MINUTES OF THE EMPLOYEE RETIREMENT ACCOUNT COMMITTEE REGULAR QUARTERLY MEETING OF NOVEMBER 21, 2024 Present: Chair Alexya Bolanos, Vice Chair Lauren Sullivan, Secretary Shayla Griggs. Others: Pension Plans Administrator Debra Martin and Pension Specialist Peter Gottlieb. Absent: Treasurer Kelly Strickland 1. CALL THE MEETING TO ORDER: Presenter: Chair Bolanos. Chair Bolanos called the Employee Retirement Account Committee (Committee) meeting to order at 10:00 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter: Chair Bolanos. Chair Alvarenga led the Committee and meeting attendants in the Pledge of Allegiance. 3. PLEDGE OF CIVILITY: Chair Alvarenga stated for the record, "We may disagree, but we will be respectful of one another. We will direct all comments to issues. We will not engage in personal attacks." 4. ROLL CALL: Presenter: Pension Plans Administrator Martin. Pension Plans Administrator Martin called roll. Treasurer Strickland was absent. 5. PUBLIC INPUT: None. 6. APPROVAL OF MINUTES: 6.1. Approyal Re: Minutes of the Employee Retirement Account Committee Regular Quarterly Meeting of September 12, 2024. Presenter: Chair Bolanos Treasurer Griggs made a motion to accept the minutes of the September 12, 2024, meeting; Vice Chair Sullivan seconded the motion. The motion passed by consensus. 7. QUARTERLY INVESTMENT REPORTS: 7.1. Presentation and Discussion Re: VALIC Financial Advisors, ERAC Report for Quarter Ending September 30, 2024. Presenter(s): Trent Harris, Financial. Advisor; David Allen, Divisional Vice President of Retirement Services VALIC Financial Advisors; Krista Hill, Relationship Manager; Corebridge Financial. Book 1 Page 124 11-21-2024 10:00 a.m. Book 1 Page 125 11-21-2024 10:00 a.m. Trent Harris of VALIC Financial Advisors appeared in person, and Krista Hill of Corebridge Financial appeared telephonically, before the ERAC and introduced themselves. Mr. Harris presented the engagement reports. The first page shows how many participants Mr. Harris met in person or telephonically. The second page shows how many participants engaged with VALIC's customer care group. The third page shows how many participants accessed their account through VALIC's website or their mobile application during the timeframe. The Committee had no questions for Mr. Harris. The Committee expressed their appreciation to Mr. Harris for his engagement with participants and noted his visibility at City facilities. 7.2. Presentation and Discussion Re: Daher Capital Group, Quarterly Investment Analysis Review Ending September 30, 2024. Presenter: Howard Daher, Principal, Daher Capital Group. Howard Daher of Daher Capital Group appeared before the Board and introduced himself. Mr. Daher reviewed the Market Insight Quarterly. He noted that as of close of business on Wednesday, November 20, 2024, the S&P 500 index was up approximately 24% year-to-date, and that analysts generally agree that the market will have a strong finish to the calendar year. Mr. Daher anticipates some volatility to return in early 2025 considering the market overcame previously anticipated headwinds in 2024; he suggested investors may wish to be underweight to equities going into 2025. Tech stocks, which had been driving the market for the last several years, were amongst the worst performing during Q3 2024; value stocks have rotated back into favor over growth stocks. The Federal Reserve (Fed) has eased interest rates which, accordingly, has eased money supply issues, and small cap stocks have been rewarded. International markets are rebounding in Q3 2024, as are all of the equity market sectors, and bond markets. Mr. Daher cautioned against a potential sell-off in early 2025 as investors try to capture gains from thel latter half of 2024. Mr. Daher briefly reviewed the DCG Plan Summary Notes. Only 1 fund, Alliance Bernstein Inflation Strategy (Alliance), is on the' Watch List this quarter for the first time; Alliance is on watch because it is not performing at the desired level, and not because of negative absolute performance. Its score is being dragged by the 3-year return, but it has solid returns over 1-, 5-, and 10-year periods. Turning to the Top Five Invested Funds By Assets, Mr. Daher explained that S&P 500 index funds, guarantee or stable value funds, and static allocation funds like the Vanguard Wellington fund, and target-date funds are very popular and tend to hold sizable portions of participants' assets across his client base. None of the top five funds are on the watchlist and Mr. Daher has no concerns regarding the concentration. He reviewed the Allocation of DC Plan Assets, noting that the Plan's allocation is diversified across the spectrum of investments with concentrations in popular areas like domestic large caps and static asset allocation furds. Mr. Daher briefly discussed reviewed the Watchlist and noted that the increase in assets under management over the last 12 months includes City contributions, but also some significant growth as well. He presented the DC and 457(b) Plan Asset Summary. By consensus, the ERAC directed Mr. Daher to include the DC and 457(b) Plan Asset Summary in his materials provided there is no additional cost to the Plan. 8. UNFINISHED BUSINESS: 8.1. Presentation and Discussion Re: Ordinance Change Regarding Investment Policy Statement. Presenter(s): Howard Daher, Principal, Daher Capital Group. Mr. Daher discussed the draft Investment Policy Statement (IPS), and each of the content sections. The IPS is dynamic and evolving, and it creates an investment structure which, if followed, should provide to participants investment choices with reasonable rates of returns, lower costs, and lower risks. While government plans are not subject to the Employee Retirement Income Security Act of 1974 (ERISA), Mr. Daher recommended the Committee continue to adhere, to the extent applicable, the Safe Harbor practices stated on page 3 of the draft IPS. He noted that the draft IPS is not restrictive, and the Committee may adopt other best practices as it deems appropriate. Mr. Daher reviewed the Roles and Responsibillties for the ERAC, Custodian/Trustee, Record keeper, and Investment Fiduciary Adviser. He discussed Section 6., Selection of Investment Options, noting the investment criteria are listed in Appendix A and Section 7., Investment Monitoring and Reporting; he clarified that while some plans may terminate investments which fail the investment criteria after one quarter, he recommends the Committee refrain from any immediate action on funds appearing on the watchlist as frequent investment menu changes causes disruption to the participants for what may be a transitory period of poor performance. He discussed, in Section 8., Investment Option Termination, the process by which the Committee may consider in terminating an investment option. He noted that 12. Appendix A lists the available Asset Classes from which funds can be chosen to be offered to participants. He cautioned against offering too many choices as it can lead to participant confusion. Returning to the Investment Criteria, Mr. Daher and Pension Plans Administrator Martin clarified that the criteria was established in 2012 and have remained unchanged to date. He discussed each of the criteria and how they characterize funds so that they can be compared to identify those which offer appropriate risk-weighted returns. Secretary Griggs left the meeting at 10:48 a.m. and retured at 10:49 a.m. To Vice Chair Sullivan's question, Mr. Daher explained that the investment criteria was established by the ERAC at the time it was approved, with input provided by Daher Capital Group. He explained that the criteria can be changed at the Committee's request; he reiterated that the Committee's purpose is to provide participants with investment options that are appropriate for an employer-sponsored retirement account. He praised the Committee for historically taking reasonable approaches to selecting and changing the investment menu. Turning to the Investment Analysis Review, Mr. Daher explained how the Evaluation Criteria matches those stated in the IPS. He then explained how the Executive Summary presents each fund's scoring history over the prior 8 quarters. Mr. Daher noted that scoring criteria is applied only to active managers, and not to index funds. Because index funds charge management fees yet indexes do not, index funds would consistently score lower than their respective index, and thus the scoring would inaccurately characterize index funds' performance. He explained some of the arguments for investing in actively managed fund versus investing in index funds. Mr. Daher explained how to read the Performance Summary; he noted that under the Annualized Returns, the number appearing in brackets is the percentile ranking in the fund's peer group, with 1 being the best rank and 100 the worst. The Expense Ratio Percentage Gross is the maximum chargeable fee, while the Net is the actual amount paid by the participant in addition to the Corebridge record-keeping fee. Additionally, the Peer Group Median (50th Percentile) line is provided for comparison. The Asset Allocation by Fund shows how much is invested in each fund as well as what percentage of participants' assets are in each fund. The Fund Fact Report for each fund provides more detailed and granular analytic information. The Committee had no additional questions for Mr. Daher regarding the IPS. Secretary Griggs made a motion to approve the Investment Policy Statement as proposed; Vice Chair Sullivan seconded the motion. The motion passed unanimously (3-0). The Committee thanked Mr. Daher for his presentation. Book 1 Page 126 11-21-2024 10:00 a.m. Book 1 Page 127 11-21-2024 10:00 a.m. 9. NEW BUSINESS: None. 10. OTHER MATTERS: None. 11. ADJOURN. Chair Bolanos adjourned the Employee Retirement Account Committee (ERAC) Regular Quarterly Meeting at 11:10 a.m. A bavl Sb0n 15 CM Chair Aleya Bolanos Secretary SHayla Griggs