Longview Firefighters' Relief and Retirement Fund - Regular Meeting

All right. Is everybody on? Good morning. Uh we'll go and call to order the May 20th, 2025 Long View Firefighter Relief and Retirement Fund uh quartly meeting. Uh we'll start off with presentations. Uh there's nobody in the audience for public comment, but I can see. So, uh presentation on Forbix, um Jennifer and Ron, are you all on and ready? Can y'all hear us? Guess not. Maybe having some technical difficulties. So, Ron, can you hear us? Ron, you might be muted or we're muted. Well, if we need to. Uh, okay. Presentation. Okay, great. Thank you. Uh, good morning. Uh, my name is Ron Ross. I'm with the Forbes Group of Companies and today I'll be going over our Forbix income fund. Uh, if you could please go to the next slide. Okay, great. Thank you. Uh so a little about I'm going to start off with uh giving you information as far as the Forbix income fund initially and thereafter I'll go into the background of Forbix financial or the group of companies that is behind the Forbix income fund. So uh right here we have pretty much a summary of the fund itself. Uh the minimum investment is $5 million. Uh although obviously we're taking uh smaller increments as we kind of build up the size of the fund. Our targeted returns are 10% for the fund. Um the fund is an open-ended fund. Uh pretty much um you can either get quarterly distributions of income earned or you can roll it over and acrue the yields for compounding. Uh the fund is

open-ended. Um uh that being the case, we uh our lockout periods are 12 months and thereafter you can withdraw in 25% increments quarterly. So over 24 months you can have full devestature of the investment. The fund assets are backed by bridge loans for US commercial and non-owner occupied residential properties. Um we don't lend against office. We don't lend against uh construction. It's primarily I would say probably 80% of the loans we make are against income property as multifamily as well as duplexes, triplexes or forplexes. That's primarily what the fund is invested in. We have a 1% management fee. Our expense ratio is roughly 25 basis points. Uh now obviously that covers the third part third party uh such as the fund administration uh the servicing of the loans and the annual audit of the fund. Uh as far as the loans that make up the fund, they're typically between 12 to 24 months in duration. Uh the reason we do that is we want to uh minimize duration risk. So typically if the loan is made for 12 months, we might extend it another 12 months. But we always know within 12 months the loan will mature. Therefore, we get the proceeds back. And that's really important from the standpoint of it is a a black swan event or some financial crisis, you can kind of see it coming to some extent. So, by having 12-month terms on the loans, uh it really keeps the fund liquid and minimizes exposure. The loan to value on the loans we make are typically maximum 75% loan to value, but I would say on average we're around 65%. uh the lean positions are first and second position leans. Majority are first positioned. Now even the second position we would not exceed 75% cumulative loan to value. And many times what we do is loan participations whereby we might do a loan for let's say 70% and we might have 50% a regional

bank like East West Bank and then 20% US. So that way we're still in the first position and we always even second positions if we do that we have a interparty agreement with the first. So this way we can't get wiped out and we work together as far as uh um the loan itself. Our fund administrator is CSC Global. Our fund auditor is with him Smith Brown and obviously this is under regggd rule 506. If we can go to the next slide please. Great. Thank you. So, let me kind of give you a background on the on the fund, what the kind of loans that we make and and kind of the background of these loans. And I'm going to kind of jump a little bit to what Forbix Financial does as far as a lender and kind of show you how it integrates with the fund. So, let me give you some background on the commercial real estate industry. Uh, in residential uh loans, typically there are no prepaids. So, uh when those loans are made, people can refinance a month later, 6 months later, but not in commercial real estate. in commercial real estate because most of the funding is done by securization uh those borrowers those securities demand uh was a yield for a certain period of time and that being the case it's always attached with a prepaid penalty. So for example if someone gets a 5-year loan the prepay is 5 years 10-year loan 10ear prepaid. So, by nature of the industry is that when people get commercial loans, they want to make sure that they're maximizing uh the the income of the property before they enter into that long-term permanent financing because they know that they have a premium for five or 10 years. Therefore, they got to maximize the the the income of the property. So, typically in commercial real estate, for example, um a a borrower will let's say buy an apartment building and what they'll do is they won't get permanent financing when they buy it. they will get a bridge loan or a short-term loan. And the reason is they want to get a short-term loan to buy the property and have a good 12 or 18 months to uh you

know get some tenants out, fix some of the units, basically maximize the income and then go and get permanent financing. So for Financial, which is separate from the fund as a lender, what we normally do in our course of business is when we have a borrower come to us, we give them two LOIs. We give them an LOI for a short-term bridge loan and then we give them the permanent financing which takes out that bridge loan. So historically what we've done is on the bridge loan side we would just broker it out to a regional bank uh and then we would give the permanent financing let's say Fanny May Freddy Mack FHA and take out the bridge loan. So in essence what the Forex income fund is instead of us giving that bridge loan to a regional bank the fund itself becomes like the bridge lender. So in essence, we would go to this borrower and say, "Okay, from Forbix Income Fund, here's an LOI. We're going to lend you X amount." And then here is an LOI from Forbix Financial that will be your permanent loan when you get your full occupancy fully stabilized. And that will pay off the bridge loan, which in essence pays off the loan that the fund makes to the borrower. So that's kind of the backdrop of how um uh as being a direct lender, we complement the fund back and forth, vice versa. If we can go to the next slide please. Okay. Uh now this is an example of the fund. The fund inception was October of uh last year. We've been averaging about a little under 1% a month. And as you can see right now we're averaging annualized 11.11%. And then if we can go to the next slide please. Okay great. So, sorry I'm looking at my screen over here as well. So, it's kind of hard to see on the screen over here. Now, what we're proposing was that for a select u investors, we're offering a JV profit sharing uh venture. So, when we talked

about the fund itself, uh the fund has targeted returns of 10%. What we're doing is we're offering um a JV uh co-GP uh profit sharing plan for seed investors. What happens is that we have soft commitments from larger pension funds that will only invest once you hit a good hundred or $200 million. So to kind of get there faster, what we're offering is for 100 million of seed capital, we're offering 20% share profit sharing in RGP. And to kind of run through the numbers is basically that the the total capital raise is $1 billion. So we're looking to get uh seed capital of 100 million, which is about 10% of the overall capital raised. We raise the other 90%. Now, in exchange for that that 10% of the total capital raise of 100 million, we're offering 20% profit sharing in the partnership in in the GPU or the general partner of the fund. So, I'll kind of walk you through the numbers. So, in essence, the return to the the seed seed capital partner is twofold. One, when they put the seed capital in, that money actually goes into the fund as limited partner. So and and the other part of the revenue or income that is earned by the seed capital partner is the generation of what we earn on the origination fees and the management fees. So in the first part there you'll see that where it says JV $100 million seed capital the 5year return of the total income the 20% share for the seed capital partner over 5 years is about 25%. If you divide that by 5 years it comes to about 5% annualized. The second component is enterprise value of the fund because of what it generates in fees. So based on a six time multiple, it's probably a little bit higher, but on a six time multiple that'll equate to about a 41% return over 5 years or 8% uh annualized. So on the the profit sharing side, uh you as an investor would earn roughly 13%. In addition to that, as the LP

where the capital goes to seed capital, you would get 10%. So the combined annual return would be about 23% over five years. Uh if I can go to the next slide please. Thank you. Uh this kind of breaks down the summary of how the seed investor uh capital works. So the seed investor is on top and the left you see where the seed capital goes into the forex income fund and from that side it earns 10% as direct as limited partner. On the right side, it gets 20% profit sharing of the general partner uh which earns its fees through origination points and the management fee. If we can go to the next slide, please. Thank you. This kind of breaks down the uh the income generation of the fund. So up top we have a general partner. To the left is where is how we actually make money as general partner. Uh we make 1% origination fee that comes from the borrower direct to general partner. And on the right side we have the 1% management fee that uh comes from the fund. Now one other thing that to bring up a lot of funds that are debt funds or credit uh type funds like this they a lot of times uh charge performance fees and exit fees. Uh we just made a straight 1% management fee. It's very lean and the purpose of that is to just you know uh make it easy for for investors to come in knowing that pretty much they're getting a pass through the entire yield on their investment. So meanwhile we make our money on the origination fee as well. So that's kind of how we make the income uh from the fund standpoint and that obviously benefits a seed investor and everybody else because you can raise more capital in a quicker time frame and offer a better return to the the investors. And if we can go to the next slide please. So that kind of summarizes the fund itself. Now I want to give you background on Forbix uh which is important. It kind of gives you a background on who we are, what our experience is, and how that kind of plays into the fund itself as the manager of the fund. So, Forbix was

established in 2011, about almost 15 years ago. We are an FHA lender, a direct lender nationwide. Uh, give you some background, there's three government sponsored agencies pretty much. You have Fanny May, you have Freddy Mack, and you have FHA. So out of about 4,500 lenders nationwide, only 90 are approved by the US government as FHA lenders to underwrite on behalf of the US government of which they ensure and then we wrap enginemas and sell on Wall Street. So we are one of those lenders. Um and that and how that kind of comes into play as far as the underwriting of the fund. Uh it's almost a corporate culture when you when you underwrite it for for the US government, everything else there's it's it's a lot more stringent requirements. Uh I'll give you an example of one of them. One of them is that we walk every property. Uh most credit funds don't do that. They get an appraisal and they go off the appraisal. Uh for us, from our experience of 15 years of doing this, we always walk the property, every single property. And the reason being is that, you know, an appraisal might tell you uh the valuation of the property uh based on the comparables and and so on so forth. But unless you're on the ground, you don't really see what's around the property. you might see a freeway in proximity or certain things that might be detrimental to the sale of the property in case you do have to foreclose and it might actually, you know, um be discount what the value of the property really is. So, to give you an example of of of an underwriter that we may do is we might get an appraisal for a property for a million dollar and then we might say we're going to lend 70% or $700,000 and then we go and walk the property and we notice there is either a freeway or something that maybe that might impact the value of the property. So we'll go back to the borrower and say okay well our valuation is $900,000 so we'll only use 70% of 900 which is 630,000 versus 700,000. So what that kind of does is give an extra buffer of protection from the standpoint of the valuation of the property. Um secondly this is more asset based lending. Uh in addition to that what we

do is we sometimes give personal guarantees. we will um uh see we'll do a global look at the person at the borrower's portfolio from a standpoint of how many other properties do they have um how much money they have in the bank and in some instances if we want a little bit more security we might crossize certain properties um so those are kind of the examples of what we do from the standpoint of having overlays and above in and above the the appraisal and if we can go to the next slide please. Thank you. So, uh, since 2011, we have funded about 5 billion with the loans. We've also done about two billion of equity participation in projects and we currently have a portfolio of apartment units and and commercial retail nationwide of about 625 million and we have about $200 million in the same short-term uh credit platform that the fund has. It's about 200 million. The difference is that before we had investors in which we made a loan and we might take let's say the loan was a million dollars. We might take investor A and investor B with a half million each and then do a lean against the property in fractionalized interest 50% for party A and 50% party B. The difference in the fund structure is that the fund actually lends the million and has ownership 100%. So even though we've been managing the same platform, the same type of structure for the last uh 10 years, which we have 200 million under management, uh it's kind of hard to scale it because in that context, every time you're making a loan, you're going back to the individual investors and saying, "Hey, here's a property and do you want to sign on to it?" Whereas in a fund structure, we just make a loan direct and the the beneficiary of of of the note is the fund itself. So just kind of give you backdrop as far as even though the fund is new for about 7 months, we've been doing this for over 10 11 years. Uh a second to kind of go a little bit backwards on is as far as our

our investment portfolio. The way that thing grew was that as a lender we would have had over the years we had developers come to us and for example let's say they were doing a project for 40 million and they had to have 8 million down payment for the project. They might have five or six. So we kicked in an extra two or three million to participate with them. Uh they help they handle the development side and we pretty much were just the the cogp uh investors. Why that's important is that it's we're not just lenders, we also are investors. We understand the perspective of the borrower. We understand the inherent risk. So from the fund standpoint as a lender, you know, we also have our investor hat on from our experience over the last 15 years that we know every aspects of of the industry and where they're coming from. So it gives you a different perspective as a lender by being an investor in these projects separately from the lending side. And the next slide please. Thank you. This is an example of just forix as a lender the the the scope of of how we lend. Uh for example we did uh in Washington state a loan for 72 million and we've done loans as small as 12 million or 1 million or or 2 million. So our spam for underwriting and making loans spans the whole gamut from let's say 1 million to almost 100 million. Uh next slide please. So as far as the let me kind of go back to the 200 mill we've been managing for the last 10 11 years uh on those loans we've made we've only had seven defaults in that entire uh 10 11 year time frame. uh and all those seven defaults, there was never a principal loss because obviously with all the underwriting guidelines that we put into place with uh the equity that's in place and short-term duration of the loans, we'll always be able to recover our principal in most cases uh even more than the targeted yield because the default interest kicked in and we pretty much work through the the the properties. So that's been very fortunate for us in that time frame. Uh

and actually let me kind of expand upon that as well. You know uh because we're also investors as for separate from the fund uh and we have a background in in in in commercial real estate. We kind of have a preference for multif family and our mentality is going through 2008 for example in 2008 financial crisis office buildings took a big hit commercial retail took a big hit. Multifamily took a hit. The difference in multif family is you drop the rents 10% 15% you're fully occupied. 12 months later after the financial crisis things stabilize your rents are back up to where they were. So our our mentality, our favorite asset class within commercial is multifamily, is income producing properties that people reside because we know people have to live somewhere and you can always adjust the rents a little bit and and you know in essence that minimize potential downside risk compared to if you're an office or commercial retail. Uh next slide please. So this is this is a comparative uh look back at our private credit platform the 200 mill that we we've been managing for the last 10 11 years. We kind of want to show you an example of what yields we're hitting. So we've been averaging about 11%. What we do is we took about five accounts that are about 40 million out of the 200 million and we track those since 2018 and those accounts all return an average of 11% returns. And if you look at the compare yields, we're hitting 11% returns even precoid uh during co rates were at zero and postco. So you'll kind of see how the consistency of our return was 11% from 2018 till now. Uh and then since the fund which is the same program just in the fund wrapper uh since October we've been averaging 11.11% for the last 7 months. So I want to just show you the consistency of our lending and this credit uh program we've had for the last 10 11 years. Next slide

please. Thank you. This is an example of just three clients of ours that that have been investing us in the private credit platform. Uh the first one is like Monica Vespie. She's been since 2016. Um you know good returns almost 10% for the last nine years. Uh the Shaw Trust. Uh and then Jeffrey L. So these are examples of about three people that from 2016 or 2020 till now they've been consistently invested with us on the same private credit uh platform that uh the fund is is based upon. And obviously we have the the fine print which uh you guys would have in the PPM and everything else. And that kind of summarizes uh the Forb's income fund and our background as a forb group of companies as as a lender and how it kind of interplays with uh the Forb's income fund. So, are there any questions? I'd love to, uh, to answer them. Anybody have any questions for Mr. Ross? Okay. Thank you for your time, sir. Yep. We lose you again, man. Oh, sorry. We can't hear the Scott. Okay. Will, if you just let him know that uh we appreciate his time. So, All right. So, we'll go ahead and move on to uh item B, presentation of first quarter pension performance with Will Herrell and Charles Smith. Sorry, folks. Hey, Will, you're we could not hear the chamber for any questions for Ron. Um, okay. We didn't have any questions. They can't hear us. God needs to Sorry, we're having somebody look at that right now. So,

Maria, can y'all hear me? Yes. Yes, sir. Yes, I cannot hear you. Therefore, if we have Are there any questions for Mr. Ross? No. No. That is a no across the board. I am shocked, but I'll accept it. Well, Ron, thank you very much for your time. Charles and I will visit with the board and we will circle back with you and thank you so much for getting up so early in California. Not all. Thank you very much. Thanks, Ron. Yes, sir. Thank you very much. Thank you. All right, Mr. Shellhorse. Um, I'm assuming that someone will be running um I guess the quarterly commentary first. Good morning everyone by the way. Yes sir. Morning. Actually I need the other file first if you would be so kind. That's the one. That's the one. All right. Well, I won't be able to see that. So I'm going to if you just give me a hot second. Let me pull that up on or wait. Maybe I can. Hold on. Alrighty, let me pull this up. Pardon me, guys. I'll be right there. I thought I'd be able to um It is a little bit better read it, but that's okay. It won't take me but a hot minute. Somebody have his phone number. Perfect. Okay. All right. Um, let's start on the market commentary. And again, I can't

see y'all, so I apologize. I'm just going to run straight through this. If y'all have any questions, I guess we can hit them uh in between this document and the report. But appreciate your patience. We will certainly be there in person in August. All right, we'll start the Q1 market commentary. I don't have to tell y'all it has been a pretty wild ride for the S&P 500 the first half of this year. Um we had tariff talks that absolutely spooked the market in the first quarter. um you know the market fell geez about 14% on April 2nd or thereabouts or right starting April 2nd bottomed out on April 7th and then on April 7th when the tariffs were announced that there'd be a 90-day reprieve the market went up 10% that day which is unheard of and so far the market's up about 20% from that April 7th low and um for the year pardon me hold on one sec and for the year The market's up about 1.62%, but I'll get into some more detail in a bit. After gaining 26% in 23 and 25% in 24, the S&P finally fell 4% in the first quarter on heavy-handed tariff proposals, which spooked both the stock and bond markets alike. As of the end of the quarter, the total return on the S&P was 8% for the trailing one-year period, 9% per year for the last three years, and 18.6% 6% per year for the last 5 years. Small caps were up 11 12% in 24 and down 9.5% in Q1. They are currently down about 5 1.5% uh year to date. But the second half of the year for midcaps and small caps ought to be really great uh very positive with the uh favorable expected policy changes, lower taxes, lower interest rates, increased onshoring, etc. all this this entire agenda that

we're seeing play out from the administration will be very good for small businesses we think and they are about 90% of all businesses in the United States after finishing 24 up just 1.25% the bond index finished the first quarter of the year up 2.78% and at the moment it's it's come off a little bit because of all the money that came out of bonds and into the stock market. So you've seen yields rise again up to a little over 4 and a.5% and the bond index for the year is just up uh under 1% about 75 basis points at the moment. The March inflation rate came in at 2.4% down from February inflation rate of 2.8. We recently I believe it was Tuesday I think last Tuesday got the April inflation number and it was 2.3. So, we're moving in the right direction. Uh, moreover, after spiking 270% from $2.30 a dozen at the end of September to a record $850 a dozen at the end of February, wholesale egg prices in the US have fallen 53% in in the last 5 weeks down to $3.95 a dozen, which still sounds pretty high to me. Maybe I'm getting old. Uh, Federal Reserve Board lowered the short-term interest rates from 5.2 25. This is from the last quarter, but I held it because we're still monitoring this. It's it's still very relevant. Um short-term interest rates from 5.25 to 425 in 24. Uh with the last cut happening, a 50% cut in October of 24. The yield on the 10-year Treasury note rose spooking the bond market. 10-year yield. And and the reason why the 10 the 10-year note the yield rose at more towards the end of 24 was really because our fiscal house, our deficit spending and our debt was was spooking uh the bond markets. Now you see the interest

rates going up again. That is a function of it's it's less a function of the fiscal problems and more a function of that money moving from bonds into stocks recently. And then real GDP grew by 3.1% in the third quarter, 2.4% in the fourth quarter of 24. And they when I wrote this, they hadn't released that GDP number, but the Atlanta Fed was forecasting a negative GDP number of -2.2. Um, but they recently released uh the GDP and it was actually a negative0.3%. And if you dig into that number a little bit and if we if I were there and things were a little more flexible, I'd show you all this other document. But if you look into the GDP number and what's driving that GDP number, imports to this country are a negative in the calculation of our GDP. And when the tariff talks began late last year and certainly early this year, uh companies began to frontr run or import more ahead of those tariffs. So that large sort of um that large number for imports for Q1 uh really dinged or uh um detracted from the otherwise positive GDP growth. Um, also if you look back at the 3.1% in the third quarter, a lot of that was government spending and that has pretty much dried up as far as GDP goes. And then US unemployment rate rose slightly from 4.1% and not dried up, but it's been curtailed. Uh, government spending will never dry up. Unemployment rate rose slightly from 4.1% in December to 4.2% in March of 25. So that means there are about 7.1 million people who are in pretty good shape sitting on their couch as we speak. Our clients are fully invested, diversified, and rebalanced diligently.

This portfolio was rebalanced in the middle of December. It will be rebalanced uh about 30 days from now, probably closer to 25 days from now in order to prepare the portfolio for whatever the last half of this year brings. And there is really no telling. It looks positive. It, you know, things look like they're settling down. The bottom's been taken out and um things seem to be moving in a positive direction. I think if they get this tax bill through, uh you'll you'll probably see another leg up. As they say, the the market will melt up. They they always say the market takes the elevator down, but it takes the stairs up. So, something to consider. So, the S&P was down 4% for the quarter and up 8% for the trailing year. Bond index was up 2.8% 8% for the quarter and up 4.9% for the trailing year. Internationals have been on a tear this first half of the year. Internationals are up 17% uh for the year, up 7% for the quarter, up 5.4% for the trailing year. And emerging markets are up 3% for the quarter, up 8 12% for the trailing year. And right now, emerging markets are up 9% for the year. And then oil closed the quarter at $71 a barrel. And clearly, everyone has seen oil now drops. It's I think it's $63 a barrel today, maybe 62 bucks and change. So that's been a pretty, you know, that's about 15% drop in the price of oil, which will be great for summer driving season, particularly as we're coming up on Memorial Day. So things are looking pretty positive. If you would please move to that other uh report, that would be much appreciated. Thank you so much. All right. And if you would please go to that next page. So here, let me pull this up. All right. So, pardon

me. All right. So, this first page is the balance sheet for the Long View Firefighters Relief and Retirement Fund. As of March 31st, the fund the total fund balance was $98,421,81069. The current balance of the portfolio, even given all the mess that went on in April, which I've described, the current balance is $100,570,47 at the moment. So up about 1 and a half 2% from the end of March. If you would please go to the next slide. So this is a graphic representation of the prior page. Up at the top right you'll see your large cap funds uh your midcap managers your small cap funds raigar MFS your international equity fund your emerging markets another emerging markets those complement one another millennium magnitude cohesive pimco these little bitty bits from from uh legacy uh bits from your prior uh relationship Guggenheim PGIM total return funds Blackstone which is also just a smidge now I believe it's about $30,000 if I'm No, I believe I'm confusing that one. It's not 30. We'll see in a sec. Um, Bred's Global Opportunity Fund, Black Rockck High Yield, and Senior Loan ETF. And if there was if there were an appetite for the Forbix private credit fund, this would be where that fund would find itself would be in that area up in the TCW senior loan ETF. as a floating rate instrument, it would be um a complement to the senior loan ETF and would probably share that spot uh with

that um with Forbix if and only if of course there's an appetite uh for their services. Next page, please. This page is the asset allocation by asset class. So you're 42% domestic equity, 10% international equity, 5% real estate, 5% emerging markets, 30% fixed income, and 6% alts with 2% cash. This ne uh next page, please. And then the next page, please. And the next page, please. So at this point, we are at uh 2022 on page six. And just as a reminder, 2022 2021 to see this inflation numbers. 2020 you're up 11 and a half percent with very low inflation as they shut the economy down for 6 months. The actuary got a 10.14% uh rate of return. 11% in 21. You see inflation is now near 7% um giving us a 4% for the actuary on the real rate of return. And then 2022 was just a perfect storm down 14%. Uh inflation was 6.5%. So in for a number that we're trying to maintain the average of 4.5 when you drop a negative 20 into that into that data set, it is just devastating for that uh for that real return number. Prior to 2022, y'all were well above that 4.5% target, but that negative 20 was uh was like a torpedo. Next page, please. So, now we're on page seven, and 2023, you're up 13.8%. You can see that inflation has cooled to 3.3%. And your actuary got 10%. 2024, you're up 10.4%, 2.7% inflation, 7.5% for the

actuary. The first quarter of this year, there was $1.3 million in net outflows for the quarter. Negative66 basis points was the performance of the invested dollars net of all investment related fees. 1.31% inflation, so a negative 1.97 real for the first quarter of this year. So if you go all the way back 14.25 years, you have a long-term average of 4.8. 8% an inflation assumption an inflation experience of 2.6%. Your assumption is 3%. And because of 22, this number has been taken from a little over 4% down to 2% by that negative 20 nearly 21% in 2022. Next page, please. This page is your executive summary. This looks back at the 5, three, and one-year rankings of not only the total fund, but also the individual investment managers that that that um lend themselves to this sort of analysis. Uh balanced fund 8.9% each year for the last 5 years puts you above average. 3year return in rank 3.95% above average as well. And the one-year return in rank 4.86% right in the average. Uh looking at the individual funds, Lumis sales growth fund uh 22nd, 1st, and 11th. And as a reminder, we want these numbers as low as possible. And we focus primarily on the three-year number um and the five, but particularly the three-year number for an indication of a termination. Uh Vanguard Equities in the 40th, ClearBridge 30th, Fidelity Low Price 18th, Hood River 6th, uh MF 67th. So they're pretty much on a watch list. And you can see how that has gone to their 5year as well. But then you look

at their one year and it's 36. So this is one of those sort of watch list circumstances. And there's something else about that that Charles and I have have concluded over the years that we've really put into practice more recently is that these value managers should really be given a little more time than the growth or core managers. And the reason for that is that it they're simply out of favor for longer periods of time. And we have done case studies and tracked managers that we have terminated that were value managers that we were very confident in our termination and we replaced them with good managers. However, in some of those cases, we've seen the the value managers really come springing back to life and um that's basically what's happened. we think with MFS New Discovery, but in some cases it takes a little bit longer uh for that to really efferves. Fidelity emerging markets 27th, Goldman Sachs 55th, Black Rockck High yield 23rd and the senior loan ETF 11th. Next page please. This will be instead of alpha in rank, it's return in rank. So Vanguard Large Cap Index Fund 35th. And I know that I've been saying this for so long about the normalization of these core funds after 22, but you can finally basically see it. Vanguard Large Cap Index 35th, the Midcap Growth ETF is not a core fund, but is our midcap growth ETF for the fund 19th. Uh, and then the Russell Midcap 47th and 16th. And then the small cap core is the only one that continues to struggle a little bit in the 70th, but we don't expect much out of a small cap core. real estate 22nd. That's the iShares USRT REIT that replaced New uh ticker TI X which was originally T I A CRF that

was replaced maybe a year ago or less. My memory is failing me at the moment. Guggenheim, I know I say this every single time, but the the disposition of your two core plus fixed managers is just crucial for the for the for the health of the fund because they constitute 20% of the total pension fund and that is a lot by by way of diversification. So we've got Guggenheim at 24, 35th and sixth and that's so that's their return for the trailing one year. So you have a bond manager returning 6.21% 21% over the oneyear period and he's it's a diversified bond manager and then PGIM 28 22nd 21st pardon me and 22nd so they've done 5.75% outperforming the benchmark by a by a long shot a JP Morgan Global Bond Fund 9th 12th and 20th Millennium is a hedge fund that you've had since well before I came around well before Charles came around second fourth and third and your complimentary hedge fund which was hired at the last meeting uh magnitude second fourth and first so they're up 10.64% for the trailing one year and their year to date magnitude's year to date is just under 3%. So as a diversifier you can see that it's absolutely doing its job so far. I know it hadn't been long, but uh compared to the ad which is up 74 basis points, 3% looks looks pretty attractive. Next page, please. This is your uh long-term return net of all investment related fees versus your custom benchmark. I would uh I would remind you that there are 70 you have 75 basis points worth of fees in the pension fund that are investment

related fees and that includes your actuary and us and the custodian and investment managers and I'm forgetting somebody else administrator etc. All the all the v all you know all the things it takes to run the pension plan are in that 75 basis points. So your total fund, let's we can go back 10 years. 5.23% is a net number. A gross number is 5.26. So if you were to add that 75 basis points worth of fees back into that 523, you would have outperformed 526 by about 50 basis points. Same thing on the 7-year 6% net versus a 54 gross is excellent. Five-year 8.9 versus an eight growth, excellent outperformance. 395 versus a 349, again more outperformance. The one-year 4.86 versus a 345, more outperformance. And year to date, the total fund is down 66 basis points and your custom benchmark is down 1.18%. So, we've got outperformance across the board. Uh, next page, please. Now, this page is a little more interesting, I think. I mean, yes, it's it's neat that that there's outperformance. Um, that's all well and good, but the real question is why is the custom benchmark in the 80s on the one-year? So, what we were looking at before was really the effect of the manager's impact on the portfolio versus your custom benchmark. Now, what we're doing is we're taking the the return of the fund and the custom benchmark and ranking them both. And what you see is over this one-year period, the custom benchmark itself is in the 80s. And what that tells me as an analyst is that that's not a manager issue. What that is is that your current asset

allocation is currently and has been for a few quarters out of favor. And it's easily explained. You have small cap exposure that has been out of favor as an asset class. And that has that has um been the primary culprit. So this is not where we looking at the managers. This is where we're looking at the total asset allocation and ensuring that it's uh over a long period where we want it to be which is at least an average. Um, so you can see that it's been out of favor for about the last few quarters and we would expect that trend to uh not continue and that there would be a reversion to the mean and small caps and midcaps will get there due and indeed year-to date midcaps are outperforming the S&P 500. Midcaps are up 2.6% the S&P is up 1.6%. So we we obviously don't think this will continue but it is something to point out to the board and I do find it fascinating that sometimes despite your best efforts despite our best efforts of keeping good managers in place sometimes the allocation itself is simply out of favor. And that would conclude uh my report, ladies and gentlemen. If there are any questions, I don't know that I'll be able to hear them, but I'd be happy if maybe if you could write them on a whiteboard and hold them up, I could answer them. Can you hear us now? I can hear you now. Oh my gosh, look at that. Wow, that was great. Way to go, Scott. Yes, sir. Are there any questions? Oh, will this is John Newstead. The Sure. The only question I had was uh last meeting I or requested that we break out when y'all became managers, what time period that was and then the performance on that.

Um, hold on one second. Let me So, our first You're going to put it on this. Uh, that's I'm so sorry, John. Yes, sir. And and and and you wanted it on the executive summary, did you not? No, I wanted on this total plan document. This um I see the unit value schedule. Yes. Yes, sir. Understood. I apologize for that. I did not see that in my notes and that will absolutely be there. Um in fact, uh Charles can calculate that and we will send that after the meeting and next time we meet we will have that as well. Awesome. I apologize. Oh, it's fine. Hey, John, to get a good reference, if you were to look at the return page, that sevenyear mark would be pretty close, right? My my issue is my issue is every time we have to basically make an asterric about it at every all the quarterly meetings and there's there's change over and on the on the on the well the the board makeup and so it's just easier if that's consistently explained since it's something we always reference. Sure. I I blame Charles I do have one question sir. Um on the forex you were talking about where it would fall into uh and everything. How would that affect our verification in that asset class? Well that's something that if there was sufficient interest in Forbix we would model it before we could really come to a conclusion. But I suspect that it would not affect the diversification of the portfolio other than to add to it. um it would be sort of a sub sector of floating rate. So that would be u you know the floating rate fund you have now is more uh those

loans are more growth capital to middle market companies and this obviously would be more lending to developers uh say such as you know multifamily developers as well. It's almost the other side of the coin of raastagar. So, you know, you have to understand when you begin to get into private credit and private equity, you're now doing business with not only you're a partner with the equity side, but now you're involved in the lending to those types of investments. So, we don't think it would have a negative effect on uh the diversification of the portfolio. Uh it would probably be a net positive, but that again is something we would model before coming to a firm conclusion. talk about model. So that I like for you as for so if you want to get a model for it so we at least decide at that point. Absolutely. Okay. Because we're positive toward that investment. Okay. That's what I didn't know yet. Thank you. Um so what we'll do is we can um what we'll do is we'll put together a Let me think through this a little bit. We'll put together a full simulation of Forbix to different degrees. Again, I just having done this as long as I have, I suspect it would be close to a 2% allocation because you've got a 4% allocation to the floating rate. And so, it would probably be in that neighborhood. But what we'll do is we'll model several different um several different scenarios and we will attend the June meeting and simply discuss that topic if that works for the board and also by then we'll have an

updated unit value schedule that will have RHI's performance on it and we'd be happy to share that with you as well. Now, will this is John Newstead? I believe the minimum investment was 5 million. So, you would look at No, they said we could do a little bit less. Their paperwork did say 5 million, but Okay. So, they didn't mention as part of the JV. They'll allow less. Okay. I wasn't sure if they were going down to the 5 million because of the JV. Um, no, sir. I believe the interest in the seed capital um precludes their minimum. All right. And then um we'll vote on it this Thursday, but I'm changing on the board. So I'll I'll kind of express a little bit on this, but I won't be here for the decision. Um you're changing. Yeah, they're mayor's appointing new council member to the board. So that'll that'll change. But to get on to this one, my biggest concern with with it is that the fund is only seven month old. Mhm. Charles and I that is my that's my biggest concern. Uh this is going to where you're doing a fund is a completely different it's a different model. It's a different animal altogether and to use past performance uh without for their other part of the company to me just we don't have enough experience there. Understood. Yep. And then also just understand that this is highly cyclical and so odds of a recession the more likely this will become u challenged and then they haven't really increased interest rates uh even though rates have went up which means their spread has shrank and I don't know what the reason for that is there's also you got to be concerned about the geography of the markets that they're in. Uh there was no uh loan allocation that was broken down. multif family is definitely more favorable than if

they're an office or u other types but other thing to consider is those and um there is some reference to FHA lending which really wouldn't be applicable for the type of funding that they're doing which is bridge loan and short-term financing. Um so those are all my comments and notes about it. Yes sir. Thank you. You're welcome. And we will miss you. All right. We'll miss y'all. We will, actually. You've already made a great improvement to the report. And now you're going to leave. Yes. Well, thank you for your service. Uh, thank you. Yes. Thanks for your service on the board, John. Appreciate it. Mr. Mr. Chairman, if there are any questions, we'll stay all day. And if there are none, then I guess our presentation would conclude. Uh, I think we're good. Thank you, gentlemen. Thank y'all. Thank you. Yes, sir. We'll hang around for the remainder of the meeting if that's okay. Sure. All right. So, moving on to items for action. Uh item action A, a review and motion regarding recommended trades for first quarter pension performance presentation. Didn't really didn't have any didn't have any. So, we'll go ahead and move on with that. Item action B uh review and motion regarding reconciliation for the month of April 25th, April 2025 for Moody checking account, Moody dispersement and MSSB omnibus. I'll make a motion to approve. I'll second it. Uh motion and second. Do we have any discussion?

All in favor? I. Any opposed? All right. Uh item action C, review and motion regarding internal financial statements, April 2025. So, we're like 98, but today we're at 100. Yeah. Or over million. The bottom was in the 80s. So, that was scary. Yeah. A motion to approve the financials. Second. All right. We have a motion and a second to approve the financials. Any discussion? All right. All in favor? I review and motion regarding minutes for April 2025 meeting. Sorry, I wasn't able to be there. A motion to approve the minutes. Second. Any uh any discussion? All in favor of approving minutes for April 2025? I. Any opposed? All right. Uh moving on to item action E review and motion regarding refunded contributions to Jared Hall due to separation. Motion to approve. Second. Did his not get a board member signature on it? Uh we did that this morning. Okay. Yeah. Uh we everybody was off and gone so we did that this morning. Yes. Yes, ma'am. Okay. All right. All in favor? I. Any oppos? Oh, any opposed? Sorry. I apologize for not asking for discussion. Feel discussion. So, uh item action F uh review and motion regarding

refund of contributions to Ashley Armstrong due separation. Make a motion to approve. Second. Any discussion? That one was already paid out, right? On the reconciliation. Yes, sir. It looks like it. So, yep. All in favor? I. Any opposed? All right. Item action G, review and motion regarding rollover contributions to Brandy Parker due to separation. A motion to approve. Second. Any discussion? All in favor? I I Any opposed? All right. Uh moving on to item action H. Review and motion regarding expense reports for the Telra peer review uh from May 7 uh 7th through 9th in Conro, Texas. Kobe Pam and Logan went I motion to approve second. Any discussion? All in favor of approving the uh expense reports for self for peer review. I I Any opposed? All right. Moving on to items for discussion. Uh discussion of upcoming retirements. None that I know of. Um I don't know if there's feel like I'm always the last to know. Nothing that I'm aware of imminently. I am anything. All right. Everybody's here is this month. All right. So uh next item for

discussion is the upcoming conference uh textur summer forum August 3rd through 5th in El Paso and the Telra annual conference October 5th through 8th in Abalene. Um not sure who all is planning on attending those. Plan on going to Texas. I'm not far enough down my calendar to look at October yet. I was going to try to hit both of them. So, so I don't know if I'll get back in when I get back in time from a balloon race to go to the El Paso one. I got to figure out when I'm getting back. Yes, ma'am. All right. So, uh, next regular scheduled board meeting is June 17th. Um, does anybody have any issues with that time frame? I'll be out of pocket, but I'm sure the meeting can I will also be out of pocket. So, all right. Where's Where's Kobe at? Kobe's on cruise. He's on vacation right now. So, good. Uh, we may review and make sure we'll have a quorum for that and see if we can't update that since a couple of good. All right. I want to know more about the the mayor's Yeah. I do too. I don't know if that's a recording conversation. No, it's it just happens every year. There's new appointments and so that's all it was. Anyway, we can make a request. It's going to be Councilwoman Moore. Yeah. So, is she going to do her continuing education? I have to. Well, we greatly appreciate your time and service for sure. So, I'm actually a little depressed here. Questions. I enjoy being part of it, but Shannon will be asking questions. It'll be a great addition for y'all. Motion to adjurnn. Awesome. Motion second to adjurnn. I All in favor. Thank you.