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2007 Trusco 3rd Quarter Fund Management Report r' j d~ ~ r + r Trusco Capital Management, Inc. Village of North Palm Beach General Employees' Retirement Plan Third Quarter 2007 Blake Myton Investment Manager Trusco Capital Management 407-237-5816 blake.myton @truscocapital.com _- .k: ~ ~s , b ~ , , ,r,= nt~ an~e ction I of C . se T ket Snapsh°t . ~ ,Mar section II °mic ~~e~1ew . , , , ? Ec°n ~ ~°mp°sition• ` III e & P°~~4lio Section . . ? perk°rmanc ~ • • ' ' . s secti°n IV d F act sheet ur~'~'ary ' ' . , ? F un ut1°n ~ el'~und pttrib nanc Section V °~ate G°~er ' ' . . ~°~p ' ' , . ~ endix ' , • • . ' ' statement + App estrnent p olrcy .Ins Disclosures - i ~ . i . ~ w F r . ~'!9 Market Snapshot: 9/30/2007 S&P"500 1526.75 2.'0' 8.4 9:1? 16.4 13.2 15.5 Lehmah Aggregate 5.31 2.84'i 2.31 3.85 5.14' 3:86 4.13 Russell Top 200. 651.23 3.0 9.3 9.3 16.6 12:4 14.2 Treasury 4.30 3:81 3.36 4.86' 5.62 3.72 3.39 ' Russell 1000 830.59 2.0 8.0 9.3 16.9 13.8 16.0 Government-Related 4.88 3.25 3.02 4.54 5.74. 4.05 3.92 Russell MidCap 1073.86 -0.4 4.9 9.5 17.9 17.3 20.9 .Corporate 5.90 1.82 1.05 2.54 3.93 3:28' 5.08 Russe112000 805.45', -3.1 1.2 3.2 12.3 13.4 18.8 Securitized 5.72 2.64 2.07 3.66 5.24 4.18' 4.10 Russell 3000 882.79 1.5 7.4 8.8 16.5 13.7 16.2 Lehman Government/Credit 4.99 3.Ot 2.50 4.00 5.08 3.66 4.16 MSCI EAFE (Net) 2300.38- 2.2' 13.2 10.9.. 24.9. .23.2 23.6 Lehman Intermediate G/C 4.81 2.87 2.72 4.35 5.43 3:48 3.82 MSCI EAFE Small Cap (Net) 202.97 -4.5 -0.3 6.6 19.1 23.6 27.6 Lehman High Yield 8.64 0.33 0.56 3.21 7.54 7.44 12.65 MSCI Emerging Markets (Net). 1204.90. 14:4 31.8 34.5 58.1 40:8 38.7 Lehman Municipal G0 Index 4.12 1:82 1.15 1.97 3.09 3.86' 4.02 • ~ ~ ' ML U:S Govt: Corp:, 1-5 4.51 2.66 3.06 4.67 5.74 3:50 3.35 Russell Top 200 Growth 702.48 5.2' 12.5 12:5' 18.7 10:6" 12.0 ML 1-3 U.S:'Treasury 3.99 2.67;; 3.39 4.84 5.80 3.49' 2.82 Russell Top 200 Value 651.23, 1:0 6.4 6.4 14.7 14:3 16.7 • Russell 1000 Growth 618.52 4.2 11.4. 12:7. 19.4 12.2 13.8 3 Mo 3.89 1.38', • 2.69 3.98'' 5.29 4.i3" 2.95 Russell 1000 Value- 851.00 -0:2 4.7 6.0 14.4 15.4 18.1 6 Mo 4.07 1.56 2.92 4.21 5.52 4:17 3.03 Russell MidCap Growth 462.04' 2.1 9.0 13.3" 21.2. 17.0 20.4 2 Yr 3.96 2.69 3.25 4.79 5.71 3.27 2.75 Russell. MidCap Value 1161.43 -3.5 0.0 4:8 13.7 17.4 21.0 5 Yr 4.23 4:21 3.60 5.45 6.01 2.63 2.56 Russell 2000 Growth 430.85 0.0 6.7 9.3 18.9 14.1 18.7 10 Yr 4.58 4.71 2.72 4.23 4.69 2,64 2.61 Russell 2000 Value 1149..07 -6.3 -4.1 -2.7 6.1 12.6 18.7 30 Yr 4.83 5.78 2.57 2:85 3.30 4.19' 3.79 Russell 3000 Growth 502.73 3.8 11.0 12.4 19.3. 12.4 14.2 ~ -. ~ Russell 3000 Value 1111.81 -0.8 3.9 5.2r. 13.7 15.2< 18.1 ~ ~ • . ~ ~ ~ 3-Month 3.82', ' 4.82 5.04 5.02' 4.89 1.72'; 1.51 Consumer Discretionary 289.95 -6.3j • -2.9 -3'8'. 6.3 6.8' 11.2 6-Month 4.09 4.86 5.01 5.09- 4.88 2.02 1.45 Consumer Staples 290.10 4.8 7.6 10.0 13.8 12.0 9.7 2-Years 3.96 4.88! 4.58 4.81 4.69 2..61 1.67 Energy 579.47 9.8. 26.0 28.7 43.1 30.1 30.0 5-Years 4.23. 4.94 4.54 4.70 4.59 3.37 2.56 Financials 461.49 -4.3' -2.2 -5.0 1.7 9.2 13.5 10-Years 4.58 5.03 4.65 4.71 4.63 4.12 3,61 Health Care 411.58 1.0 6.1 72 8.7 g.g g g 30-Years 4.84 5:13 4.85. 4.81 4.77 4.89 4.66 Industrials 373.48 5.9 16.2 17.5 24.4 14.4 17.5 • ~ ' • ~ ~ ~ ~ Information Technology. 411.97 6.3 17.3 16.2 23.3 13.1 18.6 Citigroup WGBf (All maturities) (US' 698.00- 4.64' 3.02. 4:21 6.09 3:88' 6.57 Materials 260.99 4.9 12.4 22.4 36.4 18.1 21.8 JP Morgan EMBI Global 398.10 2.58 1.12 3.54, 7.51 9.73. 14.76 Telecommunication Services 178.61 2.1 9.9 17.9 28.2 18.2 22.0 • • ~ ~ ~ ~ Utilities 202.43 2.0 1.6 11.0 21.2 20.8 20.9 Trade-Weighted Dollar (1973=100)' 74.38 -5.4' -7.6 -8:6` -9.1 -4:4 -6.4 ~ ~ ~ . Gold Futures 742.80 14.6 12.0 16:9 24.1 21..1 18.1 CS/T Equity Market Neutral Sep ~07 1.3` 3.7 6.5" 8.9 8:3' 7.8 Crude Oil Futures 81.66 15.5 24.0 33:8" 29.8 18.1 21.8 CS/T Eyent Driven Sep ~07 0.7 6.3 11.5 18.3 14.6:: 14.8 DJ/AIG Commodity Futures 178.25 5.1 3.7 7.1 11.4, 5:2 10.9 CS/T Long.Short Equity Sep ~07 1.2 7.0 11.0 18.8 .14.4 13.1 TIPS 4.52 4.54 3.75 6.35 4.97' 4.03.:. 5.36 CS/T Multi-Strategy Sep'07 0.1 4.5 8.4' 14.7 11.6 11.3 • - • ~ ~ FTSE NAREIT Equity Index 562.60 2:6' -6.7 -3.5! 5.7 19.0 21.5 Consumer Price Index:(82-84=100)I 208.3 0.2 1.5 2',7 2.8 32 2.9 *Sources: FactSet Lehman Bros. MSCI Merrill Lynch FFiB BLS w = ` , ~ h ~ J'" ~ I~~ e ' ' ~A - ~ - . J~rrf ' - _.I - I Key Q3 2007 Themes: Fed Eased in Response to Slower Growth and Credit ~ Market Strains , ? Stocks moved modestly higher point-to-point in the third quarter, but slowing economic 6 ,-arget Fed s momentum and credit market turbulence Funds Rate generated significant market volatility and 5 5 sector performance variations. 4 4 ? The Federal Reserve cut the overnight federal 3 3 funds rate by 50 basis points to 4 3/4% and the yield on the 10-Yr. Treasury note fell to 4.55%. 2 z Fixed-income markets rallied in response to Fed ease, moderating core inflation and weakening t , , , t economic momentum. 00 of oz os oa os os o~ Sources: FRB ? Core inflation remained in the Fed's 1-2% comfort zone, despite record oil prices and further dollar declines. Housing weakness intensified as oversupply kept downward pressure on prices. ? Stress in the subprime mortgage market increased and spread globally. Quality spreads widened during the quarter, particularly in less liquid markets. ? Large-Cap stocks outperformed Mid and Small-Cap stocks and the Growth style outperformed Value. International equities slightly outperformed Domestic stocks, and Emerging Market equities led all categories. Commodities and REITS rose. ? Bottom line: Reasonable valuations and continued profits growth supported stocks in a volatile quarter, but slowing economic momentum and credit market strains initiated a significant adjustment to risk spreads and growth estimates. +~'I ~ µ - . rrr. - ~.~- Asset Allocation: Current Strategy ~Supte30,20072007 NEUTRAL Maintaining moderate equity overweight. U.S. Stock Market • ~ : BOndS: ~ Valuations reasonable /attractive, profits growth ---c-= - -~ ---_- :- expectations more realistic, and economic growth appears sustainable. Large/Small - Small Attractive relative valuation. Small-Cap headwinds. ~ ~ Growth: Valuation attractive, slower earnings GrowthNalue • a ~ growth favors growth, dollar weakness, Growth . , _ _ "under-owned." ___r_~; -;, Moderate: Attractive valuations, improved foreign ~OmeStIC/Intl - ~ _ -c Int'I - -- -- growth prospects in Asia and Europe. Projected (developed) ~ ® weaker dollar. ~ ~ ; _ Developed international economies are less Int'I Dev/Int'I Emerging MktS Int I Eillerg117g MktS ` - ----- dependent on US demand and valuation compression support favoring developed. Subprime mortgage weakness raising market concerns about credit quality. Remain underweight Bond Quality Hlgh Yield and shift higher on quality spectrum despite ~ ~ ~ expectations of continued economic expansion. Domestic/Intl ~ Int'I Firm overseas policy /weak dollar to favor international. Hedge FUndS ~ ~ ~ Ult ; Ca Ital ` -- High volatility and rising risk premiums should q Y p "benefit absolute return strategies. ~ ~ ~ ~ REITS ~ 0 ~ Ove~Welght valuations still too rich. Favor international exposure. _ _ - _ • ~ OVe1:Wel ht -- Secular growth story in tact but recent run and Commodities 9 potential cyclical slowing keep us underweight. ~ ~ ~ k ~ D. p, Q c ~ ~ y ~ 3 ~ m CD 1j ----- - ! - :ji'. _~yM't _ ~ a.~ Category Average, Returns Comparison 4~n~arter Year 'tiJalue Blerad Grouvkfh '~+'af~e Blersd Growkt~ 0 ~ Lame Large ~ - r O 0 _ r Mtd Mid - _ _- _ 0 O r D +-~ _ . o Small Smal'l' 0 3 Years ~.u~urun.~alize~d ~ Yews A~u-n~alizeci "Jallm;oe Bteatd Grotvtl~ '1JaCw~e Blered GrowY~ O Q _ ti Large ~ Large - - p - - -._ - -- _- ~ Mid Mid n (6 o O -> Please refer to appendix for full disclosure. Past performance is not indicative of future results. Source: Morningstar Direct Period Ending September 30, 2007 _ y Underlying Conditions Favor Equities: Equity Valuations Remain Reasonable /Cheap ? Equity valuations remain reasonable. 50 Price/Earnings Ratio (S&P 500 TTM) ? Economic and corporate earnings 40 growth is positive and recession is unlikely. 30 ? Core inflation is low. zo ? Interest rates are historically low and the Fed is easing. FedModeltion 10 95 00 OS • Sources: S&P, NDR Economic Growth Positive /Core Inflation Low Bond Yields Historically Low & Fed is Easing 5 _ 1a 10-Yr. Treasury e 4 No#e Yield Core PCE Target Fed (YOY%) ~ Funds Rate 5 z ~ 4 -- p Real GDP 2 (YOY%) 95 00 OS 90 95 00 05 Source: BEA Source: FRB 4 -~' ~i J_ ® U ~ r . • - ~1 • - • 1'~J rl. ~ ~ -'_! x:11 g _ Economy and Core Inflation Slowed in Q3 Economy Positive but Momentum Slowed to.o --- ? Economic growth remained positive in the third quarter but momentum slowed ''S IsM Man. + following a relatively firm second quarter. Non-man e.o Indexes ? The Index of Leading Indicators was marginally positive compared to a year 2.5 earlier but was well-below the peak in 2004. ? Business activity was also firm but. again showed signs of fading momentum as Leading Indicators measured by the sum of the ISM -2.5 (YOY~ia) Manufacturing and Non-Manufacturing _5.o Indexes (upper left). ~ ~du4~c@~j 15M',~ybr+fer~sc~ ~8~fd' 02 ~ 03 ~ 04 ~ 05 ~ ~ O6 ~ 07 Core Inflation Lower but Oil Prices Higher 80 WTI Oil Price ($/Barrel) ? Core inflation, as measured by the Core PCE Deflator Index, remained within the so Federal Reserve's unofficial y-2% target range during the third quarter. core PcE (YOY%) 40 ? However, oil prices soared to new nominal , ~h_ highs in the third quarter, raising the risk of zo higher heating and driving costs in the coming months. 0 ~ 97 ~ 98 ~ 99 ~ 00 ~ 01 ~ 02 ~ 03 ~ 04 ~ OS ~ 06 07 ~ Sources: BEA, WSJ /Haver Consumer Momentum Slowing Housing Weakness Continued ? Housing market weakness intensified in the 25 Existing Home third quarter as existing home sales fell to sales (ooos> 20 multi-year lows. Inventories of unsold homes remain high suggesting continued -~ t5 stress through the end of the year and into 2008. , ° ? Home prices continued to soften in the third 5 quarter which is likely to impact consumer confidence ands endin in the comin --- `- --- - - ° p g g Case-Shiner Home Price months. Index (YOY%) -5 ~ 97 ~ 98 ~ 99 ~ 00 ~ 01 ~ 02 a 03 ~ 04 ~ OS ~ 06 ~ 07 ~ Sources: REALTOR, SNP /Haver Job Growth Slowed & Unemployment Rate Rose 6.5 ~,onfarm ,,ob s- ? Job growth is the major, perhaps only, mo. Avg. Change s.o (ooos> consumer driver at this stage of the cycle. 5.5 ? Employment growth remained positive in the third quarter, but decelerated to the - _.._.__-_ _ _ _ _____-__-_ -- 5.0 slowest pace in, three years. 4.5 Unemployment ? The Unemployment Rate drifted higher Rate from the cyclical low set early in the year 4.0 though it remains below 5%. 3.5 ~ 97 ~ 98 99 00 ~ 01 02 03 04 OS O6 07 ~ Source: Bureau of Labor Statistics /Haver Analytica e 1 I Consumer Facing Near-Term Headwinds Fed Ease Has Limited Impact on Housing a Mortgage Rate ? The weakness in the housing market is a ---- significant headwind for consumer 6 __--_ - spending. ---- ? The decision by the Federal Reserve to cut 4 short-term interest rates in September was hailed as an important source of stimulus, Fed Funds but wider credit spreads limited any 2 Target ----- favorable impact on home financing costs. 0 97 98 99 00 ~ 01 02 03 0 04 OS ~ 06 ~ 07 Sources: FHFB, FRB /Haver Gasoline Prices Lagging Oil Prices 360 r = 0.94 ? While consumers read headlines of record WTI Oil Price 320 -- (~/Bar el) oil prices, costs at the pump actually fell in the third quarter. 260 ? History suggests that oil and gasoline 240 prices tend to move together. 20o Gasoline (Cents/Gallon) ? If gasoline prices "catch up" with oil prices, ,6° --` consumer discretionary spending could suffer as the heating and holiday spending 120 , ~ ~ 03 ~ , 04 , ~ 05 , os 07 ~ n seasons approach. Sources: Department of Energy, Wall Street Journal /Haver Analytics - ~4 f Strong Exports & Low Inventories Help Business Exports Benefit from a Weaker Dollar 20 -_ r =-0.72 Exports (YOY% ? Business activity remained the relative bright spot for the economy in the third 10 quarter, led by double-digit export growth. ? Further declines in the value of the dollar ° - make U.S. goods more competitive internationally and increase the value of _10 corporate earnings derived from foreign operations. Trade-Weighted Dollar X73=100) -20 I I I I I 93 94 95 96 97 98 99 00 01 02 03 04 05 O6 07 Sources: Census Bureau, Federal Reserve Baard /Haver Analytics Production Slowing but Inventories Lean 1.60 ? Industrial output growth slowed in the third quarter despite the strong export gains 1'55 Industrial Praduction (YOY%) mentioned above. 1.50 ? However inventories remained very lean 1.45 relative to total sales, which suggests that -. - - - production imbalances (translate: 1.40 Inventory/Sales downside economic risks) are limited. Ratio 1.35 1.30 97 98 99 00 ~ 01 ~ 02 03 04 OS ~ O6 07 Sources: Census Bureau, Federal Reserve Board /Haver Analytics - - - .e _ b ~ Ce t - - ~ P, Federal Reserve Policy Update: 9/18/07 ? The Federal Reserve cut the fed funds rate by'/2% to 43/4% and lowered the discount rate'/2% to 5~/4%. It was the first change in the funds rate since June 2006 and the first cut since June 2003. ? The drop was on the aggressive end of market expectations. ? Tighter credit conditions now threaten the general economy. ? The Fed will "monitor inflation developments carefully," though there was no suggestion of worry. ? The Fed removed inflation from its risk assessment. There were no dissenters on the vote. August 7 September 18 FOMC Post-Meeting Statement FOMC Post-Meeting Statement Rates "The Federal Open Market Committee decided today to keep its 50 BP CUT "The Federal Open Market Committee decided today to lower its target for the federal funds rate at 5-1/4 percent." target for the federal funds rate 50 basis points to 4-3/4 percent." "Economic growth was moderate during the first half of the year. "Economic growth was moderate during the first half of the year, but Financial markets have been volatile in recent weeks, credit the tightening of credit conditions has the potential to intensify conditions have become tighter for some households and Intensified Growth businesses, and the housin correction is on oin Nevertheless, the housing correction and to restrain economic growth more g g g~ Downside generally. Today's action is intended to help forestall some of the economy seems likely to continue to expand at a moderate Risks the adverse effects on the broader economy that might otherwise pace over coming quarters, supported by solid growth in arise from the disruptions in financial markets and to promote employment and incomes and a robust global economy." moderate growth over time." "Readings on core inflation have improved modestly in recent Inflation "Readings on core inflation have improved modestly this year. months. However, a sustained moderation in inflation pressures Monitor However, the Committee judges that some inflation risks has yet to be convincingly demonstrated. Moreover, the high Only remain, and it will continue to monitor inflation developments level of resource utilization has the potential to sustain those carefully." pressures." Risks "Although the downside risks to growth have increased "Developments in financial markets since the Committee's last somewhat, the Committee's predominant policy concern Risk Only to regular meeting have increased the uncertainty surrounding the remains the risk that inflation will fail to moderate as expected. Growth economic outlook. The Committee will continue to assess the Future policy adjustments will depend on the outlook for both effects of these and other developments on economic prospects and inflation and economic growth, as implied by incoming information." will act as needed to foster price stability and sustainable economic growth." Vote Unanimous vote. Unanimous Unanimous vote. BOTTOM LINE: Fed policy is now tilted toward ease which will eventually be favorable for growth. Sources: Federal Reserve, Trusco Capital Management Alan M. Gayle -Senior Investment Strategist - ~- Domestic Equity Markets in the 3rd Quarter, 2007 30% Large-cap stoclzs 20% 14.4% 16'9% 194% Drivers of Return outperformed both Mid and 1°i° -0.2% 2.0% 4.2% • Energy, Technology, Industrials, Consumer o% Staples, Materials Small-Caps again ° . Detractors from Return -toi° i1z the third 3rd Quarter 2007 1 Year Ending 9/30/2007 Consumer Discretionary, Financials, Utilities, quarter. Small- ? Russell 1000 Value Index ¦ Russell 1000 Core Index D Russell 1000 Growth Index Health Care Caps trailed on a l2-month basis following an extended period o f 30 outperformance. 17.s°~, 21.2% zo% 13.7°~° . Drivers of Return t°°i Energy, Health Care, Technology, Energy, 2.1 °i° Materials, Industrials Materials, and _ : , -0.4°~° . Detractors from Return -i o% Technology 3rd Quarter 2007 1 Year Ending 9/30/2007 Consumer Discretionary, Financials, outperforaned Telecom, Utilities Russell Md-Cap Value Index ¦ Russell Mid-Cap Core Index ? Russell Mid-Cap Growth Index across market caps, while _ _ _ Consicn2er DLSCYetlO/2ary and 30% 1 g g Financials 2°°~° 12,3% ° • Drivers of Return io% 6.1% Health Care, Materials, Telecom, Utilities Zaaaed o.o°i° as of . Detractors from Return -10°~ -3'1% Consumer Discretionary, Financials, -6.3% Growth -20°i° Industrials outpeyfoyaned 3rd Quarter 2007 1 Year Ending 9/30/2007 Value across all ~ Russell 2000 Value Index ¦ Russell 2000 Core Index ? Russell 2000 Growth Index market caps. Past Performance is not indicative of future results. Please refer to appendix for full disclosure. *Source: FactSet _ _ ; _ ' ~- - 1 International Economies in Q3, 2007 Global Expansion Moderating Inflation Higher in U.S. and U.K. s. o°i 6% - 5.0% - --. _.._..__-----..... --..__...---------..------------- -U.S. -E.U. -Japan U.K. 4.0% --~- .---- o - --"--'---- 4°/ 3.0% ~ - - -- - - - - \ ---- _ _ ---_ _ - _ _ n _ ^ --- --- - 1% -- -- - ~ --- O.O%O --T"Tr-I-TZ r-r-"IT-I-ITI-I'-I-I-T'l'...T_T `1-I'TTr1T -U.S. -----E.U. --- -Japan U.K. ~ / V -2.0% - ---._..._.._. -1% - -3.0% -2% 00 01 02 03 04 05 06 07 00 01 02 03 04 05 06 07 Real GDP Growth (YOY%) -Data through 02 2007 Inflation (YOY%) -Data through August 2007 Fed Ease Counter to Global Tightening in Q3 7 0 - ? Global growth moderating though still positive. ROW -U.S. -E.U. -Japan u.K. continued to grow faster than the U.S in first half. 6.0 _ ~ ---.------ ------- ? Inflation pressures eased to more comfortable levels 5.0 ---- - -------- in the third quarter outside of Japan, though inflation a.o - ----~.----- _ _ risks cited as a central bank concern. 3.0 _ _ _--__ ? The September Fed rate cut went counter to the trend of our trading partners, though recent history 2.0 _ - __---- suggests Fed moves tend to lead global short rates. 1.0 ------- --- - - - - ? Expectations of continued growth overseas along with o.o - -, - ~ ----I easier U.S. policy could keep downward pressure on the dollar. • -1.0 - 00 01 02 03 04 05 06 07 Overnight Policy Rate -Data through September 2007 'Source: Haver Analytics International Equity Markets in the 3rd Quarter, 2007 30% 24'9 ~ International Large Cap Core Emerging Mai°ket 20% Drivers of Return stocks rebounded Hong Kong, Finland, Greece, Australia, at the end of the y o°i°- Canada third quarter to 2 2,, . Detractors from Return outpeafor~n in the o°i° Ireland, Austria, Portugal, Belgium, Japan 3rd Quarter 2007 1 Year Ending 9/30/2007 Inter°national ¦ MSCI EAFE Index space. Large-Caps otetpe~ formed 30 Small-Caps. International Small Cap Hong Kong, 20%- '9'" . Drivers of Return Greece, and Greece, Hong Kong, Canada, Australia Canada led the 'o°i°- . Detractors from Return developed Portugal, UK, Austria, Italy, Japan -a.s i markets while ° ~ 3rd Quarter 2007 '1 Year Ending 9/30/2007 Portugal, Altstrla, ?MSCI EAFE Index Small Cap Index acid Japan trailed. 3 of the 4 BRIC so i° $ ° so i Countries (Brazil, International Emerging Market Russia, India, 40 . Drivers of Return 3oi°- China, Turke Peru Brazil India China) again led v, > 2oi°- ,44~ , Detractors from Return the Emerging yO%- Venezuela, Sri Lanka, Pakistan, Mexico Markets index in of the third guar^ter. 3rd Quarter 2007 '1 Year Ending 9/30/2007 ?MSCI EAFE Emerging Mkts. Index Past Performance is not indicative of future results. Please refer to appendix for full disclosure. *Sources: FactSet, MSCI r~ i - ` Bond Markets in Q3, 2007 US Treasury Benchmark Security Yields Credit Market Strains Lifted Quality Spreads 5.3 _ 1s.o 5.1 ,..-.:_ . 4.9 12.5 4.7 - 4.5 ML High Yield 10.0 Master 4.3 4.1 9/30/07 ~ ~.s 6/30/07 3.9 - 12/31 /06 s.o 3.7 - 9/30/06 3.5 ~ ~ ~ ~ ~ ~ ML Treasury Maste 2.5 0 5 10 15 20 25 30 i ~o~ ' ~ ~ I oz ' ~ i ~ 03 ' ~ I oa ~ I ~ as ' ~ i ~ ~ ~os ~ I of ~ I US Sector Benchmark Returns g o _ ? Signs of economic weakness and severe credit 7 0 market strains related to problems in the subprime mortgage market prompted the Federal Reserve to 6.0 - cut short term interest rates by 50 basis points. 5.0 4.0 ? Yields fell across the maturity spectrum and longer- - term bonds outperformed. The yield curve 3.0 - steepened significantly. 2.0 - ' 1 0 ' ? Credit spreads widened from narrow levels to reflect the increased risks, though they remained 0.0 - Agg G/Cr I G/C Tr Agy Cred ABS MBS HiYd Mun well below previous peaks. ¦ 3-Mos. 2.85 3.01 2.88 3.81 3.19 2.07 1.41 2.65 0.33 2.24 ? Treasuries led the broad bond market advance YTD 3.84 4.02 4.37 4.87 4.55 2.85 2.99 3.72 3.22 2.40 while High Yield lagged. 1-Y r. 5.13 5.10 5.44 5.63 5.71 4.23 4.12 5.39 7.55 3.42 -- *Sources: FactSet, Lehman Brothers, Merrill Lynch k -_ ~ _ ~.~v]S Moderating . • Slow Growth / onomic Outlook. Ec flation / No Recession In Economic -.. mom,entuna slowe ~ ~ _ . in Q3 due to weak - ~ - ~ rice rise credit Fading At Risk Weak housinge dineand consumer sentiment. Job hoaasing, Fading dampening sp 9 market tigl2tness and growth, a key driver of consumer strength, slowing. slowing profits ~ Slower profits growth, after extended period of growth. Moderate High Fading Neutral ains, likely to curb pace of future above-average g ositions. job gains are tlae key _ investment despite high cash p driver at present. Weaker ! Weaker domestic growth and Fed ease contrasts Low Weaker with firmer growth and more restrictive monetary Neutral Core inflation policies globally. drifted lower, but oil Core inflation below 2%, and recent economic Core Core Core prices hit record. Moderately softness lowered Fed anxiety over potential upsi e Slightly Easing risks. Slower growth expected to curb future core Lower Lower Fed policy shifted to inflation. ease due credit Easin Easing Fed cut fed funds rate to 4 3~a% olicedue tto credit market crisis and Easing g following 15 months of steady p Y ' s to uture market strains and weaker economic reports. Future rack f policy remains "data-dependent", but additional ga•owtla. eases are likely if recent softness persists. Tax revenues enjoying strong cyclical growth, offset The dollar is Neutral / addition to war costs. 2008 presidential Neutral Neutral Stimulative in pad by ro osals. expected to reanaira race likely to generate new spending p p under downward pa-essure over the near-teryn. _ _ - -- -'" _ Outlook: ? Economy and credit markets adjusting to summer subprime credit shock. ? Slower but positive growth expected. Consumer under greatest downward pressure (weak housing, slower job growth, higher energy prices) while corporations benefit from continued international growth. Recession risks higher but downturn unlikely. ? Comfortable core. inflation likely to moderate further, though weaker dollar could put a floor under prices. ? Fed expected to ease a bit further in coming months, but will likely complete its moves in the next 3-6 months. ? Corporate earnings growth forecasts remain positive and relative valuations are reasonable /attractive. ? Still emphasizing strength and quality in portfolio construction. This perspective was prepared for clients and prospective clients of Trusco Capital Management, Inc. Neifher Trusco or any affiliations make any representation or warranties as to the accuracy or merit of this analysis for individual use. Past returns are not indicative of future results. Commenfs and projections were based on information available of the time of writing, are for informational purposes only, are not intended as individual or specific advice, and may not be relied upon for future investing. Investors are advised to consult wifh (heir investment professional about their specific financial needs and goals before making any investment decisions. - - ~-. n - ~ Rz - - e . th environment. d,~ R'?$ ~ slow grow ~W r1~? ion risks rn a recess ia? stress increase Cern d financ tl the greatest c°n Economic an obs~ Curren y Dosing, energy,l mer headwinds ~h rDwers• Consu all bor + Recession ailability of funds to nsify and reduce av • market strains ?nte + Credit into a crisis 1 flight. r weakness evolves ~ polla focus. ~ ed to shift policy oyes higher forcing ? Inflation m eCt trade unCeharnty or aff as to the accuracy or litical events create ~,eopo are for informational representation or warranties ecific at the time of writing, affiliations make anY ent professional about their sp or anY information available Neither Trusco based on ith their investor ement, lnc~ dvised to consult w ments and protections were are a ital Manag f Trusco Cap results. Com investing- Investors - ~- rospective clients o _ of future for future clients and P are not indicative not be relied upon was prepared for past returns vice, and maY ~ o { erspective or specific ad ~ J ~ ~ This p for individual individan~ investment decisions. ~ ~ • • merit of this an alts snot intended making P nancial needs and goals before _ ~5'~ , ~ Values r a~ ke~ a1 M ~stQr~c H 8,8,732,161 $6,734,6 ~g~000,000 5,750,894 ~s,929,252 ~5,963,2g4 X5,585,178 8,5,439,701 7,000,000 X5,820,625 8,5,931,174 ~4,3p3,742 ~gy000,000 '$5,OOO,oaa ~4,ooo,oao ,3,000,000 2006 Sep-07 000 2004 2005 $2,000, 2003 2001 2002 $1 y000,0p0 1999 2000 1998 arket Value ~ Total M tember 30, 2007 Period Ending Sep i t 4 4 9 , , ~ r • J Account Activity Summary Beginning Portfolio Market Value 6/30/07 $ 6,220,452.99 Beginning Portfolio Market Value 9/30/06 $ 5,107,253.91 Portfolio Additions/Withdrawals Portfolio Additions/Withdrawals Additions $ 349,174.82 Additions $ 1,151,865.62 Withdrawals $ (29,390.12) Withdrawals $ (280,451.70) Total Additions!Withdrawals $ 319,784.70 Total Additions!Withdrawals $ 871,413.92 Portfolio Earnings Portfolio Earnings Net Accrued Income $ 379.28 Net Accrued Income $ 379.28 Interest and Dividends $ 2,611.43 Interest and Divdends $ 20,243.35 Gains/Losses $ 189,312.20 Gains/Losses $ 733,250.14 Total Portfolio Earnings $ 192,302.91 Total Portfolio Earnings $ 753,872.77 Ending Portfolio Market Value 9/30/07 $ 6,732,540.60 Ending Portfolio Market Value 9/30/07 $ 6,732,540.60 Net Change $ 512,087.61 Net Change $ 1,625,286.69 Period Ending September 30, 2007 Please refer to appendix for full disclosure. Source: First Rate investment performance system. Data includes accrued income ~ - Historic-al Asset Allocation 700% o.o % o.o % o.o % o.o % o.o % o.o % 1.1 % o.s % Fixed Income 2.0 % z.1 % 90% and Cash $0% 36.1 % 38.0 % 35.3. % 37.4 % 40.1 % 35.9° 34.1 % 32.1 % 34.3 % (34.9%) 35.8 70% s~+ 8.0 60% ~y~p?eT 100 , c 13 ~ 10 9.1% 13.1% :o°°` o o a.. Equities 50% a 11.0 ~ (65.1 40% 30% 20% y0% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 Sep-07 ¦ Large Cap ®Small/Mid Cap ? International ? Fixed Income ? Cash Period Ending September 30, 2007 _ - w s ~4 ~_- - • ' • - - ' - - - . • f ~ AIf1VI5Cr: Tru;co Capied Management.lnc. t t r i ssa;oa Paastair Ina. 9.2% Pund BencEtmark PortfofioMaoager - --------- s2~:en_ Prcl:isfoncastpartsCorgo, 3.SX Corsumer0iscredorcup fz42w 1273m Portddlio manageriince3007 Hewlrt•Packard Ca 3•SX Consumer Suples S.T7X 4.EOR aa;oa ------ ------------------------••---- Procter&GambleCo. 3.3% Energy S.S7ro 8.37n O17jeCtiVe sts,o-a'-"" - CiscoSysxemslnc, 3.2k Financial Services T.D3% T.13X -Thetundseekscapiralapprrtiadon6yinvesringprirnarilyinlarbe. 3e0;oi4 PopsiColnc. 3.2X Hea[xhCare IBASR; IS,b7X .well-esaablished denoestic corpacaticns The Fund is desi6n~ to cempfywithguidelinesdiaaare6isedprincipaflyatFlaidalaws ss'~ RaytheonCo~. 2.4X Indasuials IS.89X 13,43ro goromirg the irnesunencof muteiripa[ retircmcrrc plaru for fire. 30 App°t Inc. 24X InfonrraxionTechnology 34-~&2X 2T.S8X oli[e and rr! mmenx em ecs. ~A13019) 4130102 4A3A~07 P g~ P~1' UnicedTechnolagfesCorp. 2.bX Materials 4:23m 3-23X ¦ dctrum rsLr +,ith rrimeu=me tntane ark c~pcrl grim $uitabtluty ' Emerson Electric Co. 2:b~ 7elecom Services. O.CO% 0.8SX This fund is openta:invrsancntonhybytnutsfarwhichSun7nuc Tfreahevegm~5oswmesoninirielFypothecFelinsrsrmec:vfSPO,~i fra~a Utilities 0.90X I.S7X Bank scrve$ as tnxsttc or im•rtment manager of qualified retire- F~30i9T to 9F301l1T. inerrt plate whidt zdop: the teims of a colleca•re cruse. The Performance quatedherein represeMS past Performance, This Furd is suitable for irnrstors vhio wxru the value of their imesunencs to o aw,lwedo no: need co recer~ incomeon their im•estmenc ,c - Aggregate Returns ArerageAnnualTota[ Returns • Inception gatest q 3 5 q~p Equrcoes 163.OX Date Qaarter YTD Year Year Year Year Equivalent da.(4R~ Fend 4Jg1S0 &15X lb.bl^e" 21.?9X I?.14X 11.42% $.33R; Russell 11N00° Growth Index {benchmarkp 4.2IX 12.68' 14.35n I:-20X 13.89 4.Odio S&P SO~Olndrx 2.03"n 4.C3» 16.49X 13.19X 15.4Sa 6,S±X r.,r~ of Sepxem9:er 30,2007 and subjecc co chatsge. Past Perfnrmance does natguarantee future resufts.The performance data quazed represents Past performance and current returns may5e dower ar higher. TozaP return figures include change fin unit price,relrtrestmeM of dlyddends and capital godns.Tlte dnvestmeni return and princlpaP endue wile fluctuate so that an imestos's units, when redeemed, may be worth more or dens [hare the ordginoP cast ~~V~% SunTrun Bankhientber FDIC.O SunTrusa &>rl~, Inc. T~.rr)-t~.~T T~'T SunTrusx is afiederallya'e~gistered senicc mark of £unTrusa ftinks.lnc. -. L~l~lq 1 ~'GlJ HOT FOR PUBLIC DISiRIBUTFO~ 1 • .~- ! ~ Investrrter,tTerms & Index Definitions CUSIP+ 940001273 Alpha 3.71% Pr4ceter-BavkRrnioB~s¢daocampareastockimasic¢cvalue` UnfitValue 573.40 Beta 0,83 ooi¢bookvalueihelw~ert9setado,il~ehigherthepremiumthe TatalFundAssc¢ 514,329.560 R-Squared 6731 nnrketiswillingmpaydoraeompatryabarei¢harrlassets. Sharpe Ratio I.4; Priee`ta-Earnings Ratio ("P!E'}is a valuation rario o6a company's Standard Deviation 7 SSA. wrremt utiitprice to fts per~snicearnirsgs. The hight:r ¢he P!E ratio. - die more the nnrket is willies to pay for each do®ar of amnuat Market Cagiaricatian d56~1 g7I.616) °As of September 30,2007 and subject to change, ezxni~s. . Price•to•Book ~ 5.0 Afphomeas>tresafund'srisk•atfjusted,perfomranceandY+epresen¢ Priceao-EarninRS f 12 ma trLlirr~) 23.7 the diHernrsee betvreea a fund's actual pcrtormastce and its expected Return on. C-quiq (I2 ma tra0ins:} 29,9 performatxe,given i¢ 1eve1 of risk as ineaswed hY beta: Beta 1sa means of measuritsg the volatility of a seduriry or pordalio aE seturiraes in tor~rarisot wider the market as a whole. A berg of indi~testhaeahesecuritjrwillntotevriththemarkecgtraterthan foliates shat Ks motevalm1e than the rnarlre¢, and less than. t indicate, dvci{sless volatile than the marlaer. R-Squared measures the portion os a fund's mo>,;ement that is e expiained by mamanenrs in the marke< indexand helps indicate rhe' ~-~e" ~ n auuraq of a fund's alpha and beta. -00 ~ - 'ate" a ' Sharpe Ratio is a riskadjusted measure that is mlwlated using M ~ M ~ ' i standard deviation and excess rcmrn to detcrrnine rrnard unit 30% Per' ~ _ I ~ a° risk The hlglser rise Slwrpe ratio,the better the fund's historical 20'Ia I - ~ i ~ _ risfca~us[ed performance. i a e x -°~- Sta+rdarc! Dev7aQon is a sntisdcal measuremetx aE.dispersion 10 % ~ = 4 ~ ~ ~ ~ ~ ~ 'I "T - about an average,wlsich depiar how widely rnnsrns varies aver a I - _ _ I ~ .a ~ ~ cerraatperodoftime, ' 0°!a ~ a ~ Russell f 000 GrowtL frtdex offers imescoss zccess w the largetap grmvch segment of the US. equity unirerse.The index -10',~ I ® ~ ~ measures the perfoomance of those Russell 1000 tompasires wish highes• price-to-5ook ratios and higher forecasted gra+rth values. -39 f ' ~ ' Startdad d Poa,'s 300 index is an unmasmged isode~c of 500 i I selected cwnmon stocks,mosx ofwhirEt are listed on rite NewYark -3A°,a ~?i'd I'i49 z~3C~~0 2ftUt± 7!002 1003 2001, 2f10S "c0~0is ~StockFx<hinge.andisarneasureofthgU.Sstockmariaecas ¦ Gollettive7rusx Uni¢ E~ Russell 1000° Gra+rth Index ¦ S8P' 500 Isr3ex awfsole:Investors camera iarescdiiccdy in an irtdrx Irrvestment Concerns Aost ,performance does oat guarantee fature results. Equip securities {soodcs) are more volatile and arry more risk than oSaer forcnsof inmestrneiixs,indudiag fnvestmeitasin high gtedefuted 'ncome securities.Tlie unixvalue per unit of this Fund vrill fluttuate as the valuz of the xcuritees in the pordolio ohanges..~ Colfedive Funds are sponsored and adminfstered fay SunTrust Sank as Trustee and managed byTrusco Capitol Management, fnc. fan investment adviser registered witfr t}te SEC) in accordance with the laws of Georgia and applicable banking regal-0tions. They sire open to dnvestment anfy by trusu for whdch SunTrust Sank serves as trustee err investment manager of qualifjed retirement. plans syhicfr adept the terms of a collective trust. TPrese funds are not sufaJect to direct regvlatian by the United States Securities and Exchange Commission sad are exempt }'ram registmrian as securities. The plan and' l?eclaraxion documents svfrich govern the {end's operations are avaffofale upon requesGAudited financial smxements ore also available upon request. ~Jj+~~//"" la formatfan contained herein should not be relied upon for any other purposes including separate account investment adviser or registered fund investment 1ii~tllJ advice.Fhe information u believed to be accurate, but content accuracy cannot be ensured. S~~ST please canted your designated corn pony representaifve for further in formation. CTR~iGG-0907 ~fff FJR Pl1Bt4C DISLEIIBUT10,1I `70107 ~~- ~ r: - , _ _ • AdYisel':TruscoCapi®IManagemenr;Inc. ~ _ S.aaoD; S1aA071, ConotaPh1lips 2.5% 1:und Benchmark I?OCt{OIIO ManageY - General Elettric Co. 2.~% Consumer Discretionary 8.54 7.G3~ • James Sxrage. CFA s l saaD Portfolio managersihce 2407 ~ AT.&T fnc 2.2~ Goraumer Sttpfes 10.31 ~ 7.82 Fiaon Mabil Corp. 2.2% Energy I I.d2% 14.49 3lalea0 finantial5ervices 19.46ro 3Z2in Ob"ectrve CGevroar Co 2.IX Tfie fund seeks longterm cap'rtat appmciation with a3econdary SSAaD ' , . Fteatrle Care 11.42 7.C9~ In[e1 Corp 2.0~ goal of currahcincome by usingavalue-oriented inrestanenc Indusvials 12.04 10.45 sttacegy.Yhe Fund is desired zocomplywithgt6delines dwc SD Bank eEAmeric: Corp. 1.4% are taste principally on Ronda laws gamming the iraesuneoc of 9rsafs7 sx>w'at Sr30rD7 Berksfiire Ha[hxway Inc. (CI B~ 18h Infomut;an Technology Id,SZ~ 3.EA% w3aroz Materials 2.50 4.068; municipalredrementplansfarfirr,policeandgenealgarernmerrc ~r~~~,mwlx.ishrc;ter:rmeuofinw~crnarrpiim',yxnr App"iedMa[e[ialslnc. 1.8X anpSoyces. 7elecom5ervites 4.OS< 6.71 Gtigroup Inc ~1,8~ Jhe obare grop'[ aswmes an lnio-a~ f;yywrherkaJ;nresrmer of S1 O,LY~^ fian Utilities 3AI`S 5.98ro S[titabilalty 9F30i97 to 9,r3p,'d+7, This Fund is open to investrtnem: only by avscs For whi:h ~nTrusc The performance quoted herrfm represems port performance. Bank serres as mueeear invesunen[ managerof gvalified reore- rnem plans which adop¢ the urim of a mSecaire ws:. This Fund issuita6le for im'eStonS who are loo4ing for apical appredation po[ena'ral and some income v~dn less volatility than - ' ~ cheequiryenarkezasawhak. Aggregate Returns AuerageAnnvalFotalReturns Inception latest I 3 5 Since Egeirces IOO:fi% Dade Quarter YTD Year Year Year Incepiaon Gasn_Eq~ivafen[ 0:0`$ Eund 6130102 •0.-06;6 7.12; 114.S6X 14.14"a f6,04~ 10.95ro Russell 7000sYalue index (benchmark] .0.24 i97~ 19,;5 [5.25X 18.457 ; I?S4~'"' S&P SOO Index 2A3~ 9'.73% 16.94 13.19k 15.45p fp.60n~ ~~As of 5eptemEer 30.2007 and suEjetc [o charge. Pasi perfarmance does nat guarantee futare resufa:The perforrrrance data quoted re presents past performance and current ret[rrns may be lower or higher. Total return figures include change in unit price, reinvestment of dividends and ccpita! gains.Tl[e investment return and princdpol value will fluctuate so that an investor's units, when redeemed, maybe worth more or !en than the orlglnal cost. ~"Rewrn item 6'l3CA'OZ ~~~r~/ SunTrust Bank,MemSer FDIC:~ SunTrus; fluiks.lnc. CT ra zr'~'~~T T~T SunTrus[isafederallyreg8ceredsen~cemarL.oFSun7rusc&uiks,lnc' lJ'U~d'~Ilj L! 1 i~OT FOR PUBLIC DISiRIBlITlO~ -. - _ j _ i _ •- - - - '- - - ff ImestmentTerms & Index Definition Pritc-to•Book Ramio is used to caor~are a soocKs marEmtvaWe oeitsEaakvdfuc.Tbehighertherago,ghehigEier~epremiumtbe marker is willing tapay Ear a company abavei[s fiord assets, C1951P 450001162 A9pha, Priccto~F.omingfRatla(''P!E'yisaYdluadonrndoofacampanf's l9nitValue 517.40 Ben 4.90 currencvnicpricetoicsper-unheunings.TSiehigherrhePJErzuo, TorilPwndAss¢a 520,654.453 R•Squared 91,33 them~etht:marketiswi0irbtopzfioreachdoffaroEannual Sharpe Ratio 1.47 earrvrgs. Standard Deviation b.48; Alpha rneasares a fund's riskadjusced performance and represems ' ~ Markat Capiolizaxion {S~ily 596.b[ts) BAs of ~ptember 30,206E and su'bect ta change- the difference between afund's actuzt perfornronce and ies et~eaed Prise-to-Bcc:< 2.7 perfommnce,~vert icy level of risk as measured by Geo. Pricrto•EamingsQl2matraaing~ 17.0 Betaisam~nsofineawringthevolatiliryofasewriryarpordolia Return Gn Equity (12 mo tuail"rngi 21,pq, oE.securides in corriparisan whhthe markeeas awhcte. Abera of I indxatesthacrthesecurigwillmrnrwiththernarkea;greaterthate l ind'zaoes that dc's more wtatile than the maiket,tnd less tlrn l indacaces that tit's less ~+ohtie awn the aearket I R-Squared meawres the poruaar of a fund's mev~ttciictlnc is exphvied by moremerits in the marks trader, and helps indicate the accuracy of a fund's alpha and beta. m ~ Sharpe Rotto is arisk-adjusted measure that iscakalaced using 4'6°!° I ~ m I ~ x i sondard deviation and excess rewrn to detemdne reward per unit i --~ e -~~„° of risk Thu fiigher the Sharpe nmo,the ticaer nc~ furxdi historiol ~ ` e 36°!0 (i - Ii riskadjusoad performaxe.; j i a e ! ~ _ StaadardDexiotdonaasodstiolmeasummenaoidispersionabout I ' 26,'0 e i - - an average; wlndt depicts haw widely rerirns varied arer a cmoin i _- I ` ' ~ °- a o ~ pCt'iOd Of time. P. a o. I i - i ~ ~ i RussdIIDOO~Yafucl rrdex is ccrn rued of the secunucs in the i - f.. P - - e r: - ~ Russell 10001ndexwdh a less•than-areragegro~nth oriennteoar. B!0 I ~ i Companies'inthisindex~enerallyEjaroelowprite-tabooEcand i ~ ..prior to~earnir~ ratiaa.higher diHdend y%elda~and lo+~rer forecasoed -ea'/P ' _ i grovrthvalues. Standard & Poar's i001adex is an unmanaged index oE506 ~ -26"!0 ! selesaedccmmonswcks,mascolvvldiftareGsced'ontheNevr ! ~ York Stock6cdunge and is a rne~ure of the E1S. stock nrarlret as a -30% µ I I !d'~>~ 19'~Sz x060 .,1~Iil :OO:u ;!'0+7q> ZuV:'ui 2flfPir whe[eanveswrscwnoti~.+escdirec~yimanmdnx 'Collective Trust Dni~s ~ Russalt €0,70 1+afue Index ®~F ~ Index Irn2stnlEnt COnCPxns Smdcsare more mdadleand carryuwre riskand return poccndal ' dtart ocher farms of imes~mcrtuYltc unrt value per unrt atthis Faad i Past performance doesnatgvarontee fvtureresudts, w,11Et~tuateas~evalueottheseouritiesinthepoctfoliodtarr~vs. Ualuebased invesuneim-are subject co the risk tfiar the broad. marltec may nor necognae their intrinajc value. Collective Funds are sponsased anti admirtisrered by 5unTrvrt Sank as Trustee and managed by Trvsco Capital A+lartagement, Inc. {art investmens adviser registered with rtbe SECJ an accordanee with the laws a f Georgia acrd appdiwbde banking regaMatiorts. They are open to investment only by trusts far wtilcfr SunTnust Sonk serves as trustee or investment manager of qualified retirement plans which adapt the terms of a colPeaive traist These funds are nor subject to direct regulation by the United States Securities and Laxchange Commission and' are exempt from registration as securities, The Plan and aecdaratlon documents which govern the fund's operations are available upon regvest.Auddted ifiitanciadstatements are oho araidabie upon regaest. f~ dnfarmatian contained herein should not be reYied.upon for any other purposes indirding separate account drrvestment adviser or registered land investment ~j~~~rV i advice.The in formation is believed to be accurate, but content accuracy cannot be ensured. ~ 7 T Please contact your designated campanyrepresentative for further in format+am, ~~q;i~ 1 CFR-HGRV-0907. ~ hUd FUR PdlBUC DI55'RIB'UFIU;sd tOf07 ~ ~.µ-°`. m M _ _ ~ ' AdvisertTnsco Capiaal Managemen4lnc. ~ i ~ i - POrtfolio Clanager S36,O:a Exxon l"lobil Corp 4.0~ Paand Benchmark • MOB Riddick C54 S25,ote s*3.3tn ' General Elettric Ca. 4.09; Corsumcr Discreciortary b,50:5 7.53 ' Portfaliomattagersince 1993 _ _ _ _ _ _ _ _ . _ _ _ , _ _ _ _ , _ _ _ _ _ . _ _ _ _ _ , _ _ ConocoPhillips 3.2~ Coraumer Staples 9.53 7.82% slo-,oro Citigrouplnc. 3.1~' Energy 15.45 14.49; r Ob'ectNe sts,oa - a f Bank ofAmerica Cor 2.4K Rnancial Services 2b.56~" 3'Z27~ The Fund seeks to pmridecapital appmtiadw,and asa secondary Srp,ppry Chr~•ron Carp. 2.4~ Health Care b °0% 7.00 gwl,turrentitucome.frymresdngprimarily'vtdividerid~payirr~ ss,o-ro VyachoviaCor 2.7~ Indusaials 14.89°5 i0.45a sewrlties: The Fund is designed w comply with guidelines thaz P• are used principally on Ronda lawsgovemima ahe invr_KUnent of Sa AT&T Inc_ ?.S~ Information T chnolcgy 3.36`>; 3.b0~ nwnmi redrnrnent lane for5re. olice and rat mmem 9F3atF7 A13bf0I 4A301gr ~ p P gene s^o're Johrrson&$ohnson ?.4~ Materials 3.42g 4.Qb~ empkryees: ~ia[[ant vSWr *iC erimrrecn[ vtan~ ~nj apc>! g[im Pfizerfnc. 3.3~ 7clecom5enices 5.755 6.71 Suitability Tlwahrregrota5ossamescviinitreihrpatheczeJanvesrmer.ofSP0.u~9(ram Utili[irs 6.58p 5.98 This fund is open to inves[ment only by cnssts Ear wlsich Sun7rust 9F30rYT to 41301p7. Bank serves as vusceeor invesuneaxmanagarof qualified retire The performance rluoted herein repreunts post performance. rnerrc plans which adapt the terma of a ca9eccre octal. This fvrd' is svira6le for imrrstorswhoare looking for capital apprndation potentizl and some inconu wide kss volatility than the r ~ equiq market az a whole. ' ' Aggregate Returns Average AnnualTotat Returns Equities IAO.fl~ Inception 0_atest tl 3 5 14 Date Quarter YTD Year Year Year Year Equivalent 0:0% Eend 3f31143 ( IShS~ 10.44 14:OY~ Ib.?b% tl8.16~ 7.91% Russell I OOOt`1/alue Index , •0.24 5.97% 14.45% 15.251, 18.07°5. 8.80 x:is of ~pttmher 30.2007 and suiyecc to charrde. Pose per farmance doesnotguartrntee future resuPts.TPre perforruonce data quoted represents past performance and current returns maybe lower orhigher. FotoP return frgures incfude change in trait prke, rnirrvestmerrt o f dividends and capita! gaiirs.7Pte irrvestmerrt return and printrpoP value will fluctuate sa'that an irtvestor's units, when redeemed; may Pae wort}r mare or fen thou the origirraP cost. ~~~(~f! SunTrustBank,Mem6erFDIC.0Ssm7ruuBinks,lnc. S,~U~°T SunTruuisafederatlyrngisoeredserritemarkofSanTruuBanks,Inc:'. 17 lJ 1 NOT FOR PUB9.tC DISTRIBIIRQ~1 ~ _ • . i' ~ • ~ - - ' - - - ~ i IrnestmentTerms & index Definitions CUSIP' 990001281 A%pha' 5.28:5 Price-to-book Rat2o is used to compare a stocKs market value Umt:Value $99.51 Beat 069 co is bookpafue.Tfie li~gher the ramialahe higherthe premium the Total FundAssea $26.;640,528 R-Squared 65.45 rnarkec is willingto pay fora company a6ave its Jxtrd assets. Sharpe Ratio 1.86 Price-to•Earnings Rotfo {"P!E'} is a vxtuation ratio ~a Standard [}eviadon 699A compznl/s curreata urot prite to itt perumt earmn8s. Tha higher • chePlEm[iothemorerbernarkecisvrillingtopayforeadadollar.. Market Capital9sttion {$5il} ry109.1{L) +~ps af'September 30, 200f and subject to change. d annual earnings. Price-x-Boob Z3 Afphomeasur~i(und'sriskadjusced~performaxeand Prucnto•Eamings (12 ma trar7in81 15.1 rnpresencs the d`dlernncc between a fund's acaraf pcrfommtxnoc Rewrn an Equity (12 rno trailiagl 19.9 and fts expected perfcrrnance,given its, CeveC aEris9as measured bybed. , Reta is a means of measuring the vaCaaliry of a secuiity or portEo1io of sewridez in comparisem with the market as a whole. A Gaza of I indaates thxc tfie securrty wilt move wilts dre market greater than I indicates that it's morcuoladfethan [he market.and less than"I indicates shat ids less votarile than the mar9ux. 45%a ~ RSquarcd nuasurrsthe portion of a dund'smaremenc that ~s - ~ ~ explained by moromena in the marlaeci~ex,and helps ire 35%a a ~ ,-,~', the aoaraq of a funds alpha and beta. - -"' o ' ~ M _--6-.- ;g -^ Sharpe Ratio is a ciskadjusted measaretha[is calwlaced.usiog _ 25;6 ,-~'~ = a standard deviation and excess return oo determine reward par n - - u~rcof risk.l3te higher the Sharpe rado,thebetcerche Eund's 6594 - - _ - ~ I ~ - - ~ historical risk-adjusced petformaxe: - - I . _ _ o M a e Standard Deviation is asta6stica6 measurrmenc oEdispersion Shia ~ - .r , ,.r - r«r aboutanaveeage,whichdepicahowwidelyrearnsvariedovera ~- --- certainperiodaftime... 5! - RusseiP Y000° Yoiue index is composes oEthe secorides fn the -B S%a I Rruse®; I OOO Index with ales-tharo-aver~e gravth orientation: Carnpanies in this index generally have low ~re-oo-hook v ~ and price-to-earnings radar,higher dwidend yields and km+er o ?Lr0" +!°sl _ .tKSi ,:~-~.; -^,G5 ~p0a fareastedgrtrmhwlues.InvercaGSCannociaeescdwecdyin,an ¦ Cdtectire Tnssc Units Russell IODDs Va[ue index index' Imesttnent Concerns Stocks am ntom vofao'te and carry more risk and return pocenaal past performance does not gvarontee futare results. than orherfornu,of invesmxncs.7lte tinic value per trnic of this Fund will flucwace as die vaWe cE the severities ut the poudolio changes.` Value-based invesanents are subject w the risk that the broad ColdectEve Funds are sponsored and odminfstered by Sun?-rust Sank as Trustee and managed by7rusco CapitaV A+lartagement, inc. (an investment adviser muleen,ofnocrewgniueth~eirfnuinaicwlue. registered with tdie SFC)rrt accordance with the taws n f Georgia artd appifcabde banking regulatdorts, They ore open to investment only by trusu for which SunTrust Sartk serves as trustee ar investment manager of gaafi~ed retirement. pJarts which adapt the terms of a codlectire trust, Tfrese funds ore not subject to direct regulation by the United States Securities and Exchange Commission and' are exempt from registration es securities. The plan and' Decdaroaion documents which govern the fund's operations are avalable upon request.audited j'anancdai statements are also avoidable upon request. r In formatron mnmfned Prerein should Trot be relied upon for any other purposes including separate account investment adufser or registered fund investment il(PU~'//% advice, The in formation is believed zo be accurate, but content accuracy cannot be ensured ~~~T please contact your designated company representaifve for fundrer in formttion, aJ,l ~ jx CSR-t4GE[~0907 Cvi)i FO4 PU81[C DI511n.16UlCON 10107 t - , - ~ - • f - ~11 Adviser.Trusco Capital Management,lnc. { ~ ~ ~ ~ slsagqu I Shares PiSCI EAFE Index 2.9% Fumd Benchmark Portfolio Managers szw'7>a rQiadDeakirts,~A 5700.Oqo~--'----------------__-•-- - EniS.ph. 1.SX Japan 21.4b% 2119% Siemens iJFY r d i Pordaliomanag¢rsiacel999 ~ Eon ortnerl VaEa 1.3% Gernta.ny 15-14% 14-79% SISV.000....... _ _ _...---- UnitedKi~a¢d'om 11.19% 11,7$% •Mdn:wgtkins y ~ 9.3% frnnce h6.79n 10.33% 5100.000-- - - - - T~?Sa,9Vew 9,2% Idfr 9,08% 9.05% Pordoliomanagersince2005 Trv3eFonica 9.2% Saain b.3]% b.20% 55flggq Australia 4.29% 3.49% Objective Anianx SE I.2% • The Fund iecks [o prandc irrmstmenc revalcs tha;ttxrespond to Sq BancoSantanderCentra9 Nispano 9.1~ Motherlands 353% 3.35% the ce rite riormantc of the securities included in the 913014? 9130+q2 9130+07 Monvar L73% L35% aggr?9:'^ P , ~ DaimlerChryslerAG I.0% Morgan $tanleyCapiral In[emational Europe, Australasia, Far East ¦ ntasur, rate riU[ ainrew~tnt sf inttme and altW gain Sweden 1.82,E 1.84% {EAFi7,GDPWeigbced Index (Price Retum). Toyoa Motor 9.0% $el¢ium 1.73% I.81% TneoEovegrophossurneson;nit~ulrrfpgthc~icolirwesun¢n;af5d00,A~17(mm Svvicer9and I,71% 1,83% Suitability.. , 9130,~F7 to 9f30~'D7. Grec~c 1.6b% Lb5% Denmar9c 1.48% 1.43% 'this Fund is suipble Foraggressive ira'estors who wartt exposure The per farmancc gaoled heroin represents pest perl'ormenrc. Austrie 1.39% 1.34% m foreigr marltexs znd are wilting to aoceptthc increased risks of Foar~rtlnresmigfortbe,Poss~ilityafhighei•.rrurns. Finland 1.19% 1.19% Flon¢ Kon¢ 1.16% 1.0d% Share Class Description Portuza 0.9d% 0.99% Shares are offered prima~ly m firaaadil insdtunons and Ireland 0.79% 1.07% intermediaries for their own arxauna:s or Forthe accounts of $In¢aPOrc O.bA% 0.E8% urstomotsdorwhomtheymayaccasfideriaryagent,rcne9Vnenc Ocher ~OS7% 0-b9% adviser,orcusto&an,Tlseseaccourrcs,prinx+ailyconsistaF.auets Mew2eala~ 0.59% 0-47% oFalxutafa6evust,businesserrorypossessingatazidenatipmon United5tates ~D.00% 0.0p~` number, or employee benefit planandazse¢be'dwitFi,selet[ fee.basedprogramsandsertamenort~disereuonaryintenmediary r i no-load plaaforms, • Aggregate Returns Average/SnnualTatal Returns Equines 4$:0% Inception 3..atest I 3 5 10 5hares~ Date Quarter YT® Fear Year Year Year Equivalent I.9'~ 9 bl6f94 ~ I:$I:5 ~ 13.37% ~ 25.79x, I 23.94% 33.83% B.B~ b15C1 64,FE Index G9]P Weighted {Price Returns ~ 1.4541 g 1148% li 23.58% 21,ti3X 22.41 % 7.65P' f•ISCI SAFE index GDP Weighted {Total Returns j ISS n' ~ 13.73% 26.40% 24.34% 25.07% 9.50% "As of September 3D, 2007 and subject to change. Past performance does ttoz guarorizee ~'ature resultsThe perjorrrtance date quoted represents past yer~formorrce vnd current returns may be Jower ar higher.Tatat return ~gares incitrde change in share price, reiroueszmeaz of dividends and capitalgains.TPre investment return and prindpal value will fP.uctuaze sa that an irlvestor°s shares, wlMen redeemed, may be worth mare ar less than the original cost For per{ormance data current za zlre most recent marrtfr arid, visit our website at www.sticlossic(urtds.cam. r"The expense ratio for I Shares is 9.ti I ~Class~c Funds ~ i ~ ~ ! - ~ f - 11 InvestmentTerms & Index Definitions Ticker S6EDf Alpha 0,21 n P»ce-to-Book Ratio is used to compare a stocfis marked vdfue Cl9SIP ?&9766:544 Bea 0-9d co is hook ralue.The higberrhe ratio,ahe hjgherthe premium the MetAssetValue S?0.26 R-Squared 97,04 matitec is willing to pay fora comparry !bare its lgxd assets. Sharpe Ratio 2.03 Price•to•6:arnings Ratio i("P!E") s a valuation rario of a Standard aeviadan 9.61 .a C0P"~s current flrare price w its per-share earnings. 7?[e higher ilic PJE ratio, the more the anarket is t+nlliJg to pay dor each Toral FundAssecs S 1,13p;096;a55 eAs of September a0,20p7 and su6~ecc to change ddhar of annual eamingc Upper Ca[e~ry Interna[ional Muld•Cap Care F'vnds Afpho rneasurrs a dvnd's riskadjusted perEormaxcand Market Caiuittlitatian {Stab S9s.7~) represents ia[e ddlerenoe between a furids attual perforsrmsce Priceao-Book 23 and'ucsexpettedper(aniance,givenitsfeeetoEriikasmeasurad Priceao-~mings{I2 monthvailing) 64.1 bybem. Return on Equity {02 morrfh trailing! 19.8 Seto is a means of measuring the vcfatiliry of a security or patfoliogf securities in comparisortwith the market as !whole A berg od I indicates tint the security wil[ mare vrith the market greater dratr I indiptes that it's more voladte than the market,artd Tess thzn 1 indidces that it's less volatile than dse maricrx. a RSquared naasures the portion of a dund's maremarc thae as b. explaimedbymovemenaFrt[hemarkecindex,andhelpaindicate. d5'fr a ~ ~ ` ~ ( o the accurary oEafund's alpha and beta., : SharpcRatio is a riskadjusted meawre tha[is wlwlamd using a o. 35f a ,-~.,~, ~ - ; p N ~ standard deviationand excess rewrn m determine revrard per , - ~ N_ unitofriskli[eh6gher•theSharpetado,ihebetcersE!eEund's 3S! - i; o a; a j historical riskadjusced performance. o I - Standard Drrfation isa statistical rneasur~rtenc of dispersion P IS! a; ~ ~ b ~ e ~ N ~ ~ - - about~navcrage,wliichdepicrshauwidelyrcturnsvariedovcra - - i certain period ddame. 5'dr o - - - - - i f MSCI FIFE fndcx,GDP weighted {Price Return) and {7otaf .5 j 1 I Return) are unmanaged gross dwnesoe produa weighted equity indices <ompnsirb 20 odiite 4Btountries m the MSCI universe i ~ I I and represcnaarg the dereloped world oursrdeof NordtAmcrica- -l5°l, ~ Each MSCI country codex ~ treated separately then aggregated, I A f I without change, imo regional MSCI indica.FAPE peRarmance -2S% y,,;; data isakvtetedimUS;dollarsandin6ocaltumanty.'GheMSCi _ F.AFE fndcr. GDP weiglrced (Total Return) isadjusted 6or die ¦ l Shares MSCI FIFE codex GOP1~lreigh[ed (Price Rrurn) ¦ MSCI EAFE Index G,DPYJecghted (Total Return} reinvrstrtxnr of income dividends.lrrvestnrs emtnoa irnesc dirxxdy Rost performance does not guarantee (vivre results. inin index. InYe5tn6F?nC COr6Cel'nS lntemadomal irn~g ircrch~es increased riskand+voladliry. Stocks zre more volad[e and grry more risk and turn pp[ettmal~ An dnvestor should consider the fund s drrveszment object+res, asks, acrd cdtarges mod expenses carefully before ?.nvesting or sending money.7"his and other dmportarrt in formaz6on about ttae than o3,er fomu of invesmxnt;-The net uzec,a1u¢ per share S7d Classic Funds con be ,found fn the land's prospeavs. To obzafrr a prospectus, please toff !-8&8-57!•FdJND or Ylsic www,szfdossbcifunds.corrr. Please read the prtvspeavs tare fu7dy bei'om o: rE~is Fund v,ilt tk~rniam as dre value ~ ahe scuirities in the i7nYCSting. portfoko changes. It is itnportanc w rermember that there are risks assoaated vkth 'Ire $rj CjQSSfC FandS are Ud595E0~ ~l'f TrU$Cti CaidfCflj ~9P1Q~CdrJCnf, ~nC.~ WP[1Ch rCCefYe5 U ~e ~OF JLS SeFYJC2S~ Qnd t7fC uJSldrbUfed ~j' FgC2SIdE ~fSCn~]'Utf4n $CJ'6'fCeS, ~rar tY)NJCi6 J5 noC O~djf4tCd Prt~)7 Tra$co index'vrves[ing, indudiog the pocen¢aF risk of marketdedine,as Cnpind lrlantagerr6erti, {nr. welr6as the risksassociated with invesohginspetyfic tanpanfes. • !Not FDIC Insured • No ~actk. Guarantee + Ma Lose Value ~'C~.c~'SS~C F'U~"l+d.$ -9EI.09f17 60!07 ,.t ~ . Ad+liSEl :Trusco Chid ManagemenClrx.:. t ~ t i POrCfOtlil Managers SIo-.tY.o Noble Energy Inc. 1.6°5 Farad Be»chmark SoottYaschzk,CFA Canrron facernational Carp, 1.6% Gomumcr Discretionary I4.14~ 16.38. sto-.o-n -------•-----------------------------slssts- Portfolio managecsinie 2dXlb Eaton Carp. 1.6~ Comumer Sapfes 5.495 6--00~ F3a;UCd --------------------------------- CadenceDesign5ysten•~s.lnc. 6.SY5 Energy 8.5}~ 9-ISm • Charles B,Arringtota,CFA ConAgra Foo:"a Inc. 1.5`~ Financial Services 13.76% 17.87E Pordaliomanagarsince2D07 s.o-,p:a `--------- ------ )abil Circuit Inc. 1.5% Fleahh Care 10.6}a 8.10`"n Ob3eCtiv2 sta'xo Goodrich Corp. 1.4`"~ Industrials 1438 13.73; :TfaeFundseekslong-term:cap-rdgrowrh; by investing in domestic 56 P.;$EC'orp. 1.4~ InforrretionTechnala~r IS.IS`.~ 14.55% ctxporarioiuwirhamarkecppdtalixatiohbei\vecn,$Ixnd Qf3:VST 91SAN2 ~ sRWU7 $20 billion:The Fund is deli ned m tom with ~deGncc th:t Equifax Int, 1,4$ Materials 7.57 6S7% 8 P}1' 8u E ktauni ratre wip reimu:rsxnt ct ixanr an9 wpi:>f grim packaging Corp. ofAmerica 1.4`R Telecom Servicct 3.66°.5 Z43,G' are based principally ut Rocida kws governing tke investm~c of rnunkipa7 reorement plansferfee,police amd getxral ITx obcwe gfap5 ossomes on imidoJ Fjpothetrelinwrsrmen: of $ fa,Ll?fD fra~a ldtilicies 7.f4% T.33~ gammment'mnp[oyecs. 4130x'47 to 9130,177. Suitability The performance quoted iremim represents past performance. This fvtnd is open to investrneat only bf truss for which SunTrust Bank serres as vusoeE a~ imestmeatt managar of gtialiFred retiremen[ plain w}edi adopt dte Demo of a cotlecdve.oust ra ThisFmedissuirable(orirrrestorswhoxxntthevaluegftheir A~regateReturns AverageAnceualTotalRetums Investmemttog%vzndvlnoarewilPngtaacaepcmore~latiliry Itaceptiaa, latest d 3 5 NO Equ~mns 46.Gro for thepassib3ryo?highermtums. Date Quarter YTD Year Year Year Year CashEqurvafent I.I; Fund 12+1145 1 -0.17;6 4.57°5 G7.43X 16.54:5 IS.x3Yo 11.71:5 Niusse11h1idcaptfndex ~ -0.3SpS 9',499; 17.87 17.34% 20.90 IDA3n xAs of September 30,?007 and subject to charbe. Post perjarrno»ce does natguarantee fuiare resuPCS.TNre perforrrtance data quoted represents past performance a»d current returns »raybe Nowerorfrigher. TotaP return f rgares incimde change i» trnPt price, rePmestment of dPridends a»d capPtai gat»s.TNre i»vestme»t return and pri»cNpaN vaiae wNPP fPuduate so that a» Nnvestar"s units, when redeemed; may Poe worth more ar Jess rha» the arigi»aN cast. ~~~r~% StanTrust Bank.Ment6er:F@IC.O SunYnxt Banks, lnc. ~"'T ~~~7 T~,j, Sundnutisafederallyregisoeredsar~vicemarkofSun7rusxBanks,lhc. rJ'il.J'lili. lJ d\'OT FOR FUBtf~C DISYR[BIJTKYtd ~ i.a ~ ~ • • • • IrrvestrnentTet•ms & Index Definitions. {U~dP 44f}]O V E53 ntpha ?.I b~ Price-to,9ook Ratio is used [o compare astodis maticea value UrvitValue 834.4$ Beta 0.44 coia~bookvatue.The.higherx1ceramo,[bebigherthepremiumthe Total FundAsseu 831,529,?4m R'-Squared $g,Og rtsrketiswillingtopayfoeawmpatayabareitt]eardassetz Sharpe Ratio 1.55 Price•to-Footings Ratig{"PIE"J is a ratvation tetra ofa Standard De~dadon 4,42 a company's curretta umc price w its per•upit earreiags. The higher Market Gxyixatixation lSblf} Slp.9(bj "ks of September 30, 2002 and subjec[ ca change. the PIE radothe moae tFe market is willing to pay fos radt dollar Price-ta-Book ?.8 d annurl earnings. Priceto-Earnings {I2 mo trzilirx} 1$.I Alpha meantmesa Fund's riskadjusced performanceand Return on Equity (f 2 ma traanR} 14.5 repreaenu the ditfference between a fund's actual performance. and its expected pericrmance,given is tevetaEris9casmeasured by beta. Beta is a means o! measuring the vdaaliry of a security or patfolioofsecvridesincomparisonwiththematketasawhale. A beta of I indicates that the secterity vrild more wide the market; greater than I indicates the[ it's more voladte than the markec.zrod d0%~ I less than 1 indicates that it`s less v~atile than the market 50t/ I ~ I C RSquared measurr3 the portion afa fwtd's marzmemt [hacis j ~ 'explained by movements tit the markecindexand helps indtrate 90Ne - °1-o i ~ - ' I the aoaracy oEa fund's alpha and beta.; 30%a e M j ~ _- a Sharpe Rctfo is a riskedjuned meazurc dtacis ralculaoed usirdg a _c o , I ~ ~ ~ a a standard ~eriation and excess rtturn m detmnine record per 20~G = _ -- - r _ b o - a . a _ _ unit of risk. The hider the 56arpe ratio,the becoer the Fund's 10"I - m - ~ e o ~ I historical risk•adjuswd perfonmarxe. 0/ - - ~ ~ f;""=~';"I ~~- ~ Standardl?eviaiionisasa¢sdcafmcuuremencoEdispeneon -IO,G I ahoucan average which depicts haxwidely rcarns varied avers -20;4 i I I certain period of rime ~ Russel! Midcap°lrrdex is art unmanaged capitalaation weighted a -30lr , , • _ ttiLO 2tIC I 20G ?00; 7,00- :Otte tOUC~ indexthacartcksperformanceofshesmalfesc800s~urides ¦ Collt~tiveTrust Units t:.;: Russell. Midcap'$ Index ~ az ranked 6y total rnarkeccaprcaliratiai, in the medium•siaed secvritiesur~ivetse.tnvescorscamotittves[direcdyinanindez. Past pet formar,ce does net guarantee future results, Imesttnent Concerns Mid rapdralimdon Funds itypicallycarry additiwrel risks sincesndltcr compamiesgenerally hexe ahigher risRoEfatlure. tafdeetive Funds are sponsored' and odmfnis[ered Pty Sun7rrust Bank as Trustee and managed by Trusco CapitaP Management, Pnc. (an investment adviser Stocks zre morevolaoTe and arcy mart risk and return potential registered wish the SECJ do accordance with the dotes of Georgia and appldcabde bo-nddng reguPations. They are open to dnvestment only Pry trusts for whdch tGtan otherfarms olonvestments.The value alibis fvndwile SunTrast Bonk serves os trustee or inrestment manager of gaafified retirement plans which adopt the terms of o codfedire trust These funds ore nor sabject Fluctuate as the value of thesearrities in the pordd"oo changes. to direct regulatdon by trite United States Securities and Exchange Cmmmissian and' are exempt from registration as securities. The Pdan and' dAeclaratdoa d'acuments which govern the land's operations are avaflobPe upon requestAudited firtann'ad statements are also auaid'able upon regiment !n formation wntadned herein sPrould not be relied upo-a for any ether purposes including separate account dnvestaaent adviser or registered Brad investment ~I~~PJ~(% advice.The informatfan ds bePieved to be accurate, but content accuracy cannot he ensured. Please contact your designated cempany representative for further do formation. M1{d FOR P418U{ DISTRIBUTSON CTMCE-0907 '10107 "i 1~ JJ ~ • ~ • ~ • ~~T~L Irrrf -_. -- - -J~_ ~ ~ ~ ~ ' AdYlS@C: Trusco CzFial hlanagemen[, Inc. , ~ , i POr'tf0110 IN3It3,gErS S1p.P1p 7empur-Pcdic International Inc. 1,-0~ Fnad B~enchrnark. • fames d? froirnr sss,lsp Immucor fmc. 1.3~ Consumer Discrndonary Ib.S3S C7-I3~ Portf~oma~gprsince2006 s~5•p7p ~---•---•-•-----------------'----.,_-...._._ MeridianBiastiencelnc. 13~ ConsumerSapfes 2.27°6 1-045~ 5la.oop _ . _ - _ ~ Psyrcniatric Solutions Inc. 1,2% Energy -0.18~ 6.3?~ • Christopher Guenther - - • - - - - - - • - - - - ~ - ParcfoGoma~er since 2007 Alexiom Pf>armaceutir°s Inc. 'I Financial Services 5.21 % 8--00~ SSA1p . . . . . . . Biab°7aren Phamsaccutical Cnc. !1.2`x Fteattb Care 22.53 20.745 • MichaelASansotr_rra AttrADIGCCS Inc. 1.25 Industrials 18.64 f 6.245 Pordc3iomass~ersince2007 s~,sa;sa a;spr~z s;3turo~ TransDigmGrcupdnc, l.l'S InfomrationTeclinolc,~r 23.665 22.9b5 sortoro; VJMS Industries I'nc. 7.1'5 Materials 5.7846 3.b95 ~b~2Ct{Y@ ¦k[ow[ n¢e rriih rrn.a:aem M i:ccme in0 opinf stns The Fund seckslong-tarn cap'rol appreciation hylnvesting in 'hNoadward Gc~remcr Ca 1.IX 'telecom Services I.01`~ I.S9~ 77~ aharp grop5 ossumts rn tvdtJ Fjpothrcrrl imrscmer, of $ f 0,07 fra~r the dornesmc caporadonswith a market ppitalizadan hetvreen I,![ilicies 0.00% OSO~ Fund'sincrfxipn date to 9f30fPT. $50 nu8ion oral $2 billiai.The Fund is desfgnedtocomplywids guidelines that are Isased prindpa7ty on Florida Pawsgaymning Fhe performance ~uotedhereirt reprnsents past performarn[c. the ircmsvrspnc aF mwmapal rcdrcment plans forTirc,police andgencralgovemment empCayee:. $tllt~lljltyr - Tfds. Fund is open to usvrstrnent only br macs for which SunYrusc i ~ Bank servesas mssrnc or irrvestmrna rnanagcr of qualified Aggregate Returns AveraReAnnvalTotal Returns ' EGuftces I P6-0~ rcdrernesnplanswheahadoptthetermsofamllectimuust Inception Latest I'. 3 Since Cass uivafents 0.05 Date Quarter YT~D Year Year Inception ~ ThesFundisstrira6leforirrrestorswhowxntthevalueoftheir Fund 10,2~O,r03 183;5 ~ 14.b35 , 19.975 13.44k, 13.00 irnesrmenestogaw,butdonoanucdcurrercincome. Russe1C2000AG:rowth9ndex ~ 002~ro 6 9,35% ~ 18,44~~ ) 19,9U~ 11=6'[~'~ i`+"s of September 30, 200f and subject to [hare. Post performance does n of guarantee future resufts.Tfre perforrrrance data quoted represents past per formance and cur~renx returns mray be dower or higher. 'FotaN return f gttres include change in unit price, reinvestment o f dividends and capita! gadrts.The investmettt return and principal value wldC fluctuate so [fiat on investor's units, when redeemed, traay Cse worth rnore or less tdiara the origdnaC cart. 'Return tram IOf20~V}3. ~~~~s SunTrustBank,Merit~erFDIC.flSunTnnt&tnks,lnc. ~~rT~r*, StsnTrustisafederally,regisceredseryicemarkoESanTrustBanks,Inc: ~ U 1 t~'OT FOR Pl1BiIC DISfH[BUfCON ~ ~ ~ ~ IrnrestmentTerms & lntfex Definitions CUSIP g5400548b A#~a• I.IS:S Pr7~e-to-Book Ratio is used co mmparc a stock's maiket value Uni['dalue Sdb.3& Beta 4.97 -.colts~xwkvalue.Theliiglier¢herat7o,aliefiighertlrepremiumthe 7otzlfundAssecs 58,185.770 R-Squared 54,52 rna*keclswillingtopayforammpanyaboveitslnndassecc Sharpe Ratio 0.7b Price-YO-Earnings Ratio ("p1E") isa rafuavon raua of a Standard Deviation 1,.45% company's currant unit price ~o its per-u~nt earrings; The higlicr Mzrkec Capita9iation {$63) 51.7,Ib1 t`As of'Sep[emher 30, 2407 and sub~ecc to Change- the,P1E rado,the more ;he market is willingto pay foie eaoh ddllar Prite•to•8oak 3„cj of annual earnings. Price•to-Earnings f l2 month trailing! 24.1 Afpho nuasurr; a !wad's riskadjus[ed pcrformaned and Return a1 Egaity {I2 month [railing! 19.0 cepresenu the d~Yerence becn~~n a fund's actuaE perforntatece 'and its~pe~-tedperformance.givenirsfeve[ofriskasmeasured trylseta Beta is a means of measuring the voladiry ofa security or - pordolioofsecurioesincomparisonwithth¢mar{teEasawhole - A beta of J indip[es riot rbe security wilt more wide the market , greaterthan I indicatesthaci['smoreJOladletleanthemarket.xnd SS°,. less than I indidtes chat ic'a less vaWtile [hen cte marks. i d5% i I - RSquared measurta the portion ofa dund's movement that is !explained by movements in the maedcedindex.and helps inStcace 35% j , ~ the acaaq o: a fund's alpha and beta- 25% ~ 1 ~ M Sharps 12atio is zrisk-adjured meawre thatiscalwlaced using t5%v r M r a - ,°-` ~ spndard deviation and exdess rewrn codetermine rrxard par ,r d T { Q = A umcofriskThehibfierdte~rarpentio,t1eebeuertheEund's S% _ ~ ~ I I j = - his[or+cal Rsk•adjusced performaxe. ~'-R -S% ~ I „-„„,,,,, Standard f]cnation is a setasdal measuremmc aEdispersion -f S% about an average, wfiich depicts hex witkly rcturna vaned over a -ZS! ~ ~ certain pernod ~dme. I Russell 200A' GmwU[ Jndex is composed of the sewrsdes found. -35°I' y::+;; ~ ;ti:'.:irw i't'{ ,+-vs( , 2DOa a00~ 'J.005 + a'Dlli; in the Russe117A401ndezwithagreaur-tEran-av2rzgegrow[h: ¦ CommonTrust fund " Russell 2UDD` Grmn•ch Index oriesetadon.Companies in this index Send to exh~it highee- praco-to-book and ptice•to~earnings rados.fnv~cors camrot irrvesc Post performance does not guarantee future results. direuty in an index. Irnrestment Concerns Small capiali:ation funds xypicaRy carry additional risks since smaller companies ge~errlly have a higher risk offafWre. Collective Funds are sponsored' sad administered by SunTrust Sank. as Trustee artd managed by Fresco Capitol Ndartagement, Inc. (an investment adviser Equity securities {stocks};are more volatile and carrymorerisk registered with the SECJ in accordar[ce with the laws o f Georgia artd applicable 6anlting regulations, They are open to investment only b'y tnrsts for which' dun other kxms ofinresmaencs.includingitrrestments in fiigh SunTrust Bonk serves as trustee or investment manager of Qvafified retirement pions wbith adopt the terms of a cadfectire trust, 'these funds are eat svlaject grade fated income securiries.The tnie~alueper unit of this fund to direct regulation by the United Slates Securities and Exchange Commission and are exempt from mgistratioa as securities. The Plan and IDeclarairon will fiucaace as the value of chesecurities in the pordoliochanges. documents which gouerrt the fartd's operations are ava'rfabfe upon request.Audited' ~ii[anciol statements are also avaiiabie upon regvestr ~~'(fff/~~ In formation contained herein should not be retied upon for say other purposes including separate account investment adxfser or registered fund investment ~I~tUI advice.Tlse in formatfan is believed to 6•e accurate, brr[ cot[tenr accuracy cannot be ensvned. Alease contact your designaaed companyrepresentatfve for further in forrttation. ~[J~'1~~ST GTR-SCE-0907 h'DT fS4R PUBLIC DISTitfBUT1fl, 7 - j t7i07 - ,ate . _ . ~.C+liser: 7rusco Caprrxl t'aslagemanclnc. - ryG;l'foiio Niana~ers i,0.t~:d SIg.i14 United5tatesTmzsNrs 16.b'g • P¢rryTrecsi J - United StatesTrets Nts 6.2n Porcfclio rrcutagersince 2009 4;15,pp - United 5ta[esTn~s Bds b.l"; Portfolio mandg.ersince 3007 - - - United Sta[esTreas Nts 5:8°a' s l p,0:4 United StatesTreas Nts 5.7~ bj eccr.~e Th~c Fund seeks to provide cosat rewms 6y irtmsongin a dirersificd United $tatesTres Ncs 5.3% partfolro ar fixed incoltse saur;des issued b~ US. companies, The ss•oa Fund only imreSCS inassetsaudtori.ed by die leas of Florida for United $tatesTreas. Nrs S.I w Rrefighters P¢nsions and Murx:iptsl Police Pensions. sa G5 Ccnspany 2.5 41YA~kP ~413p1U? 413CPOT United Stat¢s7reas 1Vcs 22p St.it ~ilii:y This Fvnd is open to onvesanencanly by [rasa ferwhich SunTrusc J.:ccum nlue Milh «imesunent o3 ixame an8 appal gaim CCIMT 19!k8-2fs 2.1"'m Bank senes as tmscee ar fmvestmenc manager of quzlified 7fJe obtrr gro~ih cssmnres on irtciaf bjpodaerical irmxmcat of 5!'0,000 f;•a•m re5rnmenc plzrs w9licil. adopt rise terms of a collative [ruse 4F30i 17 to ~,+30,4^7. This. Fund is suita5le for imrestors who Nznt w receive incanc Tile per(ormence quoted herein reprerems past performaJrce.. from theirinvestment.as well as an incr~se in the •ratae of:he pot•LFalio~ CoJnpasitiolt''' A re to Returnrs Avers eAnnualTotal Returns ffg Sa S 0•I 3.4~ Seucr of \et Assets',: Ineeptiom latesk p 3 S 10 4.5 G33~ Daee Qttarker YTD Year Year Year Year 5.10 217 Gd+ Eq.:nk rs 02?X Fund i12416~ 3.3Fm 4.25% 5.23:G 3.7bFo 3:72.~ d.Ofi°.5. II-20 II.S^3. Merrill Lynch GavemmentJCredit A-Raied~ Itsdex ^a.2D:5 4:22 n 52l°S 3.i Y:`. 3.30 5:5b"n' L1S.Buary53~:x n~:s s.:s~c 'BAs of September 317, 21701 and subject ca chagge. A•rera3e Col.Pon 9.41 3.23X. Yie9d-to-Maturity 4.82 Fast performance does not guarantee future results The performance data quoted represents past perfonrtante and current Duraticn S.flOYrars c~urut~ - - _ returns may Ire lower or higher data! return figures include cltarrge In unit orrice, reinaestrnent a f dividends and ca~aital gafns. Weighted Flverage lyaturoty 8.41 Years - - The investment return and principal volue we!! fluctuate sa that an fnrestors snits, when redeemed, may be worth more orless A,rer,.g¢ Credit Radng AGY than the original cost. Credit Qcaii.tf (5o of Pcrtfofioj c,:nwK~aas3x ,Nr.ts.Jax ra vs:X R 6.83X US.rrnzry , Irewnera 53:SX ptK,,yIJaUX ~I~~r1~//// SunTruttBank,i`lentSerFDIC.~klnTrusaBanks-Inc. +T ~ra.~'~'t~TT~GT $unTrust is a federally registered ses-.z,e mark of S.snTrust Btmks, Inc. ~J'~j~ ,j, ill a71 NOi FOR Pi161K DISTRIBUTFC,V - _ -: ° s ~ _ - Irti~restment Concerns CIRRI _ _ ' P 9FC~G 11265 Bonds otTera refatieelysable Iota of income.although bond prfces UnitValue S35.bB will ftucwate prodding the peteratial For principal gain ar loss. Total Fund Assets 5120,b25:23~ lncerntediace-term, I>;gher-qualiq bands generally offer Icss ris'R dtan larger-mrm bonds and a lower race a° rrurn The Fund is subject co the risk drat principal v~ue reacts in opposition co the maremencofinterest races an3 that a rising _ _ _ _ _ interest ram environment increases dre ris:~of loss of principal. Index !i2linl$IOn S • Merrill lynch GervernmeatlCredii A-Ra#ed+ fadex is a [5% ` ~ e ~ ~ I widely recognized composite made up of the MerrilE Lynch US. a _ .'~-~ m o n -_ _ ~ ! Gamrnmenc Index and the Mercilf Lynch U.S.Credic Indrx.which -o a r. - - - - [Of -,°' - -'~ b indudeUS.governmencTtrasuryandagencysecuri¢es.azHwal I G ry - - ---- ~ as higEr grade corporate bonds. Investors cannot invest directly ~ e ~ ~ ~ ~ ~ ~ ~ in an index. .w o 5% ~ i .p a o. ~ _ OJ ,I - - I ~ ~I Sl 'I'~ai" p7t i x'~5- ~(ori{F 1iDV?: ;anCii` 711Q 1af04~ 7:61G5 ;GVO~Ea Collective Invesyrrnnc Trust ; I`;errill Lytrh Garemmenu'Credit R-itated+ Index. Aast performance does not guarantee fro#ure results. ColVective Funds are sponsored' and administered flay 5un7rusi Sank ar'Irus#ee artd manoged by Trusco Capi#aP N9anagenaent, Vac. (an Fnves#rreent adviser regis#ered witVe the SPCJ in accordance vri#h the Yaws o f Georgia and gpp[icabde fwnJung regulations. iTtey are open to dnvestment only by Erusts far whdch SunTrust Bank serves os trustee or Vnvestme?ri manager of qualified retirement pions whi[Vr adopt the terms of a mddective trust Tfrese funds are not subject to drrect regaia#Von by #dre United States Securities and Extbange Commission and are exempt from registration as securities. The Pdan and l?eclara#ion documents w'hrch gaverrr the fund's operations are available upon request llud+ted fiiranriod statements are also avaiJabfe upon reques#. ~jf/~~/~ lnformatran contained herein sVeovld nor be relied upon for any other purposes including sepam#e account investment advisor or regis#ered fund investment ~I~~U~f/%~ adwce.Thc rn formation is believed #o be accurate, but conten# accuracy cannot be ensured. ~ {7'~ ?lease con#act your designated company representative ,far further in formation, ~~l'"19 11'C.~~T ti~ FOS PUBLiC DI56iIl'B'UL[011 CTR-FiG8-0907 t010i '~Jt_L -. ~'- w:~ -~ -- - . ~ : ~.°r _ Fund Attribution Summary -Appreciated more than 15% -. -. SunT"rust Retirement High Grade,Growth Fund SunTrust Retirement Mid Cap, Equity Fund NO SECURITIES APPRECIATED MORE THAN 15% COPART INC COM $ 260,832.60 $ 347,339.00 17.12 NOBLE ENERGY INC COM $ 457,312.91 $ 533,214.52 16.6 'SunTrust RetiremenfHi h Grade Relative Value Fund FMC CORP COM NEW $ 374,490.00 $ 432,910.44 15.83 NO SECURITIES APPRECIATED MORE THAN 15% ';SunTrust RetiremenfSmall Cap Equity Fund COMTECH TELECOMMUNICATION $ 51,072.00 $ 66,862.50 25.41 TEMPUR-PEDIC INTL INC COM $ 92,480.00 $ 114,400.00 23.6 NETLOGIC MICROSYSTEMS INC $ 52,794.00 $ 66,803.50 22.83 MGI PHARMA INC COM $ 57,746.50 $ 69,450..00 18.08 BANKRATE INC COM $ 43, 043.00 $ 46,120.00 18.05 MERIDIAN BIOSCIENCE INC C $ 101,910.00 $ 106,120.00 17.44 OMNICELL INC COM $ 70,802.62 $ 75,631.00 16.04 BIOMARIN PHARMACEUTICAL I $ 91,290.00 $ 100,845.00 15.85 TERRAINDS INC COM $ 61,029.50 $ 92,217.00 15.76 SunTrust Retiiement'High Grade Equity Income Fund APACHE CORP COM $ 232,140.00 $ 229,653.00 15.91 SunTrust Retirement'Hi h Grade Bond Fund NO SECURITIES APPRECIATED MORE THAN 15% SunTrust Retilrement'High :Grade Intermediate Bond Fund NO SECURITIES APPRECIATED MORE THAN 15% Please refer to Appendix for full disclosure. For the period ending September 30, 2007. - - ,,;1, y --~ . -- ~ ~ r Fund Attribution Summary -Depreciated more than 15% SunTrust Retirement Hi h'Grade Growth Fund SunLrust Retirement Small Ca Equi Fund LUCENT TECHNOLOGIES INC W $ 75.60 $ 25.20 -66.67 J CREW GROUP INC COM $ 34,368.90 $ 28,635.00 -16.68 ARRIS GROUP INC COM $ 56,545.50 $ 47,238.75 -18.64 UR rUS ' e Iremen ; 1 ra e; UI nCOmea Un HEIDRICK & STRUGGLES INTL $ 56,220.00 $ 43,740.00 -22.20 KORN/FERRY INTL INC COM N $ 46,641.00 $ 34,671.00 -25.77 HOME DEPOT INC COM $ 120,676.50 $ 105,430.00 -15.23 MCCORMICK & SCHMICKS SEAF $ 53,000.00 $ 38,601.50 -28.94 un rus a Irement I ra e e atlve a ue un LENNAR CORP CL A COM $ 160,799.76 $ 110,146.95 -18.26 CIRCUIT CITY STORES INC C $ 205,272.96 $ 127,588.30 -25.85 un ;rus : e Iremen I ap ul un LENNAR CORP CL A COM $ 199,049..07 $ - -16.80 un rus a Iremen ; I ra a on un NO SECURITIES DEPRECIATED MORE THAN 15% un rust a Iremen I ra a nterme ~a a on un NO SECURITIES DEPRECIATED MORE THAN 15% Please refer to Appendix for full disclosure. For the period ending September 30, 2007. - . 4 . r , Corporate Governance ® What is a GovernanceMetrics International (GMI) rating? • GMI uses a rating system designed to assist institutional investors in evaluating the quality of a company's corporate governance and the impact that governance practices may have on performance. GMI uses a 400 metric set of objective and consistently applied criteria to each of the companies rated. ? What companies are covered in the GMI database? • The database features corporate governance ratings on more than 4,000 companies globally. ? How are GMI ratings determined? • Ratings are calculated on the basis of six core categories: > Board of Directors > Financial Disclosure > Shareholder Rights > Anti-takeover provisions > Executive and director compensation > Corporate Behavior -includes regulatory, environmental, labor and sourcing problems and policies • All GMI ratings for Trusco are expressed on a relative basis compared to all companies in GMI's Global Universe. A stock or bond's rating of 1 is lowest, 10 is highest and 6.5 is average. > Well Below Average =GMI rating of <=3.0 > Below Average =GMI rating of 3.50 - 5.50 > Average =GMI rating of 6.0 - 7.0 > Well Above Average =GMI rating of 7.5 - 9.5 > GMI's Highest Rating =GMI rating of 10.0 Please refer to Appendix for full disclosure. Period Ending September 30, 2007 tiµ --- - - ~ _ -;~ ~ . - - -~_ High Grade Fund's Corporate Governance Ratings 17.1 % 13.1% 38.1% 7.1 % 5.7% 8.3% 78.6 n2% sa.e % Average Score 8.0 Average Score 8.4 Average Score 8.3 5.6 % 27.9 1.2 61.1 % 33.3 GM I's Highest Rating (10.0) 70.9% ¦ Well Above Average (7.5-9.5) Average (6.0-7.0) Average Score 6.9 Average Score 7.8 Below Average (3.5-5.5) ~ , ~ _ : ~ ~ ~ , ~ _ : ~ 8.3 % 3.6 Well Below Average (r-3.0) 13.9% 16.4 80.0 77.8 Average Score 8.6 Average Score 8.7 Please refer to Appendix for full disclosure. Period Ending September 30, 2007 3 _ ~ ~ may:`' _ I a . ~ T~ i i t I IT~I. ~ s Blake Myfion t - _ ? 1 ~T Investment Manager February 14, 2007 Jane Lerner Village of North Palm Beach 501 U.S. Highway 1 North Palm Beach, FL 33408 ®ear 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 /~Ir~S~° I hereby a nowledge that the Investment Policy Statement dated May 10, 2005 rema'ns in effect. Dated this ~~y~~day of February 2007. 300 South Orange Avenue, Suite 1600, Orlando, FL 32801 Phone: 407-237-5816; Fax: 407-237-4726; E-mail: Blake.Myton@truscocapital.com EXHIBIT A VILLAGE OF NORTH PALM BEACI~ 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 to: 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 TnTStees 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 j. 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 fund 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 services, except that 10% of the fixed income portfolio may be invested in securities not meeting this restriction. Investment in atly 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 connlungled funds must meet the criteria outlined above. 5. CASH EQUIVALENT INVESTMENTS: There is no minimum or maximum amount of Fund assets which may be 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 including obligations of the United States or any agency thereof which are firlly 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 bonds, precious metals, private placements, short sales, purchases on margin, real estate and partnerships are prohibited. B. 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. ftmd 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 Govenlment/Corporate Bond Index. It should be a secondary goal of the investment manager(s) that the fixed income portfolio returns over any rolling tlu-ee-year period rank in the Top 40% of a representative universe of similarly managed bond portfolios. y ' .f 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 (25%) 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 Tilistees 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 Tnlstees shall be notified. P iG~:fi~ ~ Chair an, Board of Trustees Village of North Palm Beach General Employees' Pension Plan Date e -~~ ~ Trt~c~~ Capital Manag~ient • ~ 4~ - I ~i - Date Important Disclosure Information INVESTMENT PERFORMANCE Past performance is not indicative of future results. Performance data related to accounts managed by Trusco represents returns gross of investment management fees, unless otherwise stated as net-of-fees. See Trusco's Form ADV, Part II for a description of investment advisory fees. The performance information reported herein may be for a variety of products which have different methods of presenting performance data, i.e. net of fees, gross of fees, or a combination of these. This information should not be evaluated independent of or without reference to the investment advisory agreement that more specifically addresses applicable investment advisory fees. Fees have a compounding effect on cumulative results. For example, assume the account achieves a 10% annual return prior to the deduction of fees each year for a period of ten years. If an annual fee of 0.5% of assets under management were charged each of the ten years, the resulting annual average return net of fees would be reduced to 9.48%. YIELD INFORMATION Yield information more closely reflects the current earnings of the Fund than the total return. In the absence of current fee waivers the yield would be reduced. A SEC Yield relates aggregate net earnings of a fund to its aggregate net assets. In any given period a fund may distribute more or less than its actual income. SECTOR WEIGHTINGS AND PORTFOLIO CHARACTERISTICS The sector weightings and portfolio characteristics are presented as of the date shown in the left-hand corner of this presentation, and may change without notice. A complete list of sector weightings and individual security positions for any specific period are available upon request. ECONOMIC AND MARKET REVIEW This perspective was prepared for clients and prospective clients of Trusco Capital Management, Inc. Neither Trusco nor any affiliations make any representation or warranties as to the accuracy or merit of this analysis for individual use. Comments and projections are based on information available at the time of writing and believed to be accurate, are for informational purposes only, and may not be relied upon for future investing. Investors are advised to consult with their investment professional about their specific circumstances before making any investment decisions. COMMON AND COLLECTIVE FUNDS Are operated by SunTrust Bank as Trustee and managed by Trusco Capital Management, in accordance with the laws of Georgia and applicable banking regulations. They open to investment only by trusts for which SunTrust Bank serves as trustee or qualified retirement plans which adopt the terms of a collective trust. They are not subject to direct regulation by the United States Securities and Exchange Commission and are exempt from registration as securities. The Plan and Declaration documents which govern their operations are available upon request. The sheets should not be used by anyone who is a registered rep absent approval from the compliance office of the broker through whom they are registered. Recent experience suggests that such approval is unlikely. - - - _ , _y - -I~ ~ ~ ~ ~~n .e . • - - • - • ~~J~~rrr ~ ~j,