Longview Firefighters' Relief and Retirement Fund - Regular Meeting

Reunion du fonds de retraite et de secours des pompiers de Longview. Eux, veuillez noter les membres présents. Y a-t-il des commentaires de citoyens ? None, very good. If this is not the case, we will move on to the presentation. Our first presentation concerns the current evaluation of 2025 carried out by Foster and Sperluette Foster, and we have Lindsay Redman here to make this presentation.

Hello, hello everyone. Happy to be here this year. Just to review the main results of the 2025 evaluation. Overall, it was a very good year. This is mainly due, you know, to another year of good performance. And fortunately, with the smoothing over three years, we no longer feel the effects of the performance of the 2022 market. Hum, so it's the first time in about four years that we've seen a gain in assets, at least in terms of the current value of assets. Okay, okay, perfect. So just the overall results. Thus, in relation to the evaluation of 2024, the total accumulated passive has increased by about 4.8 million. So, for the evaluation of 2025, you look at a total accumulated passive of about 144.8 million. And by examining the actual value of the assets, for the yield rate of the actual value of the assets, it was estimated at about 12.2%, which is well above the yield rate hypothesis of 7.5%. So, for the evaluation of 2025, we observe an actual value of the assets of about 104.33. So, the non-financed actual passive that results from it, which is simply your passive accumulated minus the actual value of the assets, this result is therefore 40.5 million, or a decrease of about 3.2 million compared to the evaluation of 2024. Then, the normal cost rate, that is, the normal cost is generally just the cost of the benefits that will accumulate throughout the next year of evaluation. And so, the normal cost rate is just this figure in percentage of the salary mass. And we have indeed seen a slight increase compared to the previous assessment. So, for the 2025 assessment, it is about 15.55%. Then, regarding the financing percentage, we have also, you know, seen an increase last year. For the 2024 assessment, it was 68.8%. We have seen an increase of 3.2% of the financing percentage. So, for the 2025 assessment, It is exactly 72%. And finally, as for the amortization period, last year, it was 29.6 years. As we have seen significant gains in the current value of assets, we now observe a decrease of 3.6 years in the amortization period. Thus, for the 2025 assessment, the amortization period was set at just 26 years. Let's move on to the next slide. Thank you. Then, let's briefly discuss the rates of contributions. Currently, the city still contributes to 12% of the total wage. Obviously, this rate will go up to 19% once the retirement obligation comes to an end. Then, the members, according to their level of affiliation, continue to contribute to 15% or 17% of the total wage. Let's now compare this to a determined reference index in actuality. In short, it is simply a matter of establishing a benchmark to see to what extent fixed interest rates align with our usual calculation of the determined contribution in actuality. For the evaluation of 2025, the reference index was set at 13.32% of the wage. If we compare this figure to 12% of the current city's wage, we could think that there is a deficit of about 1.32%. But, when we take into account the rise to 19% of the wage expected in 2047, the adjusted deficit is actually just below 0.6% of the wage. To understand how this calculation was determined, you can see that we started in 2019 for the evaluation of 2019. You can thus visualize all the years and the different basis of gain and loss. As you can see, 31-12-2025 is the first year where we have finally observed a basis of gain. You can see that the sum of all these bases corresponds to 40.5 million for the non-financed passive. The period of amortization, or rather the payment of amortization, rises to 2.6 million. When you calculate this compensation payment in percentage of the wage, the result is 13.81% , by adding the normal cost of 15.55%, we get a total percentage of ADC of 29.36%. The mixed-cost rate is simply based on the composition of the members of levels 1 and 2, given that they contribute to different levels of the wage. The mixed-cost rate of the members, based on their share, is about 16.04%. By subtracting line 3 from line 4, we get the city's reference index, or 13.32%. Are there any questions on this subject? Yes, could you both come back to the first slide? Okay. What is the difference between the real value? No, not that one. You have 104 million for the real value of assets and we have 108 million in our audit. That's right. In fact, I will address this point in, well, in two slides. Okay. Yes.

If you allow me, just for those who could watch this presentation, for the current study, we use the 12% figure. But we want to clarify that part of the pension obligation consisted of a redirection of these 7% between 19 and 12 to pay the obligation. It was the will of the pension fund to pay a part of the obligation. Thus, the city always transfers 19, 7 are intended for the obligation and 12 for the effective payment. It's just so that the people who watch understand why there is a difference between these two figures. Thank you, Tony. I beg you.

Okay. Then, by examining the market value of assets, at the beginning of the year, we were just below 99.8 million. During the year 2025, there were about 5.5 million receivables. The total revenue of investments was a little over 12.9 million. The total increase is therefore about 18.4 million. In terms of deductions, the performance payments were just over 9 million, and the combined administration and investment expenses were around 900,000, or a total deduction of around 9.9 million. For the market value of assets at the end of the year, as it was mentioned, the final value was 108.3 million. Based on our estimated calculation, the yield for the year of evaluation 2025 was 12.24%. Okay, let's now examine the current value of assets. The fund currently uses a 3-year smoothing method. The objective of using a smoothing method is essentially to minimize the volatility of investment requirements. 3-year smoothing means that the gains or losses of each year will be different to a certain extent. For the year 2025, to briefly talk about it, there was a gain. Due to the 3-year leasing method, two-thirds of this gain will not yet be accounted for in the current value of assets. Regarding the gain of 2024, last year, two-thirds were not accounted for. For this assessment, one-third is not accounted for. In summary, you differentiate gains or losses simply to minimize the volatility of the market value and to reduce the volatility of investment requirements. As mentioned, the market value at the beginning of the year was 99.8 million, based on a yield rate of 7.5%. We would have approximately expected the net yield of the costs to rise to 7.35 million, as indicated in line 3. By adding 1, 2 and 3, we would have expected an end-of-year market value of about 103.6 million, but the real value was 108.3 million. Line 6 therefore shows that the gain for the year was about 4.65 million. Then, by looking at line 7, you can see that for the gain of 4.65 million in 2025, the two thirds are not yet accounted for, which gives about 3.1 million for the gain of 2.56 million in 2024. You only see one third of this gain which is not yet accounted for, or about 850,000. The total different gain which is not yet accounted for in the current value of assets is therefore 3.95 million. This is why you have a gap of 3.95 million between your market value and your current values, because some of these gains are not yet integrated into the current value of the assets.

So, if we didn't use smoothing, we would be even more efficient than this year?

Yes. But of course, some years, if the total difference was actually a loss, the current value would be better than your real market value. Okay. As we have had two years of gain, we also see on the side of the current value of assets a performance rate for 2025 practically identical to that of the market value. By examining the market value and the current value of assets in recent years, 2022 was the year in which pension bonds were deposited, and it was a very bad year in terms of performance of assets. You can see that in 2022, the blue line represents the market value. You can see that this year, the current value, the green line, was much higher than the market value and we have observed in the last three years a higher performance than expected. You can therefore see that the market value has seen a significant increase, almost linear, over the last three years. And so, you can see for 2024 and 2025, since they have practically the same yield rate on the market value and the actual value, that they have evolved from concert from 2024 to 2025. And the last two slides are actually just an overview of the information that the actuals are supposed to provide. But on the basis of what we have discussed so far, are there any questions?

Other questions? MHM. Okay. What about an experience study? I know we discussed it at the end of last year.

Yes, yes, it is in progress. I should be back here in November or December. So, if there is a meeting that I can attend during one of these two months, we will be able to review it at that time. There will probably also be a new mortality table that will come into play. The Society of Actuaries has recently published the tables Pub 2 0 1 6 instead of Pub 2 0 1 0 that we currently use. So, we will certainly look at this point as well. But yes, whatever the month, November or December, I should be able to be there to examine the study of experience and determine the hypotheses that we would propose to use for the next evaluation of 2026. It works. The third Tuesday of the month.

Okay. Every time, then. Mrs. Redmond is from Longview for those of you who do not know. Yes. I was not born here, but I grew up there. So, yes. Are there any other questions? If not, thank you very much.

Great, thank you very much.

Very good. Then, we have a presentation of the end of the year 2025 audit presented by Henri and Peters.

It should be one of the PowerPoints. There you go. Yes, so first of all, thank you all for receiving us. I'm going to address two points today. I'm going to review what we call a letter 114 or letter SAS 114, or even a letter of communication with the government. Many of our conversations go through PAM during the audit. We don't really have the opportunity to speak to the council, so we use this letter to communicate our conclusions and all the discussions required. So you have a copy with you and I'm going to go through it pretty briefly. Starting with the first page, there are certain things that we must bring to your attention. We call them significant audit questions. This would apply if we had a new accounting standard to implement this year. Fortunately, this is not the case. The year has been rather calm regarding audits of social benefits regimes. But we also address other subjects, such as some accounting estimates. Obviously, as for a retirement regime, the most important estimate is the fair value of your investments. We are talking here about a balance sheet stopped at 31-12-2025. So we have, you know, a delay of seven and a half months looking back. I am sure you have discussed it and that investments have fluctuated since. This is therefore a reminder of governance. Although we were talking about the financial states at 31-12-2025, they have evolved since. We also draw your attention to any sensitive or very important information. All this is found in note 5. This is a real study through the information provided by the GASB-68 standard. Thus, the entire note at the bottom of page number 5 comes from the actuals. Many actual hypotheses are integrated into the data we include. We therefore rely on their study and leave all the actual expertise to the professionals in the sector. We would also take this time to mention any difficulties encountered with Pam. We have not had any difficulties with Pam, but if that had been the case, I promise you that we would have talked about it beforehand. It is not a matter of putting Pam on the seat here. No, we have not encountered any difficulties. We always appreciate working with Pam. She is always ready to answer. So we are lucky and happy to see her. We could also talk about any kind of disagreement with the management. We are talking about the letter of affirmation of the management, which must be signed by a member of the EPAM council. There are certain elements in the audit report that confirm that it is indeed your financial states. We simply issue an opinion on these. We compile the financial states and issue an opinion confirming that it is your own financial states. We would also mention any element that we add to the report. In this case, it is the analysis and discussion of the direction to pages 5 to 7, as well as additional information required at the end of the audit report. These are therefore non-audited sections. They are based on audited financial statements and corresponding data, but these are non-audited sections for your needs. Apart from that, moving on to the audit report itself, from page 3, here is our opinion letter. Fortunately, now, from the beginning, they place the opinion at the top of the report. So, in this first and second paragraph, we indicate that it is an unreserved opinion. We estimate that the financial states themselves are exempt from significant anomalies. This does not mean that they contain no errors, but we think they are correct enough to issue an unreserved opinion. This also explains what we base our opinion on. We use the generally accepted audit standards in the United States to carry out an audit and our procedures rely on them. This also gives you a global overview of the respective responsibilities of the auditor and the management. So, a very general overview in these last two, or rather these last four paragraphs of the first page. Apart from that, we have another paragraph here because they love to include a whole bunch of jargon to drown you out. We have a paragraph on the other points that once again deals with the analysis and discussion of the direction and the additional information required not to be audited. It is at the bottom of this paragraph on the other points. Apart from that, we will move on to the analysis and discussion of the direction, which begins on page 6. This gives you a fairly general overview of the composition of the financial states and tells me where to look if I want specific information in notes at the bottom of the page. This therefore details all the notes from 1 to 10 and tells you where to find the information. This also includes the required additional annexes. There are some mandatory elements since it is a government pension fund. Some information is required by the GASB-68 standard, they are therefore also included by the actuaries. The next page gives you a very global overview of the financial states themselves. I will not go into the details because we will talk about it when we talk about the financial states, but this gives an overview of your assets at the end of the year as well as revenues and expenses. This also provides a ventilation of the members of the fund for 2025 and 2024 at the end of comparisons. Does anyone have any questions so far? You will not deceive me at all if you interrupt me or if you speak at the same time as me, I promise you. Let's move on to page 9, the state of the net fiduciary situation. This is your report. So, since it is a retirement regime, we have some loans that come to us at the end of the year. These are all types of interest or dividends declared before the end of the year, but not perceived by the regime before 2026. We therefore have to account for them according to GAAP accounting principles. You will therefore see about $ 67,000 in loans for expected investment transactions. The investments, which constitute the majority of your balance sheet, have seen growth in each category, which is phenomenal, from fixed income actions to your alternative investments. A fairly significant growth of around 9 million, or around 9%. A very solid year therefore for regime investments themselves. Overall, it continues to grow, which is an excellent thing. We have had material that is totally cushioned this year, so it will disappear next year unless you decide to add it, but this is what this small lower part represents for a total net position at 31-12-2025 of about 108.2 million. The next page shows you your state of variation of the net fiduciary position or your account of results. Many changes here regarding the quotes are quite consistent with the previous year. The percentages remained the same. You have a comparable number of active members entering the regime. Overall, the quotes are therefore quite consistent with the previous year. The revenue of the placements is at an increase of about 33%, which constitutes a very strong year, notamment en raison de l'appréciation de la juste valeur des investissements. Vous avez vu cette augmentation d'un peu plus de 2,2 millions, ce qui fait une nouvelle année forte pour les cotisations globales et les revenus de placement du régime, d'environ 17,6 millions. This is compensated by your earnings. The distributions were therefore a little higher. I think we had more distributions carried out this year. It can be retirees or people who resign and ask for refunds. But overall, your net income or your net increase in the net fiduciary position was around 8.4 million, bringing you to this total of 108.2 million assets. In summary, a solid new year. Regarding the notes to the financial states, much of this language is quite consistent from one year to the next. I will address a few points, starting with page 13 on the contributions. We always include the contribution of $ 305,000 which was a punctual contribution in 2024. But this shows you a distribution between the employer's and members' contributions, as well as their respective rates. E, on page 16, we enter the heart of the matter with the disclosure of the Texas PRB, which has decided to be quite restrictive, I would say, about 4 years ago. We have therefore somewhat reinforced this note 4. On this page, you can see the investments as well as the managers required for the submission of Colby or PAM to the Texas PRB. E, on the next page, page 17, this will show you the fees paid by the regime. When we obtain our receipts, we have a report and a PAM result account that we compile. We can only see on these investment receipts that the fees are actually deducted. This does not specify what fees are deducted from the investments already present on the market, which are not necessarily species transactions. You receive a return, it is reduced from the associated fees, so there is no incoming and outgoing flow. The Texas PRB wanted a more consistent presentation of the financial states. Some regimes declared them net of charge, others not. This is what this table shows you. The first column, on page 17, constitutes a ventilation indicating exactly the fees paid by the regime. We then established an estimate or a calculation concerning these management fees deducted from the returns. It is obvious that these figures will increase as the market value increases. If investments progress, the associated fees will also increase. You will therefore see this small detail showing the total investment expenses paid over the year. Apart from that, on page 18, you go to note 5 which we talked about. It was a very sensitive disclosure. All this information is provided by the issuers in their studies concerning the non-financed retirement passive, the used issuance hypotheses, as well as any increase or decrease in the rate of update and its impact on the net retirement passive. Apart from that, the only other note requiring any disclosure concerns the BAE. This one was extended in 2025. We have therefore continued this table of contents in note 7 on page 19. Note 8 gives you an overview of all the different additional programs required that are provided at the end. And so, moving on to these points, they, a good number of these required annexes, although not audited, are provided by the actuaries and addressed in their study. The only one that is actually provided by us is on page 25. It is a ventilation of investment and administrative costs. So, this simply shows you the different categories, E, starting with the management costs of investments on the front line. This will correspond to this note at the bottom of page, E, note 4, E, with the management costs deducted from the returns and paid directly by the regime. And so, it gives you a kind of ventilation of all the expenses paid over the year, so that you can see where things have changed. In reality, the only other thing is in the department, various, administrative fees. They, it was just office supplies in 2024, which explains this drop from 23,000 to 5,000. Apart from that, everything else is quite comparable from one year to the next. But ... Does anyone have any questions? I know I went through this a little quickly, but ... Any questions?

No. No.

No. Thank you very much. I will take care of it.

Thank you. Very well. Then, we have the presentation C, E, the performance of the second quarter, E, presented by, E, RHI. We have Will Harrell and Charles Smith here. Hello everyone. It's great to be with you all this morning. In this hot August day, I will start as always with the economic commentary and you are invited to, they, intervene if you have questions along the way. After winning 17.9% in 2025 and falling 4.3% in the first quarter, the S&P 500 won 15% in the second quarter of 2026 thanks to a possible resolution of the war in Iran and to better business benefits than expected. In fact, the benefits of the companies have far exceeded expectations. In addition, the Dow Jones Industrial Average has reached 52,000 points during the quarter. Market gains in 2026 come almost entirely from the growth of benefits rather than the fact that investors pay higher prices for the same profits. If the benefits dissuade, the rally structure will face its most serious challenge of the year. En fait, il y a environ trois semaines, eux, IBM a fait allusion au fait qu'elle pourrait ne pas gagner autant d'argent qu'elle le pensait pour le prochain trimestre, et son prix a chuté. Son action a chuté de 27% en une journée, ce qui était la pire journée pour IBM depuis le lundi noir d'octobre 1987. Donc, aussi heureux que nous soyons tous que le marché atteigne des sommets historiques, nous voudrions certainement. Call for caution because there is a lot of exuberance around these expenses linked to the IAEA. And if you look closely, it is about $ 1 billion that they will spend this year for the development of the IAEA. If you integrate this into the country's GDP, it represents 2% of our total GDP. So, without these expenses linked to the IA, our GDP would not be what it is at all. It was, you know, very robust in the first quarter, I think it was over 4%, or 2.1% in the first quarter, down to 1.5% in the second quarter. If we end up with a 2% GDP figure over the year, it will be entirely thanks to the IA expenses. which is not in fact a very diversified way of allocating capital. So, the biggest brake could be the amount of money that is, well, excuse me, that is spent in artificial intelligence. Goldman Sachs predicts that the largest hyperscale technology companies should spend around $754 billion in investment spending this year, or an increase of 83% compared to 2025. There are therefore companies that have historically generated enormous flows of available treasury. Let's take Amazon, for example. They now issue obligations. They now contract debts to finance expenses in IA. The aspect of what is happening is therefore very, very different from what it was before. And that's why you see the large growth capitalizations at an increase of 6% for the year while the large value capitalizations are at an increase of 21%. There was a withdrawal from investors, simply based on the amount they spend and the way it affects their profits. And next year, it should be around $905 billion in 2027. So, it's not. It's not over. It's just starting. On June 30, the total yield of the S&P was 22% over the past year, 20.6% per year over the last three years and 13.4% per year over the last five years. Small capitalizations were up 12.8% in 2025, up 89 base points in the first quarter and up 22.57% since the beginning of the year. So, this bias in favor of the small capitalizations that you have in this wallet and this slight bias in favor of the value that you have always had, all of this ends up paying. In fact, your growth capitalization management is at an increase of more than 30% since the beginning of the year. It was one of the most important adjustments we had to make during the rebalancing. We had to sell a large part of it because its value had increased enormously. This is the best first half of the year for small capitalizations since 1991. Over the last 5 or 6 years, while small capitalizations have been underperforming, with each rebalancing, we have bought more and more high-quality high-market shares. C'est l'une des raisons pour lesquelles le portefeuille se comporte comme il le fait. Je veux dire, vous êtes en hausse de plus de 10% rien qu'à la mi-août. And so, it's a remarkable uptrend. After finishing 2025 at a 7.3% rise, the mandatory index remained stable in the first quarter, slightly bouncing to the second, but currently, it is at a 2.5% drop, which is why the mandatory index is falling by 2.5% and the return reaches 4%. Returns over 10 years have gone from 4% to 4.7% now and, as I have said a thousand times, the mandatory market is much smarter than the stock market. The compulsory market is down by 2.5% this year because we are on the point of, well, yesterday we exceeded $40,000 billion in debt. In national debt. So, if you lend money to someone and their debt ratio on salary or income increases, you will make a higher interest rate because the risk increases. It is a systemic problem, potentially existential, that will have to be dealt with. The IPC has increased by 4.2%, well above the 2% goal of the Fed. I believe that for July, the IPC was established at 3.4%, energy being obviously the main engine of the IPC. You know, diesel was at $ 5.5. This affects everything that is transported by truck across the country. The IPP was 6.5%. This is the price index for production. So, not what the consumer pays, but what the producer pays to produce the goods that the consumer buys. So there is still a lot of pressure at this level. And as I mentioned, the 10-year yield started at 4.2%, then it was at 4.5% at the end of the second quarter. It is now at 4.7%. Even if things seem wonderful, I think there are some flaws in the armor. The real GDP has progressed by 2.1% in the first quarter. The long-term average is 3.3%. Then, the GDP for the second quarter came out to 1.5%, as I mentioned. Although the Fed of Atlanta expects a much better third quarter, we simply see the break in high energy prices. And then, the unemployment rate. In fact, the best part of the economy at the moment is probably the labor market. The labor market shows a 4.3% drop in unemployment rate. It's almost full employment. There are only 7.1 million people who do not work but who are part of the active population. Et eux, c'est probablement l'étoile brillante dans cette constellation économique. Eux, les clients sont pleinement investis, diversifiés et rééquilibrés avec diligence. Et pour rappel, ce portefeuille a été rééquilibré à la mi-juin. Chaque investissement dans le portefeuille est donc impossible. Tout a été rééquilibré, eux, assez possible à la mi-juin. Petit récapitulatif. Le S&P était en hausse de 15% pour le trimestre et de 22% sur l'année glissante. L'indice obligataire n'a progressé que de 67 points de base pour le trimestre et de 3,8% sur l'année glissante. Les actions internationales étaient en hausse de 11% pour le trimestre et de 20,8% sur l'année glissante. The emerging markets were up 24% for the quarter and 44% on the sliding year. And oil closed the quarter at $69 a barrel, up 21% since the end of 2015. And oil, as you know, is negotiated at about $85 a barrel. If we didn't produce as much in this country, we would be really, really in trouble. Very well. So, the report on page 1. Thank you very much. At the end of June, the total salary was $115,951,418.03. Your current updated report, Charles, distributes the unique sheet. At IR, you are at $117,658,130.98. It is quite easy to see where growth comes from by comparing the two reports. We see that actions have certainly progressed since the end of the quarter, going from 65% to 66%. The speculative funds are more or less consistent. The alternative assets are more or less the same, but we see that the obligations have underperformed a little. Page 2 is a graphic representation of the previous page. Page 3 presents the distribution by class of assets. We have 47% in national shares, 9% in international shares, 5% in emerging markets, 4% in real estate, 27% in fixed income titles, 7% in alternatives and only 1% in liquidity. And as always, I will ask our dear Pam if $ 756,000 is an adequate amount of liquidity at the moment or if we have important outings planned.

We will actually increase our liquidity in about a week. Okay.

So we will increase our liquidity in about a week. And just like Tyler, we love Pam. I want to say it clearly. Elle est très coopérative, je dois le souligner. Très bien, nous avons un calendrier de valeur unitaire commençant page 4, remontant jusqu'à 43 millions de dollars début 2011. Clairement, page 8, vous en êtes désormais à 115, près de 116 millions de dollars. During this period, there were 11.7 million dollars of net interest on the regime, for an annual growth rate of 15.5 years of 5.77%, 2.73% inflation and a real growth rate of just under 3%. Page 9 is the analytical summary. At the top, you can see that the performance is really excellent. Some managers have been less efficient. We had two of them on the surveillance list during a few meetings. MFS and Loomis Cell. We would like to replace them today. But, as we say, with a view of the whole, the return on 5 years of 5.8% obviously includes the drop of 14% in 2022. It is incredible that since our hiring in 2017, you have only had two negative years out of the last nine. It's a beautiful journey. The return on three years is 12.22% net, all fresh. It's an average over the last three years. And the return on one year is 15.55%. Charles, do you have the POB figures? Yes. I believe that on July 31, 2022, we were at 11.57% annually. So, roughly, for these 46 million dollars of pension obligations, this represents a little more than 11% annualized since the investment of 2022. We therefore always want to make sure to mention this. This exceeds the debt service due to the city. Yes, madam. Yes, madam. And then the actions, you see, it's a little lower than the total. And the obligations, the fixed income, it's just extraordinary. 1, 2 and 8. And as you may remember, according to my economic commentary, the mandatory index over 12 months has increased by about 3.5% to 3.6%. And you are at 4.5%. It doesn't seem like a lot, but in the mandatory world, it's a hell of a performance. Looking at individual managers, the Lumis Cell growth fund, I know it's a hell of a performance. Looking at the individual manager. Very well. Very well. I won't say anything. I won't say a word. Fate has finally caught up with me. So we have some managers on the surveillance list that we would like to replace. Loomis Cell is one and MFS New Discovery Fund is the other. If we look at the other managers, the Vanguard Equity Income Fund is 59th, ClearBridge 39th, Fidelity Mid-Value 28th, and Hood River performs exceptionally well. We find MFS stagnating in small yield capitalizations. The international fund is 53rd, Fidelity Emerging Market has slightly receded but has come back strong, and Goldman Sachs obviously remains in the first quarter. The BlackRock High Yield, page 10, is, once again, in the first quarter. By examining the index funds and those that do not lend themselves to a risk adjustment, such as Millennium, Magnitude Global Bon, Guggenheim and PGIM, first quarter for the large core capitalizations, 42nd for the medium growth capitalizations, 31st for the medium core capitalizations, 21st for the small core capitalizations, 8th for real estate, Guggenheim 16th, PGIM 16th. It is therefore always important to note that you have two total yield managers who excel in their respective pair groups, but who complement each other by adding a layer of diversification to your mandatory portfolio. As for the global obligations, they are in the top of the list, just like Millennium and Magnitude. As for real changes, I will come back to them in a moment. Page 11 presents your net yield on the white line compared to your personalized reference index. Over 10 years and 7 years, you have 74 basic cost points within the plan between investment managers, guard costs, transaction costs, advice costs, administrative costs, etc. There are 74 basic points in the fund that are not included in this personalized index. You can see the underperformance since the beginning of the year and over the period of one year. This is not major, about 1.5% or maybe 1% of underperformance, and this is due to the disappointing results of MFS and Loomis Cell. But the vast majority of your managers overperform, which in a way compensates for this gap. Page 12 presents the total yield ranking of funds. Once again, although some funds are underperforming, your performance ranking is simply remarkable. If we go back 15 years, when we were hired about 10 years ago, your performance ranking was close to 80th place. Since then, it has gone to 26th, 34th, 41st, taking into account the year 2022. This statistical delay has therefore been met, and for the past year and since the beginning of the year, you are in the first quarter, or even close to the first quarter. This ranking in relation to the personalized Longview index tells us that your current allocation is very, very good. Forget the managers for a moment. This personalized reference index is built using the indexes and references of your managers. It is therefore a hypothetical portfolio made up of indexes. Ce classement élevé dans tous les domaines m'indique que, gestionnaire mis à part, le portefeuille et l'allocation sont très, très bons. C'est très, très efficace. Très bien, cela conclut le rapport lui-même. Nous avons quelques gestionnaires de remplacement. E, bien sûr, Bridgeway conviendrait parfaitement. Nous souhaiterions remplacer le MFS Small Cap Value. E, si vous pouviez simplement afficher la fiche technique. E. This one? This one precisely? Yes. Very good. Sorry to have so many pieces together today. Very well, thank you very much. So, we would like to replace MFS Small Cap Value by Bridgeway Small Cap Value. This is a fund that has existed since 2003. We know this fund very, very well. They have slightly lower fees and excellent performance. The technical sheet is in front of you, behind tab 2, excuse me, not tab 1. I took a little late on you. E, il s'agit d'un fond de petite capitalisation, value, avec un biais de très haute qualité, ce qui signifie que, depuis, et en fait, il a sous-performé au cours de la dernière, E, partie des trois dernières années, car lorsque les taux d'intérêt ont baissé de 175 points de base à partir de septembre 2024, nous avons assisté à un phénomène appelé « rally des titres de pacotille » sur le marché boursier. Thus, companies that had neither benefits nor treasury flows, and that had a high amount of variable rate debt, climbed to the top of their reference group. As a result, small capitalization managers, value, who owned these low-quality companies, which you would probably not want to hold for very long, were at the head of the group. This made our small capitalization managers appear, value, with a very low quality bias in vogue for a while. And Bridgeway is no exception to this. This is not something that, you know, we have never licensed them. This was not something systemic. This was not a problem linked to Bridgeway. It was simply the lack of favor of this style, this high quality bias, in their reference group for about 18 months. And I will, I will show you this underperformance. E, let me see if I can find it here. So, you will see in, E. So, 2024, if you look at this technical sheet, go back to the top, 2024 and 2025, you see this slight underperformance. The situation has completely reversed in 2026. It is therefore one of the rare cases where this underperformance was not so revealing of Bridgeway's failures, but rather revealing of a huge speculative title rally while Bridgeway owned high-quality companies.

Well, I have to go. You do excellent work. Thank you.

Oh, yes, madam. Glad to see you. Your honor. And then on the next, not the next slide, but the next joint part which is our report. No, no, no, the Bridgeway report. Thank you very much. So, on the first page of the Bridgeway report, you can see on a year that we compared it to MFS and Russell 2000 Value. And you can see a overperformance going up quite far, then these last three years, a slight underperformance. Once again, this is not a problem linked to Bridgeway, it is due to the fact that their pair group has radically changed. And you can all, we can clearly see it on page 2. This figure over 3 years, this 81st rank over 3 years, this is where we really see that Bridgeway underperformed during this period of Junk Rally in 2024 and 2025. And then on page 4, if you turn a few pages, you can see to what extent Bridgeway's long-term performances are solid. 14th, 7th, 5.9 out of 7 years, and how these 5 years of John Crowley have simply crushed high quality managers. And they are not the only ones. Many quality managers have been crushed during this period. If you look at municipal obligation managers, the higher the quality of the manager or the portfolio obligations, the more they suffered during this period. It was a very classic John Crowley that Bridgeway has beautifully crossed. And if you go back to tab 1, sorry to make you navigate in the report. Tab 1, we would like to replace the Loomis Sell Gross fund with the Vanguard Gross Index Fund. In addition, these changes will reduce your ratio of fees from 74 base points to 68 base points. We would therefore improve the yield, if we can say, while reducing the fees of 6 base points. The Vanguard Gross Index Fund is exactly what its name indicates. Date of creation, 26 years ago. It manages 107 billion dollars. The fund and the reference index are in perfect harmony, as you can imagine on page 1 of the technical sheet. The ratio of costs is 5 basic points. You can also see on the next page that in terms of sectoral diversification, technology far represents the part of the lion. So here is your technological exposure in the wallet, your growth at great capitalization. One of the reasons why Loomis Cell has failed so sadly is that they have simply put too much of themselves in the communication basket and not enough in technology. They were therefore very widely exposed to communication services and, as a result, they suffered a cooking failure. At present, our report on the growth of the large Vanguard capitalizations opposes the Vanguard growth index at the Loomis-Selgross fund. On the first page, you can see the difference in performance during this period. It was a time, if we go back to 15 years, when the Loomis-Cell fund grew and this fund evolved from a concert, but that changed and worsened, and over a year, Loomis-Cell progressed from 25 base points while the index gained 12.8%. This bad sector allocation from Loomis-Cell totally penalized them over the last 18 months. And given the amount of expenses in IA planned next year, this thousands of billions of dollars, we think that your growth fund at high capitalization should have a little more technological exposure than that of the consumer. I mean, communications. The ranking of the yields is therefore on page 2. Of course, it is in the first quarter on the whole line. Since the beginning of the year, it is 35th. And of course, you will not have an alpha page or an alpha ranking because it is an index fund. It is not designed to necessarily beat the reference index. It is designed to imitate the index with a low degree of error of follow-up, which is the type difference of the excess return. Uh, do you have any questions before I move on to something else?

I have a question about Bridgeway. I look at their E, their presentation sheet here. The sheet of information. The sheet of information. Thank you. They. It seems that the Russell 2000 Value index, with the exception of 2021, where they have manifestly achieved an exceptional performance at 67.74 against 28, seems to have surpassed them since or equated them quite sharply, and I suppose that these figures on the sheet of information are net or gross.

Yes, sir. The common fund of placement is net of fees and the index is raw.

I was just wondering if we add the fees with a passive management on the Russell 2000 Value index. For me, 2021 is the anomaly. And if they hadn't achieved this exceptional performance this year, I don't know where they would be compared to their reference index.

E, in particular on 1. Well, if you look at the yields per year and just below, Mr. President, the average annual yields, you see this slashing of performance compared to the Russell 2000. And this underperformance over 3 years is exactly what I was talking about regarding the speculative asset rally. For example, if we had licensed Bridgeway, or sorry, licensed MFS during this rally and chosen the small capitalization management, Value, at the head of this pair group, we would already be licensing this management. Because the, I'm sorry, or the index, or the index at that time. So, we absolutely took that into consideration. But what we have gone through in the last three years has been very strange. It gave a very, very mediocre image to the good managers. And this is a very high quality fund. Which means that the companies it owns have a flow of available treasury, very little debt, good results, good management and good history. The company I have just described has been totally left out over the last two and a half to three years. which has really screwed up the wallets of high-quality managers. It's a strange thing to recommend a manager who has recently underperformed. I, I, I totally understand that. But what we have experienced, it's one of those things, it's just that it was a very strange period for this particular segment of small capitalizations, value. Yes, we have. I don't know how many meetings we had with Bridgeway and MFS. They, there were really strange things that happened recently. Like for example, the Russell Mill Value, our index of large capitalization, value, now holds. Amazon, Meta, Microsoft, Apple and Intel. SpaceX. And SpaceX. Now, I don't know about you.

I'm dying to laugh.

But I don't see SpaceX as a company of great capitalization, value. It does not pay any dividends, has no history, but things at the moment, from an analytical point of view. I mean, I think Charles has less hair now than six months ago. In fact, for the very first time, Russell is going to start rebalancing this same index twice a year. We will therefore have to debate and find a context to assess the performance of our managers in relation to these different indices, while the latter are changing so quickly. It is. It is. It was a challenge. At the moment, I will not lie to you, Mr. President, it is a real challenge to try to determine who to hire and who to fire, because so many things have been upset, especially in terms of quality. And may I ask you a quick question? Of course.

So, another thing to mention is your personalized reference index, you know, the way we overperform by about one and a half point. 6% of this comes from Russell Mill Value. And our managers specializing in large capitalizations, value, will not buy Apple. They will not buy these growth values ​​because they simply do not correspond to the value approach.

For example, the Vanguard Equity Income Fund will not buy Apple or Microsoft. That's not what they do. They are looking for very stable companies that pay high and growing dividends. And I don't think SpaceX is in this category. Yes, we had a meeting with another manager, Large Value, and they told us that 85% of their underperformance was due to not detaining Apple for a week.

And that's because their fund is compared to this Russell Mill Value index. So I did a little analysis myself and examined another large value index, which did not buy all its growth values, and the difference over a year was 5%, while these two indices are directly compared.

So, the analysis in general and the comparative analysis with the reference indices at the moment, it's a bit tricky. It's a bit tricky. And we would like to place this MFS money in a high-quality manager whom we know will remain faithful to his principles. They have not changed. Certainly, they have underperformed, but it is not a systemic problem that concerns us.

This fund has benefited from consistent management.

Oh yes, Atlanta, oh yes, yes, yes, yes, absolutely, yes, yes, madam. It is brilliant and, due to what is happening with small capitalizations, value, we have met these managers until exhaustion. Yes, in person, on Zoom, to try to determine if we have to end this mandate. What's going on here? And go to the bottom of things. And it wasn't easy, but that's where we are at the moment.

And the other change recommended to integrate the Vanguard Gross Index Fund is a recent change of direction. I mean, they've only been in office since.

Oh, that's right.

Since 2025.

Okay, okay. And if it wasn't an index fund, that would worry me. And if it wasn't Vanguard, that would worry me just as much. Exactly. If it was a small trading shop and they had changed managers last year, I would be much more worried. Yes, Vanguard has a very solid team. That's the case. Yes, madam. But it's an excellent question, Kobe. I fully understand your concern and I don't want to have to withdraw my words in six months. But we really think it's a cautious decision for the pension fund. It's not opportunistic, I promise you. It's just cautious. And we saw Bridgeway overperform once the speculative titles rally fell. Because speculative titles rallies, if we study them historically, are always followed by quality rallies. Once the speculative rally is over, you benefit from this superb quality rally, and that's what you're getting with Bridgeway right now.

And I suppose that, since you've just rebalanced, it's just the same amount transferred from one fund to another.

It would be a simple transfer. Are there any questions about the report before I move on to other points? Very well. The first point will be an update of Rastagar to Kyle. These are the essential points not to keep you all day. The builders are under extreme pressure. Always. I mean, it's not frozen. They still sell land, but not at the pace they would like. And the fundamentals of the Kyle market are clearly improving. But rates are really the main obstacle. They just need these rates to drop to unlock the situation between supply and demand for housing. And going from a real estate loan at 3.5% or 4% to a loan at 7.5% has simply frozen the real estate market. So, for the moment, everything is fine, but things are much slower than expected. Any questions about Rastagar before I move on to the next point?

I know we talked about the fact that he was maybe trying to close the file and pay everyone. Yes, their schedule, is it still up to date?

It is still his intention to conclude things as soon as possible. But that, in itself, will take some time. Yes, sir. Other questions on Rastagar? I have one last and then I leave you alone. We had several very productive meetings with Mayor Catherine Campion regarding the evaluation and examination of the best practices for the pension fund as part of the Senatorial Law Project 322. It was very, very fruitful. She raised some improvement tracks, what she calls improvement opportunities. We spent a lot of time with her. We exchanged absolutely everything we knew about the pension fund. She formulated very constructive recommendations, especially regarding the IPS. Once its report is finalized, and once Mary-Catherine, Charles and I will all agree on the new IPS, probably during the next meeting, now that its report has reached its end, we will present a new declaration of investment policy so that everyone can examine it and ratify it, because it is an improvement compared to your previous declaration. It is clearer. There are no more details. It is much more granular than the old document. This explains how to evaluate managers and when to fire them. There is simply a little more policy and procedures, a little more substance in this IPS. But overall, it was a very positive experience and, from our point of view, it did an excellent job.

Merci. Nous avons d'ailleurs prévu d'en discuter plus tard. Nous n'avons qu'une première ébauche pour le Conseil et nous en parlerons à la fin, mais merci pour ces commentaires. Cela nous aidera certainement dans cette discussion.

Oui, Monsieur. Mais cela conclut mon rapport pour ce trimestre, Monsieur le Président. Des questions ? Avons-nous des questions ? Merci beaucoup. Merci, Monsieur.

Merci, Will.

Très bien. Point d'action A. Examen et motion concernant la performance du fonds de pension au deuxième trimestre.

Je propose son approbation.

Appuyez. La motion est appuyée pour approuver le point d'action A sur la performance du deuxième trimestre. Une discussion ? Sinon, que tout le monde dise « pour ». Tous ceux qui sont en faveur disent « pour ». Je ne peux pas vous dire comment voter. Ceux qui sont contre ? The motion is adopted. Very well. Point of action B. Exam and motion concerning the recommended transactions from the presentation of the pension fund performance of the second quarter. I propose to approve it.

I support it.

Very well. For more clarity, this is the sale of the Loomis-Salgross fund replaced by the Vanguard Gross Index and the sale of the MFS New Discovery fund replaced by the Bridgeway Small Cap Value. A discussion? Otherwise, all those in favor say for, for, someone is against, the motion is adopted. Very well. Point of action C, examination and motion to accept the current evaluation of 2025.

Je propose l'approbation. Vient-on de le faire?

Non, indifférent.

Indifférent, je propose l'approbation.

Appuyez. Motion et appui pour approuver l'évaluation actuarielle. Des discussions? Oh! Sinon, ceux qui sont pour disent pour. Pour. Pour, quelqu'un est contre, la motion est adoptée. Et point d'action D, examen et motion pour accepter l'audit financier de 2025. Motion pour approuver. Appuyez. Motion and support to approve the point of action of the discussions. Otherwise, those who are for say, for, for, for, someone is against. Very well, the motion is adopted. Thank you to all those who took the time to move to make their presentation. Very well, then, exam and motions concerning the approach of the month of July 2026 for the Moody account, the Moody debauchery and the Morgan Stanley Smith Barnett omnibus account.

I propose approval. Press.

Motion and support on the point of action E. Are there any discussions? If not, those who are for say, for, for, for, someone is against? The motion is adopted. Point of action F. Exam and motions concerning the internal financial states of July 2026.

Who is at 115 and today we are at? 117. 117. I propose approval.

Supported. Motion and support to approve the internal financial states of July 2026. Discussions? If not, those who are for say, for. For. Someone is against? The motion is adopted. Exam and motion concerning the verbal trial of the July 2026 meeting.

I propose the approval of the verbal trial.

Press. Motion and support to approve the verbal trial of the July 26 meeting. Discussions? If not, those who are for say for.

For. Someone is against? The motion is adopted. E. H. Exam and motions concerning the tax reports for the summer conference of TASBO which took place from August 2 to 4 in San Antonio. I must make a compliment, and this has nothing to do with the fact that I am sitting at the Council, the speakers at the conference this year were much more captivating. Of course, there was a huge subject of discussion, them, there and I learned a lot, but, them, I must really congratulate them for the selection of their speakers. It was, them, I find, better than what we have seen before.

Motion to approve. Press.

Motion and support to approve the tax report, action point H of the discussion. Otherwise, those who are for say for, for, for, someone is against. The motion is adopted. An examination and a motion concerning the retirement benefit for Marcus B. of the year. I actually approved this benefit and they checked the calculation. So, I will make the motion to approve this benefit.

J'appuie la motion. 27 ans de service.

Des discussions ? Sinon, ceux qui sont pour disent « pour ».

Oui. Oui, quelqu'un s'y oppose ? La motion est adoptée. Très bien. Point de discussion. Discussion sur les départs à la retraite à venir. Eux, je crois savoir que nous avons un pompier dont le dernier jour est en octobre.

driver e we have another driver who will leave in october i think haxton is okay e octo to the latest news e this date has fluctuated a little e a departure of a driver scheduled for the same month of october and until next year i think these are the only two we are planning unless pam doesn't know anymore and has been kept a secret e Discussions on the report project on investment practices and performance. e Thank you, Will, for your comment on this subject. I have also been copied from some email exchanges between Will and Mary-Katherine. e An excellent dialogue between them. e What you have in front of you is a summary response project. Everything you see in blue represents an opportunity for improvement. She really takes off her gloves when she finds something she thinks she can optimize. It's a pleasure to work with her. I had some excellent phone conversations with her. She estimates, in the final report, to have found more than the four base points of potential savings that she had mentioned for the funds. So it's obviously a victory for us. A lot of points concern clarity, as Will said. This is nothing that we do by chance. It's just that we haven't documented it, like our three-year figure that we use when they fall into the lower quarter and that we put them on the surveillance list. We have a procedure, but we don't have a policy that announces it. Our investment policy statement does not exactly detail how we will manage it in the future. Many other points, as Will said, concern more precise definitions of our policies, ensuring that we remain in our percentage of asset allocations during our rebalances. And then, a large part concerned the risk analysis. What is our expected return? How many risks do we take to achieve this? And let's adjust this risk to which we are exposed as our return needs decrease, in order to reduce the risk associated with the fund, I just wanted to give you this initial copy. For the rest, we are working on a final version that will be submitted to the PRB after approval by the Council. It did not reflect any major critical situation, but many small possibilities for improvement which, according to it, both for us as a Council and for the declaration of investment policy, could help us better manage the fund. So it was a pleasure, it is a pleasure to work with her and we will continue to do so. The next conference to come is the annual conference of Telfer which will actually be held in Arlingen. Do not go to Abilene, you are going the wrong way. I mean, you will end up there I suppose, but it will take place in Arlingen from 4 to 6 October. Please contact Pam if you are not yet registered or if you want to register for this conference, she can take care of it for you. Who is registered at the moment? Logan and you. Very good. Junior will not be able to come. Very good.

We are talking about Harlingen.

Harlingen.

How far is it? It's far. Nine hours.

Nine hours. Well, you can take the plane and they will take you there. Nine hours on the road. It's 9 hours if you choose to go by this way. It's in the valley, near the border, and I love it because I love Mexican cuisine. So, I have no problem with that. Very well. Apart from that, our next meeting of advice will take place at the Retirement Office on September 15 at 8.30. Et s'il n'y a rien d'autre, avons-nous une motion pour lever la séance ? Motion pour lever la séance.

Je seconde la motion.

Tous ceux qui sont pour, dites pour. Pour. Très bien, cette réunion est close.