NOTES TO FINANCIAL STATEMENTSCITY OF EUSTIS, FLORIDA(Continued)Note 5 - Pension Plans (Continued)Police and Fire Defined Benefit Pension PlansInvestments HeldInvestments are reported at Fair Market Value. Securities traded on a national orinternational exchange are valued at the last reported sales price at current exchangerates. Investments that do not have an established market are reported at estimated fairvalue.Authorized investments are governed by Florida Statutes and each Plan’s investmentpolicy. All plan investments are held by an outside third party custodian who determineswhat instruments to purchase based on the plan’s investment policy. Investments heldand the return earned are reviewed quarterly by the pension board of the respective plan.Both the Police Officer and Firefighters’ Pension Plans did not hold investments in anyone organization that represents 5% or more of the Plan’s fiduciary net position.For the year ended September 30, 2020 the net of pension plan investment expense,was 7.25% and 7.80% for the Police Officers’ and for Firefighters’ plan, respectively. Themoney-weighted rate of return 12.74% expresses investment performance, net ofinvestment expense, adjusted for the changing amounts actually invested.Long Term Expected Rate of ReturnThe long-term expected rate of return on pension plan investments was determined usinga building-block method in which best-estimate ranges of expected future real rates ofreturn (expected returns, net of pension plan investment expenses and inflation) aredeveloped for each major asset class. These ranges are combined to produce the longterm expected rate of return by weighting the expected future real rates of return by thetarget asset allocation percentage and by adding expected inflation. Best estimates ofarithmetic real rates of return for each major asset class included in both the policeofficers’ and firefighters’ pension plan’s target asset allocation as of September 30, 2020Long TermExpectedRate ofReturnTargetAllocationAsset ClassDomestic EquityInternational EquityDomestic Fixed IncomeReal EstateGTAATargetAllocationPolice60.00%10.00%30.00%00Fire7.50%8.50%2.50%0072Long TermExpectedRate ofReturn45.00%15.00%25.00%10.00%5.00%7.50%8.50%2.50%4.50%3.50%
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