Book 1 Page 347 10-19-2022 8:30 a.m. MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF OCTOBER 19, 2022 Present: Chair Ryan Chapdelain, Vice Chair Mark Nicholas, Treasurer Kelly Strickland, Secretary Shayla Griggs, Trustee Robert Reardon, Trustee Barry Keeler, and Trustee Jan Thornburg. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, and Pension Specialist Peter Gottlieb. Absent: None. 1. CALL MEETING TO ORDER: Chair Chapdelain called the General Employees' Pension Plan (Plan) Board of Trustees Regular meeting to order at 8:31 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter(s): Secretary Griggs. Chair Chapdelain led the Board and meeting attendees in the Pledge of Allegiance. 3. PLEDGE OF CIVILITY: Chair Chapdelain stated for the record, "We may disagree, but we will be respectful to one another. We will direct all comments to issues, and we will avoid personal attacks." 4. ROLL CALL: Pension Plans Administrator Martin called roll. All trustees were present. 5. PUBLIC INPUT: None. 6. APPROVAL OF MINUTES: 6.1. Approval Re: Minutes of the General Employees' Pension Plan Board of Trustees Regular Meeting of September 26, 2022. Presenter(s): Chair Chapdelain. Chair Chapdelain asked if Graystone had asked Geneva if it would reduce the proposed fees. Theodore Lowe of Graystone Consultants advised that Scott Owens had contacted Geneva to determine if a fee reduction was possible,and would follow up with Mr. Owens regarding the matter. Trustee Keeler made a motion to accept the minutes of the Regular Meeting of September 26, 2022; Treasurer Strickland seconded the motion. The motion carried unanimously (7-0). 7. APPROVAL OF RETIREMENT REQUESTIS): None. 8. INVESTMENT PERFORMANCE REVIEW: 8.1. Presentation and Discussion Re: Lazard Asset Management, Investment Performance Review as of September 30, 2022. Presenter(s): Steven Keeler, Senior Vice President, Marketing Representative, Lazard Asset Management. Steven Keeler of Lazard Asset Management appeared before the Board telephonically and introduced himself. Mr. Keeler noted that as of October 18, 2022, the Portfolio is down 8% year-to-date, which is outperforming the index. He noted that listed infrastructure has not been as severely impacted as other classes in the equity market because of the infrastructure industry's ability to pass along inflation costs to consumers as services tend to be essential, such as airports, bridges and roads, and power grids. He discussed their strategy characteristics listed on the slide of the presentation materials titled Lazard Global Listed Infrastructure (USD Hedge), noting that Lazard does not invest in companies which introduce additional volatility to their portfolio beyond their needs for consistency and predictability. He reviewed the Global Listed Infrastructure Team, noting no changes, Preferred Infrastructure, and the differences between Preferred and Non-Preferred infrastructure investments. Secretary Griggs left the meeting at 8:38 a.m. and returned at 8:40 a.m. Mr. Keeler reviewed the Expected Risk and Return slide and noted that while Preferred Infrastructure's risk/reward profile is between equities and fixed income, Lazard's portfolio has had a better 10-year annualized return than the global listed infrastructure index, equity index, and bond index, with lower volatility. He discussed the Sustainable Yield Premium: Lazard GLI. Turning to the slide titled Portfolio By Country and Sector, Mr. Keeler stated that although companies are listed as being in specific countries, many of the companies operate in multi-national networks which further diversifies the portfolio. He noted how Lazard is finding value in toll roads, UK water utilities, and US railroads. He also asserted that satellite companies, which had been detractors from performance this year will outperform in the near future. Mr. Keeler referred to the Performance Summary, noting that the infrastructure market is generally flat, while equities and fixed income are both down, which has aided in decreasing Lazard's downside capture to better protect investors' assets in down markets. He pointed the Board to the slide titled Inflation Protection Attributes of Preferred Infrastructure which highlights implicit or explicit inflation linkage, which is a company's ability to pass higher costs due to inflation on to their customers. Trustee Reardon asked how much of the quarterly performance was due to declines in cash flow versus drawdowns in the markets. Mr. Keeler stated that most of the return was received in September, and therefore it was due to market reactions to the Federal Reserve's announcements regarding raising interest rates, similar to other equities. Considering the assets themselves have not changed, infrastructure investments may suffer in the short term, share prices recover over the longer term as the companies pass along costs associated with inflation. Chair Chapdelain thanked Mr. Keeler for his presentation. 8.2. Presentation and Discussion Re: NFJ, Investment Performance Review as of September 30, 2022. Presenter(s): John Mowrey, CFA, Executive Managing Director, Chief. Investment Officer, and Senior Portfolio Manager/Analyst; Krysta Hill, Director and Product Specialist; NFJ. John Mowrey of NFJ appeared before the Board and introduced himself. Mr. Mowrey noted there has been no change to the investment team, although it has added analysts. He explained that NFJ requires new hires to be proficient in finances and accounting as well in big data, programming languages, and similar technologies. He noted that NFJ's small cap strategy began in 1989, and he reviewed the Fundamental Analysis. He discussed the Portfolio Characteristics and advised the Portfolio's Price-to-Earings Book 1 Page 348 10-19-2022 8:30 a.m. Book 1 Page 349 10-19-2022 8:30 a.m. (P/E) (forward 1YR) is slightly higher than the index's because the index excludes companies which do not earn any money, which is approximately 40% of the companies in the small cap index; all the companies held by NFJ have earnings and are captured on the P/E (trailing 1YR), which is why the portfolio appears discounted relative to the index. In this context, NFJ is significantly less expensive than the broader market. Mr. Mowrey analogized dividend growth rates to a person in a marathon running at a faster pace than their competitors; maintaining the faster pace will compound the runner's lead over time relative to other runners. He noted the portfolio's earnings growth is greater than the benchmark and its holdings' profitability is also greater than the benchmark. While higher Return on Equity and Return on. Assets typically commands higher prices, NFJ seeks healthy and growing companies which have dislocations in their stock prices, and not dislocations of fundamentals. Regarding Performance, Mr. Mowrey reminded the Board that, at his last appearance before the Board, he discussed how NFJ was positioning the portfolio to be more defensive; this protected capital in the 1-year annualized as 9 out of 11 sectors added value during that period. NFJ is now underperforming relative to the benchmark because NFJ began rebalancing the portfolio at the end of Q2 2022, when it was outperforming the benchmark, by selling defensive stocks, such as aerospace, oil, and utilities, and buying cyclicals; however, the market favored those defensive stocks in Q3 2022. He noted that, inception-to-date, the portfolio is up 9.38% compared to the benchmark's 7.79% over the same timeframe and directed the Board to The Power of Active Management & Compounding, which he stated demonstrates the power of active management and compounding as the portfolio has consistently outpertormed the benchmark by a generally widening margin. Mr. Mowrey reviewed the slide titled ROE Monthly Returns (%) by Decile, April 2021 to August 2022, and explained how a manager such as NFJ will outperform when the market rewards high quality. He noted the portfolio underperformed from November 2020 through April 2021 during a massive junk rally caused by an abundance of federal stimulus money as well as anticipation of an economic reopening facilitated by the Food and Drug Administration's approval and release of multiple COVID-19 vaccines; the market's favoring of low quality was indicated by stock scandals such as GameStop and the popularity of Special Purpose Acquisition Companies. As that environment has unwound, NFJ's portfolio has begun to outperform again. From April 2021 through August 2022, the portfolio outperformed thel Rusell 2000 Value Index, the Russell 2000 Index, and Russell 2000 Growth Index. He clarified that bar chart on this page shows the lowest quality stocks performed the worst during the noted time period and the portfolio was rewarded as expected. Regarding Sector Exposures, Mr. Mowrey explained how, compared toi its allocation on September 30, 2021, NFJ has repositioned the portfolio to be less defensive and more cyclical. He noted that discretionary stocks are very attractive right now to NFJ because rising interest rates and the cessation of federal stimulus plans have created a dislocation of stock prices, but not dislocations of those stocks' fundamental health. He reviewed the NFJ Investment Outlook, noting 3 consecutive down quarters which has occurred only 15 times in 255 observations, since 1959. NFJ has mapped the S&P 500 return profile from the subsequent periods and asserts the markets will soon be favorable to small cap stocks. He noted that this appears counter-intuitive and contrary to popular opinion, however investing is one area in which being a contrarian is beneficial. Trustee Reardon asked what percentage of the companies which don't earn any money will need to go out of business before the market will have a sustained rally. Mr. Mowrey asserted that rising interest rates will bring about the end of many of these companies, which will not be widely publicized other than from the largest of companies. That notwithstanding, he stated that recessions, albeit painful, are generally part of a healthy economic cycle as they force out inferior businesses. He believes the market will not be as tolerant of companies which have no expectations of revenues for longer periods of time. To Chair Chapdelain's question, Mr. Mowrey stated he believes, based on historical context, there is a strong probability of positive returns in Q4 2022, if not over the next 12 months. He questioned the Federal Reserve' S (Fed's) ability to continue to raise interest rates by 75%, if only for thei impact on global currencies, and that future increases by .50% or 25% may be a catalyst for a reversal in the market. Trustee Reardon asked what percentage of companies historically don't earn money. Mr. Mowrey referred to the slide titled Case for Active Investing, and noted that the long-term average is 25%, and iti is currently at 40%. This was due to an accommodating Fed, and easily available money allowed companies to operate when they otherwise would have failed. The Board thanked Mr. Mowrey for his presentation. 8.3. Presentation and Discussion Re: Graystone Consultants, Quarterly Performance Review as of September 30, 2022. Presenter(s): Scott Owens, CFA, CIMA, Associate Vice President, Institutional Consultant; Theodore Loewe, Vice President, Institutional Consulting Analyst; Graystone Consulting. Mr. Loewe appeared again before the Board and noted the challenging year for the Market. Chair Chapdelain stepped out of the meeting at 9:11 a.m. and returned at 9:12 a.m. Mr. Loewe provided a market outlook. He noted the common element in Lazard's and NFJ's presentations was inflation, which the Fed is combatting by raising short-term interest rates. He stated that inflation appears to have peaked at 9%, dropped to 8.3% in August, and was 8.2%i in September; short-term interest rates have risen from 0% to 3% with the Fed's current focus being to bring inflation down to 2.5%. Despite the apparent time that may take, Graystone sees some signs of optimism in the market, as NFJ indicated. Inflation in September was .4%, which, annualized, would be 4.8% for the next 12 months if maintained; this could cut the current inflation rate in half. That not-with-standing, the Fed is committed to reducing inflation even at the cost of a recession. Graystone anticipates the Fed will increase rates by 75% at the Fed's November meeting, and the market believes the Fed will raise rates an additional 50% at the December Fed meeting, and short-term interest rates will end the year between 4% and 4.5%. The equity market has been repricing stocks based on its expectations of rising interest rates. While the Fed aims for a "soft landing, at term for bringing inflation under control without causing a recession, itl has a poor track record of accomplishing this. Of the last 11 times the Fed raised interest rates, only once did a soft landing ensue, 5 times shallow recessions followed, and the remaining times the Fed either intentionally caused a more significant recession, or other economic catalysts brought about deeper recessions. Mr. Loewe provided a brief history of various recessions in the United States and stated that Graystone believes any recessive period in the near future will likely be shallow and relatively short-lived, possibly 18-24 months. Mr. Loewe turned to the Capital Markets Returns in the materials and noted that economic indicators suggest a recession is ahead, as transportation and retail stocks, and equities have repriced. While the economy seems unburdened by issues typically associated with recessions, the market remains down significantly year-to-date. As the market shifted from favoring growth to value, the Board has repositioned its portfolio. Although price-to- equity multiples have come down from 19 and 20 to approximately 14, lower earnings have not been observed; Graystone anticipates lower earnings reports will trigger the next round of market volatility into Q1 2023. To Trustee Reardon's question regarding what has maintained earnings reports, Mr. Loewe noted that consumer spending has carried corporate earnings. Consumers amassed significant savings during the COVID-19 pandemic which led to the current increased purchasing. Buyers also expect inflation to continue and therefore they buy products now before prices increase, and consumers maintain higher credit card balances. However, increased mortgage rates will increase the cost of home ownership which will temper consumers' abilities for purchasing discretionary items that could cause equity declines into the next calendar year. Mr. Loewe reviewed the S&P 500 Sector Returns, noting investors should begin to prioritize and value companies which generate revenues without leverage, as well as earnings. He noted defensive sectors performed worse, showing growth outperformed value for the quarter, however, the greater 12-month period is more indicative that value will be favored. Graystone believes investors will favor companies with cash-flow and earnings without leverage. He discussed the Developed and Emerging Markets, noting the strength of the US Dollar compared to the Euro and British Pound due to rising interest rates; this will also affect US-based multinational companies, such as Apple or McDonalds, which convert US Dollars into foreign currencies, and then retum cash back to the United States and must convert funds again. Mr. Loewe reviewed the Fixed Income % Returns, noting negative returns in the 1-, 3-, and 5-year returns, which, at the same time, benefits new investments in fixed income. He noted short- and long-term rates are currently inverted, meaning short-term rates are currently higher than long- term; typically, long-term rates are higher to reward the longer investment period. Every recession has been Book 1 Page 350 10-19-2022 8:30 a.m. Book 1 Page 351 10-19-2022 8:30 a.m. prefaced by an inverted yield curve, and it is an opportunity to move assets to fixed income to take advantage of the higher returns and shorter durations. Mr. Loewe reviewed the Total Fund - Executive Summary, noting that in 2021 the total return was approximately almost 23% and it is reasonable to expect some volatility. He briefly reviewed the Total Fund - Risk/Return Analysis, point out that the upside capture was 98.57% and downside was 92.18%. Regarding the. Asset. Allocation Compliance, Mr. Loewe explained that the biggest detractors were in Equities, in which the Plan is underweighted, and the greatest proportionate retumns were in Alternative Investments allocation. He clarified that the portfolio is overweighted in HGK and NFJ which are both value funds. He discussed the remaining fund managers, noting especially poor performance by Clearbridge since inception as it has failed to capitalize on market trends; while Clearbridge has shown some positive movement in the last few weeks, Graystone recommends putting it on watch, and if its performance does not improve significantly, the Board may wish to consider replacing it in the next 31 to 6 months. Chair Chapdelain noted that the Board had conducted a large cap growth manager search a few years ago and asked Graystone to include the same managers for reference in any new search. Mr. Loewe noted that Polen Capital, also a large cap growth manager which is underperforming, and this is not concerning as its strategy is not appropriate for this market environment, and therefore the underperformance is expected. Because Clearbridge's underperformance is not as predictable, Mr. Loewe expressed more concern for Clearbridge at this time than Polen. Trustee Thornburg asked when a manager search would be presented. Mr. Loewe advised that the Board may wish to wait until next quarter to review a manager search sO that the growth space has an opportunity to recover. Chair Chapdelain asked if Graystone still recommended the Plan have 2 growth managers. Mr. Loewe suggested the Board could discuss it further, as there are merits to having only 1 growth manager, although Graystone does have a preference for pairing large cap growth space because there are a variety of strategies within the space. He noted that the portfolio happens to be underweight in large cap growth right now. Regarding NFJ, he reiterated Mr. Mowery's explanation for why it underperformed, and asserted Graystone expects NFJ to begin to outperform in the coming quarters. Mr. Loewe noted the Board recently replaced Allianz with Geneva; Allianz had consistent, better than benchmark performance, however, because the fund management transitioned to a less experienced team at Voya, it was appropriate to realize the gains at Allianz and change to a new manager. Chair Chapdelain asked Graystone to provide Geneva's performance information. Mr. Loewe discussed Templeton International Value, noting it is a difficult space currently, however Graystone believes it will outperform when circumstances change. Further, it has good downside protection, and, although it is a value manager, it is similar to NFJ in that it seeks high quality stocks which focus on cash flow and dividends. He noted that Graystone is monitoring Renaissance, although the growth asset class has been difficult. While it outperformed for the quarter, it did not provide downside protection as expected. Invesco outperformed its benchmark and provided downside protection, however as a class, it has provided negative returns for the past 3 years. Mr. Loewe noted that short term interest rates are reaching 3.7%, which makes it more attractive for new investment. He explained the differences in returns between equity and bonds and noted that because the portfolio's bond managers typically hold investments for the long term, yields, based on yield to maturity, are higher. Graystone believes the worst of the interest rate hikes have already occurred which would make for good opportunities going forward. Mr. Loewe reviewed the real estate managers, point out consistent positive returns in the class. He noted AEW is up 25% fiscal year-to-date and the benchmark up 15%. Because the properties are owned and being leased consistently, 6% to 7% yields are common, and expected to continue over the longer term. He briefly touched on UBS, noting it is up 15% for the year and beating its benchmark. The Board heard from Lazard in today's meeting, and it continues to provide positive returns since the Board invested in it in 2020. He reviewed the Asset. Allocation & Time Weighted Performance; compared to fixed income, real estate as an alternative has been a very good decision. He noted no concerns regarding the Compliance Checklist, and stated he has additional items regarding short term fixed income investments and fees under New Business. To Vice Chair Nicholas's question, Mr. Loewe explained that Polen Capital's underperformance was related to the energy sector, and that because it was consistent with its strategy its underperformance was understandable, while Clearbridge should be performing better than it has, which gives greater cause for concern. 9. UNFINISHED BUSINESS: 9.1. Presentation and Discussion Re: Proposed 2023 Meeting Schedule. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin explained that the 2023 proposed meeting dates have been changed according to the Board's requests at its September 26, 2022 meeting. Chair Chapdelain asked why Graystone was not presenting immediately after each quarter end; Pension Plans Administrator Martin stated that Graystone had been moved back a month after each quarter end to allow time for investment statements to be issued, and that it is especially difficult to obtain presentation materials with final performance data prior to the meetings which occur earlier in the month. Mr. Loewe appeared again before the Board and stated that the custodial bank does not typically issue their statements within the first 10 business days of a month; for today's meeting, Graystone was unable to complete its reports until October 13, 2022. While iti is possible to have the reports in time for any given meeting, iti is difficult to provide the reports to be available significantly before a meeting. Chair Chapdelain noted the February 2022 meeting was approximately 6 weeks after the quarter end and asked if that was sufficient to prepare accurate reports; Mr. Loewe stated that to include real estate index numbers, 6 weeks was sufficient. Chair Chapdelain asked if Geneva could be moved to present with NFJ to focus the discussions on small cap. Pension Plans Administrator Martin noted that Geneva is scheduled for October 23, 2023 to allow approximately a year of performance before their first report to the Board, noting the transfer of funds from Allianz to Geneva is expected to be completed by October 21, 2022. Chair Chapdelain asked if Geneva and NFJ could present together in 2024. Chair Chapdelain noted that the July 24, 2023 meeting may conflict with the City's budget workshop. Treasurer Strickland stated that Finance has not set their calendar yet. Secretary Griggs noted that the calendar is prospective and can be changed if needed. Attorney Christiansen noted that several of the meeting times were moved to 10:00 a.m. Pension Specialist Gottlieb advised that the meeting times were set to accommodate as many trustees' schedules as possible. Mr. Loewe asked if the Board would like Graystone to appear at the 2nd month following quarter ends, as some meetings they appear in the 3rd month; he stated that after fiscal year end, Graystone would be able to have materials to Pension Administration by October 16, 2023 for its October 23, 2023 meeting. Chair Chapdelain asked to move Graystone from June to May, as well as December to October, and if there are delays in obtaining materials, they could present at subsequent meetings. Trustee Keeler noted that he would be unavailable for the September 2023 meeting as he has a personal trip planned during that month. Trustee Thornburg made a motion to approve the proposed 2023 meeting calendar as amended; Vice Chair Nicholas seconded the motion. The motion carried unanimously (7-0). Book 1 Page 352 10-19-2022 8:30 a.m. Book 1 Page 353 10-19-2022 8:30 a.m. 10. NEW BUSINESS: 10.1. Presentation and Discussion Re: Investment Policy Statement Suggested Revisions. Presenter(s): Theodore Loewe, Vice President, Institutional Consulting Analyst; Graystone Consulting. Mr. Loewe appeared before the Board again and advised they have proposed changes to the Investment Policy Statement (IPS). Turning to page 2 of the materials, he noted that some of the investments continuously reach the investment limits and asked the Board to increase the ranges by 2.5% to relieve the need to rebalance every quarter. Turning to page 3, Graystone recommends referring to the stated actuarial number, but referring it by title. On page 4, Graystone recommends deleting item 1 as fund managers which have concentrated positions can find they reach the 10% IPS limit of holdings in a single company. He noted that Polen Capital currently holds Amazon, which at its current weighting, is 12% of Polen's portfolio. Graystone recommends replacing item 1 to prohibit a manager from holding a single company in concentrations greater than 5% of the total portfolio. He stated that, under Fixed Income, Mr. Loewe noted that one of the managers has a position in preferred stock, which does not have a credit quality * and therefore Graystone recommends clarifying the IPS to state that the credit quality rating restriction only applies to bonds. On page 7, Graystone recommends comparing bond funds to an appropriate Bloomberg benchmark rather than specifying the Intermediate Bloomberg to allow other alternative investments to have other benchmarks. To Secretary Griggs' question, Mr. Loewe noted that the date on the IPS being amended should have been May 2022. Treasurer Strickland made a motion to approve the proposed changes to the IPS; Vice Chair Nicholas seconded the motion. The motion carried unanimously (7-0). Attorney Christiansen asked Graystone to, upon their receipt of acknowledgements from the managers, to forward acknowledgements to Attorney Christiansen. 10.2. Presentation and Discussion Re: Fixed Income Manager Search. Presenter(s): Theodore Loewe, Vice President, Institutional Consulting Analyst; Graystone Consulting. Mr. Loewe discussed the first page of the Short-Term Fixed Income Manager Search Summary and noted that the Board requested the search to determine if current manager has performed reasonably with appropriate fees, and not because of a need to change fixed income managers. At Chair Chapdelain's request, Mr. Loewe explained that Sage is closer to BBB rating, which is the lowest investment grade allowable; below BBB are junk-bonds which have higher yield and is where Sage adds to its performance. Invesco, on the other hand, accepts less performance in exchange for higher quality holdings, which is consistent with the Board's general preference. At Chair Chapdelain's request, Mr. Loewe stated he would ask Invesco if it would consider reducing its fees based on comparable funds in the marketplace, as well as the portfolio's performance and value. Mr. Loewe discussed the second page of the Short-Term Fixed Income Manager Search, noting that because the yield curve is inverted, moving some fixed income holdings to short-term will instantly provide better returns than the current intermediatelong-term holdings. Further, the yield curve will return to a normal direction when either short-term rates fall below long-term rates, or long-term rates go higher than the current short-term rates. If long-term rates go up, the portfolio's current holdings would underperform; if short term rates decline, the Portfolio would benefit. From a risk/return perspective, Graystone recommends moving half of the current fixed income balance to a short-term manager. He reviewed the differences between Genter and Segall Bryant & Hamill, noting that because of Segall Bryant's shorter duration which results in less risk, it would be the better option than Genter, although both would provide better short-term returns than Invesco. To Chair Chapdelain's question, Mr. Loewe stated that Graystone has worked longer, and conducted more business with Segall Bryant over the last 5 to 10 years than Genter, although both are good options. In discussion with Chair Chapdelain, Mr. Loewe stated that Graystone recommends moving up to 50% of the fixed income allocation, or 10% of the total portfolio, from Invesco to either Genter or Segall Bryant; Graystone has recommended its institutional investors move 5%1 to 10% of their portfolios in this direction. This would make the portfolio more. defensive because of the inverted yield curve; when the yield curve returns to its normal direction, Graystone will recommend moving back to an Invesco-style fixed income manager. Trustee Reardon expressed support for adopting Graystone's recommendation. At Chair Chapdelain's request, Mr. Loewe stated that Graystone recommends moving 50% of the allocation at Invesco to Segall Bryant until the risk/return in intermediate fixed income sector improves. Chair Chapdelain expressed support for adopting Graystone's recommendation as it would make the portfolio more defensive considering the short-term outlook, as well as the balance with Invesco. To Trustee Thornburg's question, Mr. Loewe and Attorney Christiansen stated that a transition to Segall Bryant would take approximately 30 days but would largely depend on Segall Bryant; although Graystone has worked with Segall Bryant, Attorney Christiansen has not. Attorney Christiansen specified that a contract with Segall Bryant would need to be negotiated, and therefore any motion should include the Board authorizing him to negotiate a contract between the Plan and Segall Bryant. Chair Chapdelain noted that Segall Bryant has a lower downside capture than Genter; Mr. Loewe confirmed that Segall Bryant's lower duration makes it more defensive than Genter. Trustee Reardon made a motion to authorize Attorney Christiansen to negotiate a contract between the Plan and Segall Bryant & Hamill and allocate 50% of the balance with Invesco to Segall Bryant & Hamill. Chair Chapdelain seconded the motion. Chair Chapdelain stated that making the portfolio more defensive is beneficial and thanked Mr. Loewe for presenting to the Board. The motion carried unanimously (7-0). 11. ATTORNEY MATTERS: Attorney Christiansen reminded Pension Administration to provide Pension Letter 2 and Morgan Stanley's fiscal year-end report to the City Commission. Attorney Christiansen stated that when the Board began investing with AEW, the Board authorized him to negotiate on its behalf a contract and side letter with provisions specific to governmental investors. Included in the side letter is a "most favored nation" provision which states that if the manager enters into a side letter with another institution offers provisions which are beneficial to the institution but are not in the Plan's side letter, the manager must also offer those provisions to the Plan. AEWi issued a revised side letter to the Plan, and Attorney Christiansen selected those provisions which are beneficial to the Plan. Because the Plan had authorized Attorney Christiansen to negotiate the initial contract and side letter, the Board does not need to vote to accept the terms of the side letter revisions. Trustee Thornburg asked ift the contract Attorney Christiansen negotiates with Segall Bryant would return to the Board. Attorney Christiansen stated that because the Board authorized him to negotiate on behalf of the Board, it would not. To Chair Chapdelain's question, Attorney Christiansen explained the contract process and stated that he would not need 30 days to complete his side of the contract, however the timeframe would entirely depend on what Segall Bryant requires. Book 1 Page 354 10-19-2022 8:30 a.m. Book 1 Page 355 10-19-2022 8:30 a.m. 12. OTHER MATTERS: None. 13. ADJOURN. Chair Chapdelain adjourned the meeting at 10:14 a.m. Bhs / A Chair Ryan Chapdelain - Secretary Shayla Griggs