VOLUME 2006.12, DECEMBER 2006

FIRST CLASSPRESORT

US POSTAGEPAID

PERMIT #2454DALLAS, TX

PUBLISHED BY THE DALLAS POLICE &FIRE PENSION SYSTEM

2301 N. AKARD ST. SUITE NUMBER 200 DALLAS, TX 75201

C A L L U S A T 2 1 4 .6 3 8.3 8 6 3 OR 1 . 8 0 0 . 6 3 8 . 3 8 6 1

W W W . D P F P . O R GI N F O @ D P F P. O R G

2301 N. AKARD ST. SUITE 200 DALLAS, TX 75201

BOARD OF TRUSTEES

GERALD BROWN Chairman

STEVEN G. SHAWVice Chairman

GARY W. EDGEDeputy Vice Chairman

DONALD W. HILLJOHN M. MAYS

RECTOR C. McCOLLUMMAXINE THORNTON-REESE

GEORGE J. TOMASOVICSTEVEN H. UMLOR

RICHARD H. WACHSMAN

RICHARD L. TETTAMANTAdministrator

BRIAN F. BLAKEAssistant Administrator

DONALD C. ROHANAssistant Administrator

From the Administrator By Richard Tettamant, Pension System Administrator

Financial Highlights

Usually at this time of year I get to make the end of the year report on the progress DP&FPS has made. And, I get to report good news again this year.

The staff amazes me every year with the amount of work they produce. For instance, they facili-tated 6 PREP sessions for 272 attendees. They also hosted 5 Financial Investment seminars for 181 attendees. They made 7 presentations to rookie classes, and further conducted 2 off site seminars for pensioners. Beyond all of that, they hosted 978 individual counseling sessions and fielded 7,414 phone calls.

Keeping in mind that the Retirement System is all about retirement, Pensioner Advocate Gale Paul does enough work to keep several people busy. She, along with Gail Borneman and Kevin Killingsworth, attended 41 retiree meetings with 2,743 retirees and spouses. Gale made 4,255 re-tiree contacts, including 75 home visits. She also sponsors and hosts the monthly surviving spouse lunch groups.

The System’s I.T. team is coordinating the devel-opment of a web service program so members will have on-line access to their own member information, benefit estimates, and DROP pro-jections. The System plans to roll out this new service this coming spring.

The Board members, along with staff have attended 34 Board and/or Committee meetings so far this year that have resulted in 32 new invest-

Best Wishes for the holidays,

Pension System Administrator

The Year in Review

See “Highlights...” on page 2

See “Year in Review” on page 2

By Rector McCollum, Police Trustee

On behalf of the Board of Trustees and the staff of the Dallas Police and Fire Pension System, I would like to wish you the happiest of Holidays.

In this issue of the First Responder newsletter, Police Trustee Rector McCollum presents a wrap up of the past year in the day to day operation of the Pension System. There are also highlights of the financial position and the membership of the Pension System.

Remember, we are here to serve you. Contact us by email at info@dpfp.org, or by phone at 214.638.3863 or 800.638.3861.

The Board of Trustees’ commitment to our Mem-bers is to maintain the excellent financial condi-tion of the System and assure the accuracy and timeliness of benefit payments.

The System’s funding progress remains on track, and the overall performance of the fund is excel-lent (see Chart #1, pg.3).

The primary objective of the System’s Invest-ment Policy is to implement a prudent asset allo-cation plan that seeks to maximize return while preserving asset value.

A cornerstone of this policy is diversification. In-vestments are spread among various asset classes, including common stocks (equities), bonds, real estate, foreign securities, and short-term cash in-struments (see Chart #2, page 3).

P E N S I O N S Y S T E MC A L E N D A R

JAN. 11: REGULAR BOARD MEETING

JAN. 1 : OFFICE CLOSED; NEW YEAR’S DAY

JAN 15: OFFICE CLOSED; MARTIN LUTHER KING, JR. BIRTHDAY

DEC. 25: OFFICE CLOSED; CHRISTMAS

Richard Tettamant

Dallas Police &

Fire Pension System

2 5

The Year in Review (Continued from Page 1)

CONGRATULATIONSTO O U R N E W

R E T I R E E S !

POLICEJoseph K. Baker, Jr.

Steven A. BatesJerry D. Bogard

Marjorie L. CunninghamRobert V. Johnson

Jimmy C. KeyRichard L. Pace

Edward L. Peelman

FIRE-RESCUELynn A. Curry

Rhonda R. Westbrook

In MemoriamJeffery Lee DelbertThe Board and Staff would like to express our sincere condolences to the family and friends of Jeffery Lee Delbert, who passed away on Friday, November 17, 2006.

Mr. Delbert served with Dallas Fire-Rescue for nearly 11 years, and was a Driver Engineer. He is survived by his wife, Dena; children: Lee, Matthew and Makayla; his father, Joe; two sisters; and four brothers, including Joe, also a Dallas Firefighter.

ment contracts in an effort to keep DP&FPS among the top perform-ing systems in the country.

Speaking of performance, the returns for the system are great. In institutional investing, actual returns are realized several months after the end of any given time period due to the amount of time it takes for all the numbers to be compiled and analyzed. It takes longer for the performance numbers to come in for private investments such as real estate than for equities and bonds. That being said, the performance for the system year over year ending June 30, 2006 is 14.9 %, which is in the top 5% of our investment advisors universe. From January 1st to September 30th the returns are 9.4 %.

We are optimistic about the per-formance of the System for the rest of the year and look forward to finding more investment oppor-tunities.

During 2005, the market value of the System increased by over $240 million from $2.49 billion to $2.74 billion as of December 31, 2005. Market value through November 30, 2006 has grown to more than $3.0 billion.

The annual return for 2005 was 10.3%, and through November of this year is at 15.7%. The annu-alized return since 1982 of 11.4% significantly exceeds the actuarial assumed investment return of 8.5% (see Chart #3, page 4).

Pension Benefits:Benefits have increased significantly over the yearsBenefits, as measured by total benefits paid and average month-ly benefits, have increased great-ly over the last ten years (DROP payments are not included from amounts reported; see Chart #4 on page 4).

Actuarial SummaryThe Board of Trustees has re-tained a Qualified Actuary, Buck Consultants, to assist in the devel-opment of the System’s funding plan. The actuary conducts an an-nual valuation of the System and assists the Board in reviewing and monitoring the funding plan on a regular basis.

The Actuarial Valuation Report (Chart #5, page 5) shows that the market value of assets has increased more than $260 million during the year to $2.75 billion as of January 1, 2005. The ratio of a plan’s AVA to the actuarial accrued liability (AAL), expressed as a percentage, is an indicator of the plan’s fund-ing status. Generally, the larger the percentage, the stronger the finan-

Financial Highlights (Continued from Page 1)Actuarial Summary Information

Actuarial January 1, 2004 January 1, 2005 January 1, 2006Valuation Results Valuation Valuation Valuation

UAAL1 $603,180,958 $589,053,564 $582,084,793Actuarial Value 2 $2,285,744,890 $2,484,994,949 $2,700,136,105Market Value 3 $2,183,058,868 $2,484,994,949 $2,745,954,071AAL Ratio 4 79.10% 80.80% 82.30%Years To Fund 5 38 29 20

1 Unfunded Actuarial Accrued Liability2 Actuarial Value of Assets3 Market Value of Assets4 Actuarial Accrued Liability (GASB 25)5 Projected Years to Fund Level Funding

The above chart provides a summary of the principle results of actuarial valuations of the System over the last three years, demonstrating the funding progress made by the System

over this period.

Chart #5

The above chart provides a summary of the principle results of actuarial valuations of the system over the last three years, demonstrating the funding progress made by the System over this period.

Chart #6

cial health of the plan.

Further demonstrating the im-provement in the System’s fund-ing status, the System’s AAL ratio improved from 80.8% to 82.3% during 2005. The number of years to fully fund the System decreased by 9 years during 2005 to 20 years as of January 1, 2006 2006 num-bers are not yet available.

Membership:Serving 7,910 Public Safety Members and their Families During the past 20 years, the num-ber of Members and Qualified Sur-vivors participating in the system has grown from approximately 5,000 to more than 7,900, an in-crease of approximately 2,900 participants, at December 31,2005 (see Chart #6 on page 5).

Membership of the System(As of January 1, 2006)

Years of Service Police Fire TotalFewer than five 626 271 897

5-9 402 241 64310-14 411 175 58615-19 567 200 76720-24 326 231 55725-29 84 58 142

30 and over 0 0 0DROP Members 556 500 1,056

TOTAL 2,972 1,676 4,648

The “Membership of the System” chart lists Active Members by Department according to years of service. The average service for all Active Members is 15.92 years -- 15.03 for Police Officers,

and 17.48 for Firefighters. There were 4,648 Active Members as of December 31, 2005.

3

120%

The System is on track to be fully funded in 20 years.

Chart #1

Chart #2

2005

4

Total benefits paid to pensioners and survivors have nearly doubled over the year from about $56 million in 1996 to more than $104 million in 2005.

Annualized Cumulative Investment Return

0%

5%

10%

15%

20%

25%

1982

1985

1988

1991

1994

1997

2000

2003

The above chart demonstrates that the System's long-term investment performance has exceeded the expected rate of return – 11.4% since 1982.

Serving 7,910 public safety members and their families

Active Membership in the System (1996-2005)

0

1000

2000

3000

4000

5000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

YEARPolice Fire

Total Active Membership increased by 274 Members over the last ten years from 4,374 to 4,648 Members.

The above chart demonstrates that the System’s long-term investment performance has exceeded the expected rate of return-- 11.4% since 1982.

Chart #3

Excess Return

Return Assumption

11.4%

2005

Chart #4

2 5

The Year in Review (Continued from Page 1)

CONGRATULATIONSTO O U R N E W

R E T I R E E S !

POLICEJoseph K. Baker, Jr.

Steven A. BatesJerry D. Bogard

Marjorie L. CunninghamRobert V. Johnson

Jimmy C. KeyRichard L. Pace

Edward L. Peelman

FIRE-RESCUELynn A. Curry

Rhonda R. Westbrook

In MemoriamJeffery Lee DelbertThe Board and Staff would like to express our sincere condolences to the family and friends of Jeffery Lee Delbert, who passed away on Friday, November 17, 2006.

Mr. Delbert served with Dallas Fire-Rescue for nearly 11 years, and was a Driver Engineer. He is survived by his wife, Dena; children: Lee, Matthew and Makayla; his father, Joe; two sisters; and four brothers, including Joe, also a Dallas Firefighter.

ment contracts in an effort to keep DP&FPS among the top perform-ing systems in the country.

Speaking of performance, the returns for the system are great. In institutional investing, actual returns are realized several months after the end of any given time period due to the amount of time it takes for all the numbers to be compiled and analyzed. It takes longer for the performance numbers to come in for private investments such as real estate than for equities and bonds. That being said, the performance for the system year over year ending June 30, 2006 is 14.9 %, which is in the top 5% of our investment advisors universe. From January 1st to September 30th the returns are 9.4 %.

We are optimistic about the per-formance of the System for the rest of the year and look forward to finding more investment oppor-tunities.

During 2005, the market value of the System increased by over $240 million from $2.49 billion to $2.74 billion as of December 31, 2005. Market value through November 30, 2006 has grown to more than $3.0 billion.

The annual return for 2005 was 10.3%, and through November of this year is at 15.7%. The annu-alized return since 1982 of 11.4% significantly exceeds the actuarial assumed investment return of 8.5% (see Chart #3, page 4).

Pension Benefits:Benefits have increased significantly over the yearsBenefits, as measured by total benefits paid and average month-ly benefits, have increased great-ly over the last ten years (DROP payments are not included from amounts reported; see Chart #4 on page 4).

Actuarial SummaryThe Board of Trustees has re-tained a Qualified Actuary, Buck Consultants, to assist in the devel-opment of the System’s funding plan. The actuary conducts an an-nual valuation of the System and assists the Board in reviewing and monitoring the funding plan on a regular basis.

The Actuarial Valuation Report (Chart #5, page 5) shows that the market value of assets has increased more than $260 million during the year to $2.75 billion as of January 1, 2005. The ratio of a plan’s AVA to the actuarial accrued liability (AAL), expressed as a percentage, is an indicator of the plan’s fund-ing status. Generally, the larger the percentage, the stronger the finan-

Financial Highlights (Continued from Page 1)Actuarial Summary Information

Actuarial January 1, 2004 January 1, 2005 January 1, 2006Valuation Results Valuation Valuation Valuation

UAAL1 $603,180,958 $589,053,564 $582,084,793Actuarial Value 2 $2,285,744,890 $2,484,994,949 $2,700,136,105Market Value 3 $2,183,058,868 $2,484,994,949 $2,745,954,071AAL Ratio 4 79.10% 80.80% 82.30%Years To Fund 5 38 29 20

1 Unfunded Actuarial Accrued Liability2 Actuarial Value of Assets3 Market Value of Assets4 Actuarial Accrued Liability (GASB 25)5 Projected Years to Fund Level Funding

The above chart provides a summary of the principle results of actuarial valuations of the System over the last three years, demonstrating the funding progress made by the System

over this period.

Chart #5

The above chart provides a summary of the principle results of actuarial valuations of the system over the last three years, demonstrating the funding progress made by the System over this period.

Chart #6

cial health of the plan.

Further demonstrating the im-provement in the System’s fund-ing status, the System’s AAL ratio improved from 80.8% to 82.3% during 2005. The number of years to fully fund the System decreased by 9 years during 2005 to 20 years as of January 1, 2006 2006 num-bers are not yet available.

Membership:Serving 7,910 Public Safety Members and their Families During the past 20 years, the num-ber of Members and Qualified Sur-vivors participating in the system has grown from approximately 5,000 to more than 7,900, an in-crease of approximately 2,900 participants, at December 31,2005 (see Chart #6 on page 5).

Membership of the System(As of January 1, 2006)

Years of Service Police Fire TotalFewer than five 626 271 897

5-9 402 241 64310-14 411 175 58615-19 567 200 76720-24 326 231 55725-29 84 58 142

30 and over 0 0 0DROP Members 556 500 1,056

TOTAL 2,972 1,676 4,648

The “Membership of the System” chart lists Active Members by Department according to years of service. The average service for all Active Members is 15.92 years -- 15.03 for Police Officers,

and 17.48 for Firefighters. There were 4,648 Active Members as of December 31, 2005.

VOLUME 2006.12, DECEMBER 2006

FIRST CLASSPRESORT

US POSTAGEPAID

PERMIT #2454DALLAS, TX

PUBLISHED BY THE DALLAS POLICE &FIRE PENSION SYSTEM

2301 N. AKARD ST. SUITE NUMBER 200 DALLAS, TX 75201

C A L L U S A T 2 1 4 .6 3 8.3 8 6 3 OR 1 . 8 0 0 . 6 3 8 . 3 8 6 1

W W W . D P F P . O R GI N F O @ D P F P. O R G

2301 N. AKARD ST. SUITE 200 DALLAS, TX 75201

BOARD OF TRUSTEES

GERALD BROWN Chairman

STEVEN G. SHAWVice Chairman

GARY W. EDGEDeputy Vice Chairman

DONALD W. HILLJOHN M. MAYS

RECTOR C. McCOLLUMMAXINE THORNTON-REESE

GEORGE J. TOMASOVICSTEVEN H. UMLOR

RICHARD H. WACHSMAN

RICHARD L. TETTAMANTAdministrator

BRIAN F. BLAKEAssistant Administrator

DONALD C. ROHANAssistant Administrator

From the Administrator By Richard Tettamant, Pension System Administrator

Financial Highlights

Usually at this time of year I get to make the end of the year report on the progress DP&FPS has made. And, I get to report good news again this year.

The staff amazes me every year with the amount of work they produce. For instance, they facili-tated 6 PREP sessions for 272 attendees. They also hosted 5 Financial Investment seminars for 181 attendees. They made 7 presentations to rookie classes, and further conducted 2 off site seminars for pensioners. Beyond all of that, they hosted 978 individual counseling sessions and fielded 7,414 phone calls.

Keeping in mind that the Retirement System is all about retirement, Pensioner Advocate Gale Paul does enough work to keep several people busy. She, along with Gail Borneman and Kevin Killingsworth, attended 41 retiree meetings with 2,743 retirees and spouses. Gale made 4,255 re-tiree contacts, including 75 home visits. She also sponsors and hosts the monthly surviving spouse lunch groups.

The System’s I.T. team is coordinating the devel-opment of a web service program so members will have on-line access to their own member information, benefit estimates, and DROP pro-jections. The System plans to roll out this new service this coming spring.

The Board members, along with staff have attended 34 Board and/or Committee meetings so far this year that have resulted in 32 new invest-

Best Wishes for the holidays,

Pension System Administrator

The Year in Review

See “Highlights...” on page 2

See “Year in Review” on page 2

By Rector McCollum, Police Trustee

On behalf of the Board of Trustees and the staff of the Dallas Police and Fire Pension System, I would like to wish you the happiest of Holidays.

In this issue of the First Responder newsletter, Police Trustee Rector McCollum presents a wrap up of the past year in the day to day operation of the Pension System. There are also highlights of the financial position and the membership of the Pension System.

Remember, we are here to serve you. Contact us by email at info@dpfp.org, or by phone at 214.638.3863 or 800.638.3861.

The Board of Trustees’ commitment to our Mem-bers is to maintain the excellent financial condi-tion of the System and assure the accuracy and timeliness of benefit payments.

The System’s funding progress remains on track, and the overall performance of the fund is excel-lent (see Chart #1, pg.3).

The primary objective of the System’s Invest-ment Policy is to implement a prudent asset allo-cation plan that seeks to maximize return while preserving asset value.

A cornerstone of this policy is diversification. In-vestments are spread among various asset classes, including common stocks (equities), bonds, real estate, foreign securities, and short-term cash in-struments (see Chart #2, page 3).

P E N S I O N S Y S T E MC A L E N D A R

JAN. 11: REGULAR BOARD MEETING

JAN. 1 : OFFICE CLOSED; NEW YEAR’S DAY

JAN 15: OFFICE CLOSED; MARTIN LUTHER KING, JR. BIRTHDAY

DEC. 25: OFFICE CLOSED; CHRISTMAS

Richard Tettamant

Dallas Police &

Fire Pension System