********************************************************************************************************************* Actual Fund return $1000 invested at the year for year beginning of 1993 grows to 1993 21.1404% 1000.00+1000.00x.211404 =$1,211.40 at end of 1993 and then to 1994 -1.1628% 1211.40+1211.40x-.01162 = $1,197.32 at end of 1994 and then to 1995 15.8261% 1197.32+1197.32x.158261 =$1,386.81 at end of 1995 and then to 1996 17.3443% 1386.81+1386.61x.173443 = $1,627.34 at end of 1996 ********************************************************************************************************************** TABLE 1

Denote by i the moving four year annualized rate. Then i satisfies the equation 1000(1+i)^4=1000(1.211404)(1-.011628)(1.158261)(1.173443). Solving , we obtain, i = ((1.211404)(1-.011628)(1.158261)(1.173443))^.25 - 1 =0.129456. Hence

This means that IF the fund rate was 12.9456% for each of the four years, then the $1000 would also have grown to $1,627.34 (see table 2) ********************************************************************************************************************** If Fund return $1000 invested at the year was beginning of 1993 grows to 1993 12.9456% 1000.00+1000.00x.129456 = $1,129.46 at end of 1993 and then to 1994 12.9456% 1129.46+1129.46x.129456 = $1,275.67 at end of 1994 and then to 1995 12.9456% 1275.67+1275.67x.129456 = $1,440.82 at end of 1995 and then to 1996 12.9456% 1440.82+1440.82x.129456 = $1,627.34 at end of 1996 *********************************************************************************************************************** TABLE 2

Suppose that on January 1 1996 the cash value of all of your future pension payments commencing in 1997 (after the 1996 payments had been made) was $100000. Then using using assumed annualized Fund rate of rate of 6.00% 12.9456% value on January 1 1996 $100,000.00 $100,000.00 value on January 1 1997 $106,000.00 $112,945.60 Denote by R the % increase of the $106000 to $112,945.60. Then R = ((112945.60-106000)/106000)x100% =( (.129456-.06)/1.06)x100% = 6.5525%

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Using Method Prior to 1997 Prior to January 1 1997 , in order to determine the increase in pension payments, the "Moving Four Year Average Fund Return" was the simple arithmetic average of the four previous actual returns of the Fund. As of January 1 1997 the "Moving Four Year Average Fund Return" is taken to be the "Moving Equivalent Four Year Annualized Rate". If instead of using the annualized rate of 12.9456% , the old aritmetic mean method was used, then the moving four year average used would have been (21.1404-1.1628+15.8261+17.3443)/4 = 13.2870%.

Then, using using assumed annualized Fund rate of rate of 6.00% 13.2870% value on January 1 1996 $100,000.00 $100,000.00 value on January 1 1997 $106,000.00 $113,287.00 The increase is R =((113287-106000)/106000)x100% = ((.13870-.06)/1.06)x100 = 6.8745%..