ACCOUNTING AND FINANCE
POLICIES AND PROCEDURES MANUAL
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OPEB 115 Trust Investment Policy
October 2025
Introduction
This document sets forth the investment policy for the investment portfolio available to the Other Post Employment Benefits (OPEB) 115 trust administered by Shuster Advisory Group, LLC. This policy should be read in conjunction with the Investment Advisory Agreement and Risk Analysis report.
Purpose
The purpose of this OPEB investment policy statement is to:
• Ensure that all fiduciaries involved in the plan take prudent and careful action to maintain the investment portfolios
• Facilitate the process of ongoing communication between the Employer/Plan Sponsor and its plan fiduciaries
• Confirm the Plan’s investment goals and objectives and management policies as well as cash flow expectations applicable to the investment portfolio identified below and obtained from the Employer/Plan Sponsor
• Provide a framework to construct a well-diversified asset mix that can potentially be expected to meet the account’s short- and long-term needs that are consistent with account’s investment objectives, liquidity considerations and risk tolerance • Identify any unique considerations that may restrict or limit the investment discretion of the Investment Advisor
• Maintain a long-term perspective when market volatility is caused by short-term market events.
Investment Advisory Authority
In accordance with the relevant terms of the documents related to Plan, the Employer/Plan Sponsor/Plan Administrator has delegated investment discretion and authority to Shuster Advisory Group, LLC., an independent SEC-registered investment advisor.
Except as otherwise noted in this document, Investment Advisor has full investment discretion over the assets in the account that are managed. Investment Advisor is authorized to purchase, sell, exchange, invest, re -invest and manage the designated assets held in the account without prior approval or subsequent approval of any other party to the Plan. This management shall be based upon the account’s investment objectives provided by the Employer/Plan Sponsor/Plan Administrator.
Investment Objectives and Constraints
The primary objectives, in order of priority, of the City’s investment activities, shall be:
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The goal of the Plan’s investment program is to provide a reasonable level of growth which, will result in sufficient assets to pay the present and future obligations of the Plan. The following objectives are intended to assist in achieving this goal:
• The Plan should seek to earn a return in excess of its policy benchmark over the life of the Plan. • The Plan’s assets will be managed on a total return basis which takes into consideration both investment income and capital appreciation. While the Employer/Plan Sponsor recognizes the importance of preservation of capital, it also adheres to the principle that varying degrees of investment risk are generally rewarded with compensating returns. To achieve these objectives, the Employer/Plan Sponsor allocates its assets (asset allocation) with a strategic perspective of the capital markets.
Investment Time Horizon: More than 10 years
Anticipated Cash Flows: Assets in the Plan will seek to mitigate the impact of the funding of current and future unfunded OPEB liabilities to reduce the impact of future expenses on the Employer/Plan Sponsor. It is not anticipated that the Plan will have a high level of disbursements in the next five years, however it is anticipated that a steady increase in disbursements will occur as more employees begin to retire. The goal is to manage the cash flow of the plan via actuarial projections provided by the Employer/Plan Sponsor.
Risk Tolerance: Balanced - The account’s risk tolerance has been rated balanced, which demonstrates that the account can accept modest price fluctuations to pursue its investment objectives.
Investment Objective: Balanced – The Balanced Portfolio is a globally diversified portfolio consisting of asset classes that may include U.S. and foreign equity, commodities, real estate investment trusts, and bonds. This strategy is designed for the balanced investor with an i nvestment horizon of at least 5 years who can withstand modest fluctuations in their portfolio value.
Strategic Asset Allocation: Balanced
Equity Fixed Income Cash
40%-60% 38%-58% 0-12%
Policy: 50% Policy: 48% Policy: 2%
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OPEB 115 Trust Investment Policy
October 2025
Policy Weight Ranges:
Asset Classes Min. Policy Max.
Cash 0% 2% 12%
Bonds 38% 48% 58%
High Yield 0% 0% 10%
US Large Cap 11% 21% 31%
US Mid Cap 0% 6% 16%
US Small Cap 0% 3% 13%
International Developed Markets 10% 20% 30%
Emerging Markets 0% 0% 10%
Global Real Assets 0% 0% 10%
Market conditions may cause the account’s asset allocation to vary from the stated range from time to time. The Investment Advisor will rebalance the portfolio no less than quarterly and/or when the actual weighting differs substantially from the strategic range, if appropriate and consistent with your objectives.
Performance Benchmarks: The performance of the total Plan shall be measured over a three and five-year period. These periods are considered sufficient to accommodate the market cycles experienced with investments. The performance may be compared to the return of the total portfolio blended from selected benchmarks. These benchmarks have been chosen for their relevance to the portfolio’s investment objectives and strategy. While we strive to provide a comprehensive comparison, it is important to note that other benchmarks not listed here may also be relevant for assessing the portfolio’s performance.
▪ Cash ▪ S&P 400 Index
▪ Bloomberg US Aggregate / Bloomberg US
Universal Aggregate
▪ Bloomberg Municipal Bond / MS Category
Avg – Municipal CA Intermediate
▪ S&P 500 Index ▪ MSCI All Country World ex USA Index
▪ Russell 2000 Index ▪ MSCI EAFE Index
▪ MSCI World ex USA Index ▪ S&P Global Real Assets Index ▪ MSCI Emerging Markets Index ▪ S&P Global Infrastructure Index ▪ S&P Global Real Estate Index ▪ Private Asset Index
▪ S&P Global Natural Resources Index ▪ Alternative Index ▪ ICE BofA 0-3 Month US Treasury Bills
Permitted Investments: Investment Advisor may utilize a full range of investment vehicles when
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constructing the investment portfolio. Given the portfolio's above -stated investment objectives and its Total Program Benchmark, Shuster Advisory Group will seek to cause the portfolio to have exposure to a complete array of global assets to fully capture risk diversification and return opportunities. Variation will be permitted across tactical opportunities and in the case of Total Portfolio Approach (holistic) opportunities.
Security Selection: Investment Advisor may utilize a full range of investment vehicles when constructing the investment portfolio, including but not limited to individual securities, mutual funds, exchange -traded funds, fixed income portfolios, and alternative investments.
Alternative investments, including but not limited to private equity and private debt, real assets (natural resources, real estate, infrastructure as examples) are generally not directly correlated to equity or fixed income investments and are therefore designed to lower overall portfolio volatility.
Restricted Investments: Direct Investments, other than through pooled or separately managed funds.
Margin Purchases will not be used for leverage. Direct Ownership of letter stock. Securities of the Investment Manager, its parent or subsidiaries, except when in a pooled vehicle.
Duties and Responsibilities
The Employer/Plan Sponsor/Plan Administrator is responsible for:
• Confirming the accuracy of this Investment Policy Statement, in writing. • Advising Trustee, Custodian and Investment Advisor of any change in the plan/account’s financial situation, funding status, or cash flows, which could possibly necessitate a change to the account’s overall risk tolerance, time horizon or liquidity requirements; and thus, would dictate a change to the overall investment objective and goals for the account. • Monitoring and supervising all service vendors and investment options, including investment managers.
• Avoiding prohibited transactions and conflicts of interest.
The plan Custodian is responsible for:
• Valuing the holdings
• Collecting all income and dividends owed to the Plan
• Settling all transactions (buy-sell orders)
The plan Trustee is responsible for:
• Tracking valuation of the holdings.
• Holding assets in Trust as directed trustee.
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OPEB 115 Trust Investment Policy
October 2025
The Trust Administrator and Investment Advisor is responsible for:
• Assisting the Employer/Plan Sponsor/Plan Administrator with the development and maintenance of this Investment Policy Statement.
• Meeting with Employer/Plan Sponsor/Plan Administrator to review portfolio structure, holdings, and performance.
• Designing, recommending and implementing an appropriate asset allocation consistent with the investment objectives, time horizon, risk profile, guidelines and constraints outlined in this statement.
• Researching and monitoring investment advisers and investment vehicles. • Purchasing, selling, and reinvesting in securities held in the account. • Monitoring the performance of all selected assets.
• Voting proxies, if applicable.
• Recommending changes to any of the above.
• Periodically reviewing the suitability of the investments, being available to meet with the committee at least once each year and being available at such other times within reason at your request.
• Preparing and presenting appropriate reports.
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OPEB 115 Trust Investment Policy
October 2025
Glossary of OPEB Investment Terminology
CAPITAL APPRECIATION: the increase in an asset's market value over time, leading to a higher price than its original purchase price. This growth can happen due to factors like increased demand, market trends, inflation, or company performance, resulting in an unrealized profit until the assets are sold.
CAPITAL MARKETS: are financial systems where long-term debt and equity securities are bought and sold to raise capital for investment and growth. These markets connect investors seeking returns with companies, governments, and entrepreneurs who need funding for projects or operations.
CASH FLOW: The total amount of money being transferred into and out of a business, especially as affecting liquidity.
EQUITY: the value of the shares issued by a company.
FIDUCIARY: An organization that holds a position of trust and acts in the best financial interest of another entity.
INVESTMENT ADVISORY: A person or firm that, for compensation, provides advice or analysis on securities, or recommends investments for clients.
INVESTMENT INCOME: includes interest income, dividends earned, and other investment gains, net of losses.
INVESTMENT TIME HORIZON: The length of time you plan to hold an investment or work toward a financial goal. Shorter horizons often require more conservative investments to avoid losses, while long horizons allow for potentially higher-growth, riskier assets that have time to recover from downturns.
LIQUIDITY: A liquid asset is one easily and rapidly converted into cash without a substantial loss of value.
MARKET CYCLES: The natural, recurring pattern of ups and downs, or expansion and contraction, in financial markets, often characterized by four distinct phases: accumulation, mark -up, distribution, and markdown.
MARKET VOLATILITY: Measures how quickly and by how much prices change in financial markets, indicating a degree in price fluctuations over time.
OTHER POST EMPLOYMENT BENEFITS (OPEB): Non-pension retirement benefits provided to the employees after their employment ends, most commonly retiree health insurance, but can also include dental, vision, and life insurance.
ACCOUNTING AND FINANCE
POLICIES AND PROCEDURES MANUAL
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OPEB 115 Trust Investment Policy
October 2025
PLAN ADMINISTRATOR: An individual or organization responsible for managing the day-to-day operations and ensuring compliance of an employee benefit plan, such as a retirement fund or insurance plan.
PLAN SPONSOR: Establishes and maintains an employee benefit plan. As a sponsor, they have fiduciary responsibilities to act in the best interest of the plan participants.
PLAN’S INVESTMENT: refers to how a retirement plan, such as a 401(k) or pension, is managed to grow and protect its assets, often by selecting from various investment options like stocks or bonds.
PORTFOLIO: Collection of securities held by the investor.
RISK TOLERANCE: The level of risk an investor is willing to take when investing. There are three groups:
aggressive, moderate and conservative.
SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation.
SHORT-TERM MARKET: Buying or selling an asset with the intention of holding it for a short period, ranging from minutes to a year or so, to profit from quick market movements or meet near-term cash needs.
TOTAL RETURN BASIS: refers to an investment or accounting approach that includes all sources of investment profit, such as capital gains (from selling an asset for more than its purchase price) and income (like dividends or interest payments) within a specific period.
TREASURY BILL: A discount security issued by the U.S. Treasury to finance the national debt matur ing from three months to one year.
VOTING PROXIES: a written authorization from an individual giving a designated person or firm the power to vote on their behalf at a meeting.