Book 1 Page 305 04-11-2022 8:30 a.m. MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF APRIL 11, 2022 Present: Chair Ryan Chapdelain, Vice Chair Mark Nicholas, Treasurer Kelly Strickland, Secretary Shayla Griggs, Trustee Robert Reardon, and Trustee Jan Thornburg. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, and Pension Specialist Peter Gottlieb. Absent: Trustee Barry Keeler. 1. CALL MEETING TO ORDER: Chair Chapdelain called the General Employees' Pension Plan (Plan) Board of Trustees Regular meeting to order at 8:30 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 always be respectful to one another. We will direct all comments to issues, and we will not engage in personal attacks." 3 4. ROLL CALL: Pension Plans Administrator Debra Martin called roll. Secretary Griggs and Trustee Keeler were not present. Pension Plans Administrator Martin noted that Secretary Griggs would arrive late to this meeting, and noted that at the May 22, 2022 meeting, Trustee Keeler had requested an excused absence for today's meeting 5. PUBLIC INPUT: None. 6. APPROVAL OF MINUTES: 6.1. Approval Re: Minutes of the General Employees' Pension Plan Board of Trustees Membership Meeting of March 22, 2022. Presenter(s): Chair Chapdelain. Trustee Reardon made a motion to accept the minutes of the Membership Meeting of March 22, 2022; Vice Chair Nicholas seconded the motion. The motion carried unanimously (5-0). 7. APPROVAL OF RETIREMENT REQUEST(S): None. 8. INVESTMENT PERFORMANCE REVIEW: 8.1. Presentation and Discussion Re: Franklin Templeton, Investment Performance Review as of December 31, 2021. Presenter(s): Stephen Votto, Senior. Advisor Consultant, Private Wealth Director; Andrew Burkly, Institutional Portfolio Manager; Franklin Templeton. Stephen Votto and Andrew Burkly appeared before the Board and introduced themselves. Mr. Votto gave an overview of their presentation and noted the Plan has invested with Franklin Templeton for over 25 years. Mr. Votto stated that the portfolio had positive performance on an absolute basis but underperformed its benchmark due to the rotation away from value and towards growth; year-to-date, however, the portfolio has outperformed its benchmark by 300 basis points. The Board had no questions for Mr. Votto. Mr. Burkly explained that despite its effectiveness at working remotely, Franklin Templeton's Ft. Lauderdale office begun returning to working in-person. He echoed Mr. Votto's comments regarding how the market has returned to favoring value instead of growth, which has rewarded Franklin Templeton's strategy. He discussed the Summary in the presentation materials and predicted choppy markets for the near future due to global inflation, supply chain issues, labor market tightness, the war in Ukraine, and rising interest rates; these environments present opportunities for active equity managers such as Franklin Templeton. He discussed the Historical Performance, noting that year-to-date as of March 2022, the portfolio is still approximately 300 basis points ahead of the benchmark. He reviewed the Attribution by Sector (1 Year) and provided broad highlights of companies held in its portfolio. He explained that the portfolio is overweighted in energy as Franklin Templeton believes oil prices will remain high for at least another year; he discussed some of its underperforming holdings. Chair Chapdelain asked Mr. Burkly to elaborate on the discrepancy between the returns of the portfolio and index in Consumer Staples. Mr. Burkly explained that two beverage companies, Kirin, and AB InBev, had significant negative returns in the 4th quarter as the COVID-19 omicron variant caused shutdowns in industries which retail their products. He noted that they will likely begin to perform well when sports arenas and convention centers re- open and consumers retum to nightlife; further, the portfolio does not contain tobacco companies due to their valuations, however that industry performed well. Mr. Burkly discussed the Sector Allocation, noting that in Financials, Energy, and Health Care, the portfolio is overweighted relative to the benchmark. He discussed Geographic Allocation and explained that its biggest weight is in the United Kingdom as it's currently the least expensive developed market. Mr. Burkly commented that while Brexit started a splintering of Europe, COVID-19 and the war in Ukraine have brought Europe back together such that it is contemplating issuing Eurobonds and that discussions of breaking from the Euro are becoming less realistic. He noted that European valuations are compelling, and this reunification trend puts those valuations into even better positions. Secretary Griggs entered the meeting at 8:44 a.m. Mr. Burkly stated that two of the portfolio's larger holdings are Royal Dutch Shell and British Petroleum. Mr. Burkly reviewed the allocations in other geographic areas, noting an underweight in Asia but overweight in Japan due to better shareholder behavior and additional corporate reforms; he discussed Hitachi as an example of how reforms have made it a more attractive investment. Trustee Thornburg asked Mr. Burkly to discuss Norway's total return on the Performance Attribution by Country (1 Year). Mr. Burkly stated the portfolio has a single holding in Norway, Equinor, which is an energy company with al leveraged play on energy prices; this has had an outsized impact on Equinor's return. Trustee Reardon asked if the under-allocation in China was due to geo-political risk. Mr. Burkly stated that it was, and Franklin Templeton frequently discusses whether China is investable or not. He stated that the answer hinges largely on how restrictive the Chinese government is; due to the political structure, the Chinese government can impose regulations quickly and without public debate, and therefore they are swift and heavy- handed. Mr. Burkly believes valuations are becoming more attractive and therefore larger, more transparent Book 1 Page 306 04-11-2022 8:30 a.m. Book 1 Page 307 04-11-2022 8:30 a.m. companies will become investment opportunities in the future, although it currently has no holdings there. Mr. Burkly discussed the Top Ten Holdings, elaborating on its concentrations in semiconductors and the auto supply industries, and how each are affected by supply chain issues. Chair Chapdelain asked when Franklin Templeton believes the automobile industry will retum to pre-COVID-19 levels. Mr. Burkly stated that in the United States, approximately 20 million units sold per year is the pre-pandemic average; that had dropped as low as 14 million and is now around 17 million. He believes it will take at least another 2 to 3 years to return to its norm. He expects the semiconductor industry to return to pre-pandemic levels in 2023. Mr. Burkly discussed the Portfolio Characteristics, noting it typically trades at a 20% discount to the overall benchmark, which is where the portfolio is today. He believes the outiook is constructive, and the portfolio is poised to take advantage of volatility in the equity markets. He asserted the market trend had been thematic, however it will shift to favor stock picking and earnings, which is Franklin Templeton's strategy. Chair Chapdelain thanked Mr. Burkly and Mr. Votto for their presentation. 8.2. Presentation and Discussion Re: Renaissance Investment Management, Investment Performance Review as of December 31, 2021. Presenter(s): Joe Bruening, Senior Partner, Portfolio Manager, Renaissance Investment Management. Joe Bruening appeared before the Board and introduced himself. Mr. Bruening gave a brief overview of his presentation; he stated there have been no changes at Renaissance, it has approximately $3.1 billion in total assets under management, with approximately $600 million in its international strategy, and he has been the lead Portfolio Manager of the international strategy for over 20 years. He discussed Renaissance's investment philosophy and compared the firm to Franklin Templeton, noting Renaissance is smaller and therefore more agile regarding investment decisions and executions. He explained that Renaissance was able to liquidate all of its holdings in Russia before the war in Ukraine which limited losses to approximately 5%. He reviewed the Investment Process Overview, noting it is a growth investor, as compared to Franklin Templeton's value philosophy, and it has a GARP portfolio, meaning "growth at a reasonable price." He reviewed the Plan's Profile and Fiscal Year Performance Summary, noting that, calendar year-to-date, the portfolio is down slightly relative to the benchmark. Mr. Bruening discussed Renaissance's goal to have quality growth holdings which maintain strong value. He reviewed the Trailing Performance Summary, noting the differences between value and growth investors; he asserted that Renaissance performs when the markets normalize, and do not favor growth or value, and he believes the market is trending towards that balance. To Chair Chapdelain's question, Mr. Bruening stated that through April 2022, the benchmark is down approximately 7% and the portfolio trails by about 200 basis points, mostly due to China in emerging markets. Mr. Bruening discussed the Portfolio Sector Attribution, noting the best and worst performing sectors in the portfolio. He explained that Renaissance is maintaining its holdings in China despite difficulties as it believes there will be regulatory reforms mplemented whichwill reward investment. He reviewed the Portfolio Country Attribution, covering the best and worst performing countries, pointing out that Renaissance has approximately 25% of the portfolio in emerging markets because, in accordance with its GARP philosophy, the best values and growth potentials are seen in emerging markets. While emerging markets have not performed as well as developed markets have recently due to challenges in China, the most potential for growth remains in China. He reviewed the Portfolio Characteristics and Positioning, Sector Allocation, noting itl has added more financials because of the potential for interest rate increases, and Regional Allocation. Mr. Bruening provided a market outlook and discussed the Uneven Global Recovery, China Beginning to Stimulate Economy, Surging Inflation, and Global Semiconductor Demand Expected to Remain Strong. He opined that inflation will increase, however as more countries increase interest rates, inflation will eventually gradually decrease. Mr. Bruening concluded by reviewing the Intemational Valuation Discount Continues to Widen slide. Trustee Reardon asked what would happen when ADRs are delisted. Mr. Bruening explained that has happened already; some Chinese companies which were related to the defense industry, and they were accordingly delisted by the Securities and Exchange Commission. Upon delisting, US investors may continue to trade on US markets for a limited period of time; after that period ends, only the local stocks may be traded in China or Hong Kong. Chair Chapdelain thanked Mr. Bruening for his presentation. 9. UNFINISHED BUSINESS: None. 10. NEW BUSINESS: None. 11. ATTORNEY MATTERS: Attorney Christiansen explained he is collecting medical records for Susan Blake's request for disability benefits; upon receiving all of her records, he will schedule an independent medical examination. 12. OTHER MATTERS: 12.1. Presentation and Discussion Re: Asset Allocation as of April 5, 2022. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin explained this is presented to the Board for its information. Pension Plans Administrator Martin advised that Pension Administration received only 1 nomination form for Seat 2, the term for which expires June 30, 2022; the nominee is Ryan Chapdelain, and he will therefore retain his seat with no need for an election for an additional term ending June 30, 2025. Pension Plans Administrator Martin stated she anticipates 3 retirements to be presented at the next regular meeting. Chair Chapdelain asked for clarification of the. Asset. Allocation, noting the underweight in Invesco. Pension Plans Administrator Martin explained the amounts are provided by the custodial trustee, the cost is the amount paid, and the market value is the amount as of, in this case, April 5, 2022. Treasurer Strickland noted that Invesco is at fixed income manager, and as a sector, fixed income is performing very differently than equity markets. 13. ADJOURN. Chair Chapdelain adjourned the meeting at 9:19 a.m. 2 - - - - Chair RyahOhapdelains Secretary-Shayla Griggs Book 1 Page 308 04-11-2022 8:30 a.m.