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2007 Trusco 1st Quarter Fund Management Report I i ~~n ry aia,~s . g q , r ~ ~ ~ry 'e.~ ~ ~ .reP' ~i''f L~ .x -t~ .t ~ ~ Ir V ~~~s Trusco Capital Management, Inc. Village of North Palm Beach General Employees' Retirement Plan First Quarter 2007 Blake Myton Dianne Garcia Investment Manager Relationship Manager Trusco Capital Management SunTrust Banks, Inc. 407-237-5816 407-237-4513 blake.myton@truscocapital.com dianne.garcia@suntrust.com _ „.~- 4 ~J '!h nt~~ts of Co Ta~~e ~ n I SeCt?o I Market Snapshot ' • • . Econom?c ~verV1eW Section II ~ ortfolio pomp°sition... • . performance & P Section III i Fact Sheets.•••••''••' ctionlV ? Fund ummary • Se Fund Attribut?on S rate ~overnanCe~ tion V Gorpo , •Sec ~ Appendix . • • • • • ' ~ ' ' ~ ' +State1ment InVeStment Pol?cy Disclosures . ~1~! ~ ~ ~ ~ ~ , ~~F ~ 1 v _•Iy ~ r r~e Market Snapshot: 3/31 /2007 S&P 500 ' 1420.86 1.1 0.6 7:4 0.6 11:8" 10.1 63 Lehman Aggregate 5.28 0:00', 1.50 2.76 1.50 6:59 3.31 ';;5:35 Russell Top 200 599.82 1.1 0.0 6.6 0.0 11:9 8.8 4:8 Treasury:, 4.68 -0:05' 1.45 2.18 1.45 5.87 2.60 5:1.1 Russe111000 1491.66 1.0' 1.2 8:2 1.2 11:8 10.7 6:9 Government-Related 5.06 0.14 1.48 2.64' 1.48 6.29 3.05 5:30 Russell MidCap , 2645.04 A.8 4.4 12:4 4.4 11.8: 15.7 12.9 Corporate 5.61'. -0.57 1.48. 2.86! 1.48 7.10 3.17 6.29 Russe112000 1990.01 1:1' 1.9 i :0 1.9 5.9 12.0 10.9 Securitized 5.54 0.25 1.55 3af 1.55 6.90` 3.93 5:01 Russe113000 1523.01 1.0" 1.3 8.5 1.3 11:3 10.8 7.2 Lehman GovernmenUCredit 5.08 -0.17 1.47 2.52 1.47 6.38 2.90 5:57 MSCI EAFE 2147.51 "2.6 4.1 15:0 4.1 20:7 20.3 16:1 Lehmarrlntemiediate G/C 4.97. 0.17 1.59 2.64. 1.59 6.14 2.60 4.91 MSCI EAFE SmaII Cap 206.10 3.3 7.2 19.8 7.2 15.9 23.7 24:7 Lehman High Yield 7.59 0.11:, 2.64 6.95' 2.64.. 11.58: 8.59 ;1A.39 MSCI Emerging Markets 929.03 4A 2.3 20:4 2.3 21.0 28.0 24.8 Lehman Municipal G0lndex 3.98 -0.25: 0.81 1.93 0.81 5.43 3.96 5.50 ~ ~ ~ ML U.S Govt. Corp., 1-5 4.85 0:35', 1.56 2.59 1.56 5:68 2.45 4:05 Russell Tdp'200 Growth 627.39 0.5" 0.0 5:5 0.0 7:1 ' 5.1 1.7 ML 1-3: U.S. Treasury 4.70 0.38! 1.40 2.331 1.40 ' 5:02 2.31 3.11 Russell Top 200 Value 843.63 f.7 -0.1 7:7 -0.1 16:8' 12.6 8.1 ~ Russell 1000 Growth - 369.34 0:5 1.2 7:2 1.2 7.1 7.0 3.5 3 Mo 5.03. 0:45' 1.27 2:54 1.27' 5:11 3.42 2.59 Russell 1000 Value 508.23 1:5 1.2 9:3 1.2 16.8 14.6 10:2 6 Md 5.07 0:44' 1.27 2.54 1.27', 5:12 3.38 ' 2:69 Russell MidCap Growth. 917.19 -0:5 4.0 112 4.0 6:9 12.4. 9:4 2 Yr 4.57 0:42 1.50 2.39': 1.50 4.98 2.09 3.24 Russell MidCap Value 1192.93 i.i 4.9 13.8 4.9 17:1 18.8 15.2 5 Yr ' 4.54 0:24 1.78 2.32' 1.78' 5:60 1.21 ' 4.38 Russe112000 Growth 2458.23 0.9 2.5 1 T,5 2.5 1.6 9.4 7.9 10 Yr 4.64 -0.35 1.47 1.93 1.4T 5:84 1.72 5:47 Russe112000 Value 4399.22 t:2'' 1.5 10.6 1.5 10.4 14.6', 13:6 30 Yr 4.84 -2.351 0.28 0.73 0.28 5.40. 3.60 - ' 7.33 Russell 3000 Growth 2205.70 0.6' 1.3 7.5 1.3 6:5 7.2' 38 ~ Russell 3000 Value.. 3136.77 1.5 1.3 9.5' 1.3 ]6:2; 14.6 10:5 3-Month 5.04 5:07' 5.02. 4.89 5.02 4:63 0.95 1.74 • ~ ~ • • ~ ~ 6-Month.. 5.01 5.08 5.09 4.88! 5.09 4.7f 1.02''." 2.06 Consumer Discretionary 299.93 -0:5' -0.7 ` 9.5 -0.7 14:4' 7.3 5:0 2-Years 4.58 4.63" 4.81 4.69' 4.81 4.82 1.58 3:63 Consumer Staples 272.68 _1.9 2.2' 5.8 2.2 15:0 7.4 5:1 5-Years 4.54 4.51' 4.70 4.59' 4.70 4.81' 2.78. 4.93 Energy 463.37 6.1 2.1 13:5 2.1 16:3 27.8: 17.5 10-Years 4.65 4.55 4.71 4.63 4.71 4:85 3.84 6:41 Financials 478.27 -0.7 -2.8 4:0 -2.8 12.2 9.2 8:1 30-Years 4.85 4.67! 4.81 4.77 4.81 ' 4.90 4.78 5.81 Health Care 391.15 0.3 1.0 2:5 1.0 7.3 5.8 2.0 ~ • ~ : • ~ ~ ~ Industrials 324.51 0.9 1.1 7.1 1.1 7.0 11.8 6.4 Citigroup WGBf{USD) 666.82 0:23° 0.93 2.75`: 0.93 `.7.54` 2.69 " -9:12 Information Technology 352.34 0:6 -0.9 5.1 -0.9 3.1 4.5 2.1 JP Morgan EMBLGIobal 393.69 0.97- 2.39 6,32 2.39 10.86' 10.42 -73:34 Materials 234.71 f:9 9.0 21.4. 9.0 20.3 15.9'. 12:4 • - • • ~ r Telecommunication Services 165.02 3.9 7.3 16:6 7.3 28.2 16.6. 6.8 Trade-Weighted Dollac(1873=100); 80.53 -1.1' -1.1 -1:6 -1.1 ' -5:3 -1.9 -6.3 Utilities 202.34 41 9.3 "19.3 9.3 33:8' 22.2 10.4 Gold Futures 663.00 -1.0 4.4 10:8 4.4 14.0 15.8. 17:0 ~ ~ ~ ~ ~ ~ Crude'Oil Futures. 65.87 6:6` 7.9 4.7 7.9- -1:1 22.6 20:1 CS/T Equity Market Neutral Mar-07 1:7 2.8 5.1 ' 2.8 10.3 8.4 8,Q DJ/AIG `Commodity Futures 171.96 0:6 3.3 7.5' 3.3 - 4.1 4.5 11.5 CSR Event Driven Mar-07 1.3 5.0 11.3 5.0 15.9 13.5. 12.3 TIPS.. 4.29 0.24? 2.51 1.18 2.51 5:30 2.98 7.41 CS/T Long Short.Equity Mar-07 1.9 3.8 11.1 3.8 11:1 11.8 11:0 • ~ ~ ~ CSR Multi-Strategy Mar-07 b.8 3.8 9.7 3.8 12.6 10.3 10:9 Consumer Price Index (82-84=1:00) 205.1 0:6' 1.2 . _ 1:2; 1.2 2.8' 3.1 ' ' . 2.8 FTSE NAREIT Equity Index 615.23 -2.4 3.5 13.3 3.5 21.8 22.6. 22:1 *Source: FactSet ---- r .C 11 r~ - J ~ first T ~ ebbed in (~'~i1E+5 ntum ed positive• ono?r?c m'ome owth remain Key . ~ Quarter ? Ec rter though g • e tum'~bbed ?n the F?rs 1AO qua subpr?Cn . omen out fro?r risi~dg defaults s~sed Econo?ric M ,35 ed fall ties a arks ~0 ~ C°or~gage deiinogn ~o he broader m 1 fears of contag e the ?ndicators IS abov t„eadi IYQY~f'~ rn at leve riceS 125 stubbo . asoline p wined zone pal and g _- 120 ~ inflation o~ momfort , al drop. _ 1,~ Fed following an ir~'it~ _--- ,oo~ ros ~---- tors Inde% (1996II arl{ets teadinJindica 11o rlceS• While rn e ~ ni wnward pressure on p 05 ~ d 02 ' ~ ~ ~ oa ~ on o a~~?~$ knpa' variances' p1 goardiHavar nn Hued as oversupply d lower gourea: 'fns Canferenae Cor?t? rowth an akness re s?gn?ficant redo ar~ets s;ng ~'e there a ~t versus sl°w?r erg, lnternat?°nal m ? H°e generally Softer, orate M&A act?v? y the f?rst qua a core higher in . ul? of increased odestly erred in The push p aces left equities m Ve steep 4 s est?m , od and the yield cur ea ~ ?e9®rmed~ cks for the per? ed credit ou p sto increas tl outperformede cuts. fits estimates, a r~n the year. + Bonds sl?on o future Fed ra lower corporate od of Fed ease Tate _ anticipat? conomic growth, likeliho ~ m r rr Wing e d increased the fife - c~,~-' * . . + r r~ J a Bottom line ~ ed market volatility an ~ rais . * . ~ ~ ' concerns ® fjaFJ J--'1. ~ ~ ; .,.rae.. Job & Wage Growth Powering Consumers Job Gains and Wage Growth Supporting Consumer 4.5 ? Job and wage gains are now the primary Avg. Hourly Earnings Growth (YOY%) drivers of consumer spending, as the 4.0 impetus declines from previous tax cuts 3.5 and mortgage rate drops. 3.0 ? The economy continued to generate -__-_.....,..._ _ _,-_..._ moderate job growth in the first quarter, Nonfarm Payrou 2.5 and the unemployment rate dipped back Growth (Mo. OOOs) down to the cycle low 4.4%. 2.0 1.5 i ~ 00 i ~ 01 i,~i~ ~ 02~i i.. ~03~i~~i~ i~04, i ~,OS~i~ i~~i~OS~ .i.. ~O'~i~~i Source: Bureau of Labor Statistics/HaverMalytics Weather, Higher Gas Prices Crimped Spending 112.5 Consumer - ? Consumer spending was slowed by bad sentiment io5.o weather and higher gasoline prices in the 0966=100) first quarter, but helped by an "early" 975 Easter. 90.0 ? Consumer sentiment dipped in the latest 62.5 quarter, influenced by job market conditions and higher gasoline prices. 75.0 Retail Sales Growth (YOY%) 67.5 00 01 02 03 04 05 06 07 Sources: Census Bureau/Haver Analytics, University of Michigan ` rl~~ J.. _ L • ®- i . • - a^ ~ • : - tJ rim J r ~~~J n~; Housing: Correction Well Underway but not Complete Home Construction Off Sharply as Sales Slowed ? New home construction stayed at 7-year 825° lows in the first quarter, while existing Single-family Home Sales (OOOs) home sales (new + existing) fell further. ~I 7soo ? Weakness in the subprime and Alt A V 8750 mortgage markets curbed demand in lower priced homes, and raised fears of tighter J eooo conditions and greater losses in the /?,rJ broader mortgage market. 5250 Single-Family Housing Starts OOOs) 4500 ~ 97 ~ 98 ~ 99 ~ 00 ~ 01 02 ~ 03 ~ 04 ~ OS ~ 06 ~ 07~ ~ High Inventories Push Prices Down & Affordability Up 142.5 Home Affordability Index ? The level of unsold homes remains high, 135.0 but softer prices and builder incentives 127.5 have improved affordability. 120.0 ? We believe housing will remain a drag on growth in 2007, but will not derail the Homelnventory(Months) 112.5 expansion. 105.0 97.5 97 98 99 00 01 02 03 04 05 O6 07 Sources: Census Bureau, National Association of Realtors /Haver Analytics ~ ,r Exports are Current Manufacturing Bright Spot Qy Manufacturing Activity Slowed but Exports Rose ® Manufacturin activit slowed in the first 54 g Y quarter, but remained positive. ISM Export Index 60 ? Export growth is a relative bright spot 56 helped by steady foreign demand and a weaker dollar. 52 ISM Index 48 44 40 ~ I~~ 1 ~ I~ I~~ I~~ I~~~I~ ~~I~ ~I 97 98 99 00 01 02 03 04 OS 06 07 Source: Institute for Supply Management /Haver Analytics Durable Orders Dipped & Inventories Rose 1.45 Nondef. Orders Ex. Aircraft ? While some pockets of strength are Growth (YOY%) 1.40 evident, orders for durable goods slowed in Q I . 1.35 ? Inventory growth picked up causing the 1'30 inventory /sales ratio to rise from historic 125 lows. However the I/S ration remains well below trough levels in the last recession. ,,20 Inventory /Sales Ratio 1.15 I~ ~I~~~I 1 ~I~~~I~~ I ~ I~~~I~ ~I~~~I~~~I 97 98 99 00 01 02 03 04 OS 06 07 Sources: Census Bureau, Census Bureau/Haver Analytics ms-, ~ ¦ Ana~ys~s ch'mark S. S&p 5°° e ~1 gen a last 12 month _Cap Cor i 1,s% over th Large i •2% in Qi a 2 months. se?? i 040 ?ndeX1 pg% over last 1 ~ Ru 0.6% •rr? Qi and •n the first quarter. up erf ormed ~ ?er-cap names °utp oduCed strongest ~ The sma? a er va?uation Pr with re?ative?Y the P anies ings grOV?rth paid Comp anCe• ?ong-term earn perform osting higher nCe for companies p a performa , st quarter. long-term aVerage• off in the f?r rter, but still below tilit in the qua ?ncreaSe ?n v4?a y est sectors + + Strong Utilities, Telec©m 16.8°/° . Materials Weakest $ectors Consumer piscretionary 25°I° 11.8°1° . Technology Financials, ° 20 0 7.1°~° 15% 10°/° 1.2% 1.2°(° 1.2% 5°I° 313112007 1 Year End+ng Factset 1st Quarter 2007 ? Russell1000 Value Index ent Group; endix for full disclosure. . Russeli ~nVeStm Russell 1000 Index 1 Russe111000 Gore index refer to app Please Standard & Poor s, 5~- resu?ts. LLC ; S&P 500 Index an ~ Russe111000 Growth Index of future ui Group, sis based on _ r is not indicative q~tribution anaiy Past Per{ormance Source: Prudential Not ~ ~ ~ , r7 ~~b ,~- ~ r1 r,~ ~~A.~ r J ,p' • l . ~ ~ WPif< r-'= r~ ~ - ~ l~ ati°n ,t°rY and Varu ~ Qual?tY rk Ana'Ys'~ ~ ~ ` thy. on 1 Ban~hma last 12 n' a ~°re ~ nil 11 over the quarter. M?d C p o ?n a~ a ed dcr?ng index up 4'41o e octperform -Cap rang n perf°rmance~ ,Russell ?N?d le market cap roduced stro g ~ tion p ithin the mrdd er va?ua arn;ngs gr°wt ~ Stocks ~ cheap ,her longterrr? e . s with relat?velY h?g ~ Companre an1es post?ng for comp carter. in the quarter. ed in the first q ? Perf4rma m t erformed octperfo ~ hest RoEs ou p d. with the h?g a was fairly nnixe carter . ~ Firrr?S r the beta trail ed in the first q erfornn,ance fO • ms outperform Mors P nil paying f?r ~ Strongest se Utilities Vrde Nlateriais, Energy' N°n dr 17.1°(° weakest Secto~s,.~ec}nnology~ Consumer • Financ?a 11.$°~° piscretionar 25°!° 20°/° 6.9°l° 15°/° 4.9°1° 10 to ° 4.0% 1 Year finding 313112007 . FactSet 5°/° vestment Group, 2007 Valuelndex _ Russell in ' o°t° 15t Quarter ~ Russell Mid~CaP endixfor full disclosure Group, ~~C" s -- core Index refer to aPP y -,~_ Index ¦ Russell ~~d' re results. Please Prudential EgUit Grow th of futu Source: ~ i ~ l p Russell M~d-Gaance is not indicative - Past Perform ~ ~ , i ^ ~ . r r' ( a I _ ~,b rJ J J~ ~ 1 , Story Grawth A ch~ark re (~1 gen months. ,~.~ap ~a o 0 over last 12 sma~ Q1 and 5'9 ~ ~ he quarter" dex up 1.9% rn rformed durrng t In s outpe erfor?ranCe' ~ Russell 2 st market cap ced strong p ~s with the large ~ valuation pYOdu s growth ~ StOC ex ensrVe .term earnrng 1es with more p higher long ? Compan ompan1es posting anCe fOn the first quarter' d ?n the quarter. ~ Perform outperformed r oES outperforme arter. ,th the average R formed rn the qu Firms wr ,hest betas outper ed in the quarter Locks with the hrg ut erform * S aying firms o p Non.dividend p ies, Technology Strongest $ecto Consumer Stap Materials, a 10.4°1° Weakest $ectors Telecom, Utilities • ancials, 25/ Fin 20°i° 5.9% 15°/° i.6% 10 2.5% 2A°~° 1.5% gj3112007 " 5°t° 1 Year Ending tment Group FactSet a Russe~~2000 v awe Index endix for full disclosure ~~G ; Russeii Imes o°~° 1st Quarter 2007 refer to app core index Please Y Group, ¦ Russen 2000 tial Equit rowthlndex of future results. Source: Pruden ~ Ru$5ep2000 r ` ~ ~- Ped'orman0e Is not indicative r) ~ ~x past ~ . ~ jl ;-_J_ ~ , r , i ® ~ ~- Q~e~ l ~ J~'~ '~J Bond Markets in Q1, 2007 US Treasury Benchmark Security Yields US Treasury Benchmark Returns 5.2 7.0 3/31/07 12/31/06 6.0 - 5.1 - 9/30/06 3/31 /06 - 5.0 5.0 - 4.0 - 4.9 - 3.0 - 4.8 - 2.0 - 1.0 - 4.7 - _ 0.0 - 3Mo 6Mo 2Yr 5Yr 10Yr 30Yr 4.6 - ¦ 3-Mos. 1.27 1.27 1.50 1.78 1.47 0.28 4.5 6 Mos. 2.54 2.54 2.39 2.32 1.93 0.73 0 5 10 15 20 25 30 1-Yr. 5.11 5.12 4.98 5.60 5.84 5.40 US Sector Benchmark Returns 12.0 Ebbing economic momentum helped push shorter-term 10.0 - bond yields lower in the first quarter, while stubborn inflation pressures kept long-term yields anchored. 8'0 The yield curve "pivoted" around the 7-year maturity range, 6.0 - and the yield curve from 2 to 10 years returned to a 4.0 - positive slope. The "middle" of the yield curve tended to outperform both 2.0 - ends during the quarter. o.o Agg Tr Govt Corp sec c-vc ic-vc HY TIPS Mur, All major bond sectors improved in the first quarter. High ¦ 3-Mos. 1.50 1.45 1.48 1.48 1.55 1.47 1.59 2.64 2.51 o.si Yield and TIPS outperformed on an absolute and duration adjusted basis. 6 Mos. 2.76 2.18 2.64 2.86 3.11 2.52 2.64 6.95 1.18 1.93 1-Yr. 6.59 5.87 6.29 7.10 6.90 6.38 6.14 11.58 5.30 5.43 *Sources: FactSet, Lehman Brothers µ ~la~,?on Ong ~n h Show rQwt n ~ e~at~ g _ ice rise ~,Qt~ 2pp7 ¦ ' ' ' recent energy pang consumer • - ousing andoliday spending. of consumer . k h ost-h key driver ~ . ~ ~ At Risk a mpen~ng fob growth now Fading sentiment d eriod of Fading strength. rowth after extende p of future er profits 9 ains likely t° curb pace Slow average 9 s of Fed ease in the tnic Neutral agove- ,~c~~2o Fading ent• ectat~on ore restrictive slQwit2g High investor th and exp hand m ~totnet2ttttn weak Weaker grow with firm gr0~ d~.e Weaker ~ U.S. contrasts overseas. olicy concern, ho22sin~ and Neutral ,monetary policies a Weaker n agove 2°f~ remains p unit labor itt pr,~•~ts Low h?gher core inflation slow ~ Gore inflat~o achy and curb n may keep ®derat6 Gore q tighter ca h expected to ~t"°w~h' M tl2e driven y row inflatio ~al~ gait2s at'e Gore Moderately glower g d food costs. ear. E nurmbers elevated. since key driver at gtagle ~ leaking Lower later this y ~7 rate hikes ~"ed policy Slightly top line inflation and «data- at 5 continuing preset2t. steady Lower j~4 ~a following hold rhetoric olicy approach curr6n~ly Fed on endent p Fed focus dt26 61gO10~• pnti~inflation term• Restrictive ~ ,forecast dep . near ~rtable oderately Neutral dependent 1 volatile rowth if recent arrcotnf strictive to keep markets later in 2p5~ Moderately M likely ave to shift to ssetexpeg ed it2flatiot2 fev6l ~~s i~le Restrictive Re may h o{fset in part ease is p~ ess persists. Ea clical growth, ar pht's year if softn o ing cy addition to w lute t.awth Tax revenues enlh Yurricane relief in enerate new slower g ulus from likely to g e dollar Neutral ! qy stem residential race het"Si5tS• e ~ 6ct6d fo ulatlve OOgtS.'~~~$roposals. to the accuracy or Neutral grim ational is P s ending p arranties as inform under eutral p resentation or W Writing, are for ecific retT'tati2 N ake any rep time of ut their sp yeSS~,r6 ilable of the ent professional ab° wtZ.yyprd Xt or anY affiliations m ation ava dU Trusco on inform their investor y~~"' ith gr 1126 treat'"let•yn. ent, Ina. Neitheections were based , to consult W ~V anagem and prof investors are adv~$ed ital M Comments of Trusco Cap results. investing• ~ J ~ , rospective c11ents of future on for future clients and p not indicati maY not be relied up ; ' ~ ~ : ; r. ared for use. past returns are deice and ~ ective Was prep ecrfic a ~ This persp. i sis for individual decisions, , ~ " this an are not intended as individual o~Vestment merit of making any purposes only, and goals before financial needs ~ • „ J^, / Asset Allocation: Current Strategy NEUTRAL Maintaining moderate equity overweight. _ •- Valuations reasonable 1 attractive, profits U.$. Stock Market • ~ ~ $OndS : ~ growth expectations more realistic, - ~ - -- economic growth appears sustainable, and eventual Fed ease is likely. Lar e!$ma{{ • ~ ~ Small ` ~ Attractive relative valuation. Flatter yield curve. ~?March 31, 2007 g - - - December 31, 2006 Neutral: Valuation, the shape of the yield • curve, and sentiment favor Value, but the GrOWth/ValUe c c Value. '-' extended value outperformance and recent mixed performance tempers enthusiasm. • Moderate: Attractive valuations, improved DomesticlForei n Foreign : foreign growth prospects in Asia and (developed Europe. Projected weaker dollar. T Subprime mortgage weakness raising High Yield • • - - ~ ®verweE ~~fi r g~ market concerns about credit quality. ~ ~ ~ ~ ~ ~ Remain underweight and shift higher on x a Q Q °a x quality spectrum despite expectations of y y ~ c continued economic expansion. ~ m ~ m ? Economic growth expected to continue at asub-average pace. Recession probability higher but still low. Job growth is the key economic driver currently. We expect housing will continue to slow and the pace of consumer spending will soften. CAPEX growth is likely to slow as well due to slower profits growth. Lower, more realistic corporate earnings forecasts have reduced some valuation risks. Fed policy is on hold, but could shift toward ease if economic momentum continues to slide. ? Core inflation remains a focus for policymakers, but is likely to trend somewhat lower this year. 0 "Data-dependent" f "Forecast-dependent" -Economic volatility around slower growth rates will help generate market volatility. ? Valuations are reasonable, particularly after the recent correction which followed eight consecutive monthly gains. ? Moderate overweight position in Equities. Maintain emphasis in Large-Caps, and slightly increase exposure to International. Shift to balanced exposure between Growth and Value styles. 0 Bonds: Emphasize quality. Reduce High Yield weighting and move up quality scale. Maintain overweight position in Mortgages. (1) Strategic/Tactical Asset Allocation models approved by Trusco's Investment Policy Group (IPG) on 3/20/07. (2) Portfolio allocations are in accordance with IPG decisions and may change at any time and without notice. _ ~ _ f -. -~ _._.-:.tlg~l- - ilk -.. hies et V Mark r~~a1 ~~sto $6,734,677 $6,929,252 $5747,204 $8,750,894 $5,963,2g4 $5,585,178 ~7 ,QQQ X000 $6,439,701 $5,820,625 $5,931,174 ~6'QQQ eQQQ $4,3p3,742 ~5,000,0p0 $4~000'0Q0 $3~000,0p0 2006 Mar 07 ~Z,ooo~oo0 2004 2005 2002 2°0~ 2000 2001 ,ooo,op0 1999 199$ arke~ Value ®Total M March 31, 2007 din -~+° period ~n ~ , j, r~ , r r ~ - R~ • r r ~ ~ ~fJJ J Account Activity Summary Beginning Portfolio Market Value 12/31/06 $ 5,585,178.45 Beginning Portfolio Market Value 3/31/06 $ 4,614,218.79 Portfolio AdditionslWithdrawals Portfolio Additions!Withdrawals Additions $ 237,330.55 Additions $ 956,845.23 Withdrawals $ (161,947.76) Withdrawals $ (272,368.67) Total AdditionslWithdrawals $ 75,382.79 Total AdditionslWithdrawals $ 684,476.56 Portfolio Earnings Portfolio Earnings Net Accrued Income $ 373.60 Net Accrued Income $ 373.60 Interest and Dividends $ 2,161.33 Interest and Dividends $ 21,424.30 Gains/Losses $ 84,481.81 Gains/Losses $ 427,084.73 Total Portfolio Earnings $ 87,016.74 Total Portfolio Earnings $ 448,882.63 Ending Portfolio Market Value 3/31/07 $ 5,747,577.98 Ending Portfolio Market Value 3/31/07 $ 5,747,577.98 Net Change $ 162,399.53 Net Change $ 1,133,359.19 Period Ending March 31, 2007 Please refer to appendix for full disclosure. Source: First Rate investment performance system. Data includes accrued income ~:~~J ~ ~R. ® • • ~ tl rim, Jt i~~~,1J _ _ ~ Performance Comparisons _ Net. of Fees Approximation 1.35% 5.53% 8.09% 7.05% 5.12%° 7.42% 8.63% Total Equity 1.62% 8.20% 10.84% ~ 10.36% 6.01% 9.17% 11.23% High Grade Growth 0.73% 5.16% 10.15% 5.96% 2.83% 9.36% 11.43% Russell 1000 Growth Index 1.19% 7.19% 7.06% 7.01 % 3.48% 5.51 % 8.33% S&P 500 Citigroup Growth Index -0.09% 5.55% 8.08% 6.97% 3.45% 6.74% 9.73% S&P 500 Index 0.64% 7.38% 11.83% 10.05% 6..27% 8.20% 10.77% High Grade Relative Value** 0.08% 6.93% 11.61% 12.55% WA WA WA Russell 1000 Value Index 1.24% 9.34% 16.83% 14.42% 10.25% 10.85% 1298% S&P 500 Citigroup Value Index 1.34% 9.17% 15.63% 13.19% 9.06% 9.22% 11,42% S&P 500 Index 0.64% 7.38% 11.83% 10.05% 6.27% 8.20% 10.77% Internationallndex 4.31% 15.73% 20.27% 19.83% 15.96% 9.48% 8.86% MSCI-EAFE Index 4.08% 14.86% 20.21 % 19.84% 15.78% 8.28% 7.75% Mid Cap Equity 5.01% 12.53% 10.08% 15.29% 8.50% 14.51% WA Russell Md Cap Index 4,38% 12.38% 11.79% 15,72% 1291 % 1271 % 13.83% S&P Mid Cap 400 Index 5.80% 13.19% 8.44% 13.35% 10.70% 14.28% 15.01 Small Cap Growth*** 2.15% 6.90% -8.01% 8.33% 9.01% WA WA Russe112000 Growth Index 248% 11.46% 1.56% 9.41 % 7.88% 6.31 % N/A Total FixedJncome `'1.37% 2.33% 5.96%' >2.78% 4.67% 5.76% 5.97% Hi h Grade Bond _.1.37% 2.31% 5.92% _ . _ g 2.86% 5.36% 6.48% 6.59% Lehman Aggregate Bond 1.50% 2.76% 6.59% 3.31 % 5.35% 6.46% 6.60% Period Ending March 31, 2007 'Inception is 143 months " -Inception 6/30/2002. Longer term results are linked to the STI Classic Growth and Income Fund to show results prior to inception. -Inception 10/20/2003. Longer term results are linked to the Past Performance is not indicative of future results. STI Classic Small Cap Growth Fund to show results prior to inception. Please refer to appendix for full disclosure. Source: First Rate investment performance system rte, ~ ® • • :- Il F~~ ~J=!rl~ ` -~ . Portfolio Composition Total Cash 0.8% Total Fixed Income 34.8% Total Equity 64.5% - ~ . Total Portfolio' $ 5,747,204 100.0% _ _ Total Equity $ 3,704,400 64.5%. High Grade Growth $ 1,243,752 21.6% High Grade Relative Value $ 1,244,971 21.7% International Index $ 697,837 12.1 Mid Cap Equity $ 410,769 7.1 Small Cap Growth $ 107,072 1.9% TotaFFixed''Income $ 1,998,603.. 34.8% High Grade Bond $ 1,998,603 34.8% Total. Cash _ _ $44,201.25 0.8% Please refer to appendix for full disclosure. Period Ending March 31, 2007 f .ry Historical Asset AI location y oo°io , ° os°io 0.0% 0.0'/0 0.0 /0 1.1 % 2.0% 2.1 % Fixed Income 0 36.2% 38,1'/° 35.5% 37.4% 35.9% 34.1% 32.1% o and Cash 80 /0 40.1 % 35.8% 34.8 /o (35.6%) 60% 10.7% o, 10.1°,0 8.0% 13.1 io 11:990 1.3.2°0 9.1°io 12.1% 15.0% _ 10.0°/ ~8.5% s.7~~o s.o°% Equities 40% (64.4%) ~ ~ 20% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 Mar-07 -20% ¦ Large Cap oSmall/Mid Cap ? International ? Fixed Income ? Cash Period Ending March 31, 2007 m ~a. ~ ~:~i Period Ending March 31, 2007. SunTrust Retirement High Grade Growth Fund Fund Type: Large Growth - . ~ -. - Value Blend Growth Annualized Large Medium Three Year to One Three Five Ten Inceptio Small Months Date Year Years Years Years 4/1/1990 Fund 0.73% 0.73% 10,15% 5.96% 2.83% 9.36% 10.81 Objective and Strategy The Fund seeks capital appreciation by Li er Lar e Ca Growth Index 1.02% 1.02% 3.39% 6.51 % 2.75% N/A N/A investing primarily in large, well- pp g p established domestic corporations. The Fund is designed to comply with ' • • - - - • guidelines that are based principally on Florida laws governing the investment of Characteristic Fund 13.7 municipal retirement plans for fire, police o _ consumer olsoretionary Dividend Yield (Current) 1.0 /o ,o.si and general government employees. $,~i Portfolio Data EPS Growth (3 -5 yr, est.) 15.0% consumer staples ss r Cusip ....................990001273 Market Capitalization ($bil) 71.1 s.si Energy Benchmark............ S&P 500 Index Price-tO-Book 4.1 x 10.1 i 12.9 Unit value . . $63.41 P/E (12 months trailing) 21.2x Financials 21 6% Assets ($miq $24.54 Return on Equity 22.3% 1s.2i Healthcare 11 9 'Portfolio Characteristics are subject to change. Portfolio Manager Industrials 1s.1 r Elliott Perny, CFA 10.si 2s.1 r Information Technology 14 9 Top Holdings* % Fund ~ ~ s.s~i Baxter International Inc. 4.0% U.S. Stocks 96.5% Materials 3 1 Microsoft Cor 4.0% ° o.oi p~ Cash 3.5 /o Telecom Services 3 ~ ~ ~ Fund Precision Castparts Corp. 3.9% o.or ? Index Praxair Inc. 3.6% Utilities 3 ~ Stryker Corp. 3.5% Procter & Gamble Co. 3.4% Hew Jett-Packard Co. 3.2% PepsiCo Inc. 3.2% American Express Co. 2.9% Cisco Systems Inc. 2.8% "Holdings are subject to change. This fund is a common fund managed by Trusco Capital Management and trusteed by SunTrust Bank. Please refer to appendix for full disclosure. ~ I - lj - j. ~ period Ending Nlarch 31,2007. th F ~ n d - continued tads brow t Hr h G rren~,en g _ 2007 T r u St ~et 2006 --- u n - ~ " 2004 2~ 2.i 9 / 0.73°l0 ' ~ ~ 2~ 2~0 1.3 °O /o -3.60°l0 0 _ • ' 2.39% -2.0210 0 0.12°!0 -2.42 /o ~ ~ 0 3 40°/° 0.91 °l0 7.34°I° - -10.89% 9.5710 First Quarter 2.03 !0 0 4.40% a vQlatlle One aS gecond Quarter -14.94°/0 7.01°l0 3.1210 The first quarter was in the quarter Third Quarter 4.03% 10'41°10 0.73% timism early ° 20.94% 662°/0 0.43% 11.75°l0 investors' op ed above Forth Quarter diminished as inflation stay -18,26 r° ° 4.71°/° 1.oz°i° et and hopes Qf interest 7 5o°I° 7,5$1° the Fed's targ until the i'und 26.97°i° ushed out -24.zo°i° rate cuts were p The market did Lipper Large Cap Growth Index ~ ~ 1 I1 second half of 200. ' , , , ~ , finish on the upside with the Fund up . the S&P 500 Index up 0.73% and . the quarter, the Fund $60,000.00 p~~~ J 0.64°l°. During from the I had strong performance $50,000.00 Healthcare and IndustriaEne gy whsle 00.00 and from the The $40,0 returns lagged. Technology sectors stock returns ~so,ooo.oo quarter saw Growth That ...-------- Value stock returns. 20,000.00 match long running Value ~ ~ subtle shift from Si nal the much $10,000.00 Apr-04 Apr-06 outperformance may g ppr-oo Apr-o2 stock relative Apr-g6 Apr-98 awaited return of Growth the trend $- ppr-g2 Apr-94 g&p 500 However, Apr-90 Fund outperlormance. Small Cap stocks of Mid Cap and their larger counterparts 3 Year outpe?~Qrmin9 ect that trend will • - Standard continued. We expslower economic Share ~ reverse as Ratio Dew also Beta R~ua~ 3 7.27 growth is seen in 2007. Al~~ha o 89.21 -0.32 Fund Please refer to appendix for fiull disclosur . ement and trusteed by SunTrust Bank. ~ -~ r ~ ~ Trusco Capital Manag , ~~-x; -, managed by ~ . ~1 r! on fund ~ . -` This fund is a comm - ~ . ~ , ' • r ~ . ~ Period Ending March 31, 2007 v ague un de ~e~at~ve t H~~h bra ?~et?remen u nT r u st • • - Annualized s - ~ ~ Inception Two Three e Large Value Three One Years 6130 Fund TYp ~ Year Y~ ~ 0 10.77°f° MOs 11.88°I° 12.55 Value Blend Growth 0,08% 11.61 /o ° 12.91 °10 Large ° 16.83% 15.05°!° 14.421° ° 1.24 to ° 11.78% 10A5 9.$8 /o pAedium Fund Index 0,64% 11.83 smart Russell V aloe S&P 500 - ective and Strategy capital . s a % Ob] seeks long-term The Fund secondary goal of B.a% With a oriented . ~ • • Ins Consumer Discretionary appreciation using a valueFund is F~ ,z.3% current inco strategY• The Charm 1 9% 2.5°l° investment I with guidelines that Consumer Staples $ a o°•s i to comp y Florida laws Current) t a.o % designed rincipatly on muriiclpal pividend Yield ~ 10.9°/0 9.3°/° ~,ersv 21.a % 3as % are based the Investment of EPS Growth (3`5 Yr• est.) 107 1 for fire, police and 81.3 governing tans 2.1 x Financials retirement p ent employees' Market Capitalization t$bd) 2.5x to.5% general governm gook 15 4x 13.6x IaYICe`tO` Healthcare 6.9 Portfolio Data • •gg0001182 20.0°l0 17•OX to.z% 12 months trailing) Gusip . • ~ • • • ' ' ` • • on Equity Industrials 6.9°~ Russell Value Index P/E eturn ta~0 Benchmark. • • • • • ' ' . • $16.26 5 Year R ect to change• "Portfolio Characteristics are sub) a ~ ~ Unit Value.. • • • • ~ ' ' ' • • , $31.QQ In4ormation Technology 3.a ASSetS I$mll~ ' • • ` • Materials 3.9 % 3.3 . 6.61 ~ FUnd onager 98.13°l° ser`/icea Portfolio M CFA ~ Telecom Index L. Savage, 3.z % ? James • utaities e.~ % °lo FUnd U.S. StOCkS 1 .87% Top Holdings" 2.3 • roue 2.2 Cash........... 1. Citig 2,2 2. ConocoPhillips 2 1 3. ChevroMobll 2.0 q. Bxxon 1 g 5. General Electric 1 8 6. Bank of America 1 8 _ 7 Archer Daniels IJlidtand 1 8 g, Pfizer ~r-`~ . g. AT&T 1.7 endix for full disclosure. ._-----""•"•'~ :f 10, Berkshire Hathaway B SunTrust Bank. Please refer to app r ect to change• ital Management and trusteed by ~ ~ .I Holdings are subj Trusco Cap • : - • !1 t"! J on fund managed by ~ . • ~ ~ This fund is a comm 1~ r I~LG~ ~ ` J -~ J Period Ending March 31, 2007 • Bond Fund • H~ h Grade st Retirement g SunTru Fund Type: Intermedate-Term Bond _ ~ - • Annuaiized Short Int. Long H;9h Three One Three Five Ten lnception~ Months Year Years Years Years 831 X1989 m.al°"' ° 5.92% 2.86% 5.36% 6.48% 7.47°l0 1.37 L°W Fund 1.45% 6.19% 2.85% 5.33% 6.41% 8.20°I° Merrill Lynch Gov't/Credit A+ Index Objective and Strategy ~ ~ ~ ~ The fund seeks to provide a high leve of total return through current income . ~ ~ - and capital appreciation by investing in domestic corporate investment grade Characteristic Fund index bonds rated A or higher by major credit AGY AAA 7.6°~ rating agencies and U.S. Government Average Rating o-1 Year secunties. 4.7% 5.4% 2s% Average Coupon 4.6% 5.3°1° 30.4 Portfolio Data Current Yield 990001265 4.9% 5.0°!o t-3 Years 35.1 1 Cusip • • • • • • • • • • ' ' Yield-to-Maturity 7 2 Benchmark Merrill Lynch Avera e Maturity (Years) 7.3 Government/Credit g 4 g 4.9 27.7% A Rated and Above Index Effective Duration (Years) 3.5 Years 2o.9i Unit Value • • • • • • • . ~ • • ' ' ' ' $34.63 "Portfolio Characteristics are subject to change. $154.6 Assets ($mil) • • 12.4 - . 5-7 Years 15.3% ~ • • Portfolio Managers Fund Index John Talty, CFA Characteristic Perry Troisi Treasury 44'8% 49.2% 7.10 Years 9 o 12.8% Fund TIPS 4.2% 0.0°l° Quality Distribution 48 9 g 23.2% 25.4°l° Treasury A ency/Gov't Related 12.9°~, ~ Fund AAA 38.4 Mortgages 11.5% 0.0% 10+Years 12.0°j° p Index AA 7'8 15.0% 25.4% A 4,9 Corporate Bond 1 3% 0.0% Cash Equivalents S "Ci'~•. This fund is a common fund managed by Trusco Capital Management and trusteed by Sung rust Bank. Please refer to Appendix for full disclosure. r ~~~i 1 _ J J6i'~ Period Ending March 31, 2007 SunTrust Retirement High Grade Bond Fund -continued The first quarter produced excellent returns 2003 2004 2005 2006 2007 of 1.5% for the Merrill Gov't/Credit A+ First Quarter 1.56% 2.90% -0.11% -1.15% 1.37% Index, as investors were rewarded across Second Quarter 2.52% -2.96% 3.01% -0.07% all major sectors. For the past year, Third Quarter -0.41% 3.27% -0.88% 3.60% returns of 5.9% for the portfolio kept pace Fourth quarter -0.06% 0.97% 0.76% 0.94% with strong results for the Index of 6.2%. Fund 3.63% 4.12% 2.76% 3.29% 1.37% The Fed has effectively kept rates range- Merrill Lynch Gov't/Credit A+ Index 3.20% 3.73% 2.62% 3.69% 1.45% bound and inflationary pressures under control, and we would be surprised to see any Fed action before the fourth quarter, ~ ~ ~ ~ ~ ~ absent surprises. Although recent events in the sub-prime $35,000 mortgage market have impacted investor's J~ views about the economy, we believe the $30,000 sub-prime problem is an isolated $25,000 phenomenon with little risk to the portfolio. Our mortgage allocation is composed of $20,000 conventional agency guaranteed pass- through securities and AAA-rated senior $15,000 `=-~-- tier CMBS. In addition, while the major commercial banks have nominal exposure $10,000 --- to the sub-prime market, their risk is well managed. On the other hand, we have $5,000 reduced OUr mortgage overweight WhICh Aug-89 Aug-92 Aug-95 Aug-98 Aug-01 Aug-04 was added last year, providing higher incremental yield during a lower volatility Fund Merrill Lynch Gov't/Credit A+ Index period than we currently see. We continue to be underweight corporate exposure, and have worked to minimize LBO risk. We believe these strategies will serve you well as we move through the year. This fund is a common fund managed by Trusco Capital Management and trusteed by SunTrust Bank. Please refer to Appendix for full disclosure. r~,J J I ,err:;, ® ~ .F" I - 1 ! ~ , ~ 2 ..a~~ Fund Attribution Summary -Appreciated more than 15% - - SunTrust Retirement Small Ca `f ui 'Fund SunTrust"Retire'menYHi h Grade E uit Income Fund VASCO DATA SEC INTL INC C $ 61,620.00 $ 54,503.50 50.80 PUBLIC SVC ENTERPRISE GRO $ 136,079.00 $ 145,320.00 25.87 TERRA INDS INC COM $ 81,464.00 $ 71,750.00 46.08 MARTIN MARIETTA MATERIALS $ 62,346.00 $ - 20.37 ZOLTEK COS INC COM $ - $ 71,606.50 44.04 DOW CHEM CO COM $ 89,775.00 $ 91,720.00 15.97 SOTHEBY-S DEL COM $ 86,856.00 $ 86,736.00 43.54 COMMSCOPE INC COM $ 99,060.00 $ 92,235.00 40.75 SunTrust Retirement Hi h Glade BOnd`FUnd FEI CO COM $ 81,747.00 $ 68,514.00 36.75 NUANCE COMMUNICATIONS INC $ 108,514.74 $ 86,792.39 33.60 NO SECURITIES APPRECIATED MORE THAN 15% - - ANADIGICS INC COM $ 65,564.00 $ 70,920.00 33.41 AEROPOSTALE INC COM $ 111,132.00 $ 84,.483.00 30..32 _SunTrust Retirement Hi h Grade:Relative Value Fund GUESS INC COM $ 98,316.50 $ 74,906.50 27.87 NBTY INC COM $ 151,730.50 $ 42,432.00 27.59 CONSOL ENERGY INC COM $ 528,056.55 $ 467,760.02 22.01 SMITH & WESSON HLDG CORP $ 65,379.52 $ 76,877.57 26.60 CADENCE DESIGN SYS INC CO $ - $ 389,946.96 16.99 W ILD OATS MARKET INC COM $ 62,553.00 $ 99,190.00 26.56 ARCHER DANIELS MIDLAND CO $ 598,451.00 $ 557,032.60 15.19 RADIANT SYS INC COM $ 72,568.44 $ 39,103.03 24.81 ABBOTT LABS COM $ 564,402.77 $ 371,628.00 15.17 PAXAR CORP COM $ 74,945.00 $ 54,530.00 24.46 KANSAS CITY SOUTHERN COM $ 81,144.00 $ 83,613.00 22.77 SunTrust Retirement Hi h Grade:Growth Fund GENERAL CABLE CORP DEL NE $ 161,727.00 $ 117,546.00 22.24 PRICELINE.COM INC NEW COM $ 122,108.00 $ 87,879.00 22.13 PRECISION CASTPARTS CORP $ 1,004,019.28 $ 993,261.30 32.96 HOLOGIC INC COM $ 147,182.64 $ 113,147.32 21.91 STRYKER CORP COM $ 1,012,370.70 $ 897,972.80 20.34 NEW YORK & CO INC COM $ 68,670.00 $ 48,949.00 20.72 GILEAD SCIENCES INC COM $ 706,892.91 $ 584,609.55 18.05 PERFICIENT INC COM $ 86,152.50 $ 61,318.00 20.54 II-VI INC COM $ 48,090.11 $ 62,622.50 1x.66 SunTrust Retirement Mid Ca Fund - MYERS INDS INC COM $ 45,946.44 $ 33,325.12 19.62 LAUREATE ED INC COM $ 64,052.17 $ 47,058.06 19.50 TESORO CORP COM $ 338,386.65 $ 437,673.94 52.85 HEALTHEXTRAS INC COM $ 85,555.00 $ 58,999.00 19.42 MEMC ELECTRONIC MATERIALS $ 179,065.50 $ - 49.18 DICK-S SPORTING GOODS INC $ 127,374.00 $ 90,303.00 18.92 SOTHEBY-S DEL COM $ 315,287.28 $ 410,550.40 43.55 SUNOCO LOGISTICS PARTNERS $ 78,266.88 $ 53,197.52 18.41 UNITED STS STL CORP NEW C $ 274,275.00 $ 343,128.20 35.86 HECLA MINING CO COM $ 38,300.00 $ 53,001.00 18.28 STEEL DYNAMICS INC COM $ 225,722.20 $ 277,819.20 33.59 WITNESS SYS INC COM $ - $ - 18.20 WELLCARE GROUP INC COM $ 474,996.60 $ 536,052.00 23.73 CARPENTER TECHNOLOGY CORP $ 82,016.00 $ 60,380.00 18.01 MENS WEARHOUSE INC COM $ 283,544.86 $ 299,426.20 23.08 HANOVER COMPRESSOR CO COP $ 69,893..00 $ 24,475.00 17.79 KROGER CO COM $ 364,459.86 $ 408,890.50 22.73 DIGITAL RLTY TR INC COM $ 83,863.50 $ 55,860.00 17.40 NOBLE ENERGY INC COM $ 530,299.49 $ 501,835.45 21.71 PHILLIPS VAN HEUSEN CORP $ 132,950.50 $ 94,080.00 17.27 MATTEL INC COM $ 401,807.12 $ 439,079.82 21.67 VARIAN SEMICONDUCTOR EQUI $ 70,556.00 $ 88,077.00 17.27 TOTAL SYSTEM SVCS INC COM $ 303,828.07 $ 335,444.20 20.96 ANSYS INC COM $ 95,678.00 $ 68,539.50 16.74 ALLIANT ENERGY CORP COM $ 490,103.52 $ 506,062.62 19.50 GULFMARK OFFSHORE INC COM $ 117,841.50 $ 82,935.00 16.68 FREEPORT-MCMORAN COPPER & $ 267,281.08 $ 278,990.85 19.32 NEW RIV PHARMACEUTICALS I $ 136,775.00 $ 117,715.50 16.30 CAMERON INTL CORP COM $ 445,407.80 $ 490,892.22 18.36 ALKERMES INC COM $ 75,540.50 $ 51,724.00 15.48 CHURCH & DWIGHT INC COM $ 258,757.55 $ 279,140.40 18.21 ASPEN TECHNOLOGY INC COM $ 58,824.76 $ - 15.37 LYONDELL CHEMICAL CO COM $ 306,916.71 $ 328,860.81 18.09 ALBEMARLE CORP COM $ 140,010.00 $ 70,278.00 15.36 CADENCE. DESIGN SYS INC CO $ 406,574.91 $ 473,155.02 17.59 STEREOTAXIS INC COM $ 90,650..88 $ 43,839.60 15.31 LENNOX INTL INC COM $ 415,714.41 $ 435,218.70 17.05 TRACTOR SUPPLY CO COM $ 96,126.50 $ 77,250.00 15.19 CSXCORP COM $ 288,592.26 $ 374,227.20 16.67 LSI LOGIC CORP COM $ 277,857.00 $ 421,347.96 16.00 SUnTI'USt Retirement Hi h Grad@ Intermediate"BOnd Fund ALBEMARLE CORP COM $ 369,913.60 $ 374,788.44 15.41 AMERICAN ELEC PWR INC COM $ 569,677.82 $ 564,866.25 15.41 NO SECURITIES APPRECIATED MORE THAN 15% - - Please refer to Appendix for full disclosure. Period Ending March 31, 2007. i.. ~ _ _ Fund Attribution Summary -Depreciated more than 15% -. -. SunTrust Retirement Hi h Gratl`e Growth Fund 'SunTrust Retirement SmaII Ca E ui Fund LUCENT TECHNOLOGIES INC W $ 710.21 $ 217.64 -69.35 OSIRIS THERAPEUTICS INC C $ 53,222.64 $ - -46.09 AMGEN INC COM $ 868,903.20 $ 308,234.08 -18.20 CV THERAPEUTICS INC COM $ 58,632.00 $ - -38.32 SYMANTEC CORP COM $ 847,260.60 $ - -15.26 RACKABLE SYS INC COM $ 100,652.50 $ - -36.41 EXPLORATION CO COM NEW $ 32,683.00 $ - -32.20 SunTrustRetirement Hi h`Grade EgLlty InCOme FUnd ALLIS-CHALMERS ENERGY INC $ 90,524.16 $ 23,294.25 -31.64 NUTRI SYS INC NEW COM $ 85,576.50 $ - -28.23 DUKE ENERGY CORP NEW COM $ 138,419.28 $ 129,206.72 -37.91 GULF ISLAND FABRICATION I $ 66,420.00 $ - -27.28 ILLUMINA INC COM $ 108,102.50 $ 46,880.00 -25.46 Un rUS a Yemen I ap qUl Un TRIAD GUARANTY INC COM $ 76,818.00 $ 35,198.50 -24.53 BANKUNITED FINL CORP COM $ 40,542.00 $ 27,573.00 -24.12 BANKUNITED FINL CORP COM $ 275,461.92 $ 197,783.25 -24.12 HORNBECK OFFSHORE SVCS IN $ 78,540.00 $ - -22.19 LEXMARK INTL INC NEW CL A $ 406,406.40 $ 291,890.78 -20.14 ULTRALIFE BATTERIES INC C $ 56,151.00 $ - -22.05 APPLERA CORP COM $ 393,793.77 $ 304,157.02 -19.29 COLDWATER CREEK INC COM $ 88,272.00 $ - -21.54 INDYMAC BANCORP INC COM $ 328,584.16 $ - -16.74 PALOMAR MEDICAL TECHNOLOG $ 139,342.50 $ 63,920.00 -21.16 ACXIOM CORP COM $ 343,479.15 $ 156,382.29 -16.38 ASPECT MEDICAL SYS INC CO $ 97,680.33 $ - -21.12 KB HOME COM $ 316,346.32 $ 240,402.78 -16.30 SIRONA DENTAL SYS INC COM $ - $ 51,690.00 -19.69 INSITUFORM TECHNOLOGIES C $ 66,046.44 $ 39,584.16 -19.61 SU11TI'USt Retlrement HI h:Grade BOnd Fund INNERWORKINGS INC COM USD $ 16,758.00 $ - -18.25 INVESTOOLS INC COM $ - $ 45,870.00 -17.57 NO SECURITIES DEPRECIATED MORE THAN 15% - - MARTEN TRANS LTD COM $ 50,516.06 $ - -16.64 SWITCH & DATA FACILITIES $ - $ - -16.19 SunTrust Retirement Hi h Grade lntermedlate BOnd Fund BENCHMARK ELECTRS INC COM $ 53,592.00 $ 42,353.00 -15.19 NO SECURITIES DEPRECIATED MORE THAN 15% - - SunTrust Retlrement HI h Grade Relative Value Fund JABIL CIRCUIT INC COM $ - $ 248,527.28 -20.51 AMGEN INC COM $ 537,599.70 $ 319,857.12 -18.2 SLM CORP COM $ 384,795.30 $ 435,503.20 -15.63 BOSTON SCIENTIFIC CORP CO $ 641,827.62 $ 395,109.96 -15.37 Please refer to Appendix for full disclosure. Period Ending March 31, 2007. r'. -. _ . High Grade Fund's Corporate Governance Ratings Bottom Quartile CGQ _ • • " • Costco Wholesale Corp. 2.70 Danaher Corp. 7.40 Thermo Fisher Scientific Inc. 14.80 i a.a % Coach Inc. 16.30 Best Buy Co. Inc. 19.10 Automatic Data Processing Inc. 23.90 3 7 % QUALC OM M Inc. 24.90 ~1 34.2 23.7 Bottom;Quartile CGQ Top Quartile • • ' Emerson Electric Co. 0.80 ¦ Abercrombie & Fitch Co. (CIA) 5.80 Alltel Corp. 7.00 2nd Quartile 197% Nike Inc. (CI B) 8.00 Medtronic Inc. 8.60 3rd Quartile CBS Corp. CI B 10.10 ~ssi Eli Lilly& Co. 11.10 Bristol-Myers Squibb Co. 12.30 B otto m Quart i le 32'4 % Duke Energy Corp. 12.60 WM. WrigleyJr. Co. 13.40 Principal Financial Group Inc. 20.40 Wachovia Corp. 21.40 Jabil Circuit Inc. 22.20 32.4% LennarCorp.(CIA) 24.40 Bottom Quartile CGQ • •- • • - _ Maxim Integrated Products Inc. 0.60 Emerson Electric Co. 0.80 Apache Corp. 1.60 37.0% Thor Industries Inc. 2.00 Brown-Forman Corp.. B 2.30 s.3=r, Alltel Corp. 7.00 Dow Jones & Co. Inc. 8.40 Eli Lilly & Co. 11.10 Duke Energy Corp. 12.60 Peabody Energy Corp. 14.60 Southwest Airlines Co. 15.60 zo.7 % Hershey Co. 17.10 Please refer to Appendix for Bear Stearns Cos. 20.80 full disclosure. 2s , % Wachovia Corp. 21.40 United Parcel Service Inc. (CI B) 22.80 Period Ending March 31, 2007. ~ - ~ _:~- , High Grade Fund's Corporate Governance Ratings __-___ _ . _ ~ ~ Small Cap Botfom,Quartile CGQ Mid Cap Bottom, Quartile., CGQ _ Time Warner Telecom Inc. 0.50 Marshall & Ilsley Corp. 3.10 ,~.3=r, Hologic Inc. 1.20 Telephone & Data Systems Inc.. 3.80 Palomar Medical Technologies Inc. 2.90 Celgene Corp. 4.50 Genlyte Group Inc. 3.90 BankUnited Financial Corp. (CIA) 4.70 zzo% BankUnited Financial Corp. (CIA) 4.70 Applied Biosystems Group - Appler 5.30 30.3°'° ' Skechers USA Inc. (CIA) 6.20 Abercrombie & Fitch Co. (CIA) 5.80 Zoltek Cos. 6.50 Copart Inc. 8.60 Bankrate Inc.. 8.10 Universal Health Services Inc. (CI B; 8.80 Copart Inc. 8.60 Lexmark International Inc. 9.70 zso=r Private8ancorp Inc. 9.50 CBS Corp. CI B 10.10 Dick's Sporting Goods Inc. 9.60 Vishay Intertechnology Inc. 10.10 _ _ _ Immucor Inc. 11.00 Paccar Inc. 10.70 ~ ~ Radiant Systems Inc. 11.30 Freeport-McMoRan Copper & Gold 12.80 NetLogic Microsystems Inc. 11.40 Thermo Fisher Scientific Inc. 14.80 zz.s% ValueClick Inc. 11.40 Church & Dwight Co. 15.60 Advanta Corp. (CI B) 12.20 Sotheby's 19.10 Charlotte Russe Holding Inc. 14.80 Laboratory Corp. of America Holdin 19.30 ,jai TurboChefTechnologieslnc. 16.20 LSICorp. 19.80 . TOp Quartile HealthExtras Inc. 16.80 Acxiom Corp. 20.20 3e.~r Atheros Communications Inc. 18.20 J.M. Smucker Co. 20.70 Tween Brands Inc. 18.50 Bear Stearns Cos. 20.80 2nd Quartile Sotheby's 19.10 Millipore Corp, 21.80 z3.s r Infocrossing Inc. 19.10 Harmonic Inc. 19.60 3rd Quartile ~ ~ ~ _ ~ ~ ~ Trimble Navigation Ltd. 22.80 Varian Semiconductor Equipment I 23.30 2.6 BOttOnl Quartile o.o% Dril-Quip Inc. 24.80 o.o HG Bond Bottom Quartile CGQ s~.a % None . _ _ _ _ • • - : • • o.o% o,o% HG Int.Bond Bottom Quartile CGQ None'........ _ . o.o% 100.0 % Please refer to Appendix for full disclosure. Period Ending March 31, 2007. ~ . . -- 1 T~~~{~ I ~ C1~PITAI, ( Blake Myton ~ ~ ~ 1VI~NA~EMENT Investment Manager k ! , February 14, 2007 Jane Lerner Village of North Palm Beach 501 U.S. Highway 1 North Palm Beach, FL 33408 Dear Ms. Lerner: Periodically, our auditors require that our clients provide written acknowledgment as to the current investment directives and/or policy. In _ that regard, please sign below and return this letter to me. If you have any questions, please don't hesitate to contact me. Thank you. Very truly yours, Blake Myton Investment Manager BM/ces ,'D I hereby a nowledge that the Investment Policy Statement dated. May 10, 2005 rema'ns in effect. Dated this 1~ay of February 2007. 300 South Orange Avenue, Suite 1600, Orlando, FL 32801 Phone: 407-237-5816; Fax: 407-237-4726; ~-mail: Blake.Myton@truscocapital.com EXHIBIT A VILLAGE OF NORTH PALM BEACH GENERAL EMPLOYEES' PENSION PLAN STATEMENT OF INVESTMENT POLICY GOALS AND GUIDELINES The guidelines and objectives provided below are designed to complement all applicable laws. The purpose of these guidelines is ta: 1} Provide the investment manager(s) an accurate understanding of the . Trustees' investment objectives and; 2) Indicate the criteria by which the Investment Manager's performance will be evaluated. The primary investment objective of the General Employees' Pension Plan is the protection and preservation of the assets while the secondary objective is long term growth. As a result, the investment manager(s) shall seek the highest possible return while maintaining a prudent regard for legal considerations, fiduciary responsibility, safety of capital and minimum volatility of returns. To accomplish these objectives, the Board of Trustees has elected to retain professional investment managers. The investment manager(s) retained will be expected to employ a balanced investment strategy (a combination of stocks, bonds and cash). The following guidelines, restrictions and objectives shall apply to each investment manager retained by the Board of Trustees. A. GUIDELINES Although the equity portion of the portfolio shall not exceed 65% of the Fund's total ' assets (at cost), there is no limit imposed on the fixed income or cash portions of the Fund. It shall be the decision of the investment manager(s) to determine the most appropriate asset nux (within these limits) to achieve the Fund's objectives. 1. EQUITY PORTFOLIO: Any stock purchased for the portfolio (except mutual fiend or commingled fund shares) must have been listed on a major stock exchange or NASDAQ Investment in any single stock issue shall not exceed 5% of the Fund's total value nor shall the equity portfolio's total value (at cost) exceed 65% of the Fund's total assets. 2. FIXED INCOME PORTFOLIO: The fixed income portion of the Pension Fund shall consist only of U.S. Government, U.S. Government Agency bonds or bonds issued by the corporations listed on major stock exchange or NASDAQ and are rated "BBB" or better by a nationally recognized rating service, except that 10% of the fixed income portfolio may be invested in securities not meeting this restriction. Investment in any single corporate bond issue shall not exceed 5% of the Fund's total value. 3. CONVERTIBLE SECURITIES: Bonds and preferred stocks that are convertible into common stock or that include warrants for the purchase of common stock are allowed only if it meets the above mentioned criteria and restriction of equity and fixed income portfolio. 4. MUTUAL FUNDS AND COMMINGLED FUNDS: Investments in mutual fund shares and bank sponsored commingled funds are permissible. However, 90% of the securities held in mutual or commingled funds must meet the criteria outlined above. 5. CASH EQUIVALENT INVESTMENTS: There is no minimum or maximum amount of Fund assets which maybe invested in cash equivalents, subject to the cash flow needs of the Fund. Assets of the fund should not be in anon-interest bearing account for more than one (1) day, but should be invested in an interest bearing account. Cash or other non-interest bearing assets shall never total more than 10% (at market value) of Fund assets. Assets of the Fund may be invested in a variety of cash equivalent investments inch~ding obligations of the United States or any agency thereof which are fully guaranteed as to the payment of principal and interest; money market funds, deposits in S&L associations and banks which are federally insured; corporate obligations with a rating of at least A-1 by Standard & Poor's or P-1 by Moody's. 6. PROHIBITED TRANSACTIONS: All investments in options, futures, municipal bands, precious metals, private placements, short sales, purchases on margin, real estate and partnerships are prohibited. S. GOALS 1. TOTAL PORTFOLIO: The total portfolio goal shall be to achieve returns over any rolling three-year period in excess of a Target Index. The Target Index for the Pension Fund is defined as a 60% investment in the S&P 500 Index and a 40% investment in Lehman Government/Corporate Bond Index. It should be a further goal of the investment manager(s) that the total portfolio return in any rolling three-year period should meet or exceed the Consumer Price Index plus 500 basis points and rank in the top 40% of a representative universe of other mentioned relative criteria, a further goal of the total portfolio shall be to provide an annualized return in any rolling three-year period equal to or greater than the rate of 9%. 2. EQUITY PORTFOLIO: The goal of the equity portion of the portfolio shall be to achieve a return over any rolling three-year period in excess of Standard & Poor's 500 Index. In addition, it should be a goal of the investment manager(s) that the equity portfolio returns in any rolling three-year period rank in the Top 40% of a representative universe of other equity portfolios. 3. FIXED INCOME PORTFOLIO: The primary objective of the fixed income portfolio is to add stability, consistency, and safety to the total fund portfolio. The secondary objective shall be total return. As a result it should be a goal of the investment manager(s) to achieve a return in excess of the Lehman Government/Corporate Bond Index. It should be a secondary goal of the investment manager(s) that the fixed income portfolio returns over any rolling three-year period rank in the Top 40% of a representative universe of similarly managed bond portfolios. .r C. REPORTING AND PERFORMANCE MEASUREMENT The investment manager(s) for the Pension Fund shall provide quarterly reports for management purposes. The reports shall include data on investments held, returns earned and any other information necessary for clarification of the investment manager's results. Any loss, realized or unrealized, on any single investment position (e.g. the stock or bond of any single company, any single government bond or commercial paper, etc.) of more than twenty-five percent (2~%) of the cost or purchase price, shall be disclosed to the Trustees on a quarterly basis by the investment manager(s) by a separate report. Upon reasonable notice, the investment manager(s) shall provide any relevant information requested by the Board of Trustees. The investment manager's performance shall be evaluated on a quarterly basis in terms of achieving the goals as outlined in this statement. D. POLICY REVIEW It is the intention of the Board of Trustees of the Village of North Palm Beach General Employees' pension plan to review the Statement of Investment Policy from time to time and to amend them if necessary to reflect any changes in philosophy or objectives. However, if at any time the investment manager believes that the specific objectives defined herein cannot be met, or that the guidelines unnecessarily constrict performance, the Trustees shall be notified. ~ Chai an, Board of Trustees Village of North Palm Beach General Employees' Pension Plan Date _ Tru~~Capital Manag ent s j ~ - f `~c Date - ~t;on nfQrrm 1 r ~'O~u Q'~ actives, ris ds Gan obj O~ vestment lassfc Fun read ider the fund s iabout the STI ~s.com, please Id cons ation sticlassicfun for sh°u ant inform pn inves they imp°'d' visrtin9 www• rinclPal' Yg Fund b a prospectus. and o UN , or ossible loss of p used by gIS . dad or aceom~est n9 ° sendrn9 m°ne ca 11 800-ST9ncludtin9 P and are distrib ectus, please s risk, race before tin rose sting involve for its services terial must bas carefully obtain a P ~nve fee This es and expens s ProsPeetunv sting. Mutual fund ~ which receives a return of the char9 in the fund ant' Inc•' Inc. the expected before CapitallVlana9en' ant, be found ectus carefully Capital Mana9em lnfo~at+on and the prose b Trusco rivate advised y with Trusco onager with p erfect fit. r. ponds are of affiliated of a portfolio rrr o dicates a p gTl Classic p whrch is n ENTS return of 1.0 (100 /o) in her the Services, L The hag ' R MEpSUREM the average realized atic risk. lass. an r-squared r artfolio. THE. • e ual system rapriate asset ° ata points; ant o p excess return• MpT ST pT1STlCSlO betweeation with q to an app real d of an investm with the the d~fferenCe ales once varied over a based upon public inform relative line appr°xim e~orm risk associated the returns ha is defined as ant's volatility, Yession actual p er unit °f widely investm rag Model p return p d depicts how A~~" strategy well a relicts the passive measure of an of how ricing excess Beta - ensure ital A Ratio, indicates the for a mutual fun , S 's a a stati~ow well the Gap ~alaPitY' which' the o{{ering price oared - as Reward-to- about an average sores of calculation by squared men also known once. dispersion date olio - erform ant of on the Shay e R the better the p. easurem 30 days ended for what Sharpe Ratio, a statistical m peviation - e er Share far the er Year'ou're paying t°° much lard of tim Stan eriod IT1ONS ant incom p company in dera of whether y in S pEF1N et in e certa p ISTIC then vestm each uity• CTER ann h rate for Ives sO1~ the shareholder's eq pORTFp1.l0 CHARA calculated by dividing d and ~ ashore growl This ratio 9 ounde it by k and may 30 Da SEC Yield - The figure is com Dyfed earnings p to its book value. d dividing that date. ear rep value er share. s net income an any ban per share on h _ is the fNe are a stock's market a company' uaranteed by Grows ediatelY• istorical earnings ~ re they 9 5 Year EP ook - is used tO cowent bankrupt'mm divided by . , envy nor a price.tO-B if the company e price of a st0t on,s prafitab 1 ty, calculated by taWn Federal a9 e left _ is th corpora the pDIC or any other would b months trailin measure of a PIE 12 E uit - is a not insured by Return on STI Classic Funds are ants in the 2007 Investor ding March 31 ~ lose value. period En r fn _ l ~I~ ® e , Yob (?J Jl e.. 9~. . - tion form ¦ r `r ent t D ~s of ?nvestm C1pSVl is returns gross ~r Trusco represen dvisory fees Thnet of flees, ent a anCe datent advisoYY anaged by. t?on of investmedorm to accounts descnpof present?ng e to the investor related Il for a Its. per{°rman6 Tdusca's Form ADS' ~ {~erent methods ut referee have endent of or w?tha of fees RFORMpNCE resu See which indep e deduction of future fees• riot to th annual ENT PE . stated aS n a varieshould not be evaluated o ual return p the resulting fN~ESTM anCe ?s not ind?cat?ve et-of- roduc s fees. /o ann ears, athe~jSe be far ten y past perform unless herein m Y at?on ent adv?SOYy t achieves aed each of the ementfees, anon rep,°ded se, This inform 1e investor accoun aharg mana9 informcom of the es aPPI?cab le, assume the ent were per{armance b?nat?on address amp nder managem of fees, or aore specif?cally salts. F5 ~ ex ets u dual gross ent that m cumulative re of 0 a of ass its a agreem effect Ye or less than ounding reduc a distribute n'o a comp . ears. if an ann to 9 48%. Fees have er?ad of tenould be ed and than the total return. a fund m Y ear for a P of fees w iven period each Y earnings of the F In anY g may change average return net current e reduced. et assets. ORMATION reflects the resentation, and YIELD INF more closely the Yield would b o its aggregate n of this p on request. anon waivers rnings of a fund hand corner ce of currenagate net ea in the left- , eriod are available up Yield inform Shawn sped?f?c p make any . In the absen relates agg RACIER{STfGS date available A SEC Yield ted as of the asit?ons for any affiliations anon NGS AND PORTFOLIO CHA are presen Security P Trusco nor aased on inform incame• ent, Inc• Neither ections are b Investors are characterlh{legs and ?nd?vidual ital M em rnents and PrOj future investing• SECTOR WEIGHTI sand pohfolisector weig anag on for we?ght?ng lete 1?st of a{Trusco Cap. nand may not be relied uP decisions• The sector p, aomp clients investment ot?ce. EV1EW rospect?ve analysis f urpo es only, efore making anY d applicable without n clients and p Brit of this ational p stances b laws of Georgia an adopt the ECONOMIC AND MARKEared fto the accuracy or m for inform ecif?c circum ent Pand aye?ex mPt from ective was pCeP rate, areabout their sp e with the ret?rem , This Persil or warranties as e accu ement, in accordanc ualifie Gomrnisswn rit?ng and belie vedtment professional anag as trustee or q representet ~ w ital M serves Exchang nest. h wham they are at the tim alt w?th their in Trusco Gap Trust Bank SeCUrit?es and on req cons DS managed by which Sun States available uP advised to LECTIVE FUN trusts for b the United . erations are of the broker throng ~{ON ANp CO Trust Bank as Trustee ntdonly by elation Y the?r oP compliance office COM eeated by Sun They open to ?nnot subject to d?rde cum nts which govern Are °p ulatwns. They are absent apPrOVaI Pram the banking reg trust. The plan and Declaration S of a colleceicurities. who is a registered rap ikely• term anyone royal ?s registrat?on ass e used by that such app ~p07 should not b Suggests March 3~ The sheets erience period Ending _ registered. Recent exp r J 1 J. I ~ . ~ r ~ _ ~ . r _ nY§rpa ~J JJ