106 . . . . . . . . C. COMERICA LETTER TO RETIREES (RECEIVE)
D. DISABILITY RETIREMENT REEXAMINATION
Motion: To go into closed session pursuant to MCLA 15.268, Sec. 8 (h) to consider material exempt from discussion or disclosure by state or federal statute.
107 – 108 . . . . . . . . . E. RFQ AUTHORIZATION FOR OUTSIDE LEGAL COUNSEL
Total disbursements -1,455,058.55 -1,455,058.55 See funding & disbursement summary
Income received 377,494.98 377,494.98 See income & expense summary, cash activity detail
Expenses paid -464,266.65 -464,266.65 See income & expense summary
Unrealized gain/loss change 0.00 4,798,967.09 See asset summary
Realized gain/loss 634,758.43 634,758.43 See realized gain/loss summary
Accrued income change -10,481.86 -10,481.86 See income & expense summary
Other receipts and disbursements -100,605.97 -100,605.97
Closing balance 268,071,214.96 347,520,496.27
Although this report has been prepared using information believed to be reliable, it may contain information provided by third parties or derived from third party information, and/or information that may have been obtained from,
categorized or otherwise reported based upon client direction. The Northern Trust Company does not guarantee the accuracy, timeliness or completeness of any such information. The information included in this report is intended
to assist clients with their financial reporting needs, but you must consult with your accountants, auditors and/or legal counsel to ensure your accounting and financial reporting complies with applicable laws, regulations and
accounting guidance. The Northern Trust Company and its affiliates shall have no responsibility for the consequences of investment decisions made in reliance on information contained in this report.
*Generated by Northern Trust from daily data on 8 Nov 17 B01120
21 21
22 22
23 23
BARINGS
Barings Real Estate Advisers 333 Ludlow Street | Stamford, CT 06902 | 860.509.2200
BARINGS.COM
October 31, 2017 Bay County Employees’ Retirement System Bay County Voluntary Employees’ Beneficiary Association 515 Center Avenue, Suite 706 Bay City, MI 48708-5128 Dear Bay County Employees’ Retirement System:
The total return of the Bay County Employees’ Retirement System REIT account for the quarter ended September 30, 2017 is as follows:
Total Returns Ending September 30, 2017
Portfolio Q3 2017 1 Year Bay County Employees’ Gross 1.10% -0.56% Bay County Employees’ Net 0.95% -1.16% FTSE NAREIT Equity REIT Index 0.94% 0.67%
Portfolio Performance The Account had the strongest performance relative to the index due to its positioning in the “Other” sector, mostly for its overweight position in Hilton which had a 12.56% quarterly return. Hotel stocks, including Hilton, outperformed in the third quarter despite disruption by two major hurricanes, as investors looked for potential positive impacts from the growth initiatives proposed in the Republican tax bill into the end of the quarter. The Account’s performance also benefited from its underweight positioning in Regional Malls and Apartments, and its overweight position in the Industrial Sector. The Regional Mall sector, in particular General Growth Properties, continues to underperform on news of accelerating retail store closures and poor retailer operating results. The Apartment sector continues to exhibit decelerating internal growth as a result of supply in the key REIT markets. This sector has a heavy bias towards Class A properties which typically underperform in the latter part of the real estate cycle. The Industrial sector’s strong leasing trends have been driven by e-commerce demand. High occupancy levels are providing landlords strong pricing power, with new supply remaining at manageable levels.
24
The Account’s weakest performance relative to the Index was in the Specialty, Self-Storage, and Hotel sectors. In the Specialty sector, the account was underweight Iron Mountain, which provides records storage and management. This company had very strong returns in the quarter, benefitting from cost savings as a result of last year’s acquisition of Recall. Market Overview Overall, U.S. REIT returns lagged broader equity markets in the third quarter. Index returns were healthy in the Net Lease, Industrial, Data Centers, and Self-Storage sectors, while Health Care, Regional Malls, Manufactured Homes, Office, and Apartments all posted negative returns. The Net Lease Sector outperformed as tenant credit concerns from the second quarter were worked out. Both Spirit Realty Capital and STORE Capital Corporation outperformed on company specific issues. Spirit announced a spinoff to resolve some credit concerns regarding troubled retailer Shopko. STORE Capital announced an equity investment by Berkshire Hathaway, Warren Buffett’s famed investment vehicle, which fixed the balance sheet and relieved investor credit concerns. The Industrial sector continues to benefit from e-commerce demand. Supply remains at manageable levels, and high occupancy levels are providing landlords strong pricing power. The Data Center sector’s performance has been driven by the emergence of cloud computing. Strong leasing is expected to continue as more companies continue to outsource their datacenter requirements. The Self-Storage sector, which had seen weakening fundamentals earlier in the year, got a boost in the third quarter from the two major hurricanes in the U.S. The Houston and Miami markets were previously weak, but will see increased demand from displaced households. Despite a broadly negative retail narrative, the Shopping Centers sector rebounded in the third quarter after reporting solid leasing fundamentals. We expect same-store NOI to remain positive in the next few quarters as recently vacated space is backfilled. Longer-term we remain cautious about the growth prospects for the sector. We have favored grocery anchored centers and street retail in this sector. Going forward we expect a more competitive environment for grocers.
25
Healthcare stocks underperformed in the third quarter on several company specific tenant issues and a market focus on higher interest rates as the Fed announced a reversal of the quantitative easing program into the end of the quarter. Regional Malls saw negative performance again in the third quarter, as elevated store closings remained a headwind to fundamentals. Malls trade at large discounts to NAV, but a transaction remains unlikely given poor corporate governance in the sector. We expect tenant closings to weigh on mall earnings through the balance of the year. The malls also face a several year period of repurposing department stores. The Office sector performance was weak in the period, as several companies reported greater tenant churn than expected, driven by increased supply in most major markets. The Apartments sector continues to exhibit decelerating internal growth as a result of supply in the key markets. The sector has a heavy bias towards Class A properties which typically underperform in the latter part of the real estate cycle. Performance was negative in the Manufactured Homes Sector in the third quarter, mostly due to the negative effects of the September hurricanes. In addition, the sector was likely also negatively impacted by the Fed’s confirmation of tightening monetary policy into the end of the quarter. Market Commentary U.S. GDP grew 3.1% in the second quarter, offsetting a weaker first quarter and reaffirming our positive economic outlook. However, we expect increased threats from the economic impact of hurricanes, global uncertainty, and bipartisan political showdowns. The Fed will continue its tightening program for the remainder of the year, normalizing its balance sheet and raising rates in the fourth quarter. Employment growth remains healthy, at approximately 200,000 average per month over the past three months. Some weakness in the coming months due to the hurricanes in Texas and Louisiana is expected, but jobs related to recovery efforts should follow. REIT Outlook Overall, we continue to believe that U.S. REITs are an attractive investment in the current environment, with positive real estate fundamentals in most property sectors. Demand remains steady for quality real estate, and overall new supply levels are in check. In addition, earnings growth is likely to re-accelerate for the REIT sector into next year.
26
, , , d if .
We are optimistic that the U.S. recovery will continue, and we believe our portfolio is positioned to benefit from its growth. REIT performance will continue to be bifurcated among segments, depending on the nature of the economy’s growth, as well as fundamental trends such as evolving consumer demand due to ecommerce. We see the downside risks of geopolitical events increasing, and we see risk that President Trump’s economic initiatives prove more disappointing than currently expected. Also, the devastating September hurricane season could cloud near-term data. The effects of President Trump’s economic initiatives remain unknown at this time, and we believe that there could be policy-driven volatility in the coming quarters. While we see low likelihood that the tax plan passes in its current form, the proposed plan would have a mixed effect on the REIT sector. The whole sector would benefit from higher corporate profits and higher discretionary income for most consumers, but the positive effects for REITs would likely lag those of companies that pay taxes. However, the implications of the plan will become clearer once Congress makes progress in drafting legislation in the coming weeks.
Sincerely, David Wharmby, CFA Head of Real Estate Equity Securities, Portfolio Manager
27
BARINGS
I
•
•
•
1
I
PERFORMANCE HISTORYBay County Employees' Retirement SystemU.S. REIT Strategy
Total Return as of 09/30/2017
Gross Net
Q3 2017 1.10% 0.95% 0.94%
YTD 2017 3.16% 2.69% 3.67%
1 Year -0.56% -1.16% 0.67%
3 Year 10.44% 9.79% 9.86%
5 Year 10.57% 9.91% 9.69%
Since Inception* 14.27% 13.59% 12.78%*Inception Date: October 21, 2008
** All forward yields
Past performance is not a guarantee of future performance. *** FTSE EPRA/NAREIT Developed Index
Dividend Yields**
Returns Summary Capital Markets & Real Estate Comparison
Portfolio ReturnsTime Period
FTSE/NAREIT Equity REIT Index
1.1%
-0.6%
10.4% 10.6%
14.3%
1.0%
-1.2%
9.8% 9.9%
13.6%
0.9% 0.7%
9.9% 9.7%
12.8%
Q3 2017 1 Year 3 Year 5 Year Since Inception*
Gross
Net
FTSE/NAREITEquity REIT Index
0.9% 0.7%1.8%1.5%4.5%
18.6%
Q3 2017 1 Year
FTSE/NAREITEquity REIT Index
Global RealEstate***
S&P 500 TR
3.5%2.3%
4.0%
Portfolio Yield U.S. 10 YearTreasury Yield
FTSE/NAREITEquity REIT Index
28
I
M
• • • • • • • • • • • •
BARINGS
Top Ten Equity Holdings
Ticker SecurityTotal Portfolio
Weight Sector QuantityMarket Close
Price Portfolio Market
Value Equity Weight* Dividend YieldSecurity Market Return Quarter
Returns less than one year are cumulative. Returns greater than one year are annualized.
Past performance does not guarantee future results. Results are for the client's own account and are not composite results. Performance results in this report are calculated by Columbia Management Investment Advisers, LLC on a gross basis and do not reflect the deduction of management fees. Information on the impact of fees on performance is available upon request. Performance is based on time-weighted, daily calculation using values that are determined in good faith by Columbia Management Investment Advisers, LLC. Portfolio performance is calculated based on trade date, net of transaction costs and reflects accrued interest. If you have any questions regarding the above information, or if there are any changes in your investment objectives or guidelines, please contact your client relationship manager.
Indices shown are unmanaged and do not reflect the impact of fees. It is not possible to invest directly in an index.
Institution Account(s): Bay County Employees Retirement System ( 53D )
Custodian Account(s): All Custodian Accounts
Additional Policy: None ADR Meetings: All Meetings Ballot Statuses: All Statuses Contrary Votes: All Votes Date Format: MM/DD/YYYY Header Display: Repeat Headers for Any Meeting Split by Multiple Pages Markets: All Markets Meeting ID's: All Meeting ID's Meeting Types: All Meeting Types PoA Markets: All Markets Proposal Proponents: All Proponents Rationale: All Rationale Recommendations: All Recommendations Record Date Markets: All Markets Shareblocking Markets: All Markets Sort Order: Meeting Date, Company Name Vote Instructions: All Instructions Voting Policies: All Policies
Zero (0) Share Ballots: All Ballots
Account Watchlist: None
Country Watchlist: None
Issuer Watchlist: None
Proposal Code Watchlist: None
Proposal Code Watchlist - Agenda Output: Include Full Meeting Agenda
Page 1 of 1
35
Materials 5.8%
Financials 5.05% Information
Technology 25.81%
Industrials 16.7%
Consumer Staples 1.57% Index
4.59%
Consumer Discretionary 18.18%
Health Care 20.66%
Cash 1.64%
Russell 2000 Growth Index
Performance is based on fiscal year end of portfolio
EAGLE I Asset Management
QTD 3
Years
5
Years
YTDAnnualized
Since
Inception
Performance Summary
MTD 1
Year
3.78
3.58
6.22
12.18
11.26
14.08
13.10
18.30
17.61
15.46
14.53
4.33
4.33
5.45 16.81RU20GRTR1
12.17 14.28 16.14
22.34
21.38
20.98
Gross
Net
1
Bay County Employees' Retirement System - 05231100
Investment period ending: 09/30/2017
Top Ten Holdings
% of Market ValueSecurity Description Total Market Value
QUAKER CHEMICAL CORP 3.58%341,320.65
COHERENT INC 3.47%330,413.85
MERCURY SYSTEMS INC 2.50%238,648.00
SYNOVUS FINANCIAL CORP 2.47%235,504.78
SUMMIT MATERIALS INC -CL A 2.21%211,045.67
WASTE CONNECTIONS INC 2.12%202,114.44
UNIVERSAL ELECTRONICS INC 2.05%195,335.40
REALPAGE INC 1.92%182,861.70
PLANET FITNESS INC - CL A 1.91%181,656.34
HFF INC-CLASS A 1.83%174,657.40
Currency Valuation: USD
Portfolio Style: SmallCap Growth Equity
Portfolio Summary
Month To Date Year To Date
Beginning Market Value
Contributions
Withdrawals
Dividend and Interest Income
Change in Market Value
Ending Market Value
9,134,495.14
971.31
46.45
2,787.58
393,405.98
9,531,613.56
8,054,749.90
1,779.57
189.95
35,758.61
1,439,515.43
9,531,613.56
Industry Weightings
Portfolio inception date: 09/02/2010
Page 2 of 1536
Geneva -JANUS HENDERSON-
Geneva Capital Management
100 E. Wisconsin Avenue, Suite 2550, Milwaukee, WI 53202 T (414) 224-6002 F (414) 224-9503
genevacap.com
Janus Henderson Distributors
Geneva Capital Management
Part 2A of Form ADV July 31, 2017
Item 2 Material Changes This item summarizes material changes that have been incorporated in the brochure since Geneva’s last update on June 16, 2017:
Item 4, Advisory Business, has been updated to reference the SMID Cap Strategy.
Item 8, Methods or Analysis, Investment Strategies and Risk of Loss, has been updated to include a description of the SMID Cap Strategy.
We will ensure that clients receive a summary of any material changes to this and subsequent brochures within 120 days of the close of our fiscal year. We may further provide other ongoing disclosure information about material changes as necessary. In addition to the material changes described above, minor items, including clarifying language, formatting and corrections to typographical errors, also have been completed since June 16, 2017 brochure. A full copy of our brochure is available upon request. To receive a copy, free of charge, please contact us by telephone at (312) 871-6114, (414) 224-3343 or by email to [email protected]. Geneva’s brochure is also available on our website at https://www.GenevaCAP.com. Additional information about Geneva is available on the SEC’s website at www.adviserinfo.sec.gov. The SEC’s website also provides information about any persons affiliated with Geneva who are registered, or are required to be registered, as investment adviser representatives of Geneva.
Russell 2000 Value Index 7.08 5.11 5.68 8.71 Price / Cash Flow 7.1x 8.5x 10.4xRussell 2000 Index 6.24 5.67 10.94 8.97 Price / Book 1.3x 1.5x 2.2xS&P 500 Index 2.06 4.48 14.24 8.70 Dividend Yield 1.4% 2.0% 1.4%
Market Capitalization (mm) $2,502 $1,997 $2,252Commencement of portfolio: 12/1/03. Periods over one year are average annualized returns. # of Holdings / 1-Yr Turnover 59 / 37%
Top and Bottom Five Contributors to Performance Trading Data Top Ten Holdings - Total PortfolioAvg Wgt Ttl Ret. Contr. Major Buy(Sell) *New buy/final s e ll + / - End Wgt
KBR Inc. 3.34 % 18.01 % 0.58 % TCF Financial Corp. 2.1% Seritage Growth Properties 4.7 %Enstar Group Ltd. 4.48 11.93 0.52 Masonite Int'l Corp. 1.6% Enstar Group Ltd. 4.7 Embraer SA 2.23 24.30 0.51 Frank's International 1.5% Masonite Int'l Corp. 4.2 Meritor Inc. 1.27 56.59 0.51 Office Depot Inc. 1.0% ARRIS International PLC 3.9 Kosmos Energy Ltd. 2.20 24.18 0.50 Seritage Growth Properties 0.9% KBR Inc. 3.4 Real Industry Inc. 0.46 % -37.93 % -0.24 % (MDC Partners Inc.) -0.8% Horace Mann Educators 3.3 Office Depot Inc. 2.07 -19.00 -0.33 (American Vanguard Corp.) -1.1% * TRI Pointe Group Inc. 3.2 LSC Communications Inc. 1.58 -21.68 -0.41 (Meritor Inc.) -1.3% Matson Inc. 2.8 Energy XXI Gulf Coast Inc. 0.77 -44.32 -0.42 (Rush Enterprises Inc.) -1.6% Popular Inc. 2.8 Popular Inc. 3.30 -13.31 -0.45 (EnPro Industries Inc.) -1.7% Sonic Automotive Inc. 2.8
Performance Attribution Top Ten Industries - Total PortfolioPortfolio Russell 2000 Value Allocation
Returns are calculated using daily holding information, gross of fees. Performance attribution returns can differ from actual client portfolio returns due to data differences, cash flows, trading, and other activity. For the portfolio’s total performance attribution, interaction effect is combined with stock selection.
47
BAY COUNTY EMPLOYEES' RETIREMENT SYSTEM
September 30, 2017
888-596-4926 Hotchkis & Wiley Page 1
Assets Transactions SummaryTotal Market Value: $9,552,587 Total Purchases: $1,095,038
Total Sales: $1,066,342Total Equity Value: $9,263,446 Total Commissions: $2,063Total Cash Value: $278,767 Average Transaction Cost/Share: $0.015Total Accrued Value: $10,374% Cash of Portfolio: 2.9%
Sources: Loomis, Sayles & Company, L.P. and others For Institutional Investor Use Only. Not for Further Distribution September 30, 201753
Yield Curve
Allocation
0.21
Selection
EXCESS RETURN ATTRIBUTION BY SECTOR
EXCESS RETURN ATTRIBUTION
. Total . Parallel Non-Parallel
Cash Et Equivalents -0.02
US Treasuries
Agencies
Gov Related
IG Corporate
HY Corporate
0.03
0.13
0.07
El LOOM IS SAYLES
Bay
Cou
nty
Empl
oyee
s Ret
Sys
tem
performance attribution by sector06/30/2017 TO 09/30/2017 (%)
TOTAL RETURNS
Total Return
Portfolio Return 1.57
Benchmark Return 1.34
Excess Return 0.23
Figures on the bar chart may not add up to total excess return as they exclude impact of trading and pricing differences. Excess Return by sector excludes yield curve impact. Values shown include impact of hedging if utilized. Unless otherwisenoted, the performance shown is gross of management fees.The current benchmark is Bloomberg Barclays Corporate.
Sources: Loomis, Sayles & Company, L.P. and others For Institutional Investor Use Only. Not for Further Distribution September 30, 201754
MFS QUARTERLY ATTRIBUTION
Growth Equity Strategy (USD)
The opinions are current as of September 2017, and are subject to change. Page 1 of 3 FOR INSTITUTIONAL USE ONLY GREQ_R1G_USD_Q
THIRD QUARTER 2017 PERFORMANCE REVIEW
The Growth Equity portfolio underperformed the Russell 1000 Growth Index during the third quarter of 2017.
Detractors
Stock selection in health care and special products & services
Underweight in industrial goods & services
Our modest allocation to cash, used for transactional purposes, negatively impacted relative performance
Contributors
Stock selection in leisure and consumer staples
A combination of stock selection and overweight position in financial services
Individual stocks: Facebook
SIGNIFICANT IMPACTS ON PERFORMANCE — DETRACTORS
Health Care
The portfolio's overweight in medical device maker Medtronic (United States) hurt relative returns. Early in
the quarter, the company announced that first-quarter 2018 sales would be adversely impacted by both a
week-long systems outage that occurred in June and a shortage of diabetes sensors. Later in the period,
the company announced disappointing first-quarter earnings due to weak sales volumes and organic
growth rates.
Not holding a position in shares of research-based biopharmaceutical company Abbvie (United States)
detracted from relative performance. The stock traded higher throughout the period as the company
announced quarterly earnings that beat consensus estimates, driven by strong revenue results in the
company's Humira and Imbruvica products.
The portfolio's holdings in shares of eye care and skin care products company Allergan (United States)
held back relative results. Despite reporting solid second-quarter earnings, the stock declined in part due to
disappointing results for tests on cenicriviroc (CVC), a drug used for the treatment of liver disease NASH,
and poorly performing Restasis.
Special Products & Services
An overweight position in credit reporting agency Equifax (United States) detracted from relative
performance. The stock tumbled after the company reported a major security breach, potentially affecting
roughly 143 million customers. The information at risk includes names, social security numbers, birth
dates, addresses and, in some cases, driver's license numbers. The unauthorized access occurred
between mid-May and July. The company is under regulatory investigation by the Federal Trade
Commission (FTC) and several lawsuits have already been filed against the company due to the breach.
55
A MFS QUARTERLY ATTRIBUTION
Growth Equity
The opinions are current as of September 2017, and are subject to change. Page 2 of 3 FOR INSTITUTIONAL USE ONLY GREQ_R1G_USD_Q
Industrial Goods & Services
Not owning shares of aerospace company Boeing (United States) hampered relative performance. The
company reported solid profitability upside in the Defense, Space & Security division coming from lower
taxes and better-than-expected margins in the Commercial Airplane segment.
SIGNIFICANT IMPACTS ON PERFORMANCE — CONTRIBUTORS
Leisure
The portfolio's overweight position in internet TV show and movie subscription services provider Netflix
(United States) contributed positively to relative performance. Shares advanced during the quarter on the
back of stronger-than-expected second-quarter earnings results and raised guidance from management.
New subscriber growth exceeded expectations, both domestically and internationally, as original content
offerings appeared to have drawn new customers to the platform.
Consumer Staples
Not holding a position in shares of US-based tobacco company Altria Group helped relative performance
as shares fell after the Food and Drug Administration (FDA) announced its plan to lower the amount of
nicotine in cigarettes to non-addictive levels.
Financial Services
An overweight position in shares of debit and credit transaction processing company Mastercard (United
States) supported relative returns. Shares rose throughout the period as second-quarter earnings results
came in ahead of investor expectations on the back of strong transaction and volume trends, as well as a
lower tax expense. Management also raised its outlook for the remainder of the year which further
benefited the stock.
An overweight position in payments technology firm Visa (United States) contributed to relative returns as
the stock outperformed the benchmark during the period. Quarterly earnings per share exceeded
consensus estimates, driven by higher gross revenues, lower client incentives and a lower tax rate.
Management also raised revenue and earnings per share growth guidance ranges by approximately 3%.
Additional Factors
An overweight position in social networking company Facebook (United States) contributed to relative
performance. The company reported earnings that exceeded expectations for the second quarter, with
almost a 50% growth in ad revenue.
POSITIONING
The historical model for consumer products companies was create a product, achieve scale in distribution,
market the brand to a broad audience, and profits would follow. Consumer Staples operators sometimes
referred to this playbook as "stack 'em high and let 'em fly."
However 'center-of-store' categories today are less relevant to the consumer because the internet has
democratized shelf-space and created a much more challenging environment for legacy operators. E-
commerce platforms and digital marketing have lowered the once high barriers-to-entry of brand creation.
As a result, brand loyalty is declining. It’s particularly weak amongst millennials, who have shown either a
distrust of big brands or little brand loyalty. Thus many mass appeal staples companies today have to either
innovate or compete on price. Profits, we believe, will be challenged in either scenario for many of the legacy
franchises. Household companies with high private label exposure are particularly at risk while other verticals
56
A MFS QUARTERLY ATTRIBUTION
Growth Equity
The opinions are current as of September 2017, and are subject to change. Page 3 of 3 FOR INSTITUTIONAL USE ONLY GREQ_R1G_USD_Q
are more insulated, such as tobacco, perfume/cosmetics, and alcohol. And given the rear-view linear
construction methodology of most benchmarks, they are over-indexed to the former and under-indexed to the
latter.
Technology, as we have been consistently writing for some time, is commoditizing the intellectual property of
long-standing market share incumbents. Within Staples, this strategy has been positioned away from those
models we believe most at risk and exposed to those with differentiated products, intellectual property, and
underappreciated long-duration free-cash-flow compounders. We believe a combination of avoidance of falling
margin Staples operators combined with judicious selection/ownership of those with an ability to navigate a
more challenging operating environment will be a source of alpha for clients.
Significant transactions over the period included:
• We exited Panera Bread following the acquisition by JAB Holdings.
• We continued to build a position in theme park operator Six Flags that was established during the second
quarter. Six Flags possesses many of the attributes we seek in a company such as pricing power, recurring
revenue, positive operating leverage and a returns-oriented management team.
• We added to software company PTC on weakness. We believe their switch to a subscription model offers
the potential for higher margins and earnings visibility.
The commentary included in this report was based on a representative fully discretionary portfolio for this product style; as such the commentary may include securities not held in your portfolio due to account, fund, or other limits. Issued in the United States by MFS Institutional Advisors, Inc., a U.S.-based investment advisor and subsidiary of Massachusetts Financial Services
Company ("MFS"). Issued in Canada by MFS Investment Management Canada Limited. No securities commission or similar regulatory authority in
Canada has reviewed this communication. Issued by MFS International (U.K.) Limited ("MIL UK"), a private limited company registered in England
and Wales with the company number 03062718, and authorised and regulated in the conduct of investment business by the UK Financial Conduct Authority. MIL UK, an indirect subsidiary of MFS®, has its registered office at One Carter Lane, London, EC4V 5ER and provides products and
investment services to institutional investors globally. This material shall not be circulated or distributed to any person other than to professional
investors (as permitted by local regulations) and should not be relied upon or distributed to persons where such reliance or distribution would be contrary to local regulation. Issued in Hong Kong by MFS International (Hong Kong) Limited ("MIL HK"), a private limited company licensed and regulated by
the Hong Kong Securities and Futures Commission (the "SFC"). MIL HK is a wholly-owned, indirect subsidiary of Massachusetts Financial Services
Company, a US based investment adviser and fund sponsor registered with the US Securities and Exchange Commission. MIL HK is approved to engage in dealing in securities and asset management regulated activities and may provide certain investment services to "professional investors" as defined in
the Securities and Futures Ordinance ("SFO"). Issued in Singapore by MFS International Singapore Pte. Ltd., a private limited company registered in
Singapore with the company number 201228809M, and further licensed and regulated by the Monetary Authority of Singapore.
For investors in Australia: MFS Institutional Advisors, Inc. ("MFSI") and MFS International (U.K.) Limited ("MIL UK") are exempt from the
requirement to hold an Australian financial services licence under the Corporations Act 2001 in respect of the financial services they provide to Australian wholesale investors. MFS International Australia Pty Ltd ("MFS Australia") holds an Australian financial services licence number 485343. In
Australia and New Zealand: MFSI is regulated by the SEC under US laws and MIL UK is regulated by the UK Financial Conduct Authority under UK
laws, which differ from Australian and New Zealand laws. MFS Australia is regulated by the Australian Securities and Investments Commission.
This material is directed at investment professionals for general information use only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. Any securities and/or sectors mentioned herein are for illustration purposes and should not
be construed as a recommendation for investment. Investment involves risk. Past performance is not indicative of future performance. The information
contained herein may not be copied, reproduced or redistributed without the express consent of MFS Investment Management ("MFS"). While the information is believed to be accurate, it may be subject to change without notice. MFS does not warrant or represent that it is free from errors or
omissions or that the information is suitable for any particular person's intended use. Except in so far as any liability under any law cannot be excluded,
MFS does not accept liability for any inaccuracy or for the investment decisions or any other actions taken by any person on the basis of the material included. MFS does not authorise distribution to retail investors.
Unless otherwise indicated, logos, product and services names are trademarks of MFS and its affiliates and may be registered in certain countries.
36196.1
57
A MFS
Cost Market Value Accrued Income Total Value Total Value
CASH 856,515.17 856,515.17 0.00 856,515.17 2.55 %
COMMON STOCK 21,001,321.86 32,435,538.90 12,580.95 32,448,119.85 96.66 %
This report contains trade date position values, calculated by MFS. This is not the official book of record for the account. Cash is a net cash balance comprised of cash on deposit, and payables and receivables that have not settled.
Page 1 of 1Run Date: 10/5/2017 11:15:12 AM
Bay County Employees' Retirement System - Growth Equity BCS
Mgmt ForForAdvisory Vote to Ratify Named Executive Officers' Compensation
2
Mgmt One YearOne YearAdvisory Vote on Say on Pay Frequency 3
Mgmt ForForAmend Executive Incentive Bonus Plan 4
SH ForAgainstReport on Political Contributions Disclosure 5
Mgmt ForForRatify PricewaterhouseCoopers LLP as Auditors
6
Page 3 of 4
63
MSCI EAFE - Net
Return
Russell Midcap Growth
Russell Midcap Value
S&P 500 Russell 2000 Value
Russell 1000 Value
20.5
17.8 18.6 19.1 21.0
21.9
15.1 13.4
6.2 5.9 4.5
3.1
LRussell
000
2
Growth
Russell 1000
Growth
32.2 33,8
20.1 22.6 22.9 27.7
22.2 26.5
20.4
5.8 5.4 8.9 8.9 8.4 4.2 3.9 2.9
6.9 6.8 9 55 5
-3.0
-17.5
ustri
al
Goo
ds &
Serv
ices
0
a)
Fina
ncial
Serv
ices
Util
ities &
Com
mun
icat
ions
Spec
ial
Prod
ucts
& Se
rvic
es
Basi
c M
ater
ials U)
u) a)
Con
sum
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tapl
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.41k M
Bay County Employees' Retirement System
CRPEQUITY-BCS-30-Sep-17
Market overview
Style performance (%) (USD) as of 30-Sep-17
Third quarter 2017 One year
Source for benchmark performance SPAR, FactSet Research Systems Inc. All indices represent totalreturn unless otherwise noted.
US Equity Market Review as of 30-September 2017The US market, as measured by the S&P 500 Index, continued to move upward throughout the third quarter, accelerating its pace from Q2. Despite noprogress on the president's economic agenda, the future unwinding of the US Federal Reserve's balance sheet, significant geopolitical concerns andmajor hurricanes hitting the US, investors have pushed the S&P 500 Index to an all-time high.US economic growth (GDP) increased from last quarter with a final reading of 3.1% for Q2. A strong labor market and consumer spending were keyfactors in this pickup of growth. And while the Fed did not raise interest rates this fall, the market is expecting one more increase at the end of the year.The growth style of investing continued to outperform the value style of investing in Q3, despite value's relative improvement in September. Growth'soutperformance for the quarter was driven mostly by a persistent stronger relative return from the technology sector versus weaker relative returns fromthe utilities and real estate sectors. In addition, small caps modestly outperformed large caps during the quarter, which was a reversal from the first sixmonths of the year.
Sector performance (%) (USD) as of 30-Sep-17
Third quarter 2017 One year
Source: FactSet. Sector performance based on MFS sector classification. The analysis of Russell1000® Growth Index constituents are broken out by MFS defined sectors.
1
164
.41k M FS'
■ ■ ■
Bay County Employees' Retirement System
CRPEQUITY-BCS-30-Sep-17
Executive summaryAsset summary (USD)
35,783,065Beginning value as of 30-Jun-170Contributions
-4,000,000Withdrawals+1,785,001Change in market value33,568,066Ending value as of 30-Sep-17
Sector weights (%) as of 30-Sep-17 Portfolio Benchmark^^
Russell 1000® Growth Index^^Portfolio and benchmark data shown is based on MFS' sector/industryclassification methodology, which differs from the benchmark's.
The Growth Equity portfolio underperformed the Russell 1000® Growth Index inthe third quarter of 2017.
DetractorsContributors
• Leisure – Stock selection
• Consumer Staples – Stock selection
Individual stocks:•
Visa Inc-
Facebook Inc-
• Health Care – Stock selection
• Special Products & Services – Stockselection
Individual stocks:•
Boeing Co (not held)-
Performance results (%) gross and net of fees (USD) as of 30-Sep-17
Portfolio (gross) Benchmark^Portfolio (net)
5.10
20.81
12.65
16.21
4.95
20.12
11.99
15.53
5.90
21.94
12.69
15.45
3Q 2017 1 year 3 year Since inception(04-Sep-12)3Q 2017 1 year 3 year Since inception(04-Sep-12)3Q 2017 1 year 3 year Since inception(04-Sep-12)
Source for benchmark performance SPAR, FactSet Research Systems Inc. All periods greater than one year areannualized.Past performance is no guarantee of future results.
Russell 1000® Growth Index^
2
265
414 MFS
Bay County Employees' Retirement System
CRPEQUITY-BCS-30-Sep-17
Performance results
Benchmark^ (%)Period Portfolio gross (%) Portfolio net (%)
Excess return net vs
benchmark (%)
Performance results (%) gross and net of fees (USD) as of 30-Sep-17
Source for benchmark performance SPAR, FactSet Research Systems Inc. All periods greater than one year are annualized.Past performance is no guarantee of future results.
Russell 1000® Growth Index^
3
366
A MFS
MFS HERITAGE TRUST COMPANY
CERTIFICATE OF PORTFOLIO COMPLIANCE
MFS INTERNATIONAL GROWTH FUND
To the best of my knowledge, for the quarter ending September 30, 2017, MFS Heritage Trust Company ("MHTC") – MFS International Growth Fund complied in all material respects with the investment restrictions contained in the Information Memorandum dated July 1, 2017 for the MHTC - MFS International Growth Fund. Such certification is subject to the following conditions: (i) MHTC’s compliance testing is performed using portfolio valuation reports derived from its internal security inventory system and not the books and records of the Portfolio; and (ii) MHTC is responsible for compliance with the investment restrictions as stated in the Information Memorandum. MFS HERITAGE TRUST COMPANY BY: ______________________________ Robert R. Flaherty Title: Compliance Officer – Vice President Dated: October 4, 2017
67
.41k M
• •
Canada UK Japan Emerging Europe ex UK Markets
United States Pacific ex Japan
15.9 12.9 12.0 10.5
4,0 8
16.8 13.8
20.0
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18.5
7 3 2 a a A 3j j
9 4 7 9 7 8
14.4
•
•
•
Bay County Employees' Retirement System
CRPEQUITY-HTG-30-Sep-17
Market overview
Region performance (%) (USD) as of 30-Sep-17
Third quarter 2017 One year
Source: FactSet. Region performance based on MSCI regional/country indexes.
Market review as of 30-Sep-2017
Global equity markets have continued to advance amidst historically low volatility. Valuations appear stretched by historical measures but not at extreme levels.With some modest improvements in economic and earnings growth globally, growth has outperformed value and emerging markets have outperformeddeveloped markets in 2017. However, overall global growth and inflation remain below long-term trends.As global central banks appear to transition gradually toward a more neutral policy stance and begin to remove liquidity from the system, interest rates mayface upward pressures. However, we continue to believe that long rates will likely be contained in a lower range relative to history, given our views of subduedlong-term growth and inflation.
Sector performance (%) (USD) as of 30-Sep-17
Third quarter 2017 One year
Source: FactSet. Sector performance based on MFS sector classification. The analysis of MSCI AllCountry World (ex-US) Growth Index constituents are broken out by MFS defined sectors.
1
168
.41k M FS'
Bay County Employees' Retirement System
CRPEQUITY-HTG-30-Sep-17
Executive summaryAsset summary (USD)
30,326,006Beginning value as of 30-Jun-170Contributions0Withdrawals
+1,558,934Change in market value31,884,940Ending value as of 30-Sep-17
Sector weights (%) as of 30-Sep-17 Portfolio Benchmark^^
Top overweights
Health Care 13.4 9.4Consumer Staples 17.3 14.0Special Products & Services 6.7 4.1
MSCI All Country World (ex-US) Growth Index^^Portfolio and benchmark data shown is based on MFS' sector/industryclassification methodology, which differs from the benchmark's.
The MFS Heritage Trust Company CIT - MFS International Growth Fundunderperformed the MSCI All Country World (ex-US) Growth Index in the thirdquarter of 2017.
DetractorsContributors
• Retailing – Stock selection
Individual stocks:•
Baidu Inc-
British American Tobacco (notheld)
-
Intertek Group Plc-
• Technology – Stock selection
• Leisure – Stock selection
• Consumer Staples – Stock selectionand an overweight position
Performance results (%) class 1 shares net of fees (USD) as of 30-Sep-17
Portfolio Benchmark^
4.95
18.51
8.306.926.33
17.68
6.435.45
3Q 2017 1 year 3 year Since(06-Aug-14)
Source for benchmark performance SPAR, FactSet Research Systems Inc.All periods greater than one year are annualized.Past performance is no guarantee of future results.
For periods prior to the inception date of a unit class, performance information shown for such class is based on theperformance of an older class of units that dates back to the Fund’s inception, as adjusted to reflect differences in feespaid and expenses incurred by the newer class.MSCI All Country World (ex-US) Growth Index (net div)^
2
269
414 MFS
Bay County Employees' Retirement System
CRPEQUITY-HTG-30-Sep-17
Performance results
Benchmark^ (%)Period Portfolio (%)
Excess return vs
benchmark (%)
Performance results (%) class 1 shares net of fees (USD) as of 30-Sep-17
4.95 6.33 -1.383Q 2017
10.58 7.56 3.022Q 2017
8.18 9.13 -0.951Q 2017
-5.61 -5.72 0.114Q 2016
25.55 24.82 0.732017 YTD
2.83 0.12 2.712016
0.56 -1.25 1.812015
18.51 17.68 0.831 year
8.30 6.43 1.873 year
6.92 5.45 1.47Since client inception (06-Aug-14)
Source for benchmark performance SPAR, FactSet Research Systems Inc. All periods greater than one year are annualized.For periods prior to the inception date of a unit class, performance information shown for such class is based on the performance of an older class of units that dates back to the Fund’s inception, as adjusted to reflect differences infees paid and expenses incurred by the newer class.Past performance is no guarantee of future results.
MSCI All Country World (ex-US) Growth Index (net div)^
3
370
Bay County Employees' Retirement System
MFS® Heritage Trust Company CIT - MFS International Growth Fund
Class 1 Shares
Report as of 30 September 2017
Performance results (%) class 1 shares net of fees (USD)
Period Portfolio net Benchmark^ Excess^^
September 1.98 1.75 0.23
August 1.04 1.00 0.04
July 1.86 3.46 -1.61
3Q 2017 4.95 6.33 -1.38
2Q 2017 10.58 7.56 3.02
1Q 2017 8.18 9.13 -0.95
2017 YTD 25.55 24.82 0.74
1 year 18.51 17.68 0.84
3 year 8.30 6.43 1.87
Since client inception (06-Aug-14) 6.92 5.45 1.47
Source for benchmark performance SPAR, FactSet Research Systems Inc.
All periods greater than one year are annualized.
Past performance is no guarantee of future results.
For periods prior to the inception date of a unit class, performance information shown for such class is based on the performance of an older
class of units that dates back to the Fund�s inception, as adjusted to reflect differences in fees paid and expenses incurred by the newer class.
^ MSCI All Country World (ex-US) Growth Index (net div)
Benchmark^PortfolioPerformance results (%) class 1 shares net of fees (USD) Excess returns
3Q 2017 6.334.95 -1.38
2017 YTD 24.8225.55 0.73
1 year 17.6818.51 0.83
3 year 6.438.30 1.87
Since client inception (06-Aug-14) 5.456.92 1.47
Q3 | 30 September 2017
Bay County Employees' Retirement SystemMFS® Heritage Trust Company CIT - MFS International Growth Fund
(Class 1 Shares)
MFS ® Heritage Trust Company CIT - MFS International Growth Fund
33470PSR-HTG–30-Sep-17
Source for benchmark performance SPAR, FactSet Research Systems Inc.
All periods greater than one year are annualized.Past performance is no guarantee of future results.
For periods prior to the inception date of a unit class, performance information shown for such class is based on the performance of an older class of units that dates
back to the Fund’s inception, as adjusted to reflect differences in fees paid and expenses incurred by the newer class.
MSCI All Country World (ex-US) Growth Index (net div)^Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's
performance results would be less favorable. All results are historical and assume the reinvestment of dividends and capital gains.
Trailing 1 year turnover 13% –Trailing 1 year turnover 3
Risk profile (current)
Barra predicted tracking error 3.15% –Barra predicted tracking error 4
Risk/reward (since inception)
Information ratio 0.66 –Information ratio 5
Source: Thomson Reuters
Weighted median.
(Lesser of Purchase or Sales)/Average Month End Market Value
Source: Barra
Since inception, based on first full month of performance.
No forecasts can be guaranteed.
Portfolio characteristics are based on equivalent exposure, which measures how
a portfolio's value would change due to price changes in an asset held either
directly or, in the case of a derivative contract, indirectly. The market value of the
holding may differ.
1 Source: Thomson Reuters2 Weighted median.3 (Lesser of Purchase or Sales)/Average Month End Market Value4 Source: Barra5 Since inception, based on first full month of performance.
Asset summary (USD)
Beginning value as of 30-Jun-17 30,326,006
Contributions 0
Withdrawals 0
Change in market value +1,558,934
Ending value as of 30-Sep-17 31,884,940
Top 10 issuers Sector
Consumer StaplesNESTLE SA
Health CareROCHE HOLDING AG
TechnologyTAIWAN SEMICONDUCTOR
MANUFACTURING COMPANY LIMITED
TechnologyALIBABA GROUP HOLDING LTD
TechnologySAP SE
Financial ServicesAIA GROUP LTD
Special Products & ServicesACCENTURE PLC
RetailingLVMH MOET HENNESSY
Consumer StaplesL'OREAL SA
TransportationCANADIAN NATIONAL RAILWAY CO
FOR EXISTING INSTITUTIONAL CLIENT USE ONLY.
MSCI All Country World (ex-US) Growth Index^^
174
414 MF5
FOR EXISTING INSTITUTIONAL CLIENT USE ONLY.
MFS Heritage Trust Company
Q3 | 30 September 2017
Bay County Employees' Retirement SystemMFS® Heritage Trust Company CIT - MFS International Growth Fund
(Class 1 Shares)
MFS ® Heritage Trust Company CIT - MFS International Growth Fund
Note: Custom Benchmarks consist of BofAML All Convt (Inc Mand) since 8/31/15. Previously, (I) was BofAML Convt Inv Grade Bds (Inc Mand) Index and (II) was BofAML Convt InvGrade Bds (Inc
Mand) 5% Cap Index.
Past performance is not indicative of future results.
76
MAC KAY H I E LDS
4
BAY COUNTY EMPLOYEES RETIREMENT SYSTEM
Summary Report — Account 1256September 30, 2017
Total Percent Yield Market Percent Yield A nnual Co st at Cost at Cost Value of Assets at Market Inco me
*REIT Level Management Fee is deducted via a reduction in the Fund’s unit value and will not reduce the units of your account.
Bay County Employees' Retirement SystemClient Account Number: 900203
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#*#Client Account Number: 900203#*#
Investment ResultsGross Time Weighted
For Periods Ending September 30, 2017
Inception Date Quarter Year-to- Date 1 Year Inception-
to-Date
8.06% 5.41% 2.27%Real Estate 10.35%
PRISA LP 03/31/2015 2.27% 5.41% 8.06% 10.35%
8.06% 5.41% 2.27%Total Gross Return 10.35%
For investments in PRISA LP, gross time weighted returns are based on realized & unrealized gains/losses and net investment income. Net investment
income used for return purposes is gross of operating cash flow distributions, and manager compensation.
Bay County Employees' Retirement SystemClient Account Number: 900203
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Bay County Employees' Retirement SystemClient Account Number: 900203
Portfolio Summary - PRISA LPSeptember 30, 2017
Objective: To produce a total return, each year, that outperforms the NCREIF Fund Index Open End Diversified Core Equity (NFI-ODCE) on a total return basis each
year (before fees and profit's interest), while maintaining the benefits of a broadly diversified, core portfolio. Further, we anticipate that achieving these
annual performance goals will result in an annualized (after inflation) rate of return (before fees and profit's interest) between 7.5% and 9.5% over a complete
market cycle.
Annual Performance Returns by Income and Appreciation (Before Compensation)
Annualized Performance Returns by Income and Appreciation (Before Compensation)
Period Ended September 30, 2017
Period Quarter 1 Year 3 Year 5 Year 10 Year Inception
(07/31/70)
Income 1.15% 4.59% 4.79% 5.00% 5.56% 7.69%
Appreciation 1.12% 3.35% 6.10% 6.62% -1.05% 1.26%
Total 2.27% 8.06% 11.10% 11.86% 4.48% 9.02%
Annual Performance returns are gross time weighted returns for each period.
Past performance is not a guarantee of future results. Performance information related to periods prior to January 1, 2013 relates to the performance of the PRISA Separate
Account ("PRISA SA") and not PRISA LP. Information related to periods after January 1, 2013 relates to PRISA LP returns.
Detailed holdings of the underlying investments for the investment strategy shown on this page are available quarterly, 45 business days after quarter end. Please contact your
account representative if you would like to request a copy of these holdings. There is no guarantee that the portfolio objective will be achieved.
Effective January 1, 2013, the method for calculating income and appreciation returns has changed to one which uses separate geometric link ing, which is consistent with recent
changes in Global Investment Performance Standards. As a result, when link ing multiple periods' returns, the cumulative effect of cross compounding may cause the sum of
income and appreciation returns to not equal the total return.
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6g PGIM
#*#Client Account Number: 900203#*#
PRISA LP management fee information shown below provides a breakdown of the fee charged by quarter and the current year.
PRISA LP Management Fees
Total
Quarterly
Fee
Effective
Annualized
Rate*
100bpFirst Quarter 2017 $39,711.23
Second Quarter 2017 100bp 40,218.19
Third Quarter 2017 100bp 40,731.02
Total Year-To-Date 2017 100bp$120,660.44
*The calculation of the effective annualized fee rate is determined on a quarterly basis by using the fee base of the account for the respective period. The fee base for these periods is the beginning market value.
"Adjustments Related to Prior Periods" shows updates to management fee information reported in previous Quarters. These adjustments reflect any year-to-date corrections or adjustments applied since your last
report.
Bay County Employees' Retirement SystemClient Account Number: 900203
�8�84
6g PGIM
#*#Client Account Number: 900203#*#
Current Quarter Fee Calculation Details
Total PRISA LP Cash $107,498,062.30
Total PRISA LP Market Value $4,279,421,738.55
Market
Value Tier
Quarterly
Basis
Points
Annual
Basis
Points
Investor's Market
Value in Tier Fee
$0 - 25 MM 100.00 25.00 $16,292,408.12 $40,731.02
$25 - 50 MM 95.00 23.75 - -
$50 - 100 MM 85.00 21.25 - -
$100 - 200 MM 75.00 18.75 - -
$200 - 300 MM 70.00 17.50 - -
> $300 MM 65.00 16.25 - -
$16,292,408.12 $40,731.02
Cash as a % of Market Value
Excess Cash
2.51%
$0.00
Investor's Market Value $16,292,408.12
Investor's Share of Excess Cash $0.00
Investor's Share of Excess Cash
Investor's Adjusted Market Value
$0.00
$16,292,408.12
All figures are based on beginning of period values. If the fund's cash balance exceeds 5% of the fund's Market Value, a cap is put into effect. For fee calculation purposes, if the cap is in effect for a given period, the
investor's fee base is reduced by such investor's share of excess cash.
Total Market Value on this client statement may not match with the Total Market Value on the Fund financial statement due to rounding.
Bay County Employees' Retirement SystemClient Account Number: 900203
Bay County Employees' Retirement SystemClient Account Number: 900203
�10�86
PGIM Real Estate
;PGIM
Confidential Information. Not For Further Distribution. 17JCUND-AS4K45
Highlights
PRISA1 delivered a total gross return for the quarter of 2.23%, with 1.14% derived from income. The Fund’s performance this quarter was supported by value increases across the portfolio, with strong appreciation in the industrial and storage sectors. The Fund’s total return exceeded its benchmark by 37 bps for the quarter and 2 bps year-to-date. PRISA’s longer-term relative performance also remains positive, with returns surpassing NFI-ODCE’s in the one, three, five, seven-year and since inception time periods. In addition, PRISA’s income returns continue to be higher than the benchmark across all key time periods.
The industrial portfolio generated the strongest unlevered return this quarter of 4.6%. The sector contributed 31.9% of the Fund’s total return, which is significantly greater than its allocation of 13.3%. This outperformance was largely driven by assets in Los Angeles, which generated 56.2% of the sector’s return. The most significant contributors in this market included Vernon Distribution Center, Pacific Gateway, and Dominguez Hills primarily from rental rate increases and positive leasing activity. The storage properties also outperformed this quarter with an unlevered return of 3.1% due to strong income growth across the portfolio. Lastly, first time valuations for three build-to-core apartment developments contributed $12.7M of the Fund’s total appreciation for the quarter – Continuum (White Plains, NY), The Katy (Dallas, TX) and Prisma (Santa Ana, CA).
YTD market transaction activity through 3Q is lower than in recent years as market uncertainty continues to drive a spread in pricing expectations, which has made it more difficult for transactions to come to fruition. However, during the quarter, PRISA increased its apartment exposure through the acquisition of The Quaye, for a total gross investment of $118.6M..This property is a stabilized Class A asset in a prime suburban infill location within Palm Beach Gardens, FL. In addition, PRISA has a number of new investments in the pipeline that are expected to close before year-end.
During the quarter, PRISA sold Dakota Springs, a garden apartment asset located in Austin, TX, for a total gross amount of $51.2M, which generated a 7.9% IRR over the 10-year hold period. This property was constructed in 2007 and would have required significant defensive capital investment in the near-term given its age. This disposition is therefore consistent with PRISA’s strategy of upgrading its apartment portfolio through the sale of non-strategic assets. Additional sales of non-strategic assets are expected to transact in 4Q, and it is possible PRISA will be a net seller this year.
PRISA also continued to experience a high level of interest from investors and received $288.3M in contributions, which brought year-to-date deposits to $1.1B. Over 70% of the contributions for the quarter came from new clients, many of which were non-US investors. In addition, PRISA met all eligible withdrawal requests this quarter.
Lastly, PRISA’s risk metrics remain favorable. The Fund paid down five loans this quarter, totaling $211.1M, which aided in lowering the Fund’s debt-to-income ratio below our long-term target of 5.0x, while maintaining a loan-to-value in line within our targeted low-20% range. Our non-core exposure also remans within our guideline of 10% at approximately 9% at quarter-end.
OutlookLooking forward for the remainder of 2017, we expect value gains to come from growing income within the portfolio and that income returns will continue to outweigh appreciation. We believe that PRISA’s high-quality portfolio is well positioned to generate healthy income growth and performance through active asset management and leasing activities, targeted new acquisitions and strategic sales. In addition, we expect that the execution of our build-to-core pipeline will further support appreciation. For 2017, PRISA is projecting a total return in the range of 6.0% to 8.0%, with an income return between 4.5% to 5.0%.5
Total Return 2.23% 5.45% 2.22% 5.45% 2.27% 5.41% 1.86% 5.43% 6.00% to 8.00%
87
PGIM Real Estate PGIM
PRISA Performance Report | Third Quarter 2017
Disclosures1 ”PRISA”, or “PRISA Composite” or the “Fund”, represents aggregate or composite of PRISA LP and PRISA Separate Account (“PRISA SA”).
Although this is not an actual fund in which any client is invested or can invest, it is indicative of the overall performance of the PRISAinvestment strategy. The portfolio of PRISA LP, which co-invests in substantially all of the assets of PRISA SA through a REIT (“PRISA REIT”),differs somewhat from the portfolio of PRISA SA. Additionally, PRISA LP’s and PRISA SA’s interests in PRISA REIT are approximately 24.5% and 75.5%, respectively as of September 30, 2017. Accordingly, certain of the information presented in the prior page (e.g., Gross Assets, NetAssets and Leverage Ratio) may differ if it was presented only with respect to PRISA LP or PRISA SA. It is expected that performance andcomposition will be substantially the same.
2 Third quarter gross returns are not annualized. Performance – Annualized returns are calculated by linking quarterly returns for each return component. Therefore, the sum of the income and appreciation component returns may not equal returns due to compounding effects of linking quarterly returns.
3 Based on Fund’s share of gross activity.4 NFI-ODCE returns are based on the preliminary snapshot report published by NCREIF on October 12, 2017.5 Past performance is not a guarantee or a reliable indicator of future results. This is a projection based upon management expectations of
future events, which are subject to change and not guaranteed.
Note: All returns are shown prior to deduction of manager compensation/fees. Please refer to the PRISA Fund Review for additional details or for discussion of investment considerations. All data is preliminary and subject to modification.
Important InformationPGIM is the primary asset management business of Prudential Financial, Inc. PGIM Real Estate is PGIM’s real estate investment advisory business and operates through PGIM, Inc., a registered investment advisor. Prudential, the Prudential logo, PGIM Real Estate and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
The information contained herein is provided by PGIM Real Estate. This document may contain confidential information and the recipient hereof agrees to maintain the confidentiality of such information. Distribution of this information to any person other than the person to whom it was originally delivered and to such person’s advisers is unauthorized, and any reproduction of these materials, in whole or in part, or the divulgence ofany of its contents, without the prior consent of PGIM Real Estate, is prohibited. Certain information in this document has been obtained from sources that PGIM Real Estate believes to be reliable as of the date presented; however, PGIM Real Estate cannot guarantee the accuracy of suchinformation, assure its completeness, or warrant such information will not change. The information contained herein is current as of the date ofissuance (or such earlier date as referenced herein) and is subject to change without notice. PGIM Real Estate has no obligation to update any or allsuch information; nor do we make any express or implied warranties or representations as to the completeness or accuracy. Any informationpresented regarding the affiliates of PGIM Real Estate is presented purely to facilitate an organizational overview and is not a solicitation on behalfof any affiliate. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services. These materials do not constitute investment advice and should not be used as the basis forany investment decision.
These materials do not take into account individual client circumstances, objectives or needs. No determination has been made regarding the suitability of any securities, financial instruments or strategies for particular clients or prospects. The information contained herein is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. Any discussion of risk management isintended to describe PGIM Real Estate’s efforts to monitor and manage risk but does not imply low risk.
All performance and targets contained herein are subject to revision by PGIM Real Estate and are provided solely as a guide to current expectations. There can be no assurance that any product or strategy described herein will achieve any targets or that there will be any return of capital. Past performance is not a guarantee or reliable indicator of future results. No representations are made by PGIM Real Estate as to the actual composition or performance of any account.
These materials do not purport to provide any legal, tax or accounting advice. These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation.
These materials are for informational or educational purposes. In providing these materials, PGIM (i) is not acting as your fiduciary as defined by theDepartment of Labor and is not giving advice in a fiduciary capacity and (ii) is not undertaking to provide impartial investment advice as PGIM willreceive compensation for its investment management services. This product or service is available to ERISA plans only when represented by anIndependent Fiduciary as defined by the DOL. A plan or its Independent Fiduciary will be asked to make representations in the onboarding documents to enable reliance on the Independent Fiduciary exception from the definition of fiduciary in the DOL’s regulations.
Confidential Information. Not For Further Distribution. 17JCUND-AS4K45
88
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AbelNoser LLC
>
>
Abel Noser LLC One Battery Park Plaza, 6th Floor New York, NY 10004-1405 phone: 646.432.4000 800.322.2610 fax: 212.363.7571 website: www.abelnoser.com
Date 10/12/2017Page 1 of 1
Commission Program ReviewRep: MARY DAVIDSON
Ms. Crystal HerbertBay County Financial OfficerBay County Retirement System515 Center AvenueSuite 701Bay City, MO 48708
Month Summary: BAY COUNTY EMPLOYEES RETIREMENT SYSTEM
Period: September 1, 2017 To September 30, 2017
September 2017 Year To DateOpening Balance: $0.00 $0.00*
Manager Commission Summary September 2017 September 2017 Year to Date Year to Date
Commission Credit Commission Credit
$0.00HOTCHKIS & WILEY $0.00 $52.00 $0.00
$0.00 $0.00 $52.00 $0.00Total:
Are you considering making a portfolio change soon? Contact your Abel Noser representative [email protected] for information about our Transition Service which was rated #1 in the'Overall Service' category in the 2013 aiCIO Global TM Survey.
In order to comply with ERISA; It is our understanding that the monies disbursed from your commission recapture account are for the exclusive benefit of the plan's participants and their beneficiaries. Please contact us if you see there are any exceptions to this compliance.
Member New York Stock Exchange and other Principle Exchanges, FINRA/SIPC90
CAPITAL INSTITUTIONAL SERVICES, INC.
1 I I 1
September YTD September YTD September YTD
Beginning Balance $350.67 $26.31
U.S. Equity 331.44 1,183.40 88.24 301.23 243.20 882.17
International Equity - - - - - -
Fixed Income - - - - - -
International Fixed Income - - - - - -
New Issues - - - - - -
Options - - - - - -
Futures - - - - - -
Foreign Currency - - - - - -
Syndicates - - - - - -
U.S. Correspondent Equity 129.09 1,922.45 60.24 904.30 68.85 1,018.15
BANK FEES 1,312.27 5,019.62 237.25 412.11 6,981.25
NET INCOME 3,068.06 11,743.88 554.71 965.51 16,332.16
Although this report has been prepared using information believed to be reliable, it may contain information provided by third parties or derived from third party information, and/or information that may have been obtained from,
categorized or otherwise reported based upon client direction. The Northern Trust Company does not guarantee the accuracy, timeliness or completeness of any such information. The information included in this report is intended
to assist clients with their financial reporting needs, but you must consult with your accountants, auditors and/or legal counsel to ensure your accounting and financial reporting complies with applicable laws, regulations and
accounting guidance. The Northern Trust Company and its affiliates shall have no responsibility for the consequences of investment decisions made in reliance on information contained in this report.
Northern Trust * Generated on 01 Nov 17 09:38 No.6052598
REFUNDS: FOR THE MONTH ENDED: October 31, 2016
EMPLOYEE/BENEFICIARY CONTRIBUTIONS PROCESSED DEPARTMENT TERMINATION
RESOLUTION BY: ASSISTANT CORPORATION COUNSEL (11/14/17) WHEREAS, The Retirement Board has expressed a desire to review its service providers (actuary, investment consultant, medical director, outside attorney, and custodian bank) on a five year cycle reviewing one each year. WHEREAS, Last year, the custodian bank services were up for review. This year, outside legal counsel services are up for review through a competitive bidding process. WHEREAS, The tentative schedule for this process anticipates a March release date for the RFQ. WHEREAS, In the past, the Retirement Board has authorized a sub-committee to participate and decide who should be awarded the bid or they have authorized a sub-committee to bring the final candidates to the entire Retirement Board. A sub-committee would likely be comprised of the Chair, Vice Chair, two additional Retirement Board Members, Assistant Corporation Counsel, Secretary of the Board and the Retirement Administrator. WHEREAS, After the issuance of the RFP and the acceptance of the bids, the Retirement Administrator will report back to the committee with further recommendation(s). Therefore, Be it RESOLVED That this Board authorize permission to issue a competitive bid for outside legal counsel services, utilize a sub-committee to decide and award the bid, have the Board Chair sign any related documents after review and approval by Corporation Counsel and approve any required budget adjustments.
STEVE GRAY, CHAIR AND BOARD
RESOLUTION – RFQ OUTSIDE LEGAL COUNSEL MOVED BY TRUSTEE ___ _________
SUMMARY ANNUAL REPORT TO MEMBERS DECEMBER 31, 2016
Dear Retirement System Members and Retirants:
The Retirement System, which is managed by the Retirement Board of Trustees, is designed to help you meet your financial needs should you become disabled, retire, or die. The County also supports a retiree health insurance program, which is separate from the Retirement System.
The Retirement Board’s fiduciary responsibility to you is to oversee the general administration of the System and invest its assets. Our Board retains professional advisors to assist us in fulfilling these duties.
We have prepared this summary report to give you a brief overview of the Retirement System and how it operates. We hope you will find it useful and informative. However, a summary cannot cover all the details of the System, which is governed by the provisions of the County’s Retirement Ordinance and the Retirement Board’s official rules and regulations. Additional information about the System, including the Retirement Ordinance and the actuarial valuation, is available in the Finance Office or can be accessed via the County’s website.
Respectfully submitted, Board of Trustees Bay County Employees’ Retirement System Auditors/Accountants
• Steve Gray – Chairman • Thomas Herek • Rehmann • Richard Brzezinski – Vice Chairman • Jon Morse • Thomas Ryder • Matthew Pett Legal Counsel • Kristal Gonzales • Thomas Starkweather • Shawna Walraven • Richard Gromaski
Investment Consultant Medical Director Custodial Bank
• AndCo • Kirk Herrick, D.O. • Northern Trust
Actuaries and Consultants Plan Administrator Secretary • Gabriel, Roeder, Smith & Company • Katie Meeth • Jan Histed
Your Retirement System’s financial objective is to accumulate the assets necessary to pay the promised benefits in an orderly manner. To accomplish this, contribution rates are established in a manner that is designed to keep those rates approximately level as a percentage of payroll from year-to-year.
The Board of Trustees of the Bay County Employees’ Retirement System provides for payment of the required employer contribution as described in MCL 38.1140m and the Bay County Employees’ Retirement System Ordinance.
To determine an appropriate employer contribution level for the ensuing year and to gauge how the System’s funding is meeting this fundamental objective, an independent firm of actuaries and employee benefit consultants, Gabriel, Roeder, Smith & Company, conducts annual actuarial valuations.
These valuations are based on the System’s past experience, information about current participation and financial markets, and assumptions concerning the System’s future demographic and economic activity. The results of the December 31, 2016 valuation, based on the established funding objective, are summarized below:
Valuation Date December 31, 2016
Actuarial Cost Method Individual Entry-Age Normal Cost
Amortization Method Level dollar amount for Library. Level percent-of-payroll for all other groups.
Open/Closed Plan The Bay County Employee’s Retirement System is open to all future hires, except Library members hired on or after January 1, 2012.
Amortization Periods 26 years closed for groups that are underfunded (unfunded accrued liability is positive). 20 years open for groups that are overfunded (unfunded accrued liability is negative). 10 years closed for BABH Early Retirement Incentive Program (ERIP) starting with the
contribution for the calendar year beginning January 1, 2015.
Asset Valuation Method Market value with 5-year smoothing of gains and losses.
Valuation Payroll $47,370,515
Annual Pensions Paid $17,574,754
Average Annual Pensions Paid $ 18,776
Deferred Vested Members Annual Benefits $ 886,173
Retirees and Beneficiaries Receiving Benefits 936
Deferred Vested Members 80
Active Plan Members 1,115
Total 2,131
Principal Actuarial Assumptions:
− Net Investment Return 7.25%
− Projected Salary Increases 3.25% pay inflation plus merit and longevity
− Cost-of-Living Adjustments None
Fiscal Year Beginning January 1, 2018 Employer Contribution Rates as a Percentage of Active Member Payroll
General Sheriff’s Road Contributions For County DWS Library^ MCF Dept. Comm. Total BABH
Normal Cost Total 10.65% 13.68% $ 188,174 10.26% 15.54% 15.92% 11.66% Member 4.15 4.00 54,901 4.00 5.36 4.76 4.00 Employer (ER) 6.50 9.68 133,273 6.26 10.18 11.16 7.66 Amort. of ERIP UAL 1.28 Amort. of UAL (7.24) 5.23 (58,493) (3.50) (14.65) 10.12 (0.17 0.33 Computed ER Rate 0.00% 14.91% $ 74,780 2.76% 0.00% 21.28% $ 1,546,699 9.27% ^ Beginning with the 2013 valuation, the Library contribution is calculated as a level dollar amount, since the Library is closed to future hires.
General Sheriff’s Road Funded Status County DWS Library BMCF Dept. Comm. Total BABH
It is the actuary’s opinion that the contribution amounts recommended in the most recent actuarial report are sufficient to meet the System's financial objective. 110
of fees). Results may differ from investment manager's stated returns.
Projected Expenses for the Fiscal Year Ending December 31, 2017
Administrative $ 333,955
Professional Training/Education 16,500
Travel 3,000
Investment 2,180,000
Professional 53,500
2016 Market Value - January 1 $300,948,229 Revenues Member contributions 2,275,749 Employer contributions 3,201,872 Investment income 24,476,867 Miscellaneous income 0 Total 29,954,488 Expenditures Benefit payments 16,953,468 Refund of member contributions 268,593 Administrative expenses 321,625 Professional training/education expenses 17,467 Travel expenses 2,835 Investment expenses 1,768,595 Professional expenses 69,160 Total 19,401,743 Market Value - December 31 $311,500,974 The Board of Trustees has confirmed that the employer contributions shown above represent the required employer contribution for the year covered.
Domestic Stocks – 66%
Bonds – 24%
Cash Equivalents* – 3%
Real Estate – 7%
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Brief Summary of Primary Benefit Provisions
(Please refer to the Retirement Ordinance for a complete description)
Division Name
Normal Retirement
Eligibility
Early Retirement
Eligibility Elected Officials and Department Heads (div. 1), Judges (div. 2), General County (div. 3), General Circuit Court (div. 4), General District Court
Elected Officials and Department Heads: Elected Sheriff and Appointed Undersheriff (div. 33) (h) or (d) or (f)* (b)* Nurses (div. 10) (d) or (f)# (b)#
Sheriff-Road Patrol (div. 11) (h) or (f)* (b)* Sheriff Correctional Facility Officers (div. 12) (c) or (f)* (h) or (b)* Dispatchers (div. 13) (i) or (c) or (f)* (h) or (b)* Circuit Court G.E.L.C. (div. 14) (d) or (f)@ (b)@
Probate Court USWA (div. 16) (d) or (e) (a) Behavioral Health AFSCME (div. 23) (d) or (e)/(g)~ (b)~ Behavioral Health General (div. 24) (d) or (e)/(g)& (b)& Library-Employee Members of UWUA Local 542 (div. 18), General Library (div. 19), ICEA/PERA 1203 (div. 30), ICEA/PERA 612 (div. 31) (d) or (f)! (b)! MCF United Steel Workers Local 15301 (div. 20), MCF RN & LPN Nursing Council – USW 15301-01 (div. 21), General MCF (div. 22) (i) or (c)+ or (f)$ (b)$ Road Commission AFSCME Local 1096 (div. 25), Road Commission Class I Supervisory and Admin. Employees (div. 26) (i) or (f)* (b)* Water and Sewer UWUA Local 546 (div. 28), and Water and Sewer General (div. 29) (i) or (f)^ (b)^ Road Patrol Supervisory Unit (div. 32) (h) or (f)@ (b)@
(a) Age 55 with 8 yrs of service (b) Age 55 with 8/10 yrs of service (c) Age 55 with 25 yrs of service (d) Age 55 with 30 yrs of service (e) Age 60 with 8 yrs of service (f) Age 60 with 8/10 yrs of service (g) Age 62 with 10 yrs of service (h) 25 yrs of service regardless of age (i) 30 yrs of service regardless of age
@ 10 years of service for members hired after 1/1/2006. ~ 10 years of service (age 62 with 10 yrs of svc) for members hired on or after 10/1/2014. * 10 years of service for members hired after 1/1/2007. & 10 years of service (age 62 with 10 yrs of svc) for members hired after 1/1/2015. # 10 years of service for members hired after 3/1/2007. $ 10 years of service for members hired on or after 7/30/2015. ^ 10 years of service for members hired after 7/1/2008. + Members hired before 7/30/2015 only. ! 10 years of service for members hired after 3/1/2008.
Eligibility Amount
NORMAL RETIREMENT See Above. Total service times FAC times:
2.00% for division 23 hired before 10/1/2014 2.25% for divisions 1-10, 14, 16, 33 hired before 1/1/2012 2.25% for divisions 18, 19, and 28-31 2.25% for divisions 20-22 hired before 7/30/2015 2.50% for divisions 12, 13, and 15 hired before 1/1/2012 2.80% for divisions 11 and 32 hired before 1/1/2012 2.25% for division 24 hired on or before 1/1/2015 1.60% for divisions 1-16, 32, and 33 hired on or after 1/1/2012* 1.60% for division 23 hired on or after 10/1/2014 1.60% for division 24 hired after 1/1/2015 1.75% for division 20-22 hired on or after 7/30/2015 2.50% for division 26 hired before 1/1/1996 2.50% for division 26 hired on or after 1/1/1996 for service through 3/31/2011 and 2.25% for service after
3/31/2011 2.50% for division 25 hired before 1/1/2011 2.25% for division 25 hired on or after 1/1/2011 Type of Final Average Compensation (FAC) - Highest 5 years. Some lump sums included. Maximum County-financed is 75% of FAC.
EARLY RETIREMENT See Above. Normal retirement reduced to the actuarial equivalent of a pension at normal retirement age (age 62 for
division 23 hired on or after 10/1/2014 and division 24 hired after 1/1/2015, age 60 for all others).
DEFERRED RETIREMENT 8/10 or more years of credited service depending on date of hire. Benefit begins at age 60 (age 62 for division 23 hired on or after 10/1/2014 and division 24 hired after 1/1/2015) or reduced at age 55.
Computed as a normal retirement but based on service and final average compensation at time of termination.
The Retirement System also provides benefits for Non-Duty Death-in-Service, Duty Death-in-Service, Non-Duty Disability, and Duty Disability. Please check the Retirement Ordinance for a complete description of these benefit options.
POST-RETIREMENT COST-OF-LIVING ADJUSTMENTS One-time increases have been granted at various amounts.
MEMBER CONTRIBUTIONS 6% of annual compensation for divisions 11-13, 15, and 32 for members hired before 1/1/2012. 4% of annual compensation for divisions 11-13, 15, and 32 hired on or after 1/1/2012.* 5% of annual compensation for division 25. 4% of annual compensation for remaining divisions. For certain employee groups, the employer pays the member contribution either by directly contributing to the Retirement System or by transferring funds from the employer to the employee reserves.
EMPLOYER CONTRIBUTIONS Actuarially determined amounts which, together with member contributions, are sufficient to cover both (i) normal costs of the plan, and (ii) financing of unfunded accrued liabilities over a selected period of future years.
RETIREMENT SYSTEM ELIGIBILITY Library members hired on or after January 1, 2012 are no longer eligible to participate in the Bay County Employees’ Retirement System.
* Two members hired after 1/1/2012 continue to be eligible for the multiplier and member contribution rate in effect prior to the implementation of the 1.60% multiplier and 4% member contribution rate for members hired after 1/1/2012.
