Fresno County Employees Retirement System Data as of September 30, - PowerPoint PPT Presentation

International Equity T E M P L E T O N Fresno County Employees’ Retirement System Data as of September 30, 2006 November 1, 2006 Gary P. Motyl, CFA Peter A. Nori, CFA President Executive Vice President Templeton Global Equities Templeton Global Equities Thomas J. Dickson Senior Vice President U.S. Client Service 650.312.3203 tdickson@templeton.com

International Equity T E M P L E T O N Table of Contents Table of Contents Portfolio Summary and Process Tab 1 Performance and Portfolio Attribution Tab 2 Geographic and Sector Allocation Tab 3 Holdings Tab 4 Appendix Tab 5

International Equity T E M P L E T O N Portfolio Summary Fresno County Employees’ Retirement System Fresno County Employees’ Retirement System As of September 30, 2006 As of September 30, 2006 Portfolio Overview Investment Mandate International Equity Inception Date August 1, 1994 Lead Portfolio Manager Peter A. Nori Total Net Assets (USD) 227,235,421 Cash & Cash Equivalent 7.2% Number of Holdings 81 Market Capitalization (Weighted Average in Millions USD)—Fresno County Employees’ Retirement System 48,704 Market Capitalization (Weighted Average in Millions USD)—MSCI EAFE Index 51,084 Portfolio Performance (USD %) Fresno County Employees’ Retirement System MSCI EAFE Index 1 Quarter 5.0 4.0 YTD 16.6 14.9 1 Year 19.6 19.7 3 Years* 20.4 22.8 5 Years* 13.9 14.7 7 Years* 7.5 5.7 Since Inception* 9.3 7.1 *Average Annual Returns All MSCI data is provided “as is.” The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability 3 of any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited.

International Equity T E M P L E T O N Investment Objectives and Guidelines INVESTMENT OBJECTIVES • No Regulation S Securities. [IPS (letter stock restriction)] • The investment objectives for Templeton Investment Counsel, • No OTC. [IPS (exchange listing requirement)] LLC will be for the asset value, exclusive of contribution or withdrawals, to grow over the long run and earn, through a • Maximum 10% Cash and Cash Equivalents (“fully invested” as combination of investment income and capital appreciation, a per Templeton’s definition). [January 1995 Letter] rate of return (time-weighted total return) in excess of the • Maximum 25% Investment Companies. [California Code] benchmarks established for the long-term (five years). [IPS] • Maximum 5% in one equity security at market. [IPS] PERFORMANCE OBJECTIVES • The total equity segment of the portfolio is to exceed the Morgan • No single equity position in the portfolio may comprise more Stanley Capital International Europe, Australia and Far East than 5% of the company’s total market capitalization. (MSCI EAFE) Index as well as the median equity return in a [Maximum 5% O/S—IPS] representative international equity performance universe. [IPS] • The weight average market capitalization of the portfolio should ELIGIBLE SECURITIES not fall below $1 billion. [IPS] • Equity securities listed on the major local country stock • The portfolio will not engage in investment transactions exchanges. [IPS] involving: • American Depository Receipts (ADRs) and Global Depository – Stock options; Receipts (GDRs). [IPS] – Short sales; – Purchases on margin; INVESTMENT RESTRICTIONS – Letter stock; • No U.S. Securities. [International Mandate] – Private placement securities (with the exception of Rule 144A securities); • No Non-EAFE Ex-Canada, Bermuda and Cayman Islands. [IPS] – Commodities • No Derivatives. [IPS] without the written consent of the Association. [IPS] 4

International Equity T E M P L E T O N Investment Objectives and Guidelines (continued) • The portfolio shall not hold securities classified as “compounded PROXY VOTING REQUIREMENTS risk” or “risk” by the Investor Responsibility Research Center • Effective March 21, 2003, Templeton Investment Counsel, LLC (IRRC) Global Security Risk Monitor. The Investment Manager will have the responsibility to vote proxies. Proxy vote decisions must screen the portfolio against the IRRC Global Security Risk should be made to maximize shareholder values. Please provide Monitor at least on a monthly basis. In the event that a security Mr. Brian Knutson at Fifth Third Bank with your individual already in the portfolio becomes classified as “compounded risk” voting instructions and any other information he may require on or “risk,” the Investment Manager has 60 days to sell the this matter. Please send this information to: security. If the Investment Manager believes that the IRRC Fifth Third Bank classification is in error and believes that the security in question Fifth Third Center poses an important investment opportunity, the Investment MD 1090CC Manager may petition the Board of Trustees for a waiver of this Cincinnati, OH 45263 guideline. [IPS (Letter dated June 16, 2004—IRRC screening is no longer a requirement)] [2/26/03 Letter] CORRESPONDENCE BROKERAGE • Manager shall provide Client with a monthly written report of • FCERA will not prescribe a pre-determined percentage of trades all transactions undertaken on behalf of Client. that must be executed through the commission recapture program. Each Manager must determine the percentage of participation based solely on the objective to minimize costs wherever possible without sacrificing best execution. FCERA respects the position of those Investment Managers that have justified limited or no participation in the program on this basis. [Letter dated 4/9/03] • Client sent updated Traders List on September 27, 1995. 5

International Equity T E M P L E T O N Investment Objectives and Guidelines (continued) • The Manager shall maintain complete and detailed records of • The Manager shall provide a written quarterly report detailing all billed services provided pursuant to soft dollar and directed the name of each brokerage institution which received brokerage arrangements and such services shall be clearly commissions from the fund as a result of the discretionary defined. [California Code] trading authority bestowed upon the investment advisor by the Board of Trustees. [IPS] • The Manager shall disclose to the Client: FEES (1) A list of all billed services provided pursuant to soft dollar and directed brokerage arrangements with respect • No special requirements. to investment transactions for the Client; (2) The justification for providing each of those services; (3) The maximum percentage of the investment transactions of the Client planned for use in soft dollar and directed brokerage arrangements; (4) An annual statement of all billed services provided during the previous year under soft dollar and directed brokerage arrangements with respect to investment transactions for the Client; and (5) A determination of whether each service provided under soft dollar and directed brokerage arrangements with respect to investment transactions for the Client is proprietary or is being shared by other clients of the Manager. [California Code] 6

International Equity T E M P L E T O N Templeton’s Investment Philosophy VALUE We seek companies that we believe are trading at a discount to what our research indicates the company may be worth. PATIENCE Security prices can fluctuate more widely than underlying security values. In our opinion, market efficiencies should recognize and correct these security prices over time. BOTTOM-UP We identify value through rigorous fundamental analysis of a company’s business to determine what we consider its economic worth based on projected future earnings, cash flow or asset value potential. 7

International Equity T E M P L E T O N T E M P L E T O N Templeton—Global Presence Buenos Aires Ft. Lauderdale Nassau Edinburgh Istanbul Moscow Hong Kong Shanghai Melbourne Warsaw Seoul Singapore Rio de Janeiro Toronto Johannesburg Geneva Mumbai Global Research Offices Emerging Markets Research Offices Templeton has 17 Global Equity and Emerging Markets research offices worldwide, providing on-the-ground, comprehensive research insights and contacts 8

International Equity T E M P L E T O N Templeton Global Equity Group Management Team CIO—INSTITUTIONAL CIO—RETAIL Gary Motyl, CFA Jeffrey Everett, CFA DIRECTOR OF PORTFOLIO DIRECTOR OF RESEARCH MANAGEMENT—INSTITUTIONAL Norman Boersma, CFA Cindy Sweeting, CFA Investment Locations FORT GENEVA LAUDERDALE TORONTO NASSAU HONG KONG MELBOURNE SINGAPORE EDINBURGH 1 PM/Analyst 7 PM/Analysts 6 PM/Analysts 4 PM/Analysts 1 PM/Analyst 1 PM/Analyst 5 PM/Analysts 1 PM/Analyst 5 Analysts 1 Analyst 1 Analyst 9