Investment Workshop Summary

Fort Lauderdale, Florida

Opening Remarks
Speaker: Michael Dew, Chairman
Fort Lauderdale Police and Fire Retirement System

Capital Markets Review

Firm: Asset Consulting Group
Speaker: Jason Pulos
Summary:
 The markets have rebounded significantly in 2009 as investors
have once again embraced risky assets.
 Year to date through October 31, the S&P 500 is up 17% and is
up more than 60% from equity market lows experienced in
March of 2009.
 The fixed income markets have displayed a remarkable
turnaround from 2008 where the only refuge was U.S.
Treasuries. This year treasuries are down 2.34% while
investment grade corporate fixed income securities are up
17.93%. High Yield (non-investment grade) corporates are up
51.65% through October 31.
 Investors‟ appetite for risk has changed markedly from the fourth
quarter of last year and the first quarter of 2009. Consequently,
many investment managers that led their respective peer groups
in the declining markets through higher quality, more defensive
securities have found themselves lagging their peers in the more
bullish, speculative phase of the second and third quarters.

Fixed Income Market Overview

Firm: Asset Consulting Group substituting for BNY Mellon
Speaker: John Jackson, CFA
Summary:
 The financial industry has been going through a significant
transition beginning with the sub-prime lending meltdown and
overleveraged positions of financial organizations.
 The Fed and Treasury have taken extraordinary measures to
stave off financial collapse.
 The bailout effort is not only U.S.-oriented, but global in nature
as foreign governments have also intervened to mitigate the
structural damage to their economic systems.
 Households are still de-leveraging and limiting spending.
 The level of unemployment for October is at 10.2%, a 26 year
high.
 There is little wage and price inflation at this time and Mellon
expects the Fed to hold rates until mid 2010.

1
Investment Workshop Summary
Fort Lauderdale, Florida
Securities Litigation Monitoring
Firm:
Speaker: Saxena White
Summary:
 There have been 127 securities fraud suits filed in the first half of
2009.
 60% of the suits filed have centered on the credit crisis, and 80%
have been against companies in the financial sector.
 Following a troubling judgment in the Stoneridge case that held
that secondary actors are protected from civil liability even if they
commit criminal acts, Senator Arlen Specter has sponsored
legislation to protect investors.
 Lawsuits with an institutional lead plaintiff are less likely to be
dismissed and have significantly large settlements.

Real Estate Market Environment

Firm: American Realty Advisors
Product: Core Real Estate
Speakers: Jay Butterfield, CFA
Summary:
 “Buy high and sell higher” world is over.
 Rents and demand are weak with prices down as much 35-40%
off the peak.
 Over $1 trillion of commercial real estate loans mature by 2012
 As a “Core” Real Estate Fund, its strategy is focused on
downside risk control by targeting properties substantially
leased, with minimal need for capital expenditures. Return will
come primarily from income rather than appreciation.
 The fund had 15%-25% leverage initially which has increased to
25%-35% in the recovery market.

Firm: Prudential Real Estate Investors

Product: Core Plus Real Estate
Speaker: Darin Bright
Summary:
 Prudential „s PRISA II strategy is “Core-Plus” which is more
opportunistic than Core strategies. Therefore, it will assume a
greater degree of leverage. As of 9/30, the Fund had effective
leverage of 57%.
 The expected peak to trough decline is expected to reach
approximately 65%.
 The Fund‟s liquidity has improved measurably since early 2009.
 The near term strategy is to manage the fund‟s liquidity and take
steps to de-lever.

Non – U.S. Equity

Firm: Thornburg Investment Management
Product: International Equities
Speaker: Chris Neill, CFA
Summary:
 Thornburg‟s approach to investing is “bottom-up” and value -
oriented.
 Securities are selected on a case by case basis looking at the
key fundamentals. The Thornburg portfolio held 66 securities at
September 30.

2
Investment Workshop Summary
Fort Lauderdale, Florida
Firm: Artio
Product: International Equities
Speaker: Brian Holland
Summary:
 Artio combines a bottom-up approach for developed markets
with a top-down approach for emerging markets.
 Once a theme has been identified, Artio will hold a large number
of securities employing that theme. The Artio portfolio held over
400 securities at September 30. This approach provides good
complement to Thornburg‟s more concentrated, value-oriented
style.
 Artio expects inflation to be low for the next few years, but the
massive monetization of debt means inflation will win over time.
 Artio expects low grade bonds, inflation linked bonds, and real
assets to outperform in an inflationary environment.

Domestic Equity Panel

Firm: Northpointe Capital
Product: Small Cap Growth Equities
Speaker: Karl Knas, CFA
 Northpointe seeks to acquire securities with strong projected
earnings growth selling at a discount.
 Nortpointe performs an analysis of business trends and risks and
incorporates that information into their security selection process.
 The Northpointe portfolio holds approximately 70 securities.

Firm: Lee Munder

Product: Small Cap Growth Equities
Speaker: Todd Vingers
Summary:
 Lee Munder selects small cap securities that are selling at a
discount to their estimate of fair value.
 The portfolio holds approximately 112 securities.
 They focus on securities with a high probability of modest
outperformance.

Firm: Sawgrass Asset Management

Product: Large Cap Growth
Speaker: Martin LaPrade
Summary:
 Sawgrass selects large capitalization stocks with projected
growth in earnings that exceeds the benchmark.
 The portfolio holds approximately 47 securities
 Since October of last year, the markets have exhibited a great
deal of volatility with the most speculative securities
outperforming in 2008.
 Given its higher quality, larger cap orientation, the portfolio will
lag in the types of markets that we have experienced since
March of 2009.

3
Investment Workshop Summary
Fort Lauderdale, Florida
Firm: Systematic Financial Management
Product; Large Cap Value
Speakers: Kevin McCreesh
Summary:
 Systematic selects securities that have been discounted by the
market due to some disruption such as earnings
disappointments or management issues.
 They will not buy a security until it has exhibited that it has turned
the corner.
 The portfolio will hold 65-90 securities.

LargeCap Indexed/Enhanced Index Managers

Firm: Rhumbline
Product; S&P 500 Index Fund
Speakers: Wayne Owen
Summary:
 The Fund is designed to replicate the S&P 500 Index.
 This Fund does not participate in securities lending so it did not
experience some of the issues that other funds had.
 Firm has increased its asset base as a number of institutional
funds have gone from active to passive management, even in
small cap.

Firm: INTECH
Product; Large Cap Core Equity
Speakers: Dick Loebig
Summary:
 INTECH utilizes a mathematical approach to portfolio
management that is not driven by the customary fundamental
approach to security selection. Rather, securities are selected
based on the price behavior.
 Using a covariance formula securities are selected based on
their relationship with others securities in the portfolio.

Hedge Fund of Funds

Firm: K2
Product; Long/Short Fund of Funds
Speakers: Dan Elsbury, Kelsey Biggers
Summary:
 K2 has 20-30 managers supporting this long/short fund of funds
strategy.
 K2 has been a leader in requiring transparency from the
underlying managers in this fund of funds
 2009 has been an extremely volatile time for the markets.
 Three managers have been terminated in the last year for this
fund.
 This fund offers liquidity in a time when many hedge fund
strategies have encountered difficulty in meeting liquidity needs.
 Net flows have been positive for this fund in the last year.

4
Investment Workshop Summary
Fort Lauderdale, Florida
Liability Driven Approach to Fixed Income Investing
Firm: Agincourt Capital Management
Product;
Speakers: Patrick Kelly, CFA
Summary:
 Liability Driven Investment (LDI) strategies is a different
approach to the asset allocation process
 Asset allocation is considered in the context of liability behavior.
 LDI strategies have been used more often in corporate plans.
 The assets are invested in a fixed income portfolio that mirrors
the liability schedule. For example, the current fixed income
portfolio has a duration of approximately 4.5 years. The duration
of the liabilities is an estimated 10+ years. Therefore, an LDI
strategy would extend the duration of the assets to match that of
the liabilities. As interest rates increase, the value of the assets
would go down, but so would the value of liabilities.
 Duration measures an asset‟s sensitivity to interest rate
changes. An asset with a 4.5 year duration would decline in
value by 4.5% with a 1% increase in interest rates.

Summary
Firm: Asset Consulting Group substituting for BNY Mellon
Speaker: John Jackson, CFA
Summary:
 The consensus outlook appears to be calling for a lower growth
environment with the potential for a weakened dollar and the
possibility of U.S. inflation down the road.
 The portfolio has undergone a series of changes that offer a
greater likelihood to participate more strongly in that type on
environment.
o Increased international equity target allocation from 5%
to 15%.
o Increased long/short target allocation from 7% to 15%