HomeMy WebLinkAboutPacket - 4/9/2019 - Police Pension Board y
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POLICE PENSION BOARD OF TRUSTEES
Tuesday,April 9, 2019
2:30 PM
Municipal Center-333 South Green Street
Aldermen's Conference Room
AGENDA
1. Call to Order
2. Roll Call
3. Public Input(5-minutes)
4. Meeting Minutes:
a) Motion to approve the January 8, 2019 meeting minutes.
5. Report of Investments and Accounts:
a) Motion to approve Treasurer Report
b) Fixed Assets Investment Report
c) Equities Investment Report
d) Semi-annual review of Police Pension Fund Investment Policy
6. Unfished Business:
a) Motion to approve payment of bills
7. New Business:
a) Elections
8. Additional Items for Discussion
9. Motion to Adjourn
Next Scheduled Meeting:July 9, 2019
Police Pension Checks to Approve —
Date Vendor Description Amount
3/18/2019 Capital Gains _ 2/1/19-4/30/19 Services 5,126.00
3/4/2019 Marsh USA Bonds-Foerster, Fisher 180.00
2/15/2019 Bankcard Processing Center W2mate Software for 1099's 68.96
2/4/2019 Puchalski Goodloe Marzullo Klechak 1,024.64-
1/21/2019 Lauterbach&Amen, LLP Actuarial Report 4,750.00
1/18/2019 Pershing LLC, FBO Fremont Peter Nester IV Pension Refund 28,460.40
1/18/2019 Pershing LLC, FBO Fremont Peter Nester IV Pension Refund 20,100.23
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CITY OF MCHENRY
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POLICE PENSION FUND
INVESTMENT POLICY
Adopted July 13, 1999
Revised:
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3/13/2001
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1/8/2013
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10/8/2013
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1/12/2016
10/11/2016
CITY OF MCHENRY POLICE PENSION FUND
INVESTMENT POLICY
PURPOSE
The investment of pension funds is the responsibility of the members of the Board of Trustees
(Pension Board) of the McHenry Police Pension Fund (Fund). The purpose of this investment
policy is to indicate a conscious, formal effort by the Pension Board to develop, implement and
monitor the investment of pension funds. It shall be considered an important means to
communicate the Pension Board's policy views on management of pension funds to the public,
participants, and beneficiaries of the Fund.
SCOPE
Th
is policy governs investm
entpr
actices and applies to all financial transactions of the McHenry
Police Pension Fund.
OBJECTIVES
The Pension Board has a fiduciary responsibility to discharge their duties with respect to the
Pension Fund solely in the interest of the participants and beneficiaries as set forth in the Illinois
Pension Code at 40 ILCS 5/1-109.
• Safety: Safety of principal is the foremost objective of the McHenry Police Pension Fund.
Each investment transaction shall seek to first ensure that large capital losses are js
avoided whether they are from securities, defaults or erosion of market value.
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• Return on Investments: The Pension Board seeks to attain or exceed market rates of
return on its investments consistent with constraints imposed by its safety objectives,
cash flow considerations and Illinois Laws that restrict the placement of public funds.
• Maintenance of Public Trust: All participants in the investment process shall seek to
act responsibly as custodians of pension funds. Investment officials shall avoid any
transactions that might reasonably impair Fund participant's confidence in the Pension
Board's ability to manage the Fund.
• Liquidity: The assets shall be sufficiently liquid to meet the Fund's disbursement
requirements for the payment of operating expenses and benefits.
RESPONSIBILITY
Management of the investment program is the responsibility of the McHenry Police
Pension Fund Board of Trustees. No person may engage in an investment transaction except as
provided under terms of this policy established by the Pension Board.
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The Pension Board may appoint an investment manager (as defined in 40 ILCS 5/1-101.4) to
assist in the management of the investment program. The investment manager shall
acknowledge, in writing, that they are a fiduciary with respect to the McHenry Police Pension
Fund. Any such written agreement shall be attached to this policy.
The Pension Board will meet with the investment manager quarterly to review market
conditions and to determine investment strategy. The Treasurer of the City of McHenry
(Treasurer) is responsible for ensuring all investment transactions undertaken are
consistent with the Fund's investment strategy.
The Board shall file a copy of this Policy with the Illinois Department of Insurance within 30
days after its adoption, per 40 ILCS 5/1-113.6. A copy of this Policy shall be made available
to the public at the main administrative office by the Fund, per 30 ILCS 235/2.5(b).
PRUDENCE
The standard of prudence to be used by investment officials shall be the "prudent person" and
shall be applied in the context of managing the portfolio. Investments shall be made with care,
skill, prudence and diligence that a prudent person acting in like capacity and familiar with such
matters would use in the conduct of an enterprise of like character with like aims.
PROHIBITED TRANSACTIONS
A Fiduciary with respect to the Fund shall not:
• Deal with the assets of the Fund in their own interests or for their own account.
• In their individual or other capacity act in any transaction involving the Fund on behalf
of a party whose interests are adverse to the interests of the Fund or the interests of
its
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participants ants or beneficiaries.
• Receive any consideration for their own personal account from any party dealing with the
Fund in connection with a transaction involving the assets of the Fund.
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INVESTMENT INSTRUMENTS j
The Pension Fund may invest in any type of security allowed for in Police Pension Statutes 40
ILCS 5/1 — 113. Approved investments include:
1) Bonds, notes, certificates of indebtedness, treasury strips, treasury bills, or other
securities, including obligations of the Government National Mortgage Association,
which are guaranteed as to principal and interest by the full faith and credit of the
government of the United States of America or its agencies.
2) Agencies include Federal Housing Administration (FHA), Government National
Mortgage Association (GNMA), Public Housing Boards (HUD), Farmers Home
Administration, General Services Administration (GSA), Maritime Administration,
Small Business Administration (SBA), Tennessee Valley Authority (TVA), Washington
Metropolitan Area Transit Authority, Federal Land Bank, Federal Intermediate Credit
Banks, Banks for Cooperatives, Federal Farm Credit Banks, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage
Association, Student Loan Marketing Association (Sallie Mae) and any other agency
created by Act of Congress.
3) Interest-bearing savings accounts, interest-bearing certificates of deposit or interest-
bearing time deposits or any other investment constituting direct obligations of any
institution that is insured by the Federal Deposit Insurance Corporation or insured
accounts at credit unions chartered in the state of Illinois or federally chartered provided
its principal office is located in Illinois.
4) Illinois Funds (formerly IPTIP)
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(2)
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5) Municipal bond and tax anticipation warrants issued by any city, county, township,
village, incorporated town, municipal corporation or school district in Illinois and
Illinois Municipal Certificates of Accrual (M-Cats) or tax exempt securities.
6 Guaran
teed Investment Contracts (GI Cs)s) valued at purchase price (not mark
et value) not
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to exceed 10/o of the total aggregate book value of the portfolio.
7) Separate accounts of a life insurance company authorized to do business in Illinois,
comprised of; common or preferred stocks, bonds or money market instruments; real F;
estate or loans upon real estate secured by first or second mortgages. The total
investment in such separate accounts shall not exceed 10% of the aggregate book value
of all investments owned by the fund.
8) State of Israel Variable Rate Issue Bonds and Prime Rate State of Israel Notes, limited
to 5% of the book value of the pension fund. The fund must have at least $5 million of
net present assets to invest in these funds.
9) Corporate bonds which meet the following requirements:
a) Rated as investment grade by one of the two largest credit rating services —
Standard & Poor's and Moody's Investors Service - at the time of purchase.
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b) If securities are downgraded by both Standard & Poor's and Moody's Investors
Service, subsequent to purchase, below investment grade, they must be liquidated
within 90 days of the downgrade.
If the Fund has assets in excess of$2,500,000, it may invest up to 45% of its total assets in
the following items:
1) Separate accounts that are managed by life insurance companies authorized to transact
business in Illinois and are comprised of diversified portfolios consisting of common or
preferred stocks, bonds or money market instruments.
2) Mutual funds that meet the following requirements:
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a) The mutual fund is managed by an investment company as defined and registered
under the federal Investment Company Act of 1940 and registered under the
Illinois Securities Law of 1953. r
b) The mutual fund has been in operation for at least 5 years.
c) The mutual fund has total net assets of$250 million or more.
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d) The mutual fund is comprised of diversified portfolios of common or preferred
stocks, bonds, or money market instruments.
If the Fund has assets in excess of $5,000,000 and has appointed an investment advisor
under section 1-113.5, it may, through that investment advisor, invest up to 45% of the
aggregate market value of the total portfolio in domestic common and preferred stocks,
provided;
(3)
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1) The common stocks are listed on a national securities exchange or board of trade as
defined in the federal Securities Exchange Act of 1934 and set forth in Illinois Securities
2) Law of 1953 or quoted in the National Association of Securities Dealers Automated
Quotation System, National Market System (NASDAQ NMS)
3) The securities of a corporation created or existing under the laws of the United States or
any state, district, or territory thereof and the corporation has been in existence for at
least 5 years.
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4) The corporation has not been in arrears on payment of dividends on its preferred stock
during the past 5 years
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5) The market value of stock in any one corporation does not exceed 5% of the cash and b
invested assets of the pension fund, and the investments in the stock of any one
corporation do not exceed 5% of the total outstanding stock of that corporation.
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6) The straight preferred stocks or convertible preferred stocks are issued or guaranteed by
a corporation whose common stock qualifies for investment by the Board.
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7) The issuer of the stocks has been subject to the requirements of Section 12 of the federal
Securities Exchange Act of 1934 and has been current with the filing requirements of
Sections 13 and 14 of that Act during the preceding 3 years.
8) The Fund's total investment in the items authorized in section 5/1-113.3 and 5/1-113.4, r
shall not exceed 45% of the market value of the pension fund's net present assets stated
in its most recent annual report on file with the Illinois Department of Insurance.
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If the Fund has net assets of at least $10,000,000 and has appointed an investment adviser,
as defined under Sections 1-101.4 and 1-113.5, it may, through that investment adviser,
invest an additional portion of its assets in common and
p preferred stocks and mutual
funds.
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The stocks must meet all of the following requirements:
1) The common stocks must be listed on a national securities exchange or board of trade ''
(as defined in the Federal Securities Exchange Act of 1934 and set forth in paragraph G
of Section 3 of the Illinois Securities Law of 1953) or quoted in the National Association
of Securities Dealers Automated Quotation System National Market System.
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2) The securities must be of a corporation in existence for at least 5 years.
3) The market value of stock in any one corporation may not exceed 5% of the cash and
invested assets of the pension fund, and the investments in the stock of any one
corporation may not exceed 5% of the total outstanding stock of that corporation.
4) The straight preferred stocks or convertible preferred stocks must be issued or
guaranteed by a corporation whose common stock qualifies for investment by the board.
The mutual funds must meet the following requirements:
1) The mutual fund must be managed by an investment company registered under the
Federal Investment Company Act of 1940 and registered under the Illinois Securities
Law of 1953.
(4)
2) The mutual fund must have been in operation for at least 5 years.
3) The mutual fund must have total net assets of$250,000,000 or more.
4) The mutual fund must be comprised of a diversified portfolio of common or preferred
stocks, bonds, or money market instruments.
ASSET ALLOCATION
The Pension Funds total equity investment in the items authorized under this Section and Section 1-113.3
shall not exceed 65%of the market value of the Pension Fund's net present asset valuation, at fiscal year- r;
end(April 30th). The recommended percentages of each asset class are listed below.
Asset Class Minimum Maximum
Equities 40% 65%
Fixed Income 20% 59%
Cash/Cash Equivalents I % 30%
1) Other permitted investments as approved by the Pension Board from time to time.
The Board of Trustees may register the investments of the Fund in the name of the Pension
Fund, in the nominee name of a bank or a trust company authorized to conduct trust business in
Illinois, or in the nominee name of the Illinois Public Treasure's Investment Pool.
CONTROLS
The Fund maintains its books and records in conformance with generally accepted accounting
principles. The internal controls shall be reviewed by the Pension Board and an
independent auditor. The controls shall be designed to prevent losses of public funds
arising from fraud, employee error, misrepresentation by third parties, unanticipated changes in
financial markets of imprudent action by employees and officers of the Pension Board.
The Treasurer is named an authorized signature on all Fund accounts. All Fund disbursements
shall be authorized by the Pension board and be executed by two (2) signatures. One of the
signatures shall be the Treasurer and the other shall be a Trustee authorized by the Pension
Board.
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DIVERSIFICATION/STRATEGY
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Fixed Income: C
1) The average maturity/duration of the portfolio will be managed based upon the current
existing interest rate environment.
Equities:
2) Shall be maintained in accordance with the guidelines of Illinois State
Statutes.
COLLATERALIZATION .
It is the policy of the Fund to require that all deposits in excess of FDIC insurable limits
(applies to bank Certificates of Deposit) be secured by collateral in order to protect r..
deposits from default.
1) Eligible collateral instruments and collateral rations (market value divided by deposit) are as
follows:
(5)
a) U.S. Government Securities
b) Obligations of Federal Agencies
c) Obligations of the State of Illinois
d) Local and Municipal Bonds rated "A" or better by Moody's
The ratio of fair market value of collateral to the amount of funds secured shall be reviewed
at least quarterly and additional collateral shall be requested when the ratio declines
below the level required.
2) Safekeeping of collateral:
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a) Third party safekeeping is required for all collateral. To accomplish this, the
securities can be held at the following locations:
i. A Federal Reserve Bank of branch office.
ii. At another custodial facility-generally in a trust department
through book entry at the Federal Reserve, unless physical securities
are involved. If physical securities are involved, at a third party j
depository in a suitable vault and insured against loss by fire, theft, and
similar causes.
b) Safekeeping of collateral shall be documented by a written agreement
approved by the Treasurer. This may be in the form of a safekeeping
agreement, trust agreement, escrow agreement or custody agreement,
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c) Substitution or exchange of securities held in safekeeping as collateral may
occur without prior written notice to the Treasurer provided that the market �!
value of the replacement securities are equal to or greater than the market
value of the securities being replaced. The Treasurer shall be notified in
writing within two days of all substitutions.
CUSTODY AND SAFEKEEPING OF INVESTMENTS
1) Third party safekeeping is required for all securities owned by the Fund. To
accomplish this, the securities shall be held in a trust department through book-entry at
the Depository Trust Company.
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2) Safekeeping shall be documented by an approved written agreement. The
agreement may be in the form of a safekeeping agreement, trust agreement, escrow
agreement or custody agreement. Fees for this service shall be mutually agreed upon by
the Pension Board and the safekeeping bank.
ETHICS AND CONFLICTS OF INTEREST
Any fiduciary with respect to the Fund shall refrain from personal business activity that
could conflict with the proper execution of the investment program, or which could impair
their ability to make impartial investment decisions.
INDEMNIFICATION
Pension Board members, investment officers, and the Treasurer acting in accordance with this
Investment Policy and such written procedures as have been or may be established, in relation
thereto, and exercising due diligence, shall be relieved of personal liability for an Individual j
security's credit risk or market changes,
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(6)
REPORTING
On an annual basis, the Treasurer shall submit to the Pension Board an investment report
which shall describe the portfolio in terms of investment securities, maturity, cost, and earnings
for the current period and year to date. The Treasurer shall also submit a comprehensive
annual report on the investment program and activity.
MEETING SCHEDULE
The Board shall schedule quarterly meetings on the 2nd Tuesday of January, April, July and
October of each year. Special meetings may be called from time-to-time by the Police
Pension Fund President,
AUDIT j
The Police Pension Fund shall be audited annually by a certified public accountant in
conjunction with the City's audit. In addition, the Fund is subject to periodic examination
by the Illinois Department of Insurance.
DEFINITIONS:
Beneficiary. Person eligible for or receiving benefits from a pension fund.
Book Entry Security. Securities that can be transferred from institution to institution using
the federal electronic wire system, thus eliminating the physical transfer of certificates.
Records are maintained on a computer system at the Federal Reserve.
Collateral. The pledging of a security to guarantee performance of an obligation.
Commercial Paper. Unsecured promissory notes of corporations issued for 270 days or less.
Fiduciary. Person entrusted with the control of assets for the benefit of others.
Investment Manager. An individual or organization that provides investment
management services for a fee, either on a discretionary or nondiscretionary basis. Under
Illinois law, an investment manager is considered a fiduciary with respect to the Fund.
IPTIP (Illinois Public Treasurer's Investment). A short-term money market fund for public
funds in Illinois.
Market Value. The present price of a given security.
Return. The profit or interest as payment for investment.
Security. Any note, stock, bond, certificate of interest or certificate of deposit. F
Stagnate Account. Term used of variable annuities. Because the risk is borne by the k
investor in a variable annuity, the issuer may not commingle funds invested in the variable
annuity with the general funds of the issuer.
Treasury Bill. Short-term debt obligation of U.S. government which will mature within ten
years at the time of original issuance.
Treasury Bond. Longer debt obligations of U.S. government which will mature in ten
years or longer at the time of original issuance.
Yield. Percentage measured by taking annual interest from an investment and dividing by
current market value.
(7)
AMENDMENT
This policy may be amended from time to time by the Pension Board.
CONFLICT
In the event of any conflict between this Policy and the Illinois Compiled Statutes or case
decisions of the State of Illinois, the Statutes and case law decisions shall govern.
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(g)
Investment Policy
Signature Page
The undersigned have read and agree to follow the Investment Policy adopted by the Board of
Trustees of the City of McHenry Police Pension Fund on July 13, 1999, and last amended
October 11, 2016.
Name Officers Signature
Jeffrey Foerster President
Jon Meyer Vice-President— �-
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Kelly Ducak Secretary
Ormel Prust Appointed Trustee
Marc Fisher Elected Trustee
Name Investment Managers Signature
Gary Karshna Capital Gains, Inc
James Schmidt LPL Financial r '
Name Board Attorney Signature
Laura Goodloe Puchalski, Goodloe, 4a 14+1 C.H t
Marzullo LLP
Rev 10-11-2016MInvestPolicy
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Investment Policy
II
Signature Page
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The undersigned have read and agree to follow the Investment Policy adopted by the Board of k
Trustees of the City of McHenry Police Pension Fund on July 13, 1999, and last amended
October 11, 2016.
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Name Officers Signature
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Jeffrey Foerster President
Jon Meyer Vice-President
Kelly Ducak Secretary
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Ormel Prust Appointed Trustee
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Marc Fisher Elected Trustee
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Name Investment Managers Signature
Gary Karshna Capital Gains, Inc
James Schmidt LPL Financial
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Name Board Attorney Signature
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Laura Goodloe Puchalski, Goodloe,
Marzullo LLP
Rev 10-11-2016MInvestPolicy
° CITY OF MCHENRY POLICE PENSION FUND
LIST OF INVESTMENTS AT MARCH 31,2019
Capital Gains Start Date:12/5/2003
Difference Percent
Date Maturity Initial Rate of FMV at 3/31/2019 b
Description of Securities Cusip No. Acquired Date Investment Interest 3/31/2019 Initial Invest. Type
McHenry Bank&Trust Checking Acct 998 691.21 3.74%
IL Funds Money Market varies 270 234.71 1.01%
Corporate Bonds and Notes
Microsoft Corp 594918BR4 8/24/2016 8/8/2026 100605.00 2.400 96,949.00 3.656.00
9114/16;12/21/16;
Apple Inc 037833CD0 216117 8/4/2046 119 542.81 3.850 126 407.50 6,864.69
General Motors Finl 37045XAN6 8/17/2017 7/10/2019 102 617.00 3.500 100 185.00 2,432.00
Capital One Bank 14042E4A5 8/21/2017 9/5/2019 251,907.50 2.400 249,507.50 2.400.00
Citigroup Inc 172967KS9 11/19/2017 6/7/2019 149,952.00 2.050 149,823.00 129.00
Morgan Stanley MTN 61746BDR4 10/19/17;12/6/17 7/23/2019 185,786.80 2.375 184,763.20 (1,023.60)
General Motors Finl 37045XBP0 12/6/2017 10/4/2019 199.818.00 2.350 199,504.00 314.00
Gen Elec Cap CRP MTN 36962G4J0 12/26/2017 1/8/2020 175,530.30 5.500 168,578.85 6.951 A5
American Express MTN 0258MOEK1 1/5/2018 513/20191 199,474.00 1.875 200,000.00 526.00
Capital One NA 14042RBS9 2/8/2018 9/13/2019 247,855.75 1,850 248870.00 1,014.25
Se raEner 816851AZ2 6/5/2018 10/7/2019 98,207.00 1.625 99289.00 1,082.00
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Goldman Sachs Bank 38148PP84 6/7/2016 6/5/2020 199,954.00 3.200 201 236.00 1.282.00
Compass Bank 20451PKN5 7/27/2018 9/29/2019 249,210.00 2.750 249 762.50 552.50
CVS Caremark Corp126650CE8 7/27/18;11/23/18 8/12/2019 308.579.50 2.250 309.287.00 707.50
Constellation Brands 21036PAMO 7/3012018 11/15/2019 202 194.00 3.875 201 052.00 1 142.00
Goldman Sachs Group38148LAA4 8/6/2018 4/23/2020 198,436.00 2.600 199 432.00 996.00
First Tenn Bank 337158AF6 8/15/2018 12/1120191 249,835.00 2.950 249 827.50 7.50
Goldman Sachs GP MTN 38141EA58 8/30/2018 3/15/20201 140 828.00 5.375 139 168.80 (1,659.20)
American Express MTN 0258MOEE5 11f7/2018 3/3/20201 197,554.00 2.200 199,072.00 1,518.00
Gen Elec Ca Cr MTN 36962G4D3 1117/16;11/20/18 8f7/2019 305 184.47 6.000 302,856.00 2.328.47
Wells Faro Com MTN 94974BFU9 11/8/2018 4/22/2019 199 480.00 2.125 199 940.00 460.00
Fortune Brands Home 34964CA82 11/20/2018 6/15120201 124.043.75 3.000 125,136.25 1 092.50
Intl Lease Fin AIG 459745GH2 12/6/2018 5/15120191 202 602.18 6.250 200 732.00 1 870.18
Ford Motor Credit Co 345397WY5 12/18118;3/15/19 11/4/20191 397,036.00 2.597 398,840.00 1 804.00
General Motors 37045XBJ4 1/29/2019 5/9/20191 149,806.50 2.400 149,935.50 129.00
Ford Motor Credit Co 345397YE7 2/21/2019 1/9/20201 198 800.00 2.681 199146.00 346.00
Kinder Morgan Ener 494550BBI 2/21/2019 2/15/20201 103 702.00 6.850 103 215.00 487.00
Williams Partner WPZ 96950FAD6 2/21/2019 3/15/20201 102 395.00 5.250 102 122.00 273.00
Kraft Foods Grp Inc 50076QAU0 3/5/2019 2110/20201 204 322.00 5.375 204,080.00 242,00
Ford Motor Cred 345397VR1 3/13/2019 2/1/20211 412 544.00 5.750 411 936.00 608,00
Ford Motor Cred 345397YD9 3/14/2019 8112/20191 248 822.50 1.897 248 950.00 127.50
FordMolorCred 345397VM2 3/15/2019 1/15/2020 259605.00 8.125 259,105.00 500.00
6,486 230.06 6,478,708.60
7 521.46 24.23%
Muni BDS-Discount/Zero C n
Carol Stream IL Park 143735TT5 4/9/2018 11/1/2019 86,242.50 0.000 88,105.50 1,863.00
88 242.50 88 105.50 1,863.00 0.33%
Muni BDS-Fixed Taxable
LaSalle Cnty IL Sch 504588FSB 2/15/2018 12/1/2019 154 318.50 4.000 150,967.50 3.351.00
Moline IL 608557YJ7 3/28/2018 11/1/2019 149230.50 2.250 149194.50 36.00
Decatur IL Build 243127RF6 11/8/2018 12/15/20271 179 987.50 6,300 179,283.70 703.80)
Illinois St Build 452152FY2 1/4/2019 7/1/20191 202,274.00 5.500 201 148.00 1,126.00
685 810.50 680 593.70 (3.387.00) 2.55%
Other Foreign Corporate Bonds
Barrick Australia 06849UAC9 8/14/2018 1/15/2020 205,260.00 4.950 203,162.00 2,098.00
Barclays Bank MTN 06746XLX9 8/17/2018 8/17/2020 150,000.00 3.;1W 149,545.50 (454.50
Barclays Bank MTN 06747MDZ6 2/26/2019 2/26/2021 200,000.00 3.100 199,252.00 748,00
555 260.00 551,959.50 2,562.50) 2.06%
USAgencies
FHLB Deb 3130AA2K3 12/5/2016 11/26/2021 295,757.84 1.700 294,936.00 821.84
295 757.64 294 936.00 821.64 1.10°J,
CITY OF MCHENRY POLICE PENSION FUND
LIST OF INVESTMENTS AT MARCH 31,2019
Capital Gains Start Date:1215/2003
Difference Percent
Date Maturity Initial Rate of FMV at 3/31/2019 b
Description of Securties Cusip No. Ac wired Date Investment Interest 3/31/2019 Initial Invest. Type
USA encies-Disc/Zero C n
US Trees BD Strip 912834KP2 6/15/2016 8/15/2041 53,378.00 0.000 52,938.00 440.00
US Trees BD Strip 912833456 6117/2016 8/15/2031 73,842.00 0.000 72 558.00 1,284.00
US Trees BD Strip 912833LX6 7/6/2016 11/15/2025 86 868.00 0.000 85,432.00 (1,436.00)
US Trees BD Strip 9128335A4 7/6/2016 8/15/2035 68,236.00 0.000 64,213.00 4.023.00
US Treas BD Strip 912834PB8 7/21/2016 11/15/2044 60,807.60 0.000 57,117.60 3.690.00
US Trees BD Strip 912834AU2 10/14/2016 2/15/2039 71,730.00 0.000 72,198.75 468.75
US Trees BD Strip 912834MT2 9/14/2017 8/15/2043 70,713.60 0.000 74,334.00 3,620.40
US Trees BD Strip 912834MZ8 1/12/2016 11/15/2043 104,220.00 0.000 110,601.00 6,381.00
589 795.20 589 392.35 402.85 2.20%
US Treasury Bonds&Notes
1/21/15;11/18/15;
12/31/15;1/27116;
2/12/16;2/17/16;
3/7/16;4/15/16;
US Treasury BD 912810RJ9 5/24/161 5/31/16 11115120441 306,435.32 3.000 295 530.75 10.904.57
US Treasury NT 9128282A7 8/24/2016 8/15/2026 99,250.00 1.500 94 324.00 (4,926.00)
405 685.32 389 854.7b 10 904,57 1.46%
FIXED INCOME TRUST A/C 9,104 781.42 9,073,550.40 23 037.72 33.94%
SEPARATE ACCOUNTS
LPL Financial: 3.743 663.57
AMCAP Fund-A 11/9/2001
Small CAP World Fund-A 5/1/1998 2,782,910.26
Capital World Growth and Income 140543109 5/1/1998 3,531 502.67
Washington Mutuallnvestors-A 939330106 5/1/1998 5623,508.81
New World 712,875.91
0.00 18 394 461.22 0.00 61.32%
$ 9104 781.42 S 28 736 937.54 $ 23 037.72 100.00%
Property Tax Receipts as of 3131/19 2,017,300
Clity of McHenry Police Pension Fund
R lGains
INCONCORPPORATED
BOND MARKET UPDATE
Porvwo
Structure 4INWOThe fiscal year-to-date changes in the yield curve. 7%Corp T4kwWs
Bonds076% amp*
Seventy-five percent of your portfolio is invested in
corporate bonds, with the balance invested in a
diversified mix of US government&municipal bonds.
PERFORMANCE & STATISTICS
What caused the powerful rally in the bond market,
that took most people by surprise? It was the Statistical data for the eleven-month period from May
Federal Reserve announcement that it was done 1, 2018 through March 31,2019, are listed below:
raising interest rates (for the moment) which drove Returns Comparison.As of 3-31-19,FYTD
yields on intermediate term securities to levels we
have not seen since 2017. The Fed's announcement Barclays Blended Bond Benchmark 5.20%
forced two sets of traders - those who bought McHenry Police Bond Portfolio(BV-ROR) 2.26%
mortgage bonds and those who had bet markets McHenry Police Bond Portfolio(MV-ROR) 3.51%
would remain calm —to turn to derivative securities McHenry Police Statistics,As of 31/31/19
to tweak their portfolios to staunch their losses.
They bought intermediate-term and longer-term Portfolio Book Valuation $ 9,480,217
securities (3 to 10 year maturities), pushing interest Portfolio Market Valuation $ 9,412,785
rates down to levels we have not seen since 2017. McHenry Duration 2.4 Benchmark Duration 4.0
As mortgage rates fall, homeowners refinance, t, ;
causing payments on mortgage securities to escalate,
shortening the duration of a mortgage security ,
portfolio. This forces these investment managers,
to buy longer-term bonds, to maintain their
duration.
Your short duration bond portfolio is trailing the
Although bond yields have fallen across the board, Blended Barclays Bond Benchmark. However, we
the biggest moves were made in the intermediate- believe it is important to remain cautious, in the
term maturities, causing the yield curve to invert. current uncertain investment environment. Buying
Long-term yields have not rallied as much as longer-term bonds now would lock in low yield
intermediate-term securities. levels for many years to come.
If bond prices continue to move higher, we will sell Benchmark Returns,Past 15 Years
longer-term US STRIPS and capture profits.
However, if bond prices decline (and bond yields Barclays Intermediate Govt.Bond Index 2.92%
move higher), that will provide an opportunity to McHenry Police Market Value Return 3.16%
reacquire intermediate and longer-term US STRIPS SUMMARY
positions with significantly higher yields.
We will continue to look for securities which
PORTFOLIO STRUCTURE represent the best value in the fixed income market.
ssax 1laturttlss In this manner, we can maximize investment
Imle revenues'in a safe and responsible manner.
r 17% f% Ir
iwC ains
14, <a trr 1-e��"` air rn �°;Ya Gary Karshna Ca Investment Manager P
INCORPORATED
The majority of maturities in your bond portfolio are
concentrated in the short-end of the maturity spectrum.
r
G}try
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�^c.i`iC I+ �I'(�1�psA`�°"� R�lati�'e Last t; �'�t :�I �•1_�j �y ,. Curves &Relative Vatue �
Ploy Curves
Il it 1•lid 'r'�1•I
= Recant CU�t-es
�Ur, _� relittd to F:ELntT �.� ilbi2�;.
- BondSpread tc, Curs+e
Curt�e id 3f•1 1'r -.�, =Y 51` 11ti� 15Y 3i�Y
1 Gary Karshna
14 t tj ot oe L- c-r
Page of I
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' +"; . '_.;� * c '4,+ ��} Ct�nipare 9G} Actions - 9T} Edit - Fibonacci �etracements
4
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r<<en
tl ,..1. ., 1 _",;?._- >-t8:-1+ 1, S 1• EGT G"T--i r�i
• 11 /. 1 1 1 1 1 1/ i
Performance Detail by Asset Class
MCHENRY POLICE
Valuation Period: December 31, 2018-April 5, 2019
Prepared by: James Schmidt
Account Summary
LPL Sponsor Market Value($) Market Value($) 12/31/2018-to-4/5/2019
Loc Account Name Account# Account# Description on 12/31/2018 on 4/5/2019 Total%(IRR)
LPL MCHENRY POLICE 4423-5054 Brokerage-Retirement 14,603,477.12 16,722,253.98 14.51
Report Totals: $14,603,477.12 $16,722,253.98 14.51%
LG - Large Cap U.S. Growth Equity
Starting Capital Ending Return
Market Dividends Payments Market %
Loc Account# Security Description Value($) Inflows($) ($) ($) Interest($) Outflows($) Net Change($) Value($) (IRR)
LPL 4423-5054 AMCPX AMCAP CL A 3,322,144.21 0.00 0.00 0.00 0.00 0.00 503,679.93 3,825,824.13 15.16
Totals: 3,322,144.21 0.00 0.00 0.00 0.00 0.00 503,679.93 3,825,824.13 15.16
LV - Large Cap U.S. Value Equity
Starting Capital Ending Return
Market Dividends Payments Market %
Loc Account# Security Description Value($) Inflows($) ($) ($) Interest($) Outflows($) Net Change($) Value($) (IRR)
LPL 4423-5054 AWSHX WASHINGTON MUTUAL 5,095,898.95 25,119.76 25,119.76 0.00 0.00 (25,119.76) 633,525.72 5,729,424.66 12.43
INVESTORS CL A
Totals: 5,095,898.95 25,119.76 25,119.76 0.00 0.00 (25,119.76) 633,525.72 5,729,424.66 12.43
Performance Detail by Asset Class LPL Financial Generated 4/8/2019 12:18 PM
MCHENRY POLICE Member FINRA/SIPC Page 1 of 3
LGS - Large Capitalization Global Stock
Starting Capital Ending Return
Market Dividends Payments Market %
Loc Account# Security Description Value($) Inflows($) ($) ($) Interest($) Outflows($) Net Change($) Value($) (IRR)
LPL 4423-5054 CWGIX CAPITAL WORLD 3,148,793.87 14,710.55 14,710.55 0.00 0.00 (14,710.55) 456,574.16 3,605,368.03 14.50
GROWTH&INCOME CL A
Totals: 3,148,793.87 14,710.55 14,710.55 0.00 0.00 (14,710.55) 456,574.16 3,605,368.03 14.50
SEM - Small Cap Foreign / Emerging Market Equity
Starting Capital Ending Return
Market Dividends Payments Market %
Loc Account# Security Description Value($) Inflows($) ($) ($) Interest($) Outflows($) Net Change($) Value($) (IRR)
LPL 4423-5054 NEWFX NEW WORLD CL A 626,771.34 0.00 0.00 0.00 0.00 0.00 99,544.75 726,316.09 15.88
Totals: 626,771.34 0.00 0.00 0.00 0.00 0.00 99,544.75 726,316.09 15.88
SGS - Small Cap Global Equity
Starting Capital Ending Return
Market Dividends Payments Market %
Loc Account# Security Description Value($) Inflows($) ($) ($) Interest($) Outflows($) Net Change($) Value($) (IRR)
LPL 4423-5054 SMCWX SMALLCAP WORLD CL A 2,409,868.75 0.00 0.00 0.00 0.00 0.00 425,452.31 2,835,321.06 17.65
Totals: 2,409,868.75 0.00 0.00 0.00 0.00 0.00 425,452.31 2,835,321.06 17.65
CASH - Cash and Equivalents
Starting Capital Ending Return
Market Dividends Payments Market %
Loc Account# Security Description Value($) Inflows($) ($) ($) Interest($) Outflows($) Net Change($) Value($) (IRR)
LPL 4423-5054 Cash Cash Balance 0.00 39,830.31 0.00 0.00 0.00 (39,830.31) 0.00 0.00 0.00
Totals: 0.00 39,830.31 0.00 0.00 0.00 (39,830.31) 0.00 0.00 0.00
Totals: $14,603,477.12 $39,830.31 $0.00 $0.00 $2,118,776.86 $16,722,253.98 14.51%
Performance Detail by Asset Class LPL Financial Generated 4/8/2019 12:18 PM
MCHENRY POLICE Member FINRA/SIPC Page 2 of 3
Performance to Benchmark Summary
Asset Class Return%(IRR) Benchmark Benchmark Rtn%(SRR) Return%(IRR)
CASH-Cash and Equivalents 0.00 Citigroup 3-Month Treasury Bill Index 0.03 Your Account 14.51
LG-Large Cap U.S. Growth Equity 15.16 Russell 1000 Growth Index 18.83 0
Benchmark Return /o(SRR)
LGS-Large Capitalization Global Stock 14.50
LV-Large Cap U.S.Value Equity 12.43 Russell 1000 Value Index 14.01 LPL Financial Aggressive Growth Benchmark 15.71
SEM-Small Cap Foreign/Emerging Market 15.88 MSCI Emerging Markets Free-Net 12.80
Equity Dividends
SGS-Small Cap Global Equity 17.65
Returns for asset classes and their corresponding benchmarks are weighted on the time that the asset class was held
during the report period,which may be less than the time that the group or account was held during the report period.
50890792
This is not an official LPL Financial("LPL")statement;it has been prepared by your Advisor for informational purposes only,and does not replace the statements you should receive directly either from LPL or from
the investment sponsors for which LPL is the broker-dealer of record. It is intended to estimate the total value of your investments for which you receive such statements,as well as any investments held away from LPL about which
you have provided to your Advisor information from which values can be estimated. The"Account Summary"portion of this report has been prepared from data believed to be reliable but no representation is being made as to its accuracy or
completeness. In particular,for any investments that you do not hold at LPL and/or for which LPL is not the broker/dealer of record,the identification of such investments and their estimated valuation have been prepared by your Advisor
based on information provided by you. Values shown should only be used as a general guide to portfolio value,and may vary from the actual liquidation values. Position values,size of positions,and dates,may be estimates made by your
Advisor based on information you have provided.The information contained in this report should not be relied upon for tax reporting purposes.The source of all price information for tracked positions(as defined in the Portfolio Manager Report
Disclaimer that accompanies this report)is one or more third party vendors and may include the use of substitute prices where prices are not readily available. Substitute prices may be based on trades up to 30 days prior to the date of the
missing price dates. Past performance is no guarantee of future results. Current performance may be lower or higher than the performance shown. Please contact your advisor to obtain performance current to the most recent month-end. A
copy of the Portfolio Manager Report Disclaimer must accompany this report. If you do not receive it,please ask your Advisor for a copy or call(800)877-7210 extension 6835. (09/09)
Performance Detail by Asset Class LPL Financial Generated 4/8/2019 12:18 PM
MCHENRY POLICE Member FINRA/SIPC Page 3 of 3
1 1
Portfolio Performance Summary
MCHENRY POLICE
Valuation Period: December 31, 2018-April 5, 2019
Prepared by:James Schmidt
Investment Summary
From 12/31/2018 to 4/5/2019
Market Value on 12/31/2018 $14,603,477.12
Inflows $0.00 $20,000,000
Outflows $0.00
Market Fluctuation $2,078,946.55 $15,000,000
Interest $0.00
Dividends $39,830.31 $10,000,000 a
Advisory Fees $0.00
Market Value on 4/5/2019 $16,722,253.98 $5,000,000 t
Performance Return(IRR) 14.51% $
rn
N ^ry Ory ary ti 7�
From Inception to 4/5/2019
Total Invested Dollars Since 8/7/2011 $6,784,420.77
Outflows $0.00
Net Invested Dollars $6,784,420.77 Market Value Net Invested Dollars
Net Change $9,937,833.21
Market Value on 4/5/2019 $16,722,253.98
Performance Return(IRR) 147.28%
Annualized Return(IRR) 12.55%
Investment Details
LPL Sponsor Net Invested Market Value($) Market Value($) 12/31/2018-to-4/5/2019
Loc Account Name Account# Account# Description Dollars($) on 12/31/2018 on 4/5/2019 Total%(IRR)
LPL MCHENRY POLICE 4423-5054 Brokerage-Retirement 6,784,420.77 14,603,477.12 16,722,253.98 14.51
Report Totals: $6,784,420.77 $14,603,477.12 $16,722,253.98 14.51%
Portfolio Performance Summary LPL Financial Generated 4/8/2019 12:18 PM
MCHENRY POLICE Member FINRA/SIPC Page 1 of 2
J
Performance to Benchmark Summary
Return%(IRR)
Your Account 14.51
Benchmark Return%(SRR)
LPL Financial Aggressive Growth Benchmark 15.71
50890792
This is not an official LPL Financial("LPL")statement;it has been prepared by your Advisor for informational purposes only,and does not replace the statements you should receive directly either from LPL or from
the investment sponsors for which LPL is the broker-dealer of record. It is intended to estimate the total value of your investments for which you receive such statements,as well as any investments held away from LPL about which
you have provided to your Advisor information from which values can be estimated. The"Account Summary"portion of this report has been prepared from data believed to be reliable but no representation is being made as to its accuracy or
completeness. In particular,for any investments that you do not hold at LPL and/or for which LPL is not the broker/dealer of record,the identification of such investments and their estimated valuation have been prepared by your Advisor
based on information provided by you. Values shown should only be used as a general guide to portfolio value,and may vary from the actual liquidation values. Position values,size of positions,and dates,may be estimates made by your
Advisor based on information you have provided.The information contained in this report should not be relied upon for tax reporting purposes.The source of all price information for tracked positions(as defined in the Portfolio Manager Report
Disclaimer that accompanies this report)is one or more third parry vendors and may include the use of substitute prices where prices are not readily available. Substitute prices may be based on trades up to 30 days prior to the date of the
missing price dates. Past performance is no guarantee of future results. Current performance may be lower or higher than the performance shown. Please contact your advisor to obtain performance current to the most recent month-end. A
copy of the Portfolio Manager Report Disclaimer must accompany this report. If you do not receive it,please ask your Advisor for a copy or call(800)877-7210 extension 6835. (09/09)
Portfolio Performance Summary LPL Financial Generated 4/8/2019 12:18 PM
MCHENRY POLICE Member FINRA/SIPC Page 2 of 2