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Indian River County, Florida <br />Notes To Financial Statements <br />Year Ended September 30, 2018 <br />NOTE 13 - RETIREMENT PLAN - Continued <br />Pension Plan - Continued <br />Long -Term Expected Rate of Return: The long-term expected rate of return on pension plan <br />investments are not based on historical returns, but instead are based on a forward-looking capital <br />market economic model. The allocation policy's description of each class was used to map the target <br />allocation to the asset classes shown below. Each asset class assumption is based upon a consistent set <br />of underlying assumptions and includes an adjustment for the inflation assumption. The target <br />allocation and best estimates of arithmetic and geometric real rates of return for each major asset class <br />are summarized in the following table: <br />Asset Class <br />Cash <br />Fixed Income <br />Global Equity <br />Real Estate (Property) <br />Private Equity <br />Strategic Investments <br />Total <br />Assumed inflation -mean <br />Annual <br />Target Arithmetic <br />Allocation Return <br />1% 2.9% <br />18% 4.4% <br />54% 7.6% <br />11% 6.6% <br />10% 10.7% <br />6% 6.0% <br />100% <br />88 <br />Compound <br />Annual <br />(Geometric) <br />Return <br />2.9% <br />4.3% <br />6.3% <br />6.0% <br />7.8% <br />5.7% <br />2.6% <br />Standard <br />Deviation <br />1.8% <br />4.0% <br />17.0% <br />11.3% <br />26.5% <br />8.6% <br />1.9% <br />