if any) will depend on a variety of factors, including future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may differ from the assumptions and circumstances on which any current unrealized valuations are based. Neither PCA nor PCA s officers, employees or agents, make any representation or warranty, express or implied, in relation to the accuracy or completeness of the information contained in this document or any oral information provided in connection herewith, or any data subsequently generated herefrom, and accept no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information. PCA and PCA s officers, employees and agents expressly disclaim any and all liability that may be based on this document and any errors therein or omissions therefrom. Neither PCA nor any of PCA s officers, employees or agents, make any representation of warranty, express or implied, that any transaction has been or may be effected on the terms or in the manner stated in this document, or as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Any views or terms contained herein are preliminary only, and are based on financial, economic, market and other conditions prevailing as of the date of this document and are therefore subject to change. The information contained in this report may include forward-looking statements. Forward-looking statements include a number of risks, uncertainties and other factors beyond the control of the Firm, which may result in material differences in actual results, performance or other expectations. The opinions, estimates and analyses reflect PCA s current judgment, which may change in the future. Any tables, graphs or charts relating to past performance included in this report are intended only to illustrate investment performance for the historical periods shown. Such tables, graphs and charts are not intended to predict future performance and should not be used as the basis for an investment decision. All trademarks or product names mentioned herein are the property of their respective owners. Indices are unmanaged and one cannot invest directly in an index. The index data provided is on an as is basis. In no event shall the index providers or its affiliates have any liability of any kind in connection with the index data or the portfolio described herein. Copying or redistributing the index data is strictly prohibited. The Russell indices are either registered trademarks or tradenames of Frank Russell Company in the U.S. and/or other countries. The MSCI indices are trademarks and service marks of MSCI or its subsidiaries. Standard and Poor s (S&P) is a division of The McGraw-Hill Companies, Inc. S&P indices, including the S&P 500, are a registered trademark of The McGraw-Hill Companies, Inc. CBOE, not S&P, calculates and disseminates the BXM Index. The CBOE has a business relationship with Standard & Poor's on the BXM. CBOE and Chicago Board Options Exchange are registered trademarks of the CBOE, and SPX, and CBOE S&P 500 BuyWrite Index BXM are servicemarks of the CBOE. The methodology of the CBOE S&P 500 BuyWrite Index is owned by CBOE and may be covered by one or more patents or pending patent applications. The Bloomberg Barclays Capital indices (formerly known as the Barclays indices) are trademarks of Bloomberg Finance L.P.. The Citigroup indices are trademarks of Citicorp or its affiliates. The Merrill Lynch indices are trademarks of Merrill Lynch & Co. or its affiliates. 50

203 PCA INVESTMENT MARKET RISK METRICS Monthly Report February 2017

204 Takeaways U.S. credit spreads narrowed in both investment grade and high yield (pg 8), an interesting outcome eight years into an expansion. Both spread levels are richer than average. With the 10-year Treasury interest rate moving up to 2.5%, spreads between the cap rate on core real estate and the 10-year Treasury rate (a measure of valuation), tightened to levels not seen since before the global financial crisis (expensive). With the Fed tightening in December, the yield curve flattened. U.S. public equity and private equity valuations keep extending. Equity volatility levels moved to bottom decile levels. Non-U.S. developed and emerging market equity valuations remain historically cheap relative to their own histories, and relative to U.S. levels. Inflation indicators remain well behaved, as U.S. dollar strength kept commodity prices at decade lows. (pg 10) PCA s sentiment indicator (pg 4) accelerated, as U.S equity valuations surpassed precrisis highs. The sentiment indicator remains solidly green. 1 See Appendix for the rationale for selection and calculation methodology used for the risk metrics. PENSION CONSULTING ALLIANCE, LLC. Investment Market Risk Metrics 2

205 Risk Overview Monthly Report - February 2017 Valuation Metrics versus Historical Range A Measure of Risk Top Decile Unfavorable Pricing Average Neutral Bottom Decile Favorable Pricing US Equity (page 5) Dev ex US Equity (page 5) EM Equity Relative to DM Equity (page 6) Private Equity (page 6) Private Real Estate Cap Rate (page 7) Private Real Estate Spread (page 7) US IG Corp Debt Spread (page 8) US High Yield Debt Spread (page 8) Other Important Metrics within their Historical Ranges Pay Attention to Extreme Readings Top Decile Attention! Average Neutral Bottom Decile Attention! Equity Volatility (page 9) Yield Curve Slope (page 9) Breakeven Inflation (page 10) Interest Rate Risk (page 11) PENSION CONSULTING ALLIANCE, LLC. Investment Market Risk Metrics 3

206 Monthly Report - February 2017 Market Sentiment PCA Market Sentiment Indicator (1995 Present) Positive Positive Neutral Neutral Negative Negative Avoid Growth Risk Growth Risk Neutral Embrace Growth Risk PCA Sentiment Indicator PCA Market Sentiment Indicator Most Recent 3 Year Period Positive Positive Neutral Neutral Negative Negative Avoid Growth Risk Growth Risk Neutral Embrace Growth Risk PCA Sentiment Indicator Information Behind Current Sentiment Reading Bond Spread Momentum Trailing Twelve Months Equity Return Momentum Trailing Twelve Months Agreement Between Bond Spread and Equity Spread Momentum Measures? Growth Risk Visibility (Current Overall Sentiment) Positive Positive Agree Positive PENSION CONSULTING ALLIANCE, LLC. Investment Market Risk Metrics 4

207 Monthly Report - February 2017 Developed Public Equity Markets P/E Ratio U.S. Equity Market P/E Ratio 1 versus Long Term Historical Average US Markets Current P/E as of 1/2017 =28.3x US Markets Long term Average (since 1880) P/E = 16.7x 1 P/E ratio is a Shiller P/E 10 based on 10 year real S&P 500 earnings over S&P 500 index level. (Please note the different time scales) P/E Ratio Developed ex US Equity Market P/E Ratio 1 versus Long Term Historical Average 2 Average /2017 EAFE Only P/E = 23.5x Long Term Average Historical 2 P/E = 16.9x Intl Developed Markets Current P/E as of 1/2017 = 14.5x 1 P/E ratio is a Shiller P/E 10 based on 10 year real MSCI EAFE earnings over EAFE index level. 2 To calculate the LT historical average, from 1881 to 1982 U.S. data is used as developed market proxy. From 1982 to present, actual developed ex US market data (MSCI EAFE) is used. PENSION CONSULTING ALLIANCE, LLC. Investment Market Risk Metrics 5

208 Emerging Market Public Equity Markets 275% 250% 225% 200% 175% 150% 125% 100% 75% 50% 25% 0% Mexican Peso Crisis Asian Crisis Monthly Report - February 2017 Emerging Markets PE / Developed Markets PE (100% = Parity between PE Ratios) Russian Crisis, LTCM implosion, currency devaluations Technology and Telecom Crash Commodity price runup World Financial Crisis EM/DM relative PE ratio is slightly below the historical average Source: Bloomberg, MSCI World, MSCI EMF EM/DM PE Average EM/DM PE Parity US Private Equity Quarterly Data, Updated to Dec. 31st Price to EBITDA Multiples Paid in LBOs (updated to Dec. 31st) 250 Disclosed U.S. Quarterly Deal Volume* Average since Deal volume ticked up in the fourth quarter Multiples remain elevated. Billions ($) Source: S&P LCD study, data presented is on 1 month lag Source: Thomson Reuters Buyouts * quarterly total deal size (both equity and debt) PENSION CONSULTING ALLIANCE, LLC. Investment Market Risk Metrics 6

209 Monthly Report - February 2017 Private Real Estate Markets Quarterly Data, Updated to Dec. 31st Cap Rate 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Core Real Estate Current Value Cap Rates 1 Core Cap Rate LT Averate Cap Rate 10 Year Treasury Rate Core real estate cap rates remain low by historical standards (expensive). Sources: NCRIEF, 1 A cap rate is the current annual income of the property divided by an estimate of the current value of the property. It is the current yield of the property. Low cap rates indicate high valuations. 5.0% Core Cap Rate Spread over 10 Year Treasury Interest Rate Spread to the 10 year Treasury dropped during 4Q due to rising interest rates. 4.0% Cap Rate Spread 3.0% 2.0% 1.0% 0.0% Core Cap Rate Spread to Treasuries LT Average Spread 20% Transactions as a % of Market Value Trailing Four Quarters (a measure of property turnover activity) 15% Activity has slowly been increasing since Q % 5% 0% Source: NCREIF, PCA calculation PENSION CONSULTING ALLIANCE, LLC. Investment Market Risk Metrics 7

210 Monthly Report - February 2017 Credit Markets US Fixed Income 700 Investment Grade Corporate Bond Spreads Spread Over Treasuries (basis points) Investment grade spreads were essentially unchanged in January, remaining below the long term average level at month end. Investment Grade Bond Spreads Average Spread since 1994 (IG Bonds) Source: LehmanLive: Barclays Capital US Corporate Investment Grade Index Intermediate Component High Yield Corporate Bond Spreads 1600 Spread Over Treasuries (basis points) High yield spreads ticked down in January, ending the month below the long term average level. High Yield Bond Spreads Average spread since 1994 (HY Bonds) 0 Source: LehmanLive: Barclays Capital U.S. Corporate High Yield Index. PENSION CONSULTING ALLIANCE, LLC. Investment Market Risk Metrics 8

211 Other Market Metrics Monthly Report - February 2017 VIX a measure of equity market fear / uncertainty Equity market volatility (VIX) decreased in January, ending the month meaningfully below the long term average level ( 20) at Source: (Please note the different time scales) Yield Curve Slope 5.0 The average 10 year Treasury interest rate ticked down in January. The average oneyear Treasury interest rate also ticked down during the month. The slope slightly Yield curve slopes that are negative (inverted) portend a recession. 3.0 Source: (10 yr treasury yield minus 1 year treasury yield) PENSION CONSULTING ALLIANCE, LLC. Investment Market Risk Metrics 9

212 Measures of Inflation Expectations Monthly Report - February % 10 Year Breakeven Inflation (10 year nominal Treasury yield minus 10 year TIPS yield) 2.50% 2.00% 1.50% 1.00% 0.50% Breakeven inflation ended January at 2.05%, increasing from the end of December. The 10 year TIPS real yield declined to 0.40%, while the nominal 10 year Treasury yield remained at 2.45%. 0.00% Source: (Please note the different time scales) Inflation Adjusted Dow Jones UBS Commodity Price Index (1991 = 100) Broad commodity prices ticked up slighty in January and continue to remain above the historical lows set in early Source: Bloomberg Commodity Index, St. Louis Fed for US CPI all urban consumers. PENSION CONSULTING ALLIANCE, LLC. Investment Market Risk Metrics 10

213 Monthly Report - February 2017 Measures of U.S. Treasury Interest Rate Risk 10.0 Estimate of 10 Year Treasury Forward Looking Real Yield Expected Real Yield of 10 Year Treasury The forward looking annual real yield on 10 year Treasuries is estimated at approximately 0.21% real, assuming 10 year annualized inflation of 2.22%* per year. 2.0 Sources: for 10 year constant maturity rates *Federal Reserve Bank of Philadelphia survey of professional forecasts for inflation estimates 10 Year Treasury Bond Duration Year Treasury Duration (Change in Treasury price with a change in interest rates) Higher Risk Lower Risk Interest rate risk is still near all time highs. If the 10 year Treasury yield rises by 100 basis points from today's levels, the capital loss from the change in price is expected to be 8.8%. Source: for 10 year constant maturity rates, calculation of duration PENSION CONSULTING ALLIANCE, LLC. Investment Market Risk Metrics 11

214 Appendix PENSION CONSULTING ALLIANCE, LLC Investment Market Risk Metrics

215 Appendix METRIC DESCRIPTION, RATIONALE FOR SELECTION AND CALCULATION METHODOLOGY US Equity Markets: Metric: P/E ratio = Price / Normalized earnings for the S&P 500 Index To represent the price of US equity markets, we have chosen the S&P 500 index. This index has the longest published history of price, is well known, and also has reliable, long-term, published quarterly earnings. The price=p of the P/E ratio is the current price of the market index (the average daily price of the most recent full month for the S&P 500 index). Equity markets are very volatile. Prices fluctuate significantly during normal times and extremely during periods of market stress or euphoria. Therefore, developing a measure of earnings power (E) which is stable is vitally important, if the measure is to provide insight. While equity prices can and do double, or get cut in half, real earnings power does not change nearly as much. Therefore, we have selected a well known measure of real, stable earnings power developed by Yale Professor Robert Shiller known as the Shiller E-10. The calculation of E-10 is simply the average real annual earnings over the past 10 years. Over 10 years, the earnings shenanigans and boom and bust levels of earnings tend to even out (and often times get restated). Therefore, this earnings statistic gives a reasonably stable, slow-to-change estimate of average real earnings power for the index. Professor Shiller s data and calculation of the E-10 are available on his website at We have used his data as the base for our calculations. Details of the theoretical justification behind the measure can be found in his book Irrational Exuberance [Princeton University Press 2000, Broadway Books 2001, 2nd ed., 2005]. Developed Equity Markets Excluding the US: Metric: P/E ratio = Price / Normalized earnings for the MSCI EAFE Index To represent the price of non-us developed equity markets, we have chosen the MSCI EAFE index. This index has the longest published history of price for non-us developed equities. The price=p of the P/E ratio is the current price of the market index (the average daily price of the most recent full month for the MSCI EAFE index). The price level of this index is available starting in December Again, for the reasons described above, we elected to use the Shiller E-10 as our measure of earnings (E). Since 12/1972, a monthly price earnings ratio is available from MSCI. Using this quoted ratio, we have backed out the implied trailing-twelve month earnings of the EAFE index for each month from 12/1972 to the present. These annualized earnings are then inflation adjusted using CPI-U to represent real earnings in US dollar terms for each time period. The Shiller E-10 for the EAFE index (10 year average real earnings) is calculated in the same manner as detailed above. However, we do not believe that the pricing and earnings history of the EAFE markets are long enough to be a reliable representation of pricing history for developed market equities outside of the US. Therefore, in constructing the Long-Term Average Historical P/E for developed ex-us equities for comparison purposes, we have elected to use the US equity market as a developed market proxy, from 1881 to This lowers the Long-Term Average Historical P/E considerably. We believe this methodology provides a more realistic historical comparison for a market with a relatively short history. PENSION CONSULTING ALLIANCE, LLC Investment Market Risk Metrics

216 Appendix METRIC DESCRIPTION, RATIONALE FOR SELECTION AND CALCULATION METHODOLOGY Emerging Market Equity Markets: Metric: Ratio of Emerging Market P/E Ratio to Developed Market P/E Ratio To represent the Emerging Markets P/E Ratio, we have chosen the MSCI Emerging Market Free Index, which has P/E data back to January 1995 on Bloomberg. To represent the Developed Markets PE Ratio, we have chosen the MSCI World Index, which also has data back to January 1995 on Bloomberg. Although there are issues with published, single time period P/E ratios, in which the denominator effect can cause large movements, we feel that the information contained in such movements will alert investors to market activity that they will want to interpret. US Private Equity Markets: Metrics: S&P LCD Average EBITDA Multiples Paid in LBOs and US Quarterly Deal Volume The Average Purchase Price to EBITDA multiples paid in LBOs is published quarterly by S&P in their LCD study. This is the total price paid (both equity and debt) over the trailing-twelve month EBITDA (earnings before interest, taxes, depreciation and amortization) as calculated by S&P LCD. This is the relevant, high-level pricing metric that private equity managers use in assessing deals. Data is published monthly. US quarterly deal volume for private equity is the total deal volume in $ billions (both equity and debt) reported in the quarter by Thomson Reuters Buyouts. This metric gives a measure of the level of activity in the market. Data is published quarterly. U.S Private Real Estate Markets: Metrics: US Cap Rates, Cap Rate Spreads, and Transactions as a % of Market Value Real estate cap rates are a measure of the price paid in the market to acquire properties versus their annualized income generation before financing costs (NOI=net operating income). The data, published by NCREIF, describes completed and leased properties (core) on an unleveraged basis. We chose to use current value cap rates. These are capitalization rates from properties that were revalued during the quarter. This data relies on estimates of value and therefore tends to be lagging (estimated prices are slower to rise and slower to fall than transaction prices). The data is published quarterly. Spreads between the cap rate (described above) and the 10-year nominal Treasury yield, indicate a measure of the cost of properties versus a current measure of the cost of financing. Transactions as a % of Market Value Trailing-Four Quarters is a measure of property turnover activity in the NCREIF Universe. This quarterly metric is a measure of activity in the market. Credit Markets US Fixed Income: Metric: Spreads The absolute level of spreads over treasuries and spread trends (widening / narrowing) are good indicators of credit risk in the fixed income markets. Spreads incorporate estimates of future default, but can also be driven by technical dislocations in the fixed income markets. Abnormally narrow spreads (relative to historical levels) indicate higher levels of valuation risk, wide spreads indicate lower levels of valuation risk and / or elevated default fears. Investment grade bond spreads are represented by the Barclays Capital US Corporate Investment Grade Index Intermediate Component. The high yield corporate bond spreads are represented by the Barclays Capital US Corporate High Yield Index. PENSION CONSULTING ALLIANCE, LLC Investment Market Risk Metrics

217 Appendix METRIC DESCRIPTION, RATIONALE FOR SELECTION AND CALCULATION METHODOLOGY Measure of Equity Market Fear / Uncertainty Metric: VIX Measure of implied option volatility for U.S. equity markets The VIX is a key measure of near-term volatility conveyed by implied volatility of S&P 500 index option prices. VIX increases with uncertainty and fear. Stocks and the VIX are negatively correlated. Volatility tends to spike when equity markets fall. Measure of Monetary Policy Metric: Yield Curve Slope We calculate the yield curve slope as the 10 year treasury yield minus the 1 year treasury yield. When the yield curve slope is zero or negative, this is a signal to pay attention. A negative yield curve slope signals lower rates in the future, caused by a contraction in economic activity. Recessions are typically preceded by an inverted (negatively sloped) yield curve. A very steep yield curve (2 or greater) indicates a large difference between shorter-term interest rates (the 1 year rate) and longer-term rates (the 10 year rate). This can signal expansion in economic activity in the future, or merely higher future interest rates. Measures of US Inflation Expectations Metrics: Breakeven Inflation and Inflation Adjusted Commodity Prices Inflation is a very important indicator impacting all assets and financial instruments. Breakeven inflation is calculated as the 10 year nominal treasury yield minus the 10 year real yield on US TIPS (treasury inflation protected securities). Abnormally low long-term inflation expectations are indicative of deflationary fears. A rapid rise in breakeven inflation indicates an acceleration in inflationary expectations as market participants sell nominal treasuries and buy TIPs. If breakeven inflation continues to rise quarter over quarter, this is a signal of inflationary worries rising, which may cause Fed action and / or dollar decline. Commodity price movement (above the rate of inflation) is an indication of anticipated inflation caused by real global economic activity putting pressure on resource prices. We calculate this metric by adjusted in the Dow Jones UBS Commodity Index (formerly Dow Jones AIG Commodity Index) by US CPI-U. While rising commodity prices will not necessarily translate to higher US inflation, higher US inflation will likely show up in higher commodity prices, particularly if world economic activity is robust. These two measures of anticipated inflation can, and often are, conflicting. Measures of US Treasury Bond Interest Rate Risk Metrics: 10-Year Treasury Forward-Looking Real Yield and 10-Year Treasury Duration The expected annualized real yield of the 10 year U.S. Treasury Bond is a measure of valuation risk for U.S. Treasuries. A low real yield means investors will accept a low rate of expected return for the certainly of receiving their nominal cash flows. PCA estimates the expected annualized real yield by subtracting an estimate of expected 10 year inflation (produced by the Survey of Professional Forecasters as collected by the Federal Reserve Bank of Philadelphia), from the 10 year Treasury constant maturity interest rate. Duration for the 10-Year Treasury Bond is calculated based on the current yield and a price of 100. This is a measure of expected percentage movements in the price of the bond based on small movements in percentage yield. We make no attempt to account for convexity. Definition of extreme metric readings A metric reading is defined as extreme if the metric reading is in the top or bottom decile of its historical readings. These extreme reading should cause the reader to pay attention. These metrics have reverted toward their mean values in the past. PENSION CONSULTING ALLIANCE, LLC Investment Market Risk Metrics

218 PCA Market Sentiment Indicator Explanation, Construction and Q&A By: Pension Consulting Alliance, LLC. John Linder, CFA, CPA Neil Rue, CFA PCA has created the PCA Market Sentiment Indicator (PMSI) to complement our valuation-focused PCA Investment Market Risk Metrics. This measure of sentiment is meant to capture significant and persistent shifts in long-lived market trends of economic growth risk, either towards a risk-seeking trend or a risk-aversion trend. This paper explores: What is the PCA Market Sentiment Indicator (PMSI)? How do I read the indicator graph? How is the PCA Market Sentiment Indicator (PMSI) constructed? What do changes in the indicator mean? 2012 Pension Consulting Alliance, LLC. Reproduction of all or any part of this report is permissible if reproduction contains notice of Pension Consulting Alliance s copyright as follows: Copyright 2012 by Pension Consulting Alliance, LLC. Information is considered to be reliable but not guaranteed. This report is not intended to be an offer, solicitation, or recommendation to purchase any security or a recommendation of the services supplied by any money management organization unless otherwise noted.

219 PCA Market Sentiment Indicator PCA has created a market sentiment indicator for monthly publication (the PMSI see below) to complement PCA s Investment Market Risk Metrics. PCA s Investment Market Risk Metrics, which rely significantly on standard market measures of relative valuation, often provide valid early signals of increasing long-term risk levels in the global investment markets. However, as is the case with numerous valuation measures, the Risk Metrics may convey such risk concerns long before a market corrections take place. The PMSI helps to address this early-warning bias by measuring whether the markets are beginning to acknowledge key Risk Metrics trends, and / or indicating non-valuation based concerns. Once the PMSI indicates that the market sentiment has shifted, it is our belief that investors should consider significant action, particularly if confirmed by the Risk Metrics. Importantly, PCA believes the Risk Metrics and PMSI should always be used in conjunction with one another and never in isolation. The questions and answers below highlight and discuss the basic underpinnings of the PCA PMSI: What is the PCA Market Sentiment Indicator (PMSI)? The PMSI is a measure meant to gauge the market s sentiment regarding economic growth risk. Growth risk cuts across most financial assets, and is the largest risk exposure that most portfolios bear. The PMSI takes into account the momentum (trend over time, positive or negative) of the economic growth risk exposure of publicly traded stocks and bonds, as a signal of the future direction of growth risk returns; either positive (risk seeking market sentiment), or negative (risk averse market sentiment). How do I read the PCA Market Sentiment Indicator (PMSI) graph? Simply put, the PMSI is a color coded indicator that signals the market s sentiment regarding economic growth risk. It is read left to right chronologically. A green indicator on the PMSI indicates that the market s sentiment towards growth risk is positive. A gray indicator indicates that the market s sentiment towards growth risk is neutral or inconclusive. A red indicator indicates that the market s sentiment towards growth risk is negative. The black line on the graph is the level of the PMSI. The degree of the signal above or below the neutral reading is an indication the signal s current strength. Momentum as we are defining it is the use of the past behavior of a series as a predictor of its future behavior. PCA Market Sentiment Indicator ( Present) Positive Positive Neutral Neutral Negative Negative Avoid Growth Risk Growth Risk Neutral Embrace Growth Risk PCA Sentiment Indicator PENSION CONSULTING ALLIANCE, LLC Investment Market Risk Metrics

220 PCA Market Sentiment Indicator How is the PCA Market Sentiment Indicator (PMSI) Constructed? The PMSI is constructed from two sub-elements representing investor sentiment in stocks and bonds: 1. Stock return momentum: Return momentum for the S&P 500 Equity Index (trailing 12-months) 2. Bond yield spread momentum: Momentum of bond yield spreads (excess of the measured bond yield over the identical duration U.S. Treasury bond yield) for corporate bonds (trailing 12-months) for both investment grade bonds (75% weight) and high yield bonds (25% weight). The scale of this measure is adjusted to match that of the stock return momentum measure. The black line reading on the graph is calculated as the average of the stock return momentum measure and the bonds spread momentum measure. The color reading on the graph is determined as follows: 1. If both stock return momentum and bond spread momentum are positive = GREEN (positive) 2. If one of the momentum indicators is positive, and the other negative = GRAY (inconclusive) 3. If both stock return momentum and bond spread momentum are negative = RED (negative) What does the PCA Market Sentiment Indicator (PMSI) mean? Why might it be useful? There is strong evidence that time series momentum is significant and persistent. In particular, across an extensive array of asset classes, the sign of the trailing 12-month return (positive or negative) is indicative of future returns (positive or negative) over the next 12 month period. The PMSI is constructed to measure this momentum in stocks and corporate bond spreads. A reading of green or red is agreement of both the equity and bond measures, indicating that it is likely that this trend (positive or negative) will continue over the next 12 months. When the measures disagree, the indicator turns gray. A gray reading does not necessarily mean a new trend is occurring, as the indicator may move back to green, or into the red from there. The level of the reading (black line) and the number of months at the red or green reading, gives the user additional information on which to form an opinion, and potentially take action. I Momentum as we are defining it is the use of the past behavior of a series as a predictor of its future behavior. ii Time Series Momentum Moskowitz, Ooi, Pedersen, August PENSION CONSULTING ALLIANCE, LLC Investment Market Risk Metrics

221 CITY OF OAKLAND AGENDA REPORT TO: Oakland Police and Fire Retirement FROM: Katano Kasaine System Board SUBJECT: Request to hire Oakland PFRS Small DATE: February 1, 2017 Cap Growth Investment Manager Services SUMMARY In 2016, the Oakland Police and Fire Retirement Board (PFRS) issued a Request for Proposal (RFP) seeking a firm to provide Small Cap Growth Asset Class Investment Management services. After interviews, the PFRS Board selected the firm, Rice Hall James & Associates, LLC. On January 17, 2017, the System's consultant, Pension Consulting Alliance (PCA) and Investment Committee Chairman conducted an on-site due diligence meeting at the offices of Rice Hall James & Associates, LLC. RECOMENDATION Staff recommends the PFRS board approve Resolution No authorizing a professional service agreement with Rice Hall James & Associates, LLC to serve as investment manager of the small cap growth domestic equity asset class investment for the Oakland Police and Fire Retirement System over the term of five (5) years at a fee rate not to exceed one percent (1.00%) of the portfolio's assets value each year. Respectfully submitted, Attachments (1): Katano Kasaine, Plan Administrator Oakland Police and Fire Retirement System Resolution No Resolution Authorizing a Professional Service Agreement with Rice Hall James & Associates, LLC to Serve as Investment Manager of the Small Cap Growth Domestic Equity Asset Class Investment for the Oakland Police And Fire Retirement System over the Term of Five (5) Years at a Fee Rate Not to Exceed One Percent (1.00%) of the Portfolio's Assets Value Each Year. Agenda Item F3 _ PFRS Board Meeting February 22, 2017

222 Approved to Form OAKLAND POLICE AND FIRE RETIREMENT BOARD. ~tty CITY OF OAKLAND, CALIFORNIA.,_~--~ ===.-.~"V"' RESOLUTION NO ON MOTION OF MEMBER SECONDED BY MEMBER RESOLUTION AUTHORIZING A PROFESSIONAL SERVICE AGREEMENT WITH RICE HALL JAMES & ASSOCIATES, LLC TO SERVE AS INVESTMENT MANAGER OF THE SMALL CAP GROWTH DOMESTIC EQUITY ASSET CLASS INVESTMENT FOR THE OAKLAND POLICE AND FIRE RETIREMENT SYSTEM OVER THE TERM OF FIVE (5) YEARS AT A FEE RATE NOT TO EXCEED ONE PERCENT (1.00%) OF THE PORTFOLIO'S ASSETS VALUE EACH YEAR WHEREAS, the Oakland City Charter section 2601 (e) gives the Board of the Oakland Police and Fire Retirement System ("PFRS Board") power to make all necessary rules and regulation for its guidance and shall have exclusive control of the administration and investment of the funds established for the maintenance and operation of the system; and WHEREAS, at the May 25, 2016 Board meeting, after consideration of the information presented to it, and the recommendation of the PFRS Investment Committee and Investment Consultant, Pension Consulting Alliance ("PCA"), the PFRS Board passed a motion terminating the service contract with Lord, Abbett & Co. LLC, directed the portfolio assets to be deposited into a fund matching the Russell 2000 Growth Index pending selection of a new Domestic Equities Small Cap Growth Asset Class Investment Manager, and directed staff to return with a resolution ratifying said motion; and WHEREAS, on June 29, 2016, the PFRS Board ratified the May 25, 2016 motion by approving PFRS Board Resolution No terminating the service contract with Lord, Abbett & Co. LLC for the PFRS Domestic Small Cap Growth investment management services, and directing the Plan Administrator to transfer the domestic small cap growth investment portfolio assets into a Russell 2000 Growth index or equivalent fund pending selection of a new investment manager for that asset class; and WHEREAS, pursuant to direction from the Board, PCA issued and a Request for Proposals {"RFP") for Small Cap Growth Domestic Equities Asset Class Investment Manager services for the Oakland Police and Fire Retirement System (PFRS) investment portfolio; and WHEREAS, on November 30, 2016, the PFRS Investment Committee and the PFRS Board reviewed and considered the RFP responses and qualifications of the investment firms of (1) Brown Advisory, (2) Rice Hall James & Associates, LLC and (3) Falcon Point;

223 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA WHEREAS, on December 21, 2016, the PFRS Board selected Rice Hall James & Associates, LLC to be its new investment manager of its Small Cap Growth Domestic Equities account; and WHEREAS, the fees charged by Rice Hall James & Associates, LLC will not exceed 1.00 percent (100 basis points) annually of PFRS's investment portfolio assets under its management (presently valued at approximately Ten Million Dollars ($10,000,000.00)), which fees are estimated to be no more than approximately One Hundred Thousand Dollars {$100,000.00) for the first year; and WHEREAS, Rice Hall James & Associates, LLC agrees to charge no more than said 1.00 percent {annual) fee rate during for the initial contract term of five (5) years, and during each of the three (3) options to extend the contract; now, therefore be it RESOLVED: that the Board authorizes PFRS to enter into a professional services agreement with Rice Hall James & Associates, LLC to serve as the Small Cap Growth Domestic Equities Asset Class investment manager for the Oakland Police and Fire Retirement System, subject to the terms and fees set forth above,; and be it FURTHER RESOLVED: that the agreement shall contain options for the Board to extend the agreement by three additional one-year terms at a fee rate not to exceed 1.00 percent of the portfolio asset's value each year. IN BOARD MEETING, CITY HALL, OAKLAND, CA.F_E_B._R_..U._A""'"R... Y.._..._22...,, PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, GODFREY, MUSZAR, SPEAKMAN, WILKINSON, AND PRESIDENT JOHNSON NOES: ABSENT: ATTEST:,, PRESIDENT ATTEST: SECRETARY

224 2016 ASSET-LIABILITY STUDY - PRESENTATION Modeling of Proposed OPFRS Strategic Classes December 2016

225 MEMORANDUM Date: February 22, 2017 To: Oakland Police and Fire Retirement System (OPFRS) From: Pension Consulting Alliance, LLC. (PCA) CC: RE: David Sancewich - PCA Sean Copus PCA Teir Jenkins OPFRS Katano Kasaine - OPFRS 2017 Preliminary Strategic Investment Agenda Approximately once a year, PCA develops a list of projects that we expect to work closely with OPFRS to complete over the next twelve-plus months (see table below). In an attempt to coordinate the scheduling of these tasks, this memo details a Preliminary Investment Project Agenda by calendaring and prioritizing the expected tasks and deliverables that would be required to fulfill the Agenda. PCA welcomes any suggestions and/or modifications to the proposed timeline Preliminary Investment Project Agenda Expected Completion Date Task February 2017 PCA Performance Report (4Q 2016) Manager Update: Ramirez and Rice, Hall, James Asset/Liability Modeling Cash Flow Report (2Q 2017) March 2017 Asset Allocation approval and Follow-up 2017 Asset Class Assumptions Manager Update: DDJ April 2017 Flash performance Report (1Q 2017) Manager Update: Reams May 2017 PCA Performance Report (1Q 2017) Domestic Equity Review June 2017 Cash Flow Report (3Q 2017) Manager Update: Parametric

226 Expected Completion Date Task July 2017 Covered Call Review Flash Performance Report (2Q 2017) August 2017 PCA Performance Report (2Q 2017) Manager Update: Ramirez September 2017 Cash Flow Report (4Q 2017) October 2017 Flash Performance Report (3Q 2017) Manager Update: Rice Hall, James November 2017 PCA Performance Report (3Q 2017) Bold are priority strategic items. This agenda continues forward with the implementation of a new potential asset allocation as a result of the asset liability modeling in the first quarter of Key aspects of this agenda are considering a review of the U.S. Equity and covered call classes and implementing potential manager changes in both the U.S. Equity and Fixed Income classes. This agenda includes only major strategic items. PCA also expects to work with the Staff and Board to complete more routine tasks and projects, as expected. 2

227 DISCLOSURES: This document is provided for informational purposes only. It does not constitute an offer of securities of any of the issuers that may be described herein. Information contained herein may have been provided by third parties, including investment firms providing information on returns and assets under management, and may not have been independently verified. The past performance information contained in this report is not necessarily indicative of future results and there is no assurance that the investment in question will achieve comparable results or that the Firm will be able to implement its investment strategy or achieve its investment objectives. The actual realized value of currently unrealized investments (if any) will depend on a variety of factors, including future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may differ from the assumptions and circumstances on which any current unrealized valuations are based. Neither PCA nor PCA s officers, employees or agents, make any representation or warranty, express or implied, in relation to the accuracy or completeness of the information contained in this document or any oral information provided in connection herewith, or any data subsequently generated herefrom, and accept no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information. PCA and PCA s officers, employees and agents expressly disclaim any and all liability that may be based on this document and any errors therein or omissions therefrom. Neither PCA nor any of PCA s officers, employees or agents, make any representation of warranty, express or implied, that any transaction has been or may be effected on the terms or in the manner stated in this document, or as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Any views or terms contained herein are preliminary only, and are based on financial, economic, market and other conditions prevailing as of the date of this document and are therefore subject to change. The information contained in this report may include forward-looking statements. Forward-looking statements include a number of risks, uncertainties and other factors beyond the control of the Firm, which may result in material differences in actual results, performance or other expectations. The opinions, estimates and analyses reflect PCA s current judgment, which may change in the future. Any tables, graphs or charts relating to past performance included in this report are intended only to illustrate investment performance for the historical periods shown. Such tables, graphs and charts are not intended to predict future performance and should not be used as the basis for an investment decision. All trademarks or product names mentioned herein are the property of their respective owners. Indices are unmanaged and one cannot invest directly in an index. The index data provided is on an as is basis. In no event shall the index providers or its affiliates have any liability of any kind in connection with the index data or the portfolio described herein. Copying or redistributing the index data is strictly prohibited. The Russell indices are either registered trademarks or tradenames of Frank Russell Company in the U.S. and/or other countries. The MSCI indices are trademarks and service marks of MSCI or its subsidiaries. Standard and Poor s (S&P) is a division of The McGraw-Hill Companies, Inc. S&P indices, including the S&P 500, are a registered trademark of The McGraw-Hill Companies, Inc. CBOE, not S&P, calculates and disseminates the BXM Index. The CBOE has a business relationship with Standard & Poor's on the BXM. CBOE and Chicago Board Options Exchange are registered trademarks of the CBOE, and SPX, and CBOE S&P 500 BuyWrite Index BXM are servicemarks of the CBOE. The methodology of the CBOE S&P 500 BuyWrite Index is owned by CBOE and may be covered by one or more patents or pending patent applications. The Barclays Capital indices (formerly known as the Lehman indices) are trademarks of Barclays Capital, Inc. The Citigroup indices are trademarks of Citicorp or its affiliates. The Merrill Lynch indices are trademarks of Merrill Lynch & Co. or its affiliates. FTSE is a trademark of the London Stock Exchange Group companies and is used by FTSE under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. No further distribution of FTSE data is permitted with FTSE s express written consent. 3

228 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA Approved to Form a/lty RESOLUTION No ON MOTION OF MEMBER SECONDED BY MEMBER RESOLUTION EXERCISING A ONE-YEAR OPTION TO EXTEND THE AGREEMENT WITH EARNEST PARTNERS, LLC, TO PROVIDE MID CAP CORE ASSET CLASS INVESTMENT MANAGER SERVICES FOR THE CITY OF OAKLAND POLICE AND FIRE RETIREMENT SYSTEM BOARD COMMENCING MARCH 24, 2017 WHEREAS, the City of Oakland Police and Fire Retirement System Board ("Board") approved by Board motion at the November 30, 2005 Board meeting to enter into an agreement with Earnest Partners, LLC ("Investment Counsel") effective March 16, 2006 to secure competent investment counsel to provide advice and counsel regarding investments of the assets of the Police and Fire Retirement Fund ("Fund"); and WHEREAS, Article XXIV of said agreement allows for modification to this agreement only by written agreement of all parties; and WHEREAS, Article IV(B) permits the Board the option to extend the term of the agreement for three additional one-year terms by giving Investment Counsel written notice of its intent to exercise its option not less than sixty days prior to the expiration of the term or extended term of the agreement; and WHEREAS, On March 30, 2016, the Board approved the second of three one-year agreement extensions by a motion of the Board, which shall expire on March 24, 2017; and WHEREAS, The Board wishes to extend the current agreement with Investment Counsel for another one-year term, effective March 24, 2017; now therefore, be it RESOLVED, that the PFRS Board authorizes exercising a one-year options to extend the agreement with Earnest Partners, LLC for the one-year period commencing March 24, IN BOARD MEETING, CITY HALL, OAKLAND, CA... F-=E=B... R U..._A-...R Y_...2=2""", =20.._1;;..;.7 PASSED BY THE FOLLOWING VOTE: AYES: NOES: ABSTAIN: ABSENT: BERNARD, DANIEL, GODFREY, MUSZAR, SPEAKMAN, WILKINSON AND PRESIDENT JOHNSON ATTEST: ,P,.-RE-SIO-EN_T ATTEST:

229 M E M O R A N D U M Date: January 25, 2017 To: Oakland Police and Fire Retirement System (OPFRS) From: Pension Consulting Alliance, LLC (PCA) CC: RE: David Sancewich PCA Sean Copus PCA Teir Jenkins OPFRS Katano Kasaine - OPFRS EARNEST Partners Contract Renewal Manager: EARNEST Partners Inception Date: 3/01/2006 OPFRS AUM: $30.4 million (8.6%) Product Name: Mid-Cap Core Management Fee: 81 bps ($244,846)* Investment Strategy: Domestic Mid-Cap Equity Firm-wide AUM (9/30/16): $19.9 billion Benchmark: Russell Mid-Cap Index Strategy AUM (9/30/16): $8.5 million *Estimated based on AUM as of 12/31/2016 Summary and Recommendation PCA recommends that OPFRS renew its contract with EARNEST Partners before the current contract date of expiration. OPFRS contracts reserve the right for the Board to terminate the agreement, with or without cause, at any time upon 30 calendar days prior written notice. In making this recommendation, PCA considered investment performance and recent organizational / personnel issues. PCA believes that there are no issues that should prevent a contract extension for this manager. Analysis Investment Performance (as of 12/31/2016) Manager Mkt Value ($000) Asset Class Quarter 1 YR 3 YR 5 YR Since Inception Inception Date* EARNEST Partners 30,391 Domestic Equity /2006 Russell Mid-Cap * Inception date reflects the month when portfolio received initial funding. EARNEST Partners has shown strong short-term performance, outperforming its benchmark by 2.0% and 2.6% over the most recent quarter and 1-year periods. Over the longer-term, EARNEST has outperformed the benchmark by 1.3% over the 3-year period and matched its benchmark

230 over the 5-year period. Since being originally funded in March 2006, EARNEST has modestly outperformed the benchmark by 29 basis points on an annualized basis. Peer Ranked Performance Analysis (as of 12/31/2016) Manager Quarter Rank 1 YR Rank 3 YR Rank 5 YR Rank 10 YR Rank Excess Return EARNEST Partners* ev Mid-Cap Core Median Standard Deviation (Risk) EARNEST Partners* ev Mid-Cap Core Median Sharpe Ratio (Risk-Adjusted) EARNEST Partners* ev Mid-Cap Core Median * Returns represent evestment Alliance composite returns When compared to its Mid-Cap Core peer group, EARNEST Partners has performed well on both an absolute and risk-adjusted basis. EARNEST s excess return has generally ranked above the median over most trailing time periods with the exception of the 5-year period, when it trailed its peer group median by (40) basis points. Excess returns over the most recent 1- and 3-year periods have been exceedingly strong, outperforming the median manager by 3.9% and 1.3%, respectively, and ranking in the top third percentile of its peer group over both periods. EARNEST s risk-adjusted performance has also been strong, ranking above the median over all periods measured and ranking in the top third percentile over the 1-, 3-, and 5-year periods. Organizational Issues During 2016 there was no significant reported turnover in the organization. Over the last five years, the majority of the EARNEST Partner s turnover has occurred in the Marketing and Client Services division, where four professionals have been hired and two have departed. There has been no analyst or trader turnover, but three portfolio managers have left the firm and three portfolio managers have replaced them. Of note, Alysia Wurst, Director of Equity Investments, left the firm in early It should also be noted that the Mid Cap Core management team includes 11 portfolio managers, so a small amount of PM turnover is not considered unusual. EARNEST partners continues to be 100% employee owned with eight out of 47 total employees holding an equity share in the firm. PCA does not see any material concerns with EARNEST Partner s organization at this time. Investment Philosophy, per manager EARNEST Partners is a fundamental, bottom-up investment manager. The Firm s investment objective is to outperform the assigned benchmark while seeking to control volatility and risk. EARNEST Partners implements this philosophy using a screen developed in-house called Return 2

231 Pattern Recognition, thorough fundamental analysis, and risk management that seeks to minimize the likelihood of meaningfully underperforming the assigned benchmark. Investment Process, per manager Companies are unique, and the firm considers the differences in selecting companies that it believes make good investments. The first step in the investment process is to screen the relevant universe to identify stocks that the firm believes are likely to outperform based on their financial characteristics and the current environment. Using an approach called Return Pattern Recognition, the firm identifies the financial and market characteristics that have been in place when an individual company has produced outstanding performance. These characteristics include valuation measures, market trends, operating trends, growth measures, and profitability measures. The firm screens the relevant universe of companies and selects those exhibiting the set of characteristics that have historically indicated excess returns. Additionally, the firm assesses the reliability of the accounting conventions used by each company and normalizes the financial reporting to more accurately compare valuations. The approximately 150 companies that pass the aforementioned screens are put through a second more in depth review. In this step, the team develops an investment thesis for each company. This thesis must be tested. The test generally includes conversations with the company s management team and industry specialists, review of the company s financial reports, analysis of industry and company-specific studies, and independent field research. The team seeks companies in attractive industries with developed strategies, talented and honest management teams, sufficient funding, and strong financial results. The experience and different perspectives of our investment team are an advantage in determining which companies they believe are best positioned to meet or exceed expectations. The team eliminates from consideration any company that does not pass the fundamental analysis. The final step in the investment process is to construct a portfolio that includes the stocks which the firm expects to have the best performance and that blend together well. They believe investors are primarily concerned about the risk of meaningfully underperforming the assigned benchmark. Hence, the firm focuses its attention on reducing this possibility. The firm uses a statistical approach called downside deviation to measure and then constrain the likelihood of significantly underperforming the assigned benchmark. Using this information, the firm seeks to select investments that blend together to manage downside risk. The result is a client portfolio of approximately 60 stocks that EARNEST believes will provide excess returns and limited risk of meaningful underperformance versus the assigned benchmark. 3

232 DISCLOSURES: This document is provided for informational purposes only. It does not constitute an offer of securities of any of the issuers that may be described herein. Information contained herein may have been provided by third parties, including investment firms providing information on returns and assets under management, and may not have been independently verified. The past performance information contained in this report is not necessarily indicative of future results and there is no assurance that the investment in question will achieve comparable results or that the Firm will be able to implement its investment strategy or achieve its investment objectives. The actual realized value of currently unrealized investments (if any) will depend on a variety of factors, including future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may differ from the assumptions and circumstances on which any current unrealized valuations are based. Neither PCA nor PCA s officers, employees or agents, make any representation or warranty, express or implied, in relation to the accuracy or completeness of the information contained in this document or any oral information provided in connection herewith, or any data subsequently generated herefrom, and accept no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information. PCA and PCA s officers, employees and agents expressly disclaim any and all liability that may be based on this document and any errors therein or omissions therefrom. Neither PCA nor any of PCA s officers, employees or agents, make any representation of warranty, express or implied, that any transaction has been or may be effected on the terms or in the manner stated in this document, or as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Any views or terms contained herein are preliminary only, and are based on financial, economic, market and other conditions prevailing as of the date of this document and are therefore subject to change. The information contained in this report may include forward-looking statements. Forward-looking statements include a number of risks, uncertainties and other factors beyond the control of the Firm, which may result in material differences in actual results, performance or other expectations. The opinions, estimates and analyses reflect PCA s current judgment, which may change in the future. Any tables, graphs or charts relating to past performance included in this report are intended only to illustrate investment performance for the historical periods shown. Such tables, graphs and charts are not intended to predict future performance and should not be used as the basis for an investment decision. All trademarks or product names mentioned herein are the property of their respective owners. Indices are unmanaged and one cannot invest directly in an index. The index data provided is on an as is basis. In no event shall the index providers or its affiliates have any liability of any kind in connection with the index data or the portfolio described herein. Copying or redistributing the index data is strictly prohibited. The Russell indices are either registered trademarks or tradenames of Frank Russell Company in the U.S. and/or other countries. The MSCI indices are trademarks and service marks of MSCI or its subsidiaries. Standard and Poor s (S&P) is a division of The McGraw-Hill Companies, Inc. S&P indices, including the S&P 500, are a registered trademark of The McGraw-Hill Companies, Inc. CBOE, not S&P, calculates and disseminates the BXM Index. The CBOE has a business relationship with Standard & Poor's on the BXM. CBOE and Chicago Board Options Exchange are registered trademarks of the CBOE, and SPX, and CBOE S&P 500 BuyWrite Index BXM are servicemarks of the CBOE. The methodology of the CBOE S&P 500 BuyWrite Index is owned by CBOE and may be covered by one or more patents or pending patent applications. The Barclays Capital indices (formerly known as the Lehman indices) are trademarks of Barclays Capital, Inc. The Citigroup indices are trademarks of Citicorp or its affiliates. The Merrill Lynch indices are trademarks of Merrill Lynch & Co. or its affiliates. FTSE is a trademark of the London Stock Exchange Group companies and is used by FTSE under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. No further distribution of FTSE data is permitted with FTSE s express written consent. 4

233 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION No ON MOTION OF MEMBER SECONDED BY MEMBER RESOLUTION EXERCISING A ONE-YEAR OPTION TO EXTEND THE AGREEMENT WITH FISHER INVESTMENT, TO PROVIDE INTERNATIONAL EQUITY ASSET CLASS INVESTMENT MANAGER SERVICES FOR THE CITY OF OAKLAND POLICE AND FIRE RETIREMENT SYSTEM BOARD COMMENCING FEBRUARY 16, 2017 WHEREAS, the City of Oakland Police and Fire Retirement System Board ("Board") approved by Board motion at the October 27, 2010 Board meeting to enter into an agreernent with Fisher Investments ("Investment Counsel") effective February 15, 2011 to SE!CUre competent investment counsel to provide advice and counsel regarding investments of the assets of the Police and Fire Retirement Fund ("Fund"); and WHEREAS, Article XX of said agreement allows for modification to this agreement only by written agreement of all parties; and WHEREAS, Article IV{B) permits the Board the option to extend the term of the agreement for additional one-year terms by giving Investment Counsel written notice of its intent to exercise its option not less than sixty days prior to the expiration of the term or extended term of the agreement; and WHEREAS, On February 24, 2016, the Board approved a one-year agreement extensions by a motion of the Board, which expired on February 16, 2017; and WHEREAS, The Board wishes to extend the current agreement with lnves1ment Counsel for another one-year term, effective February 16, 2017; now therefore, be it RESOLVED, that the PFRS Board authorizes exercising a one-year options to e:dend the agreement with Fisher Investments for the one-year period commencing February 16, IN BOARD MEETING, CITY HALL, OAKLAND, CA F=E=B..:...:R=U..-A;.;..R=-=Y...::2=2:.z.., =20;:;...;1;...:.7 PASSED BY THE FOLLOWING VOTE: AYES: NOES: ABSTAIN: ABSENT: BERNARD, DANIEL, GODFREY, MUSZAR, SPEAKMAN, WILKINSON AND PRESIDENT JOHNSON ATIEST: =-PR-ES-IOE-NT-- ATIEST:

234 M E M O R A N D U M Date: January 25, 2017 To: Oakland Police and Fire Retirement System (OPFRS) From: Pension Consulting Alliance, LLC (PCA) CC: RE: David Sancewich PCA Sean Copus PCA Teir Jenkins OPFRS Katano Kasaine - OPFRS Fisher Investments Contract Renewal Manager: Fisher Investments Inception Date: 3/01/2011 OPFRS AUM: $15.1 million (4.3%) Product Name: All Foreign Equity Management Fee: 75 bps ($113,000)* Investment Strategy: International Equity Firm-wide AUM (9/30/16): $71.4 billion Benchmark: MSCI ACWI ex U.S. Index Strategy AUM (9/30/16): $3.5 billion *Estimated based on AUM as of 12/31/2016 Summary and Recommendation PCA recommends that OPFRS renew its contract with Fisher Investments before the current contract date of expiration. OPFRS contracts reserve the right for the Board to terminate the agreement, with or without cause, at any time upon 30 calendar days prior written notice. In making this recommendation, PCA considered investment performance and recent organizational / personnel issues. PCA believes that there are no issues that should prevent a contract extension for this manager. Analysis Annualized Investment Performance (as of 12/31/2016) Manager Mkt Value ($000) Asset Class Quarter 1 YR 3 YR 5 YR Since Inception Inception Date* Fisher Investments 15,127 International Equity /2011 MSCI ACWI ex U.S * Inception date reflects the month when portfolio received initial funding. Fisher Investments has struggled to match its MSCI ACWI ex U.S. benchmark over the short term as it has trailed the index by (39) basis points over the most recent quarter and by (2.7%) over the past 12-month period. Over the longer term, Fisher has performed well, outperforming its benchmark by 89 and 73 basis points over the 3- and 5-year periods, respectively. Since being

235 originally funded in March 2011, Fisher has outperformed its benchmark by 72 basis points on an annualized basis. Peer Ranked Performance Analysis (as of 12/31/2016) Manager Quarter Rank 1 YR Rank 3 YR Rank 5 YR Rank 10 YR Rank Excess Return Fisher Investments * ev Intl. Equity Median Standard Deviation (Risk) Fisher Investments * ev Intl. Equity Median Sharpe Ratio (Risk-Adjusted) Fisher Investments * ev Intl. Equity Median * Returns represent evestment Alliance composite returns When compared to its International Core Equity peer group, Fisher Investments has performed roughly in-line with its peers. Despite trailing its benchmark over the 3- and 12-month periods, Fisher was able to outperform the majority of its peers. Over the longer term, peer-relative performance was more mixed as Fisher slightly outperformed the peer median over the 3-year period, while underperforming the median by (1.0%) over the 5-year period. Over all periods measured, Fisher Investments returns came at the expense of higher risk than that of its peers as Fisher s standard deviation over the 1-, 3-, 5-, and 10-year periods all ranked in the bottom third of its peer group. However, despite the higher annualized risk of its portfolio, Fisher risk-adjusted performance (as represented by its Sharpe Ratio) was similar to that of its peer group, ranking above its peer group median over all but the 5-year period. Organizational Issues During 2016 there was no significant reported turnover at Fisher Investments. Similar to previous years, turnover in the organization was mostly limited to its stable of Research Analysts as the firm added five new analysts and lost three. The amount of turnover among its Research Analyst group is on par with previous years. Most importantly, there continues to be no change to the Investment Policy Committee, which is responsible for directing all of the firm s strategic investment decisions. PCA does not see any material concerns with the Fisher organization at this time. Investment Philosophy, per manager Fisher Investment s International Equity strategy utilizes a top-down investment process based on applying capital markets technology to the analysis of a wide range of economic, political, and sentiment drivers to formulate forecasts and develop portfolio themes. The firm attempts to exploit the structure of foreign markets and capitalize on country and sector/industry cycles as 2

236 they come into and out of favor. The firm also seeks to add value at the security level, but believes individual security research is most effective when used to complement higher-level portfolio themes and characteristics rather than as the sole focus of the investment process. Fisher expects approximately one-third of the strategy s performance will be attributable to each of the country, sector, and security decisions. Fisher also adheres to a strict application of portfolio management discipline such that it remains continuously cognizant of the composition of the relevant benchmark and the relative risks engineered into portfolios against the benchmark. Investment Process, per manager Fisher s International strategy focuses on three basic decisions that are ultimately made by the Investment Policy Committee based on research conducted by the Capital Markets Research and Securities Research teams. The process begins by using certain economic indicators, known as drivers in order to determine country and sector allocations based on risk and return expectations. These indicators are continuously monitored in order to recognize shifts and determine if the market has discounted them. Next, a prospect list of individual securities is created using a quantitative screening process to minimize risk and screen out securities with insufficient liquidity or solvency. Finally, The Investment Policy Committee then further narrows the prospect list based on fundamental research performed by the Securities Research Team. The fundamental research process includes an outlier analysis where buy candidates are examined to ensure their revenue streams and lines of business are closely linked to the strategy s top-down themes. Companies are then subject to a "strategic attribute" review where a company s comparative advantages are identified. Examples of "strategic attributes" include niche market, consolidator, regional advantage, high market share, etc. Next, an attribute execution analysis is conducted to understand how the company s management is exploiting their advantage. Stocks are subjected to a relative valuation analysis to understand the stock's current price relative to the market, its peers, and its history. Finally, the firm examines the risks, if any, to the company s operations. Fisher looks for red flags" like customer concentration, environmental concerns, poor labor relations, etc. Based on the above analyses, the Investment Policy Committee selects stocks for the portfolio. Stocks are sold based on three disciplines: strategic shifts in country or sector allocations that require the sale of securities, changes in the stocks fundamentals that cause them to shift from the strategic attributes that originally warranted their purchase, and partial sales related strictly to portfolio management risk control. 3

237 DISCLOSURES: This document is provided for informational purposes only. It does not constitute an offer of securities of any of the issuers that may be described herein. Information contained herein may have been provided by third parties, including investment firms providing information on returns and assets under management, and may not have been independently verified. The past performance information contained in this report is not necessarily indicative of future results and there is no assurance that the investment in question will achieve comparable results or that the Firm will be able to implement its investment strategy or achieve its investment objectives. The actual realized value of currently unrealized investments (if any) will depend on a variety of factors, including future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may differ from the assumptions and circumstances on which any current unrealized valuations are based. Neither PCA nor PCA s officers, employees or agents, make any representation or warranty, express or implied, in relation to the accuracy or completeness of the information contained in this document or any oral information provided in connection herewith, or any data subsequently generated herefrom, and accept no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information. PCA and PCA s officers, employees and agents expressly disclaim any and all liability that may be based on this document and any errors therein or omissions therefrom. Neither PCA nor any of PCA s officers, employees or agents, make any representation of warranty, express or implied, that any transaction has been or may be effected on the terms or in the manner stated in this document, or as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Any views or terms contained herein are preliminary only, and are based on financial, economic, market and other conditions prevailing as of the date of this document and are therefore subject to change. The information contained in this report may include forward-looking statements. Forward-looking statements include a number of risks, uncertainties and other factors beyond the control of the Firm, which may result in material differences in actual results, performance or other expectations. The opinions, estimates and analyses reflect PCA s current judgment, which may change in the future. Any tables, graphs or charts relating to past performance included in this report are intended only to illustrate investment performance for the historical periods shown. Such tables, graphs and charts are not intended to predict future performance and should not be used as the basis for an investment decision. All trademarks or product names mentioned herein are the property of their respective owners. Indices are unmanaged and one cannot invest directly in an index. The index data provided is on an as is basis. In no event shall the index providers or its affiliates have any liability of any kind in connection with the index data or the portfolio described herein. Copying or redistributing the index data is strictly prohibited. The Russell indices are either registered trademarks or tradenames of Frank Russell Company in the U.S. and/or other countries. The MSCI indices are trademarks and service marks of MSCI or its subsidiaries. Standard and Poor s (S&P) is a division of The McGraw-Hill Companies, Inc. S&P indices, including the S&P 500, are a registered trademark of The McGraw-Hill Companies, Inc. CBOE, not S&P, calculates and disseminates the BXM Index. The CBOE has a business relationship with Standard & Poor's on the BXM. CBOE and Chicago Board Options Exchange are registered trademarks of the CBOE, and SPX, and CBOE S&P 500 BuyWrite Index BXM are servicemarks of the CBOE. The methodology of the CBOE S&P 500 BuyWrite Index is owned by CBOE and may be covered by one or more patents or pending patent applications. The Barclays Capital indices (formerly known as the Lehman indices) are trademarks of Barclays Capital, Inc. The Citigroup indices are trademarks of Citicorp or its affiliates. The Merrill Lynch indices are trademarks of Merrill Lynch & Co. or its affiliates. FTSE is a trademark of the London Stock Exchange Group companies and is used by FTSE under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. No further distribution of FTSE data is permitted with FTSE s express written consent. 4

238 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION No to Form tjnq~'mlj.,ity ~~L ON MOTION OF MEMBER SECONDED BY MEMBER RESOLUTION EXERCISING A ONE-YEAR OPTION TO EXTEND THE AGREEMENT WITH NORTHERN TRUST INVESTMENTS, N.A., TO PROVIDE LARGE CAP CORE ASSET CLASS INVESTMENT MANAGER SERVICES FOR THE CITY OF OAKLAND POLICE AND FIRE RETIREMENT SYSTEM BOARD COMMENCING APRIL 19, 2017 WHEREAS, the City of Oakland Police and Fire Retirement System Board ("Board") approved by Board motion at the October 28, 2009 Board meeting to enter into an agreement with Northern Trust Investments, N.A ("Investment Counsel") effective April 19, 2010 to secure competent investment counsel to provide advice and counsel regarding investments of the assets of the Police and Fire Retirement Fund ("Fund"); and WHEREAS, Article XX of said agreement allows for modification to this agreement only by written agreement of all parties; and WHEREAS, Article IV(B) permits the Board the option to extend the term of the agreement for three additional one-year terms by giving Investment Counsel written notice of its intent to exercise its option not less than sixty days prior to the expiration of the term or extended term of the agreement; and WHEREAS, on March 30, 2016, the Board approved the second of three one-year agreement extensions by a motion of the Board, which is set to expire on April 19, 2017; and WHEREAS, The Board wishes to extend the current agreement with Investment Counsel for another one-year term, effective April 19, 2017; now therefore, be it RESOLVED, that the PFRS Board authorizes exercising a one-year options to extend the agreement with Northern Trust Investments, N.A for the one-year period commencing April 19, IN BOARD MEETING, CITY HALL, OAKLAND, CA PASSED BY THE FOLLOWING VOTE: F=E=B;.::..R=U;.::..A:.::..R... Y-=2=2..._, =20::...;1:...o.7 AYES: BERNARD, DANIEL, GODFREY, MUSZAR, SPEAKMAN, WILKINSON AND PRESIDENT JOHNSON NOES: ABSTAIN: ABSENT: ATTEST:------= PRESIDENT ATTEST:,,.. SECRETARY

239 M E M O R A N D U M Date: February 22, 2017 To: Oakland Police and Fire Retirement System (OPFRS) From: Pension Consulting Alliance, LLC (PCA) CC: RE: David Sancewich PCA Sean Copus PCA Teir Jenkins OPFRS Katano Kasaine - OPFRS Northern Trust Contract Renewal Manager: Northern Trust Inception Date: 5/01/2010 OPFRS AUM: $71.1 million (20.0%) Product Name: Russell 1000 Index Strategy Management Fee: 6 bps ($42,667)* Investment Strategy: Large Cap Core Equity Firm-wide AUM (12/31/16): $942.4 billion Benchmark: Russell 1000 Index Strategy AUM (12/31/16): $28.1 billion *Estimated based on AUM as of 12/31/2016 Summary and Recommendation PCA recommends that OPFRS renew its contract with Northern Trust before the current contract date of expiration. OPFRS contracts reserve the right for the Board to terminate the agreement, with or without cause, at any time upon 30 calendar days prior written notice. In making this recommendation, PCA considered investment performance and recent organizational / personnel issues. PCA believes that there are no issues that should prevent a contract extension for this manager. Analysis Annualized Investment Performance (as of 12/31/2016) Manager Mkt Value ($000) Asset Class Quarter 1 YR 3 YR 5 YR Since Inception Inception Date* Northern Trust R1000 Index 71,112 Large Cap Core /2010 Russell 1000 Index * Inception date reflects the month when portfolio received initial funding. As OPFRS passive core equity manager, Northern Trust Passive Russell 1000 Index Strategy portfolio has performed in line with its benchmark over all time periods and has met the expectations of a passive mandate. Over the past 1-, 3-, and 5-year periods, the portfolio has had a tracking error of 0.17%, 0.16%, and 0.13%, respectively.

240 Organizational Issues There have been no major changes to the Russell 1000 Core Strategy team since the last contract renewal. There has been some portfolio manager turnover over the past year, but given that the Northern Trust Passive team includes roughly 25 portfolio managers, PCA considers the amount of turnover to be typical for this product. Investment Process, per manager The Northern Trust Russell 1000 Index fund seeks investment results, before expenses, approximating the aggregate price and dividend performance of the securities included in the Russell 1000 Index. The fund invests at least 80% of its net assets in equity securities in the index and uses proprietary quantitative techniques to minimize trading costs. 2

241 DISCLOSURES: This document is provided for informational purposes only. It does not constitute an offer of securities of any of the issuers that may be described herein. Information contained herein may have been provided by third parties, including investment firms providing information on returns and assets under management, and may not have been independently verified. The past performance information contained in this report is not necessarily indicative of future results and there is no assurance that the investment in question will achieve comparable results or that the Firm will be able to implement its investment strategy or achieve its investment objectives. The actual realized value of currently unrealized investments (if any) will depend on a variety of factors, including future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may differ from the assumptions and circumstances on which any current unrealized valuations are based. Neither PCA nor PCA s officers, employees or agents, make any representation or warranty, express or implied, in relation to the accuracy or completeness of the information contained in this document or any oral information provided in connection herewith, or any data subsequently generated herefrom, and accept no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information. PCA and PCA s officers, employees and agents expressly disclaim any and all liability that may be based on this document and any errors therein or omissions therefrom. Neither PCA nor any of PCA s officers, employees or agents, make any representation of warranty, express or implied, that any transaction has been or may be effected on the terms or in the manner stated in this document, or as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Any views or terms contained herein are preliminary only, and are based on financial, economic, market and other conditions prevailing as of the date of this document and are therefore subject to change. The information contained in this report may include forward-looking statements. Forward-looking statements include a number of risks, uncertainties and other factors beyond the control of the Firm, which may result in material differences in actual results, performance or other expectations. The opinions, estimates and analyses reflect PCA s current judgment, which may change in the future. Any tables, graphs or charts relating to past performance included in this report are intended only to illustrate investment performance for the historical periods shown. Such tables, graphs and charts are not intended to predict future performance and should not be used as the basis for an investment decision. All trademarks or product names mentioned herein are the property of their respective owners. Indices are unmanaged and one cannot invest directly in an index. The index data provided is on an as is basis. In no event shall the index providers or its affiliates have any liability of any kind in connection with the index data or the portfolio described herein. Copying or redistributing the index data is strictly prohibited. The Russell indices are either registered trademarks or tradenames of Frank Russell Company in the U.S. and/or other countries. The MSCI indices are trademarks and service marks of MSCI or its subsidiaries. Standard and Poor s (S&P) is a division of The McGraw-Hill Companies, Inc. S&P indices, including the S&P 500, are a registered trademark of The McGraw-Hill Companies, Inc. CBOE, not S&P, calculates and disseminates the BXM Index. The CBOE has a business relationship with Standard & Poor's on the BXM. CBOE and Chicago Board Options Exchange are registered trademarks of the CBOE, and SPX, and CBOE S&P 500 BuyWrite Index BXM are servicemarks of the CBOE. The methodology of the CBOE S&P 500 BuyWrite Index is owned by CBOE and may be covered by one or more patents or pending patent applications. The Barclays Capital indices (formerly known as the Lehman indices) are trademarks of Barclays Capital, Inc. The Citigroup indices are trademarks of Citicorp or its affiliates. The Merrill Lynch indices are trademarks of Merrill Lynch & Co. or its affiliates. FTSE is a trademark of the London Stock Exchange Group companies and is used by FTSE under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. No further distribution of FTSE data is permitted with FTSE s express written consent. 3

242 December 8, 2016 Dear Valued Clients and Consultants, Barry F.X. Smith Senior Managing Director Head of SSGA Americas Institutional Client Group State Street Financial Center One Lincoln Street Boston, MA USA ssga.com As you may be aware, under the obligations of the Dodd-Frank Act, State Street and ten other US and non-us banks designated as global systemically important financial institutions are required to maintain a robust recovery and resolution plan. As part of our planning efforts, State Street has determined that its asset management business, State Street Global Advisors (SSGA), should be conducted through dedicated and distinct legal entities. As a result, we have established SSGA Trust Company, a non-depository trust company into which SSGA s US institutional investment management business will be transferred. This trust company is a wholly-owned subsidiary of State Street Bank and Trust Company (SSBT), the entity with which you are currently contracted. The establishment of this dedicated trust company will simplify the firm s legal structure, satisfying certain requirements under Dodd-Frank and make our US institutional business more consistent with the rest of SSGA s global operations and with other asset managers affiliated with large banks. In connection with this transition, we will be requesting your consent to assign your written contracts with SSBT to SSGA Trust Company. It is important to note that this initiative will not change the fact that we are affiliated with State Street. In addition, this will not impact our services, product offerings, teams, strategy, operations, processes, infrastructure, or any other aspect of our business. The new trust company will be supported by the same people, resources, systems and technology that exist today. We expect

243 no disruption to any aspect of the services you currently receive from SSGA, and the restructuring will not impact our obligations to you. These changes solely relate to the legal structure of our firm and compliance with the Dodd-Frank Act. SSGA will continue to be your trusted investment management partner. Further, SSGA Trust Company will have an initial capitalization in excess of $550 million. While this is less than SSBT, we believe it is appropriate for the operations of SSGA Trust Company and is consistent with many other institutional asset management firms. Please click here to find a detailed Q&A, which provides additional information on this initiative. Our goal is to make the transition as seamless as possible for our clients. We are grateful for your involvement in this effort, and look forward to providing our full assistance and support in this process. Please do not hesitate to contact your Relationship Manager with any questions or us at trustconsent@ssga.com. Sincerely, To unsubscribe from s from State Street Global Advisors, please reply to this . FOR INSTITUTIONAL USE ONLY, Not for Use with the Public. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA s express written consent. Canada: State Street Global Advisors, Ltd., 770 Sherbrooke Street West, Suite 1200 Montreal, Quebec, H3A 1G1, T: and 30 Adelaide Street East Suite 500, Toronto, Ontario M5C 3G6. T: INST-7235 CANMKT-3301 Exp. Date: 12/31/ State Street Corporation All rights reserved

244 State Street Global Advisors One Lincoln Street Boston, MA January 31, 2017 Dear Valued Client, You previously received a letter from us, dated December 15, 2016, letting you know that State Street Bank and Trust Company ("SSBT") will appoint its affiliate State Street Global Advisors Trust Company ("SSGA Trust Company") as successor trustee to the SSGA ERISA Collective Investment Trusts (the "Commingled Funds") in which you invest pursuant to the applicable Declaration of Trust of the Commingled Funds. SSBT is taking this action, effective on or about April 1, 2017, to meet certain of its obligations under the Dodd-Frank Act. SSBT is seeking your consent to assign the Participation Agreement(s) (or similar agreements) that govern your investment in the Commingled Funds to SSGA Trust Company. We ask that you please complete, sign and return the enclosed Consent as soon as possible approving the assignment of your Participation Agreement(s) by SSBT to SSGA Trust Company. Please return the Consent to trustconsent@ssga.com. If we do not receive your signed Consent prior to February 28, 2017 and you remain invested in the applicable Commingled Fund(s), you will be deemed to have provided your consent. You may avoid being deemed to have consented by contacting your Relationship Manager with redemption instructions prior to March 31, If you have already sent us your consent, we thank you, and no further action is needed on your part. If you have any questions, or if you need additional information, please do not hesitate to contact your Relationship Manager. Respectfully yours, State Street Global Advisors State Street Global Advisors ssga.com 1

245 State Street Global Advisors Trust Company Frequently Asked Questions What is driving this initiative at SSGA? As you may know, for a number of years, State Street has been working closely with our regulators in an effort to ensure that our company meets its obligations under the Dodd-Frank Act and the rules of the Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC). Among the most important of these is our obligation to establish our own robust recovery and resolution plan. In order to meet our Dodd- Frank obligations, we are establishing SSGA Trust Company, a non-depository trust company into which SSGA s US institutional investment management business will be transferred. What specifically is happening? This initiative is designed to streamline SSGA s current legal structure in the United States (US). Today, SSGA operates as a business unit of State Street Bank and Trust Company (SSBT); following this change the new SSGA Trust Company will operate as a wholly-owned subsidiary of SSBT. It will also make the legal structure of SSGA more consistent with the rest of our global operations and those of other asset managers affiliated with large banks. Will the process be the same for separate accounts and collective and common trust funds? Separately Managed Accounts: We are asking for your consent to assign those contracts from SSBT to SSGA Trust Company. Collective and/or Common Trust Funds: SSBT will appoint SSGA Trust Company as successor trustee to each fund. In addition, we are asking clients with investments in SSGA s collective and/or common trust funds to consent to conforming changes to their underlying Participation Agreements and/or Agreements of Trust to transfer those documents to SSGA Trust Company. We will reach out to you in the coming weeks with official notice of the appointment of SSGA Trust Company as successor trustee to your SSGA collective and/or common trust funds and to ask for your consent to assign your Participation Agreement to SSGA Trust Company and/or your consent to appoint SSGA Trust Company as the successor trustee of your grantor trust that invests in an SSGA common trust fund. We believe that obtaining your consent to these assignments and appointments is consistent with the terms of your management agreements with SSBT and, further, that keeping clients apprised of ongoing restructuring initiatives is in line with State Street's high standards of transparency and open communication with clients. It is possible that internal reorganization initiatives may be undertaken in the future to meet regulatory, business and other objectives, and it is our expectation that clients will be appropriately notified of such initiatives, irrespective of whether notice or consent is formally required under applicable laws and regulations or management agreements. State Street Global Advisors ssga.com 1/4

246 State Street Global Advisors Trust Company FAQ Will SSBT remain responsible for performing any obligations under the assigned contracts and trusts? No, SSGA Trust Company, as a wholly-owned subsidiary of SSBT, will assume full responsibility for all of SSBT's obligations under our contracts and fund governing documents, and SSBT will have no ongoing obligations to you under those documents. SSGA Trust Company is a separately capitalized legal entity, and its obligations will not be obligations of or guaranteed by SSBT. Like SSBT, SSGA Trust Company is a Massachusetts Trust Company and, as such, it is not registered as an investment adviser with the US Securities and Exchange Commission. We have capitalized SSGA Trust Company in a manner we believe is appropriate for its operations and is consistent with other asset management companies. Will the assignment change any of the contractual terms of my agreements with you or the terms of the fund governing documents, other than the assignment from SSBT to SSGA Trust Company? No. Will there be any tax consequences for my firm resulting from the change in legal entities? No. Will there be any change in the portfolio management team responsible for my account as a result of the establishment of SSGA Trust Company? No, the same portfolio management team will continue to manage your assets. Will anything change for my organization as a client of SSGA? No, this assignment of your investment management agreement(s) to SSGA Trust Company will not impact our services, product offerings, teams, strategy, operations, processes, infrastructure, or any other aspect of our business. We expect no change or disruption to any aspect of the services you currently receive from SSGA, and the restructuring will not in any way impact any of our obligations to you. Further, SSGA Trust Company will be adequately capitalized and supported by the same people and level of resources, systems and technology. These changes solely relate to the legal structure of our firm and compliance with the Dodd-Frank Act. SSGA will continue to be your trusted investment management partner. Will this change impact any custody or other service arrangements my organization has with SSBT? No, if you have a custody agreement, securities lending arrangement or use other products or services offered by SSBT or any other affiliate of State Street, those arrangements will not be impacted by this restructuring. SSBT will also continue to act as custodian and provide administration services for the collective and common trust funds. What is the timeline for these changes? SSGA Trust Company has been established and we expect the transfer of SSGA s collective and common trust funds will be effective at the beginning of Q The transfer of separate accounts clients managed by SSGA will begin in early 2017 and is expected to be complete prior to July 1, What is the timeline for receiving client consents for this transition? We are asking that clients return their consents as soon as possible, and in no event later than January 31, State Street Global Advisors ssga.com 2/4

247 State Street Global Advisors Trust Company FAQ How will the consent process for the transition work? We will be reaching out to you in the coming weeks with a consent letter for your organization to review and sign for SSBT to assign its rights and obligations under its agreement(s) with you to the new SSGA Trust Company. Clients invested in SSGA s collective and common trust funds will receive notification of the appointment of a successor trustee pursuant to the applicable fund s governing documents at least 90 days prior to the actual appointment, which is expected to be effective at the beginning of Q Our goal is to make the transition as seamless as possible for our clients. Why am I receiving this notice if my organization is not located in the United States? While this change is being driven by response to US regulation and impacts only SSGA s US legal entities, your organization is contracted with SSBT in the US, has expressly permitted delegation of certain services to SSBT in the US, and/or you are an investor in one or more of our US common trust funds. How will the new trust company be capitalized? SSGA Trust Company will have an initial capitalization in excess of $550 million. While this is less than SSBT, we believe it is appropriate for the operations of SSGA Trust Company and is consistent with many other institutional asset management firms. Will SSGA s level of insurance coverage change as a result of this transition? No, SSGA Trust Company, like SSBT, will be covered by State Street s global insurance policies, which carry insurance against certain financial loss which may arise from staff dishonesty, external fraud, computer fraud, and physical loss/damage of valuable property. In addition, State Street procures insurance coverage related to the rendering of professional services. State Street Global Advisors ssga.com 3/4

248 State Street Global Advisors Trust Company FAQ FOR INSTITUTIONAL USE ONLY, Not for Use with the Public. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA s express written consent. Australia: State Street Global Advisors, Australia, Limited (ABN ) is the holder of an Australian Financial Services Licence (AFSL Number ). Registered office: Level 17, 420 George Street, Sydney, NSW 2000, Australia Telephone: Facsimile: Belgium: State Street Global Advisors Belgium, Chaussée de La Hulpe 120, 1000 Brussels, Belgium. Telephone: , Facsimile: SSGA Belgium is a branch office of State Street Global Advisors Limited. State Street Global Advisors Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Canada: State Street Global Advisors, Ltd., 770 Sherbrooke Street West, Suite 1200 Montreal, Quebec, H3A 1G1, T: and 30 Adelaide Street East Suite 500, Toronto, Ontario M5C 3G6. T: Dubai: State Street Bank and Trust Company (Representative Office), Boulevard Plaza 1, 17th Floor, Office 1703 Near Dubai Mall & Burj Khalifa, P.O Box 26838, Dubai, United Arab Emirates. Telephone: +971 (0) , Facsimile: +971 (0) France: State Street Global Advisors France. Authorised and regulated by the Autorité des Marchés Financiers. Registered with the Register of Commerce and Companies of Nanterre under the number Registered office: Immeuble Défense Plaza, rue Delarivière-Lefoullon, Paris La Défense Cedex, France. Telephone: (+33) Facsimile: (+33) Germany: State Street Global Advisors GmbH, Brienner Strasse 59, D Munich. Telephone +49 (0) Facsimile +49 (0) Hong Kong: State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong Telephone: Facsimile: Japan: State Street Global Advisors (Japan) Co., Ltd., Toranomon Hills Mori Tower 25F Toranomon, Minato-ku, Tokyo Japan, Telephone Financial Instruments Business Operator, Kanto Local Financial Bureau (Kinsho #345), Membership: Japan Investment Advisers Association, The Investment Trust Association, Japan, Japan Securities Dealers Association Ireland: State Street Global Advisors Ireland Limited is regulated by the Central Bank of Ireland. Incorporated and registered in Ireland at Two Park Place, Upper Hatch Street, Dublin 2. Registered Number: Member of the Irish Association of Investment Managers. T: +353 (0) F: +353 (0) Italy: State Street Global Advisors Limited, Milan Branch (Sede Secondaria di Milano) is a branch of State Street Global Advisors Limited, a company registered in the UK, authorised and regulated by the Financial Conduct Authority (FCA ), with a capital of GBP 71'650'000.00, and whose registered office is at 20 Churchill Place, London E14 5HJ. State Street Global Advisors Limited, Milan Branch (Sede Secondaria di Milano), is registered in Italy with company number R.E.A and VAT number and whose office is at Via dei Bossi, Milano, Italy Telephone: Facsimile: Netherlands: State Street Global Advisors Netherlands, Apollo Building, 7th floor Herikerbergweg CN Amsterdam, Netherlands. Telephone: SSGA Netherlands is a branch office of State Street Global Advisors Limited. State Street Global Advisors Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom Singapore: State Street Global Advisors Singapore Limited, 168, Robinson Road, #33-01 Capital Tower, Singapore (Company Reg. No: D, regulated by the Monetary Authority of Singapore) Telephone: Facsimile: Web: Switzerland: State Street Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. Telephone +41 (0) Facsimile Fax: +41 (0) United Kingdom: State Street Global Advisors Limited. Authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No VAT No Registered office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. Telephone: Facsimile: United States: State Street Global Advisors, One Lincoln Street, Boston, MA Web: INST State Street Corporation All Rights Reserved. State Street Global Advisors ssga.com 4/4

249 All persons wishing to address the Board must complete a speaker's card, stating their name and the agenda item (including "Open Forum") they wish to address. The Board may take action on items not on the agenda only if findings pursuant to the Sunshine Ordinance and Brown Act are made that the matter is urgent or an emergency. Oakland Police and Fire Retirement Board meetings are held in wheelchair accessible facilities. Contact Retirement Systems, 150 Frank Ogawa Plaza, Suite 3332 or call (510) for additional information. Retirement Systems 150 Frank H. Ogawa Plaza Oakland, California AGENDA RETIREMENT BOARD MEMBERS Walter L. Johnson, Sr. President Jaime T. Godfrey Vice President Robert J. Muszar Member Steven Wilkinson Member Steven J. Bernard Member John C. Speakman Member Christine Daniel Member SPECIAL MEETING of the BOARD OF ADMINISTRATION of the OAKLAND POLICE AND FIRE RETIREMENT SYSTEM ( PFRS ) ORDER OF BUSINESS A. Subject: Disability Retirement Carlisle, Paul; Police Officer. Application of Paul Carlisle Oakland Police Department. Determination of Death from service-connected cause under Charter Section 2611 and continuance to surviving widow From: Staff of the PFRS Board Recommendation: ACTION ON Carlisle, Paul; Police Officer. Application of Paul Carlisle Oakland Police Department. Determination of Death from serviceconnected cause under Charter Section 2611 and continuance to surviving widow. Matter to be heard in Closed Session. B. CLOSED SESSION C. Report of PFRS Board Action from Closed Session (if any). D. Subject: December 21, 2016 Special PFRS Board Meeting Minutes From: Staff of the PFRS Board Recommendation: Wednesday, February 22, :00 am One Frank H. Ogawa Plaza, Hearing Room 1 Oakland, California APPROVE December 21, 2016 Special PFRS Board meeting minutes. E. AUDIT AND OPERATIONS COMMITTEE FEBRUARY 22, 2017 E1. Subject: Administrative Expenses Report From: Staff of the PFRS Board Recommendation: ACCEPT an informational report regarding PFRS Administrative Expenses from July 1, 2016 through December 31, Page 1 of 8

250 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL BOARD MEETING FEBRUARY 22, 2017 ORDER OF BUSINESS, continued E2. Subject: Resolution No Resolution to amend the fiscal year Police and Fire Retirement System s Administrative Budget to accommodate budgetary needs for understated staff costs and the addition of two new budget line items: (1) Staff Training Tuition Reimbursement and (2) Outside Counsel - Probate/Estate From: Staff of the PFRS Board Recommendation: APPROVE Resolution No Resolution to amend the fiscal year Police and Fire Retirement System s Administrative Budget to accommodate budgetary needs for understated staff costs and the addition of two new budget line items: (1) Staff Training Tuition Reimbursement and (2) Outside Counsel - Probate/Estate. E3. Subject: Proposed PFRS Administrative Budget for Fiscal Years and From: Staff of the PFRS Board Recommendation: ACCEPT proposed PFRS Administrative Budget for Fiscal Years and E4. Subject: Annual Report for Fiscal Year ending June 30, 2016 From: Staff of the PFRS Board Recommendation: APPROVE printing and publication of the Annual Report of the Oakland Police and Fire Retirement System for the Fiscal Year ending June 30, E5. Subject: Resolution No Travel authorization for Board Member R. Steven Wilkinson to Travel and Attend the 2017 RG & Associates Consortium West Conference ( 2017 Consortium West Conference ) from/on January 25-26, 2017 in Los Angeles, CA with an estimated budget of Seven Hundred Eighty Seven Dollars ($787.00) From: Staff of the PFRS Board Recommendation: APPROVE Resolution No Travel authorization for Board Member R. Steven Wilkinson to Travel and Attend the 2017 RG & Associates Consortium West Conference ( 2017 Consortium West Conference ) from/on January 25-26, 2017 in Los Angeles, CA with an estimated budget of Seven Hundred Eighty Seven Dollars ($787.00). E6. Subject: Resolution No Travel Authorization for Board Member Robert Muszar to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00) From: Staff of the PFRS Board Recommendation: APPROVE Resolution No Travel Authorization for Board Member Robert Muszar to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00). Page 2 of 8

251 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL BOARD MEETING FEBRUARY 22, 2017 ORDER OF BUSINESS, continued E7. Subject: Resolution No Travel Authorization for Board Member R. Steven Wilkinson to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00) From: Staff of the PFRS Board Recommendation: APPROVE Resolution No Trav Travel Authorization for Board Member R. Steven Wilkinson to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00). E8. Subject: Resolution No Travel Authorization for Board Member John Speakman to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00) From: Staff of the PFRS Board Recommendation: APPROVE Resolution No Travel Authorization for Board Member John Speakman to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of Nine Hundred Forty-Six Dollars ($946.00). E9. Subject: Resolution No Travel Authorization for Board Member Robert Muszar to Travel and Attend the 2017 Pension Bridge Conference ( 2017 Pension Bridge Conference ) from/on April 18, 2017 to April 19, 2017 in San Francisco, CA with an Estimated Budget of Nine Hundred Eighty-Nine Dollars ($989.00) From: Staff of the PFRS Board Recommendation: APPROVE Resolution No Travel Authorization for Board Member Robert Muszar to Travel and Attend the 2017 Pension Bridge Conference ( 2017 Pension Bridge Conference ) from/on April 18, 2017 to April 19, 2017 in San Francisco, CA with an Estimated Budget of Nine Hundred Eighty-Nine Dollars ($989.00). E10. Subject: Resolution No Travel and Reimbursement Authorization for Investment Committee Chairman Jaime Godfrey for Travel for Due Diligence Meeting with Rice Hall James and Associates, LLC on January 17-18, 2017 in San Diego, CA with an Estimated Budget of Eight Hundred Twenty-Three Dollars ($823.00) From: Staff of the PFRS Board Recommendation: APPROVE Resolution No Travel and Reimbursement Authorization for Investment Committee Chairman Jaime Godfrey for Travel for Due Diligence Meeting with Rice Hall James and Associates, LLC on January 17-18, 2017 in San Diego, CA with an Estimated Budget of Eight Hundred Twenty-Three Dollars ($823.00). Page 3 of 8

252 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL BOARD MEETING FEBRUARY 22, 2017 ORDER OF BUSINESS, continued E11. Subject: Resolution No Travel Authorization for Staff Member Katano Kasaine to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of One Thousand Twenty-five Dollars ($1,025.00) From: Staff of the PFRS Board Recommendation: APPROVE Resolution No Travel Authorization for Staff Member Katano Kasaine to Travel and Attend the 2017 CALAPRS General Assembly Conference ( 2017 CALAPRS Conference ) from/on March 4, 2017 to March 7, 2017 in Monterey, CA with an Estimated Budget Of One Thousand Twenty-five Dollars ($1,025.00). F. INVESTMENT & FINANCIAL MATTERS COMMITTEE AGENDA FEBRUARY 22, 2017 F1. Subject: Investment Fund Performance Report for the Quarter Ending December 31, 2016 From: Pension Consulting Alliance Recommendation: APPROVE the Investment Fund Performance Report for the Quarter Ending December 31, F2. Subject: Investment Market Overview From: Pension Consulting Alliance (PCA) Recommendation: ACCEPT an Informational Report regarding overview of the global investment market through January F3. Subject: Resolution No Resolution authorizing a professional service agreement with Rice Hall James and Associates, LLC to serve as Investment Manager of the Small Cap Growth Asset Class Investment for the Oakland Police and Fire Retirement System over the term of five (5) years at a fee rate not to exceed 1.00% percent of the portfolio s assets value each year From: Staff of the PFRS Board Recommendation: APPROVE Resolution No Resolution authorizing a professional service agreement with Rice Hall James and Associates, LLC to serve as Investment Manager of the Small Cap Growth Asset Class Investment for the Oakland Police and Fire Retirement System over the term of five (5) years at a fee rate not to exceed 1.00% percent of the portfolio s assets value each year. F4. Subject: PFRS Fund Asset-Liability Study From: Pension Consulting Alliance Recommendation: APPROVE the recommendation by Pension Consulting Alliance regarding selection of asset classes to be considered for PFRS Fund Asset-Liability Study. F5. Subject: 2017 Strategic Investment Agenda From: Pension Consulting Alliance (PCA) Recommendation: APPROVE the PCA 2017 strategic Investment Agenda. Page 4 of 8

253 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL BOARD MEETING FEBRUARY 22, 2017 ORDER OF BUSINESS, continued F6. Subject: Resolution No Resolution exercising a one-year option to extend the agreement with Earnest Partners, LLC, to provide Mid Cap Core Asset Class Investment Manager services for the City of Oakland Police and Fire Retirement System board commencing March 24, 2017 From: Staff of the PFRS Board and Pension Consulting Alliance Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Resolution exercising a one-year option to extend the agreement with Earnest Partners, LLC, to provide Mid Cap Core Asset Class Investment Manager services for the City of Oakland Police and Fire Retirement System board commencing March 24, F7. Subject: Resolution No Resolution exercising a one-year option to extend the agreement with Fisher Investment, to provide International Equity Asset Class Investment Manager services for the City of Oakland Police and Fire Retirement System board commencing February 16, 2017 From: Staff of the PFRS Board and Pension Consulting Alliance Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Resolution exercising a one-year option to extend the agreement with Fisher Investment, to provide International Equity Asset Class Investment Manager services for the City of Oakland Police and Fire Retirement System board commencing February 16, F8. Subject: Resolution No Renewal of Service Agreement Resolution exercising a one-year option to extend the agreement with Northern Trust Investments, N.A., to provide Large Cap Core Asset Class Investment Manager services for the City of Oakland Police And Fire Retirement System Board commencing April 19, 2017 From: Staff of the PFRS Board and Pension Consulting Alliance Recommendation: RECOMMEND BOARD APPROVAL of Resolution No Resolution exercising a one-year option to extend the agreement with Northern Trust Investments, N.A., to provide Large Cap Core Asset Class Investment Manager services for the City of Oakland Police And Fire Retirement System Board commencing April 19, F9. Subject: Assignment of PFRS Participation Agreement(s) by State Street Bank and Trust Company to SSGA Trust Company From: Pension Consulting Alliance (PCA) Recommendation: APPROVE State Street Global Advisors request for completion of approval of assignment of PFRS Participation Agreement(s) by State Street Bank and Trust Company to SSGA Trust Company. G. Subject: Administrative Update PFRS Fire Member Jerry Almand and the Estate of Audrey Down From: Staff of the PFRS Board Recommendation: ACCEPT an informational report regarding the Administrative Update related to PFRS Fire Member Jerry Almand and the Estate of Audrey Down. Page 5 of 8

254 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL BOARD MEETING FEBRUARY 22, 2017 ORDER OF BUSINESS, continued H. Subject: Member Resolution(s)No From: Staff of the PFRS Board Recommendation: APPROVE Resolution(s) No : H1. Resolution No H2. Resolution No H3. Resolution No H4. Resolution No H5. Resolution No Resolution Approving Death Benefit Allowance Payment to Monet and John Stimel & Michelle Nelson, Children of John E. Stimel (P). Resolution Approving Death Benefit Allowance Payment to Stacey L. Rodrigues, Daughter of Harold D. Dennis (F). Resolution Approving Death Benefit Allowance Payments to Michael K. Donohue, Son of Thomas O. Donohue (P), and Rocky L. Burcham, Son of Orval Burcham (F) Resolution Approving Service Retirement Allowance Payments to Shirley R. Westbrook, Surviving Spouse of James L. Westbrook (P), and Joan H. Hanson, Surviving Spouse of Raymond Hanson, Sr. (F). Resolution Approving Disability Retirement Allowance Payment to Jeanne F. Ray, Surviving Spouse of Charles M. Ray (F). I. NEW BUSINESS Setting a board hearing regarding the claim in Retired Oakland Police Officers Association, et al. v. Oakland Police and Fire Retirement System, et al., Case No. RG , that retiree benefits are being miscalculated with respect to holiday premium pay and the 'floating holiday. J. OPEN FORUM MEETING RECESS 12:30 pm 1:00 pm 1:00 PM MEMBER HEARINGS Hearing Room 1, 150 Frank H. Ogawa Plaza K. Subject: Hearings related to the Recovery of Overpayments pursuant to PFRS Board Resolutions No. 6866, 6819 and 6825 From: Staff of the PFRS Board Recommendation: A 1 Aboussleman Donald A. A 2 Aguirre Jerry A 3 Andrews Lana K. A 4 Aquino Manuel A 5 Aven Robert L. A 6 Azevedo Richard A. A 7 Bachman Kenneth W. A 8 Balousek Nita HEARINGS Related to the Recovery of Overpayments pursuant to PFRS Board Resolutions No. 6866, 6819 and 6825 ( individual hearing requests to be heard today is listed on the table on the following pages ). Page 6 of 8 A 9 Beers Monte L. A 10 Bellusa Larry J. A 11 Bennett Sherman E. A 12 Benz David R. A 13 Berg Katherine M. A 14 Birge Jr. Edmond R. A 15 Bopp William J. A 16 Brock Paul S.

255 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL BOARD MEETING FEBRUARY 22, 2017 ORDER OF BUSINESS, continued A 17 Brown Dennis M. A 18 Brown Myrtle V. A 19 Brumback Ronald D. A 20 Burink Gloria E. A 21 Burnett Donald B. A 22 Cademartori Richard A 23 Carlen Keith A. A 24 Carlson William A. A 25 Cave John C. A 26 Celada Cesar A 27 Clark David A. A 28 Clark Louis L. A 29 Clark William H. A 30 Coleman Phillip V. A 31 Collier John M. A 32 Cordova Patricia L. A 33 Coughlin Richard P. A 34 Delbridge Gary L. A 35 Deshler Peter C. A 36 Dillmann Vaune V. A 37 Doporto Richard I. A 38 Douglas Kenneth R. A 39 Dowd Jr. John T. A 40 Downum Dennis E. A 41 Draper Bruce S. A 42 Dutra Dennis W. A 43 Eade, II Lawrence J. A 44 Edmundson Russell A. A 45 Ellingson Donald W. A 46 Emerson Mark F. A 47 Escamilla Norberto A 48 Evans David L. A 49 Evans David R. A 50 Farrington James R. A 51 Fenton Robert L. A 52 Foster Donald J. A 53 Foster Robert E. A 54 Frederick Larry J. A 55 Furry Garry D. A 56 Gallaway Phyllis M. A 57 Garrison Roy E. A 58 Gerhard Bernard G. A 59 Gillespie William J. A 60 Godwin William D. A 61 Gonzales LaVern H. A 62 Goodson Harlan V. A 63 Grabner Carl H. A 64 Graham Leonard T. A 65 Green James L. A 66 Gremminger Everett R. A 67 Guiliano Raymond J. A 68 Gunar Ronald B. A 69 Halliday Marvin W. A 70 Haxby Lytle C. A 71 Hodson Lawrence S. A 72 Hojlo Zbigniew C. A 73 Holland Charles E. A 74 Jennings David L. A 75 Jones Charles G. A 76 Kast Gregory A. A 77 Kearns Bradley D. A 78 Kraft Delbert W. A 79 Krathwohl Douglas D. A 80 Krause Elmer V. A 81 Kunath Garrett J. A 82 Landeros Jack S. A 83 Lehto Walter A. A 84 Loscher Gregory R. A 85 Lucas Larry L. A 86 Ludden John G. A 87 Mari James D. A 88 Marr Sandra L. A 89 Martin Michael J. A 90 Martin Phillip D. A 91 Martin Raul A 92 Mate George J. A 93 Matthews Burnham E. A 94 McCullough Richard A. A 95 McKenna John H. A 96 Medsker Gerald E. A 97 Mellott Frank P. A 98 Mercado Daniel J. A 99 Mitchell Alice F. A 100 Morgan Anthony D. Page 7 of 8

256 OAKLAND POLICE AND FIRE RETIREMENT SYSTEM SPECIAL BOARD MEETING FEBRUARY 22, 2017 ORDER OF BUSINESS, continued A 101 Morris Francis O. A 102 Morse Ivan O. A 103 Moschetti Francis C. A 104 Mummey Barbara E. A 105 Musch Paul D. A 106 Nelson Brenda F. A 107 Nelson Charles E. A 108 Nelson Marilyn E. A 109 Newberry Harold D. A 110 Newman Larry L. A 111 Nichols, Jr. Arthur A 112 Nordin Lamer Patricia F. A 113 O'Guinn Mattos Janis L. A 114 Oppido Michael J. A 115 Parker John C. A 116 Parr James E. A 117 Parrino J. Anthony A 118 Pemberton Michael J. A 119 Peters Bette L. A 120 Peterson Peter A. A 121 Pola James M. A 122 Pries Larry J. A 123 Randall Richard A 124 Reid Debborah J. A 125 Rhodes William M. A 126 Rice Sidney A 127 Rodrigue Larry J. A 128 Romero Antonio A 129 Rosin David P. A 130 Rothacher George E. A 131 Rye Christopher K. A 132 Sargent Earl L. A 133 Schwab Virginia C. A 134 Scott Kenneth E. A 135 Scurria Robert J. A 136 Searle Robert R. A 137 Shannahan Marian W. A 138 Sherman Earl L. A 139 Sirvain Robert L. A 140 Smith Carl L. A 141 Smith Gregory A. A 142 Souza Robert B. A 143 Steinberg Robert J. A 144 Stevenson Norman L. A 145 Sundahl Barbara A 146 Symons Gary E. A 147 Taylor John R. A 148 Thorp Robert L. A 149 Todar Steven H. A 150 Torio Robert L. A 151 Turco Samuel V. A 152 Ubben Ned S. A 153 Vares Stanley M. A 154 Vaughn Harry L. A 155 Wagenhoffer Cocilova Helen A. A 156 Wallace Russell C. A 157 Wengeler Curtis W. A 158 West James A. A 159 Whiteley Robert L. A 160 Whitfield George E. A 161 Williams Robert A. A 162 Wilson Percy A. A 163 Wiseman Artris S. A 164 Wright Arthur A 165 Wright Douglass W. A 166 Yale Lurea L. A 167 Yanke August F. A 168 Zanotto Kenneth L. A 169 Zaragosa Alfonso L. FUTURE SCHEDULING Page 8 of 8

257 D R A F T PFRS Board Meeting Minutes December 21, 2016 Page 1 of 5 A SPECIAL BOARD MEETING of the Oakland Police and Fire Retirement System ( PFRS ) was held December 21, 2016 in Hearing Room 1, One Frank Ogawa Plaza, Oakland, California Board Members Present: Additional Attendees: Walter L. Johnson, President Jaime T. Godfrey, Vice President Steven Wilkinson, Member Robert J. Muszar, Member John C. Speakman, Member Steven J. Bernard, Member Christine Daniel, Member Pelayo Llamas, Deputy City Attorney / PFRS Legal Counsel Katano Kasaine, Plan Administrator David Low & Teir Jenkins, Staff Members David Sancewich and Sean Copus, Pension Consulting Alliance (PCA) Maria L. Bracken (Stenographer/Court Reporter, Aiken Welch) President Johnson addressed the agenda out of order. The meeting was called to order at 11:01 pm. C. PFRS AUDIT COMMITTEE MEETING DECEMBER 21, 2016 C1. PFRS Monthly Administrative Expenses Report Investment Officer Teir Jenkins presented the details of the PFRS administrative expenses report from July 1, 2016 through October 31, Following committee discussion, Member Speakman made a motion to accept the Administrative Expenses Report from July 1, 2016 through October 31, 2016, second by Member Muszar. Motion passed. [ JOHNSON Y / GODFREY Y / BERNARD Y / DANIEL Y / MUSZAR Y / SPEAKMAN Y / WILKINSON Y ] ( AYES: 7 / NOES: 0 / ABSTAIN: 0 ) C2. Resolution No Travel Authorization for Member Jaime Godfrey Member Speakman said that resolution no authorizing the travel and reimbursement for Member Jaime Godfrey for the Due Diligence Meeting in New York, NY was verbally approved by President Johnson. He said his travel request occurred following the publishing of the November 2016 Agendas and could not be added to that agenda for approval. Member Speakman made a motion approve Resolution No. 6943, second by Member Bernard. Motion passed. [ JOHNSON Y / GODFREY ABSTAIN / BERNARD Y / DANIEL Y / MUSZAR Y / SPEAKMAN Y / WILKINSON Y ] ( AYES: 6 / NOES: 0 / ABSTAIN: 1 ) C3. PFRS Budget Report For Fiscal Years and Member Speakman reported that the Audit Committee continued discussion of the PFRS Budget Report for Fiscal Years and until the January 2017 Audit Committee meeting. He reported that staff will bring the draft budget reports at the February 2017 meeting. Member Speakman departed the PFRS Board Meeting at 11:05 am. A. Approval of PFRS Board Meeting Minutes Member Bernard made a motion to approve the PFRS Board meeting minutes for November 30, 2016, second by member Wilkinson. Motion passed. [ JOHNSON Y / GODFREY Y / BERNARD Y / DANIEL Y / MUSZAR Y / SPEAKMAN ABSENT / WILKINSON Y ] ( AYES: 6 / NOES: 0 / ABSTAIN: 0 ) D R A F T

258 D R A F T PFRS Board Meeting Minutes December 21, 2016 Page 2 of 5 B. Selection of Attorney for Legal Services Regarding Alameda County Superior Court Action No. RG , ROPOA et al. v Oakland Police and Fire Retirement System et al PFRS legal counsel Pelayo Llamas provided a verbal report regarding his request for Board approval for the hiring of outside legal services regarding Alameda County Superior Court Action No. RG , ROPOA et al. v Oakland Police and Fire Retirement System et al. Member Muszar asked if the City Attorneys office has any conflict of interest regarding this lawsuit. Mr. Llamas said there he doesn t believe there is presently any conflict of interest on this matter. MOTION: Member Daniel made a motion that the PFRS board hire the law firm of Gordon and Polland to represent the PFRS board for Alameda County Superior Court Action No. RG , second by member Godfrey. Member Muszar said that the City Attorneys office has stated there is no conflict of interest with this case. He added that, with no conflict of interest, no additional PFRS funds should be expended for additional legal services and made his recommendation that the PFRS legal counsel provide legal services for PFRS on this matter. A call to the question was made and a vote was taken. Motion passed. [ JOHNSON Y / GODFREY Y / BERNARD Y / DANIEL Y / MUSZAR N / SPEAKMAN ABSENT / WILKINSON Y ] ( AYES: 5 / NOES: 1 / ABSTAIN: 0 ) D. PFRS INVESTMENT COMMITTEE MEETING DECEMBER 21, 2016 D1. Small Cap Growth Asset Class Investment Manager Interview and Selection Member Godfrey made a motion to hire Rice Hall James and Associates LLC, to be the Small Cap Growth Asset Class Investment Manager for the PFRS fund, second by member Bernard. AMENDED MOTION: Member Godfrey made a motion to hire Rice Hall James and Associates LLC, to be the Small Cap Growth Asset Class Investment Manager for the PFRS fund pending satisfactory results from the due diligence inspection by the PFRS Investment Consultant, PCA, in January 2017, second by member Muszar. Motion passed. [ JOHNSON Y / GODFREY Y / BERNARD Y / DANIEL Y / MUSZAR Y / SPEAKMAN ABSENT / WILKINSON Y ] ( AYES: 6 / NOES: 0 / ABSTAIN: 0 ) D2. $15 million 1st Quarter 2017 Member Benefits Drawdown Member Godfrey made a motion that the Board draw $15 million to pay member benefits for the 1st Quarter 2017, second by member Bernard. Motion passed. [ JOHNSON Y / GODFREY Y / BERNARD Y / DANIEL Y / MUSZAR Y / SPEAKMAN ABSENT / WILKINSON Y ] ( AYES: 6 / NOES: 0 / ABSTAIN: 0 ) D3. Investment Market Overview David Sancewich from PCA reported the global market and economic factors presently affecting the PFRS investment fund. Member Godfrey made a motion accept the Investment Market overview report, second by member Wilkinson. Motion passed. [ JOHNSON Y / GODFREY Y / BERNARD Y / DANIEL Y / MUSZAR Y / SPEAKMAN ABSENT / WILKINSON Y ] ( AYES: 6 / NOES: 0 / ABSTAIN: 0 ) D4. Board Education - Crisis Risk Offset David Sancewich gave a presentation describing the Crisis Risk Offset asset class which PCA would like the PFRS board to consider adding to its current asset allocation planning model. Following Board and staff questions and discussion, Member Godfrey made a motion to accept the informational report from PCA, second by member Bernard. Motion passed. [ JOHNSON Y / GODFREY Y / BERNARD Y / DANIEL Y / MUSZAR Y / SPEAKMAN ABSENT / WILKINSON Y ] ( AYES: 6 / NOES: 0 / ABSTAIN: 0 ) D R A F T

259 D R A F T PFRS Board Meeting Minutes December 21, 2016 Page 3 of 5 D5. Resolution No Authorization for professional service contract between Ramirez Asset Management and PFRS to manage the Core Fixed Income Asset Class Investment Member Godfrey made a motion to approve Resolution No authorizing a professional service agreement with Ramirez Asset Management, Inc. to serve as Investment Manager of the Core Fixed Income Asset Class Investment for the Oakland Police And Fire Retirement System over the term of five (5) years, with three options to extend the term by one additional year, at a fee rate not to exceed 0.24% percent of the portfolio s assets value each year, second by member Bernard. Motion passed. [ JOHNSON Y / GODFREY Y / BERNARD Y / DANIEL Y / MUSZAR Y / SPEAKMAN ABSENT / WILKINSON Y ] ( AYES: 6 / NOES: 0 / ABSTAIN: 0 ) E. NEW BUSINESS E1. Scheduling request for informational report on estate of Carl Hurd Member Muszar said he had received information from the attorney of the Retired Oakland Police Officers Association related to the estate and widow (Mary Hurd) of PFRS Police retiree Carl Hurd. He requested a status report on this matter before the Board at an upcoming meeting. MOTION: Member Muszar made a motion to schedule an informational report regarding the widow and estate of Carl Hurd at the January 2017 PFRS Audit Committee meeting, second by member Daniel. Following Board discussion, it was determined that the potential of future legal action on this matter may ensue. AMENDED MOTION: Member Muszar made a motion to schedule an informational report by PFRS legal Counsel regarding the estate of Carl Hurd at Closed Session at the January 2017 PFRS Board meeting, second by member Daniel. Motion passed. [ JOHNSON Y / GODFREY Y / BERNARD Y / DANIEL Y / MUSZAR Y / SPEAKMAN ABSENT / WILKINSON Y ] ( AYES: 6 / NOES: 0 / ABSTAIN: 0 ) E2. Scheduling request of discussion and possible action - whether to direct PFRS's Actuary, Cheiron, Inc., to prepare a special analysis on the impact on the PFRS unfunded actuarial liability due to the discontinuation of Shift Differential Pay to PFRS Police Retirees pursuant to PFRS Resolutions No and 6824, and to estimate the additional cost of said report, if any Member Muszar said this agenda item was previously on the June 2016 agenda where the Audit Committee recommended the Board act to provide an actuarial analysis on the impact on the PFRS unfunded actuarial liability due to the discontinuation of Shift Differential Pay to PFRS Police Retirees pursuant to PFRS Resolutions No and Mr. Muszar said the Board meeting minutes for June 2016 are unclear as to why the action was not moved forward as was recommended by the Audit committee. Ms. Kasaine reported that the impact study requested was included as part of the actuarial valuation presented by the Plan Actuary, Cheiron Inc., in its recent July 1, 2016 report. President Johnson added the actuarial valuation and impacts on the System are taken as a whole. Member Muszar made a motion directing PFRS Plan Actuary, Cheiron, Inc., to provide a report to the PFRS Board which shows the analysis on the impact on the PFRS unfunded actuarial liability due to the discontinuation of Shift Differential Pay to PFRS Police Retirees pursuant to PFRS Resolutions No and 6824 at the February 2017 PFRS Audit Committee meeting, second by member Bernard. Motion failed. [ JOHNSON N / GODFREY N / BERNARD Y / DANIEL N / MUSZAR Y / SPEAKMAN ABSENT / WILKINSON N ] ( AYES: 2 / NOES: 4 / ABSTAIN: 0 ) D R A F T

260 D R A F T PFRS Board Meeting Minutes December 21, 2016 Page 4 of 5 F. OPEN FORUM No Speakers. Board meeting went into recess at 11:56 am Board meeting reconvened at 1:13 pm. Member Speakman was now present for the remainder of the today s meeting. G. Request of Retired Oakland Police Officers Association (ROPOA) President Robert Nichelini seeking Board authorization of a subpoena compelling Walter L. Johnson, Sr. to testify on the pending hearings related to Resolutions No. 6866, 6819 and 6825 President Walter L. Johnson, Sr., recused himself from the discussion of Agenda Item G. Member Jaime Godfrey acted as Chairman Pro Tem during Agenda Item G. NOTE: The proceedings of Item G were recorded and transcribed by a certified shorthand reporter Maria L. Bracken, CSF No , c/o Aiken Welch Court Reporters, One Kaiser Plaza, Suite 250, Oakland, CA ROPOA President Robert Nichelini requested a sixty-day continuance of items G and H in order to allow him time to obtain the information he intended to elicit from President Johnson through other sources and develop an approach which may avoid any need for a subpoena of Walter L. Johnson, Sr. on this matter. He said the continuance will allow him to present a brief that addresses the hearing matters which will allow both parties to proceed in a quicker and effective manner. He added comments about the current subpoena procedures. MOTION: Member Muszar made a motion to continue and reschedule items G & H to the February 2017 Board meeting. Member Daniel Commented on the motion. AMENDED MOTION: Member Muszar amended his motion as follows: To table Agenda Item G to the January 2017 PFRS Board Meeting and to table Item H until the February 2017 meeting. No second was made. Discussion of the Original Motion continued: Member Wilkinson commented on the motion. Mr. Nichelini explained his believe that there may be alternative sources for the evidence he was seeking through the requested subpoena of President Johnson. Member Daniel then seconded the original motion. Mr. Nichelini further stated that he intended to examine President Johnson about a 2002 letter he authored bearing on the shift differential lineup date. Member Wilkinson made further comment. Member Daniel made further comment on Mr. Nichelini s representation about alternative sources for the evidence. SUBSTITUTE MOTION: Member Daniel made a substitute motion to deny the request for a subpoena (Item G.) and to continue the hearings matters noticed as Item H., until February Second by member Speakman. Discussion continued. Mr. Nichelini stated he is fine with that, adding that the secondary sources for the information came to his attention subsequent to requesting the subpoena. Member Muszar made comments. Public speaker Ned Ubben waived his time. A roll call vote was taken. Substitute motion passed. [ JOHNSON RECUSED FROM DISCUSSION AND ACTION / GODFREY Y / BERNARD Y DANIEL Y / MUSZAR Y / SPEAKMAN Y / WILKINSON Y ] ( AYES: 6 / NOES: 0 / ABSTAIN: 0 ) The Certified Shorthand Reporter was excused from the meeting at 1:38 pm by motion by Member Speakman, Second by member Daniel. Motion passed. D R A F T

261 D R A F T PFRS Board Meeting Minutes December 21, 2016 Page 5 of 5 H. Hearings related to the Recovery of Overpayments pursuant to PFRS Board Resolutions No. 6866, 6819 and 6825 This matter was continued to the February meeting by the substitute motion made by Member Daniel on Agenda Item G above. I. Future Scheduling The next meeting was scheduled for January 25, The meeting adjourned at 1:39 pm. KATANO KASAINE, BOARD SECRETARY DATE D R A F T

262 Item: F PFRS Board meeting February 22, 2017

263 Item: F PFRS Board meeting February 22, 2017

264 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION NO ON MOTION OF MEMBER SECONDED BY MEMBER RESOLUTION APPROVING DEATH BENEFIT ROLL NUMBER 8640 AND DIRECTING WARRANTS THEREUNDER IN THE TOTAL SUM OF $1, WHEREAS, due proof having been received of the death of the person(s) named in Column (1) below, active or retired member(s) of the Police and Fire Department, under Article XIV, XV or XXVI of the Charter of the City of Oakland; and WHEREAS, the beneficiary(ies) to whom the death benefit provided in Charter Section stated in Column (3) is payable, is the person(s) whose name(s) is/are stated in Column (4) opposite the respective name(s) of the deceased active or retired member; and WHEREAS, the amount of said death benefit is stated in Column (6) opposite said respective name(s); now, therefore, be it RESOLVED: That the Retirement Board approves, and it does hereby approve Death Benefit Roll Number 8640, a copy of which is attached hereto, providing for payment of such death benefit to the person(s) named in Column (4); and be it FURTHER RESOLVED: That the Director of Finance, be and is hereby directed to draw and sign warrant(s) for the amount in Column (6) payable to the respective person(s) whose name(s) appear(s) in Column (4): (1) (2) (3) (4) (5) (6) Name of Deceased Member Status of Member Charter Section Name of Beneficiary Relationship of Beneficiary Death Benefit Amount John E. Stimer (P) Retired 2612 Monet Stimel John Stimel Michelle Nelson Children $ $ $ IN BOARD MEETING, CITY HALL, OAKLAND, CA F_..E=B. R"""'"U"""'A""""R..._Y""""2=2"""". 2~0""-'1'-'-7 PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, AND PRESIDENT JOHNSON GODFREY, MUSZAR, SPEAKMAN, WILKINSON, NOES: ABSENT: ATTEST: :: PRES1DENT ATTEST: --= SECRETARY

265 t 7= OAKLAND POLICE AND FIRE RETIREMENT BOARD Approved to Form CITY OF OAKLAND, CALIFORNIA RESOLUTION No ON MOTION OF MEMBER SECONDED BY MEMBER RESOLUTION APPROVING DEATH BENEFIT ROLL NUMBER 8660 AND DIRECTING WARRANTS THEREUNDER IN THE TOTAL SUM OF $1, WHEREAS, due proof having been received of the death of the person(s) named in Column (1) below, active or retired member(s) of the Police and Fire Department, under Article XIV, XV or XXVI of the Charter of the City of Oakland; and WHEREAS, the beneficiary(ies) to whom the death benefit provided in Charter Section stated in Column (3) is payable, is the person(s) whose name(s) is/are stated in Column (4) opposite the respective name(s) of the deceased active or retired member; and WHEREAS, the amount of said death benefit is stated in Column (6) opposite said respective name(s); now, therefore, be it RESOLVED: That the Retirement Board approves, and it does hereby approve Death Benefit Roll Number 8660, a copy of which is attached hereto, providing for payment of such death benefit to the person(s) named in Column (4); and be it FURTHER RESOLVED: That the Director of Finance, be and is hereby directed to draw and sign warrant(s) for the amount in Column (6) payable to the respective person(s) whose name(s) appear(s) in Column (4): (1) (2) (3) (4) (5) (6) Death Name of Status of Charter Name of Relationship of Benefit Deceased Member Member Section Beneficiary Beneficiary A1mount Harold D. Dennis (F) Retired 2612 Stacey L. Rodrigues Daughter $1, IN BOARD MEETING, CITY HALL, OAKLAND, CA -----"""F_...E=B'-"-R.;...;:U-..A-"-R"'""'Y'"""2=2""-=20-..1~7---- PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, GODFREY, MUSZAR, SPEAKMAN, WILKINSON, AND PRESIDENT JOHNSON NOES: ABSENT: ATIEST: PRESIDENT ATIEST: --:::" SECRETARY

266 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION NO ON MOTION OF MEMBER SECONDED BY MEMBER RESOLUTION APPROVING DEATH BENEFIT ROLL NUMBER 8665 AND DIRECTING WARRANTS THEREUNDER IN THE TOTAL SUM OF $1, WHEREAS, due proof having been received of the death of the person(s) named in Column (1) below, active or retired member(s) of the Police and Fire Department, under Article XIV, XV or XXVI of the Charter of the City of Oakland; and WHEREAS, the beneficiary(ies) to whom the death benefit provided in Charter Section stated in Column (3} is payable, is the person(s) whose name(s) is/are stated in Column (4) opposite the respective name(s) of the deceased active or retired member; and WHEREAS, the amount of said death benefit is stated in Column (6) opposite said respective name(s); now, therefore, be it RESOLVED: That the Retirement Board approves, and it does hereby approve Death Benefit Roll Number 8665, a copy of which is attached hereto, providing for payment of such death benefit to the person(s) named in Column (4); and be it FURTHER RESOLVED: That the Director of Finance, be and is hereby directed to draw and sign warrant(s) for the amount in Column (6) payable to the respective person(s) whose name(s) appear(s) in Column (4): ( 1) (2) (3) (4) (5) (6) Death Name of Status of Charter Name of Relationship of Benefit Deceased Member Member Section Beneficiary Beneficiary Amount Thomas 0. Donohue (P) Retired 2612 Michael K. Donohue Son $1, Orval Burcham (F) Retired 2612 Rocky L. Burcham Son $1, IN BOARD MEETING, CITY HALL, OAKLAND, CA --=-FE=B=R;...:..=UA~R...:..Y-=2=2"'-'2=0~1...:..7 PASSED BY THE FOLLOWING VOTE: AYES: BERNARD, DANIEL, GODFREY, MUSZAR, SPEAKMAN, WILKINSON, AND PRESIDENT JOHNSON NOES: ABSENT: ATTEST: PRESIDENT ATTEST: ,.SE-CR-ET-AR_Y

267 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION No ON MOTION OF MEMBER SECONDED BY MEMBER RESOLUTION FIXING THE MONTHLY ALLOWANCE OF THE SURVIVING SPOUSE(S) OF THE RETIRED MEMBER(S) OF THE POLICE AND FIRE RETIREMENT SYSTEM. WHEREAS, the retired member of the Police and Fire Retirement System, whose name appears below, died on the date shown; and WHEREAS, the surviving spouse, whose name appears below, does not claim such death resulted from injury in or illness caused by the performance of duty; and WHEREAS, there is now presented to this Board, the amount in Column (6), as shown on Disability Retirement Allowance Roll No and as calculated by the Actuary in accordance with Article XXVI of the Charter of the City of Oakland; now, therefore, be it RESOLVED: That the Police and Fire Retirement Board fixes, and it does hereby fix, the amount in Column (6), as the monthly allowance to which said surviving spouse is entitled, effective on the date shown in Column (4): (1) (2) (3) (4) (5) (6) %of Name of Compensation Name of Deceased Date of Surviving Effective Date Attached to Monthly Member Death Spouse of Allowance Ava. Rank Held Allowance James L. Westbrook (P) 10/21/2016 Shirley 10/22/ % $4, Raymond Hanson, Sr. (F) 10/26/2016 Joan 10/27/ % $4, IN BOARD MEETING, CITY HALL, OAKLAND, CA._FE=B R:;..;..;;;..UA;...;..;...;R... Y...;:;;;2=2.._., 2=0;...; PASSED BY THE FOLLOWING VOTE: AYES: GODFREY, SPEAKMAN, COOPER, OZNOWICZ, WILKINSON, DANIEL PRESIDENT JOHNSON NOES: ABSENT: ATIEST: PRESIDENT Anesr: SECRETARY

268 OAKLAND POLICE AND FIRE RETIREMENT BOARD CITY OF OAKLAND, CALIFORNIA RESOLUTION No ON MOTION OF MEMBER SECONDED BY MEMBER RESOLUTION FIXING THE MONTHLY ALLOWANCE OF THE SURVIVING SPOUSE(S) OF THE RETIRED MEMBER(S) OF THE POLICE AND FIRE RETIREMENT SYSTEM. WHEREAS, the retired member of the Police and Fire Retirement System, whose name appears below, died on the date shown; and WHEREAS, the surviving spouse, whose name appears below, does not claim such death resulted from injury in or illness caused by the performance of duty; and WHEREAS, there is now presented to this Board, the amount in Column (6), as shown on Service Retirement Allowance Roll No and as calculated by the Actuary in accordance with Article XXVI of the Charter of the City of Oakland; now, therefore, be it RESOLVED: That the Police and Fire Retirement Board fixes, and it does hereby fix, the amount in Column (6), as the monthly allowance to which said surviving spouse is entitled, effective on the date shown in Column (4): (1) (2) (3) (4) (5) (6) %of Name of Compensation Name of Deceased Date of Surviving Effective Date Attached to Monthly Member Death Spouse of Allowance Avg. Rank Held Allowance Charles M. Ray (F) 12/01/2016 Jeanne F. Ray 12/02/ % $2, IN BOARD MEETING, CITY HALL, OAKLAND, CA... F-"'E=B'"""R.;...;;U A..;.;..R.;...;Y_..2=2..._, =20"'"""1.;...;..7 PASSED BY THE FOLLOWING VOTE: AYES: GODFREY, SPEAKMAN, COOPER, OZNOWICZ, WILKINSON, DANIEL PRESIDENT JOHNSON NOES: ABSENT: ATTEST: --= PREs10ENT ATTEST: --= SECRETARY

269 CITY OF OAKLAND AGENDA REPORT TO: Oakland Police and Fire Retirement System Board SUBJECT: Hearings Related to the Recoveries of Overpayments per PFRS Board Resolutions No. 6866, 6819 and 6825 FROM: Katano Kasaine DATE: February 14, 2017 BACKGROUND In December 2015, the Oakland Police and Fire Retirement System ("PFRS") delivered to each PFRS police retiree and beneficiary a Notice of Repayment of Holiday Pay and Shift Diffet ential Overpayments. The Notice provided a calculation of each members' overpayment, the applicable periods from which collection of these overpaid benefits would be recouped, and the methodology for this collection. The members were also provided a Request for Hearing (per Charter Section 2603) fom1 if the member had a dispute regarding the recovery. PFRS RETIREES I BENEFICIARIES WHO REQUESTED A HEARING Table A lists the PFRS Police retirees and beneficiaries who requested a hearing related to the recc1veries of overpayments per PFRS Board Resolutions No. 6866, 6819 & Attached are the proofs of service for each hearing, listed as Attachment 4. By agreement, the Retired Oakland Police Officers Association took the responsibility of notifying its members of continuances of the hearing date to December 21, Attachments ( 4): Respectfully submitted, ~~ /~f/iv'--' Katano Kasaine, Plan Administrator Oakland Police and Fire Retirement System (I) TABLE A: List of PFRS Retirees and Beneficiaries who requested a hearing. (2) December 7, Notice of Repayment of Holiday Pay and Shift Differential Overpayments. (3) Retiree's I Beneficiary's Request for Hearing Form (4) October 7, 2016 Member Hearing Notices and Proofs of Service Agenda Item- - J PFRS Board Meeting February 22, 2017

270 Oakland Police and Fire Retirement System List of ROPOA-represented PFRS Police Members and Beneficiaries For Member Hearing on February 22, 2017 A 1 Aboussleman Donald A. A 2 Aguirre Jerry A 3 Andrews Lana K. A 4 Aquino Manuel A 5 Aven Robert L. A 6 Azevedo Richard A. A 7 Bachman Kenneth W. A 8 Balousek Nita A 9 Beers Monte L. A 10 Bellusa Larry J. A 11 Bennett Sherman E. A 12 Benz David R. A 13 Berg Katherine M. A 14 Birge Jr. Edmond R. A 15 Bopp William J. A 16 Brock Paul S. A 17 Brown Dennis M. A 18 Brown Myrtle V. A 19 Brumback Ronald D. A 20 Burink Gloria E. A 21 Burnett Donald B. A 22 Cademartori Richard A 23 Carlen Keith A. A 24 Carlson William A. A 25 Cave John C. A 26 Celada Cesar A 27 Clark David A. A 28 Clark Louis L. A 29 Clark William H. A 30 Coleman Phillip V. A 31 Collier John M. A 32 Cordova Patricia L. A 33 Coughlin Richard P. A 34 Delbridge Gary L. A 35 Deshler Peter C. A 36 Dillmann Vaune V. A 37 Doporto Richard I. A 38 Douglas Kenneth R. A 39 Dowd Jr. John T. A 40 Downum Dennis E. A 41 Draper Bruce S. A 42 Dutra Dennis W. A 43 Eade, II Lawrence J. A 44 Edmundson Russell A. A 45 Ellingson Donald W. A 46 Emerson Mark F. A 47 Escamilla Norberto A 48 Evans David L. A 49 Evans David R. A 50 Farrington James R. A 51 Fenton Robert L. A 52 Foster Donald J. A 53 Foster Robert E. A 54 Frederick Larry J. A 55 Furry Garry D. A 56 Gallaway Phyllis M. A 57 Garrison Roy E. A 58 Gerhard Bernard G. A 59 Gillespie William J. A 60 Godwin William D. A 61 Gonzales LaVern H. A 62 Goodson Harlan V. A 63 Grabner Carl H. A 64 Graham Leonard T. A 65 Green James L. A 66 Gremminger Everett R. A 67 Guiliano Raymond J. A 68 Gunar Ronald B. A 69 Halliday Marvin W. A 70 Haxby Lytle C. A 71 Hodson Lawrence S. A 72 Hojlo Zbigniew C. A 73 Holland Charles E. A 74 Jennings David L. A 75 Jones Charles G. A 76 Kast Gregory A. A 77 Kearns Bradley D. A 78 Kraft Delbert W. A 79 Krathwohl Douglas D. A 80 Krause Elmer V. A 81 Kunath Garrett J. A 82 Landeros Jack S. A 83 Lehto Walter A. A 84 Loscher Gregory R. A 85 Lucas Larry L. A 86 Ludden John G. A 87 Mari James D. A 88 Marr Sandra L. TABLE A Page 1

271 A 89 Martin Michael J. A 90 Martin Phillip D. A 91 Martin Raul A 92 Mate George J. A 93 Matthews Burnham E. A 94 McCullough Richard A. A 95 McKenna John H. A 96 Medsker Gerald E. A 97 Mellott Frank P. A 98 Mercado Daniel J. A 99 Mitchell Alice F. A 100 Morgan Anthony D. A 101 Morris Francis O. A 102 Morse Ivan O. A 103 Moschetti Francis C. A 104 Mummey Barbara E. A 105 Musch Paul D. A 106 Nelson Brenda F. A 107 Nelson Charles E. A 108 Nelson Marilyn E. A 109 Newberry Harold D. A 110 Newman Larry L. A 111 Nichols, Jr. Arthur A 112 Nordin Lamer Patricia F. A 113 O'Guinn Mattos Janis L. A 114 Oppido Michael J. A 115 Parker John C. A 116 Parr James E. A 117 Parrino J. Anthony A 118 Pemberton Michael J. A 119 Peters Bette L. A 120 Peterson Peter A. A 121 Pola James M. A 122 Pries Larry J. A 123 Randall Richard A 124 Reid Debborah J. A 125 Rhodes William M. A 126 Rice Sidney A 127 Rodrigue Larry J. A 128 Romero Antonio A 129 Rosin David P. A 130 Rothacher George E. A 131 Rye Christopher K. A 132 Sargent Earl L. A 133 Schwab Virginia C. A 134 Scott Kenneth E. A 135 Scurria Robert J. A 136 Searle Robert R. A 137 Shannahan Marian W. A 138 Sherman Earl L. A 139 Sirvain Robert L. A 140 Smith Carl L. A 141 Smith Gregory A. A 142 Souza Robert B. A 143 Steinberg Robert J. A 144 Stevenson Norman L. A 145 Sundahl Barbara A 146 Symons Gary E. A 147 Taylor John R. A 148 Thorp Robert L. A 149 Todar Steven H. A 150 Torio Robert L. A 151 Turco Samuel V. A 152 Ubben Ned S. A 153 Vares Stanley M. A 154 Vaughn Harry L. A 155 Wagenhoffer Cocilova Helen A. A 156 Wallace Russell C. A 157 Wengeler Curtis W. A 158 West James A. A 159 Whiteley Robert L. A 160 Whitfield George E. A 161 Williams Robert A. A 162 Wilson Percy A. A 163 Wiseman Artris S. A 164 Wright Arthur A 165 Wright Douglass W. A 166 Yale Lurea L. A 167 Yanke August F. A 168 Zanotto Kenneth L. A 169 Zaragosa Alfonso TABLE A Page 2

272 NOTICE: Due to the large number of pages assoicated with attachments no. 2, 3 and 4, a printed copy of these attachments are available for public viewing at the Office of the City Clerk prior to, and during, the Feburary 22, 2017 PFRS Board meeting for public viewing. You may also contact David Low at

273 Submitted Attachments from the Retired Oakland Police Officers Association

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308 All persons wishing to address the Board must complete a speaker's card, stating their name and the agenda item (including "Open Forum") they wish to address. The Board may take action on items not on the agenda only if findings pursuant to the Sunshine Ordinance and Brown Act are made that the matter is urgent or an emergency. Oakland Police and Fire Retirement Board meetings are held in wheelchair accessible facilities. Contact Retirement Systems, 150 Frank Ogawa Plaza, Suite 3332 or call (510) for additional information. Retirement Systems 150 Frank H. Ogawa Plaza Oakland, California AGENDA RETIREMENT BOARD MEMBERS Walter L. Johnson, Sr. President Jaime T. Godfrey Vice President Robert J. Muszar Member R. Steven Wilkinson Member Steven J. Bernard Member John C. Speakman Member Christine Daniel Member CLOSED SESSION of the BOARD OF ADMINISTRATION of the OAKLAND POLICE AND FIRE RETIREMENT SYSTEM ( PFRS ) Wednesday, February 22, 2017 during regular meeting starting at 11:00 am One Frank H. Ogawa Plaza, Hearing Room 1 Oakland, California ORDER OF BUSINESS THE PFRS BOARD WILL MEET IN CLOSED SESSION DURING ITS SCHEDULED BOARD MEETING Please see the meeting agenda for open session items. The board will convene in open session prior to the closed session. Speakers may address the items of business on the closed session agenda prior to closed session. All speakers must fill out a speaker s card and submit it to the Secretary to the Board. The Board will reconvene in open session following the closed session to report any final decisions that the board makes in closed session. A. Pursuant to California Government Code Section (c): 1. Personnel Matter Pursuant to Government Code section & 88 Ops.Cal.Atty.Gen 16 (2005) Application of Paul Carlisle Oakland Police Department. Determination of Death from service-connected cause under Charter Section 2611 and continuance to surviving widow. B. Pursuant to California Government Code Sections (d)2), (e)(1), & (3)(3); (e)(5): 1. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION Page 1 of 1