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CITY OF EUGENE, OREGON Notes to Basic Financial Statements (5) Other Information, continued (C) Retirement Plan – Oregon PERS (OPERS), continued Long-Term Expected Rate of Return To develop an analytical basis for the selection of the long-term expected rate of return assumption, in July 2013 the PERS Board reviewed long-term assumptions developed by both Milliman’s capital market assumptions team and the Oregon Investment Council’s (OIC) investment advisors. The table below shows Milliman’s assumptions for each of the asset classes in which the plan was invested at that time based on the OIC long-term target asset allocation. The OIC’s description of each asset class was used to map the target allocation to the asset classes. Each asset class assumption is based on a consistent set of underlying assumptions, and includes adjustment for the inflation assumption. These assumptions are not based on historical returns, but instead are based on a forward- looking capital market economic model. LowHigh Asset class/StrategyRangeRangeTarget Cash0.0%3.0%0.0% Debt Securities15.0%25.0%20.0% Public Equity32.5%42.5%37.5% Private Equity16.0%24.0%20.0% Real Estate9.5%15.5%12.5% Alternative Equity0.0%10.0%10.0% Opportunity Portfolio0.0%3.0%0.0% Total100.0% Compound annual return Asset classTarget (geometric) Core fixed income 7.20%4.50% Short-term bonds 8.00%3.70% Intermediate-term bonds 3.00%4.10% High yield bonds 1.80%6.66% Large cap US equities 11.65%7.20% Mid cap US equities 3.88%7.30% Small cap US equities2.27%7.45% Developed foreign equities 14.21%6.90% Emerging foreign equities 5.49%7.40% Private equity 20.00%8.26% Opportunity funds/absolute return 5.00%6.01% Real estate (Property) 13.75%6.51% Real estate (REITS) 2.50%6.76% Commodities 1.25%6.07% 100.00% Assumed inflation – mean 2.75% continued 74