MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF APRIL 12, 2021. Present: Chair Ryan Chapdelain, Vice Chair Susan Blake, Secretary Shayla Griggs, Treasurer Kelly Strickland, Trustee Kari McVaugh, Trustee Robert Reardon, and Trustee Mark Nicholas. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, Pension Specialist Peter Gottlieb Absent: None. 1. CALL MEETING TO ORDER: Chair Chapdelain called the meeting to order at 8:30 a.m. 2. 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. ROLL CALL: Pension Plans Administrator Martin called roll. Vice Chair Blake appeared telephonically. Pension Plans Administrator Martin also appeared telephonically. Also appearing in person were Attorney Scott Christiansen and Pension Specialist Gottlieb. At the prompting of Attorney Christiansen, Trustee McVaugh made a motion to declare extraordinary circumstances existed to allow Vice Chair Blake to appear and vote telephonically. Trustee Nicholas seconded the motion. The motion carried unanimously (7-0). 4. PUBLIC INPUT: None. 5. APPROVAL OF THE MINUTES: 5.1. Approval Re: Minutes of the General Employees' Pension Plan Board of Trustees Membership Meeting of March 22, 2021. Presenter(s): Chair Chapdelain. A motion was made by Trustee McVaugh and seconded by Trustee Nicholas to approve the minutes of the General Employees' Pension Plan Board of Trustees Membership Meeting of March 22, 2021. Motion passed unanimously (7-0). 6. APPROVAL OF RETIREMENT REQUESTIS): None. 7. INVESTMENT PERFORMANCE REVIEW: Book 1 Page 249 04-12-2021 8:30 a.m. Book 1 Page 250 04-12-2021 8:30 a.m. 7.1. Presentation and Discussion Re: Franklin Templeton, Investment Performance Review as of December 31, 2020. Presenter(s): Heather Waddell, EVP, Portfolio Manager/Research Analyst, Templeton Global Equity Group; Joseph Zuramski, Portfolio Consultant, Franklin Templeton. Joseph Zuramski appeared before the Board telephonically and introduced himself and Ms. Waddell. Ms. Waddell began the presentation by discussing the portfolio Summary and noted a page numbering error in the presentation materials. She thanked the Board for its business since 1994, and explained Franklin Templeton is strictly an international value fund which invests in the mid- and large-capitalization spaces. She discussed the Historical Performance. At 8:36:27 a.m., Ms. Waddell reviewed the Historical Performance by stating the year- to-date gross of fees pertormance of approximately 3% exceeds the value performance though this lags the overall benchmark return. She stated her expectation that the rotation to favoring value investments will further bolster the portfolio's performance. At Chair Chapdelain's request, Ms. Waddell clarified that the core benchmark is the MSCI All Country World ex US; the supplementary benchmarks are for reference, although clients are free to choose which benchmark to use. Trustee Reardon asked how long Ms. Waddell expects the rotation to value to last. She stated that is difficult to forecast, however it began during the Q4 2020 as a market recognition of distressed companies with deep value discounts. Now value is still generally outperforming growth, and there is recognition of those lesser distressed companies which are paying dividends and have good earning streams. Ms. Waddell added that she does not have an anticipated timeframe for the rotation to revert to favoring growth, however Franklin Templeton is analyzing the portfolio for varieties of value stocks which continue to perform when the market returns to favoring growth. Ms. Waddell discussed the Performance Attribution by Sector, which measured performance against the core benchmark and not the value benchmark. She discussed some of the best and worst performing sectors. In response to Chair Chapdelain's question regarding the portfolio's underperformance, Ms. Waddell explained the Attribution by Sector shows the calendar year 2020, and not a rolling 1 year from Q2 2020 through Q1 2021 considering the timeframe since Franklin Templeton's last presentation to the Board, and it includes the timeframe when value and growth stocks were separated by more than 20%. Had the Attribution by Sector reflected performance from just the most recent quarters, the difference to the benchmark would not have been as significant. Chair Chapdelain asked Ms. Waddell to forward a Performance by Sector Attribution which includes Q1 2021. Ms. Waddell stated she would and include an Attribution by geography. Ms. Waddell discussed the Performance Attribution by Country, expanding on some of the countries which added and detracted most from the portfolio, and that there were no holdings in Brazil which was suffered due to COVID- 19. She stated that Franklin Templeton is adding its exposure in Japan however some automakers which are in the portfolio lagged other areas in the benchmark for the timeframe. Regarding the Sector Allocation, Ms. Waddell noted the differences between the portfolio's holdings and the benchmark. She stated that Franklin Templeton is remaining selective on which banks to invest in despite indications and discussion of rising interest rates. Ms. Waddell discussed the differences between true cyclical stocks and those which had suffered and are now recovering from COVID-19, such as some retail firms like Burberry and Adidas which were heavily dependent on in-person sales, as well as some energy sector firms such as oil, which is competitively priced and drawing in new supply. Ms. Waddell discussed the Geographic Allocation, noting the portfolio does not have holdings in some of the more structurally challenged markets in Europe. She reviewed the portfolio holdings in Asia and discussed its rationale for diversification and risk reduction. Ms. Waddell noted it has limited holdings in Latin America but will again in the future. She stated there is a reduced amount of cash holdings; even if the Plan allowed a significant cash allocation, she believes it is a good time to be fully invested. Secretary Griggs left the meeting at 8:55 a.m. and returned at 8:59 a.m. Ms. Waddell reviewed the Top Ten Holdings, noting it had reduced its balance in Taiwan Semiconductor Manufacturing as it was prudent to take some profits when appropriate, and that it remains a good investment over the next decade due to future technology demands. She also reviewed the performances of Deutsche Telekom and E.ON. Chair Chapdelain asked Ms. Waddell to discuss the AIA Group. She stated it is a strong franchise which is heavily exposed to China, a significant growth market in insurance. She believes it will remain in the top ten holdings the next time Franklin Templeton presents to the Board. Ms. Waddell reviewed the Portfolio as of December 31, 2020, the value rally, and noted its broad diversification by type of value. She discussed Franklin Templeton's investment strategy and how its definition of quality has evolved over time while remaining a value investor. Attorney Christiansen asked Ms. Waddell to address the Assignment and Assumption Agreement. Ms. Waddell advised she was not able to comment on a corporate structural change. She advised she is primarily focused on the investment policy and strategy, and that there is a significant support staff and structure which addresses non-investment related issues such as corporate structure. Chair Chapdelain thanked Ms. Waddell and Mr. Zuramski for their presentation. 7.2. Presentation and Discussion Re: Renaissance Investment Management, Investment Performance Review as of December 31, 2020. Presenter(s): Mike Streitmarter, CFA, Renaissance Investment Management. Mike Streitmarter appeared before the Board elephonically and introduced himself. Mr. Streitmarter thanked the Board for its business, gave a brief firm overview, reviewed the Investment Team, Investment Philosophy, and Investment Process Overview. He stated that although the portfolio was down almost 27% in early 2020, it has increased by 59% on an absolute basis from April 1, 2020 through March 31, 2021 and has outperformed its benchmark by 9% over the same timeframe. He reviewed the Trailing Performance Summary, noting the portfolio still trails its benchmark over 3 and 5 years due to the market having favored growth investments over value as discussed previously by Ms. Waddell of Franklin Templeton. Mr. Streitmarter discussed the Portfolio Sector Attribution, noting that the sectors in which the portfolio is overweighted were also the best performing, as well as the Portfolio Country Attribution, noting the portfolio has no exposure to Chinese state-owned enterprises. Mr. Streitmarter discussed the portfolio characteristics, the Sector Allocation as of December 31, 2020 expanding on aspects of the Information Technology, Health Care, and Financials sectors, and the Regional Allocation. Mr. Streitmarter then turned to Renaissance's outlook, discussing the amounts and types of stimulus added into economies around the world, and Government Balance Sheets Stretched by COVID-19 noting there is uncertainty as to when investors will negatively react to the amounts of debt acquired by governments, however low interest rates have offset the impact of that debt service. He reviewed Savings Rates; Trustee Reardon asked why the savings rate in Euro Area had increased but not in the United States. Mr. Streitmarter stated that Europe had more lockdowns in the 4th quarter which caused decreased spending and greater savings. He expected the savings rate to normalize as lockdowns subside and vaccines are more commonly administered. Mr. Streitmarter reviewed the and the Economic Growth Expected to Bounce Back in 2021 and stated Renaissance expects Gross Domestic Product to grow by over 6% which would be the highest in the last 40 years. This increase will cause increases in reported earnings in 2021 and 2022. Mr. Streitmarter thanked the Board for its business and concluded his presentation. Chair Chapdelain thanked Mr. Streitmarter for his presentation. 8. UNFINISHED BUSINESS: None. Book 1 Page 251 04-12-2021 8:30 a.m. Book 1 Page 252 04-12-2021 8:30 a.m. 9. NEW BUSINESS: None. 10. ATTORNEY MATTERS: 10.1. Presentation and Discussion Re: Christiansen & Dehner, Franklin Templeton Assignment and Assumption Agreement. Presenter(s): Scott Christiansen, Christiansen & Dehner, P.A. Mr. Christiansen stated that this is required due to a restructuring at Franklin Templeton which changes the internal management structure overseeing the subsidiary which manages the Plan's account. The Police Officers' Pension Plan approved a similar Assignment and Assumption Agreement for Franklin Templeton. He recommends approving it and monitor their services. He noted Franklin Templeton added information regarding E-Verify, and Mr. Christiansen stated he added information about public records and electronic delivery. The Board noted the correct e-mail address, telephone number, and mailing address for the City Auditor and Clerk. Trustee McVaugh made a motion to approve the proposed Assignment and Assumption Agreement as amended to reflect the City Auditor and Clerk's correct telephone number, e-mail address, and mailing address. Trustee Nicholas seconded the motion. The motion carried unanimously (7-0). 10.2. Presentation and Discussion Re: Christiansen & Dehner, Proposed Operating Rules and Procedures. Presenter(s): Scott Christiansen, Christiansen & Dehner, P.A. Attorney Christiansen stated the update to the operating rules was discussed at the prior meeting and that he added information based on the statutory changes. Trustee McVaugh made a motion to approve the Proposed Operating Rules and Procedures. Trustee Nicholas seconded the motion. Chair Chapdelain asked staff if the changes sufficiently resolved the issues presented. Secretary Griggs confirmed that these changes are satisfatory. The motion carried unanimously (7-0). Attorney Christiansen stated that there are two disability cases open. He has collected the medical records for Kandy Lee and is in the process of scheduling an independent medical examination. He added that his firm is still collecting medical records for John Trumpet. Attorney Christiansen stated he did not have any proposed legislation which need to be presented to the Board. He noted the Florida Retirement System may have changes in the near future, however that would not directly impact the Plan. 11. OTHER MATTERS: Pension Plans Administrator Martin stated there is a continuing education course through the FPPTA to satisfy CEU requirements; it will be May 18 and 19, 2021 and offered as a virtual course. 12. ADJOURN: Chair Chapdelain adjourned the General Employees' Pension Plan Board of Trustees Regular Meeting at 9:33 a.m. Chair S6a0mp Ryan Chapdelain Secretary Shayla Griggs Book 1 Page 253 04-12-2021 8:30 a.m.